UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS ----------------------- PHAN THI KIM SUONG FACTORS AFFECTING CUSTOMER SATISFACTION AND BEHAVIORAL INTENTION IN THE FAST FOOD INDUSTRY IN VIETNAM MASTER OF BUSINESS Ho Chi Minh City – Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS ----------------------- PHAN THI KIM SUONG FACTORS AFFECTING CUSTOMER SATISFACTION AND BEHAVIORAL INTENTION IN THE FAST FOOD INDUSTRY IN VIETNAM ID: 22120070 SUPERVISORS: PROF. NGUYEN DONG PHONG DR. NGUYEN PHONG NGUYEN Ho Chi Minh City – Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Contents Chapter 1: Introduction.5: The structure of the proposal. 6 Chapter 2: Literature review and hypothesis .6: Behavioral purchase intention .8: The proposal model.
17 Chapter 3: Research Methodology .4: Data analysis method. 23 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 4: Data analysis and result .2: The reliability test – Cronbach’s alpha .3: Exploratory factor analysis .4: Confirmatory factor analysis .5: The structural equation modelling. 43 Chapter 5: Conclusion, implication and limitation. 53 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT Fast food industry market is a one of potential market in Vietnam with many famous brand join and expand such as KFC, Lotteria, Jolibee, Mc Donalt, Pizza Hut … More and more players mean more and more competitor.
How to attract more and more customer is the focus of all players. The study will find out four key factors effect to customer satisfaction is service quality, food quality, hedonic value, and utilitarian value. The research tests the factors the relationship between customer satisfaction and behavioral purchase intention. CHAPTER 1 INTRODUCTION This chapter provides the general pictures of this study.
This study has two objectives: first, to identify factors affecting customer satisfaction in the fast food industry in Vietnam, secondly, to test the effect of these factors on customer satisfaction and purchasing intention behavior. The research background section presents the overall situation of the fast food industry in Vietnam. Then the research problem is identified and research objective is determined, which in turns provide a ground for developing the research methodology and setting scope of this study 1.1 RESEARCH BACKGROUND The fast food restaurant caters to people who want to buy food that is fresh and served quickly. In American, most fast food restaurant have drive-thru service that allows people to get their food without getting out of their cars.
The fast food industry started its first step to 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com growth when McDonalds became popular in the late 1940s and early 1950s (What is the Fast food industry, n. Fast food restaurants design menus focus on being able to cook the food quickly and easily. They strive for absolute consistency so customers can be assured that everything they buy will always taste the same regardless which location they visit. McDonald's has outlets in 126 countries on six continents and operates over 31,000 restaurants worldwide.
On January 31, 1990, McDonald's opened a restaurant in Moscow and broke opening-day records for customers served. The Moscow restaurant is the busiest in the world. The largest McDonald's in the world, with 25,000 feet of play tubes, an arcade and play center, is located in Orlando, Florida, USA. There are numerous other fast food restaurants located all over the world.
Burger King has more than 11,100 restaurants in more than 65 countries. KFC is located in 25 countries. Subway is one of the fastest growing franchises in the world with approximately 39,129 restaurants in 90 countries as of May 2009, the first non-US location opening in December 1984 in Bahrain. Wienerwald has spread from Germany into Asia and Africa.
Pizza Hut is located in 97 countries, with 100 locations in China. Taco Bell has 278 restaurants located in 14 countries besides the United States. In Thailand, chain restaurants are considered to cater for customer who is willing to pay more for better service. In fact, chain restaurants in Thailand often offer a nicer décor, a cleaner environment or even a better service compared with those in the United States (Polyorate & Sophonsiri, 2010).
Since the chain restaurant commonly uses service quality to distinguish itself from the competitors, providing a high level of service quality has become an ultimate goal for many chain restaurants. (Polyorat & Sophonsiri, 2010) The fast food industry is a large and diverse industry with plenty of opportunities. Fast food franchises are responding with new offerings, pricing and strategies to lure consumers back in. Consumers want new ways to have a fast and healthy food, so the fast food industry 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com continues to evolve when the economy strengthens, and the fast food franchise profitability is expected to be promising.
Tenth biggest fast food in the world is Subway, Mc Donalds, Starbuck, KFC, Burger King, Pizza Hut, Dunkin’s Donut, Domino Pizza, Dairy Queen, Papa John’s. Most of them join Vietnam market. Foods in fast food restaurants are standardized and customer gets familiar meals in every location of one chain. For example, customers can enjoy the same taste of pizza in Pizza Hut restaurants in Ho Chi Minh City or Pizza Hut branches in Hanoi.
Fast food restaurant usually (as KFC, Lotteria .) uses the same format for all restaurants in all regions. With over 65% of 90 million people in Vietnam is less than 35 years old, the fast food industry in Vietnam has an annual grow rate of 26% during the economic downturn while other industries experienced a decline in terms of sales. According to data provided by Business Monitor International in 2011, Vietnam was ranked 8th in the Asia Pacific region in terms of food and beverage business environment (Vietnam fast food market see bright future, 2013) Vietnam fast food market is rising with many giant names such as Lotteria with 162 restaurants, KFC with 130 restaurants and Jollibee with 30 restaurants. Some more chain which has joined the Vietnam fast food market in the recent years includes Pizza Hut, Burger King, Popeyes and McDonald’s.
