Factors among purchase intention related to greeting cards in China: a survey in Lotus supermarkets

Factors among purchase intention related to greeting

cards in China: a survey in Lotus supermarkets

Master Thesis Business Administration

June, 2009

Student: Ruud Viscaal Student number: 1357727

Supervisor: Dr. L. Maruster Second supervisor: Dr. K. Zoethhout Rijksuniversiteit Groningen

Preface

In front of you lies the research which I have executed in Wuxi, China. This investigation has been performed in order to complete my master in Business Administration with a

specialization in Business Development.

This thesis has been written in three different countries. The primary investigation in China, a part in Holland and I wrapped it up in Spain, indicating the relative complex environments where this thesis was always around me and in my head.

I have to thank many people whom without their individual contributions this thesis would not have been possible. First of all, I would like to thank Dhr. Guido Hamans for giving me the possibility to experience what working in China stands for and giving me the freedom to explore my personality and capabilities at the other side of the world. Manolo, Arthur & Lim for making my working experience in the factory a great learning process. Dr. Laura Maruster for her advice during the whole process of my thesis, her patience and willingness to provide new insights during my research and for updating my knowledge with respect to statistics. Dr. Kees Zoethout for providing feedback on my final thesis.

Abstract

In this research factors among purchase intention of the Chinese consumer towards greeting cards in three different economic development zones in China have been investigated. Ajzens’ (1991) theory of planned behaviour serves as a basis for this investigation. In addition to this model various other constructs have been taking into account. Such as, personal value, price consciousness, consumers needs and product familiarities’ moderating role between the consumers’ attitude and its purchase intention.

The findings suggest that a persons’ value system is correlated with its corresponding needs. Still, personal value did not correlate with the various needs to a high extent. Furthermore, functional needs, which refer to the physical aspects of a greeting card, do not explain a customers’ attitude towards the product. Subjective norms, which refers to social influences, contained the highest individual degree of explaining a consumers’ attitude and can

consequently be considered as one of the key factors in explaining the Chinese’ attitude towards greeting cards. Moreover, experiential and social needs were found to explain the consumers’ attitude whereas price consciousness did not indicate any type of correlation. A strong correlation between a consumers’ attitude and its corresponding purchase intention indicates a positive relationship. Ultimately, product familiarity did not play a significant role in moderating the relationship between consumers’ attitude and its purchase intention.

Table of contents

1. Introduction

6

1.1 Fun industries 6

1.2 Wuxi Fun Gifts Manufacturing 6

1.3 Greeting card industry 7

1.4 Problem statement 7

2. Literature

9

2.5 Theory of planned behaviour 12

2.6 Price Consciousness 13 2.7 Product Familiarity 14

3. Methodology

15

3.3.2. Measurement & Scaling 16

3.4 Conceptual Model 17

4. Hypotheses

18

4.1 Introduction 18

4.2 Hypotheses 18

5. General preferences of the Chinese consumer

21

7. Data Analysis

28

8. Discussion

34

9. Conclusions & Managerial Implications

35

9.1 Conclusion 35

9.2 Managerial Implications 35

9.3 Limitations & Recommendations 36

1. Introduction

1.1 Fun Industries

Established in a small room in Eindhoven two students in their first years of university decided to develop cards added with sound and light and within this fact lies the foundation for Fun Industries. Now, almost seven years later, Fun Industries is European market leader in greeting cards with various additional technologies and its products are sold in more than 20 countries.

The Fun Industries’ head office is situated in Utrecht where 16 people are employed. The head office consists of the management, sales, project and R&D departments. From this office accounts are issued and with all the employees together, Fun Industries tries to keep

developing new technologies in order to innovate constantly and deliver superior value to its customers in terms of delivery times, product quality and tailor made solutions.

The company produces greeting cards with various technologies for well established companies such as Hallmark and American Greetings. Moreover, Fun Industries develops electronic add-ons for business gifts and advertising media for retail and business markets. Fun Industries is producing dynamic greeting cards with flashing lights, music, moving or vibrating parts. Besides this, these technologies are applied to a variety of other materials like mousemats, books, pencils, bags or brochures for business purposes.

An important part of their strategy is that Fun Industries tries to be flexible to its customer by providing them the possibility to adjust and therefore use existing technologies to the

maximum in order to meet specific customer needs. These are the so-called private label projects in which Fun Industries works together with its customers to optimize existing technologies into tailor made solutions.

1.2 Wuxi Fun Gifts Manufacturing

production process, from buying materials, burning IC’s, printing until the assembling of the products as developed beforehand. Therefore, the factory works closely together with Fun Industries’ office in Utrecht and both locations contain R&D and project departments. Although there exists a large distance between the two locations and consequently time differences, they try to keep close contact by means of virtual meetings in order to optimize the development of existing and new products.

1.4 Greeting Card Industry

The greeting card industry originates from the early 1400s but the greeting card industry did not reach America until 1856 when a German immigrant went to America to expand the greeting card industry. Over the years the industry has developed enormously by the addition of various technologies and e-cards through the rise of the internet. Contrary to popular opinion, the popularity of e-cards has not reduced traditional card sending. In fact, because E-cards and traditional E-cards are generally used in different ways and situations, the e-card seems to expand traditional card sending (http://www.greetingcard.org/about.php?ID=3).

