UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS TRINH KIM HOA Customer Satisfaction and Customer Loyalty in Vietnamese Mobile Telecommunication Industry MASTER OF BUSINESS (Honours) Supervisor: LUU TRONG TUAN, Ph.D LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Firstly, I would like to express the deepest gratitude to my research supervisor, Dr. Luu Trong Tuan, for his extensive support, suggestions and guidance during the time of doing master thesis. Secondly, I would like to show my appreciation and gratefulness to Professor Nguyen Dong Phong, Professor Nguyen Dinh Tho and Dr. Tran Ha Minh Quan for their dedication and valuable times as the members of proposal and draft thesis examination committee.
Their comments and recommendations are greatly helpful for completing my dissertation. Thirdly, my great thanks are given to professors, lecturers, tutors for their teaching and dedication during my MBA course at International School of Business-University of Economics HCM city. Lastly, I am so grateful to my MBA classmates, friends and colleagues for their significant contribution and support to the success of this thesis. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT This study was aimed at investigating three factors (service quality, brand image and price perception) and assessed the degree of the impact of each factor on customer satisfaction, especially the relationship between customer satisfaction and customer loyalty in Vietnamese mobile telecom sector where there have been the existence of the fierce competition, mature market and internationally integrated economy, ultimately struggling for market share and survival.
The method of qualitative research (in-depth interview) was used to modify the draft questionnaires on the purpose of removing the ambiguity and enhance the clarity before they was officially launched in the main research. Then, the quantitative research was conducted to gather the data for analysis. The data was analyzed by three methods, namely, Cronbach’s Alpha analysis, Exploratory Factor Analysis and Standard Multiple Regression. The results indicated that each factor (service quality, brand image, price perception) has a positive impact on customer satisfaction at the different level as well as a significantly positive relationship between customer satisfaction and customer loyalty in mobile telecommunication industry in Vietnam.
The results of this study are consistent with the findings and evidence in the extant literature. The study provides the important feedback from customers to mobile telecom suppliers. The findings are expected to be marketing insights for Vietnamese mobile telecom managers so that they can develop the sound marketing strategies in today’s competitive and costly market. Key words: service quality; brand image; price perception; customer satisfaction; customer loyalty; mobile telecommunication industry.
2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGEMENT………………………………………………………1 ABSTRACT…………………………………………………………………….2 LIST OF TABLES………………………………………………………………5 LIST OF FIGURES…………………………………………………………….4 Research methodology and scopes…………………………………………………10 1.5 Structure of research……………………………………………………………….11 CHAPTER 2: LITERATURE REVIEW…………………………………. Overview of mobile telecommunication industry in Vietnam……………………13 2. Customer satisfaction and customer loyalty……………………………………. Service quality and customer satisfaction……………………………………….
Price perception and customer satisfaction………………………………………. Brand image and customer satisfaction…………………………………………. Research model and hypotheses………………………………………………….21 CHAPTER 3: RESEARCH METHODOLOGY………………………….26 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Data analysis methods ………………………………………………………….29 CHAPTER 4: DATA ANALYSIS AND FINDINGS………………………30 4.
Descriptive statistics of research samples………………………………………. Reliability test: Cronbach’s alpha test…………………………………………. Exploratory Factor Analysis……………………………………………………. Testing assumptions of multiple regression……………………………………38 4.
