Apjml 06 2016 0106

Asia Pacific Journal of Marketing and Logistics
Repurchase intention of Korean beauty products among Taiwanese consumers

Massoud Moslehpour, Wing-Keung Wong, Kien Van Pham, Carrine K. Aulia,
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Massoud Moslehpour, Wing-Keung Wong, Kien Van Pham, Carrine K. Aulia, (2017) "Repurchase
intention of Korean beauty products among Taiwanese consumers", Asia Pacific Journal of Marketing
and Logistics, Vol. 29 Issue: 3, pp.569-588, https://doi.org/10.1108/APJML-06-2016-0106
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Korean beauty
Repurchase intention of Korean products
beauty products among
Taiwanese consumers
Massoud Moslehpour 569
Department of Business Administration, Asia University, Taizhong, Taiwan
Received 24 June 2016
Wing-Keung Wong Revised 20 September 2016
10 November 2016
Department of Finance, Asia University, Taichung, Taiwan 8 December 2016
Kien Van Pham Accepted 15 December 2016
Department of International Economics, Banking University of Ho Chi Minh,

Ho Chi Minh City, Vietnam, and

Carrine K. Aulia
Department of Business Administration, Asia University, Taizhong, Taiwan
Abstract
Purpose – The purpose of this paper is to bridge the gap in the literature to examine key factors that
influence Taiwanese consumers to repurchase Korean beauty products.
Design/methodology/approach – This study uses a quantitative approach to test the proposed
hypotheses using structural equation modeling. Causal research design is used in this research to identify
cause-and-effect relationship among the constructs. Primary data collection is used to gather data. This study
provides the better understanding about key factors that influence Taiwanese consumers’ repurchase
intention (RI) of Korean cosmetics products.
Findings – Results show that perceived price (PP) and country of origin (COO) significantly influence
word-of-mouth (WOM). PP, COO and WOM significantly influence RI. WOM is the most influential variable
toward RI, followed by COO and PP.
Originality/value – Very few studies have examined a general construct of RI related to beauty product.
The findings of this study imply several practical directions for marketers of beauty product industries
specifically for Taiwanese consumers. This study helps to know what factors become basic consideration for
Taiwanese consumers in repurchasing Korean beauty products. Second, it underscores the role of WOM
between the independent variables (PP and COO) and RI as the dependent variable.
Keywords Marketing, Taiwan, Repurchase intention, Korea, Beauty product,
Structural equation model (SEM)
Paper type Research paper
Introduction
“Appearance rules the world” ( Johann Friedrich Von Schiller, 1759-1805). Attractive
appearance is more important for women (Elder, 1969). It is common that people judge the first
impression by outward appearance. Hence, people are willing to spend money on appearance-
related products, which will enhance their self-concept and make them feel, look and smell good
(Wan et al., 2001). People’s concern with their appearance is not anything new, the history of
cosmetics products spans at least 6,000 years of human history (Khraim, 2011).
In the past decades, South Korean (hereinafter referred to as Korean) culture has been
increasingly making their presence felt in the East and Southeast Asian Countries, including
Taiwan (Hong and Kim, 2013). This is known as “Korean Wave” that involves K-drama,
shows, K-pop music, movies, fashion and also beauty products. Specifically, Korean beauty
Asia Pacific Journal of Marketing
products are easily found not only in physical stores in night markets and department store and Logistics
counters, but also through internet online shopping and TV shopping (Łopaciuk and Vol. 29 No. 3, 2017
pp. 569-588
Łoboda, 2013). In other words, Korean cosmetics brands have been rapidly growing in the © Emerald Publishing Limited
1355-5855
Taiwanese market. DOI 10.1108/APJML-06-2016-0106
APJML According to Korea Pharmaceutical Traders Association (2012), export of beauty
29,3 products from Korea surpassed their imports. In recent years, Korean cosmetic products
have been exported to 119 countries around the world. Amor pacific Corps-South (Korea’s
biggest beauty brand having Laneige, Etude House, Innisfree and Sulwhasso) reported that
its sales in China was 338.7 billion South Korean Won ($310,000,000) in 2013, a 29 percent
increase from 2012 (Chung, 2014). As the biggest market, China receives 27.7 percent of
570 Korean beauty products, followed by Japan, Hong Kong, Taiwan and the USA
(Cosmetics and Toiletries Market Overviews, 2015).
Furthermore, MarketLine in 2014 reported that the world beauty product market was
worth almost $35 billion in 2010 with projects growth of 8.5 percent per year. The global
cosmetics industry accounted for 35.3 percent of the global market in 2014 (Statista, 2016).
Asian markets account for a large portion of this significant growth (Łopaciuk and Łoboda,
2013). In addition, emerging nations represent huge potential for international companies to
expand their business markets throughout the world. This phenomenon places the beauty
industry as one of the most promising and profitable businesses in the Asian Market
(Cosmetics and Toiletries Market Overviews, 2015).
This research aims to provide a better understanding about key factors that influence
Taiwanese consumers’ to repurchase Korean cosmetics products. The objective of the
current research is to explore the extent to which perceived price (PP), country of origin
(COO), and word-of-mouth (WOM) influence repurchase intention (RI). More specifically,
the purpose of this study is to answer the following research question:
RQ1. What is the influence of perceived price, country of origin, and word-of-mouth on
repurchase intention?
In this paper “repurchase intention” presents the dependent variable instead of “purchase
intention.” Cosmetics product customers purchase the same new product once but they will
repurchase the same product frequently. Thus, “repurchase intention” is more appropriate
rather than “purchase intention.” Studying “purchase intention” could be very important in
some products like clothing because every piece of clothing could be different. However,
in “beauty products” customers will tend to use the same products many times over and
over again. Since we are interested in the products that customers always buy from time to
time, not to buy only once a long while. Thus, we are only interested in studying “repurchase
intention” and not “purchase intention” in our paper.
In Taiwan, aside from department store counters, Korean beauty brands are also easy to
find in night markets. Not only physical store, but also through internet or online shopping
and TV shopping (Łopaciuk and Łoboda, 2013; Kantor, 2014). Furthermore, Taiwan in relation
to the Korean products has a unique situation. Taiwanese consumers showed little interest in
Korean products due to a couple of factors. One factor is political. The long-standing friendly
relationship between the two countries was abruptly ended in 1992 when Korea established
formal diplomatic relationship with People’s Republic of China. The other is cultural.
Taiwanese consumers traditionally perceived Korean products as backward and outdated
(Lin, 2006). This study, thus, is different from any other studies investigating marketing of
Korean cosmetics products to Taiwanese consumers.
We extend the work by Bradley (2001) and Davidow (2003) to study the impact of PP,
COO and WOM to RI in the cosmetics market. To do so, we propose the model illustrated in
Figure 1 as our hypothesized model to test the relationship between the endogenous and
exogenous latent variables with WOM as a mediator.
Literature review