According to research executed by Mintel, a market research organization, The UK greeting card industry is worth over 1.3 billion annually. It is the most successful greeting card industry in the world with 800 publishers producing over 2.87 billion greeting cards in 2006. (http://www.greetingcardassociation.org.uk/info-resource/market-info/facts-and-figures).

The greeting card industry is still developing in America and Europe. Numbers of one billion annually indicate that the greeting card industry is not to be underestimated concerning its relative importance for the society.

1.5 Problem statement

As described in the paragraphs above, WFG M was established four years ago to function solely as a production facility for greeting cards issued by Fun Industries. To cut on costs and to use growing market possibilities Fun Industries’ management decided to move to China and manage the factory with the intention to develop the factory into an independent

a sales department has been created to initiate this alteration. WFGM wants to innovate on its products and apply their electronic add-ons to a variety of products so they can be applied to a variety of business opportunities in their market.

Besides the aspects mentioned above there is a growing need for a change of culture within the company since the majority of the positions within WFGM are being executed by the Chinese with few managements positions occupied by the Dutch.

Although the management attempts to enter the Chinese market, there is a lack of strategic direction. Furthermore, because of cultural differences between the Chinese and the Dutch, clear defined goals and strategies need to be formulated so they can be linked to the

organization in order to run the process smoothly. Moreover, nothing is known about the fact if the Chinese are aware of the fact that greeting cards exist because there is no research that indicates the establishment of a greeting card industry in China. Consequently, in order to enter the Chinese market, more information is required about the Chinese market and its consumers.

In order to provide a framework from where this research will be conducted, first an overview of applicable literature and important elements for entering China’s market concerning

2. Literature

2.1 Introduction

Market conditions indicate a strategy of adaptation of both the product and communications when differences exist in environmental conditions of use and in the function which a product serves (Keegan 1969). WFGM runs in an environment where its products are not well known and market characteristics are fundamentally distinct from other markets. The process of adapting consumer products is challenging since it involves the alteration of various parts and components of the product (Hill and Still, 1984). Moreover, mistakes in the light of cultural differences can affect sales and corporate identity (Ricks, 1983). The greeting card industry can be characterized as culturally sensitive (Berkowitz, 1996).

Entering into China’s market, the world’s largest single consumer market, evokes great challenges for foreign marketers. In order to successfully compete in this market, foreign firms must learn how to penetrate it (Miller, 1990).

2.2 Gift Giving

Gift-giving has been conceptualized as the evaluation, selection, and transfer of material and non-material objects in a spontaneous mode or in fulfilment of an obligation (Macklin and Walker, 1988). Sending greeting cards encompasses all the characteristics mentioned in their definition, indicating its relative complexity.

An important aspect of gift giving behaviour is the fact that gift-giving behaviour seems to be influenced by the individuals’ personal value system and value orientation (Qian et al, 2007). China’s culture has developed due to deep-rooted historical and cultural traditions which contributed to the Chinese life style and consumption patterns.

Given the fact that sending greeting cards can be defined as a form of gift giving and seems to be influenced by a persons’ value system the next paragraph will look in-depth to a persons’ value system.

2.3 Personal Value

As can be derived from the paragraphs above, values are the outcomes of a culture and ethnicity of a society (Phinney, 1992). Thus, various types of cultures contain different levels of importance concerning the corresponding values.

According to Yau (1994), a consumers’ products choice is generally affected by very

complex social influences and its environment. Hence, social influences and environment can be defined as components of consumers’ values. Furthermore, it is stated that these values seem to be the underlying determinants of consumers’ attitudes and purchase behaviour (Homer and Kahle, 1988). Moreover, values may be regarded as one of the most influential factors that affect the type of needs consumers try to satisfy through purchase and

consumption behaviours (Tse et al., 1989).

This research suggest the importance of understanding personal values in different cultures since the influence of these values stretches along the whole process of purchase behaviour. Kahle (1983) constructed a list of values (LOV) which is a widely used scale for the

2.4 Consumer needs

Consumers may choose particular products/brands not only because these products provide the functional or performance benefits expected, but in addition to that products are used to express consumers' personality, social status or affiliation or to fulfil their internal

psychological needs, such as the need for change or newness (Park et. al, 1986; Kim et. al, 2002). In the research by Park (1986) consumer needs are split up in three separate categories:

• Functional needs • Social needs • Experiential needs

The functional needs are defined as those that motivate the search for products that solve consumption-related problems (Park et al, 1986: 136). In other words, functional needs apply to persons who seek quality in the products they purchase and can be characterized as so called ‘quality-seekers’.

Social needs are defined as desires for products that fulfil internally generated needs for self-enhancement, role position, group membership, or ego-identification (Park et al, 1986: 136). Experiential needs are defined as desires for products that provide sensory pleasure, variety, and/or cognitive stimulation (Park et al, 1986: 136).

Kim et al. (2002) applied this distinction between needs in an investigation to see whether there are differences for purchasing clothing in China and South Korea. The results of this research highlight that the preference for certain needs differ between Chinese and south Korean consumers. Moreover, it is stated that the consumer needs are influenced according to their personal value system. Therefore it can be stated that different consumers require

different needs to be fulfilled since they posses diverse values.

