The Journal of Asian Finance, Economics and Business

Korea Distribution Science Association (한국유통과학회)
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Factors Influencing Youngsters' Consumption Behavior on High-End Cosmetics in China

  • GILITWALA, Bhumiphat (MBA Special Track, Graduate School of Business (GSB), Assumption University) ;
  • NAG, Amit Kumar (Department of Commerce, The Bhopal School of Social Sciences (BSSS))
  • Received : 2020.09.30
  • Accepted : 2020.12.05
  • Published : 2021.01.30
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Abstract

The paper investigates the factors that affect the decision of young Chinese consumers to buy high-end cosmetics. The study is based on the responses obtained by questionnaires from 400 respondents in Guangzhou, China. The information was collected and classified on the basis of gender, occupation, age and education in order to understand the main characteristics of the sample in a better way. The purposive, convenient and quota sampling techniques of non-probability sampling method were used. Besides this, the predictive test was carried out with 30 respondents to ensure the reliability and validity of the questionnaires. The data was put to descriptive statistical analysis and multiple regression analysis in order to verify the hypotheses. The data revealed that, while brand awareness does not affect the consumer attitude about the high-end cosmetics, other factors like product involvement, perceived quality, subjective norm, and word-of-mouth have significant effect on consumer's attitude and consumers' intention about high-end cosmetics. The findings of the study show that subjective norm, perceived value, word-of-mouth, and consumer attitude of cosmetic products highly affect consumers purchase intention of high-end cosmetic products. The research paper helps to form concrete and effective marketing strategy based on various aspects of consumer behavior for high-end cosmetics in China.

Keywords

1. Introduction

The market size of China cosmetic products achieved continuous and significant growth along with national economy growth and personal disposal income growth over past decades. Compounded Annual Growth Rate of Chinese cosmetic industry has achieved 11.53% from 2013 to 2018, which is much higher than the growth rate of the global cosmetic market. Total market size grew from RMB275.8 billion in 2013 to RMB373.7 billion in 2018. It is expected that overall market size of Chinese cosmetic products would achieve RMB444.6 billion by 2022. From the perspective of market size, China has become the second largest consumer of cosmetic products in the world, after the United States. However, the market concentration in China’s cosmetics industry is much lower than in the United States. The top 10 cosmetics brands in the Chinese market only have a 38.5% market share while the top 10 cosmetics brands in United States have a 70% market share. The top three cosmetics brands in China are all big foreign brands – P&G has 10.1% of the market, L’Oreal 8.4% and Shiseido 3.1%.

From the perspective of quality grade, mid-and-low-end cosmetics products account for around three-quarters of the Chinese market. Mid-and-low-end cosmetics market in China grew from RMB175.8 billion in 2012 to RMB239.5 billion in 2017, a 6.4% CAGR. However, with the trend of consumption upgrading, Chinese consumer demand of high- end cosmetics has grown fast over recent years. The high- end cosmetics market in China has grown from RMB46.85 billion to RMB84.5 billion from 2012 to 2017, a 12.53% CAGR. Growth rate of the high-end cosmetics market in 2017 even reached 24.95%, while the growth rate of mid-and- low-end that year was only 5.46%. It is expected that there will be more than 75% of Chinese households that will earn between RMB60, 000 and RMB229,000 a year. Obviously, high-end cosmetics in China have great growth potential in future. International brands have significant advantages in China cosmetic market’s competition. McKinsey’s says the reason is that Chinese consumers have more trust in big international brands than in Chinese domestic brands and are willing to pay more for international brands.

From the perspective of purchasing channels, e-commerce channels’ contribution to total cosmetics market in China increased from 10.2% in 2012 to 23.3% in 2017. Real CAGR of Chinese cosmetics selling through e-commerce platforms during the period from 2012 to 2017 increased by 27%. However, cosmetics sales CARG of all offline channels in China, except specialty stores, showed a slow uptrend or even a declining trend over the 2012-2017 period. Besides, from the perspective of consumer’s age, consumers who were born after 1980 accounted for the majority of online customers.