Global beauty market has been growing stably and has ability to be continuously growing
even in some unfavorable economic conditions (Łopaciuk and Łoboda, 2013).
Korean beauty
PP
(Perceived Price)
products
H1
H2
H6 RI
H5
WOM
(Word-of-Mouth) (Repurchase Intention) 571
H3
H4
COO
Figure 1.
(Country of Origin)
Research framework
Although having being affected by the global economy crisis in 2008-2009, beauty product
industry easily booms again in 2011. According to William Reed Business Media, the market
researchers predict that the market will reach $630 billion in 2017.
Asia-Pacific region contributed the biggest revenue ($129 Billion) of the global cosmetics
product industry in 2013. This statistic is in line with Walker’s reports in both Global
Market Report 2013 and Euromonitor 2014 that six countries of the top ten growth markets
for beauty products are members of the Asia-Pacific Economic Cooperation.
Since late 1900, Korean culture becomes popular among Asian countries, including
Singapore, China, Hong Kong, Taiwan, Indonesia and Japan (Hong and Kim, 2013).
Popularity of Korean culture starts from several TV dramas, such as Winter Sonata,
Daejanggeum and Autumn in my heart, which consider as the pioneer of Korean cultural
products (Hong and Kim, 2013). This leads to the rapid growth of other industries including
beauty products in the global markets. This culture movement is known as the
“Korean Wave,” “Hallyu” or “Hanryu.”
We note that though Korean culture becomes popular among Asian countries, Taiwanese
would avoid buying any Korean products, due to political and cultural reasons (Lin, 2006).
However, Korean cosmetic products are still popular and well received among Taiwanese.
This makes the issue interesting and our study unique in the current literature.
According to Taiwan’s Bureau of Foreign Trade, South Korea is the second biggest
exporter in the Cosmetics Industry in the Taiwan market which reaches $52.8millions in
2013, a 73 percent increase from 2012. Furthermore, in 2014, the sale of Korean beauty
products reaches $15.1millions in three months, a 39.7 percent increases from 2013.
PP
Consumers’ assessment of the net worth of the product, based on consumers’ PP of a good
that consumers are willing to pay for it. It does not reflect what is given by consumers, such
as cost, price paid or sacrifice in acquiring the product (Hellier et al., 2003; Arpita et al., 2014).
In more than three decades, perception of price has been considered as one of the most
important influential constructs that can indicate the perception of quality (Rao and Monroe,
1988) and consumers’ perceptions of negative effect of sacrifice when they pay higher price
for low-quality products (Valarie and Zeithaml, 1988). Consumers could be satisfied when
they feel the price and the quality are reasonable. On the other hand, consumers can judge
whether the product is offering a good value of price based on the performance or benefit of
the products. Further, value perceptions considered as an important factor in consumers’
APJML decision making on their consumption (Khan et al., 2012). Bei and Chiao (2001) incorporate
29,3 both service quality and product quality into an integrated model to explore the effects
of three consumer perceptions (product quality, service quality and price fairness) on
satisfaction and loyal behavior for automobile maintenance service.
COO
572 An overall stereotypic perception that consumers hold toward particular country as a
representative of products or brands (Ayyildiz and Cengiz, 2007).
Whereas country image (CI) is the general view that consumers view on a particular
product from a particular country, it is based on their prior perceptions of the country’s
production and marketing strengths and weaknesses (Roth and Romeo, 1992, p. 480).
The image is the result of past history, national physiognomies, economic and political
backgrounds. Every country has its own image in consumers’ perception. The image of the
country may present both strengths and weakness of the products or brands (Wang and
Yang, 2008). Further, it can affect consumers’ attitude toward the country’s products.
Consumers may judge developed countries to produce a good quality and reliable product
due to their technological advances. On the contrary, the country image of less developed
countries tends to be low-quality, cheap and not durable (Chao, 1993; Ayyildiz and Cengiz,
2007; Yu et al., 2013). The distinction between CI and COO is in that the major role of COO is
to influence product image while the role of CI is to increase consumers’ willingness to buy
the product (Souiden et al., 2011). Image is perhaps more culturally and economically
motivated, whereas origin is more specifically related to product or brand. The image of a
product is much more inclined to the effect of COO than CI. Also, the COO indirectly
influences consumers’ RI through the WOM.
Bilkey and Nes (1982) find that the effect of COO is important for countries (especially for
resource-poor developing countries) that need to increase manufactured exports and for firms
that source products in countries are different from where they are sold. COO influences
consumers’ assessment of the product’s quality and ultimately their likelihood to purchase
(Parkvithee and Miranda, 2012) and their “willingness to pay” (Thanasuta et al., 2009, p. 362).
Marketing researchers further propose to include the role of country’s origin image in the
analysis. First, consumers use image of the country as a cue when they are not familiar with
the product. Second, when consumers are familiar with the product, they use this image to
summarize their beliefs of the product and directly affect their attitudes toward the products
(Ayyildiz and Cengiz, 2007; Rosa et al., 2014). Based on the above discussions, this study
adopts COO as one of the independent variables.
WOM
A way consumers share their thought about the product through informal networks and
personal communications (Chevalier and Mayzlin, 2006).
In the globalization era, consumers are allowed to participate and contribute in the
media. Reviews, recommendations and comments in the media are considered as
information source for the WOM (Senecal and Nantel, 2004). WOM is the external activity
voluntarily conducted by consumers. Trusov et al. (2009) study the effect of WOM
marketing on member growth at an internet social networking site and compare it with
traditional marketing vehicles. They find that WOM referrals have substantially longer
carryover effect than any traditional marketing action. More specifically, for Asian-branded
manufacturers to promote their products to global markets (Wu and Wang, 2011),
online retailers should improve their WOM (Chung and Shin, 2010).
A significant amount of academic research has referred to WOM as one of the most
influential factors in the business (Duan et al., 2008; Tam and Khuong, 2016). Ying and
Chung (2007) suggest that WOM can help to improve or harm marketing of products.
Academics document that consumers tend to value personal communications to be more Korean beauty
credible than commercial sources. Hence, a good understanding to control (positive) WOM products
will be the advantage for company to engage consumers.
RI
Consumers consider to purchase again a particular product (Hellier et al., 2003;
Chai et al., 2011). 573
Akhter (2010) mentions that purchase intention has strong relationship with RI. Consumers
who have positive purchase intention will intend to purchase more in the future. RI behavior
tends to be more favorable than purchase intention, because it indicates continue to purchase in
the future (Valarie and Zeithaml, 1988; Ho and Svein, 2009). Hence, identification of determinant
factors of RI is important to both researchers and practitioners.
Model and hypotheses

