MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY YZ NGUYEN VAN CUONG THE IMPACT OF STORE IMAGES ON CONSUMER LOYALTY MASTER OF BUSINESS ADMINISTRATION THESIS Ho Chi Minh City, July 2011 TIEU LUAN MOI download : skknchat@gmail.com MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY YZ NGUYEN VAN CUONG THE IMPACT OF STORE IMAGES ON CONSUMER LOYALTY Major: Business Administration Major code: 60.05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: DR. NGUYEN DINH THO Ho Chi Minh City, July 2011 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS Firstly, I would like to express my sincere gratitude to my supervisor, Dr. Nguyen Dinh Tho for the patient, dedicated guidance and valuable suggestions for this thesis over the past few months. Also, I am particularly grateful for Mr.
Tran Khoa Van – GfK Managing Director and GfK management board who inspire the study and contribute valuable figures about retailer evolution in Vietnam. Next, I would like thanks to my colleagues Mr. Huynh Phuoc Cuong – Senior Manager of Retail Management and Mrs. Nguyen Ngoc Lan Huong – Senior Research Manager in helping me to conduct and analyze the qualitative study.
I also would to express my gratitude to management boards of the three consumer electronics retailers: Nguyen Kim, Thien Hoa and Cho Lon for the keen support in letting me collect shopper information during the qualitative research. My heartiest thanks are also sent to Mrs. Pham Thi Thanh Nhan, senior assistant of Charles Sturt University Australia (CSU) for her non-stop support on books and online journal article. Finally, I would like to send my deep appreciation to more than 500 postgraduate students of University of Economics Ho Chi Minh City, who contributed valuable ideas and assessment for the whole pilot and main survey.
Ho Chi Minh City, Vietnam July, 2011 Nguyen Van Cuong i TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT The area of consumer loyalty has received considerable attention during the past few years, both in academic and practice area. Many retail research has been conducted to answer for the questions such as: what is the most accurate definitions of consumer loyalty; are there any models/ generalizations when investigating consumer loyalty; what the management implications would be for those researches. There are many antecedent factors affecting consumer loyalty, store image dimensions were discovered to be among the most important loyalty drivers. In order to indentify the key determinant image elements and understand their derived importance, this study was implemented.
The research successfully explored the significant relationship between Store Service (Employee Service and After-sales Service), Store Facilities (Physical Facilities and Store Atmosphere), Product & Marketing Communication (Merchandising and Advertising & Promotions), Perceived Price and Store Convenience with Consumer Loyalty. Also, these independent factors were also discovered that they do not equally affect on consumer loyalty. One qualitative study with in-depth interview and one pilot study were performed before the main survey was conducted in Ho Chi Minh City to assess modern trade consumer electronics retailers. The study revealed that five key factors (Store Service, Store Facilities, Product & Marketing Communication, Perceived Price and Store Convenience) positively affect consumer loyalty.
Besides, the study suggested that Store Facilities and Product & Marketing Programs were the two most important factors to be invested in modern retailing industry. ii TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS CHAPTER 1.6 Research methodology and design .7 The significance of research. LITERATURE REVIEW and THEORETICAL MODEL .1 Consumer loyalty definitions .2 Store image definitions .5 Advertising and promotions .6 After-sales service .3 Store image studies .4 The relationship between store images and consumer loyalty .5 Theoretical model and hypotheses. 19 iii TIEU LUAN MOI download : skknchat@gmail.3 Sample size and target respondent .4 In-depth interview content .1 Measure of consumer loyalty .2 Measure of store convenience .3 Measure of physical facilities .4 Measure of perceived price .5 Measure of employee service .6 Measure of advertising and promotions .7 Measure of after-sales service .8 Measure of store atmosphere .9 Measure of merchandising .4 Quantitative Pilot study .3 Target respondent and sample size .4 Pilot study content .5 Pilot study result .5 Model and hypotheses modification.
36 iv TIEU LUAN MOI download : skknchat@gmail.2 Target respondent and sample size .4 Data analysis method. DATA ANALYSIS AND RESULT .2 Cronbach’ alpha reliability analysis .3 Exploratory factor analysis .4 Multiple linear regression .5 Hypotheses assessment and discussion. CONCLUSIONS AND IMPLICATIONS .2 Product and marketing communications .3 Limitations and future research. 60 APPENDIX 1: Overview of Vietnam Retailing Market.
63 APPENDIX 2: Data analysis. 64 v TIEU LUAN MOI download : skknchat@gmail.com APPENDIX 3: Questionnaire. 69 LIST OF TABLES Table 3-1: Qualitative result – important factor to retain loyal customers. 24 Table 3-2: Qualitative result – important factor to retain loyal customers.
25 Table 3-3: Cronbach alpha result for pilot study. 31 Table 3-4: Rotated component matrix for pilot study. 33 Table 4-1: Descriptive analysis. 42 Table 4-2: Average number in one household and average household monthly income.
44 Table 4-3: Cronbach alpha result for main survey. 44 Table 4-4: EFA rotated component matrix for main survey. 47 Table 4-5: Total variance explained. 48 Table 4-6: KMO and Bartlett’s Test.
49 Table 4-7: Regression model summary. 49 Table 4-8: ANOVA F test. 50 Table 4-9: Multiple linear regression result for main survey. 50 Table 1-1: Vietnam retail outlet evolution of home technology product.