As noted above, the trend and feature of China’s cosmetics market are obvious. Overall market concentration is low. High-end cosmetic would have greater growth potential comparison to mid-and-low-end cosmetics. Chinese consumers prefer foreign brands over Chinese domestic brands, when purchasing cosmetics. Online channels are increasingly preferred by Chinese youngsters to buy cosmetics. Obviously, it is of great significance for the future market competition of Chinese high-end cosmetics brands to study the potential factors influencing youngsters’ purchasing behavior of high-end cosmetics.

Although the market size of the Chinese cosmetics industry is large, empirical research about consumer behaviors in this market are limited. Most existing studies about consumer behavior in China were conducted from the perspective of demographics of consumers to describe the overall behavior of Chinese consumers in the cosmetics market. Little research was based on the relationship between the marketing promotion factors and the consumption behaviors of Chinese consumers in the cosmetics market. Actually, from the standpoint of cosmetics brands or corporates, identifying the relationship between marketing promotion factors and the consumption behaviors of Chinese consumers is more meaningful in guiding marketing strategies.

1.1. Research Objectives

Consumer behaviors are complex and are affected by many factors, both internal factors such as personal values, attitude, psychological factors, and external environment stimulating factors such as price promotion, advertisement promotion and others. The purpose of this study is to explore the possible factors that influence youngsters’ consumption behavior of high-end cosmetics in China, and focus on the relationship between different marketing factors and consumption behaviors.

This research will focus on the following objectives:

• To explore whether cosmetics brand awareness will affect consumers’ attitude of high-end cosmetics products

• To test whether the involvement of consumers will affect consumers’ attitude toward high-end cosmetics products

• To verify whether the perceived quality of cosmetics affects consumers’ attitude of high-end cosmetics products

• To examine whether subjective norms affect consumers’ purchase intention

• To explore whether consumers’ perceived value will affect consumers’ purchase intention

• To identify whether word-of-mouth will affect consumers’ purchase intention

• To explore whether consumers’ attitude about high-end cosmetics products will affect consumers’ purchase intention

2. Literature Review and Hypotheses

2.1. Literature Review

2.1.1. The Relationship Between Brand Awareness and Consumer Attitudes

Consumers tend to buy familiar and well-known products (MacDonald & Sharp, 2000). Brand awareness has a great impact on consumer choice (Hoyer & Brown, 1990); products with high brand awareness will gain higher consumer preferences (Dodds, William, & Grewal, 1991; Alamro & Rowley, 2011). Rajagopal (2007) also points out that consumers’ perceptions of brands are very important. Therefore, enterprises must concentrate on effective communication to enable consumers to understand unfamiliar brands, so that consumers have a positive attitude toward products. Nguyen, Nguyen, and Nguyen (2019) showed customer’s positive attitude in purchasing organic cosmetics, moreover, they have developed green living consciousness, thus creating customer satisfaction for organic products.

2.1.2. The Relationship Between Product Involvement and Consumer Attitudes

Consumer involvement will affect consumers’ attitudes and behaviors. For example, involvement will lead to a focus mentality, which will make the audience more motivated. Increasing the audience’s ability to process information will enable it to process information (Gunter, Barrie, Bahman, Linda, & Adrian, 2002); high-involvement consumers will pay more attention to advertising. In itself, business information will be processed more centrally (Belanche, Flavián, & Pérez-Rueda, 2017). Relevant literature confirms that product involvement has a positive impact on advertising effectiveness, and it also affects consumers’ persistent attitude toward advertising and brands (Petty, Cacioppo, & Schumann, 1983).

