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 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 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 TABLE OF CONTENTS ABSTRACT ACKNOWLEDGEMENT TABLE OF CONTENTS LIST OF TABLE LIST OF FIGURES CHAPTER I INTRODUCTION 1.1 BACKGROUND 1.2 PROBLEM DIFINITION AND RESEARCH QUESTIONS 10 1.3 RESEARCH OBJECTIVES 12 1.4 DELIMITATION 13 1.5 OUTLINE OF THE STUDY 14 CHAPTER II 16 LITERATURE REVIEW 16 2.1 MOBILE TELECOMMUNICATION IN THE WORLD 16 2.2 MOBILE TELECOMMUNICATION IN VIETNAM 18 2.3 CUSTOMER RETENTION 21 2.4 CUSTOMER SATISFACTION 23 2.5 SWITCHING BARRIERS 24 2.6 SWITCHING COST 26 2.7 INVESTMENT IN RELATIONSHIP 27 2.8 ATTRACTIVENESS ALTERNATIVES 27 2.9 INTERPERSONAL RELATIONSHIP 28 2.10 RESEARCH MODEL AND HYPOTHESES 29 CHAPTER III 34 METHODOLOGY 34 3.1 RESEARCH PURPOSE 34 3.1.1 Exploratory Research 34 3.1.2 Descriptive Research 35 3.1.3 Explanatory Research 35 3.2 RESEARCH APPROACH 36 3.3 RESEARCH PROCESS 37 3.4 MEASUREMENT SCALES 41 3.5 SAMPLING METHOD 45 3.5.1 Target Population and Sampling method 45 3.5.2 Sample Size 45 3.6 MAIN SURVEY AND DATA COLLECTION 46 3.7 DATA ANALYSIS METHODS 46 3.7.1 Exploratory Factor Analysis (EFA) 46 3.7.2 Reliability Analysis 47 3.7.3 Multiple Regression Analysis 47 CHAPTER IV 49 DATA ANALYSIS AND FINDING 49 4.1 SAMPLE DESCRIPTION 49 4.2 ASSESSMENT AND REFINEMENT OF MEASUREMENT SCALES 52 4.2.1 Cronbach Alpha Reliability Analysis 52 4.2.2 Exploratory Factor Analysis (EFA) 54 4.2.3 The revised conceptual model 57 4.3 HYPOTHESES TESTING 59 4.3.1 Testing Assumptions of Multiple Regression 59 4.3.2 Testing Hypotheses the impact Switching Barrier on Customer Satisfaction 60 4.3.3 Testing Hypotheses the impact Customer Satisfaction on Customer Retention 61 4.3.4 Summary of the Hypotheses Testing Results 62 4.4 ANOVA ANALYSIS- MLR WITH DEMOGRAPHIC INDEPENDENT VARIABLES 65 4.5 DISCUSSIONS OF THE FINDINGS 66 4.5.1 The Unexpected insignificance of the Negative Switching Barriers’ role 67 4.5.2 The impact of the Positive Switching Barrier on Customer Satisfaction 68 CHAPTER V 68 CONCLUSIONS AND IMPLICATIONS 68 5.1 CONCLUSIONS 68 5.2 MANAGERIAL IMPLICATIONS 69 5.3 IMPLICATIONS FOR FURTHER RESEARCH 71 REFERENCES 72 APPENDIX 1: A CONSOLIDATED DRAFT QUESTIONNAIRE 77 APPENDIX 2: QUESTIONNAIRE 82 APPENDIX 3: TESTING THE ASSUMPTIONS OF MULTIPLE REGRESSION 85 LIST OF TABLES Table 3.1: Measurement scales 42 Table 4.1: Sample Characteristics 51 Table 4.2: Reliability Test Results 53 Table 4.3: EFA Results 56 Table 4.5: Coefficients – Switching Barrier and Customer Satisfaction 59 Table 4.8: Coefficients- Customer Satisfaction and Customer Retention 62 Table 4.9: Summary of Hypotheses Testing Results 63 LIST OF FIGURES Figure 2.1: The Research model 32 Figure 3.1: Research Process 38 Figure 4.1: Revised conceptual Research Model 58 Figure 4.4: The Correlations of the Research Model 64 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 1.1 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 78 IV INTERPERSONAL RELATIONSHIP (Kaveh et al., 2006) Please choose six for following statements I feel there is a bond between this supplier and myself 20.00 I have developed a personal friendship with this supplier 16.67 I would be more comfortable interacting with the people working for this supplier 20.00 I would miss this mobile supplier If I switch suppliers 0.00 I will lose a friendly, communicate and comfortable relationship with my friends and this supplier If I change 16.67 I like the public image of this supplier 13.33 