It could be seen that young people in Vietnam will help to develop the fast food industry. According to foreign players, Vietnam is an emerging market for fast- food development compared with other markets in Asia (Hoang Phi, 2013). Fast food industry in Vietnam get a big boom in 2014 when KFC gains 180 stores in after 17 years join the market while Lotteria has 187 stores in Vietnam after 16 years. Pizza Hut opens the 50th restaurant in Vietnam in 2014.
IPP group is owner of Burger King, Domino and Popeyes with total 41 stores in nationwide. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com This can be concluded that while Vietnam is potential market for fast food industry, this is the time for player to understand clearly the key factors effect to customers and how to build customer loyalty to be success in Vietnam market to choose the best way to make customer satisfaction.2 RESEARCH PROBLEM With the high rate of young adult in Vietnam, 65% as mention above, the fast food industry has experienced a fast growing stage. Beside the chance, there are threats of new entrants to the industry which increase the level of industry competition and thus each industry players have to find ways to enhance their competitive advance to stay away from the fierce competition. To survive, fast food restaurant needs to follow their market-oriented strategy that focuses on enhancing customer satisfaction and purchasing intention.
Fast food restaurants have to learn and change their menus to enhance customer satisfaction. These stores of Jollibee, numerous corners in Ho Chi Minh City are increasingly frequented by young people, especially children who will insist on having easy-going meals treated by their fond parents. To better cater to these customers, many stores have managed to localize ingredients as a way to attract more patrons. According to Truong Ham Liem, the marketing manager of Lotteria Vietnam, “Lotteria focuses on developing products and services continuously to serve customers, especially fast- food rice”.
“We mainly target local teenagers, but it is a fact that in past years our main customers were young people and white-collar workers.” Liem says the fast-food business is thriving in Vietnam regardless of the global economic crisis, adding rice now is an important ingredient in the menu to attract locals. Also, Demis Flore, vice president of Jollibee says that the most popular choice at Jollibee’s is rice with chicken, which brings 60% of Jollibee’s total turnover (When fast food is localized, 2009) 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com The two biggest fast chains in Vietnam set a plan to open more and more restaurants in Vietnam. KFC own 116 restaurant at the end of 2012 and plan to have 200 restaurants at the end of 2015. In 2011, Lotteria had 100 restaurants in Vietnam and will reach 200 stores in 2016.
In the recent years, more and more foreigner fast food player join Vietnam market and expand quickly as Pizza Hut, Jollibee, Burger King, Domino, Popeyes, Mc Donalt’s, Subway …Burger King invests 1 store/160,000 people (Nguyên Hưng, 2012) “A report in 2012 by W&S Group, an online market research group in the Asia Pacific region, with 272 people aged above 16, showed that young people come to fast-food restaurant at least once every three months.” (Vietnam fast-food market sees bright future, 2013) With many famous players of fast food industry in Vietnam, players have to learn how to survive and develop in Vietnam. As Vietnam is a potential and challenge market, fast food restaurants in Vietnam have to understand the key factors affecting customer satisfaction and how to build customer loyalty, and how to improve customer purchasing intention and recommending to others because word of mouth are very effective in Vietnam.3 RESEARCH OBJECTIVES There are two objectives of the study: 1. Identifying factors affecting customer satisfaction in the fast food restaurant industry in Vietnam. The relationship between customer satisfaction and customer purchase intention behavior in the fast food restaurant industry in Vietnam.
5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 RESEARCH SCOPE This study focuses on fast food consumers living in Ho Chi Minh City, the largest economic center of Viet Nam with the population of ten million people. This city gathers people from many provinces, and cities in Vietnam. Most player choose Firstly, the author builds model and questionnaire based on previous researches. Secondly, the author collects data by some ways.
Thirdly, the researcher uses Cronbatch’s alpha to test scales availability and factors analysis to determine which of fairly large set of items are most answered most similar by the respondents. Then, the researcher uses CFA to test the relationship of six construct of factor service quality. Finally, the author uses SEM to test the relationship between four factors: service quality, food quality, hedonic value, utilitarian value with customer satisfaction and between customer satisfaction and behavioral purchase intention.5 THE STRUCTURE OF THE STUDY The study includes five chapters as following: Chapter 1: Introduction The chapter includes the following contents: the background of the research, research problems, research objectives, research scopes, and the research structure. Chapter 2: Literature review and hypothesis The chapter presents the fundamental theories and definition of each factors, construct, proposed hypothesis and theoretical modeling.
In this chapter, the author presents the conceptual model of the study. Chapter 3: research methodology The author presents the research design, research methodology, and the process of conducting the research in this chapter. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 4: Data analysis and result The characteristics of collected samples, method to collect data, and the result of the research analysis are presents in the chapter. Based on the result, the author tests the hypothesis.