Hellier et al. (2003) develop a general service sector model of RI by using a consumer theory
to incorporate customer perceptions of equity and value and customer brand preference into
an analysis to integrate RI. They find that customer RI is influenced by service quality,
equity and value, customer satisfaction, past loyalty, expected switching costs and brand
preference. We modify their model to the structural model illustrated in Figure 1 to test
consumer RI.
In this paper we will apply the model to examine the impact from PP, COO, and WOM on
RI in the cosmetics market. This study introduces a new model based on some of the factors
used in Hellier et al. (2003). We discuss the formation of the hypotheses in the following.
Interrelationship between PP and RI

Various researchers report that PP and perceived value will influence consumer RI.
If consumers feel the price of the product is reasonable, they may continue to buy the
particular product in the future again (Lee et al., 2011). Khan et al. (2012) note that PP is an
important element for consumer when they decide to repurchase in the future. They suggest
that when the price is higher than industry average, consumers are not likely to repurchase.
In contrast, when the price is lower, consumers are more likely to repurchase the product.
We hypothesize this conjecture in the following for the cosmetics products[1]:
H1. PP has a positive effect on RI.
Although Khan et al. (2012) talk about drivers of customer satisfaction and RIs on Japanese
B2B services, however, the influence of PP on RI of the Korean beauty products marketing
among Taiwanese is still a new topic. Thus, the findings from Khan et al. (2012) although
helpful, however, cannot be extended to our findings and thus our study is unique and
original in the literature.
Interrelationship between PP and WOM

Tong et al. (2013) find that perceived value of the customers has a significant effect on their
satisfaction and document that PP has a significant effect on WOM in the banking industry
in Hong Kong. On the contrary, Jeong and Jang (2011) examine the influence of PP on the
willingness to do recommendation to others in the restaurant industry. They find that
the PP does not have any statistically significant impact on WOM.
Based on the literature review from prior studies, the results depend on the types of
industries. Thus, it is interesting to readdress the issue in the cosmetics business, especially
in selling Korean cosmetic products to Taiwanese who, in general, do not like to purchase
any Korean products. To bridge the gap in the literature, in this paper we propose the
APJML following hypothesis to identify the influence of PP on willingness to do recommendation to
29,3 others in the cosmetics business:
H2. PP is positively related to WOM.
Interrelationship between COO and WOM

574 Ayyildiz and Cengiz (2007) examine the influence from the COO to WOM. Researchers agree
that WOM considered is an effective and powerful tool to engage customers, specifically to
customers who are not familiar with the products (Valarie and Zeithaml, 1988). Even though
the influence of COO to WOM has been demonstrated, result may vary in different
industries. Thus, we include the following hypothesis in the beauty products:
H3. COO positively influences WOM.
Interrelationship between COO and RI

Many studies, for example, Akhter (2010), show that there is positive influence of purchase
intention to RI. Yu et al. (2013) show that COO has significantly positive influence toward
customers’ purchase intention. In addition, Wang and Yang (2008) report that COO
influence customer purchase intention and also show a positive significant result as a
mediator (Baron and Kenny, 1986). Further, examining a similar hypothesis in the
Taiwanese luxury brand market, Molinari (2004) documents that customers’ RI tends to
be more important than purchase intention because the former indicates that customers are
willing to buy the same product in the future.
In this paper we include the following hypothesis to test whether there is a positive
influence of COO on RI in the cosmetics industry:
H4. COO positively influences RI.
Interrelationship between COO and PP

