LUẬN văn THẠC sĩ a study on customer behaviors in chain coffee shops in vietnam

INTRODUCTION

Background of the research

As a developing country, Vietnam has a massive capacity of agricultural land accounts for 39% in the total area with the contribution to GDP at 15% in 2017 (Statista, 2020) The report by Statista also indicated that the primary labor force of Vietnam is in the agriculture sector, with 40% of employment amounted to approximately 20 million people in 2018 In this sector, the coffee industry is vital for both domestic and foreign markets as Vietnam has been maintaining the position as the world’s second-largest coffee exporter in consecutive years

In the early twentieth century, coffee was first introduced into Vietnam in the time of colonization by France, coffee production then increased rapidly and became one of the most crucial agricultural products The first instant coffee plant with a manufacturing capacity of 80 tons per year, was established in Dong Nai Province, in 1969 The two main kinds of coffee beans in Vietnam are Robusta and Arabica, containing 1.6 to 2.7% caffeine and 1 to 1.5% caffeine, respectively, making the taste of coffee here bitter and healthier than the coffee drinks in the world

According to Tran (2019), in the marketing year of 2018/2019, domestic consumption of coffee is at 3 million bags, and the experts forecast this number will drastically increase due to the fierce competition of both international and local coffee brands in Vietnam The domestic consumption of coffee casts for approximately 10% of total coffee production, much lower than the exported amount of coffee, which means the local coffee shops still can grow From Table 1.1, we know the upward trend in consuming coffee of Vietnamese consumers from 2010 to 2018, and this upward trend signifies the continuing increase in domestic coffee consumption in the future

Figure 1.1 Total domestic coffee consumption in Vietnam from 2010 to 2018

(Unit: 1000 sixty-kg bags) (Source: statista.com) There are many newly-built coffee chains in recent years in Vietnam

According to Le (2018), coffee chains have competitive advantages in quickly detecting target customers and creating a standardized management system Also, coffee chains have more competency in attracting consumers when they become professional brands Additionally, it is difficult to have a precise number of coffee shops in Vietnam for the fact that the independent coffee shops locate sparsely and have a short life cycle However, the coffee chains have been the trend for business in coffee shops in Vietnam, along with the evolution of e-commerce and delivery service There are leading brands in the coffee chain market in Vietnam that prevails in the number of stores and revenue, namely Highland Coffee, Starbucks, The Coffee House, and Trung Nguyen Coffee

American giant coffee shops brand Starbucks, which entered Vietnam in 2013, now runs 60 shops, mostly in Hanoi and HCM City However, Starbucks offers a higher price than local chains like The Coffee House or Highland though they are in the same premium segment Domestic coffee chains in Vietnam manage a wide variety of products, from drinks to foods as well as secure Wi-Fi connection and tranquil space, especially sensitive in market trends and taste of the customer

Nowadays, fast-pace economic development in Vietnam encourages competition in various business and service sectors Many big firms try to invest substantial financial sources to gain market share and revenue despite losing profit, especially in creating chain businesses Other than the growth of convenient store

2010 2011 2012 2013 2014 2015 2016 2017 2018 markets, supermarkets, and food chains, the coffee chain market is among the fastest- growing sector in terms of the number of stores and revenue

In 2019, Euromonitor evaluated Vietnam’s chain coffee shop industry has a business volume at above one billion US$ for the improvement in living standards and urbanization This data shows that the coffee chain sector is essential In comparison, according to Statista, the revenue in the hot drinks market in Vietnam amounts to 8.817 billion US$ in 2020 In this hot drinks market, the most prominent industry is coffee, which has a business volume of 5.682 billion US$ According to a report by BMI Research, Vietnam’s coffee consumption increased remarkably from 0.42 kilograms per person per year in 2005 to 1.39 kilograms per person per year in

2015 Therefore, domestic coffee chains play a crucial part in the coffee market

However, Euromonitor also reported in 2019 that the five leading brands in the coffee chain market account for 15.3% of market share, with Highlands holding 7.2% Among the leading chains, Highlands Coffee, The Coffee House, and Starbucks are the biggest in earning revenue Table 1.1 shows the revenue and number of stores from leading coffee shop brands in Vietnam in 2019

Table 1.1 Leading coffee shops brand in Vietnam in 2019

Highlands Coffee The Coffee House Starbucks Revenue

(Source: VIRAC) Highlands Coffee and The Coffee House are brands that originated from Vietnam, while Starbucks is a foreign competitor However, Highlands and The Coffee House consider their targeted customer is the middle class with a pricing segment of 30000 to 60000 VND This study then chooses these two Vietnamese brands to be objects for collecting empirical data The conclusions from the research might be useful findings for Vietnamese brands, especially Highlands Coffee and The Coffee House, to understand the behavior of their customers