This supplier cares about its customers Agreed on statements but suggested to change “this supplier” to “the supplier X” 13.33 V CUSTOMER SATISFACTION (Claes-Robert et al, 2003 & Kaveh et al., 2006) Please give comments on these following statements: This supplier meets all the requirements that I see reasonable Agreed on all statements but Overall, I am satisfied with the offerings of this supplier suggested to change “this supplier” I would encourage friends and relatives to business with this supplier to “the supplier X” I am satisfied with this supplier VI CUSTOMER RETENTION (Claes-Robert et al, 2003 & Kaveh et al., 2006) Please choose six for following statements If I had needed mobile services now, my supplier would be my first choice 16.67 I plan to continue my relationship with my supplier in future 13.33 I would recommend my service operator as the best service provider in the area 16.67 I am very loyal to my supplier 16.67 I have said positive things about my supplier to others 3.33 The relationship with my supplier is important to me 13.33 I consider my supplier as my first choice for mobile service 0.00 Surely, I decide I have not switched to other suppliers 20.00 - Suggested to change “plan to continue my relationship with my supplier in future” to “I intend to continue to be customer to the supplier X - Suggested to change “in the area” to “in Vietnam” - Suggested to add “It has been worthy, I am very loyal to the supplier X” - Agreed to suggest changing “my supplier” to “the supplier X” - Newly developed as per suggestion of Ms Do Thi Lan Anh, responsibility of Marketing in VNPT Dong Nai Company 79 APPENDIX QUESTIONNAIRE Ladies and Gentlemen, I have been a student of MBUS1-2010 course, the MBA program in English of University of Economics Ho chi Minh City – International School of Business We are currently conducting a research on “Key factors in switching barrier impact customer satisfaction” And then, we research on “Relationship between customer satisfaction and retention” in Mobile telecom service industry in Vietnam We would like appreciate to you can save your time to answer this questionnaire All feedbacks are very worthy to success in this research PART A: INFORMATION OF MOBILE SERVICER SUPPLIERS: Which the mobile telecom service supplier has you regularly used? (Please choose only one answer) Vinaphone MobileFone Vietteltelecom S-Fone VietnamMobile GtelMobile (This mobile telecom supplier will be referred from now in this survey as the supplier X) Which type of use you get mobile telecom service, now? Prepaid Pay after How long have you been used mobile service of the supplier X? < months 3-5 years months -1 year -10 years - years > 10 years 80 PART B: MAIN INFORMATION: Please read each of the following statements carefully and get the level of your agree or disagree by circle the number that best reflects 1: Very strongly disagree; 2: Strongly disagree; 3: Disagree; 5: Agree; 6: Strongly agree; 7: Very strong agree Questions 4: Neutral; Level measurement Switching Cost In general, switching to new service provider would be a hassle It is difficult for me to use other suppliers I feel locked to the supplier X It takes a lot of time to get information about other suppliers I will be lost the ID mobile number from the supplier X If I change Investment in Relationship I would spend a lot of money on switch from the supplier X to another 7 I would spend a lot of time on switch from the supplier X to another I would spend a lot of effort on switch from the supplier X