Furthermore, research executed by Ralston (1999) state that cultural values differences should not only be applied to cases when one country is compared with another but within the same country, since a geographical boundary does not equate with a cultural boundary. For this reason many companies have failed to enter the Chinese market, since they didn’t recognize the heterogeneous nature of the Chinese culture.

2.5 The theory of planned behaviour

The theory of planned behaviour is an extension of the theory of reasoned action made necessary by the original models’ limitations in dealing with behaviours over which people have incomplete volitional control (Ajzen, 1991). One crucial underlying factor in this theory is the individuals’ intention to perform a given behaviour. Ajzen (1991) describes intention as motivational factors that influence a persons’ behaviour. Particularly, intention is an indicator of how much people are willing to try to perform the behaviour in question. The theory proposes three conceptually independent determinants of intention. The first determinant is the attitude toward the behaviour and refers to the degree to which a person has a favourable or unfavourable evaluation or appraisal of the behaviour in question (Ajzen, 1991: 188). The second factor which predicts the intention is labelled subjective norm. This predictor refers to the perceived social pressure to perform or not to perform the behaviour (Ajzen, 1991:188). Ultimately, the third antecedent is the degree of perceived behavioural control. This factor refers to the perceived ease or difficulty of performing the behaviour and it is assumed to reflect past experience as well as anticipated impediments and obstacles (Ajzen 1991:188).

Figure 1. The theory of planned behaviour.

The behavioural intention models have received robust support in numerous behavioural domains and are considered to be some of the most widely applied theories in social

applied to explain the consumers’ food choice behaviour. Another research conducted by Tarkiainen (2005) tested the extension of the theory of planned behaviour in an organic food buying context.

According to Ajzen (2002) the last determinant, perceived behavioural control, can cause considerable variance in behavioural intentions. However, in many research this construct has often be neglected. Perceived behavioural control can be divided into two other determinants (Tarkiainen et. al, 2005). The first factor is perceived self-efficacy which refers to a persons’ internal control for the performed behaviour. The second component is the perceived

controllability which refers to the actual opportunities of the individual to perform a certain behaviour.

Chen (2007) divided perceived behavioural control into two similar constructs, perceived difficulty and perceived control. Perceived difficulty can be defined as the skills and abilities that consumers own and are believed by them to influence the degree of personal control over the behaviour in question (Chen, 2007: 1009). Whereas perceived control covers the effects of external factors, such as time, availability, and recognition (labelling), which the consumers believe influence the judgment of risks and benefits of organic foods in a purchase situation (Chen, 2007: 1010).

Since there seems to be discussion about the construct perceived behavioural control the next paragraphs will try to investigate whether there are other constructs available which might be more comprehensive and applicable to greeting cards.

2.6 Price consciousness

Price is without a doubt one of the most important factors in marketplaces. The pervasive influence of price is due, in part, to the fact that the price cue is present in all purchase

situations and, at a minimum, represents to all consumers the amount of economic outlay that must be sacrificed in order to engage in a given purchase transaction (Lichtenstein, 1993). There is empirical evidence for the fact that consumers’ perceptions of price are sensitive to cultural differences and consequently tend to exhibit different score patterns in terms of the dimensions of price for different countries (Zhou et. al, 2001).

Lichtenstein (1993) states that price can be viewed as having a positive or negative role. Price consciousness has been used by many researchers as a construct related to a variety of

degree to which the consumer focuses exclusively on paying low prices (Lichtenstein, 1993:235).

China has undergone rapid changes in the recent years and socioeconomic conditions have changed accordingly. Consequently, the Chinese have relatively limited economic resources and are not very familiar with the Western culture (Kim et. al, 2002).

In summary, the relation of price with culture and the fact that the socioeconomic conditions have changed rapidly in the recent years, emphasizes price consciousness as an important construct to be taking into account in a purchasing context.

2.7 Product Familiarity

Choo et. Al, (2004) investigated antecedents of new food product behaviour among innovator groups in India. Important in this research is the addition of the variable ‘product familiarity’ as an extension of the theory of planned behaviour which has not been applied by many researchers. It is stated that new products which match the potential adopter’s existing beliefs and values is are more likely to be adopted since the individual is more familiar with the product (Choo, 2004: 608). In this research customers who are willing to adopt new products at the beginning of the product life cycle have been perceived as an innovators. Hence,

consumer innovativeness is considered as a key concept to understand new product success in the market (Choo, 2004; 609).

The results of the research indicate that there is a relationship between a consumers’ attitude and familiarity with the product in question. It is stated that Indian consumers hold more favourable attitudes and actual product behaviour when they are more familiar with a processed food product (Choo, 2004:621).

3. Methodology

3.1 Research objective

To provide WFGM with information about the factors among purchase intention of Chinese consumers towards greeting cards in Lotus supermarkets for three economic development zones in China so a better understanding of the new market and its customers is developed.

3.2 Research Questions

- What are the general preferences for Lotus supermarket customers in the three economic development zones concerning greeting cards in China?

- How are the variables of purchase intention towards greeting cards, for Lotus supermarket customers in the three economic development zones, affected by each other?

- What are the differences between the three economic development zones?