Besides, the phenomenon to research on the coffee chain market is the scenario approach There is a big difference between the number of stores between the two cities of Vietnam, Hanoi and HCM City Currently, the Coffee House has 32 stores in Hanoi and 88 in HCM City Also, Highlands Coffee maintains 81 and 111 stores in Hanoi and HCM correspondingly This data incurs curiosity if there is a difference in customer behavior between two cities

Highlands Coffee is the number one coffee chain in Vietnam The founder of Highlands, CEO David Thai, started the business in 1998 and opened the first store in 2002, but it gained much brand awareness and investment after 2012 From that time, Highlands continually expands its business, from 50 stores in 2012 to 300 stores in 2019 The strengths of Highlands are its attractive location in bustling districts, comfortable space, and high-quality products Moreover, Highlands has the ambition to bring Vietnamese coffee to the global; recently, they opened their first outlet in the Philippines As a leading coffee shop in Vietnam in a long time, Highlands has continuously been improving brand awareness and quality, especially on the delivery system or corporate social responsibility campaign Moreover, Highlands is prevalent not only on in-shop foods and drinks but also on roasted&ground coffee, instant coffee, and ready-to-drink coffee, which are its signature products Highlands connects with food reviewing website Now.vn or Foody.vn for delivery service in addition to traditional telephone booking or its website

The Coffee House (TCH) is a young and unique brand starting from 2014, currently holds second place in the Vietnamese market of the coffee chain CEO Nguyen Hai Ninh shared three strengths of TCH for attracting customers are the socializing space, staff behavior, and convenience TCH also identified that its strategic competitor is Highlands Coffee in the same segment TCH is also continuously adapting its menus with the current trend, and especially, they had the acquisition with the Ten Ren brand to compete with milk tea shops Gradually, TCH sets up the foundation for long-term growth from the raw materials to customer service Besides, TCH also serves the customer with roasted coffee beans or subscription combos in diversifying menus They concentrate much on convenient delivery service experience, especially on developing the TCH app on smartphones, even on Momo, an e-wallet app that generates many users in Vietnam recently

People are coming to coffee shops these days for a variety of purposes, not only for having a drink but a place to gather, socialize with friends and acquaintances

Therefore, it is necessary to study the significance of customer satisfaction and loyalty Both Highlands Coffee and TCH share the same idea about the difference in the Hanoi and HCM market in Vietnam Despite success in HCM City, many coffee shop brands are skeptical about expanding business in Hanoi CEO of TCH appreciated that customers in Hanoi prefer the attractive open space However, not many brands can provide though the potential of doing business in this city is very high Therefore, this research hopes to study customer behavior in Hanoi and HCM City and contribute findings to the coffee shop brands.

Problem statement

From academic perspectives, brand equity, customer satisfaction, and brand loyalty are vital for promoting sustainable development to the companies A satisfied and loyal customer does not only repeat their purchasing behavior but also but showing a willingness to spend extra money on their favored brand (Hoyer and MacInnis, 2008) Nowadays, loyalty also transforms into sharing positive comments on the brand, referring the brand to networks and family members These advantages from customer behavior bring word-of-mouth effect and brand image, which contribute to the sustainable growth of a brand

For service industry as coffee chains in Vietnam, the price is high in relation to the customer expenditure Therefore, it is vital to focus on CBBE and brand loyalty while the demand is still growing Coffee shops nowadays is a premium service which customer are willing to pay big money and become a regular customer Given the example of fast-food chains in Vietnam like the KFC or Golden Gate, despite charging a much higher price than a local restaurant, they still have a large number of patronages However, food chains or coffee chains face many difficulties in competing with competitors Thus, it is of great value for them to focus on educating loyal customers and gaining customer satisfaction, which helps to keep customer stay

Keller i (1993) i conceptualized i the i model i of i CBBE, i and i Nam i et i al i (2011) i employed i this i concept i to i study i the i effect i of i brand i equity i on i customer i satisfaction i and i brand i loyalty i from i empirical i data i in i the i UK i Besides, i Tu i et i al i (2012) i also i researched i on i satisfaction i and i loyalty i of i customers i in i Starbucks i Coffee i in i Taiwan i by i structural i equation i modeling i (SEM) i method i However, i there i is i no i or i little i research i to i investigate i the i relationship i between i brand i equity, i price, i customer i satisfaction, i and i brand i loyalty i in i the i Vietnamese i market i With i the i existing i literature i in i the i field i of i Vietnam i coffee i chains, i this i research i aims i to i help i in i understanding i the i customer i behavior i of i Vietnamese i customers i by i making i an i investigation i on i factors i affecting i brand i loyalty i In i a i more i common i sense, i it i will i help i to i learn i whether i Western i models i of i brand i equity, i customer i satisfaction, i and i loyalty i are i significant i for i explaining i the i Vietnamese i customer i behavior i toward i brands i i i i i i i i

