MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY --------- Nguyễn Mỹ Phước FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES IN VIETNAM MASTER THESIS Ho Chi Minh City, 2011 TIEU LUAN MOI download : skknchat@gmail.com MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY --------- Nguyễn Mỹ Phước FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES IN VIETNAM Major: Business Administration Code: 60.05 MASTER THESIS Supervisor: Nguyễn Thị Mai Trang Ho Chi Minh City, 2011 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT First of all, I would like to express my deep appreciation to my supervisor Dr. Nguyen Thi Mai Trang, a respectable, responsible and resourceful scholar, who had read and re-read my work repeatedly, thanks her for all the patience, valuable guidance, and perspectives throughout the research. Without her exceptional support, I could not have completed my thesis. I wish to express my appreciation Dr.
Tran Ha Minh Quan, my head teacher, for his encourages. Thanks and love in abundance to my parents, who provided much support in everything. I would like also thank all my best friends who had assisted and supported me, especially in valuable research database, data collection process. TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT With the intense competition and increasing globalization in the financial markets, bank management must develop customer-oriented strategies in order to compete successfully in the competitive retail-banking environment.
The longer a bank can retain a customer, the greater revenue and cost savings from that customer. However, customers are also more prone to changing their banking behaviour when they can purchase nearly identical financial products provided by the retail banks. In order to stay competitive, bank managers need to understand the factors that influence and determine bank consumers’ re-purchase intention. Purpose: This study identifies and analyses the factors that influence bank customers’ re-purchase intention in the Vietnamese retail banking industry.
Methodology: Sampling technique is used to select the respondents from some banks in Ho Chi Minh City. Multiple regression analysis was used to identify relationship between independent variables (convenience, service quality, competitiveness of price, reputation and tangibles) and the dependent variable (bank customers’ re- purchase intention). Findings: The findings reveal that Convenience, Service quality, Competitiveness of price, and Reputation have an impact on bank customers’ re-purchase intention. Practical implications: In general, the results of this research allow service marketers to develop and implement services marketing strategies to increase bank customers’ re-purchase intention rates, and in turn, increase bank profits.
Keywords: Convenience, Service quality, Competitiveness of price, Reputation and Tangibles, Bank customers’ re-purchase intention, Retail banking services, Vietnam. TIEU LUAN MOI download : skknchat@gmail.com GLOSSARY Automated teller machine (ATM). A special device that allows customer to make debit transactions for electronic payment and delivers cash. Banking services that allow a customer to interact with a financial institution from a remote location by using a telephone (Telephone banking or Tele- banking).
Systems that enable bank customers to access accounts and general information on bank products and services through a personal computer (PC) or other intelligent devices. TIEU LUAN MOI download : skknchat@gmail.com Table of Contents List of Figures. i List of Tables. ii CHAPTER 1: INTRODUCTION.4 Scope and Research methodology .5 The structure of the research.
4 CHAPTER 2: LITERATURE REVIEW.1 Bank customers’ re-purchase intention .4 Competitiveness of price. 12 CHAPTER 3: RESEARCH METHODOLOGY .1 Design and sample.1 Qualitative survey procedure .2 Results of the focus group .4 Data processing and analysis method. 20 CHAPTER 4: RESULTS AND DISCUSSION .1 Description of sample. Assessment of scale.
22 TIEU LUAN MOI download : skknchat@gmail.2 Exploratory Factor Analysis (EFA) .3 Research hypothesis testing. 29 CHAPTER 5: CONCLUSIONS AND RECOMMENDATION .3 Limitations and further research recommendation. 38 Appendix 1: Survey Questionnaire (in Vietnamese). 38 Appendix 2: Survey Questionnaire (in English).
40 Appendix 3: Reliability of Convenience. 42 Appendix 4: Reliability of Service Quality. 43 Appendix 5: Reliability of Competitiveness of Price. 44 Appendix 6: Reliability of Reputation.
45 Appendix 7: Reliability of Tangibles (before deleting TAN3 item). 46 Appendix 8: Reliability of Tangibles (after deleting TAN3 item). 47 Appendix 9: Reliability of Consumers’ Re-purchase Intention. 48 Appendix 10: Pearson correlation coefficient.
49 TIEU LUAN MOI download : skknchat@gmail.com List of Figures Figure 1.1: Vietnam’s banking market is in an early stage of development .13 i TIEU LUAN MOI download : skknchat@gmail.com List of Tables Table 3.1: Guidelines for focus group interview .2: Findings from the focus group interview .3: Description of factors .1: Sample description statistic.2: Reliability statistic and items – total statistic of components .3: Rotated Component Matrix.5: Coefficients of independent variables .6: Summary of hypotheses testing results .288 ii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1.1 Research background In recent years, the growth of Vietnam financial services sector has been gone up significantly. On lending side, “the four large state-owned commercial banks — Vietnam Bank for Agriculture and Rural Development (Agribank), Bank for Investment and Development of Vietnam (BIDV), Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Bank for Industry and Trade (Vietinbank) — continue to dominate Vietnam’s banking system, accounting for 51% of system- wide loans at end-September 2009 (2008: 52%; 2007: 54%). They very actively distributed two-thirds of all loans at subsidised interest rates and thereby defended their market shares. The two largest privately owned banks — Asia Commercial Bank (ACB) and Sacombank — recorded exceptionally brisk loans growth in first nine months 2009 (un-annualised): 78% and 62%, respectively.” (Fitch Ratings, 2010) Under World Trade Organization rules, Vietnam has to open the economy, including financial services, to global competition.
