UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ VAN THI YEN NHI ANTECEDENTS AND OUTCOME OF CUSTOMER SATISFACTION: A STUDY OF VIETNAMESE CUSTOMERS IN THE MOBILE TELECOM INDUSTRY MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2012 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ VAN THI YEN NHI ANTECEDENTS AND OUTCOME OF CUSTOMER SATISFACTION: A STUDY OF VIETNAMESE CUSTOMERS IN THE MOBILE TELECOM INDUSTRY ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. NGUYEN THI MAI TRANG Ho Chi Minh City – Year 2012 1 ABSTRACT Customer retention is a concept gaining more and more attention in today’s business when loyal customers are considered as essential components to organizational success. Therefore, corporations, strive to identify and manage effective methods to retain their customers more and more. Customer retention will lead the company of having more loyal customers and as a result more profit and market share.
The effect of switching barrier, customer satisfaction, environmental dynamism, etc on customer retention has been shown in numerous studies. However, the effect of components, factors of switching barrier on customer satisfaction and customer retention that have been subject to much less attention from researchers. Especially, not enough studies have been conducted on subject of the mobile telecommunication services industry in Vietnam. The present research studied switching cost, investment in the relationship, attractiveness alternative and interpersonal relationship of switching barriers and theirs relationships with customer satisfaction and retention in the Vietnam mobile telecommunication market.
Besides, to identify variables that influence customer satisfaction and retention based on literature and will to carry out an empirical analysis, according to the collected questionnaires, to evaluate and apply the proposed model in the Vietnam mobile market. Keywords: Switching barriers, switching cost, investment relationship, attractiveness alternative, interpersonal relationship, customer satisfaction, customer retention. 2 ACKNOWLEDGEMENT It is a pleasure to thank the many people who made this thesis possible. This thesis is a result of months of work in which I have been accompanied and supported by many people.
It is fantastic that I now have the opportunity to express my gratitude and sincere thanks to them all. The first person I would like to thank is my direct supervisor, Dr. Nguyen Thi Mai Trang. Her enthusiastic and integral view on research has made a deep impression on me.
I owe her a lot of gratitude for having shown me this way of research and her great efforts to explain things clearly and simply. I would also like to thank the faculty of ISB International Institute – University of Economic Ho Chi Minh City. And especially, I am deeply grateful Professor Nguyen Dinh Tho PHD., who have shown me this way of research and been great efforts to explain things clearly and simply, through the Research Design for Master Thesis subject and Data analysis by SPSS. I feel deep sense of gratitude for the leaderships of VNPT Dong Nai Company and especially Director Nguyen Minh Tam who have supported and got opportunities on my work and thesis.
I wish to thank my entire extended family and especially to my husband for their providing a loving environment, support and encouragement throughout my entire life. I dedicate this thesis to them. Van Thi Yen Nhi Dong Nai, November 2012 3 TABLE OF CONTENTS ABSTRACT. 2 TABLE OF CONTENTS.
3 LIST OF TABLE. 6 LIST OF FIGURES .2 PROBLEM DIFINITION AND RESEARCH QUESTIONS.5 OUTLINE OF THE STUDY .1 MOBILE TELECOMMUNICATION IN THE WORLD .2 MOBILE TELECOMMUNICATION IN VIETNAM .7 INVESTMENT IN RELATIONSHIP .10 RESEARCH MODEL AND HYPOTHESES .1 Target Population and Sampling method .6 MAIN SURVEY AND DATA COLLECTION .7 DATA ANALYSIS METHODS.1 Exploratory Factor Analysis (EFA) .3 Multiple Regression Analysis. 49 4 DATA ANALYSIS AND FINDING .2 ASSESSMENT AND REFINEMENT OF MEASUREMENT SCALES .1 Cronbach Alpha Reliability Analysis.2 Exploratory Factor Analysis (EFA) .3 The revised conceptual model .1 Testing Assumptions of Multiple Regression .2 Testing Hypotheses the impact Switching Barrier on Customer Satisfaction .3 Testing Hypotheses the impact Customer Satisfaction on Customer Retention .4 Summary of the Hypotheses Testing Results.4 ANOVA ANALYSIS- MLR WITH DEMOGRAPHIC INDEPENDENT VARIABLES .5 DISCUSSIONS OF THE FINDINGS .1 The Unexpected insignificance of the Negative Switching Barriers’ role .2 The impact of the Positive Switching Barrier on Customer Satisfaction. 68 5 CONCLUSIONS AND IMPLICATIONS .3 IMPLICATIONS FOR FURTHER RESEARCH.
72 APPENDIX 1: A CONSOLIDATED DRAFT QUESTIONNAIRE. 82 APPENDIX 3: TESTING THE ASSUMPTIONS OF MULTIPLE REGRESSION. 85 6 LIST OF TABLES Table 3.2: Reliability Test Results.5: Coefficients – Switching Barrier and Customer Satisfaction.8: Coefficients- Customer Satisfaction and Customer Retention .9: Summary of Hypotheses Testing Results. 63 7 LIST OF FIGURES Figure 2.1: The Research model .1: Revised conceptual Research Model .4: The Correlations of the Research Model.
