Crossvergence of Marketing Practices between Vietnam and North-Western Europe: Empirical study on consumer behaviour on branded fast moving consumer goods.

D.A.J. van den Akker, L. Dresselhaus, L.A.V. Pham, J.M. Tsu

Business Administration, Faculty of Management and Governance, University of Twente, Enschede, The Netherlands

Abstract An important question in the international management literature is whether or not the emerging economies are converging, diverging or crossverging with the Western economies. For MNCs intending to expand their brand to emerging economies, it is important to know whether or not they can use globalized advertisements. In this research, it is investigated whether the consumer behaviour of the Vietnamese consumers is converging towards or diverging from or crossverging with the consumer behaviour of the North-West European consumers. This is done by comparing the differences between the emotions elicited by particular products and advertisements by consumers of Vietnam and North-West Europe. This research concluded that the Vietnamese consumers’ behaviour is crossverging with the North-West European consumers’ behaviour. This will have implications for the marketing practices of MNCs who aim at expanding their brands to Vietnam. Keywords: Consumer behaviour, Globalisation, Vietnam

1 INTRODUCTION Recent studies have shown that Vietnam is one of the best examples of an emerging economy due to its ever increasing exports. According to a press release of PriceWaterhouseCoopers, Vietnam could be the fastest growing emerging economy with a potential growth rate of 10% annually in real dollar terms that can push the country up to 70% of the size of UK economy by 2050 (Amaczi, Pham Ngoc Thuy Trang, 2008). For the global FMCG industry, Vietnam is supposed to be a potential and rapid-growing market with a large population and diverse demands among customers which is vastly fertile for the western giants’ invasion that brings along new market penetrating strategies for their products. Some large global FMCG corporations which have subsidiaries in Vietnam are Unilever, P&G, B.A.T, Nestle, Coca Cola, Kimberly Clarks and Colgate-Palmolive. Since Vietnam is such a rapid-growing market, this research is done to investigate whether these marketing practices in Vietnam will be converging towards, diverging from or crossverging with those in Western-developed countries. The goal of this research is to find out similar and different behaviour patterns between emerging economies and Western-developed countries concerning consumer behaviour for FMCG of global brands. This will give a start for many MNCs of how to tackle their brand management practices in Vietnam. In this study, Vietnam will be compared to the North-West European market, which will represent the Western market. In accordance with the previous explained objectives, the following research question will be analyzed: To what extent should marketing practices of global brand corporations, specializing in fast-moving consumer goods (FMCG), which have their operations in Vietnam, converging towards, diverging from, or crossverging with

those in Western-developed countries, especially North-Western Europe? In order to find out whether the companies operating in Vietnam can use their marketing practices they use in the West also in Vietnam, it should be researched whether the market of Vietnam is converging towards, diverging from, or crossverging with the market in the West. Therefore, the concepts of converging, diverging and crossverging markets are explained first. After that, the paper discusses marketing strategies. In this case, the focus will be on different types of brand strategies, especially global and local brand strategy. It is the intention of this paper to compare customer behaviours in Vietnam and North-Western Europe. As a consequence, consumer behaviour of both regions will be described in a next step. Since Vietnam is an important topic of this paper, the country Vietnam will be described afterwards. After creating a theoretical framework, the methodology of this research will be elucidated. Next, a quantitative research method in form of a questionnaire will be used in this empirical study. In more detail, the differences between Vietnamese and Western consumer attitudes towards the brand images of Unilever products would be investigated. Because Unilever is an outstanding FMCG MNC and they have a wide range of similar brands aimed to be launched in both Vietnam and Western countries, we decided to use their brands as observed entities. Our survey with emotions questionnaires focus on figuring out how consumers respond to the same brands’ images, with the purpose of clarifying whether brand management strategies of Unilever and other FMCG MNCs should be convergent, divergent or crossverging in order to be successfully approached in these markets. This will be further discussed in the discussion/conclusion part of the paper.

2 LITERATURE REVIEW 2.1 Converging, Diverging, Crossverging According to Gupta & Wang (2003), the effect of globalization on strategic business models are both homogenizing (“convergence” school) and promoting variety (“divergence” school). The concept of convergence encompasses that as countries liberalize their markets, develop institutions, adopt modern technology and achieve industrialization, strategic business behaviour would become similar to that of the Western countries because people will embrace common values with regard to economic activity and work-related behaviour (England & Lee 1974). The diverging concept, on the other hand, asserts that national culture is the dominant force in shaping values, beliefs and attitudes of managers within a country (Hofstede, 1980) and not the economic ideology or technological growth as seen in the convergence concept. This concept shows that achieving best practices is not about converging, but rather about leveraging differences in an increasingly borderless world in order to gain differentiated positions and advantages1. And finally, to bridge the differences between “convergence” and “divergence” schools, Ralston et al. (1993) propose a middle ground using the term 'crossvergence' defined as a value set that is "in between" the values supported by the East and the West. Crossvergence suggests that the Asian organizations would develop a "hybrid" model - blending the best elements of both their domestic and their imported ideas (Abo 1994). Basically, the idea behind the terms convergence, divergence and crossvergence is to guide the management in developing organizational policies and practices which are effective in the changing cultural environment. 2.2 Global vs. local brand strategy An important question MNCs face today is what balance should be maintained between global brand which shuns linguistic and national frontiers, and one which makes provision for local requirements and context? When a company intends to internationalize its brand(s), it should consider if it can globalize its brand or if the brand should be localized according to the customers’ needs and demands of particular countries or regions. Chronologically, the globalization approach came first. Since the 1980s, there has been a major preoccupation about the globalization of brands and the standardization of marketing practices (Sinclair, 2008). However, at the end of the 1980s, failures in global marketing caused that MNCs decided to retreat towards more market-specific approaches (Philip Jones, 2000). The main advantage of globalization of a brand is that it can give economies of scale which is often one of the reasons why a company wants to internationalize its brand. However, on the other hand, often more value can be created through the adaptation of the brand, its products, and marketing practices in order to suit a particular country or region, market segment and even ethnic groups, communities and individuals on a one-to-one basis (Kapferer 2008). Referring to Ramarapu, Timmerman & Ramarapu (1999), the decision between globalization and localization depends on the primary orientation: Globalization includes maintaining the basic integrity of the marketing 1 See Guillen (2002) cited by Gupta & Wang (2003)