to another Prices to invest to use service of other supplier are higher Attractiveness of Alternative 10 I trust on quality of the supplier X than other suppliers 11 If I were choose another supplier I not know what I will get 12 I not care about the brand name of the service of the supplier X 13 I am very likely to switch to another service provider 14 If I change, there is a risk that the new service provider won’t be as good as services of the supplier X 81 Interpersonal Relationship 15 I have developed a personal friendship with the supplier X 16 I would be more comfortable interacting with the people working for the supplier X 17 I will lose a friendly, communicate and comfortable relationship with my friends and the supplier X If I change 18 I like the public image of the supplier X 19 The supplier X cares about its customers Customer Satisfaction 20 The supplier X meets all the requirements that I see reasonable 21 Overall, I am satisfied with the offerings of the supplier X I would encourage friends and relatives to business with the supplier X I am satisfied with the supplier X 7 I intend to continue to be customer to the supplier X If I had needed services now, The supplier X would be my first choice I would recommend the supplier X as the best mobile service provider in Vietnam 7 27 The relationship with the supplier X is important to me 28 It has been worthy, I am very loyal to the supplier X 29 Surely, I decide I have not switched to other suppliers 22 23 Customer Retention 24 25 26 PART C: GENERAL INFORMATION: Gender: Male Female Age: < 20 20-40 40-50 > 50 Income (million dong): – 10 10-15 >15 10 nam 83 B N i dung chính: Anh (Ch ) vui lòng cho bi t m c d d ng ý hay không d ng ý c a v phát bi u du i dây, b ng cách khoanh tròn vào m t l a ch n thích h p cho m i n i dung 1: Hoàn toàn không d ng ý; 4:Trung hòa (không có ý ki n); 2: Hoi không d ng ý; 5: Hoi d ng ý; 3: Không d ng ý; 6: Ð ng ý; 7: Hoàn toàn d ng ý Các ch tiêu dánh giá M c d d ng ý Chi phí chuy n m ng di d ng Tôi c m th y chuy n sang s d ng m ng di d ng khác m t v n d phi n ph c Tôi s g p nhi u khó khan s d ng s di n tho i, thi t b di d ng c a nhà m ng khác Tôi s th c hi n cam k t gi a m ng di d ng X Tôi s ph i m t nhi u th i gian d có du c thông tin v nhà m ng di d ng khác N u chuy n m ng, s m t s di d ng c a nhà m ng X 7 7 Chi phí vi c d u tu t o m i quan h thông tin Tôi s m t nhi u ti n chuy n sang s d ng m ng di d ng khác 7 Tôi s m t nhi u th i gian d chuy n sang s d ng m ng di d ng khác Tôi s ph i m t nhi u công s c d t o l i m i quan h , h p tác v i nhà m ng di d ng khác Nói chung, chi phí cung nhu giá c d d u tu chuy n sang s d ng m ng di d ng khác cao 7 7 7 1 2 3 4 5 6 7 S thu hút khách hàng c a m ng vi n thông di d ng 10 Tôi r t tin tu ng ch t lu ng d ch v di d ng c a nhà m ng X 12 Giã s , n u bây gi Tôi có th ch n m ng di d ng khác, th t s Tôi không bi t s ch n nhà m ng Tôi không quan tâm d n thuong hi u c a nhà m ng di d ng X 13 14 T i r t thích mu n chuy n sang nhà m ng di d ng khác Tôi không thích rui ro s d ng m ng di d ng khác 11 Nh ng m i quan h , h p tác liên quan d n nhà m ng di d ng 15 Tôi s ti p t c phát tri n m i quan h h p tác v i nhà m ng di d ng X 16 Tôi th t s an tâm ti n l i giao ti p công vi c qua m ng di d ng X 84 17 Tôi s b l m t di nhi u thông tin, m i quan h h p tác công vi c, b n bè, d i tác N u Tôi chuy n sang m ng di d ng khác 18 Tôi th t s n tu ng r t thích hình nh thuong hi u, chuong trình ho t d ng xã h i, c ng d ng c a m ng di d ng X 19 Nhà cung c p d ch v di d ng X quan