64 8 CHAPTER 1: INTRODUCTION In the introductory chapter a background regarding the concept of customer satisfaction and retention as well as the reasons why these concepts are highlighted today and their importance in mobile telecommunication market is presented. Furthermore, the problems that telecommunication companies face within this area will be discussed. And finally, the importance of the design, implementation and evaluation of customer satisfaction and retention programs will be explained followed by the research purpose and research questions, and also an overview of the whole thesis.1 Background The increasing economic importance of telecommunications companies inspired many researchers, marketers and management scholars to devoted more teaching and research attention to this sector. Since the 1990s, the telecommunications industry and services have become a dynamic key area for the economic development of industrialized nations.
This is the result of enormous technical progress as well as of the increased number of network operators and the intense competition that has developed. It has been figured out by previous researches that as markets become more competitive, companies are more likely to attempt to maintain their market share by focusing on satisfaction and retaining current customers. It’s also obvious that when the competition and the cost of attracting new customer increase; companies increasingly concentrate their strategic efforts on customer retention, therefore maintaining customer long-term relationships becomes as an important mission for business. Moreover, technology of mobile telecom evolving to meet high demand from customer, the paradigm of mobile telecommunication services is now shifting from 9 voice-centered communication to a combination of high-speed data communication and multimedia.
Furthermore, factors such as the growth of the wireless internet contribute to emphasize the appearance of a transition period in the mobile telecommunication service market. Mohan et al. (2012) suggest that the world has 6 billion mobile subscribers by ICTnews - The number of mobile subscribers in the world was almost equal to the number of people living on Earth. And it is necessary to develop the argument (n.) the United Nations telecom agency says there were about 6 billion subscriptions by the end of 2011 - roughly one for 86 of every 100 people.
So, the change of paradigm and the symptoms of a market in transition are driving the industry’s restructuring efforts and intensifying competition between companies. Mobile suppliers 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. Thus, 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.
Especially, the switching barrier in this market effects to customer satisfaction and retention, because, the customer intends to switch or exit mobile service suppliers, they are very interested in the conditions of the barriers to the most benefit for themselves. The telecommunications market in Vietnam is no longer a monopoly market. International economic integration has created an impact on the telecommunication market fierce competition, so to sustainable development and market share growth, the telecommunication companies have been orient around the customer. In Vietnam, according to statistics of the Ministry of Communications and Information, in Jun 2012, total subscribers estimated 120.7 million mobile subscribers, average people using 1.
Therefore, the attraction and development of new mobile 10 customers is very difficult, besides, the mobile telecommunication services suppliers constantly compete to increase market share subscribers in Vietnam. And customers using mobile services with the characteristic of "infidelity," they are ready to leave the supplier to a new supplier if its benefits. So customer retention that is the goal of urgent in the mobile phone suppliers in Vietnam, will lead the company of having more loyal customers and as a result more profit and market share. Several studies show that customer satisfaction is related to retain customer or repurchase intentions (Cronin & Taylor, 1992; Fornell, 1992; Anderson & Sullivan, 1990; Boulding, Kalra, Staeling & Zeithaml, 1993; Taylor & Baker 1994; de Ruyter, Wetzels & Bloemer, 1996; Zeithamel, Berry, & Parasuraman, 1996).
However, customer satisfaction never explains all of the variations in retention, since customers seldom are completely free to choose suppliers. In fact, different types of constraints, together with customer satisfaction, determine customer choice of suppliers (Bendapudi & Berry, 1997). And only a few empirical studies investigate how various types of switching barriers affect satisfaction with suppliers, retention and the relationships between these variables (Jones, Mothersbaugh, & Beatty, 2000). Thus, in term of the Mobile telecom service in Vietnam, the research for potential antecedents that have high power to explain customer satisfaction and retention forward switching barriers: switching cost, investment in the relationship, attractiveness of others alternatives and interpersonal relationship.2 Problem definition and Research Questions As mentioned earlier, today the telecom industry like many other ones faces the combined difficulties of increasing national and international competition, slower growth rates and mature markets.
As the result, fewer new customers are being pursued by an increasing number of service suppliers. Under these circumstances, a large share 11 of company’s resources must be devoted to the present customer base in order to make them satisfied and retain them. One significant of customer retention is its close relationship to the company’s continued survival and to strong future growth. Hence, for a company to maintain a stable profit level when the subscription level has reached the saturation point, the market is mature, competition is fierce, a defensive strategy which strives to retain leaving customers is more important than an aggressive one, which expands the size of the overall market by inducing potential customers (Fornell, 1992; Ahmad & Buttle, 2002).
High switching barriers mean that customers have to stay with suppliers, irrespective of the satisfaction created in the relationship. Such constrained freedom of choice could, according to reactance theory, create lower satisfaction, retention than a more unconstrained situation (Ringold, 1988), and customer satisfaction and loyalty needs to incorporate switching barriers (Bendapudi & Berry, 1997). And now, the telecommunication monopoly almost all around the world is being become to be an open and competitive market. So Telecommunications market in Vietnam has not been except that is no longer a monopoly market.
International economic integration has created an impact on the telecommunications market fierce competition, so to sustainable development and market share growth, the telecommunication companies have been orient around the customer. Companies increasingly concentrate their strategic efforts on customer retention, Therefore, the attraction and development of new customers is very difficult, besides, the service suppliers constantly compete to increase market share subscribers in Vietnam. And customers using mobile services with the characteristic of “infidelity,” they are ready to leave the network to a new network if its benefits. So customer retention that is the goal of urgent in the mobile phone suppliers in Vietnam, will lead the company of having more loyal customers and as a result more profit and market share.
12 However, not enough studies have been conducted on the subject of the mobile telecommunication services industry inside Vietnamese.