mix wherever applied. Localization, however, includes the disposal of developing a new strategy in each market the company intends to enter. Therefore, a challenge for MNCs is to find a balance between globalization and localization of their brands and their marketing practices. These authors argue that a mixture of globalization and localization in form of “being global and acting local” would be the most successful approach for MNCs, since both strategies can have advantages for MNCs. Wills, Samli & Jacobs (1991) found out that only localization has not always been appropriate for MNCs. For example, Nestlé had major problems by making use of this approach. Being global and acting local, however, includes a combination of both strategies. According to Wills, Samli & Jacobs (1991), MNCs that intend to implement a “being global, acting local” strategy, have to understand the local consumers bahaviours and consequently start at a macro level. As only few markets are exactly alike, it is necessary to adapt to these local needs and requirements in order to gain buyers and maximize economic sales. Unlike a number of years ago, more and more multinationals seem to realize that it is possible to create value by perceiving brands locally, even multinationals that globalized their brands before. Although for many brands, it seems that the best option is to localize their brands in order to reach a wide public by being an accessible and popular brand within countries, there are also some brands which create an exception, whereby these brands accomplish value through globalization of their brands (Kapferer 2008). Companies with ‘high-tech’ brands are an example of companies that should globalize their brands and products, since local is perceived as ‘low-tech’. The globalization of the ‘high-tech’ brands gives them an additional perceived quality and prestige. For the so called ‘high-touch’ brands, the best strategy would also be to globalize (Kapferer, 2008). The idea behind these ‘high-touch’ brands is that their customers can find the same product when they travel to London, New York or Shanghai. Examples of such brands are luxury goods as well as top-of-the-range cosmetics. The last category of brands for which globalization is the best strategy is a brand which has a strong national identity. An example of such a brand is Marlboro which is a well-known American brand. Hereby, it should be noted that according to Klein, Ettenson & Morris (1998), not every country has the same perceptions about other countries. For example, in Europe Germany is known for its quality, while in Asia Japan is seen as the country with the products of highest quality. The localization of a brand should take place according to regions where a group of buyers appears sensitive to the same advantages, and expects the same features. According to Kapferer (2008), companies have multiple options for localization of brands. First of all, a company can decide to adapt the product lines to the markets. Hereby, the company should pay attention to the fact that the company’s intention to build a global brand means also global perception. Consequently, it should launch all models under the same brand values as any upper model of the range sold anywhere in the world. A company can also decide to develop two product lines, whereby one product line is suited for the developed economies and the other one is developed for the developing countries. As a result, the company creates two different brand values throughout the world. The third approach is launching products in countries according to a particular phase in which the brand is within the country. Finally, a company can stick to its brand values through different

levels of operationalization, and thereby localizing to the differences in the level of economic development and cost constraints involved. 2.3 Customer behaviour in developed and emerging economies An important aspect of the research is the differentiation of customer behaviour between developed and emerging economies. An aspect of globalization is the convergence of income, media and technology which is in turn expected to lead to homogeneous consumer behaviour. But with converging national wealth, there is still substantial variation of consumer behaviour across nations (De Mooi, 2003). According to Richins (1994), consumer behaviour is a particular type of human behaviour where cultural value can have an impact on. Thus, the cultural values influence the behaviours, attitudes and judgments of the customer. But according to Legohérel et al. (2009), there are also other variables than those associated with cultures that help to explain the customer manner. Consumers seek a variety in their choices of food, for example, through the culture-related attributes as a group (Legohérel et al., 2009). In this case, according to Chetthamrongchai & Davies (2000), segmentation based on time-orientation and shopping motivation is more important to explain consumer behaviour than socio-demographic variables or shopping attitude alone. According to Luamala et al. (2009), cultural values will influence what kind of emotional-eating patterns are emphasized in particular countries or regions. Important differences in the two cultures can be seen in Hofstede’s five dimensions of national culture (namely power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation) which in turn analyzes the relationship between culture as well as the so-called McCrae’s big five dimensions of personality (namely neuroticism, extraversion, openness to experience, agreeableness, and conscientiousness) that were considered originally to be universal (Marsella et al., 2002). In line with this, the concept of branding is less relevant to members of collectivist cultures than to individualist cultures where the brand functions as a unique personality. The difference between high/low contexts of the two cultures can be seen back in terms of advertising (Yu & Cude, 2009). According to Hall (1976), in the low-context culture of the West, the majority of information is expressed in explicit messages and self-oriented expressions. In Asia, a high-context culture, however, the advertisers should use indirect expressions which convey the thoughts of the Asian people. This results in a style that is very subtle, and sometimes ambiguous (Yu & Cude, 2009). According to Han & Shavitt (1994), the Western style of advertising focuses mainly on the individual through individual benefits and preferences, personal success, independence and hedonism. Besides this, through the difference between collectivist and individualist cultures, the way advertising messages are received by the consumers differs between Asia and the West. Shavitt, Nelson & Yuan (1997) argue that the collectivist cultures (Asia) are more concerned with the appropriateness of the message, while the Western consumers are more concerned about the facts or information convey instead of the manner in which the message is send. When the message of advertising is inappropriate, the Asian consumers will not pay attention to the content of the message anymore, while the