Lin and Sternquist (1994) examine the effect of information cues, COO and store prestige on
Taiwanese consumers’ perception of quality and price in apparel products. They show that
there is no relationship between PP and COO. Nonetheless, Ha-Brookshire and Yoon (2012)
reveal that COO negatively affects the PP when apparel is made in China from their textile
industry. Drozdenko and Jensen (2009) use 767 consumers and products in 11 different
categories to study consumers’ perception on the products price in relation to COO.
They document that price premiums were significantly different for all categories, based on
different countries of origin, including Germany, the USA, China or India. Similarly,
Hulland et al. (1996) conclude that consumers are willing to pay different premiums for the
same product and brand based on information from manufacturing COO of the product.
Their study also concludes that COO has a significant influence on PP in The Philippines
market. In this paper, we include the following hypothesis to reveal whether COO has a
significant impact on the PP in the cosmetics market:
H5. COO positively influences PP.
Interrelationship between WOM and RI

In the past decade, WOM has been demonstrated to be an important factor that needed to be
understood by marketing professionals. It is simple because consumers are more likely to
believe what “people say” than “advertisement say” (Chevalier and Mayzlin, 2006).
Prior research has found the influence of WOM to RI in the movie industry (Duan et al., 2008).
On the other hand, Richins (1983) finds that consumers’ attributions of blame for the Korean beauty
dissatisfaction and perceptions of the complaint situation are related to responses to products
dissatisfaction. In short, literature has confirmed that WOM has stronger influence than
customer satisfaction to RI. In this paper we readdress the issue to study the impact of WOM
on RI in the cosmetics products by using the following hypothesis:
H6. WOM positively influences RI.
We note that prior studies have never proved anything. They only demonstrate that their
575
conjectures have not rejected in their samples of particular product marketing in a special
country. Their findings cannot prove: the behaviors of consumers from another country for
another product, the behaviors of consumers from the same country for different product or
the behaviors of consumers from different country for the same product. Furthermore it
cannot prove the behaviors of consumers from the same country for same product at
different time periods, and also cannot prove the behaviors of consumers from the same
country for the same product at the same time period but different samples. Actually,
statistical analysis cannot be used to prove any conjecture holds true. It can only be used to
demonstrate if the hypothesis is accepted or rejected. In addition, there are also Types I and
II errors have to be taken into consideration (Lehmann, 1959).
We also note that it happens that different studies for different products market in
different countries could draw completely different conclusions, and different studies for the
same product market in the same country at different time periods could draw completely
different conclusions. In addition, it could happen that the same study for the same product
market in the same country at the same time could draw completely different conclusions
for different sub-samples. Many examples show that different studies could draw
contradictory conclusions. For example, Tong et al. (2013) find that PP has a significant
effect on WOM in the banking industry in Hong Kong while Jeong and Jang (2011)
document that the PP does not have any statistically significant impacts on WOM in the
restaurant industry.
In the issue of COO, Lin and Sternquist (1994) show that there is no relationship
between PP and COO on Taiwanese consumers’ perception of quality and price in apparel
products. However, Ha-Brookshire and Yoon (2012) reveal that COO negatively affects
PPs when apparel is made in China from their textile industry. On the other hand,
Drozdenko and Jensen (2009) document that price premiums were significantly
different for all categories and Hulland et al. (1996) conclude that COO has a significant
influence on PP in The Philippines market, some are positive and some are negative.
Thus, all the conjectures we hypothesized in our paper have never been proven by prior
studies but the conjectures and findings from prior studies can be references for other
studies and our study.
Research method
Instrument development
This project studies the impact from PP, COO and WOM on RI in the Taiwanese cosmetics
market. To do so, we extend the work by Bradley (2001) and Davidow (2003) to elucidate RI
with respect to PP, COO and WOM and contribute to the literature by designing the
proposed research model. Figure 1 shows our hypothesized model to test the relationship
between the endogenous and exogenous latent variables with WOM as a mediator. We have
conjectured several hypotheses stated in the previous section that need to be examined.
We design a set of questionnaires and adopt the cluster sampling technique (Cochran, 1977)
and distribute to respondents. Individuals are requested to indicate their perceptions with
regard to the importance of each item based on a five-point Likert scale of 1-5, with 1 scoring
the lowest point “strongly disagree” to 5 scoring the highest point “strongly agree.”
APJML First part of the questionnaire is designed to get demographics and other general
29,3 information of the respondents. Second part consists of items for measuring four variables:
PP (four items), COO (four items), WOM (four items) and RI (four items).
Data collection and analysis

This study uses the cluster sampling technique (Cochran, 1977) to distribute to respondents
576 through both web-based and traditional paper-based questionnaires. Since the respondents are
Taiwanese, there are two versions of questionnaires; one written in English and the other in
Mandarin. The original questionnaire was written in English and then translated into Mandarin
and back into English to assure accuracy of translation. A pilot study of the Mandarin version
with a small group of students was also performed to make sure the questionnaire is accurate
and to estimate the amount of needed to fill out the questionnaire. The Mandarin questionnaire
is used to conduct this research. According to World Population Review in 2014, Taiwanese
population in 2014 is 23,382,069. Following on sampling size formula set by Sevilla et al. (1992)
such that n ¼ N/(1 + Ne2) and choosing a 5 percent significance level and given the population
size (N), the sample size (n), and a margin of error (e) are obtained. In our case the minimum
sample size should be n ¼ 23,382,069/(1 + 23,382,069 × 0.052) ¼ 400. The sample of this study
consists of 437 Taiwanese people.
We use both Statistical Package for the Social Sciences (SPSS) 22 and AMOS 22 to analyze
the data. Table I exhibits the descriptive statistics of the sample to give characteristics of
the sample by using mean, median, standard deviation and other descriptive statistics of the
sample. We employ the exploratory factor analysis (EFA) and confirmatory factor analysis
(CFA) to reduce items of measurement by identifying the underlying latent variables (factors).
In addition, internal consistency (Cronbach’s α), Kaiser-Meyet-Olkin (KMO) and Bartlett’s test
measure of sampling adequacy are also checked to assess the reliability and validity of each
construct and the instrument. Structural Equation Modeling (SEM) is then applied to test the
research model.
Measurement model
On the basis of the assumed causal relationships of different variables and their potential
impacts on RI in the cosmetics market, we validate the measures using SEM. Let η be the
latent of repurchase intention (RI, unobservable), ξ1 be perceived price (PP), ξ2 be country of
origin (COO), and ξ3 be word-of-mouth (WOM). We hypothesize items of (observable)
Variance extracted
Construct/Factor Item explained (%) Factor loading Cronbach’s α Mean SD KMO
Perceived price PP1 65.52 0.83 0.82 3.18 0.79 0.79