The i theoretical i contribution i of i this i research i is i that: i the i researcher i adds i a i new i factor i price i on i the i existing i model i to i investigate i the i impact i of i price i on i customer i satisfaction i We i examine i how i the i price i contributes i to i customer i satisfaction, i brand i loyalty, i and i brand i equity i i

The i practical i contribution i of i this i research i is i that i we i bring i insights i for i brand i management i in i chain i coffee i shops, i especially i spotting i the i difference i in i customer i behavior i in i two i scenarios i It i is i also i helpful i for i the i person i aiming i to i set i up i a i coffee i shop i in i Vietnam i in i the i future i because i of i the i vital i role i of i investigating i customer i behavior, i namely i customer i satisfaction i and i loyalty

This paper offers an understanding of the importance of factors affecting brand loyalty and customer satisfaction from an empirical study in Vietnam Future research can further test with more factors or in other markets in Vietnam to gain knowledge about customer behavior.

Research objectives

This i study i has i three i objectives i as i follows: i

 To i investigate i the i effect i of i price, i congruence i and i quality i on i customer i satisfaction i in i chain i coffee i shops i in i Vietnam i

 To i investigate i the i effect i of i customer i satisfaction i on i brand i loyalty i in i chain i coffee i shops i in i Vietnam i

 i To i describe i the i customer i behavior i from i analysis i results i in i two i scenarios i of i coffee i chains i in i Hanoi i and i HCM i City

Scope of the research

This study focuses on three objectives, as mentioned above Therefore, the research samples concentrated on the customer of Highlands Coffee and The Coffee House in Hanoi and HCM City The quantitative questionnaire was employed to study the phenomenon and examine the hypotheses stated in the next chapter.

Significance of the research

This research aims to examine the relationship between price, CBBE, and customer satisfaction in the coffee chain sector in Vietnam The data collection tool is questionnaire surveys with a sample of 400 respondents in two coffee chains in Hanoi and HCM City This quantitative approach enables this research to analyze the data across the sample and test the theories

The chain coffee shops sector is imperative and contributes to the growth of the coffee industry or service industry simultaneously This study then provides new data that can support brands to understand customer preferences It also recommends implications on branding which benefit coffee chains as well as other markets in Vietnam

From the literature reviews, the researcher found little or no academic paper directly studies the effect of price, congruence, quality on customer satisfaction, and brand loyalty in the case of Vietnamese coffee chains Because of this scarcity in research about the customer of coffee shops in Vietnam, scholars should also consider this research useful and information regarding the measurement of variables The results of this paper reveal knowledge about Vietnamese customer behavior in this market, and they are also useful to future research orientation in a related market.

Thesis structure

This paper consists of five chapters starting with the chapter of the research background to overview and centralize the scope of the research In chapter 2, the literature reviews are given to describe the theoretical relevance of previous researches and to develop the model as well as hypotheses for further examination In chapter 3, we show the methodology, data collection, and data analyzing technique The fourth chapter shows the findings of the research, which represent descriptive analyse and analytical results In the final chapter, we discuss the results, make conclusions about the research, answer the research objectives correspondingly, recommendations to subjects, and future researches.

LITERATURE REVIEW

Brand equity

Brand i equity, i from i the i 1980s, i has i become i one i of i the i essential i concepts i of i marketing i and i branding, i has i been i described i and i researched i in i various i ways i Previous i studies i discussed i the i idea i of i brand i equity i in i three i primary i prospects, i including i a i customer-based i perspective i (Aaker, i 1991), i financial i perspective i (Simon i and i Sullivan, i 1993) i and i the i combined i view i of i these i two i (Anderson, i 2007) i According i to i Aaker i (1991), i brand i equity i refers i to i the i array i of i different i liabilities i and i brand i assets, i associated i with i the i brand i for i instance i including i symbol, i name, i and i others, i adding i and i subtracting i from i the i value i provided i by i services i and i products i to i the i firm i as i well i as i to i firm’s i consumers i and i customers

Correspondingly, i Keller i (1993) i defined i CBBE i as i the i differential i effect i of i brand i knowledge i upon i consumer i response i to i the i marketing i of i the i brand i Therefore, i this i perspective i relates i to i three i critical i concepts, i including i brand i knowledge, i differential i impact, i and i consumer i response i to i marketing i Brand i knowledge i designates i the i combination i of i brand i image i and i brand i awareness i and i its i ideas i in i consonance i with i the i relationships i and i characteristics i of i brand i association i depicted i earlier

Likewise, i comparing i customer i response i to i the i marketing i of i a i brand i with i the i reaction i to i similar i marketing i from i a i fictitiously i named i or i an i unnamed i version i of i the i product i or i service i decides i the i differential i effect i of i brand i equity i The i definition i of i customer i response i to i marketing i is i following i customer i perceptions, i preferences, i and i behavior i arising i from i marketing-mix i activities; i for i example, i it i involves i reactions i to i coupon i promotions, i perception i of i copy i points i from i an i ad, i or i evaluations i of i a i proposed i brand i extension i and i others