Western consumers will keep listening to the content of the message. In developed economies, consumers are bombarded with a tremendous amount of commercial messages resulting in consequences such as brand and advertising confusion (Mc Kenna, 1991). Furthermore, according to Leeflang & van Raaij (1995), due to the process of individualization and the so called “both-and-era” consumer, the consumer behaviour within and between product categories are far from consistence. Consumer behaviour is much more volatile, much less predictable, and increasingly concerned with instant gratification. In other words, people of an individualist culture are more likely to buy unknown brands than in collectivist cultures. In Asia, as a collectivist culture, company‘s brands are more customary, and are used for building trust between companies and consumers instead of developing a portfolio of competitive brands. The expectation is that in due course this trend towards individualization will also become a more important factor in the emerging economies, particularly in the urban areas. Cross-cultural emotion literature states that different emotional experiences are highlighted and relevant in different cultures (Luomal, Sirieix & Tahir, 2009). Here also the distinction between individualist and collectivist cultures play an important role. According to Markus & Kitayama (1991), there is a difference between ego-focused and other-focused emotions. Ego-focused emotions can be compared to the individualist culture since they tend to be associated with an individual’s internal state of attributes, to the exclusion of others, and are consistent with the need for individual awareness, experience, and expression. On the other hand, other-focused emotions are more related to collectivist cultures where the need to be associated with other in a social context or close to others are high. 2.4 Description of the emerging economy Vietnam To investigate more on the customer behaviour in Vietnam, an outline of Vietnam will be presented here. An emerging economy is described as a developing country that has two decisive characteristics: firstly, the country started an economic reform process aimed at tempering problems, like poverty, poor infrastructure and overpopulation; secondly, emerging economies already achieved a steady growth in gross national product (GNP) per capita. Thus, Vietnam can be considered as an emerging economy as it achieved an average GDP growth rate of 7% per annum (Cavusgil et al., 2002). Vietnam’s economy is in transition from a centrally-planned economy to a socialist market economy. The nation is a member of the Association of Southeast Asian Nations (ASEAN) since 1995 and joined the World Trade Organization (WTO) in 2007. The WTO provided Vietnam an anchor to the global market and simultaneously, they reinforced the domestic economic reform process. Also Vietnamese authorities have reaffirmed their commitment to economic liberalization and international integration (CIA, The World Factbook, 2010). This country has more than 88,000,000 people and a population growth rate of 1.14% in 2009. Furthermore, deep poverty has declined significantly and Vietnam is still working to create jobs to meet the challenge of a labour force that is growing by more than one million people annually. The unemployment rate receded to 2.9% in 2009. Moreover, this large, fast-growing market as well as the cheaper and younger workforce makes Vietnam an attractive country for international investment.

The sum of foreign direct investment (FDI) in Vietnam rose by 17%, from 40.34 billion $ in 2008 to 47.37 billion $ in 2009 (CIA, The World Factbook, 2010). 2.5 Marketing practices in Vietnam With 80 million inhabitants, a high population growth rate and fast rising per capital incomes, Vietnam offers a large potential market for consumer goods. Yet, touching these potential customers is still a considerable challenge for Vietnamese companies as the marketing and distribution infrastructure is not well developed. MNCs which invest into Vietnam, on contrary, have professional international marketing strategies for many brands and they are attracted by Asian emerging markets (Speece, Nguyen 2005). According to Speece et al. (2003), in Vietnam, state- owned enterprises (SOEs) dominate the economy, and are considered the pillars upon which the socialist market economy will be constructed. However, most local companies do not really do much real marketing research2, and know little about how their average customer thinks. In general, FMCG local brands often get a low level of recognition from consumers and Vietnam actually does not have any outstanding FMCG company which can build an efficient brand positioning strategy at the beginning of its new product launch. Moreover, in the case of a highly segmented market like Vietnam, the success of a new product/brand lies with the ability of the company to cope with the local, specific segment, not only by means of aggressive and large scale promotion and advertising campaign. Brand names should also suit the Vietnamese language and avoid any conflict with local cultural context (Quang & Huyen, 1999). However, advertising on radio is currently an emerging and effective way to introduce and enhance brands images to consumers because there are more and more people listening to radio through an increasing utilized number of mobile phones and cars in Vietnam and the cost for advertising on the radio is not that high (Meyer, Tran & Nguyen, 2006). Advertising is not only advertising, but also a branding channel for manufacturers. In fact, Speece, Quang & Huong (2003) supposed that Vietnamese companies are also scrambling to use advertising more extensively, and local agencies are beginning to appear. Marketing in general, and advertising specifically, plays an important role in fostering Vietnam’s economic growth and transformation toward a stronger market-orientation. Moreover, when MNCs run business in Vietnam, they will not only bring in extensive knowledge of marketing which means marketing methods transferring, but somehow also gain stronger customer orientation for local companies. They use marketing research extensively, and are the driving force behind development of the marketing research industry in Vietnam3. 2.6 Vietnamese consumer behaviour Like other Asian cultures governed by Confucianism and Buddhism, Vietnamese culture is characterized by a strong collectivism, family-orientation and emphasis on interpersonal relationships. For the Vietnamese, age and 2. See Tran & Speece (1996), Doan & Luc (1998) cited by Speece, et al. (2003)