3.3 Research Design

Research designs maybe broadly classified as explanatory or conclusive where conclusive design can be further divided into descriptive and causal research (Maholtra, 2003).

Descriptive research is hereby defined as a type of conclusive research that has as its major objective the description of something, usually market characteristics or functions. Since not much is known about the greeting card market in China, the first part of the research will be descriptive in nature and attempts to investigate general preferences of Chinese consumers to gain more insight in their consumer behaviour.

Causal research is used to obtain evidence of cause-and-effect relationships (Maholtra, 2003: 69). The second part of the research can be classified as causal research since it attempts to test hypotheses and investigate relationships among variables of the purchase intention among Chinese consumers concerning greeting cards in Lotus supermarkets. The several hypotheses, which are formulated in chapter four, are tested with a correlation test. Furthermore, a

variables on the dependent variable. In addition to that, this regression model is used in the latter part of the research to investigate differences among the three different economic development zones by applying dummy variables for the three different cities. Since there exists more than one dependent variable in the conceptual model, an ANOVA test is applied to the rest of the variables in order to gain insight in the difference of the levels of personal value, the various needs and the purchase intention, among the three different cities.

3.3.1 Data collection

As stated before, according to Ralston (1999) cultural differences are not bounded to different countries but can also exist within a country. In other words, it is possible that differences in cultures and related values exist within the borders of one country. In order to take this into consideration, a survey is conducted in three economical development zones: Shanghai, Nanjing, Hangzhou. In every single city one Lotus supermarket is visited and a questionnaire is provided to the customers for the Lotus supermarket. In total the sample is around 300 questionnaires, for each of the cities 100 questionnaires for one supermarket (see Appendix A). The sample is conducted randomly for Lotus supermarket visitors in the three different cities.

In total 194 questionnaires have found to be useful for analysis, which indicates a response rate of 64,7% (N= 194). The obtained data consisted of 77,3% women and 22,7% men. The majority of the respondents are between 20 – 30 years and show a percentage of 75,8%. Concerning the education level pre-university and bachelors’ degree account respectively for 36,1% and 46,9% of the respondents. 40,7% of the respondents indicated to be student and 53,6% showed an income level of less than 3000 CNY. The demographic information of the investigated population is illustrated in Appendix E.

3.3.2 Measurement and scaling

Measurement and scaling are defined respectively as the assignment of numbers or other symbols to characteristics of objects according to certain specified rules and the generation of a continuum upon which measured objects are located (Maholtra, 2003).

part which attempts to investigate respondents’ attitude towards statements are constructed on a 5-point Likert scale. The scale contains numbers which describe the following meanings: 1= totally not agree, 2= not agree, 3= neutral, 4= agree, 5= totally agree.

The operationalization of the several variables is illustrated in Appendix B.

3.4 Conceptual model

Derived from the literature described earlier on a conceptual model has been drawn. The theory of planned behaviour serves as a basis for the model and several related constructs noted earlier in research have been added in order to develop a model which is applicable to greeting cards. The several hypotheses as depicted in the conceptual model below are assessed by a correlation test. Furthermore, a regression model is build for the dependent variable attitude. Its related independent variables; the various needs, subjective norms and price consciousness are examined for the individual explanatory behaviour for the variable attitude. In addition to that, this regression model is used in the latter part to investigate differences between the three economic development zones.

4. Hypotheses

4.1 Introduction

This chapter will provide rationale for the relationships which are hypothesised in the conceptual model which is depicted in chapter three. The literature as described in chapter two serves as a basis for constructing the several hypotheses.

4.2 Hypotheses

Kim et al. (2002) investigated the influence of personal value on the type of needs to be met by purchasing apparel. They indicated a strong relationship between personal value and the various needs as displayed in the conceptual model. Since the greeting card is an industry which is strongly determined by personal value (Qian et. al, 2007) it is expected to influence the consumers’ needs accordingly. Therefore, the relationship between personal value and consumers’ needs is hypothesised as follows:

H1: ‘Consumers’ personal values influence the consumers’ functional needs for Lotus supermarket customers’.

H2: ‘Consumers’ personal values influence the consumers’ experiential needs for Lotus supermarket customers’.

H3: ‘Consumers’ personal values influence the consumers’ social needs for Lotus supermarket customers’.

and attitude is an important determinant of a consumers’ purchase behaviour. Therefore the relationship between consumers’ needs and attitude are hypothesised as follows:

H4: ‘Functional needs negatively influence the consumers’ attitude towards greeting cards in Lotus supermarkets.’

H5: ‘Experiential needs positively influence the consumers’ attitude towards greeting cards in Lotus supermarkets.’

H6; ‘Social needs positively influence the consumers’ attitude towards greeting cards in Lotus Supermarkets.’

The theory of planned behaviour, as described in chapter two, has been used by many researchers to explain consumers’ behaviour to a variety of contexts. Attitudes toward the behaviour, subjective norms with respect to the behaviour, and perceived control over the behaviour are usually found to predict behavioural intentions with a high degree of accuracy (Ajzen, 1991). Therefore, the relationship between subjective norms with respect to

consumers’ attitude is hypothesized as follows:

H7: ‘Subjective norms positively influence the consumers’ attitude towards greeting cards in Lotus supermarkets.’

