UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TRAN DUC TRUNG CANG THE FACTORS AFFECTING CUSTOMER SATISFACTION AND LOYALTY OF MOBILE TELECOMMUNICATION SERVICE IN HO CHI MINH CITY MASTER OF BUSINESSADMINISTRATION THESIS Ho Chi Minh City – Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TRAN DUC TRUNG CANG THE FACTORS AFFECTING CUSTOMER SATISFACTION AND LOYALTY OF MOBILE TELECOMMUNICATION SERVICE IN HO CHI MINH CITY ID: 22110005 MASTER OF BUSINESSADMINISTRATION THESIS SUPERVISOR: DR. TRAN HA MINH QUAN Ho Chi Minh City – Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT First and foremost, I would like to thanks to my supervisor Dr. Tran Ha Minh Quan for his guidance, encouragement and excellent advice throughout this research study. Much appreciation goes to all lecturers at International School of Business, University of Economics Ho Chi Minh City for their expertise in providing me continuous learning process that greatly enriched my knowledge.
I would like to thank to all my classmates, my friends for their supports and encouragement. Last but not least, I would like to take this opportunity to express my profound gratitude to my beloved parents for being patience and never failed giving me continuous supports. i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT The purpose of this research is to assess mobile telecommunication service quality in Ho Chi Minh City based on perceptions and experiences of customers, to find the linkage between mobile telecommunication service quality attributes, customer satisfaction and customer loyalty in mobile telecommunication service sector. Based on the mobile telecommunication service quality model suggested by Lee, Lee and Freick (2001), six main dimensions (call quality, pricing structure, mobile devices, value-added services, convenience in procedures and customer support) were used to find out the relationship among mobile telecommunication service quality, customer satisfaction, and customer loyalty.
All the data were collected through questionnaires; the sample size of 350 mobile customers was drawn from different mobile carriers in Ho Chi Minh City. Descriptive statistical approach, multiple linear regression, Anova were then used to describe and analyze these six dimensions and take them into the involvement with customer satisfaction and loyalty. The results show that six dimensions above are positively related to customer satisfaction and customer satisfaction is positive related to customer loyalty. Customer support demonstrates the highest positive correlation with customer satisfaction while pricing structure demonstrates the lowest positive correlation with customer satisfaction.
Keywords: Mobile, Service quality, Customer satisfaction, Customer loyalty, Call quality, Pricing structure, Mobile devices, Value-added services, Convenience in procedures and Customer support. ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CONTENTS Acknowledgement. iii Lists of Figures. vi Lists of Tables.
vii CHAPTER 1: INTRODUCTION.2 Problem statement and research questions. 6 CHAPTER 2: LITERATURE REVIEW .2 Mobile telecommunication service quality .1 Service quality concept .2 Service quality attributes .3 Critique of SERVQUAL .5 The relationship between customer satisfaction and customer loyalty .6 The research model and hypotheses .1 The research model. 22 iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 24 CHAPTER 3: RESEARCH METHODOLOGY .5 Sample size and data collection procedures .6 Data analysis method.
30 CHAPTER 4: DATA ANALYSIS AND RESULTS .2 The general characteristics of the sample .3 Cronbach alpha reliability analysis .4 Exploratory factor analysis .1 Factor analysis for mobile telecommunication service quality attributes .2 Factor analysis for customer loyalty variable .5 Multiple linear regression .1 Customer satisfaction and mobile telecommunication service quality .2 Customer loyalty and customer satisfaction .6 Hypotheses assessment and discussion.1 In the aspect of age with customer satisfaction .2 In the aspect of income with customer satisfaction. 44 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS. 46 iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 Value-added services .5 Recommendations for future research. 64 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LISTS OF FIGURES Figure 2.1 The conceptual model of service quality by Parasunaman et al.2 The research model of service quality, customer satisfaction and service loyalty by Caruana (2002).
27 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LISTS OF TABLES Table 2.1: The definition of five services quality attributes .1: The main measurement scales of the research .1: Personal Profile of Respondents .2: Cronbach’s Alpha results for main survey .3: KMO and Bartlett’s Test (Mobile telecommunication service quality) .4: Total variance explained (Mobile telecommunication service quality) .5: EFA rotated component matrix (Mobile telecommunication service quality) .6: Cronbach’s Alpha results for new variables) .7: KMO and Bartlett’s Test (Customer loyalty) .8: Total variance explained (Customer loyalty) .9: Total variance explained (Customer loyalty) .16: Results of hypotheses test .17: Descriptive of age on customer satisfaction. 43 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.19: Descriptive of income on customer satisfaction. 44 viii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: INTRODUCTION 1.1 Research background Bolstered by the rapid development of information and communication technologies (ICT) and high demand from customers, the paradigm of mobile telecommunication services is now shifting from voice-centred communication to a combination of high- speed data communication and multimedia. Further, factors such as the growth of the wireless Internet and the upcoming introduction of mobile number portability (MNP) all contribute to emphasize the appearance of a transition period in the mobile telecommunication services market.