2.1.3. The Relationship Between Perceived Quality and Consumer Attitudes

External cues of products can affect perceived quality, which in turn further affects consumers’ perception of product value (Dodds et al., 1991). On the one hand, scholars have found that perceived quality has a direct positive impact on purchase intention (Parasuraman, Zeithaml, & Berry, 1996). On the other hand, some studies have shown that perceived quality can indirectly affect consumers’ purchase intention through satisfaction (Cronin & Taylor, 1992). Nguyen et al. (2011) show that perceived quality has a positive impact on consumer brand loyalty. Tsiotsou (2006) shows that perceived quality can directly affect consumers’ purchase intention, but also indirectly affect consumers’ purchase intention through satisfaction. Saleem, Rahman, and Umar (2015) found that perceived quality can influence consumer loyalty through brand image. Nguyen (2020) shows that men have significantly higher purchase satisfaction than women; moreover, in terms of customer service, shopping experience and external incentives, men were more satisfied than women.

2.1.4. The Relationship between Subjective Norms and Purchase Intention

As a provider of information, peer-to-peer communication has a significant impact on consumer decision-making (Smith, Menon, & Saivakumar, 2005). Consumers will have more willingness to buy skin care products if they think that other consumers who are important have a good opinion of them (Yeon & Chung, 2011). Subjective norms have a significant impact on behavioral intentions (Hillhouse, Turrisi, & Kastner, 2000).

2.1.5. The Relationship Between Perceived Value and Purchase Intention

Turel and Serenko (2006) showed that perceived value has a positive impact on customer satisfaction when studying the Canadian telecommunications industry. Wang, Lo, and Yang (2004) also found that perceived value has a positive impact on customers’ post-purchase intention when they study the Chinese telecommunications industry. Lin and Wang (2006) showed that perceived value had a positive impact on customer loyalty when they studied Taiwan’s e-commerce industry.

2.1.6. The Relationship Between Word-Of-Mouth and Purchase Intention

Research shows that Trusov, Bucklin, and Pauwels (2009) believe that word-of-mouth (WOM) communication is more influential than other sources. This type of communication is considered to be more credible and persuasive (Mayzlin, 2006). Word-of-mouth communication on the network platform will affect consumers’ purchase and choice of products and services (Subramani & Rajagopalan, 2003). Online word-of-mouth can positively affect consumers’ purchase intention, and it can also affect consumers’ purchase intention by influencing brand image (Reza & Samiei, 2012).

2.1.7. The Relationship between Consumer Attitude and Purchasing Intention

Attitudes toward behavior refer to personal evaluations that are beneficial or disadvantageous to behavior. A study by Ajzen (1985) found that, if a person has a positive attitude toward an action, he or she is more likely to adopt and proceed with an action. Many studies support a positive relationship between consumer attitudes toward related products such as organic food and wood products and behavioral intentions in different countries, such as Asia, the United States and Europe, and in different cultural backgrounds (Chan & Lau, 2001; Kalafatis, Pollard, East, & Tsogas, 1999). Kim and Yang (2020) highlighted the positive influence of internal and external factors on the repurchase intentions.

2.2. Hypotheses

H1: There is no statistically significant relationship between brand awareness and consumers’ attitude about high-end cosmetics.

H2: There is no statistically significant relationship between product involvement and consumers’ attitude about high-end cosmetics.

H3: There is no statistically significant relationship between perceived quality and consumers’ attitude about high-end cosmetics.

H4: There is no statistically significant relationship between subjective norm and consumers’ purchase intention about high-end cosmetics.

H5: There is no statistically significant relationship between perceived value and consumers’ purchase intention about high-end cosmetics.

H6: There is no statistically significant relationship between word-of-mouth and consumers’ purchase intention about high-end cosmetics.

H7: There is no statistically significant relationship between consumers’ attitude about high-end cosmetics and consumers’ purchase intention about high-end cosmetics.

3. Methodology

The main purpose of this paper is to find out what factors affect young Chinese consumers’ willingness to buy high- end cosmetics. This paper argues that brand awareness, product involvement, perceived quality, social norms, perceived value, word-of-mouth, and attitude will affect consumers’ purchase intention. Therefore, this study mainly uses quantitative analysis method to verify the hypotheses. In this study, the researchers collected and described relevant information such as gender, occupation, age, education, address, etc., in order to understand the main characteristics of the sample.