PP2 0.76 3.45 0.78
PP3 0.84 3.22 0.81
PP4 0.81 3.36 0.76
Country of origin COO1 62.91 0.73 0.80 3.07 0.96 0.75
COO2 0.80 3.25 0.95
COO3 0.80 3.08 0.78
COO4 0.84 3.16 0.85
Word-of-mouth WOM1 79.60 0.85 0.91 2.93 1.00 0.76
WOM2 0.90 2.89 1.03
Table I. WOM3 0.91 2.58 1.02
Exploratory factor WOM4 0.91 2.79 1.02
analysis and Repurchase intention RI1 86.78 0.93 0.85 3.07 0.96 0.50
reliability results RI2 0.93 2.86 0.97
RI, y, satisfies the following relation: Korean beauty
y ¼ f ðx1 ; x2 ; x3 Þþz ¼ Zþz (1)
products
where ζ is an error term with Σ ¼ Cov(ζ), see Figure 1. As all the exogenous variables, ξ1, ξ2 and
ξ3, are hypothesized to lead to the latent, η, of endogenous variable, y, positively, we assume:
@Z=@xi 40 i ¼ 1; 2; 3: 577
A linear structural equation is used to represent Equation (1):
y ¼ Gxþ z (2)
where ξ ¼ [ξ1, ξ2, ξ3 ]. The endogenous variable, y, is observable but the exogenous
variables, ξ1, ξ2, and ξ3, are unobservable. As such, four of observed items of
xi,(xij, j ¼ 1…,4) are used to measure ξi for each i ¼ 1, 2, and 4. The measurement model for
the vector of the exogenous latent variables is:
x ¼ Lx xþd (3)
where x ¼ [x1,1, x1,2,…, x1,4, x2,1, x2,2,…, x2,4, x3,1, x3,2,…, x3,4] and ξ ¼ [ξ1, ξ2, ξ3].
The parameters are estimated using the maximum likelihood estimation. We skip
discussing the detail, readers may refer to Liao and Wong (2008) and the references therein
for more information.
We first employ the EFA to examine the possible underlying factor structure of all the
observations in our study. After confirming the number of factors being used in our study
by using EFA, we employ CFA to identify the endogenous and exogenous latent variables
and test the hypothesized model (Figure 1), which includes linear structural equations
(Equations 1 and 2) and measurements of the exogenous latent variables (Equation 3).
The correlation analysis is also employed to obtain a correlation matrix based on all items
for each dimension, which is then used as an input of the path analysis. The CFA allows the
examination of the rigorousness of our research model in terms of unidimensionality,
reliability and convergent validity of the scales (Gefen et al., 2000). The unidimensionality is
the extent to which the items are strongly associated with each other, and represent a single
factor, which is a necessary condition for reliability analysis and construct validation
(Anderson and Gerbing, 1988). The benefit of using the CFA, as opposed to an EFA,
is the availability of test for factor loadings to examine statistical significance.
Both reliability test and correlation analysis can be incorporated into the CFA when
assessing the unidimensionality of each factor.
The convergent validity is the extent to which different approaches used to construct
measurements can yield similar results (Campbell and Fiske, 1959). The convergent validity
of a scale can be calculated using the Bentler-Bonett coefficient (Δ) (Bentler and
Bonett, 1980). The Bentler-Bonett coefficient (Δ) is the ratio of the difference between the
χ² value of the null measurement model (model with no hypothesized factor loading on a
common construct) and the specified hypothesized measurement model to the χ² value of the
null model. In general, a value of Δ between 0.80 and 0.90 is considered acceptable, while
0.90 or above demonstrates a strong convergent validity (Gefen et al., 2000). We will discuss
the detail in next section.
Result and findings

Demographic analysis
A total of 437 usable questionnaires were collected from Taiwanese respondents through
both web-based and traditional paper-based questionnaires. Most (77.6 percent) of the
APJML participants in this research are female and most (69.6 percent) of them are living in the
29,3 central part of Taiwan. We use the cluster sampling technique in the sampling and thus
most of the respondents do not know each other. Ages of the respondents are ranging from
15 to 46 years old with half of them in the 20-24 group. In line with that, most (89.7 percent)
of the respondents obtain undergraduate or higher degrees. Furthermore, majority of
the respondents know about Korean beauty products (79.2 percent). In addition, majority
578 of the respondents are shopping in actual physical store (70.5 percent), followed by online
shopping (50.1 percent) and TV shopping (19.2 percent).
EFA and CFA

