UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGO TRONG TRUNG AN INVESTIGATION OF CUSTOMER VALUE AND PATRONAGE IN RETAILING VENDING MACHINE SECTOR IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGO TRONG TRUNG AN INVESTIGATION OF CUSTOMER VALUE AND PATRONAGE IN RETAILING VENDING MACHINE SECTOR IN VIETNAM ID: 22120143 MASTER OF BUSINESS (Honours) SUPERVISOR: LE NHAT HANH, PhD Ho Chi Minh City – Year 2014 i ACKNOWLEDGEMENT I would like to thank my supervisor, Dr. Hanh Nguyen for her encouragement and guidance throughout the process of conducting this thesis. I would also like to thank other members of my advisor committee, Dr. Tho Nguyen, Dr. Nguyen, Dr. Quan, Dr. Phong, and Dr. Thao for helping me to understand the process and theoretical foundations of the research. Many others also deserve my gratitude. Among them, Mr. Doanh, Mr. Tuan, Ms. Kim Yen, Master Mai Thien Tam, Ms. Nguyet Anh, Mr. Huy, Master Nguyen Thi Nguyet and Master Nguyen Huy Khai, helped me to obtain final questionnaire being suitable in the context of Vietnam. My colleagues, friends and all of respondents supported to conduct the questionnaire at the best reliability. Finally, I would like to express my gratitude to my family for their love and support, and they are always there when I need them. Without their emotional and financial support, this study would not be completed. ii ABSTRACT Although Vending machine was predicted would become one of the most important non-store marketing channels, many retailers using vending machine have a difficult time in developing business in Vietnam. If vending machine-retailers want to attract more and more shoppers, they need to know what evaluative criteria consumers use when selecting a vending machine-retailer. The past researches demonstrated that Customer value and Retail patronage could enhance retail performance. This study investigated the relationship between Customer value and Retailing vending machine patronage, and examines the relationships of antecedents including Customization, Functionality and Perceived Risk with Customer Value. By utilizing literature review, a research model was proposed to identify the relationships above. Additionally, a convenient sample of 247 respondents in Ho Chi Minh City was surveyed to test the theoretical model. Structure Equation Modeling (SEM) was used to analyzed the data. The final result indicated that Customization and Functionality are positively related to Customer value, but perceived risk was not supported. Customer value is positively related to retailing vending machine patronage. iii TABLE OF CONTENTS ACKNOWLEDGEMENT i ABSTRACT ii TABLE OF CONTENTS iii LIST OF TABLES v LIST OF FIGURES vi CHAPTER 1: INTRODUCTION 1 1.1 Research background 1 1.2 Research Problem 2 1.3 Research Objective 3 1.4 Significance of the Study 3 1.5 Research methodology and scope 3 1.6 The structure of the study 4 CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES 6 2.1 Vending machine 6 2.2 Customer value 7 2.3 Customization and Functionality 8 2.4 Perceived risk 9 2.5 Customer value and retail patronage 10 2.6 Research model 11 CHAPTER 3: METHODOLOGY 13 3.1 Research process 13 3.1.1 Qualitative research 13 3.1.2 Quantitative research 13 3.2 Research design 17 3.3 Measurements of constructs 18 3.4 Data analysis method 21 3.4.1 Descriptive Statistics 21 3.4.1.1 Test of Skewness 22 3.4.1.2 Test of Kurtosis 22 3.4.2 Confirmatory factors Analysis (CFA) 22 3.4.2.1 Reliability testing 22 3.4.2.2 Convergent validity 22 iv 3.4.2.3 Discriminant validity 23 3.4.3 Structure Equation Modeling (SEM) 23 3.4.4 Bootstrap 23 CHAPTER 4: DATA ANALYSIS AND RESULTS 25 4.1 Sample characteristic 25 4.2 Descriptive statistics 26 4.3 Confirmatory Factor Analysis (CFA) 28 4.4 Structural Equation Modeling (SEM) 38 4.5 Bootstrap analysis 40 4.6 Explanation for finding result of hypotheses 41 CHAPTER 5: CONCLUSION, IMPLICATIONS AND LIMITATION 46 5.1 Conclusion 46 5.2 Implications 47 5.3 Limitation 48 REFERENCES 50 APPENDIX 58 v LIST OF TABLES Table 3.1: The result of collected data 15 Table 3.2: Measurement scales 19 Table 4.1: Sample Characteristic 26 Table 4.2: The result of Skewness and Kurtosis testing 27 Table 4.3: Correlations of components 32 Table 4.4: The result of correlation test 32 Table 4.5: Summary of measurement validation 34 Table 4.6: Correlation of Constructs 36 Table 4.7: Chi-square difference test 37 Table 4.8: Hypotheses Unstandardized Structural Paths 40 Table 4.9: Summary of hypotheses testing result 40 Table 4.10: The result of bootstrap analysis 41 vi LIST OF FIGURES Figure 1: Conceptual Model 12 Figure 3: CFA of first-order constructs 29 Figure 4: CFA