3. See Tran & Speece (1996), Speece, Doan & Luc (1998) cited by Speece et al. (2003)

hierarchy, which reflect status and rank, is highly respected and conformity to a group’s norms and values is very critical. These cultural values have significant impacts on the Vietnamese consumer behaviour (e.g. information seeking behaviour, purchasing decision process, attitudes towards products and satisfaction/dissatisfaction) (Le & Jolibert, 2001). As the viewpoint of Meyer, Tran & Nguyen (2006), “unlike other Asian consumers, Vietnamese consumers buy prestigious brands as status symbols to impress their peers rather than purely due to its functional value. Many consumers associate quality of live with the consumption of branded products, and are willing to pay considerable premiums”. Moreover, Vietnamese young generation nowadays is more fashionable and brand conscious than before. The Vietnamese youth are the translators of the consumer world for their parents and influence a great number of their purchase decisions (Le & Jolibert 2001). Le & Jolibert (2000) also noted that economic liberalization policies from the government have introduced a flood of foreign products to Vietnam. In addition, combined with an increase in income and improved living standards of Vietnamese consumers, there has ultimately to be reported a radical change in the spending habits of Vietnamese consumers. Approximately twelve years ago, the spending habit of Vietnamese consumers was still very limited, focusing mainly on basic products such as food or clothing, while very little was spent on luxury products. Nowadays, they allocate a great proportion of their revenue towards housing, entertainment activities, transportation means, and household appliances. Besides, according to Speece (2002), it is shown that the strong value orientation characteristic of the middle class continues. Price is not the most important attribute when making a brand choice. However, while Ho Chi Minh City (HCMC) middle class consumers continue to be concerned mainly about product characteristics and quality; and the demand for high quality, branded products by an expanding wealthy, educated middle-class is increasing, they take the factor price into consideration which characterizes strong value thinking. On the other hand, Vietnam’s high class consumer‘s first purchasing criteria is not product price or utility, but product image which is associated with high prestige. They prefer famous and expensive foreign brands because of the belief that “a well known brand name equals high quality”. According to Speece (2002), the country of origin also affects Vietnamese consumers buying behaviour. Basically, price cutting strategies cannot be used as an effective tool to counter negative brand image related to country-of-origin. Similarly, in a research of Batra et al. (2000), consumers in developing countries, like Vietnam, also see the country-of-origin of the product as the determining a brand’s desirability for symbolic, status-enhancing reasons (status preference), in addition to suggesting overall quality. Because the production and control of popular culture resides in the affluent core countries of the West (especially the U.S.), the flow of media images is mostly from the economic center (the West) to the periphery (the developing world), making brands that symbolize affluent Western lifestyles which seem highly desirable. Furthermore, Nguyen, Nguyen & Barrett (2008) stated that the impacts of consumer ethnocentrism on imported product judgment and on intention to purchase local products are not different in terms of product categories, gender, income, and education levels. However, differences exist between younger and older consumers. Consumer ethnocentrism does translate into bias for

imported products. Therefore, traditional marketing tools such as sales promotions, price promotions and brand advertisements will not be sufficient for attracting highly ethnocentric consumers. Instead, strategies that take the role of consumer ethnocentrism into account are more appropriate. Marketing programs of imported products are not harmful to the economy in order to reduce such a bias. For a manager, the findings of the study of Nguyen, Nguyen & Barrett (2008) suggest that brand positioning strategies, heavily based on the physical attributes of brands, are no longer suitable. Such positioning strategies may create serious problems for local brands in the market since Vietnamese consumers often consider imported products to have superior quality to the local product. Consequently, positioning strategies which focus on consumer ethnocentric tendencies may be more appropriate in persuading highly ethnocentric consumers to purchase local products. Nevertheless, Vietnamese consumers also have a cultural sensitivity which has a positive relationship with imported product judgment, but not with consumers’ ethnocentrism. Consumers in the emerging world are willing to participate in, and be perceived as members of the global consumer community4. Foreign exporters should convey to Vietnamese consumers that sensitivity to foreign cultures is a means in order to become a member of the global community. 2.7 Marketing practices in the West According to an analysis of Kapferer (1997), Western corporations follow six main typical models in the management of brand-product relationships. Each model denotes a certain role for the brand, its status as well as its relationship with the products. The six models encompass the product brand, the line brand, the range brand, the umbrella brand, the source brand and endorsing brand. The product brand strategy involves the assignment of a particular name to only one product as well as one exclusive positioning. The result of such strategy is that each new product receives its own brand name that only belongs to it. Each of these products has a precise, well defined positioning and occupies a particular segment of the market. Companies applying the product brand model, for example, are P&G, Unilever which is represented in a detergent market by the brands Ariel, Dash, Soft, or OMO and in the soap market by Camay, Dove, or Zest (Kapferer, 1997). The line brand strategy responds to the concern of offering one coherent product under a single name by proposing many complementary products. Companies like Christian Dior and L’Oreal prefer this type of brand strategy because they can take advantages of reinforcing the selling power of the brand, creating a strong brand image and reducing launch costs (Kapferer, 1997). Food, cosmetics, textiles and equipment firms like Green Giant, Benetton, Lacoste or Samsonite follow the range brand structure. These brands combine all their products through one unique principle, a so-called brand concept (Kapferer, 1997). Companies which implement the umbrella brand strategy choose the same brand supporting several products in different markets. Each of them has its own advertising tools and develops its own communications. However, 4 See Venkatesh, Swamy (1994), Batra et al. (2000) cited by Tho D.Nguyen, Trang T.M Nguyen and Nigel J. Barrett (2008)

each product retains its own generic name. For instance, Palmolive is a brand name for household products (dishwashing liquid) as well as for hygiene products (soap and shampoos for the entire family, but also shaving cream for men) (Kapferer, 1997). Firms that are using the source brand strategy and the endorsing brand strategy often place their name on the products alongside the products’ own brand. As an illustration, when Nestlé puts its name on the bar Kit Kat and on Nescafé packages, this corporate brand is endorsing the quality of the merchandise and acts as a base guarantor. Endorsing brand is considered as the most favourite type of branding strategies of Western European FMCG companies because the endorsing brand strategy is one of the least expensive ways of giving substance to a company’s name and simultaneously, it allows achieving a minimal brand status (Kapferer, 1997). About global branding, most Western FMCG companies have a trend to conquer the world, primarily through the European market and then through other foreign markets like America, Asia and South- Africa. Following the Kapferer (1997) survey, concerning the marketing strategy in the European market, the great majority of interviewed brand managers declared that they were working towards increased homogenization and standardization of their marketing mix in Europe. Only a few companies preferred a marketing policy adapted to each country. However, certainly the trend towards globalization is massive everywhere, but brands born in Italy or in France are more likely to have local adaptation policies. On the whole, 40 percent of European brands interviewed proclaimed having a common marketing mix in Europe, 34 percent vary the marketing mix according to different regions in Europe and 26 percent prefer to adapt one strategy to each country. Food brands are the most reluctant to go totally global; and luxury and cosmetic brands are the most likely to globalize their marketing strategies (Kapferer, 1997). 2.8 North-West European consumer behaviour Based on Hofstede’s dimensions of national culture, the Netherlands as well as Germany are considered highly individualistic (De Mooij & Hofstede, 2002). Consumer’s value appreciation to products has been differentiated and is reflected in the consumption, ownership and use of many products and services. Many studies have shown that consumer purchasing behaviour, especially for fast moving consumer goods, is influenced by many factors which can be classified into economic and non-economic factors. The economic factor entails the influence of income, employment and inflation. During the economic recession in the 1980’s, Dutch consumers have moved from a materialistic value perception to a post-materialistic value perception. The post-materialistic value perception score high on democracy, liberalization, freedom of speech and a less impersonal society. As the real income of the Dutch increased they would easily switch to more expensive products. Nowadays, however, due to the impact of the global economic crisis, three quarters of the Dutch consumers are in a “recessionary state of mind” which significantly influences their purchase behaviour. This causes consumers to become more price-conscious and highly aware of their expenditures. Despite the high uncertainty level in the economy and also the high unemployment level, the proportion of working women is increasing which consequently allow them to have more power over spending (Eurostat; Consumers in Europe