Choo et. al (2004) investigate the role of product familiarity on the constructs from the theory of planned behaviour. Their results suggest that familiarity has a significant impact on all the constructs of the theory of planned behaviour. Other innovation researchers draw similar results; familiarity with a product reduces consumers’ resistance to its adoption and increases consumers’ favourable attitudes toward the product (Turnbull and Meenaghan, 1980). Given the previous research that attitudes are usually found to predict behavioural intention the relationship between attitude and purchase intention is hypothesised as follows:

As described earlier, price consciousness fulfils the negative role of price (Lichtenstein, 1993). In relation to the theory of planned behaviour the role of the price has been

investigated by Tarkiainen (2005). According to the results of their research it seems that consumers did not perceive that price of products affected their intentions to buy organic food (Tarkiainen, 2005: 817). Hence, it is stated that this might be due to the fact that prices for organic goods are non existing at the moment and it is suggested that it might affect the consumers’ attitude directly as was the case in other research conducted (Bamberg et. al, 1999). Therefore, the relationship between price consciousness and attitude is hypothesised as follows:

5. General preferences of the Chinese consumer

5.1 Introduction

The general preferences of the Chinese consumer concerning greeting cards in Lotus supermarkets are investigated in this chapter. These preferences should ultimately provide additional information to the second part of the research where the factors among purchase intention of the Chinese are explored. In this chapter several issues have been identified to shed light on the matter. Firstly, the objects which the Chinese prefer to use when they want to congratulate somebody are investigated. Furthermore, locations where they are likely to buy, occasions when they are likely to send and how much they are willing to pay for greeting cards are examined. A general overview and illustrations in graphs are combined in

Appendix C.

5.2 Congratulations

People have many possibilities to congratulate someone who is considered closely related to one’s live or someone who they are not that familiar with but want to show their empathy or other emotions to. Some prefer to send a gift whereas others prefer to express their

congratulations by sending an envelope with additional money. In addition to that, e-cards are nowadays popular to send at these occasions by means of the internet. Furthermore, with the rise in mobile telecommunication a text message is very convenient to send instantly to another mobile telephone and is therefore also considered as an option in this investigation. According to the research, with a share of 33,6% of the respondents, gifts/presents are most popular for the Chinese to congratulate somebody whereas 28,8% of the respondents prefer to send a text message. A small 14,8% of the people sends a greeting card and the e-card

accounts for 10,8% of the respondents. The ‘red envelope’, in others words an envelope with money inside, accounts for 11%. Ultimately, only 1,1% of the respondents indicate that they do not send anything to congratulate somebody.

5.3

Locations

In order to gain insight into the locations where the Chinese would purchase greeting cards three options where investigated. In Europe greeting cards can be purchased in a variety of locations in which the supermarket, bookstore and convenient store belong to the most crucial locations. According to the research executed, in China 42,1% of the respondents indicate that they are most likely to purchase cards in the supermarket. Their second preferable location is the bookstore which accounts for 40,6% of the respondents. Ultimately, 17,2% of the Chinese show that they are likely to purchase greeting cards in a convenient store. Therefore, this research indicates that the Chinese are most likely to purchase cards in a supermarket.

5.4 Occasions

A quick look at the assortment of a greeting card company is sufficient to state that there are numerous occasions at which one is able to send a greeting card. Many occasions depend on the type of celebrations or historical events which occur in a country. Therefore, in the case of China, the Autumn Festival has been included as an important occasion in the survey in addition to the typical festivities as New Year or Christmas. The results indicate that the most popular occasion to send a greeting card is the New Year and accounts for 30,5% of the respondents. 29,2% of the respondents chose Christmas as their preferable occasion whereas Birthday counts for 27,4% of the respondents. Valentine and Autumn Festival seem to be important to a lesser extent with respectively 9,1% and 3,8%. Consequently, the most likely occasion to send a greeting card according to this research is the New Year.

5.5 Receivers

7,9% of the respondents and are therefore not considered very popular to send greeting cards to.

5.6 Price Level

The living standards in China are distinctly different than the standards in other continents like Europe or America and therefore the price level is investigated. The options in this

research ranged from 10 CNY until 50 CNY and tried to investigate the maximum amount the Chinese were willing to pay for a greeting card. The price level of 20 CNY accounted for 35% of the respondents whereas the level of 10 CNY showed a percentage of 29%. The price level of 30 CNY accounted for 19,4% of the respondents and 50 CNY for 11,2%. Lastly, only 5,3% of the respondents were willing to pay a maximum of 40 CNY for a greeting card.

5.7 Conclusion

This chapter investigated general preferences of the Chinese consumer towards greeting cards in Lotus supermarkets. It can be stated that according to this research the most popular object to send when the Chinese want to congratulate somebody are gifts and presents. Greeting cards only account for 14,8% of the respondents. The supermarket and the bookstore are the most popular locations to purchase greeting cards and together they account for more 80% of the respondents. New Year has been found to be the most popular occasion to send a greeting card accounting for 30,5% of the Chinese. However, Christmas and Birthday indicate similar percentage statistics. The most popular group to send greeting cards to are friends with a percentage of nearly 50%. The 20 CNY price level accounts for 35% and is therefore the maximum amount which the Chinese are willing to pay for a greeting card.