Testing hypotheses on the impacts of factors (service quality, brand image, price perception) on customer satisfaction…………………………………………………. Testing hypothesis on the impact of customer satisfaction on customer loyalty…………………………………………………………………………………42 4. Summary of hypotheses testing results ……………………………………….43 CHAPTER 5:CONCLUSIONS, IMPLICATIONS AND LIMITATIONS. Limitations and further research direction……………………………………….48 APPENDIX A-GUIDELINE FOR QUALITATIVE IN-DEPTH INTERVIEW………….54 APPENDIX B-QUESTIONNAIRE IN ENGLISH…………………………………………56 APPENDIX C- QUESTIONNAIRE IN VIETNAMESE………………………………….59 APPENDIX D-HISTOGRAM, NORMAL P-P PLOT OF REGRESSION, SCATTER PLOT OF DEPENDENT VARIABLE: CUSTOMER SATISFACTION…………………………62 APPENDIX E- HISTOGRAM, NORMAL P-P PLOT OF REGRESSION, SCATTER PLOT OF DEPENDENT VARIABLE: CUSTOMER LOYALTY……………………………….63 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 4.1 Descriptive statistics of research samples……………………………………….2 Reliability Test Result…………………………………………………………….3 Total variance explained of independent variables……………………………….4 Rotated component matrix of independent variables…………………………….5 Component matrix of mediator variable-customer satisfaction………………….6 Component matrix of dependent variable-customer loyalty…………………….8 Model summary of Testing hypotheses on the impacts of factors (service quality, brand image, price perception) on customer satisfaction…………………………………….9 ANOVAb Result of Testing hypotheses on the impacts of factors (service quality, brand image, price perception) on customer satisfaction…………………………………….10 Coefficientsa Result of Testing hypotheses on the impacts of factors (service quality, brand image, price perception) on customer satisfaction……………………………41 Table 4.11 Model Summary of Testing hypothesis on the impact of customer satisfaction on customer loyalty…………………………………………………………………………….12 ANOVAb Results of Testing hypothesis on the impact of customer satisfaction on customer loyalty………………………………………………………………………….13 Coefficientsa Result of Testing hypothesis on the impact of customer satisfaction on customer loyalty………………………………………………………………………….14 Results of hypotheses testing……………………………………………………43 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 2.1 Research model…………………………………………………………………21 Figure 3.25 Figure D1: Histogram of Customer Satisfaction……………………………………………62 Figure D2: Normal Plot of Customer Satisfaction………………………………………….62 Figure D3: Scatter Plot of Customer Satisfaction………………………………………….62 Figure E1: Histogram of Customer Loyalty……………………………………………….63 Figure E2: Normal Plot of Customer Loyalty………………………………………………63 Figure E3: Scatter Plot of Customer Loyalty……………………………………………….63 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1: INTRODUCTION 1.1 Research background Mobile telecommunication industry has been playing an economically important role in today’s increasingly fast-growing society.
Therefore, not surprisingly, this has inspired many researchers, marketers as well as management scholars to do many researches in this sector. Since the 1990s, mobile telecommunication service has soon become a dynamic sector of economic development in the industrialized nations. That is not only because of the rapid development of technology but also because of the increasing amount of network operators. In addition, the fiercely high competition among mobile telecom service providers is inevitable in this field.
It has been proved in many empirical studies that as market becomes increasingly competitive and difficult, the companies tend to make many efforts to maintain the market share by focusing on satisfying and retaining the existing customers. Because of the high cost of reaching and attracting new customers, it is extremely important for companies to strategically concentrating on customer retention and customer loyalty. Hence, how to satisfy and make customers increasingly loyal is becoming a strategic goal for any business. Vietnamese mobile telecommunication market is no longer a market of monopoly.
Internationally-integrated economy has had an impact on mobile telecom industry in ever- fiercely competitive market. According to the Department of Telecommunications (Ministry of Information and Telecommunications), by the end of May 2013, the number of telephone subscribers on the entire network of Vietnam totaled 132. More particularly, mobile subscribers occupied 122.5 percent) and 10 million was for landline 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. With the population of approximately 88 million people, one person uses an average of about 1.
In its report “Research and Markets: 2013 Vietnam Telecommunications Services Report”, Business Wire (2013) stated that 2011-2012 was a busy and difficult period for the telecommunications sector in Vietnam. The mobile telecommunication industry has left its hot growth stage to dig deeper in the saturated area. There will be no more leapfrogging in revenue streams and the number of subscribers. Obviously, mobile telecommunication services providers need to fully realize the relevance and significance of the oriented-customer business strategy as a condition for sustaining the competitive advantages and achieving profitable targets.