2009). Besides income, consumer “expectation” does also determine expenditure (Leeflang & Raaij, 1993). Consumer expectations are embedded with economic as well as cultural variables which take us to the non-economic factor. Non-economic factors such as the demographic and the cultural environment entail the population size, age distribution, household size and immigrant. The Netherlands illustrate an increasing trend in population which will become stationary in 2025 and a decreasing trend in the household to 2.22 persons according to Leeflang & Raaij (1993). Douglas & Craig (1996) state that the major shifts taking place in the populations of the Netherlands and Germany and other European countries is first of all, due to the massive wave of migration, locally affecting the consumer market by the increasing product variety, loss of cultural identity and safety. Secondly, the mobilization of consumers which makes them more easily exposed to products, lifestyles and behavioural patterns in other countries, ultimately promoting high willingness to buy together with a low confidence in the national economy (Leeflang & Raaij, 1993). The primary concern for the Dutch and German consumers is health due to environmental problems and partly due to a more sports-fitness and body oriented lifestyle (Leeflang & Raaij, 1993). This is in line with the growth rate of health products is in both countries and the rest of Europe. This is also reflected in the increasing demand of medicine, private hospitals, body care products and pharmaceuticals (Leeflang & Raaij, 1994).

3 THEORETICAL FRAMEWORK The literature review has shown some differences between customer behaviour between Asia and the West. An important factor for the differences between the customer behaviours can be traced back to Hofstede’s five cultural dimensions. Although differences between cultures exist, outside factors have an influence on the culture. For this reason, the Western values could have an influence on the Vietnamese customer behaviour. This can be seen in the fact that Le & Jolibert (2000) that due to the economic liberalization process, the foreign product and the improving living standards, that the radical change in spending habits has occurred of the Vietnamese. Therefore, it could be possible that the consumer behaviour of the Vietnamese is converging towards the Western consumer behaviour. This would result in the fact that MNC’s could globalize their brands and according to that their marketing practices when producing their products for the Vietnamese market. Hypothesis 1: The customer behaviour of the Vietnamese consumers is converging towards the North-West European consumer behaviour patterns. On the other hand, in the literature that has been found on the Vietnamese and Western customer behaviour, it can be seen that a lot of differences still exist. This is mainly because of different values which are present in the different cultures. According to Hofstede (1984), values are “a broad tendency to prefer certain states of affairs over others”. The different values of people are learned to them early in their lives and are therefore non-rational, although people may feel that they think rationale. In fact, values determine our definition of what is rationale. Values are also determined by the culture people live in. Kluckhohn (1951) quotes culture as: “Culture consists in patterned ways of thinking, feeling, and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artefacts;

the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values”. Therefore it can be said that how people receive artefacts (and therefore also products and marketing campaigns) is culturally determined. According to Boztepe (2007), value for users and how user value is shaped by local and cultural context. It can be argued that the values and the culture of Vietnamese differ substantially from the values and culture present in the West. Since culture and values have a large influence on customer behaviour, it can be argued that customer behaviour is diverging from the customer behaviour present in the West. Hypothesis 2: The customer behaviour of the Vietnamese consumers is diverging from the North-West European consumer behaviour patterns. Since for both hypothesis 1 and hypothesis 2 supporting literature has been found, it can be argued that although the West may have an influence on certain parts of the customer behaviour of the Vietnamese, they also keep certain values of their own culture. According to the crossverging concept, the Vietnamese consumers would combine the values of the West with the values of their own and therefore, creating a new kind of customer behaviour. This would mean for managers of MNCs that they could globalize some of their marketing practices, while localizing other parts of the marketing practices. Hypothesis 3: The customer behaviour of the Vietnamese consumers is crossverging with the North-West European consumer behaviour patterns. The system of figure 1 is a homeostatic (self-regulating) quasi-equilibrium which shows how a culture keeps maintained. According to Hofstede (1984), the behaviour of the people of a culture has the most influence if the cultural values will disappear. Jews, Gypsies & Basques (Spicer, 1971) have shown cases that people of a system of culture have maintained their identity over hundreds and thousands of years, although they faced pressures from the outside. On the other hand, cultures have also disappeared, because their self-regulating cycle was too far disrupted by outside influences.

Therefore, in this paper it will be researched whether the Vietnamese will be maintained and consequently that the values and culture of the Vietnamese will still determine the customer behaviour or that the outside influences of the West are that high that the customer behaviour is more converged towards the West.

