UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Dac Huy THE INFLUENCE OF RELATIONSHIP QUALITY ON CUSTOMER LOYALTY – A STUDY OF VETERINARY COMPANIES AND THEIR AGENCIES IN VIETNAM ID: 21120091 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. PHAM NGOC THUY Ho Chi Minh City – Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS Firstly, I would like to express my sincere gratitude to Dr. Pham Ngoc Thuy, my Supervisor, who has given me great guidance, inspiration and especially her motivation, thanks for her valuable advice, suggestions and resources that helping me in accomplishing this study. Secondly, I would like to express my sincere thanks to all professors, tutors and officers of MBus Program for valuable lectures, academy knowledge and your experiences transfer throughout the period of courses at International School of Business.
I want to express my special thanks to all my colleagues, friends, customers in veterinary medicine industry for your advice, cooperation and supports during the pilot and official survey. Without your support, I could not successfully complete my thesis. Ho Chi Minh City, Vietnam, 30th Sep, 2014. Nguyen Dac Huy ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT In recent years, the industry of veterinary medicine in Vietnam has been developing significantly.
The veterinary medicine companies increasingly expand the market and enlarge their agencies system to take the company's image and products to market. The purpose of attracting customers is to gain more market-share and bring more profits back to them. This research is to identify the determinants affecting customer loyalty in veterinary medicine industry. This study was aimed to explore the influence of relationship quality factors on customer loyalty in veterinary medicine industry in southern of Vietnam is done through quantitative methods.
Formal quantitative research through interviews using a questionnaire with a sample collected in a convenient method of 230 agencies around some provinces in Southern. The research results contribute to the theoretical basis of research by understanding the meaning of the factors of relationship quality that affect consumer loyalty in veterinary medicine market. Thereby, the results also provide managers with a basis for decision- making, investment options to develop new products and services in line with objectives and current strategic. Key words: Trust, Commitment, Satisfaction, Customer Loyalty iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Content Acknowledgement.iii CHAPTER 1: INTRODUCTION .
3 CHAPTER 2: LITERATURE REVIEW .1 A brief introduction about veterinary medicine industry .3 Hypotheses &Research model .1 Trust and customer loyalty .2 Commitment and customer loyalty .3 Satisfaction and customer loyalty . 10 CHAPTER 3: RESEARCH METHODOLOGY .2 Research methodology, Data collection and sample size .1 Step 1: Qualitative study .4 Step 3: Quantitative study .5 Sample size of Quantitative research . 18 iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Exploratory Factor Analysis (EFA) .3 Multi-linear regression analysis . 22 CHAPTER 4: DATA ANALYSIS, FINDINGS AND DISCUSSION .1 Descriptive data analysis .1 Descriptive analysis of Sample charateristics .2 Descriptive analysis of the variables studies .2 Measurement scale assessment .1 Cronbach Alpha reliability analysis .2 Exploratory Factor Analysis .1 Testing Assumption of Multiple Regressions .2 Evaluate and test the relevance of the model .1 Satisfaction and Commitment .
42 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS .52 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com List of Tables Table 4.1: Descriptive statistics of sample ………………………….2: Reliability analysis result…………………….3: EFA analysis result for variables after handling ………….4: Describe the correlation among variables ………………….5: Multiple regression result .6: Hypothesis testing result …………………………….7: Summary result of the hypotheses…………………….46 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com List of Figures Figure 1: Research model …………………………………….……………………10 Figure 2: Research process …….…13 Figure 3: Research model after testing EFA ……………………….…34 Figure 4: Multiple regression result ………………………………….38 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: INTRODUCTION 1.1 Research background Nowaday relationship quality is a critical success factor that influences the competitiveness of an organization. Relationship quality is one of the important outcomes of marketing activity.Hennig-Thurau and Alexander (1997) argued that relationship quality represents the relationship between the firms and the customers. Nowadays because of competitive environment among companies,losing customers is very costly for companies (Athanasopoulou, 2009, p.Researchers have concluded that there is more times expensive to acquire new clients than to keep existing ones. So that, companies have made efforts to developing and maintaining a long-term relationships with their customers in order to create customer loyalty.
Scant empirical research has been completed that has examined the group environment, or the affective states within it, such as trust, commitment, satisfaction and price as explaining the effects of relationship quality. Vietnam is an agricultural country, so the livestock sector has a huge role in the economy, contributing an important part in the economic development of Vietnam. During the recent years, the industry of veterinary medicine in Vietnam has been developing rapidly. Recent statistics show that there are now over two hundreds veterinary medicine companies that are associated with customers systems with thousands of agencies and stores stretching from the north to the south (Yellow pages Vietnam, 2014).