6. Checking Assumptions

6.1 Introduction

In this chapter the data gathered in the three economic development zones will be checked for assumptions which need to be made in order to perform statistical tests. In order to investigate the internal consistency of the items for measuring the constructs, Cronbachs’ alpha is applied to the nine constructs. The rationale for internal consistency is that the individual items or indicators of the scale should all be measuring the same construct (Hair et. al, 2005). Appendix D shows the SPSS output related to Cronbachs’ alpha and indicates which items haven been deleted in order to obtain a satisfactory alpha level. Moreover, the normality distribution of the population is tested by examining skewness and kurtosis. Appendix E illustrates the output of skewness and kurtosis with their corresponding histograms per

variable. The results of these tests will function as the prerequisites for the assumptions which have to be made in order to perform several statistical analyses. In total 194 questionnaires have been found to be useful for analysis, N=194.

6.2 Internal Validity

The guideline for internal validity is the generally agreed upon lower limit for Cronbachs’ alpha indicating a level of .70 (Hair et. al, 2005: 137). Personal value is measured on a eight-items scale with a corresponding Cronbachs’ alpha of .895. Moreover, all eight-items show a high item-total correlation with a lowest value of .624. Functional needs have been measured originally on a five-item scale showing an alpha of ,622. After deletion of three items

corresponding alpha level of 0,704. Purchase intention is measured on a two-item scale and contains an alpha level of .744. Ultimately, product familiarity is measured with one item and according to previous research this has been a reliable item to explain product familiarity. The findings have been summarized in the table below which indicate the results after the deletion of several items from where further analyses are going to be conducted.

Construct Nr. Items Cronbachs’ alpha

Personal Value 8 0,895

Functional Needs 2 0,691

Experiential Needs 3 0,748

Social Needs 3 0,788

Attitude 3 0,760

Price Consciousness 1 N/A

Subjective Norms 4 0,720

Purchase Intention 2 0,744

Product Familiarity 1 N/A

Figure 3. Cronbachs’ Alpha

6.3 Normality Distribution

Perhaps the most frequently encountered assumption violation is non normality of the independent or dependent variables or both (Hair et. al, 2005: 208). Since several statistical analyses will be performed, the normality of the distribution of the variables is assessed by identifying the magnitude of skewness and kurtosis. The rule of thumb which has been applied to this research is that skewness should be within the range plus two times the standard error to minus two times the standard error of skewness. If this is not the case, there is enough evidence to state that the distribution is skewed to a significant degree and that the data is not normally distributed. The same rule of thumb has been exercised to examine kurtosis. Furthermore, the normality of distribution will be explored with regard to the variables as constructed after applying Cronbachs’ alpha since this is the data where the several statistical tests are going to be applied to.

On the contrary, ‘functional needs’ fit within the range for skewness as well as kurtosis indicating respectively a -,125 and -,478. Hence, the data for this variable is normally distributed. ‘Experiential needs’ show different statistics with a skewness of -,500 which results in more than two times the standard error. Kurtosis shows a level of 0,431 which is less then two times the standard error. Thus, only the skewness shows a sign of non-normality. ’Social needs’ are negatively skewed with -.295 and kurtosis shows a ,220. However, both fall within the range of two times the standard error. Thus, the data for this variable can assumed to be normally distributed. The variable ‘attitude’ shows similar figures, within the range of two times the standard error, with a skewness of -,130, a kurtosis of -,134. Thus, the data for ‘attitude’ is assumed to be normally distributed. The variable price

consciousness notes a skewness of -,066 and a kurtosis of -,655. Both stay within the range of two times the standard error. Thus, the data for ‘price consciousness’ is normally distributed. ‘Subjective norms’ note a skewness of -,416 which does not fall withing the range of two times the standard error. Therefore, concerning the skewness the data for ‘subjective norms’ is not normally distributed. Still, the kurtosis indicates a ,161 which falls within the range of two times the standard error. The variable ‘purchase intention’ shows for both skewness and kurtosis high values which do not fall within the range. Thus, it can be concluded that the data for purchase intention is not normally distributed. Ultimately, the data for the variable

‘familiarity’ shows a skewness of -,414 which does not fall within the range. Hence, concerning skewness the data for this variable is not normally distributed. However, the kurtosis fits within the range of two times the standard error. The results have been summarized in figure 4.

Variable Skewness/St Error Kurtosis/St Error Within Range Normal Distr.

Personal Value -,905/,175 ,469/,347 NO NO

Functional Needs -,125/,175 -,478/,347 YES YES

Experiential Needs -,500/,175 ,431/,347 NO NO

Social Needs -,295/,175 ,220/,347 YES YES

Attitude -,130/,175 -,134/,347 YES YES

Price Consciousness -,066/,175 -,655/,347 YES YES

Subjective Norms -,416/,175 ,161/,347 NO NO

Purchase Intention -,496/,175 1,094/,347 NO NO

Product Familiarity -,414/,175 ,206/,347 NO NO

6.4 Conclusion

After assessing the internal validity of the research several items have been deleted. The original five-item scale of ‘functional needs’ has been reduced to a two-item scale in order to reach a satisfactory alpha level. The item scale of ‘attitude’ has been reduced to a three-item scale after the deletion of the item ‘I think greeting cards are unnecessary’. ‘Price

7. Data analysis

7.1 Introduction

In this chapter the variables associated with purchase intention are analysed. Firstly, a correlation test will be executed in order to gain insight in the degree to which two variables have a connection with each other and the type of direction they have (Huizingh, 2006). The hypotheses mentioned earlier on are tested according to the results of the correlation test. As stated before, there is more than one dependent variable in the conceptual model. Therefore, a regression model is developed for the dependent variable ‘attitude’ and its corresponding independent variables. The model is used to examine the explanatory power of the independent variables with regard to the dependent variable ‘attitude’.

