Factors Affecting Purchase Intention of L’Oreal in China (Case Study Sample)

An Investigative Study of the Factors Affecting Purchase Intention of Foreign Luxury Cosmetic Brands in China: a Case Study of L’Oreal
 
University of Manchester
International Fashion Retailing
Table of ContentsAbstract TOC \o "1-3" \h \z \u Chapter One: Introduction PAGEREF _Toc300498942 \h 41.1 Background of Research PAGEREF _Toc300498943 \h 41.2 Significance of the Study PAGEREF _Toc300498944 \h 51.3 Rationale of the Study PAGEREF _Toc300498945 \h 61.4 Study Objectives PAGEREF _Toc300498946 \h 71.5 Statement of the Problem PAGEREF _Toc300498947 \h 71.6 Possible Outcomes PAGEREF _Toc300498948 \h 81.7 Potential Limitations PAGEREF _Toc300498949 \h 91.8 Overview of L’Oreal Group PAGEREF _Toc300498950 \h 91.9 Structure of Research PAGEREF _Toc300498951 \h 10Chapter Two: Literature Review PAGEREF _Toc300498952 \h 112.1 Definition of terms PAGEREF _Toc300498953 \h 112.1.1 Purchasing Intention PAGEREF _Toc300498954 \h 112.1.2 Consumer behaviour PAGEREF _Toc300498955 \h 112.1.3 Ethnocentrism PAGEREF _Toc300498956 \h 122.1.4 Materialism PAGEREF _Toc300498957 \h 122.2 Consumer Characteristics that Affect Purchasing Intention PAGEREF _Toc300498958 \h 122.2.1 Cultural Characteristics PAGEREF _Toc300498959 \h 142.2.2 Social Characteristics PAGEREF _Toc300498960 \h 152.2.3 Personal Characteristics PAGEREF _Toc300498961 \h 172.2.4 Psychological Factors PAGEREF _Toc300498962 \h 192.3 Conceptualizing Luxury Brands PAGEREF _Toc300498963 \h 232.4 Conceptualizing Luxury Cosmetic Brands PAGEREF _Toc300498964 \h 242.5 Assessment of Chinese Market for Foreign Luxury Cosmetics PAGEREF _Toc300498965 \h 242.6 L’Oreal Market Overview PAGEREF _Toc300498966 \h 272.7 Factors Affecting Purchase Intention towards Luxury Cosmetic Brands in China PAGEREF _Toc300498967 \h 282.7.1 Materialism PAGEREF _Toc300498968 \h 282.7.2 Hedonism PAGEREF _Toc300498969 \h 292.7.3 Conspicuous Consumption PAGEREF _Toc300498970 \h 302.8 Challenges that Foreign Luxury Cosmetic Brands Face in China PAGEREF _Toc300498971 \h 302.8.1 Intellectual Property Problems PAGEREF _Toc300498972 \h 302.8.2 High Operational Costs PAGEREF _Toc300498973 \h 312.8.3 Protectionism PAGEREF _Toc300498974 \h 322.8.4 Finding Qualified Personnel PAGEREF _Toc300498975 \h 322.9 Conceptual Framework PAGEREF _Toc300498976 \h 332.10 Theoretical Framework PAGEREF _Toc300498977 \h 362.10.1 Theory of Reasoned Action (TRA) PAGEREF _Toc300498978 \h 362.10.2 Theory of Planned Behavior (TPB). PAGEREF _Toc300498979 \h 37Chapter Three: Research Methodology PAGEREF _Toc300498980 \h 393.1 Methodology Overview PAGEREF _Toc300498981 \h 393.2 Research Philosophy and Approach PAGEREF _Toc300498982 \h 393.3 Research Strategy and Method PAGEREF _Toc300498983 \h 413.4 Techniques of Data Collection PAGEREF _Toc300498984 \h 423.5 Sample Selection Criteria PAGEREF _Toc300498985 \h 433.6 Protocol Design for Questionnaire and Interviews PAGEREF _Toc300498986 \h 443.7 Procedures for Data Collection PAGEREF _Toc300498987 \h 473.8 Methods of Data Analysis PAGEREF _Toc300498988 \h 483.9 Validity and Relevance of the Research PAGEREF _Toc300498989 \h 503.10 Ethical Considerations PAGEREF _Toc300498990 \h 513.11 Summary of the Methodology PAGEREF _Toc300498991 \h 53Chpater Four: INTERVIEW DATA PRESENTATION AND ANALYSIS PAGEREF _Toc300498992 \h 544.1 Overview PAGEREF _Toc300498993 \h 544.2 Data Presentation PAGEREF _Toc300498994 \h 544.2.1 Interviewee Profile PAGEREF _Toc300498995 \h 544.3 Data Presentation and Analysis Regarding Research Objective one PAGEREF _Toc300498996 \h 564.3.1 Research Objective PAGEREF _Toc300498997 \h 564.3.2 Presentation and Analysis PAGEREF _Toc300498998 \h 56References PAGEREF _Toc300498999 \h 57
Abstract
This study examined the main influencing factors that affect Chinese consumers’ attitude towards purchasing of the luxury fashion goods as well as their purchase intention. Data was collected in major cities in China such Beijing and Guangzhou. A total of about 50 respondents were included. Using the sampling method, the results obtained indicated that materialism; consumer behaviour and brand uniqueness and customers’ needs have significant impact on attitude towards purchasing luxury fashion goods among Chinese consumers. In addition, Chinese consumers’ purchasing intention for luxury fashion goods was affected by their attitude towards buying luxury fashion goods.