Figure 1: The Stabilizing of Culture Patterns

4 METHODOLOGY This research is of an exploratory nature as it is the intention to seek new insights into the phenomena of different consumer behaviours between Vietnam and North Western Europe. It is chosen to use the PrEmo tool for the research because this will give an appropriate overview of the emotions that the customers will have with the product or advertisements. The PrEmo tool is an unique scientifically validated non-verbal self report instrument to measure emotions. Since the emotions involved with a product or advertisement will influence the customer behaviour, it is an important aspect for MNCs to focus on. This will give a good overview whether the products and advertisements will elicit positive or negative emotions by the customers. Besides this, the emotions are a part of the customer behaviour which is not often researched, but of great importance in our view. Data is collected by distributing a questionnaire to both Vietnamese people as well as Dutch and German people. Therefore, the basis is a quantitative survey by doing individual questioning. In order to get enough and quick results, the use of an online questionnaire was used as it is the most appropriate one. With the help of Susa Group, it was possible to conduct an empirical study in form of a questionnaire to measure consumer’s emotions on different products and advertisements. In this case, three FMCG products (OMO washing powder, Dove beauty care shower and Rexona deodorant) and two advertisements (Dove advertisement and OMO commercial) are shown to Vietnamese as well as German and Dutch respondents. The three brands are all brands of the company Unilever and available in all the three countries. The pictures will be shown to each respondent in a random order. After looking at one picture, the person has to score twelve different emotions (image and sound) on a 5-point-Likert-Scale (0 = I do not feel this; 4 = I do feel this strongly) to express their feeling. In figure 2, the different products and advertisements which are used for the questionnaire are shown. In figure 3, a screen shot of the questionnaire is shown where it is asked for the emotions the product has elicited by the user.

Figure 2: Products Questionnaire

Figure 3: Emotions Questionnaire According to Desmet & Hekkert (2007), three different levels of product experience can be distinguished, namely aesthetic experience, experience of meaning, and emotional experience. Through the different emotions, the experiences of all three levels are researched and therefore give a total overview of how the different people experience the products and advertisements. Through the different products and advertisements, it can be discovered what the differences are in experience between the consumers from the different cultures. This is important because, according to Desmet & Hekkert (2007), experience is shaped by both the characteristics of the user (e.g., personality, skills, background, cultural values, and motives) and those of the product (e.g., shape texture, colour, and behaviour). Since the experience is always influenced by the context of the user, a question of the present mood of the consumer is asked. Since no significantly difference has been found between the mood of both groups, the context of the user in which he or she gives the present emotions by the product, can be neglected. Products and advertisements can evoke strong emotions. As per Holbrook (1985)5, the product emotions play a role by the decisions of consumers to buy a product. For this research, it is assumed that the same will be the case for emotions which are elicited with advertisements and commercials. These emotions are often very difficult to express by people. According to Desmet et al. (2001), this has two reasons, namely first that emotions are difficult to verbalize, especially in the case of products and advertisements since these often elicit low intensity emotions. Besides this, the cognitive involvement which is required when asking consumers to describe their emotion response to a product will influence the response itself. Desmet et al. (2001) found in their research that the use of the PrEmo tool helps consumers in communicating the emotions they have. Since the emotions are highly personal, it seems difficult to find a general relationship between the product and advertisement characteristics and the emotional responses. But since, as discussed in the findings and analysis part, through the statistical analysis, the differences among customer behaviour between the two cultures can still be distinguished.

5 See Holbrook (1985) cited by Desmet et al. (2001)

5 FINDINGS/ANALYSIS In order to investigate the two groups of respondent’s scores on emotions, a two sample t-test was conducted to examine whether the mean difference in the scores for various emotions is statistically significant or not. To avoid bias in the results, the following conditions for the statistical test were considered: randomized condition, independent groups’ assumption and 10% condition. The data presented in table 1 show the results extracted on the basis of extreme differences or similarities between the two groups. The null hypothesis is rejected whenever the p-value exceeds the level of significance of α= 0.05.

Sig.(2-­‐tailed)