When the number of subscribers reach a level of saturation, acquiring new customers is not only complicated but also costly from marketing point of view. It is widely believed that the fundamental marketing strategy in the future is to maintain the existing customers by capitalizing upon the customer satisfaction, thus leading to customer loyalty. As a result, the strategic focus of how to investigate the factors influencing on customer satisfaction and customer loyalty is a business and research necessity for management in mobile telecommunication industry.2 Research problems Vietnamese mobile network suppliers have been struggling with the increasingly fierce competition at not only domestic level but also international level. In addition, there has been the state of the slower growth rate and saturated market.
Under these circumstances, a defensive strategy is much more significant than an aggressive one, which expands the size of the overall market by persuading the potential customers (Fornell,1992). Therefore, it would be time for management of each Vietnamese mobile network supplier to find out the best ways on how to keep, retain and satisfy customers, thereby making them to be more and more 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com loyal to mobile telecom services the operaters provide, and more importantly, for customer profitability. Needless to say, deriving from managerial statement, it is imperative for mobile telecom services providers to invetigate the main factors which affect customer satisfaction, thus creating customer loyalty in Vietnamese mobile telecom market. Many researchers have especially emphasized the importance of service quality, brand image and price perception in correlation with customer satisfaction and customer loyalty in service industry (Sureshchandar et al., 2002; Parasuraman et al.,1985; Saravana & Rao, 2007; Oliver, 1997; Han and Ryu, 2009; Hermann et al., 2007; Davies et al.
Besides, the relationship between customer satisfaction and customer loyalty has been evaluated comprehensively in many studies (Szymanski and Henard, 2001; Guiltinan, Paul and Madden, 1997; Fornell, 1992; Oliver, 1999; Lee et al., 2001; Jones and Sasser, 1995; Bei and Chiao, 2001). While the impacts of some main factors (such as service quality, brand image, price perception) on customer satisfaction as well as the relationship between customer satisfaction and customer loyalty have been intepreted and analysed in the many studies in developed countries mentioned above, there are very few studies on this in Vietnam, especially in mobile telecommunication industry. Therefore, it is determined that this study focuses only on three factors (service quality, brand image and price perception) to evaluate their impacts on customer satisfaction and customer loyalty in Vietnamese mobile telecommunication industry.3 Research objectives Because of the problem identification discussed previously, there are some research objectives that have to be achieved: 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Evaluate the degree of the impact of service quality on customer satisfaction in Vietnamese mobile telecommunication industry 2.
Evaluate the degree of the impact of brand image on customer satisfaction in Vietnamese mobile telecommunication industry 3. Evaluate the degree of the impact of price perception on customer satisfaction in Vietnamese mobile telecommunication industry. Evaluate the degree of the impact of customer satisfaction on customer loyalty in Vietnamese mobile telecommunication industry. Based on the research objectives mentioned above, this research has to answer some questions: 1.
To what extent does service quality affect customer satisfaction in Vietnamese mobile telecommunication industry? 2. To what extent does brand image affect customer satisfaction in Vietnamese mobile telecommunication industry? 3. To what extent does price perception affect customer satisfaction in Vietnamese mobile telecommunication industry? 4. To what extent does customer satisfaction affect customer loyalty in Vietnamese mobile telecommunication industry? 1.
Research methodology and scopes The qualitative research and quantitative research are conducted in this study. The author uses the software of SPSS 16.0 to analyze the data. Particularly, three data analysis methods used: Cronbach’s Alpha for testing the scale reliability, Exploratory Factor Analysis for testing the scale validity and Multiple Regression to test the relationships between independent variables and dependent variable. 10 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Only three factors (service quality, brand image, price perception) that affect customer satisfaction and customer loyalty are focused and analyzed, other factors are beyond this study.
This research is conducted only in Ho Chi Minh city and participants in survey are those who are using the mobile telecommunication services. The study examines the customers’ point of view, not the mobile telecom service suppliers’ perspectives. This study only focuses on the mobile telecommunication industry, other industries are out of research scope.5 Structure of research Structure of this study consists five chapters: Chapter 1: Introduction This chapter presents research background, research problems, research objectives, research methodology and research scopes. Chapter 2: Literature review This chapter starts with the overview of Vietnamese mobile telecommunication industry.