International banks have looked forward to enter into Vietnam’s young and potential market. Consequently, not only competition has become higher in this sector, but also consumer has more options for their financial services needs. However, “Vietnam is largely undeveloped territory for banking services. Out of a total population of 84 million people, just 5 million have a personal bank account, and only 2% have ever taken out a bank loan.
Even in the biggest cities, consumers’ use of bank services is still rare. Only about half of Hanoi’s residents and than a third of those living in Ho Chi Minh City have bank accounts. City dwellers are eager to embrace modern financial products. The number of credit card holders has jumped 300% since 2004, to some 2 million, and demand for loans to finance the TIEU LUAN MOI download :1 skknchat@gmail.com purchase of motorbikes, cars and apartments is heating up” (Edmund, Sunny, and Shinji, 2007).1: Vietnam’s banking market is in an early stage of development Adoption Growth Saturation Japan Singapore Taiwan Australia Philippines Indonesia Malaysia Vietnam Thailand Korea China India Source: Swiss Re Sigma Report 2006; Population Research Bureau; Lit.
Searches; Bain Analysis Note: Bank assets data for Taiwan, Indonesia and Philippines are for 2003; X-axis is not to scale Furthermore, loan outstanding in Vietnam is mainly from corporate borrowers. Personal loans are still a small number. Moreover, only a small percent of population has bank account. As a result, the potential for personal consumers is very big.
With the lowering of entry barriers and blurring product lines of banks and non- banks since the financial sector reforms, banks are functioning increasingly under competitive pressures emanating from within the banking system, from non- banking institutions and from the domestic and international capital markets. In this era of mature and intense competitive pressures, it is imperative those banks maintain a loyal customer base. In order to achieve this and improve their market and profit positions, many retail banks are directing their strategies towards increasing customer satisfaction and loyalty through improved service quality, competitiveness of price, etc. In the present competitive Vietnamese banking TIEU LUAN MOI download :2 skknchat@gmail.com context, characterized by rapid change and increasingly sophisticated customers, it has become very important that banks in Vietnam determine factors, which are pertinent to the customers’ selection process.
This is because if services dimensions can be identified, bank managers should be able to improve the delivery of customer perception of quality during the service process and have greater control over the overall outcome.2 Problem statement The world has been recovering after the global financial crisis happened in 2007. Like other countries, Vietnam economy has been affected at a certain level under this crisis. Around the world, many firms and banks have lost ability to pay their debts and gone bankrupt. The crisis also has it effects on consumer not only their jobs, finance, etc but also decrease of their confidence level in the economy.
Consumer behaviour in all industries generally and particularly financial sectors has been changed significantly after the crisis. In the academic world, there is many research conducted to study various issues in service marketing, including consumer behaviour towards services. Numerous studies have shown that banks’ profitability is closely associated with customer repurchase intention (Garland, 2002; Anderson et al. The longer a bank can retain a customer, the greater revenue and cost savings from that customer.
Maintaining an existing customer is five times cheaper than obtaining a new one as the advertising, sales, and set-up costs can be amortised over a longer customer lifetime. Duncan & Elliot (2002) note that customer loyalty is an important factor that contributes to an organization’s earnings and profits. Loyal customers normally establish a stable relationship with an organization compared to non-loyal customers (Zeithaml et al. Customer loyalty can contribute to an increase in a firm’s revenue; reduce customer defection rates.
Thus, at the end of the day, the TIEU LUAN MOI download :3 skknchat@gmail.com bank’s assets are not only primarily registered on the balance sheet, but also related to the fact that customers have been successfully retained.3 Research objective The objective of the research is to examine key factors such as Convenience, Service Quality, Competitiveness of Price, Reputation, Tangibles and their influences on Customers' Repurchase Intention in banking services.4 Scope and Research methodology The survey was carried out in Ho Chi Minh City, which is not only the most developed city in Vietnam but also the most crowded one of Vietnam. Qualified respondents for this study are individuals who used or have used services in commercial banks. After determining a set of variables from literature review, focus group helps to create a relevant list of major factors affecting bank customers’ re-purchase intention. Through the pilot test, the questionnaire was modified to make clearer and understandable for respondents.
The questionnaires were distributed directly to 200 qualified respondents. The SPSS 16 for Window was used for data processing and analysis. Cronbach alpha was used to measure internal reliability. Factor analysis was designed to simplify the correlation matrix and reveal a small number of factors which can explain the correlation; therefore, it was used in this study to test items for convergent validity and uni-dimensionality.
Multiple linear regression (MLR) was used to test the research hypotheses.5 The structure of the research The thesis is organized in five chapters. Chapter one presents the introduction of the thesis including research background, problem statement and research question, research objectives. Research methodology, scope and the structure are also TIEU LUAN MOI download :4 skknchat@gmail. Then, chapter two reviews the literature relating to factors affecting on bank customers’ re-purchase intention which are examined in this study.
Based on the literature review, a list of hypotheses is proposed. Chapter three describes the data and methodology of the research. Chapter four presents results and discussion. Finally, the last chapter presents the major findings of the research, managerial implication and as well as recommendations.
TIEU LUAN MOI download :5 skknchat@gmail.com CHAPTER 2: LITERATURE REVIEW This chapter begins with an overview of key factors effecting customers’ re- purchase intention and hypotheses. Then it continues with a specific research model. In financial services, the issue of the key factors effecting consumers’ bank selection has been researched a lot by many researchers in many countries.