Chapter One: Introduction
Chapter 1. Introduction
1.1. Background of research
1.2. Aims and objectives
1.3. Research Methodology
1.4. Possible Outcomes
1.5. Possible Limitations
1.6. Structure of this dissertation
1. Introduction
In relation to the ongoing worldwide economic crisis, luxury brands face a shadowy prospect. The world’s largest luxury goods markets such as Europe, Japan, and the United States has showed flat or negative growth in 2009. In Japan after the devastating earthquake in March 2011, sales of luxury goods declined by a range of 50 to75%. Compared to the downturn in these markets, China’s consumption of luxury goods, according to is projected to rise from 12% in 2007 to 29% by 2015. Therefore, the Chinese luxury goods market is likely to surpass the Japanese market and become one of the world’s biggest markets within 5 years. High-end designers and luxury retailers expect that China’s growing luxury seeking population will help boost their sales in light of the economic recession in other countries. China’s relatively strong economic growth and government policies developed to boost consumption will help maintain luxury sales levels. Therefore an understanding of this consumer group is essential for the luxury fashion industry to survive in this unstable business situation. The potential growth of luxury brands in China which help protect the profits of luxury brand companies suffering from a shrinking market in all other parts of the globe. Despite all these, little research has been conducted to examine crucial determinant which relates to Chinese consumers’ attitude for luxury goods. Considering the enormous potential of this market, in order to expand the general understanding of the emerging market key factors associated with Chinese consumers’ attitude towards purchasing luxury goods need to be examined. This will be essential in developing appropriate marketing strategies that would enhance business success. To fill the gap in the literature, this study aims to identify the influencing factors that affect Chinese consumers’ attitude towards purchasing luxury fashion goods and examine the effect of consumer attitude on purchase intent of luxury fashion goods. The present study makes a vital contribution in two important ways. First, the study contributes to the body of literature for global luxury goods by addressing the fast growing Chinese luxury fashion consumption market. Then the second one is that the findings of the study would provide both practical and empirical insights to luxury brand firms which plan to enter or expand business in China by indicating the key determinants related to Chinese consumers’ appetite for luxury fashion goods.
1.1 Background of Research
Different brands in the Chinese market have had a rough time in the recent past as they found it unrealistic to rely on foreign allure to make inroads into the Chinese market as the consumer demands are increasingly becoming mature and in response to the domestic trends. One of the companies that have been affected by these trends is the French cosmetic manufacturer, L’Oreal Group that is headquartered in Clichy (Henry, 2011). In 2013, the cosmetic industry in China registered double-digit growths though the trend changed in 2014 as most of the foreign firms such as L’Oreal and Revlon registered significantly lower sales (Samin et al., 2014). One of the reasons that was attributed to the decline in sales by foreign firms was poor brand positioning. For instance, Revlon’s brands targeted both middle-class and high-end markets which created the perception that its brands were not of high quality after all because the target market was not defined. According to Gil et al. (2011), L’Oreal’s brands such as Garnier were also not defined in terms of their target markets as they were perceived to be neither too cheap nor luxury enough to win the Chinese consumers. It therefore implies that the foreign cosmetic firms in China had to learn the hard way that the consumers in China won’t just go for any foreign brand that is put in the shelves unless it can be demonstrated that it is exemplarily better than the local brands. However, Goodwin et al. (2010) postulate that consumer attitudes towards foreign brands in China are increasingly evolving as their perceptions of local brands also improve. In order to effectively investigate this study, the research is going to major so several key areas. These key areas include: having clear and specific objectives that will form the guideline of the research is conducted. There is clear methodology in that it is both qualitative as well as quantitative to ensure that all factors be it qualitative or quantitative are all factored in to account. All the possible outcome of the research that is both the expected outcome and the actual outcome will be analysed. This will essential in justifying of the hypothesis that they had been established at the beginning of the research. The research will also outline all the limitations that they are likely to be faced during the research. This will be essential as it will help mitigate these limitations by use of effective strategy. This will eventually lead to the having a successful research.
1.2 Significan...