EFA is first utilized to examine the possible underlying factor structure of all the
observations in our study. After confirming the number of factors being used in our study
by using EFA, we employ CFA to identify the endogenous and exogenous latent variables,
test the hypotheses described in Section 3, verify the hypothesized model (Figure 1) and
construct validity of the measurements items of this study. By identifying and exploring
underlying items, both EFA and CFA are employed to reduce measurement items through
each latent variable to make the data more representable. By using SPSS 22, there are four
latent variables being explored: two independent variables (PP, COO), one mediating
variables (WOM) and one dependent variable (RI). two questionnaire items (RI1 and RI4) are
removed to improve the composite reliability (CR), convergent validity and discriminant
validity of the factors. We first use one-factor model to choose the items being selected for
each latent variable. After determine all the items being used for each latent variable, we will
then employ CFA to include four factors in the model.
Some descriptive statistics of all the latent variables are exhibited in Table I.
From the table, we find that on average, PP has the highest mean, followed by COO and RI
while WOM obtains the smallest mean. On the other hand, the standard deviations are
relatively small.
Validity and reliability test

The Kaiser-Meyer-Olkin (KMO, Kaiser, 1970) and Barlett’s Test (Bartlett, 1950) of
Sphericity are used to check the construct validity. In this study, we follow Kaiser (1970)
and others to require the KMO to be greater than 0.50. The results of factor analysis
indicate that the data are valid for our hypothesized model and meets the requirements to
be used for further analysis.
Reliability test is conducted to make sure that the measurement items are consistent over
time and that they are an accurate representative of particular latent variable. Cronbach’s α
reliability coefficient is commonly used as an estimate of reliability test. According to
Peterson (1994), α coefficient W0.9 is considered as excellent, W 0.8 as good, W0.7 as
acceptable, W0.6 as questionable, W0.5 as poor and o0.5 as unacceptable.
Table I also shows the result of mean, SD, variance extracted explained, and factor
loading for each item and exhibit KMO for each latent variable. In this study, all the items
are found to have significantly high loading score with all the EFA factor loadings to be
greater than 0.50 and range between 0.73 and 0.93. Further, we also can see Cronbach’s α for
each item belongs to the good to excellent category and is an acceptable number ranging
from 0.80 to 0.91.
CFA
In this process, all variables are included as exogenous variables in the proposed model
(Figure 1) using AMOS 22. Using EFA, we explore factor structure. Thereafter, we employ
CFA to confirm the factor structure we extracted from EFA to improve the overall model fit
of model. The CFA results indicate that χ²/df ratio is 2.29 and the goodness-of-fit (GFI) Korean beauty
index ¼ 0.95, these results meet the criteria of being good model fitting suggested by Bentler products
and Bonett (1980) and others. It is commonly agreed (Bentler, 1990), that the comparative fit
index (CFI) should be greater than 0.90 to indicate fitting the model well. İn this study, the CFI
is 0.98, implying our model fits the data very well. İn addition, MacCallum et al. (1996) suggest
that the model is adequate if the root mean square error of approximation (RMSEA) is less
than 0.08. In this paper, the RMSEA is 0.05, much smaller than 0.08. In short, all the tests of the 579
CFA shown in Table II suggest that a good fit of the hypothesized model (Figure 1).
Convergent validity
Convergent validity is the extent to which indicators of a specific variable “converge”
or share a high proportion of variance in common. Convergent validity consists of two
items: CR and average variance extracted (AVE). CR is a measure of reliability and internal
consistency based on the square of the total of factor loadings for a construct (Anderson and
Gerbing, 1988) and AVE a summary measure of convergence among a set of items
representing a variable (Fornell and Larcker, 1981). It is the average percent of variation
explained among the items (Anderson and Gerbing, 1988).
As suggested by Anderson and Gerbing (1988), the CR should be greater than 0.7 while
Fornell and Larcker (1981) suggest AVE to be at least 0.5. The findings of CR and AVE of
this study provide, once again, the evidence is supporting the reliability and reliability of the
indicators of the proposed model (Table III).
Discriminant validity
In this part, we measure the extent to which a variable is truly distinct from other
variables. Fornell and Larcker (1981) suggest comparing the square root of AVE with the
maximum correlation coefficients of latent variables. The result should be close or greater
than 1. As presented in Table IV, all of the square root of AVE divided by maximum
correlation was ranging from 1.12 to 1.48, implying that all the four variables indicate
strong discriminant validity.
GOF index Acceptable value CFA model References
χ² 157.94
df 69
χ²/df o3 2.29 Hair et al. (2006)
Probability p o0.05 0.000
GFI W0.9 0.95 Bentler and Bonett (1980)
CFI W0.9 0.98 Bentler (1990) Table II.
TLI W0.9 0.97 Brown (2006) Goodness-of-fit
RMSEA ⩽ 0.08 0.05 MacCallum et al. (1996) statistics
Construct CR AVE
PP 0.88 0.66
COO 0.87 0.63 Table III.
WOM 0.94 0.80 Test of composite
RI 0.93 0.86 reliability and
Minimum acceptable value W0.7 W 0.5 convergent validity
APJML Multicollinearity test
29,3 The implementation of multicollinearity test helps to check for the unwanted situation
where the correlations among the independent variables are strong. Variance inflation
factors (VIF) measures how much the variances of the estimated coefficients are increased
over the case of no correlation among the independent variables. If no two independent
variables are correlated, then all the VIFs and tolerances will be 1 (O’Brien, 2007). Table V
580 indicates that there are no multicollinearity problems. The values of tolerance are well above
the 0.2 threshold, and all values of VIF are well below the threshold of 5 (O’Brien, 2007).
SEM
Standard measures and indicators used in most studies show that each variable of this
research model is suitable and fit the SEM well. We follow previous studies (Guh et al., 2013;
Moslehpour et al., 2014; Rigdon et al., 2010; Williams et al., 2015) to employ SEM to analyze
the measurement model, estimate the structural model and test the proposed research
hypotheses. Results of the impacts of PP, COO and WOM on RI based on the proposed
research model are reported in Table VI.
As shown in Table VI, the value of χ²/df ¼ 2.29, which complies with the suggested
criteria of value to be less than 3. In addition, GFI index ¼ 0.95, adjusted goodness-of-fit
index (AGFI) ¼ 0.93, CFI ¼ 0.98 and RMSEA ¼ 0.05. As it can be seen in Table VI, each
statistic meets the minimum requirement of acceptable values. Thus, these results indicate a
good fit of the conceptual model (Model 1) on the empirical data in this study.
PP COO WOM RI
PP 1 0.42 0.48 0.55

