The impact of customer satisfaction, service quality and brand image on customer loyalty towards the restaurants of the tourist

MINISTRY OF EDUCATION AND TRAINING ACKNOWLEDGEMENTS UNIVERSITY OF ECONOMICS - HOCHIMINH CITY I would like to express my appreciation to Dr Tran Ha Minh Quan for his motivation, support This thesis would not be completed without his support, enthusiasm He transferred professional knowledge of research methodology to me has improved my research skills and provided useful guidance throughout my academic career I greatly appreciate to the board of managers in Van Thanh Tourist Village, Tan NGUYỄN MINH HẬU Cang Tourist Village who allowed me to conduct the survey at these restaurants I would like to thank the customers at the restaurants of the Tourist Village in Ho IMPACT OF CUSTOMER SATISFACTION, Chi THE Minh City for their participation of effective data collection I SERVICE QUALITY AND BRAND IMAGE ON greatly thanks to Mr Nguyen Van Cuong, who spent hours with me for the CUSTOMER LOYALTY interview TOWARDS THE RESTAURANTS OF THE TOURIST VILLAGE IN HO CHI MINH CITY Lastly, I offer my regards to all of those who supported me during the research Ho Chi Minh, Viet Nam MASTER’S THESIS th April, 11 , 2012 Nguyen Minh Hau Ho Chi Minh City -2012 MINISTRY OF EDUCATION AND TRAININ UNIVERSITY OF ECONOMICS - HOCHIMINH NGUYỄN MINH HẬU THE IMPACT OF CUSTOMER SATISFACTION, SERVICE QUALITY AND BRAND IMAGE ON CUSTOMER LO TOURIST VILLAGE IN HO CHI MINH MASTER’S THESIS MASTER IN BUSINESS ADMINISTRATION Ology Code: 60.34.05 Supervisor PhD TRẦN HÀ MINH QUÂN Ho Chi Minh City -2012 ABSTRACT Nowadays, together with the social economic improvement, the living standard is increasing and having lots of restaurants operating in Ho Chi Minh City To satisfy the customers’ needs, restaurants try to improve their quality of service and find out the better ways to attract more customers But it seems to be inefficient to keep old customers and attract new customers Why does inefficient state happen and last for a long time in restaurant industry? The researchers pay attention to find the reason for the problem and discover the main factors influencing to customer loyalty in restaurant industry On the other hand, one of the interesting tourist types is the Tourist Village It exists as the resort or the simpler type: restaurant If resorts mainly exist in the provinces, restaurants of the tourist village popularly exist in Ho Chi Minh city The restaurants of the tourist village possess some advantageous points compare to the normal restaurants, such as: having a large square, can connect luxurious structure of the restaurant to the use of air, atmosphere and tree building But even though, possessing these advantages, the number of customers come to the restaurants of the tourist village have also decreased Whether may It be influenced by the common rules which have affected to restaurant industry or having another factors aiming at the tourist village not? This is a practical question and to supply a correct answer requires a research to show full of theoretical side, practical side This thesis was conducted aiming at solving these problems and used interview A main survey was undertaken with a sample of 205 customers in two sites: The restaurant of Van Thanh Tourist Village, The restaurant of Tan Cang Tourist Village The results reveal that customer satisfaction, the components of service quality and the brand image of the restaurant have positive impact of customer loyalty Based on the findings, it is recommended that the restaurants of the tourist village in Ho Chi Minh city should consider the long term strategy as well as increasing marketing program Key words: Customer loyalty, customer satisfaction, the brand image of the restaurant TABLE OF CONTENTS Acknowledgements .I Abstract .II Table of contents .III CHAPTER I: INTRODUCTION 1.1 Research background 1.2 Problem definition 