Moreover, a stagnating rate of diffusion, indicated by a fall in the rate of increase in subscriber numbers, suggests that the market may have now reached maturity (ETRI, 2002). This change of paradigm and the symptoms of a market in transition are driving the industry's restructuring efforts and intensifying competition between companies. Vietnamese mobile carriers are coming to a full realization of the importance of a customer-oriented business strategy as a condition for sustaining their competitive edge and maintaining a stable profit level, and, indeed, for their very survival. When the number of subscribers has reached its saturation point, creating and securing new customers is not only difficult but also costly in terms of marketing.
Hence, it is becoming an industry-wide belief that the best core marketing strategy for the future is to try to retain existing customers by heightening customer loyalty and customer value. Earlier studies suggest that customer loyalty provides the foundation of a company’s sustained competitive edge, and that developing and increasing customer loyalty is a crucial factor in companies’ growth and performance (Lee & 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Cunningham, 2001; Reichheld, 1996). However, not enough studies have been conducted on the subject of the mobile telecommunication services industry inside or outside Vietnam; a mere handful of research papers have been published. This is partly due to the relatively short history of the industry.
Only in the late 1990s did research on factors affecting customer loyalty and carrier switching begin. In particular, there are few studies examining interactions between factors affecting customer loyalty. This paper analyses the effects on customer loyalty of customer satisfaction and the structural relationship between these factors in the Vietnam mobile telecommunication services industry. Vietnam mobile telecom (Mobifone) offered Vietnam's first mobile telecommunication service, an analogue service, in April 1993.
Until 2003, the market's structural monopoly resulted in high subscription and usage fees, and high prices for mobile devices. This kept subscriber numbers and sales low, and the growth rate was equally insubstantial. The entry of S-Phone Telecom in 2003 put an end to the monopoly of Mobifone and Vinaphone. After the introduction of digital service, the entry of Viettel in 2004 triggered a full-scale activation of the market.
Competition between carriers quickly brought down subscription fees, and led to struggles to secure new subscribers by such means as subsidizing the purchase of mobile devices. All these developments contributed to the rapid growth of the mobile telecommunication services market. As reported by the Ministry of Information and Communications, Vietnam mobile charges in the past 10 years has decreased by more than 3 times. The heated competition in the mobile market has made Vietnam from countries with high rates of goods in the world has become in every country have the 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com cheapest rates in the world.
As of June 2013, the total number of telephone subscribers that were active subscribers was 148.5 million, in which the mobile subscribers was 93. Recently, the ITU has ranked Vietnam ranks 8th in the world of mobile subscriber density. This high rate of growth came to an end with the new millennium, when the market, nearing its maturity phase, started to slow down (ETRI, 2002). The diffusion rate of mobile telecommunication services having surpassed 100% of the total population, factors such as the discontinuing of subsidies for mobile device purchases after June 2000 reduced the increase of subscriptions to a marginal level, and some carriers even experienced a decrease in subscriber numbers.
This is evident in support of the assertion that the mobile telecommunication services sector had reached its saturation point in terms of customer numbers, in other words, attained market maturity.2 Problem statement and research questions In Vietnam context, the empirical studies of the relationship among service quality, customer satisfaction and customer loyalty for mobile telecommunication system are limited, the existing studies on mobile telecommunication also do not account for the changing roles of mobile telecommunication setting system in Vietnam’s economic structure. Having a good way in supplying high quality services is a key to achieve customer loyalty which is the primary goal of business organizations, due to the advantages of customer retention (Ehigie, 2006). Today, the increasing awareness among mobile telecommunication customers of their rights, changing demands and highly competition requires constant progress in service quality from the telecommunication carrier for their customers to stay loyal. The present research 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com intends to test whether the telecommunication customers are happy with the services provided to them, which will eventually lead customer loyalty or not.
This study attempts to examine the effect of service dimensions on perceived service quality, customer satisfaction, and customer loyalty based on the estimated research questions which presented as follows: 1. What are the key service quality dimensions of mobile telecommunication carriers that determine satisfaction of customers in the mobile telecommunication sector in Ho Chi Minh City? By addressing this question, managers who are working in the mobile telecommunication sector can identify their strength and weakness to drive their investment in a right direction. What are the specific predictors that affect the customer loyalty in the mobile telecommunication sector in Ho Chi Minh City? By addressing this question, managers who are working in the mobile telecommunication sector can identify their strength and weakness to drive their investment in a right direction to retain customer retention. How important each mobile telecommunication service quality dimension placing on general customer satisfaction, customer loyalty in the mobile telecommunication sector in Ho Chi Minh City? Resolving this question will assist mobile telecommunication carriers to prioritize their investment for a marketing communication program.3 Research purposes 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Based on the research questions, this study was implemented to identify the mobile telecommunication service quality drivers of customer loyalty to achieve the following objectives: (1) Explore the impact of mobile telecommunication service quality dimensions such as transaction convenience, physical facilities, perceived price, employee service, reliability, access, effectiveness and assurance on customer satisfaction.
(2) Explore the impact of customer satisfaction on customer loyalty. (3) Qualify the importance level of each independent factor (mobile telecommunication service quality) in the relationship with customer satisfaction and linkage between customer satisfaction and customer loyalty. (4) Find a suitable instrument for testing the mobile telecommunication service quality in Vietnam mobile telecommunication context.4 Research scope The research was conducted in Ho Chi Minh City, a commercial and financial trading center of Vietnam.