COO 0.42 1 0.63 0.64
WOM 0.48 0.63 1 0.80
RI 0.55 0.64 0.80 1
Table IV. Max correlation 0.55 0.64 0.80 0.80
Test of discriminant √AVE 0.81 0.79 0.89 0.93
validity √AVE/max. correlation 1.48 1.23 1.12 1.16
Constructs Tolerance VIF
PP 0.74 1.34
Table V. COO 0.58 1.72
Assessment of WOM 0.54 1.84
multicollinearity Note: Dependent variable ¼ repurchase intention (RI)
GOF Index Acceptable value SEM model
χ²/df o3 2.29
Probability p o0.05 0.000
GFI W0.8 0.95
Table VI. AGFI W0.8 0.93
Model fit results CFI W0.9 0.98
for SEM model RMSEA o0.08 0.05
Table VII presents the result of the proposed hypotheses while Figure 2 summaries the results Korean beauty
for the proposed research model. From Table VII, we find that: the path from PP to RI with products
β ¼ 0.19 significant at p-valueo0.001, concluding H1 is accepted such that PP has significant
positive effect on RI; the path from PP to WOM with β ¼ 0.25 significant at p-valueo0.001,
implying H2 is accepted such that PP is significantly and positively related to WOM; the path
from COO to RI with β ¼ 0.22 significant at p-valueo0.001, indicating H3 is accepted such that
COO significantly and positively influences WOM; the path from COO to WOM with β ¼ 0.60 581
significant at p-valueo0.001, implying H4 is accepted and showing significant support that
COO leads to RI; the path from COO to PP with β ¼ 0.53 significant at p-valueo0.001,
concluding not to reject H5 and support COO significantly and positively influences PP; and
the path from WOM to RI with β ¼ 0.64 significant at p-valueo0.001, showing H6 is accepted
and supporting the argument that WOM has significant positive impact on RI. Thus, all six
hypotheses conjectured in our study are strongly supported and statistically significant.
Conclusion
The tests of hypotheses in this research examine three factors (PP, COO, and WOM) that
influence consumer’s RI. This study identifies the factors to be basic consideration for
consumers in repurchasing cosmetics products. Our findings support the selection of
Taiwanese consumers for Korean Cosmetics products is a good choice because all the
statistics suggests that our hypothesized model fits the data very well. We discuss our
conclusion for each of our hypothesis one by one in the following.
H1: as mentioned in literature review, several researchers, for example, Khan et al. (2012),
Noyan and Simsek (2012) and Calabuig et al. (2014) have considered PP as antecedent of RI
Hypothesis Path Estimates Results
H1 PP → RI 0.19*** Accepted
H2 PP → WOM 0.25*** Accepted
H3 COO → RI 0.22*** Accepted
Table VII.
H4 COO → WOM 0.60*** Accepted Result of the
H5 COO → PP 0.53*** Accepted hypotheses based
H6 WOM → RI 0.64*** Accepted on standardized
Note: ***p o0.001 estimates
PP
(Perceived Price) H1=0.19***
H2 = 0.25***
WOM RI
H5 = 0.53*** (Word-of-Mouth) H6 = 0.64*** (Repurchase Intention)
H3 = 0.60***
H4 = 0.22*** Figure 2.
COO
(Country of Origin)
Result of
hypothesis test
APJML both in service and product. This study yields the same result that PP significantly
29,3 influences RI in the beauty product industry, implying that PP is one of the most important
factors for consumers to consider when buying the same product. Therefore, it can be said
that in the cosmetics industry, while the price is reasonable and the products are worth
buying (has a good value for money), consumers may likely repurchase a beauty product
even though the price is not cheap.
582 H2: this study shows that WOM is significantly influenced by PP. As explained in
literature review, Senecal and Nantel (2004), Duan et al. (2008) and others have documented
that WOM as an influential factor in the business. In addition, Jeong and Jang (2011) and
Tong et al. (2013) find that the influence of PP on WOM may vary, depending on the types of
the industries. In the beauty product industry, based on our analysis, when consumers feel
the price of the product is reasonable and have a good quality and value, they tend to share
their opinion with their friends. Academics have found that consumers tend to give more
credibility to WOM than commercial advertising.