On i the i other i hand, i brand i equity i is i the i enhancement i in i perceived i utility i and i desirability i that i a i brand i name i confers i in i products i or i services i (Lassar, i Mittal, i and i Sharma, i 1995) i Besides, i Christodoulides i (2010) i represents i brand i equity i as i a i set i of i attitudes, i perceptions, i behaviors, i and i knowledge i on i the i part i of i consumers, i resulting i in i the i enhanced i utility i of i products i and i services, i which i facilitates i the i brands i to i generate i more i significant i revenues i and i margins i than i that, i without i the i brand

Aaker i (1991) i offered i the i measurement i of i brand i equity i conforming i to i different i elements, i aspects, i and i dimensions i The i author i relates i the i brand i equity i to i multiple i issues, i including i brand i association, i brand i awareness, i perceived i quality, i brand i loyalty, i and i other i proprietary i assets i of i brands i From i this i part, i CBBE i is i the i type i of i brand i equity i that i the i author i wants i to i focus i on i and i research i in i this i study i

As i explained i by i Washburn i and i Plank i (2002), i four i concepts, i including i brand i awareness, i perceived i quality, i brand i association, i and i brand i loyalty, i are i fundamental i dimensions i to i measure i CBBE i The i authors i also i noted i that i the i perspective i of i other i proprietary i assets i of i brands i is i irrelevant i in i consumer-based i brand i equity i measurement i Besides, i Yoo i and i Donthu i (2001) i reported i that i consumer-based i brand i equity i at i the i individual i level i of i customer i breaks i into i behavioral i and i cognitive i perspectives; i therefore, i conducting i consumer i surveys i is i a i valid i measurement i i i i i i

Additionally, i consumer-based i brand i equity i is i the i synthesis i of i physical i quality, i staff i behavior, i brand i identification, i lifestyle-congruence, i and i ideal i self- congruence i (Nam i et i al., i 2011) i Consequently, i this i paper i explores i the i impacts i of i those i characteristics i of i consumer-based i brand i equity i on i brand i loyalty, i in i consideration i of i customer i satisfaction i as i a i medium i Ko i and i Chiu i (2006) i viewed i the i coffee i shop i industry i as i a i part i of i the i service i industry, i notably i the i food i and i service i industry, i consequently, i reflecting i and i reutilizing i the i items i from i the i measurement i of i CBBE i in i the i study i of i Nam i et i al i (2011) i is i viable i Furthermore, i O’Louhglin i and i Szmigin i (2006) i portrayed i that i developing i and i designing i the i relationship i of i brand i association i and i five i dimensions i of i consumer-based i brand i equity i helped i to i meet i functional i needs i as i well i as i the i symbolic i needs i of i customers i

Besides, i for i the i resemblance i in i the i research i matter i as i an i area i of i the i service i industry, i this i study i applies i consumer-based i brand i equity i by i incorporating i four i dimensions i illustrated i by i Nam i et i al i (2011) i The i authors i formulated i a i model i with i a i measurement i of i four i dimensions i of i consumer-based i brand i equity i with i aiming i to i research i the i case i of i hotels i and i restaurant i industry i in i the i UK i Thus, i for i similarity i to i the i case i of i hotels i and i restaurants i industry, i this i paper i employs i the i physical i food i and i service i quality i dimensions i as i well i as i the i symbolic i dimensions, i including i lifestyle- congruence, i and i ideal i self-congruence, i to i measure i consumer-based i brand i equity i in i the i coffee i shops i industry.

Customer satisfaction

Many i types i of i research, i especially i in i the i marketing i field, i recognized i customer i satisfaction i as i a i critical i factor i for i the i long-term i success i of i a i brand i (Pappu i and i Quester, i 2006) i Accordingly, i a i large i number i of i scholars i employed i customer i satisfaction i as i a i dominant i factor i to i explore i the i post-purchase i behavior i of i the i customer, i for i example, i attitudinal i loyalty i and i behavioral i loyalty i Nemati i et i al i

(2011) i described i customer i satisfaction i as i the i level i a i product i or i service i serves i the i customer i and i satisfies i his i or i her i expectations i

Customer i satisfaction i has i both i cognitive i and i affective i aspects i The i cognitive i aspects i related i to i thoughts i and i judgments i about i the i product i or i service i and i the i brand i while i the i affective i perspectives i encompass i a i subjective i feeling i that i the i overall i experience i in i dealing i with i the i firm i is i positive i (Tu i et i al., i 2012) i Baig i and i Khan i

(2010) i believed i that i retaining i customers i is i certainly i worthwhile i financially i in i correlation i to i the i cost i of i gaining i new i customers, i which i is i far i more i expensive i Consequently, i customer i satisfaction i is i a i vital i factor i when i doing i business i in i such i profoundly i competing i markets, i mainly i the i hotel i and i restaurant i industry i or i coffee i shops i industry

Among two forms of customer satisfaction, including cumulative satisfaction and transaction-specific satisfaction, researchers concentrate more to study related to cumulative types, which refer to the extent of post-purchase satisfaction of the customer Tu et al (2012) evaluated the overall satisfaction of the latest consumptions of products and services along with the rendezvous with the brand or their employees.