Furthermore, the regression model is used to investigate whether there are differences between the three cities for the variables included in the regression model.

Ultimately, an ANOVA test is executed in order to gain insight in the difference in the levels of the other variables; personal value, the various needs and the purchase intention, between the three economic development zones.

7.2 Correlation

Figure 5. Results correlation test

7.2.1 Testing Hypotheses

The hypotheses drawn earlier on in chapter four are tested in this paragraph. The null

hypothesis of this t-test states that the correlation coefficient in the population does not differ from zero whereas the alternative hypothesis states that there is a relationship between the variable, so the correlation coefficient differs from zero (Huizing, 2006: 277). All the hypotheses are tested with a two-tailed test and the minimum level of significance is 0,05 (α = 0,05).

according to the relationship between personal value and the various needs were stated as follows:

H1: ‘Consumers’ personal values influence the consumers’ functional needs for Lotus supermarket customers’.

H2: ‘Consumers’ personal values influence the consumers’ experiential needs for Lotus supermarket customers’.

H3: ‘Consumers’ personal values influence the consumers’ social needs for Lotus supermarket customers’

H1, H2 and H3 are thus supported, personal values show a positive relationship with a consumers’ functional, experiential and social needs.

Functional needs were expected to negatively influence the consumers’ attitude whereas experiential and social needs were expected to positively influence the consumers’ attitude. The hypotheses to describe the relationship between the various consumer needs and their attitude were formulated as follows:

H4: ‘Functional needs negatively influence the consumers’ attitude towards greeting cards in Lotus supermarkets.’

H5: ‘Experiential needs positively influence the consumers’ attitude towards greeting cards in Lotus supermarkets.’

H6: ‘Social needs positively influence the consumers’ attitude towards greeting cards in Lotus Supermarkets.’

The relationship between subjective norms and the consumers attitude was hypothesised as follows:

H7: ‘Subjective norms positively influence the consumers’ attitude towards greeting cards in Lotus supermarkets.

The results of the correlation test indicate a strong relationship with a coefficient of 0,512 on a significance level of 0,01. Thus, H7 is supported.

The hypothesis which linked a consumers’ attitude to its purchase intention and the moderating effect of product familiarity on this relationship was formulated in H8. The relationship with attitude and purchase intention according to the correlation test shows a strong positive correlation coefficient of ,487 on a significance level of 0,01. Hence, the hypothesis included the moderating effect of product familiarity on the relationship between a consumers’ attitude and its purchase intention. To see to which extent product familiarity influences this relationship, the dataset was split up in a set were only cases with a high extent of product familiarity (familiarity => 3) were included and the other set included cases with a small extent of product familiarity (familiarity <=3). The dataset with only cases of a high extent of product familiarity indicated a correlation coefficient of 0,491 between attitude and purchase intention on a significance level of 0,01 and the dataset with only cases with a small extent of product familiarity a correlation coefficient of 0,496 on a level of 0,01 (see

Appendix F). This is a very small difference and therefore H10 can be partially accepted. In other words, there exists a strong positive relationship between a consumers’ attitude and its purchase intention, but product familiarity does not moderate this relationship.

H8: ‘Consumers’ attitude positively influence consumers’ purchase intention towards greeting cards in Lotus supermarkets and is moderated by product familiarity’

As was stated before, the variable ‘price consciousness’ can be deleted from the conceptual model since this construct showed a correlation coefficient of 0,086 on a significance level of ,233. Consequently, H9 is rejected.

7.3 Regression model

A regression analysis is executed in order to examine the causality of the relationship between the dependent variable ‘attitude’ and the five independent variables as depicted in the

conceptual model. As stated before, price consciousness shows a non significant correlation with the variable ‘attitude and is therefore excluded from the regression model. Moreover, functional needs are excluded from the regression model. Previous regression results, with functional needs included in the model, show that functional needs have a non significant influence on the attitude with a significance level of ,541 and a standardized coefficient of 0,036. Therefore, it can be stated that functional needs do not explain a consumers’ attitude. Ultimately, the regression model contains three independent variables: subjective norms, experiential needs and social needs with regard to the dependent variable ‘attitude’. The results indicate that the three independent variables together explain 43,6% of the variance in attitude. The standardized coefficients indicate that importance of explaining the attitude by subjective norms is ,351 and herewith the highest of all independent variables. Moreover, the regression results indicate experiential needs with a standardized coefficient of ,322 and the importance of social needs for explaining attitude, with a standardized coefficient of ,208.