Therefore, beauty product industry should consider WOM as an important variable in
determining RI. In addition, WOM is significantly influences RI which gives good ground
for testing the mediating effect of WOM. The mediation role of WOM will be explained later.
In addition, most of the respondents of this study are female (77.6 percent). It also can be an
indication that industries that have female customers as their main target may want to
consider the important role of WOM.
H3: our analysis shows that COO significantly and positively influences RI. Several
studies have examined the influence of COO toward purchase intention, but do not examine
the influence of COO toward RI. For example, Wang and Yang (2008), have shown that COO
has a positive influence on customers’ behavioral intention.
Nonetheless, customers’ RI could be more important than purchase intention because it
indicates that customers are willing to buy the same product in the future. Based on the
results of our analysis, we conclude that in beauty product industry, COO has a significant
influence on RI. Consumers consider the image of the country where product is made before
buying beauty product. The influence of COO on RI through its mediating variable (WOM)
will be discussed in detail later.
H4: our analysis concludes that COO has a significant influence on WOM. In line with
this finding, Ayyildiz and Cengiz (2007) find that in the hot spring industry, COO has a
significant influence on WOM. Hence, our finding in the beauty product industry is
consistent with the literature in other industries that COO should be considered as a drive to
consumer behavior and, more specifically, it motivates consumers to repurchase in the
cosmetics market. The influence of COO on RI through WOM as the mediating variable will
be discussed later.
H5: studies, for example, Gaedeke (1973), Hulland et al. (1996), Ha-Brookshire and Yoon
(2012) and Drozdenko and Jensen (2009), have shown that products from more developed
countries generally receive more positive evaluations than products from less developed
countries. Our finding conclude that the argument that the influence of COO on PP also
holds true for Korean beauty products among Taiwanese consumers.
H6: this interrelationship presented in our study provides new evidence in consumer
behavior model in the beauty industry. Prior research, for example, Khan et al. (2012), often
report that PP and customer satisfaction are the most important variables to generate RI.
However, in this study we find that WOM is the most influential variable toward
RI compared with PP and COO, implying that consumers of beauty product, most of them
are female, will “listen” to what their friends or others would say more than what celebrities
might endorse.
Our findings could make inference for cosmetics product marketers in their planning.
For marketing managers, it is important to realize that there are different venues and
avenues to increase and then maintain their products’ RI in emerging markets. Considering Korean beauty
the case of Taiwan, it is clear that international producers must understand the specific products
environmental and cultural conditions of Taiwan before proceeding to enter the market.
One of these particular circumstances is that Taiwanese consumers are hesitant when they
consider the purchase of Korean products. These consumers are influenced both negatively
by their distaste toward Korean products and positively by their yearning, through WOM,
to purchase Korean beauty products. Thus, despite ancient stereotyping of cultural and 583
political disagreements and standoffs between Taiwan and Korea, marketers in both
countries can still sell their products. Korean beauty product marketers have been able to
maintain their Taiwanese consumers to have a positive WOM about their product by
maintaining the antecedent variables (PP and COO) of WOM. Beauty product
industry should also consider the image of the COO before they launch their products,
because COO is found to be the most influential variable to WOM. Furthermore, good value
for the money should be maintained, because PP is found to be the second influential
variable toward WOM.
The findings of this research could draw several practical directions for marketers of
beauty product industry specifically for Taiwanese consumers. First, it helps to know which
factors are the basic considerations for consumers in repurchasing cosmetics products.
Based on our findings, PP, WOM, and COO are identified having significant influence
toward RI.
Second, it also gives explanation and evidence to what extent does each variable
influence RI. As mentioned above, WOM is found to be the most influential variable
toward RI, followed by COO, and PP. Since most of the consumers of beauty products in
Taiwan are female, our findings are important and reasonable. Females tend to easily share
their thought or opinions about anything than males do. Hence, marketing specialists in the
cosmetics industry should pay more attention to maintain their products’ imagine to
consumers so that they will have a positive opinion about their brand or product. Marketers
should also use WOM as one of their marketing strategies. For instance, consumers will get
discount or bonus if they recommend the products to their friends. Furthermore, they have
to keep up and improve the quality the product from time to time to satisfy consumers,
and consider the image of the COO as one of the major marketing tools if the country
already has a good image. Extension of this paper can include both COO and CI to study the
products and firms when entering new foreign markets. A strong image for a product means
improving the CI and that is a way to increase product success. The authors believe that a
focus on COO alone would not cover the whole spectrum and therefore recommend
investigating both COO and CI.
Further extension to our paper includes studying respondents from countries other than
Taiwan and products other than Korean beauty product. If the products/phenomenon has
good WOM, COO and PP, we believe that products/phenomenon should have good RI.
However, this conclusion still needs real data to demonstrate whether it is true. Customer
Satisfaction is also a strong variable discussed in the literature, but not tested with
cosmetics products and Taiwanese population. An interesting extension of our paper is to
test time variation to investigate whether our results can be applied to other products/
phenomenon from time to time. We have included our discussion in our “Conclusion”
section. Media Marketing is also a new phenomenon and a new variable to include in a
future study.
Additional study could also consider using our model to investigate the influence of
the mediating variables. More advanced studies could use more independent variables,
more mediating variables and more dependent variables. Including other variables could
help develop more general construct of RI. For instance, not only WOM can mediate the
relationship between independent variables, other variables such as brand identification,
APJML brand trust, brand commitment and customer satisfaction could be considered.
29,3 Extension could also consider to combine both quantitative and qualitative approaches
and to develop a better model. Nonetheless, it is interesting to include more independent
variables, more mediating variables, and more dependent variables in the study. However,
the limitation of including too many variables in the study is to lose the power of the test the
application of the purpose of the study.
584
Note
1. We note that in this paper we follow the traditional approach in marketing and management to state
the alternative hypotheses instead of the null hypotheses. The null hypothesis of H1 should be H0:
PP does not have any positive effect on RI, see, for example, Lehmann (1959). Rejection of H0 will
lead to “accept” H1.
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Corresponding author
Kien Van Pham can be contacted at: kienpv@buh.edu.vn
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Asia Pacific Journal of Marketing and Logistics

Repurchase intention of Korean beauty products among Taiwanese consumers

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Department of International Economics, Banking University of Ho Chi Minh,

Ho Chi Minh City, Vietnam, and

Model and hypotheses

Interrelationship between PP and RI

Interrelationship between PP and WOM

Interrelationship between COO and WOM

Interrelationship between COO and RI

Interrelationship between COO and PP

Interrelationship between WOM and RI

Data collection and analysis

Perceived price PP1 65.52 0.83 0.82 3.18 0.79 0.79

Result and findings

EFA and CFA

Validity and reliability test

GOF index Acceptable value CFA model References

PP 1 0.42 0.48 0.55

Constructs Tolerance VIF

GOF Index Acceptable value SEM model

Hypothesis Path Estimates Results

credibility to WOM than commercial advertising.

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