63 Table 1-2: Organized/ chain store vs. independent channel evolution. 63 Table 1-3: Ranking of Retail Market Attractiveness. 63 Table 4-10: Descriptive statistic.
64 Table 4-11: Correlation between Consumer loyalty, Store Service, Store Facilities, Product & Marketing Communication, Store Convenience and Perceived Price. 66 vi TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 2-1: Theoretical model. 17 Figure 3-1: Research Process. 22 Figure 3-2: Modified theoretical model.
36 Figure 4-1: Result of multiple linear regression. 51 Figure 4-2: EFA Scree Plot. 64 Figure 4-3: Histogram of Consumer Loyalty. 67 Figure 4-4: Normal P-P Plot of Consumer Loyalty.
67 Figure 4-5: Scatter plot of Consumer Loyalty. 68 vii TIEU LUAN MOI download : skknchat@gmail.1 Research background In recent years, the rapid growth of retailers in both quantity and channels (supermarket, hypermarket, exclusive single brand stores) has resulted in a corresponding increase in the competition between retailers. The understanding of what motivates consumers to purchase from one stores rather than another becomes increasingly important to retail stores design and management (Black et al. In Asia, retailing has been still one of the most attractive industries over the past few years.
Vietnam, an emerging country with a dynamic economy and a potential entry market with more than 85 million people, will be a prosperous land to invest. According to the Global Retail Development Index 2010 of American consulting company AT Kearney, Vietnam was ranked as the 14th in 30 countries having the most attractive retailing industry worldwide. The retailing industry is still considered as an attractive industry because Vietnam has a young population and promises a robust growth of the industry. Furthermore, after joining WTO, Vietnamese government continued encouraging and supporting local retailers to participate and expand in the regional retailing industry to keep pace with neighbor countries like Thailand, Singapore or Malaysia.
The growing of retail industry in Vietnam is recorded to be in both channel and outlet development. Firstly, regarding number of outlet, according GfK Vietnam (see appendix 1, table 1.1), the total number of retailers selling technology products is expected to increase significantly in 2011 (44%) compared to 2010. Of which, telecom group (mobile phone retailer) has the largest number of retail store (19,347 outlets). Secondly, modern trade channels continued to emerge despite the dominance of traditional channels.
Consumers have been interested in shopping at supermarkets, hypermarkets and convenience stores because of their pleasant environment as well as their diversified product ranges. In addition, modern trade channels try their best to offer consumers a more competitive price to compete with traditional channels. Consumers also preferred to come to modern consumer electronics stores because they could freely look, touch and try products that they wanted. GfK retail audit recorded a positive growth in revenue 1 TIEU LUAN MOI download : skknchat@gmail.com of organized chain store (modern trade retailers) compared to traditional independent store during the past three years 2009-2011 (See appendix 1, table 1.
As can be seen, the value share of modern trade channel in consumer electronics and home group retailer increased from 27% in 2009 to 35% in 2010 and is predicted to be 40% in 2011. Consumers seemed to be more willing to make purchases compared to the previous years. However, the booming of retail outlet and the developing of modern trade channel make consumers to be more selective in choosing retail stores. Consequently, many retailers have tried to find different marketing communication tools to attract new customers as well as retain loyal ones.
Advertising, sales promotions and other marketing activities have been considered to stimulate demand as well as to boost sales. Despite many approaches applied by different types of retailers, it’s necessary to have a consistent model for retailers to drive their sales, create consumer loyalty and increase benefit. The model have to focus on building a proper marketing communication mix, sustaining and developing store physical facilities as well as improving store services.2 Problem statement The rapid growth of modern trade consumer electronics retailer in an emerging country like Vietnam also has some issues to be address. In the first place, there are only a few of retailers which are real modern trade according to the definition of worldwide retail industry.
The others can considered themselves as technical super stores, super market, hyper markets of consumer electronics product because they have some competitive advantages No matter how big the retailers, each of them find their own strategy to drive their business and create a unique loyalty image in consumer’s mind. While big retailer names such as Metro, Big C, Nguyen Kim, Thien Hoa, Tran Anh or Pico always empower their brands by enhancing their stores facilities and improving customer service as a mass merchandiser. The other smaller ones, based on their advantages about locations, government relationship or manufacturer relationship, increase their sales and retain their loyal customers by offering different attractive price and in-store promotions which were run monthly or even weekly. 2 TIEU LUAN MOI download : skknchat@gmail.com There have been a number of failures in retailing industry during the past five years beside the successful names like The Gioi Di Dong, Nguyen Kim or Tran Anh.
Most of the failures claimed that they were really misled to retain loyal consumers. Some invest a lot on location and facilities, some spend money running price and sales promotions while the other put many efforts to build a good customer service team. However, they have some common questions: Why their loyal customers easily switch to competitor stores? How can they identify competitor strength or weakness periodically? Among facilities, services, product & promotions, and price, which one is the key to invest? 1.3 Research questions In order to resolve the above problems, this research was conducted to answer the following questions • What are the key image dimensions of a store that determine loyalty of customers to one particular retailer? By addressing this questions, managers who are working in retail industry can identify their strength and weakness to drive their investment in a right direction • How important each store image dimension placing on general consumer loyalty? Resolving this question will assist retailers to prioritize their investment for a marketing communication program. Moreover, new retailers or retailers with limited budget can find it useful to firstly spend money for some important factors in a short- term development.