1.3 Research questions & objectives 1.4 Research delimitation 1.5 Research methodology and research design 1.6 Significance of the research 1.7 Thesis structure CHAPTER 2: LITERATURE REVIEW & THEORETICAL MODEL 2.1 Loyalty concept 2.2 Review of previous articles and theses on customer loyalty .14 2.3 Service quality concept 17 2.4 Customer satisfaction concept 19 2.5 The brand image concept 22 2.6 Impact of service quality, customer satisfaction, restaurant image on customer loyalty 27 2.7 Factors contributing to customer loyalty 28 2.8 The conceptual framework 29 2.9 Theoretical model and hypotheses 30 CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research process 32 3.2 Measurement 34 3.3 Preliminary survey .37 3.4 Sampling method 39 3.5 Data analysis method 39 CHAPTER 4: DATA ANALYSIS AND RESULTS 4.1 Descriptive data analysis 40 4.2 Measure assessment 41 4.3 Hypotheses testing 44 4.4 The regression model 44 4.5 Interpretation and Discussion 45 CHAPTER 5: CONCLUSION & IMPLICATIONS 5.1 Overview 47 5.2 Main findings .48 5.3 Theoretical implications .50 5.4 Managerial implications 51 5.5 Future research 53 References 54 Appendix 61 List of tables .72 CHAPTER I: INTRODUCTION 1.1 Research background When Viet Nam joint WTO in 2007, Viet Nam became a central point for tourist visiting because of its natural atmosphere and beautiful sight as well as characteristic cuisines To attract tourist around the world, hotel and restaurant industries play an important role on bringing value to customers If hotel supplies values related to destination for tourist visiting, restaurant sends characteristic cuisines for tourist As a result, hotel industry has a close relationship to restaurant industry because they aim at one objective as tourist Take this rules, lots of resorts had opened to supply both of hotel and restaurant services Normally, resorts set up at places where are near to beach and resorts focus on tourist who has the demand on enjoying beautiful landscape and natural atmosphere Restaurant seems to be one of a small part of resorts to serve customer about cuisine, and hotel plays a central point to make profit for resort because travelers tend to book room on hotel over night during several days But in Ho Chi Minh City, resorts have individual characteristic where restaurant services also play dominant role not less than hotel services The reason is due to the demands of customers In table 1.1, the number of respondent who visit to Ho Chi Minh city by attractive side is 43% and is smaller than the respondent who visit to other province As a place in which have many small rivers and lack of mountain or beach, Ho Chi Minh City has not a dominant point about beautiful sight compare to many provinces in which have beach or mountain but Ho Chi Minh city can be thought as a place where tourist can enjoy delicious Vietnamese food and cuisines from around the globe, including French, Indian, Mexican, Italian, Japanese, Thai and Chinese For this reason, tourist village in Ho Chi Minh city had grown and can be seen as a type of resorts In table 1.2, the number of respondent who visit to the tourist village by attractive side is 36% This is a small percentage comparing to the respondent of who visit to star hotel and it implies that tourist village has not attractive landscape for visitors In table 1.3, the structure of average expenditure out of tour for foreign visitors in the tourist village shows that expenditure to food is 48.3% as the highest value compared to the expenditure to food of other accommodations This means that in tourist village, restaurant which supplies food and beverage play an important source of profit compared to other hotels which have restaurant component Although tourist village mainly focus on cuisine services which create a large percentage of its profit but tourist can enjoy more values in here rather than normal restaurant Tourist village