Several medicine companies, besides selling their products, are striving to attract and retain customers by offering the best services which are strongly based on the business relationships. The companies need to understand how they can create and deliver values in business to LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com business relationships beyond selling products. On the other side, customers need to understand how to create, build and manage portfolio of supplier relationships to develop overall return on relationships.2 Research problem This study will research the influence of relationship quality and customer loyalty especially between veterinary medicine companies and their agencies in Vietnam. It will focus deeply on three factors of relationship quality affect to the customer loyalty.
They are: trust, commitment, satisfaction. If yes, how do each factor influences on customer loyalty – positive or negative? 1.3 Research objectives The objectives of this research are to: - Identify factors of relationship quality impacting on customer loyalty between the veterinary medicine companies and their agencies in Vietnam veterinary medicine industry. - Measure the impact levels of three factors of relationship quality namely trust, commitment, satisfaction on customer loyalty, - Analyze the differences of those relationships between groups of duration of cooperation and number of partners.4 Research scope The unit analysis in this research is organization so this research was investigated on the owners and director of the veterinary agencies. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com In terms of geography, this research carried out from Hue to Ca Mau province.
The period of conducting the survey was last from 10 June, 2014 to early July, 2014.5 Research structure The research consists of five parts: - Chapter I: Introduction. This chapter introduces the research background, management problem, research problem, research objectives, research significance, and research scope as well as research structure. - Chapter II: Literature review. This chapter reviews previous related theories and research, as well as to select the research’s factors and formulate the research hypotheses and model.
- Chapter III: Research methodology. This chapter provides general method how the research is designed and implemented. - Chapter IV: Data analysis and findings. This chapter will translate primary data collected from survey, analyze data as well as discuss the result findings in connection with literature review.
- Chapter V: Conclusion, implication, limitation and future research. This chapter will conclude the research finding, provide research implication and give the further suggestion as well as research limitation. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 2: LITERATURE REVIEW This chapter presents reviews of relevant literature related to factors of relationship quality and customer quality. Throughout this chapter, variables will be established and grouped into relevant factors.
This chapter also mentions some previous studies and experiences related to the research topic 2.1 A brief introduction about veterinary medicine industry The livestock sector is a key sector in the Agriculture in particularly and in the economy generally in Vietnam. The development also brought the improvement in the veterinary drug manufacturing which played an important role in maintain sustainably of livestock. In order to serve to the needs of farmers and farms, the companies which produce veterinary medicine was born in turns. In parallel with the development of veterinary medicine companies is the appearance and development of agencies system.
The veterinary agencies are the customers of veterinary medicine companies. The agency will distribute and sell products from the company farmers and farms which are the ultimate consumers. In order to expand market share and increase total revenue, veterinary medicine companies are now built and developed their system of agents across the country Vietnam. Base on that, now more farmers have been using drugs from medicine companies Veterinary Vietnam.
Besides, in order to cater to the diverse needs of farmers, veterinary agencies and store are distributed and sold products from many different companies. Each agency can be a customer of 2 or 3 or more companies. Thus consumers can select and use the most suitable products for themselves while the agencies can increase sales by doing business with many different companies. With the fierce competition in the market today, the veterinary 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com medicine companies offer best policies for agencies in order to create and build up the good relationship with their agencies.
For these companies, customer loyalty is the most priority concern and important issue. On the veterinary market, the company has established a long time ago, in ten years and the agencies have the same. There are many agencies who have worked closely with the company since the company first established. To build loyalty from such agents, companies must have a good relationship with the agencies, must take care and have good incentives to help them develop in long term.
The development of agency and relationship between agency and veterinary medicine company growing higher, the company will develop in strength. Each company has different business lines, different methods to attract customers. Each agency has different ways to select business partners. So there should be a lot of factors that affect customer loyalty, which highlights the three factors: Trust: customers must trust the company, have confidence in the business policies and guidelines of the company activities.
If the company wants to create the trust of customers, the company's products have to meet the needs of consumers, veterinary drugs which are manufactured from veterinary medicine have to be effective in the prevention and treatment of diseases in livestocks and aquaculture Commitment: customers have good reviews about the company, the products of the company. Besides, consumers also rated the company through product quality and image of the company which was brought to them. 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Satisfaction: Company to attract customers, the customer must satisfy, fulfill the requests from customers. Company’s product must be efficient, have a positive effect on the animal.1 Relationship quality In the past, a number of authors (e.
Dwyer and Sejo, 1987; Moorman, Gerald and Rohit, 1992) found that relationship quality was the association of trust, commitment and satisfaction. These authors discussed and applied their concept in several contexts, research projects and lead to the agreement that the concept of relationship quality is the summarize construct of several different but related factors such as trust, commitment, satisfaction. Therefore, this study proposes that relationship quality is combination of three components, which are: trust, commitment and satisfaction.2 Trust Trust enables cooperative human endeavors (Fukuyama, 1996) and is vital to inter organizational relationships (Gambetta, 1988; Rousseau et al.