p

Dove_pride -­‐1,01 0,025 1,25 1,27 97 0,92

Dove_fascination -­‐4,04 -­‐0,097 1,35 1,45 97 0,687

Dove_dissatisfaction -­‐2,357 -­‐0,559 0,50 1,06 97 0,02

Dove_shame -­‐2,239 -­‐0,344 0,15 0,49 97 0,027

Omo_disgust 0,119 0,02 0,33 0,31 97 0,906

Omo_hope -­‐2,476 -­‐0,58 0,81 1,39 97 0,015

Omo_shame -­‐2.545 -­‐0,349 0,06 0,41 97 0,012

Omo_sadness -­‐2.379 -­‐0,35 0,04 0,39 97 0,019

Rexona_fascination -­‐0,332 -­‐0,025 1,23 1,31 97 0,74

Rexona_disgust -­‐0,123 -­‐0,025 0,58 0,61 97 0,903

Rexona_boredom 2,523 0,7 1,90 1,20 97 0,013

DoveAdd_joy 2,643 0,69 1,73 1,04 97 0,01

DoveAdd_dissatisfaction

-­‐2,777 -­‐0,722 0,73 1,45 97 0,007

DoveAdd_sadness -­‐2,384 -­‐0,553 0,27 0,87 97 0,019

DoveAdd_boredom -­‐1,986 -­‐0,614 0.90 1,51 97 0,05

OmoCom_hope -­‐2,03 -­‐0,472 0.98 1,45 97 0,045

OmoCom_fascination -­‐2,295 -­‐0,565 1,40 1,96 97 0,024

OmoCom_boredom 3,471 0,966 1,75 0.78 97 0,001

OmoCom_shame -­‐0,496 -­‐0,065 0,23 0,29 97 0,621

OmoCom_fear 0,233 0,04 0,35 0,31 97 0,816

DfType  of  Emotion t Mean  difference

Mean  Netherlands

Mean  Vietnam

-­‐0,086 1,54 1,63 97 0,743

-­‐0,069 1,17 1,24 97 0,781

0,604 0,94 0,33 97 0,005

-­‐0,558 1,19 1,75 97 0,03

Omo_satisfaction

Rexona_satisfaction

DoveAdd_desire

OmoCom_pride -­‐2,208

2,899

-­‐0,279

-­‐0,328

Table 1 : Independent Two-sample T-test

A total number of 201 questionnaires were sent out from which 102 forms were incomplete and 99 forms complete, which is a response rate of about 49.3%. The chi-square test for homogeneity was used to compare the distribution of the two groups: Vietnam and North-West Europe on the same categorical variables; gender, age and mood. The p-values for the categories gender, age and mood are all >α, so we fail to reject the null hypothesis and conclude that the two groups show no significant difference in distribution over the categorical variables gender, age and mood. Among the usable respondents, 51 were of Vietnam and 49 of North-West Europe. In total, 46.5% were male and 53.5% were female. Almost all respondents were between the age of 18 and 35. The majority of the respondents were in a slightly or generally in a happy mood. All the results can be found in the annex in table 2 till 14. For every product, remarkable findings can be outlined. In response to the Dove product, it is noticeable that the Vietnamese and North-West European consumers score approximately similar on the emotions “pride” and “fascination” which can be seen in the high p-level of 0.92

and 0.687>α=0.05. This means that the null hypothesis cannot be rejected because it shows no significant differences signifying convergence (H1). Significant differences can be gathered from the emotions “dissatisfaction” and “shame” which are estimated significantly higher by the Vietnamese consumers (“dissatisfaction” Mean West: 0.5, Mean Vietnam: 1.06). The p-values are both <α=0.05. The null hypothesis is rejected because it shows significant differences signifying divergence (H2). Concerning the OMO product, there are conformable reactions on the emotions “satisfaction” and “disgust”. Significant disparities, however, can be found for the emotions “hope”, “shame”, and “sadness”. For the Vietnamese consumers, the score of all the three emotions is substantial higher than the score of North-West Europeans (“hope” Mean West: 0.81, Mean Vietnam: 1.39 with (p<α=0.05). The null hypothesis is rejected signifying divergence (H2). Looking at the Rexona product, it is evident that most emotions advocate a similar strategy as both nations score quite similar the emotions “satisfaction”, “fascination”, and “disgust”. The only decisive difference is the aspect “boredom” as the North-West European consumers found this product much more boring than the Vientamese consumers (“boredom” Mean West: 1.9, Mean Vietnam: 1.2 with p-value <α=0.05). The null hypothesis is rejected signifying divergence (H2). Considering the Dove advertisement, there are no significant similar reactions on one of the twelve emotions. Both groups never react in an identical way and score most emotions extremely differently. The advertisement is found to be more desireable and joyful for the West consumers than for Vietnamese consumers (“joy” Mean West: 1.73, Mean Vietnam: 1.04 with p-value <α=0.05). The Vietnamese respondents score significantly higher on “dissatisfaction” and “sadness” as well as “boredom” when viewing this advertisement than the West consumers (“dissatisfaction” Mean West: 0.73, Mean Vietnam: 1.45 with p-value <α=0.05). The null hypothesis is rejected signifying divergence (H2). The OMO TV commercial has two emotions that are evaluated almost similar: “shame” and “fear”. Both emotions do not play a decisive role for the customers (“shame” Mean West: 0.23, Mean Vietnam: 0.29). Consequently it does not have to be regarded in detail. On the other hand, this commercial appears to be much more interesting to Vietnamese consumers than North-West European consumers. Vietnamese score high on “pride”, “hope”, and “fascination” while the West consumers score high on boredom when viewing the OMO commercial (“pride” Mean West: 1.19, Mean Vietnam: 1.75 with p-value <α=0.05). The null hypothesis is rejected signifying divergence (H2).

6 DISCUSSION/CONCLUSION For the managers of MNCs, it is important to know whether the consumer behaviour of the Vietnamese is converging towards or diverging or crossverging from the Western consumers. Therefore, first for each product will be explained what the differences and similarities are and what reasons can be for this. First all the concepts will be explained according to the diverging and converging concepts, since the crossverging concept is more a concept which lies in between the two extreme concepts. First of all, for Dove product, the Vietnamese and North-West European consumers score similar on the emotions “pride” and “fascination”. It can be stated that especially the positive emotions are scored similarly for the Dove product. The soft pastel colours and the natural symbols, the flower are preferred by both the Vietnamese and the Western consumers (Schmitt, 1995). On the other hand,

the significant different emotions are “dissatisfaction” and “shame”, whereby the Vietnamese score higher on these emotions than that the Western consumers do. The product is rather big, which is quite normal for the Western consumers, although the Vietnamese consumers prefer smaller products. According to Schmitt (1994), the East Asians prefer products with a lot of complexity and decorations. This means they prefer products with multiple forms, shapes and colours. In the packaging of the Dove product, not that many complexity and decorations are present. These factors explain why the Vietnamese consumers score higher on the emotion “dissatisfaction” than the Western consumers do. Besides this, the lotus flower is an important symbol in the Vietnamese culture and therefore, the Vietnamese do not like it when this is used for a product. According to Quang & Huyen (1999), a brand should avoid any conflict with local cultural context and thus the use of the lotus flower would not suit in the Vietnamese culture. For these reasons it can be explained that the Vietnamese score higher on the emotion “shame” than that the Europeans do. Altogether, it can be said that there are both aspects of the concept which support the converging concepts as aspects which support the diverging concepts. For the OMO product quite some different responses are gathered. The Vietnamese and the North-West Europeans score significantly different on the aspects of emotions “hope”, “shame”, and “sadness”. On the other hand, both groups score the same for the emotions “satisfaction” and “disgust”. The first impression is that there are more emotional differences than similarities between the two groups which could support the divergence concept. Reasons why the Vietnamese score higher on the emotions of “hope”, “shame”, and “sadness” can be that the Vietnamese have no tablets yet and do not have different washing powders for white, black and coloured clothes. Therefore, it can be that the new information is too complex for the Vietnamese consumers, which can result in the emotions “shame” and “sadness”. On the other hand, since they are not familiar with this kind of product, consumers see it as an innovative product for the future. It is possible that the Vietnamese are therefore hopeful to buy it in the future. This would lead to the conclusion that the Vietnamese are diverging from the Western consumers, but that this is mainly the case through the fact that the Vietnamese are not familiar to these products yet. As a consequence, it can be stated that the diverging concept, which is promoted by this concept, is more available through differences in products on the market than through differences in culture. Rexona is one of world’s most sold Deodorants. With more than 100 years on the market, it’s considered number one in 29 countries. This product is categorized by Unilever as a typical global product. For the product of Rexona, the only significant difference in the emotional responses was for the emotion “boredom”. An explanation for this can be that this is an old product for the Western consumers, whereby already newer versions are introduced, while in Vietnam this is the current version of the product. This could be a reason why the Western consumers score higher on the emotion “boredom” than that the Vietnamese consumers do. The emotions “satisfaction”, “fascination”, and “disgust” are comparable for both groups. Thus, it can be concluded that the Rexona product supports the convergence concept. The Dove Advertisement supports the diverging concept, since none of the emotions scores between the two groups are similar. The Western consumers score significantly higher on the positive emotions “Desire” and