include restaurant which possesses a large square and hotel as well as yacht service, fish hunting service Because of its sophisticated structure, all of its service values have an impact on customer visiting but restaurant service play a central point to attract customer Although, restaurant is a part of supply chain of tourist village, but restaurant also compete strongly with other restaurant Especially, there are lots of restaurant in Ho Chi Minh city which provide cuisines service not only Vietnamese characteristic but also Asian or Europe characteristic To survive in this competition, restaurant on tourist village should reposition its value on two dimensions: The first, the restaurant manager should define customer demands Understanding customer demands as well as analyzing factors influencing to customer loyalty is a key to make restaurant’s success The second, the restaurant manger should define restaurant strength and character in a relationship with other services of Tourist village Defining their character is very important and it requires define their brand image on customer perception There have been many studies on customer loyalty in restaurant industry to clarify what factors influence in loyalty as well as to supply information for restaurant manager making their solution Previous research on customer loyalty focuses on what main impact on loyalty in restaurant industry Cevded Avcikurt and Murat Dogdubay (2008) studied the determinants of customer loyalty by emphasizing on the importance of food, service quality, ambiance, convenience Rasha Alli Eliwa (1993) focused on the image of restaurant to customer loyalty Beside, there has been study on customer loyalty in the tourist village of Viet Nam country Nguyen Thi Tuyet Loan (2011) studied the impact of service quality, customer satisfaction on customer loyalty in the tourist village of Da Lat province This study had also pointed out that some factors have influence in customer loyalty in the tourist village, including price, service quality and customer satisfaction So far there has been no research on customer loyalty in restaurant of the tourist village To approach the tourist village, determinants of customer loyalty in restaurant can be different from the result of previous research because of its characteristic It is also necessary to research on customer loyalty in restaurant on the tourist village in Ho Chi Minh city so as to out line marketing strategies, increase the profit of restaurant and so far create the compared advantages of the tourist village 1.2 Problem definition In table 1.4, the number of tourist foreigner respondent who decide to visit Vietnam by friends, relations in the tourist village is 18.2% and is smaller than other accommodations This means that the impression of visitors to the tourist village is not high and they are not willing to introduce to their relations or friends It is a signal to consider about the customer loyalty forwards to the tourist village as well as to the restaurant of the tourist village In table 1.5, the number of tourist foreigner respondent on best impression forwards to the tourist village is 30.3 percent for landscape, and 30.3 percent for cheap commodities The percentage of respondent to landscape of the tourist village is smaller than other accommodations so it can be considered that landscape is not an advantage side of tourist village On the other hand, cheap value makes strong impression for visitor forwards to the tourist village compared Table 1.6: The plans and Revenue of Tan Cang, Van Thanh restaurant of the tourist village – Internal Source The period 6/2010 12/2010 The plan of The revenue Van Thanh of Van Thanh restaurant restaurant were conducted Clean all of Revenue of areas at month 6: 12 restaurant billion Revenue of month 12: 12 billion The plan of Tan Cang restaurant were conducted Price reducing for buffet by 30% on Tuesday