As young white-collar workers’ income has increased, young consumers, not only have a variety of product needs, but also have a higher pursuit of the quality and image of cosmetics brands. According to a survey by relevant Chinese agencies, more than half the buyers of high-end cosmetics in China are youngsters aged between 15 and 29, and they like high-end brands much more than other age groups. Therefore, the targeted population of this research is young adult male and female Chinese nationals living and working in Guangzhou, who have purchased high-end cosmetics products at least once. Gay and Diehl (1996) mentioned that sampling is the process of selecting a number of units for a study in such a way that the unit represents the larger group from which they were selected. The sample size of 400 was determined from the sample size formula of Zikmund (2003). Since the total population is unknown, non- probabilistic sampling method with purposive, convenient, and quota sampling techniques were applied for this study. The predictive test, to ensure the validity and reliability of questionnaires, was carried out with 30 respondents.

Zikmund (2003) believes that the survey method is a tool for collecting information in the form of questionnaires. Therefore, the researcher selected two famous crowded shopping malls, Taikoo Hui Square and Teemall, in Guangdong province, Guangzhou City, China, to collect relevant data and information through a survey. A total of 400 questionnaires were equally distributed at the two selected places in the month of February 2019. The collected data were analyzed through correlation analysis, multiple regression analysis and other statistical analysis methods, data processing and analysis, in order to test the hypotheses put forward in this paper.

4. Results and Discussion

With the data collected from 30 respondents to conduct the pretest, the Cronbach’s alpha test was carried out and the overall consistency of the variables is validated. The alpha values of all independent variables and a dependent variable were greater than 0.6, which means that all the questions in the questionnaires are reliable to be used in this research.

In this paper, multiple linear regression is used to test the hypotheses. This paper takes consumer’s attitudes as dependent variables, and brand awareness, product involvement, perceived quality as independent variables, and carries out multiple linear regression to test H1, H2, and H3. In addition, subjective norm, perceived value, and word-of-mouth are used as independent variables, and purchase intention as dependent variables for multiple linear regression to test H4, H5, and H6. Consumer’s attitudes were used as independent variables and purchase intention as dependent variables to test H7 by linear regression. The results of multiple linear regression analysis are shown in Table 1 and Table 2.

H1: There is no statistically significant relationship between brand awareness and consumers’ attitude about high-end cosmetics. 

Based on Table 1, this hypothesis was tested by multiple regression analysis. The results show that the P value is 0.983, which is above 0.05. This means accepting the null hypothesis that brand awareness has no significant effect on consumers’ attitude about high-end cosmetics. So, H1o is accepted.

H2: There is no statistically significant relationship between product involvement and consumers’ attitude about high-end cosmetics.

Based on Table 1, this hypothesis was tested by multiple regression analysis. The results show that the P value is 0.000, which is less than 0.05. This means rejecting the null hypothesis and accepting the alternate hypothesis that product involvement has a significant impact on consumers’ attitude about high-end cosmetics. In addition, the standardization coefficient is 0.155, which indicates that, if product involvement increases by 1, consumers’ attitude about high-end cosmetics will increase by 15.5%.

H3: There is no statistically significant relationship between perceived quality and consumers’ attitude about high-end cosmetics.

Based on Table 1, this hypothesis was tested by multiple regression analysis. The results show that the P value is 0.000, which is less than 0.05. This means that we need to reject the null hypothesis and accept the alternate hypothesis, that perceived quality has a significant impact on consumers’ attitude about high-end cosmetics. In addition, the standardization coefficient is 0.748, which indicates that, if perceived quality increases by 1, consumers’ attitude about the high-end cosmetics will increase by 74.8%. According to the above results, perceived quality has a strong influence on consumers’ attitude about high-end cosmetics.

H4: There is no statistically significant relationship between subjective norm and consumers’ purchase intention about high-end cosmetics.