“Joy”, while the Vietnamese consumers score higher on the negative emotions “dissatisfaction”, “sadness” and “boredom”. A reason for this high contradiction between the Western consumers and the Vietnamese consumers could be that the advertisement is quite controversial. According to Yu and Cude (2009), the advertisements in Asia should be very subtle, which is not in line with the Dove advertisement used in this research. When the message of an advertisement is inappropriate in the view of the Asians, they will not pay attention to the content anymore (Shavitt et al., 1997) and may therefore not see the actual reason behind the controversial advertisement. Hence, it would be very risky for a company to make controversial advertisements for the Asian market. Besides this, according to Unilever’s brand facts (2010) Asian women overwhelmingly feel that beautiful women have greater opportunities in life but few consider themselves beautiful. Across Asia, fewer than 3% said “beautiful” and only 1% of women in Vietnam called themselves beautiful. Their norms promote more negative emotions in Vietnamese consumers when viewing ads portraying “normal” women. The commercial of OMO is significantly similar for both groups for the emotions “shame” and “fear”. The Vietnamese score higher on the emotions “pride”, “hope”, and “fascination”. On the other hand, the Western consumers score higher on the emotion “boredom”. The commercial is much more appreciated by the Vietnamese than by the Europeans, probably because this kind of commercials is shown on the European television for many years, while it is quite new for the Vietnamese consumers. Overall, it can be said that the OMO commercial supports the diverging concept. Altogether, it can be said that the different products and advertisements support both the diverging concept and the converging concept, although the diverging concept is supported a little bit more. Especially the Dove advertisement, which is loved in Europe, is not appreciated in Vietnam and therefore supports the divergence concept. This is also in line with the literature. Since the products of Unilever are not ‘high-tech’, ‘high-touch’ or have a strong national identity, they are more suited for localization (Kapferer 2008). Besides this, the literature about customer behaviour also shows a lot of differences in the reasons for the purchase of products. On the other hand, the literature also shows significant changes in the customer behaviour of the Vietnamese consumers, whereby some of their values are more converging towards the western values. For these reasons it can be stated that the research suggest that the crossverging concept fits best to the customer behaviour of the Vietnamese customers compared to the North-West European customers. From this research, it can be concluded that the consumer behaviour in Vietnam is crossverging with the consumer behaviour in North-West Europe. This research can contribute to MNCs, since they can gain better insights in the emotions behind the consumer behaviour in the two different cultures. According to this research, the best suitable strategy for the managers of MNCs, which intend to operate in Vietnam, would be to have a “being global and acting local strategy”. MNCs are companies that focus on being global, but they need local strategies for each different country. This is mainly due to the fact that the literature (e.g. Speece, 2002) has shown that the Vietnamese regards foreign brands as higher quality than the local brands. But in order to create more value for the Vietnamese consumers, they should also localize their products and advertisements, although not all parts of the products and advertisements have to be

localized. Managers should pay attention to which parts of the products and advertisements can be globalized and which parts should be localized. Besides this, it also contributes to the general knowledge on the convergence/divergence debate, since the topic of emotions behind customer behaviour between Vietnamese and North-West European consumers has not been researched before. This study shows that with disappearing differences in GDP per capita, culture is still a powerful explanation for consumer differences, but that the West has also influences on the consumer behaviour. In order to make further generalizations to other products, more research should be done. First of all, the reasons behind the emotions should be researched, to gain more insight between the actual characteristics of the products and advertisements which create the emotions. Besides this, the research should also be conducted with a broader range of products and advertisements. A limitation of this research is that the products were sometimes familiar to the North-Western consumers, while they were not familiar to the Vietnamese consumers. Furthermore, the North-West European consumers sometimes had already a newer version of the product, while the Vietnamese were still used to the product shown. This will have an influence on the data. Consequently, the research should be done with products which are unfamiliar for both groups. Another limitation is that the approach does not focus on the relationship between emotion and purchase behaviour (Desmet et al., 2001). According to Holbrook (1985)6, however, the product emotions have an influence on the purchase of the product. According to that, we do not know if all emotions have all equal influence on the purchase. As a result, more research should also be done for this.

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8 ANNEXES

Table 2 : Gender and Chi-Square Test table

Table 3 : Age categories and Chi-Square Test table

Tables 4 : General Mood respondents and Chi-Square Test table

Table 5 : Group Statistics Dove Product

Table 6 : Group Statistics OMO Product

Table 7 : Group Statistics Rexona Product

Table 8 : Group Statistics Dove Advertisement

Table 9 : Group Statistics OMO commercial

 

Table 10 : Independent Sample Test Dove Product

Table 11 : Independent Sample Test OMO Product

Table 12 : Independent Sample Test Rexona Product

Table 13 : Independent Sample Test Dove Advertisement

Table 14 : Independent Sample Test OMO commercial