every week The revenue of Tan Cang restaurant Revenue of month 6: billion Revenue of moth 12: billion Table 4.1: Number of respondents on age division: Number of respondents Percentage (%) 16-25 22 10.7% 26-35 40 19.5% 36-45 102 49.7% Over 45 41 20.1% Age Table 4.2: Number of respondents on gender division: Number of respondents Percentage (%) Male 137 66.8% Female 68 33.2% Gender Table 4.3: Number of respondents on education background division: Number of respondents Percentage (%) Bachelor 126 61.5% Higher education 24 11.7% Other 35 17% Missing 20 9.8% Education background Table 4.4: Number of respondents on career division: Number of respondents Percentage (%) Student 20 9.8% Employee 82 40% Self-employed 65 31.6% Others 31 15.2% Missing 3.4% Career Table 4.5: Number of respondents on address division: Number of respondents Percentage (%) Ho Chi Minh city 151 73.6% Provinces of VietNam 32 15.6% From outside VietNam 22 10.8% Address Table 4.6: Number of respondents on nationality division: Number of respondents Percentage (%) Vietnamese 169 82.4% Foreigner 36 17.6% Nationality Table 4.7: Reliability analysis of customer satisfaction Reliability Statistics Cronbach's Alpha N of Items 856 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted PA1 10.6293 4.656 737 800 PA2 10.5854 4.960 628 845 PA3 10.6098 4.416 815 767 PA4 10.3073 4.773 625 848 Table 4.8: Reliability analysis of brand image Reliability Statistics Cronbach's Alpha N of Items 771 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted BI1 6.6146 2.277 661 625 BI2 6.8488 2.580 574 725 BI3 6.5366 2.632 582 716 Table 4.9: Reliability analysis of product quality Reliability Statistics Cronbach's Alpha N of Items 860 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted PQ1 10.0000 5.206 689 828 PQ2 10.1902 4.635 787 786 PQ3 10.1220 5.539 658 842 PQ4 10.2244 4.675 703 826 Table 4.10: Reliability analysis of service quality Reliability Statistics Cronbach's Alpha N of Items 866 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted SQ1 27.3756 25.647 738 839 SQ2 27.5512 26.739 684 845 SQ3 27.4244 27.344 550 856 SQ4 27.2098 26.176 773 837 SQ5 27.6976 27.859 394 873 SQ6 27.7756 26.008 652 847 SQ7 27.7463 26.377 668 845 SQ8 27.3951 25.838 728 840 SQ9 27.8244 28.802 314 880 Table 4.11: Reliability analysis of value and cost Reliability Statistics Cronbach's Alpha N of Items 670 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted VC1 6.3610 1.997 431 642 VC2 6.3512 1.954 486 569 VC3 6.3902 1.857 531 509 Table 4.12: Reliability analysis of place and atmosphere Reliability Statistics Cronbach's Alpha N of Items 856 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted PA1 10.6293 4.656 737 800 PA2 10.5854 4.960 628 845 PA3 10.6098 4.416 815 767 PA4 10.3073 4.773 625 848 Table 4.13: Reliability analysis of service quality after removing variable SQ5 “the staff is available and accessible” and variable SQ9 “The servers have ability of personal attention” Reliability Statistics Cronbach's Alpha N of Items 899 Item-Total Statistics Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if Item Deleted Deleted Correlation Deleted SQ1 20.8976 17.367 769 876 SQ2 21.0732 18.313 711 883 SQ3 20.9463 18.629 597 896 SQ4 20.7317 17.736 822 872 SQ6 21.2976 18.014 629 893 SQ7 21.2683 18.178 667 888 SQ8 20.9171 17.557 755 878 Table 4.14: EFA for all independent variables KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity 883 3202.337 df 300 Sig .000 Communalities Initial Extraction CS1 1.000 709 CS2 1.000 759 CS3 1.000 698 CS4 1.000 666 BI1 1.000 767 BI2 1.000 593 BI3 1.000 640 PQ1 1.000 662 PQ2 1.000 826 PQ3 1.000 643 PQ4 1.000 758 SQ1 1.000 781 SQ3 1.000 626 SQ4 1.000 839 SQ6 1.000 598 SQ7 1.000 628 SQ8 1.000 733 VC1 1.000 598 VC2 1.000 737 VC3 1.000 630 PA1 1.000 820 PA2 1.000 613 PA3 1.000 859 PA4 1.000 691 SQ2 1.000 748 Extraction Method: Principal Component Analysis Table 4.15: The total variance explained