tâm cham sóc khách hàng r t t t S hài lòng khách hàng 20 M ng di d ng X dáp ng yêu c u mong d i c a Tôi 21 Tôi hài lòng v i nh ng mà nhà m ng di d ng X dã cung c p h p tác v i Tôi su t th i gian qua 22 Tôi s gi i thi u khuy n khích b n bè, ngu i thân s d ng m ng di d ng X 23 Tôi hài lòng v i m ng di d ng X Tôi s ti p t c khách hàng c a m ng di d ng X Gi s , n u Tôi c n có nhu c u s d ng d ch v di d ng, Tôi v n ti p t c ch n m ng di d ng X Tôi s tin tu ng d ng ý r ng: “m ng di d ng X m ng di d ng t t nh t t i Vi t Nam” Theo Tôi, m i quan h h p tác v i m ng di d ng X r t quan tr ng c n thi t 7 7 28 M ng di d ng X x ng dáng có du c s trung thành c a Tôi 29 Tôi nh t d nh không chuy n sang m ng di d ng khác Nh ng m i quan h trung thành - Gi khách hàng 24 25 26 27 C Tru c k t thúc, xin Anh (Ch ) vui lòng cho bi t m t vài thông tin cá nhân: Gi i tính: Nam N Ð tu i: Du i 20 20-40 Thu nh p c a Anh (Ch ) 01 tháng: < tri u -10 tri u 40-50 Trên 50 10-15 tri u > 15 tri u Trình d : Chua t t nghi p PTTH T t nghi p PTTH Ð ih c Trên Ð i h c Trung c p, Cao d ng Xin chân thành cám on Anh (Ch ) v s h p tác giúp d ! 85 APPENDIX Testing the Assumptions of Multiple Regression Table 4.4: Correlations Matrix Correlations SWITCHING COST SWITCHING COST Pearson Correlation INVESTMENT Pearson RELATIONSHIP Correlation ATTRACTIVENES Pearson S ALTERNATIVES Correlation INTERPERSONAL Pearson RELATIONSHIP Correlation CUSTOMER Pearson SATISFACTION Correlation CUSTOMER Pearson RETENTION Correlation INVESTMENT RELATIONSHIP S ALTERNATIVES RELATIONSHIP CUSTOMER CUSTOMER SATISFACTION RETENTION 186 ** 433 ** 480 ** 472 ** 428 ** 440 ** 395 ** 391 ** 521 ** 777 ** 442 ** 428 ** 447 ** 749 ** ** Correlation is significant at the 0.01 level (2-tailed) N= 200 ATTRACTIVENES INTERPERSONAL 1 787 ** 86 87 Figure 4.2 Customer satisfaction (MCSAT)- Histogram, Normal Probability Plot, Scaterplot 88 Figure 4.3 Customer Retention (MCRET) - Histogram, Normal Probability Plot, Scartterplot 89 Table 4.6: Testing results the impact of Switching Barrier (Switching Cost, Investment Relationship, Attractive Alternatives and Interpersonal Relationship) on Customer Satisfaction Change Statistics Model R R Square 803 a Adjusted R Std Error of R Square Square the Estimate Change 645 638 73541 F Change df1 645 88.526 df2 Sig F Change 195 000 a Predictors: (Constant), Switching Cost, Investment Relationship, Attractiveness Alternatives, Interpersonal Relationship b Dependent Variable: Customer Satisfaction ANOVA c Mean Model Sum of Squares df Square F Regression 191.508 47.877 Residual 105.460 195 541 Total 296.969 199 Sig 88.526 000 a Table 4.7 Testing results for the impact of Customer Satisfaction on Customer Retention Model Summary Model R R Square 787 a b Adjusted R Square 619 Std Error of the Estimate 617 72656 a Predictors: (Constant), Customer satisfaction b Dependent Variable: Customer Retention ANOVA b Sum of Model Squares df Mean Square Regression 169.694 169.694 Residual 104.523 198 528 Total 274.217 199 a Predictors: (Constant), Customer Satisfaction b Dependent Variable: Customer Retention F 321.454 Sig .000 a 90 Table 4.10 Multiple Linear Regression – Coefficients on Customer Satisfaction of demographic factors Coefficientsa Model (Constant) Unstandardized Standardized Coefficients Coefficients B Std Error 411 308 Switching Cost -.016 047 Investment Relationship -.020 Attractiness Alternatives Beta Collinearity Statistics t Sig Tolerance VIF 1.337 183 -.018 -.350 726 654 1.528 055 -.019 -.372 710 695 1.440 231 051 242 4.520 000 630 1.586 