Brand loyalty

Previous i studies i have i defined i and i developed i the i concept i of i brand i loyalty i as i an i important i factor i in i branding i and i marketing i Brand i loyalty i is i the i repeated i purchasing i products i and i services, i as i well i as i support i the i brands i resulting i from i the i positive i attitude i towards i the i brand i from i customers i (Hoyer i and i McInnis, i 2008) i According i to i Jacoby i and i Chestnut i (1978), i brand i loyalty i refers i to i the i perspective i which i is i biased i behavioral i response i conveying i over i a i period i made i by i decisions i of i consumers i concerning i the i purchase i of i a i particular i brand i or i multiple i brands, i consider i as i a i process i of i psychological i thinking i of i customers i The i authors i also i highlighted i the i importance i of i brand i loyalty i with i the i role i of i simplifying i the i purchasing i decision, i for i example, i that i with i existed i positive i experiences i with i the i brand, i the i customer i tends i to i keep i buying i as i a i signal i of i loyalty i Therefore, i through i brand i loyalty i concentration, i a i firm i or i a i brand i can i build i up i their i regular i customer i or i customer i base, i which i is i morale i for i expanding i business i scale i and i growth i i i i

Because i brand i loyalty i is i a i psychological i concept i defined i by i many i scholars, i it i is i difficult i to i measure i it i objectively i One i method, i including i price i sensitivity i and i purchasing i behaviors, i is i widespread i and i mentioned i in i various i studies i Moreover, i brand i loyalty i is i informatively i measured i by i inspecting i customers i to i assess i their i commitment i to i the i brand i based i on i critical i items i such i as i the i attitude i toward i the i product i and i their i consistent i opinions i overtime i (Mohammad, i 2012) i Previous i studies i suggest i two i perspectives i to i view i brand i loyalty i Attitudinal i loyalty i attributes i to i the i positive i feeling i or i opinion i on i the i brand i itself i or i the i products i provided i by i the i brand i (Gremler i and i Brown, i 1996) i There i are i multiple i ways i to i measure i attitudinal i loyalty, i for i example: i “intention i of i word i of i mouth” i (Boulding i et i al., i 1993) i or i “willingness i to i pay i a i premium i price” i (Narayandas, i 1996) i On i the i other i hand, i behavioral i loyalty i regards i as i the i purchasing i behavior i or i repeated i the i frequency i of i purchase i products i of i the i same i brand i over i time i (Chaudhuri i & i Holbrook, i 2001) i Bandyopadhyay i and i Martell i (2007) i considered i the i cause i and i effect i relationship i between i attitudinal i and i behavioral i loyalty; i for i instance, i if i a i customer i holds i a i pleasant i experience i with i the i brand, i consequently, i he i or i she i favors i becoming i a i repeated i consumer

Choi et al (2011) developed a set of brand loyalty items that were useful for further researches This measurement of brand loyalty helped in mitigating the risk of other factors affecting behavioral brand loyalty, such as convenience or habit

Besides, Nam et al (2011) also described a set of items to assess brand loyalty This research then employs items from previous papers to study the correlation between brand loyalty and other variables.

Price

A price refers to the amount of payment or compensation given by one party to another in exchange for one unit of goods or services (Schindler, 2012) Price is also an element of marketing mix together with product, place, and promotion

Besides, from the business viewpoint, marketing mix is a critical tool for firm and organization to achieve marketing target as well as increase the sale and financial performance (Bay, Petrizzi and Gill, 2008) In the service industry, the price has the intangible nature of service, then in case other information is missing, price becomes a pivotal quality degree (Olander, 1970; Zeithaml, 1981) Moreover, it is imperative that the firm also confronts with setting price competitively, for example, a customer considers price as a basis to choose the brand in situation among several competing service organizations (Yelkur, 2000)

According to Olson (1977), the objective or actual price has been defined distinctively from perceived price, and whether the price is low or expensive is understood by the actual price by the customer Moreover, Yoo et al (2000) represented that price is subjectively perceived by the consumer; it is possible to measure it by collecting the opinion of the consumer Using items of Smith and Park

(1992), the authors also developed eight items related to price measurement; for instance, “the price of this brand is high.” This paper, therefore, will adapt and employ this method of price assessment as a part of the scale for measuring the research variable.