of independent variables Total Variance Explained Initial Eigenvalues Component Extraction Sums of Squared Loadings Cumulative % of Total % Variance Rotation Sums of Squared Loadings Total % of Variance 9.412 37.646 37.646 9.412 37.646 37.646 4.358 17.430 17.430 2.250 9.001 46.648 2.250 9.001 46.648 3.157 12.629 30.059 1.831 7.324 53.972 1.831 7.324 53.972 2.893 11.572 41.631 1.605 6.420 60.391 1.605 6.420 60.391 2.701 10.804 52.435 1.480 5.920 66.311 1.480 5.920 66.311 2.557 10.230 62.664 1.043 4.171 70.482 1.043 4.171 70.482 1.954 7.818 70.482 917 3.669 74.151 689 2.755 76.906 646 2.585 79.491 10 615 2.459 81.950 11 560 2.240 84.191 12 462 1.846 86.037 13 434 1.736 87.773 14 410 1.639 89.412 15 402 1.607 91.020 16 367 1.468 92.488 17 302 1.207 93.695 18 280 1.119 94.813 19 265 1.059 95.872 20 230 919 96.791 21 220 880 97.672 22 187 746 98.418 23 165 660 99.078 24 137 550 99.628 25 093 372 100.000 Extraction Method: Principal Component Analysis Cumulative % of Total % Variance Cumulative % Table 4.16: Rotated component matrix for independent variables: Rotated Component Matrix(a) Component SQ4 873 SQ1 804 SQ8 739 SQ3 691 SQ2 671 SQ7 617 SQ6 565 CS1 788 CS2 771 CS4 732 CS3 732 PA3 888 PA1 844 PA2 702 PA4 625 PQ2 817 PQ4 764 PQ1 619 PQ3 575 BI1 841 BI3 692 BI2 621 VC2 818 VC3 733 VC1 664 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Table 4.17: EFA for dependent variables KMO and Bartlett's Test 715 Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity 451.280 df 000 Sig Initial Extraction LOY1 1.000 780 LOY2 1.000 656 LOY3 1.000 601 LOY4 1.000 772 Extraction Method: Principal Component Analysis Table 4.18: The total variance explained of dependent variables Total Variance Explained Initial Eigenvalues Component Extraction Sums of Squared Loadings Total % of Variance Cumulative % Total % of Variance Cumulative % 2.809 70.217 70.217 2.809 656 16.389 86.607 385 9.623 96.229 151 3.771 100.000 Extraction Method: Principal Component Analysis 70.217 70.217 Table 4.19: The multiple regression of independent variables: Coefficients(a) Unstandardized Standardized Coefficients Coefficients Model Std Error B -.481 238 CS 366 060 BI 178 PQ t Statistics Sig Beta Tolerance VIF -2.021 045 360 6.085 000 560 1.786 056 175 3.185 002 649 1.541 156 069 149 2.253 025 449 2.227 SQ 141 067 129 2.115 036 524 1.908 VC 334 056 282 5.913 000 862 1.160 PA -.060 057 -.056 -1.046 297 694 1.442 (Constant) Collinearity a Dependent Variable: LOY Table 4.20: Results of hypothesis testing with the impact of customer satisfaction, service quality, product quality, value / cost and perception of customer to the restaurant brand image on customer loyalty Model Summary Model R R Square Adjusted R Square Std Error of the Estimate 782(a) 612 600 48239 a Predictors: (Constant), PA, VC, BI, CS, SQ, PQ ANOVA(b) Model Sum of Squares df Mean Square Regression 72.653 Residual 46.074 198 Total 118.727 204 a Predictors: (Constant), PA, VC, BI, CS, SQ, PQ F Sig 12.109 52.037 000(a) 233 b Dependent Variable: LOY Coefficients(a) Unstandardized Coefficients Standardized Coefficients Model B Beta t Sig -.481 238 -2.021 045 CS 366 060 360 6.085 000 BI 178 056 175 3.185 002 PQ 156 069 149 2.253 025 SQ 141 067 129 2.115 036 VC 334 056 282 5.913 000 PA -.060 057 -.056 -1.046 297 (Constant) Std Error a Dependent Variable: LOY ... customer loyalty Figure 2.1: The structure of brand image 35 Brand image of brand associationType of brand Uniqueness of brand Favorability associations of brandStrength associations associations... by customer perception and evaluation of restaurant brand Based on the structure of brand image, the measurement can focus on brand attitude, brand benefit from customer perception 2.6 Impact of. .. restaurant of Tan Cang Tourist Village The results reveal that customer satisfaction, the components of service quality and the brand image of the restaurant have positive impact of customer loyalty