of second-order construct 31 Figure 5: CFA final 33 Figure 6: Customer value versus retailing vending machine patronage 37 Figure 7: SEM model 39 Figure 8: Structural results (Standardized estimates) 44 1 CHAPTER 1: INTRODUCTION 1.1 Research background More than three decades ago, Quelch and Takeuchi (1981) predicted that vending machine would become one of the most important non-store marketing channels. Reality, their prediction has surely materialized. Most of countries all over the world used vending machine as retail business. There are more than seven millions vending machines in operation in U.S (Leaner 2002), Japan has become a vending-machine-country and Vietnam also has the first vending machines in 2000s. Vending machine offers consumer a variety of products including food, snack, beverages, newspaper, cosmetic, CDs, cigarettes and so on. Lee (2013) argued that as more people has joined workforce during the past several decades and their busy social life increasingly places more value on time and convenience, vending machine had become an indispensable part of many people daily’s lives. In Vietnam, vending machine was deployed in early 2000s when the Vietnam’s Government issued the coins and experts believe that they will be potential market in the future (Kieu Giang, 2004). However, vending machine sector developed slowly during past time. There were many investors failed in applying Vending machine for retail business. The first main reason can explain for this is technology. Most of vending machine at that time integrated used-coin technology, but Vietnam people do not have habit keeping the coin available or do not like to use coin in transaction. This leads used-coin vending machine to be inconvenient for customer to reach and purchase by vending machine; secondly, retailers using vending machines cannot find the suitable locations to install vending machine, especially two biggest cities in Vietnam: Ho Chi Minh City and Hanoi City for sidewalk and public areas are quite narrow. As a result, vending machine cannot operate at the best; finally, most of the companies invested vending machine sector at that time, were small and not enough ability to invest new modern vending machines, while the companies having enough potential did not want to joint into this industry to push the vending machine sector in Vietnam (Hong Phuc, 2005). 2 Fortunately, the business environment has changed in recent years leading to many good signs from vending machine sector. First of all, technology is improved, current vending machine can accept both the cash and coin, even consumer can use credit card to purchase some product sold by vending machine. This makes vending machine to be more convenient for customer. On the other hand, some big brand names in Vietnam: Pepsi, Coca Cola, begin to use vending machine to sell their product at public areas such as hospital, park, railway station, bus station and airport. All above things have prompted vending machine sector grow quicker and quicker. Based on those, author will conduct a study to investigate about relevant knowledge of vending machine sector in Vietnam. 1.2 Research Problem Given the ever increasing presence and the pervasiveness of vending machines in lives of consumers, it is surprising that there have been to date no studies in marketing and consumer behavior literature that shed light on consumers’ usage behavior with vending machines services in Vietnam. Furthermore, most research has focused on purchase intention, which is customer acquisition oriented, little research has examined consumers’ patronage behavior, which is customer retention oriented. However, customer retention is more important than customer acquisition, and building customer value is the key to retaining customers (Weinstein, 2002). On the other hand, Customer value has emerged as a crucial instrument for analyzing service quality, customer satisfaction, and consumer behavior (Yieh, Chen, and Wei, 2012). It is not only the antecedent of attitude, intention, and behavior (Gounaris et al. 2007; Parasuraman and Grewal 2000; Yang and Peterson 2004) but also a critical factor influencing customer retention and purchase intention (Chang and Wildt, 1994). In addition, customer value is a strategic weapon in attracting and retaining customers and has become one of the most significant factors in the success in service providers (Gale 1994; Parasuraman 1997). Therefore, many previous studies examine relationship between Customer value and consumer’s purchasing intention or satisfaction, but little of studies research about influence of Customer value on Patronage behavior. [...]