Relationship between brand equity, price, customer satisfaction and

2.5.1 Brand equity and customer satisfaction

Service i quality i is i a i fundamental i part i of i marketing i and i helps i in i sustaining i and i succeed i in i business i (Fitzsimmons i et i al., i 2001) i Previous i studies i already i researched i service i quality, i and i this i paper i utilizes i two i perspectives i of i service i quality i comprising i staff i behavior i and i physical i quality i to i investigate i in i the i field i of i coffee i shops i industry i The i staff i behavior i reflects i the i competence, i friendliness, i and i helpfulness i of i staff i members i in i the i service i industry, i while i the i physical i quality i dimension i refers i to i the i physical i facilities i of i the i brand i (Bloemer i and i Kaspe, i 1995)

The i physical i facilities i accommodate i firms i to i give i the i customer i a i pleasant i experience, i which i may i incur i not i only i repeated i purchasing i behavior i but i also i word- of-mouth i effect i Consequently, i a i good i and i pleasant i experience i also i provokes i customers i in i terms i of i strongly i affecting i their i level i of i satisfaction i and i loyalty i (Bloemer i and i Kaspe, i 1995; i Ryu i and i Jang, i 2008)

On i the i other i hand, i the i staff i behavior i has i an i impact i on i customer i satisfaction i because i during i service i providing i process i customer i has i a i particular i experience, i it i can i be i positive i or i negative i The i staff i and i employees i of i an i organization i play i an i important i role i in i creating i customer i satisfaction i as i they i have i ultimate i responsibility i in i contacting i and i providing i service i to i customers, i meeting i their i expectations i (Zeithaml i et i al., i 1986) i Past i researches i have i described i that i low-skilled i staff i might i induce i the i negative i emotional i experience i of i the i customer i because i those i staff i might i be i reluctant i to i cope i with i that i emotion i of i the i customer i properly i while i they i are i the i representative i of i the i firm i (Bloemer i & i Kaspe i 1995; i Lemmink i and i Mattsson, i 2002) i Additionally, i Han i et i al i (2015) i believed i that i the i behavior i of i employees i has i a i significant i effect i on i overall i customer i satisfaction i Besides, i Bhattacharya i and i Sen i (2003) i researched i the i explicit i service i attribute i and i reported i that i the i politeness i and i attentiveness i of i staff i also i have i an i impact i on i customer i satisfaction

Also, i there i are i numerous i scholars i identified i and i employed i the i relationship i among i customer i satisfaction, i physical i quality i and i staff i behavior i in i different i sectors i of i the i service i industry i for i their i studies, i namely i Parasuraman i et i al i (1988); i Bergami i

& i Bago i i i (2000); i Brady i & i Cronin i (2001); i Ryu i & i Jang i (2008)

The lifestyle of people refers to how they purchase products or choose a brand, for example, luxury goods or services Brands and brand settings are expressions of lifestyles (Solomon, 2002) Peter and Olson (2008) defined lifestyles as the specific manner that people conduct their lives Also, Solomon et al (2006) described lifestyle as a way to differentiate people belong to a group or not According to Casswell and Maxwell (2005), interpretation desired experiences and lifestyles when the customer uses a product or service facilities to build a brand Similarly, the authors believed that the suitability of the brand and personal lifestyle of consumers stimulates the right attitude of the customer with the brand Lifestyle-congruence describes the degree to which brand consumption supports consumers’ unique pattern of living as expressed by their activities, interests, and opinions (Nam et al., 2011)

Sarki i et i al i (2012) i portrayed i purchasing i behavior i as i relates i to i emotion i more i than i rationale i This i research i also i mentioned i that i encouraging i customers i to i buy i products i or i services i of i a i brand i is i influenced i by i many i external i factors i such i as i culture i and i lifestyle

Solomon i (2002) i also i identified i the i mechanism i for i the i marketing i of i lifestyle, i which i aims i to i gain i customer i satisfaction i is i harmonizing i the i specific i lifestyle i of i the i customer i to i brand i strategy i Researches i about i the i effect i of i lifestyle i on i the i level i of i satisfaction i of i customer i towards i a i brand i confirm i that i there i is i a i positive i relationship i between i customer i satisfaction i and i lifestyle i (Kyungnam, i 2011; i Awan i and i Rehman, i

2014) i A i further i study i conducted i by i Nam i et i al i (2011) i also i confirmed i that i the i congruence i between i the i lifestyle i of i consumer i and i a i brand i strongly i reinforce i customer i satisfaction

The construct of congruence relates the personality of brands to the self- concept of consumers (Nienstedt et al., 2012) According i to i Baumeister i (1999), i self- concept i refers i to i the i sum i of i thoughts i and i feelings i of i a i person i about i himself i or i herself, i including i the i comprehension i of i that i person i about i who i and i what i the i self i is i Carl i Rogers i (1959) i also i identified i three i perspectives i of i self-concept, i including i self- image, i self-esteem, i and i ideal i self i In i these i three i concepts, i this i paper i employs i the i use i of i ideal-self, i which i means i what i individuals i wish i they i were i becoming