Based on Table 2, this hypothesis was tested by multiple regression analysis. The results show that the P value is 0.000, which is less than 0.05. This means rejecting the null hypothesis and accepting the alternative hypothesis that subjective norm has a significant impact on purchase intentions. In addition, the standardization coefficient is 0.606, which indicates that, if subjective norm increases by 1, purchase intentions will increase by 60.6%. According to the above results, subjective norm has a strong influence on purchase intention.

H5: There is no statistically significant relationship between perceived value and consumers’ purchase intention about high-end cosmetics.

Based on Table 2, this hypothesis was tested by multiple regression analysis. The results show that the P value is 0.000, which is less than 0.05. This means rejecting the null hypothesis and accepting the alternative hypothesis that perceived value has a significant impact on purchase intentions. In addition, the standardization coefficient is 0.240, which indicates that, if perceived value is increased by 1, purchase intentions will increase by 24.0%.

H6: There is no statistically significant relationship between word-of-mouth and consumers’ purchase intention about high-end cosmetics.

Based on Table 2, this hypothesis was tested by multiple regression analysis. The results show that the P value is 0.000, which is less than 0.05. This means rejecting the null hypothesis and accepting the alternative hypothesis that word-of-mouth has a significant impact on purchase intentions. In addition, the standardization coefficient is 0.136, which indicates that, if perceived value increases by 1, purchase intentions will increase by 13.6%.

H7: There is no statistically significant relationship between consumers’ attitude about high-end cosmetics and consumers’ purchase intention about high-end cosmetics.

Based on Table 3, this hypothesis is tested by single regression analysis. The results show that the P value is 0.000, which is less than 0.05. This means rejecting the null hypothesis and accepting the alternative hypothesis that consumers’ attitude about the high-end cosmetics has a significant impact on purchase intentions. In addition, the standardization coefficient is 0.695, which indicates that, if consumers’ attitude about the high-end cosmetics increases by 1, purchase intentions will increase by 69.5%. According to the above results, consumers’ attitude about high-end cosmetics has a strong influence on purchase intentions. 

Table 1: Summary of Multiple Linear Regression Analysis for Variable Predicting

Note. R2 =.725, Adjusted R2 = .723, p < .05. Dependent Variable= Consumer’s attitude.

Table 2: Summary of Multiple Linear Regression Analysis for Variable Predicting

Note. R2 =.784, Adjusted R2 = .782, p < .05. Dependent Variable=Purchase intention.

Table 3: Summary of Single Linear Regression Analysis for Variable Predicting

Note. R2 =.482, Adjusted R2 = .481, p < .05. Dependent Variable=Purchase intention.

Hypothesis 1 tests the relationship between brand awareness and consumer attitudes. The statistical results showed that brand awareness has no significant effect on consumers’ attitudes in the context of high-end cosmetics. For Alamro and Rowley (2011), consumers will prefer products with high brand awareness. However, in the context of high-end cosmetics, this paper does not draw a significant relationship. This may be due to the high-end cosmetics industry in which each brand has a high reputation. Therefore, consumers are insensitive to brand awareness when choosing goods.

Hypothesis 2 tests the relationship between product involvement and consumers’ attitudes. Data analysis shows that product involvement has a significant positive impact on consumer attitudes. This result is similar to that of Belanche et al. (2017). They validated that high-involvement consumers in advertising context will pay more attention to advertising.

Table 4: Summary of Findings

Hypothesis 3 tests the relationship between perceived quality and consumers’ attitudes. The analysis shows that perceived quality has a significant positive impact on consumers’ attitudes. Saleem et al. (2015) found that perceived quality can affect consumer loyalty through brand image. This paper repeats similar findings in the context of high-end cosmetics.

Hypothesis 4 tests the relationship between subjective norm and consumers’ purchase intention. The analysis shows that subjective norm has a significant positive effect on consumers’ purchase intention. Yeon and Chung (2011) believed that consumers will have more willingness to buy skin care products if they think that other consumers who are important have a good opinion of them. The results of this paper support Yeon and Chung (2011).