...Thus, in order to fulfill this gap, an investigation of Customer Value and Patronage behavior in retailing vending machine sector is examined, and in an effort to indentify the key factors impacting on customer value in vending machine sector in Vietnam, this study considers the concepts of Functionality, Customization, and Perceived Risk as antecedents of Customer value 1.3 Research Objective To examine... strategy and customer relationship management Therefore, the overall purpose of this current study is to examine retailing vending machine patronage in Vietnam Particularly, this study investigates: 1 The impact of Customization of vending machine on Customer Value 2 The impact of Functionality of vending machine on Customer Value 3 The impact of Perceived Risk of using vending machine on Customer Value. .. with the vending machine Each service item/function of the vending machine is error-free The vending machine understands my specific needs The vending machine has my best interests at heart The vending machine has feartures that are personalized for me Functional value The vending machine service has consistent quality The vending machine service is well made The vending machine service has an acceptable... machine which respondents can use in Ho Chi Minh are Vending massage chair, vending soft drink machine, and vending exchange coin machine Thus, only respondents had used one of threes kinds of vending machine mentioned above, are chosen to conduct the questionnaires for main survey The Author applies data analysis tool including Microsoft Excel and SPSS, to handle the collected data and to conduct the research... impact of Customer value on retailing vending machine patronage 1.4 Significance of the Study The study will provide helpful implications for marketers in executing marketing and business strategy in Vending machine sector in particular and in retail business in general 1.5 Research methodology and scope The research conducted on consumer in Ho Chi Minh City is one of the biggest cities in Vietnam, ... stress while using the vending machine Sometime, when I am using machine I feel anxious I am concerned about wasting too much time using the vending machine I am concerned about having to waste time on tasks related to using the vending machine Using vending machine can worsen the image other people have of me Using vending machine makes some people whose opinion I value think that I am not acting correctly... vending machine instead of conventional stores when there is a subsidy for using vending machine I would use vending machine instead of conventional stores when there are discount rates for using vending machine or promotional activity I would using vending machine instead of conventional stores when vending machine are available I will pay slightly more for products if I can buy them through vending machine. .. standard of quality The vending machine service would perform consistently The vending machine service has poor workmanship.(R) The vending machine service would last a long time The vending machine service is reasonably priced The vending machine service offers value for money The vending machine service is good product for the price The vending machine service would be economical Emotional Value Vending. .. examine customer value in vending machine situation, it is necessary to focus on identifying key factors affected customer value in using vending machine These factors are perceived risk, functionality and customization Each of these can either positively or negatively influence customer value in vending machine sector Knowledge about the effect implications to marketers in executing marketing and business... pleasure Using vending machine would make me feel good Epistemic Value Before using the vending machine, I would obtain substantial information about the different makes and models of vending machine I would acquire a great deal of information about the different makes and models before using vending machine I am willing to seek out novel information I like to search for the new and different Retail patronage . vending machine for purchasing prior. There are three kinds of vending machine which respondents can use in Ho Chi Minh are Vending massage chair, vending soft drink machine, and vending. OF ECONOMICS HO CHI MINH CITY International School of Business NGO TRONG TRUNG AN INVESTIGATION OF CUSTOMER VALUE AND PATRONAGE IN RETAILING VENDING MACHINE SECTOR IN VIETNAM. retailing vending machine sector is examined, and in an effort to indentify the key factors impacting on customer value in vending machine sector in Vietnam, this study considers the concepts of Functionality,