Sirgy i et i al i (2000) i developed i self-congruence i theory i and i defined i self- congruence i as i the i extent i to i which i actual i and i ideal i self-congruence i matches i with i the i brand i image; i this i level i then i partially i influence i customer i behavior i Ambler i et i al i

(2002) i also i share i the i same i opinion i on i self-congruence; i the i individual i owns i or i buys i brands i to i enhance i their i self-esteem

He i and i Mukherjee i (2007) i considered i self-congruity i as i a i crucial i factor i in i researching i various i aspects i of i customer i behavior, i and i it i is i of i great i importance i in i being i antecedent i to i impact i customer i satisfaction i i Previous i studies i by i Andreassen i

(1994), i Baker i (1987), i and i Grewal i & i Mangleburg i (2000) i also i supported i that i there i is i a i positive i correlation i between i customer i satisfaction i and i ideal i self–congruence i in i the i service i industry i In i the i study i about i the i effect i of i brand i self-congruence i on i the i behavior i of i the i customer, i brand i self-congruence i has i more i impact i on i satisfaction i than i attitude i and i preference i

This i study i then i combines i the i physical i quality, i staff i behavior, i lifestyle i congruence, i and i ideal-self i congruence i dimensions i of i CBBE i into i quality i and i congruence i dimensions i to i explore i their i impacts i on i customer i satisfaction

According to Peng and Wang (2006), the customer has to pay the price as the financial cost they purchase products or services, then the customers consider price as a crucial thing to decide between buying a product or service There is a close relationship between the fairness of price and customer satisfaction (Al-Msallam,

2015) The authors found that price fairness is one of the critical determinants for customer satisfaction because the customers often switch to any other brand which offers a reasonable price This idea means that as long as a brand offers a fair price, the customer will stick to them for a longer-term

Most of the customers view price with the service quality; when there is a match, the result is customer satisfaction and vice versa (Oliver, 1997) This idea means the customers have a tendency to pay for the product or service if they feel the deal given by the service provider is reasonable There are two perspectives in calculating the price perception (Cheng et al., 2008) The first one is the reasonableness of price, which refers the customer’s perception of the differentiation between one brand and the others The other aspect is how the customers consider the relative position of a brand; then, they perceive the fairness of price concerning the value of money Ordinarily, the products or services with low quality are often cost lower than those with high quality (Chitty et al., 2007)

Research model

The above literature reviews are about CBBE, brand loyalty, price and customer satisfaction, and their relationships From these conceptual constructs, this paper foresees the influences of price and brand-equity on customer satisfaction and customer satisfaction on brand loyalty Although different from the conceptual model from Nam et al (2011), we do not test the role of the brand identification dimension in the model because the coffee chains market in Vietnam is still developing with little awareness from the customer about brand identification However, it is of the great potential that there is a positive effect of the price on customer satisfaction, which is a new dimension to the conceptual model Moreover, from the phenomenon about location, the hypotheses are developed and tested as two separate empirical cases in Hanoi and HCM City Therefore, the author developed the research model with four hypotheses as follows:

 Hypothesis 1: Price i has i a i positive i effect i on i customer i satisfaction i in i chain i coffee i shops i in i Vietnam i i i

 Hypothesis i 2: i Quality i has i a i positive i effect i on i customer i satisfaction i in i chain i coffee i shops i in i Vietnam

 Hypothesis i 3: i Congruence i has i a i positive i effect i on i customer i satisfaction i in i chain i coffee i shops i in i Vietnam i

 Hypothesis i 4: i Customer i satisfaction i has i a i positive i effect i on i brand i loyalty i in i chain i coffee i shops i in i Vietnam.

METHODOLOGY

Research design

This i study i aims i to i identify i and i investigate i the i relationship i between i price, i congruence, i quality, i customer i satisfaction, i and i brand i loyalty i in i the i coffee i shops i industry i in i Vietnam i The i researcher i adopts i deductive i reasoning i with i a i theory i about i the i concerned i topic i instead i concentrates i on i formulating i testable i hypotheses i by i collecting i observations i and i gathering i data i that i concerns i the i confirmation i of i the i original i theory

Besides, i this i paper i uses i a i quantitative i research i strategy i generating i the i numerical i representation i of i a i particular i phenomenon i through i collected i data i It i then i employs i the i survey-style i questionnaire, i which i is i popular i and i effective i as i the i previous i researches i in i the i field i Under i time i and i resource i limitations, i the i author i considers i the i deductive i approach, i quantitative i research i strategy, i and i questionnaire i are i the i most i suitable i design i to i conduct i this i paper