Interpersonal Relationship 730 057 690 12.862 000 629 1.590 YEAR1 166 160 052 1.036 302 713 1.403 YEAR2 -.090 119 -.037 -.758 449 773 1.293 236 308 765 445 Switching Cost -.013 047 -.014 -.267 789 646 1.548 Investment Relationship -.026 055 -.024 -.466 642 680 1.471 Attractiness Alternatives 224 051 235 4.384 000 633 1.579 Interpersonal Relationship 743 056 702 13.148 000 637 1.570 AGE1 174 135 059 1.282 201 858 1.166 (Constant) 124 345 359 720 Switching Cost -.018 046 -.020 -.392 696 677 1.478 Investment Relationship -.013 056 -.012 -.241 810 681 1.468 Attractiness Alternatives 228 051 239 4.423 000 627 1.594 Interpersonal Relationship 732 058 692 12.524 000 599 1.670 INCOM1 330 229 134 1.439 152 210 4.767 INCOM2 218 233 086 936 351 217 4.615 INCOM3 249 255 071 976 330 348 2.877 (Constant) a Dependent Variable: Customer Satisfaction 91 Model (Constant) Coefficients Coefficients Std Error 696 1.436 056 -.013 -.243 808 670 1.492 227 051 238 4.451 000 633 1.579 720 057 681 12.723 000 631 1.585 EDU1 153 238 057 645 520 233 4.293 EDU2 322 224 126 1.438 152 237 4.224 (Constant) 467 274 1.703 090 -.029 046 -.032 -.626 532 700 1.429 -.011 055 -.011 -.206 837 696 1.438 215 052 225 4.100 000 604 1.657 738 056 698 13.089 000 641 1.560 -.099 109 -.040 -.906 366 950 1.053 453 297 1.523 129 -.031 047 -.035 -.677 499 674 1.483 -.011 057 -.011 -.200 842 654 1.530 226 051 237 4.397 000 629 1.589 733 058 692 12.645 000 611 1.638 -.027 130 -.010 -.210 834 840 1.191 Relationship Switching Cost Investment Relationship Attractiness Alternatives Interpersonal Relationship GEND (Constant) Switching Cost Investment Relationship Attractiness Alternatives Interpersonal Relationship TYPED -.014 VIF 610 Interpersonal 045 Tolerance -.511 Alternatives -.023 Sig -.026 Attractiness 354 t 554 Relationship 210 Beta Collinearity Statistics 593 Investment Standardized B Switching Cost Unstandardized 92 Table 4.11 Multiple Linear Regression – Coefficients on Customer Retention of demographic factors Coefficients Unstandardized Standardized Collinearity Coefficients Coefficients Statistics Model B 1.238 228 762 043 YEAR1 -.138 YEAR2 (Constant) Sig Tolerance VIF 17.679 000 948 1.054 148 -.045 -.931 353 807 1.240 135 116 057 1.162 247 789 1.267 1.765 221 7.995 000 741 041 771 18.258 000 993 1.007 AGE1 -.510 119 -.180 -4.267 061 993 1.007 (Constant) 1.357 254 5.342 000 732 040 761 18.420 000 967 1.035 INCOM1 -.257 208 -.109 -1.237 218 213 4.690 INCOM2 346 212 142 1.632 104 219 4.567 INCOM3 305 232 090 1.311 191 348 2.872 1.246 273 4.558 000 732 042 762 17.443 000 969 1.032 EDU1 -.074 226 -.029 -.329 742 243 4.111 EDU2 280 216 114 1.297 196 241 4.143 1.277 209 6.116 000 Customer Satisfaction 757 042 788 17.863 000 993 1.007 GEND 041 105 017 392 696 993 1.007 1.385 231 6.000 000 752 043 782 17.637 000 981 1.019 -.088 118 -.033 -.741 460 981 1.019 (Constant) (Constant) Customer Satisfaction t 793 Customer Satisfaction Beta 000 Customer Satisfaction Std Error 5.420 Customer Satisfaction a (Constant) (Constant) Customer Satisfaction TYPED a Dependent Variable: Customer Retention ... viable competing alternative are available in the market place (Jones et al., 2000) And several researches have shown that when viable alternatives are lacking, the probability of terminating an... 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... satisfaction in the mobile telecom industry in Vietnam? How can these factors and determinants be developed and evaluated in Vietnam? How can customer satisfaction affect on customer retention in the