HCMC v Hanoi: Regional Consumer Differences Study

26 June 2008
Ho Chi Minh City

Half the June 26, 2009, Ho Chi Minh City: Vietnam – one country; diverse consumers. What are the regional differences between Hanoians in the north and Saigonese in the south? We all know the old adages and stereotypes about each region and its people, but what are the true differences between consumers in Hanoi and Saigon and what does this mean for brands in Vietnam?

Rooted in historical, cultural and economic diversity, consumers across Vietnam hold different attitudes and values in life. These differences are manifested in their brand choice, decision-making, shopping habits and confidence levels. The Nielsen Company Vietnam’s HCMC v Hanoi: Regional Differences study found these differences are vast and translate to varied behaviors and attitudes particularly when it comes to consumers’ decision-making process and how they cope with tougher economic times.

INDIVIDUALISM v COLLECTIVISM: ME v WE.

Nielsen’s intensive cross-region study carried out in April and May 2009, found that the key driver of these differences between Northerners and Southerners is their disposition: we vs. me. Me: In Saigon, individualism is dominant. People care less about other’s opinions and when it comes to making purchasing decisions; their own desires and needs are the biggest influence. Saigonese are more open to change and like to try new things and as a result they are a mixed consumer group.

 We: In Hanoi, there is homogeneity of consumers and a collective spirit. Hanoians listen to their peers and are influenced by their opinions and recommendations, with social conformity a high priority. But they are complex consumers: saying they want to be noticed and impress their friends, but want to do so without breaking what is socially acceptable.

WHAT INFLUENCES CONSUMERS’ PURCHASING BEHAVIORS?

Hanoians are significantly influenced by other people’s opinions, and perceptions – much more so than Saigonese.  Hanoians are critical in their decision-making and seek out as much information they can to make an informed decision. The opinions and recommendations of family members and neighbors as well as what is reported through the media – newspapers, advertising, brand websites and blogs/forums – are crucial when it comes to making an informed decision. 94% of Hanoians surveyed said recommendations from neighbors are very important in their decision-making process. One respondent from Nielsen’s focus groups exemplified this by saying, “I want to buy a new TV and if some of my neighbors tell me that the TV is not high quality, then I would be turned off that TV right away.” 

By contrast Saigonese care little about others’ opinions and don’t follow the crowd – Saigonese still listen to other’s opinions, but classify their neighbors opinions as least important. And when it comes to making a decision, they will make it based on what they want and need.

Saigonese live for the moment. Compared to Hanoians, Saigonese plan little for the future.  The old adage: Hanoians earn 10 dong and spend 1; Saigonese earn 10 and spend 11 is true in this respect. Hanoians save their dong for the future, while Saigonese will spend to get what they need today and worry about tomorrow later.  According to Nielsen’s Personal Finance Monitor 2008, consumers in Saigon are more willing to take out loans from the bank or other financial institutions; while more than half (57%) of Hanoians are not willing to borrow. This can be attributed to the collective spirit in Hanoi, whereby consumers are more conscious of and influenced by what other people think of them – and in the eyes of Hanoians, having to rely on an institution to take out a loan to purchase something may result in losing face.

PREMIUM PRODUCTS

Somewhat contradictorily, Hanoians love premium goods (71% claim they love premium products) and they are more inclined to buy premium particularly when it comes to big-ticket items such as mobile phones and cosmetics. As a result, they are willing to spend more to purchase premium products; and due to the fact that they tend to be savers and long-term thinkers, Hanoians have the ability to afford these premium goods when they want them.  “Despite a tougher economy, Hanoians are keen on keeping up with the latest trends and are still willing to spend on what some would classify as ‘nice to have’ or ‘luxury’ products,” said  Aaron Cross, Managing Director, The Nielsen Company Vietnam.

Saigonese are impulse buyers – they buy what they need at the time they need it. They still like premium products, but 48% of those surveyed say they believe premium products are for people who want to “show off”; and they would rather spend their money on necessary items.

A TOUGHER ECONOMY

Awareness of the current economic downturn was high, not surprisingly. Northerners are more positive about the future than their Southern counterparts but they still claim to be impacted by the crisis.

According to Nielsen’s Global Online Survey (March 2009), consumer confidence in Vietnam is wavering but it’s not all doom and gloom. “History tells us that the Vietnamese people are resilient and today they still remain relatively positive when compared to the rest of the world,” said Cross. Vietnamese are the 6th most optimistic about future job prospects globally; and the most confident about their country getting out of the economic recession within the next 12 months.

According to Nielsen Vietnam’s Omnibus survey (May 2009), the top consumer concerns for HCMC and Hanoi residents are:

Hanoi:

1. Increasing Food Prices
2. Job Security
3. Increasing Cost of Bills
4. Petrol Price Increases
5. Children’s welfare

HCMC:

1. Health
2. Increasing Cost of Bills
3. Job Security
4. Work Life Balance
5. Debt

Hanoi and Saigon consumers alike cite rising concern for the future and are tightening their belts. Both groups say they are cutting down on luxury items, eating out less, and calculating their purchases more closely even to the extent of trying to save on electricity and gas bills.

To cut costs, Hanoians say they are buying less in quantity but are staying loyal to their chosen brand; while Saigonese are willing to switch to a cheaper brand in order to afford consuming the same amount.   

WHAT DOES THIS MEAN FOR BRANDS IN VIETNAM?

Understanding these differences is crucial. Promotion and marketing strategies need to cater to different consumer preferences.  

“Brands in Vietnam need to adopt different product concepts and marketing strategies for the two cities: one size will not fit all across Vietnam,” said Cross.

And within Ho Chi Minh City, where individualism is present, consumers are open to try new things and are less loyal to brands. Cross continued, “This means even within the Ho Chi Minh City market, brands need to diversify their marketing strategy because again, one size will not fit all.”