In summary, the regression model which is developed does not include functional needs and price consciousness whereas the other constructs (subjective norms, experiential and social needs) together explain 43,6% of the variance in the dependent variable ‘attitude’. Details of the results are illustrated in Appendix F.

7.4 Differences

In this paragraph the differences between the three economic development zones are

7.4.2 Regression

In the regression model, the three cities are coded as dummies by means of indicator coding to examine to which extent the explanation of attitude by the independent variables differed among the three cities.. Hangzhou functions as the reference group. The standardized coefficients for the cities Shanghai and Nanjing are respectively ,037 and ,093. The

significance level of Shanghai is ,528 whereas Nanjing illustrates a level of ,148. Thus, it can be concluded that there are no significant differences between the three cities in predicting the attitude.

7.4.2 ANOVA

An ANOVA, analysis of variance, is used for examining F tests of significance of differences between group means. It tests the null hypotheses that group means do not differ. The

independent variables in this case are the three economic development zones whereas the dependent variables are personal value, functional needs, experiential needs, social needs and purchase intention.

Since the number of cases within the three cities is different, a scheffe-test is executed. Figure 6 shows the F statistic with the corresponding significance level for the variables investigated. Since there are three different cities the number of degrees of freedom is 2. (df = 2). The F-ratio for all the types of variables is not significant. Consequently, there is no significant difference among the three cities, concerning the level of the variables investigated.

Figure 6. ANOVA results

In summary, it can be stated that, for the regression model and the variables in the ANOVA test, no differences exist between the three different economic development zones.

Variable F-value Significance level

Personal Value ,356 ,701

Functional Needs 2,198 ,114

Experiential Needs 1,318 ,270

Social Needs ,658 ,519

8. Discussion

In this chapter the results obtained from the research are compared with other findings in previous literature. Kim et al. (2002) studied the influence of personal value on needs related to the purchase of apparel. Their investigation shows linkages between personal value and the type of consumers’ needs to be satisfied by purchasing apparel which is supported by the research executed in this paper.

The regression analysis indicates the non significance of functional needs in explaining the consumers’ attitude. Kim (2002) applied functional needs to purchase behaviour and neither established a relationship between the two variables. Moreover, the results indicate that subjective norms explain, to the greatest extent, the consumers’ attitude. This result supports research executed by Choo et al. (2004) were they examined the impact of innovation of Indian consumers’ purchase behavior of new processed foods. They found that subjective norms had a significant influence on attitudes of Indian consumers for new processed foods. The results of the relationships between price consciousness and the consumers attitude does not support the findings of Lichtenstein (1993). In their paper they examined price

perceptions and consumer shopping behaviour. Their research stated price consciousness to have a negative role on consumers shopping behaviour. According to the research executed, price consciousness does not influence the consumers attitude.

As for the attitude related to purchase intention, the findings of the research for greeting cards supports the findings of the earlier study by Tarkiainen (2005) were the researchers studied the relationship between attitude and intention to buy organic food. Ultimately, the

moderating role of product familiarity on the consumers’ attitude and purchase intention was not significant in this research. However, research executed by Choo et al. (2004) shows that familiarity with processed/packaged food products has a significant impact on Indian

9. Conclusion & Managerial Implications

9.1 Conclusion

In this research factors among purchase intention of the Chinese consumer towards greeting cards have been investigated. The research objective as stated before is:

‘To provide WFGM with information about the factors among purchase intention of Chinese consumers towards greeting cards in Lotus supermarkets for three economic

development zones in China so a better understanding of the new market and its customers is developed’.

From all the factors investigated, three did not have the influence as expected. Price

consciousness did not have a significant influence on the consumers’ attitude. Furthermore, product familiarity did not have a moderating role between a consumers’ attitude and its purchase intention. Personal value showed correlation with the various needs but did not indicate a strong relationship. Regression results indicate that functional needs did not explain a consumers’ attitude whereas subjective norms explained the consumers’ attitude to the highest degree. Furthermore, the results illustrated that experiential and social needs explained the consumers’ attitude towards greeting cards. Ultimately, a consumers’ attitude showed a strong relationship with its purchase intention.

9.2 Managerial Implications

influenced by other people, one positive attitude can result in more positive attitudes. Social influences can be one of the key factors for shaping a positive attitude towards greeting cards. Furthermore, experiential and social needs, which indicate the importance of excitement, social relationships and respect derived from sending a greeting card are important. Consequently, it can be stated that WFGM needs to focus on the experiential and social aspects with regards to greeting cards. Therefore, investments need to be made in creating feelings and emotions with the product, rather than optimize the functional aspects of the cards in order to enhance quality. Interesting to note is the non influence of the price. When the Chinese hold a positive attitude towards greeting cards, the price is not considered that important. Ultimately, when a positive attitude towards greeting cards is created, the Chinese are more likely to purchase greeting cards. This indicates the attitudes’ relative importance on the purchase intention of Chinese consumers.

9.3 Limitations & Recommendations

Since not all the data for the several variables stated earlier are normally distributed, the conclusions of this research are less reliable. Furthermore, only nine constructs have been taking into account. Ajzens’ theory of planned behaviour has been used by many researchers and several other important constructs have been applied to it, for example ‘relative

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www.greetingcard.org