Factors Affecting Consumer Behaviour in Instant Noodle Industry

VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY

INTERNATIONAL UNIVERSITY

SCHOOL OF BUSINESS ADMINISTRATION

FACTORS AFFECTING CONSUMER BEHAVIOUR IN INSTANT NOODLE INDUSTRY IN HO CHI MINH CITY

A research proposal

submitted to

the School of Business Administration

in partial fulfillment of the requirement for the course in

Research Methods for Business

By

BUI THI KIM DUNG

HUYNH ANH DUY

NGUYEN THI HOANG HIEU

PHAM LE KHANH HOA

TA NGOC LINH

NGUYEN DINH PHUONG THAO

LE TRAN MY THUAN

LE THI THUY TRANG

Supervised by

Dr. LE HOANG DUNG

HO CHI MINH CITY, June 26

INTRODUCTION

Background

Modern life with fast pace makes instant foods play more and more important role in everyone’s daily life. “Instant foods” are fast and convenient food, which is easy and fast to prepare besides being hygienic, free from microbial contamination and also convenient to eat (Usha V., 2007). Oxford Advanced Learners Dictionary defined instant food products as “are prepared and packaged often in powered form are required only the addition of a liquid as water or milk for final preparation.” In addition to modern life, the globalization with the Western influence also increases the usages of instant food. These foods become widely used among public, from traditional family with many generations to nuclear family, from people with high income to those with low income, and from the elderly to the children.

There are various kinds of instant foods ranged from packaged foods in cans, bottles or sweets, potatoes. Among them, instant noodle is the most familiar food with Vietnamese people due to some main following reasons: (1) fast development of urban areas with high speed of life, busy works because of increase in population and emergence of industries alarm the need for instant noodles, (2) Women started to join working places without having enough time to prepare traditional meals for family members, which create the need for ready-to-eat foods, (3) Emergence of nuclear families with only two generations: parents and children. Most of them want to save time and energy in cooking to do another couple things, which also increase the consumption of instant noodles, (4) increase in price of ingredients for traditional meals such as meat, vegetables or fishes without increasing in income due to economic recession makes instant noodles become a great choice, (5) Continuous development and improvement with many different types, favors and brand names in instant noodles make consumers feel free to choose, (6) Drudgery of work – heavy workload in limited time makes people feel too tired to cook. Thus, instant noodles are taken advantage to provide energy and save time, and (7) development in advertising tools in electronic and print media plays an important role in motivating awareness of consumption instant noodles. The above reasons mainly cause the popularity of instant noodles in Vietnamese market recently.

Instant noodle industry has showed up the fast speed with dramatic increase in number of instant noodle packages used annually. In 2012, with over 5 billion packages, Vietnam ranked 4th among countries with the highest number of instant noodle consumed (World Instant Noodles Association). With the annual growth of 15-20% and the total annual value around 10,000 billion VND (Euromonitor), Vietnam is considered as one of the continual potential market for consuming instant noodle in the future along with China, Indonesia and Japan in spite of the Vietnamese population is approximately 88.78 million people which is too small compare to China or Indonesia. As a result, conducting research to find out what factors affecting consumer behaviors is essential for further development of instant noodle industry in Vietnam.

Table 1: Number of instant noodle consumed over last 5 years in the world (Source: World Instant Noodles Association)

Up to now, there are approximately 50 manufacturers producing instant noodle, including both domestic and foreign one with the total capacity is around 5 billion packages per year. The market share shows the great domination of Acecook Vietnam with 55%, follow are Asia Food, Vifon, Masan and Saigon Ve Wong with the percentage are 15%, 15%, 10% and 5% respectively. The small remained market is divided among new and old, domestic and foreign producers. Although there is a big gap in market share, harsh and tough competitions still happen between different brand names, especially when one new type of instant noodle was born. Thus, all manufacturers make the greatest effort to satisfying consumers’ demand by providing instant noodle available to consumer at competitive prices in comparison with other producers. In other words, manufacturers ensure that the products should be provided to consumers whenever they want in the way they like at the price they think reasonable to pay. These measures help to increase the sales of the product with good feedback from the customers and create significant market share for that business. Before making those decisions related to customers, it is necessary to conduct careful research about what factors affecting consumer behaviors in instant noodle industry.