Hypothesis 5 tests the relationship between perceived value and consumers’ purchase intention. Data analysis shows that perceived value has a significant positive impact on consumers’ purchase intention. This conclusion supports the results of Wang et al. (2004). They believe that perceived value has a positive impact on customers’ post-purchase intention when they studied the Chinese telecommunications industry.

Hypothesis 6 tests the relationship between word-of- mouth and consumer’ purchase intention. The analysis shows that word-of-mouth has a significant positive impact on consumers’ purchase intention. Subramani and Rajagopalan (2003) believe that word-of-mouth communication on the network platform will affect consumers’ purchase and choice of products and services. This paper found the same results in the context of high-end cosmetics.

Hypothesis 7 tests the relationship between consumers’ attitudes and consumers’ purchase intentions. The analysis shows that consumers’ attitudes have a significant positive impact on consumers’ purchase intentions. This result is consistent with the findings of many scholars that support a positive relationship between consumer attitudes toward related products behavioral intentions (Chan & Lau, 2001).

This paper studies the consumer behavior in China’s high-end cosmetics market through the survey method and finds that product involvement and perceived quality will have a significant positive impact on consumer attitudes. Subject norm, perceived value, word-of-mouth, and consumer attitudes have a significant positive impact on purchase intention. This paper finds out the main factors affecting young Chinese consumers’ purchase of cosmetics through research, constructs relevant theoretical models, and tests them by survey method.

5. Recommendations

This paper identifies several important factors that affect Chinese consumers’ purchase intention of cosmetics, namely, product involvement, perceived quality, subjective norm, perceived value, word-of-mouth, and consumer attitude. When high-end cosmetics enterprises carry out marketing strategies to improve consumers’ willingness to buy, they can consider these aspects for designing marketing activities.

High-end cosmetics enterprises should try their best to increase the involvement of consumers. Through relevant marketing activities, consumers can know more about high- end cosmetics and increase the relationship between them and the products, so as to improve consumers’ purchase intention. In addition, high-end cosmetics enterprises also need to improve the quality of their own products. Product value is an important value that consumers can obtain when buying products, so enterprises should strive to improve their own product quality, better meet the needs of consumers than competitors, and then improve market share.

Subjective norms and word-of-mouth are also important factors affecting consumers’ purchase of high-end cosmetics. Enterprises should build relevant promotion methods to encourage consumers to recommend products to peers and family members. In order to encourage consumers to recommend and improve consumers’ subjective norms in purchasing products, high-end cosmetics enterprises can offer cash backs or product incentives, so as to enhance consumers’ willingness to recommend, improve subjective norms, and then enhance consumers’ willingness to buy.

In addition to the above factors, improving the perceived value and attitude of consumers is also an important aspect that enterprises should focus on when managing consumers’ purchase intention. Enterprises should strive to improve the perceived value to consumers, such as improving the service attitude of staff, enhancing the image of products in the minds of consumers, and so on. Enterprises can also use some marketing strategies, such as trial, to improve consumers’ preference for products, and then to improve their willingness to buy.

6. Conclusion and Future Research

Because of environment and experience constraints, the sample of the questionnaire focuses on the consumers who use high-end cosmetics in Guangzhou, and the age of the sample is between 20 and 25 years old. At the same time, the sample object of this survey is not comprehensive enough in terms of occupation and income, and the sampling has a certain one-sidedness. This study adopts a method of investigation, which may not ensure that the most appropriate data collected were free of errors.

In this paper, when studying the influencing factors of Chinese consumers’ willingness to buy high-end cosmetics, we draw lessons from previous studies. We hope that future scholars can find more appropriate theoretical models to further study this issue. At the same time, whether they can reach a consistent conclusion in different cultural contexts remains to be further studied. Future research can use case studies and experimental method to further confirm the conclusions of empirical research in this paper, in order to supplement its inadequacy.

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