First, this study utilized secondary data coming from journal articles, textbooks, and media stories, which ensured the research motivation and literature reviews The process follows a pilot test for the validity purpose of the questionnaire by the 47 offline surveys (27 in Hanoi; 20 in HCM City) These surveys reinforced the meaning of research items and the translation of questionnaire items into the Vietnamese language The author then conducted surveys to collect primary data in the one month between February and March 2020 in Vietnam under a common sampling technique This i paper i collects i data i by i online i questionnaires i with i the i purposive i sampling i following i chosen i criteria: i (1) i The i respondent i are i customers i of i Highlands i Coffee i or i The i Coffee i House i in i Hanoi, i and i HCM i City; i and i (2) i The i respondent i has i purchased i the i product i or i service i of i these i brands i at i least i three i times i in i recent i three i months

As i a i structural i equation i modeling i (SEM) i research, i this i study i includes i the i exploratory i and i confirmatory i factor i analysis, i and i according i to i Gorsuch i (1983), i those i fair i samples i require i the i minimum i sample i of i 200 i observations i Also, i according i to i Hair i et i al., i (2010), i the i least i ratio i of i observations i over i a i questionnaire i item i is i 5:1, i and i Kline i (2015) i believed i that i the i N:q i ratio i should i be i 20 i to i 1 i or i each i parameter i in i the i model i requires i 20 i participants i Therefore, i this i study i with i 24 i items i and i four i parameters i from i the i research i model i needs i to i collect i at i least i 120 i respondents i

The i author i generated i 450 i questionnaires i equally i distributed i in i Hanoi i and i HCM i City i After i check i and i elimination i of i false i or i incomplete i responses, i there i were i

427 i completed i and i valid i answers i for i the i analyzation i steps i (218 i in i Hanoi i and i 209 i in i HCM i City), i which i indicated i the i valid i rate i of i 94.9%

In terms of analytical technique, this study utilized IBM SPSS Statistics 20 and AMOS 21, which is an added module of SPSS to conduct multivariate analyses and test hypotheses AMOS is a popular tool in SEM, and it also helps to graph and to modify the relationship between variables.

Data collection instruments

This paper studies the relationship between five variables, including price, quality, congruence, customer satisfaction, and brand loyalty The scale using for the research has been used in previous researches to apply to the case of the coffee shops industry in Vietnam In specific, the price variable consists of four items dropped from Yoo et al., (2000) The congruence variable comprises of six items of ideal-self congruence and lifestyle congruence adopted from Nam et al., (2011) The product and service quality variable was evaluated with six items from Nam et al., (2011)

Customer satisfaction and brand loyalty measured by four items respectively, were adopted from Choi et al (2011)

Apart from demographic questions, surveys of this study also employed a five- point Likert scale for all those variables to assess the answers of respondents ranging from strong disagreement to strong agreement The table below then summarizes the scale and construct of the questionnaire:

Table 3.1 Questionnaire scale and construct

PR1 The price of this brand is higher than other brands PR2 The price of this brand is lower than other brands

PR3 The price of this brand is more affordable than other brands

PR4 The price of this brand is more expensive than other brands

QL1 Quality of foods and drinks QL2 Staff behavior

QL3 Physical quality QL4 Staff behavior QL5 Quality of atmostphere and space QL6 Attitude of staff

CON1 Self-congruence from other personal view CON2 Lifelstyle support

CON3 Self congruence from other people’s view CON4 Lifestyle congruence

CON5 Ideal self expectation CON6 Personal lifestyle

CS1 Foods and drinks satisfaction CS2 Staff behavior satisfaction CS3 Good experience in this coffee chain brand CS4 Choosing this brand is a right choice

BL1 Sharing good comments about the brand BL2 Continue purchasing and using the brand in future BL3 Prefer this brand to others

BL4 Recommend this brand to someone who ask

Data analysis

Structural equation modeling (SEM) has advantages in running multiple regression models simultaneously, while one variable might be both independent and dependent This study follows the typical steps in an (SEM) research to investigate the relationship in literature Firstly, each latent variable will go through the reliability check based on the Cronbach’s alpha indices If the observed variables meet the required threshold, the remained indicators proceed to the explanatory factor analysis (EFA) for testing if they belong to the same variables The critical result is the principal axis factoring with the convergence of criteria into iterations The CFA analysis step follows to examine the reliability of the measurement items as a whole with the goodness-of-fit and statistical indices The last step is to run the SEM analysis, where the path loading of the proposed model will be tested In this study, the objects are the coffee chain market in Hanoi and HCM City; therefore, we will run the model twice for checking the hypotheses and comparing the results of two cases.

FINDINGS

General results

The first part of the questionnaire focused on the profile of respondents There were a total of 450 surveys given in which 427 responses are valid to continue to the next step In these valid responses, the majority were male in both cases of Hanoi and HCM City In terms of age, this research has a relatively equal distribution of three groups; each of them accounted for 30% of the total sample Highlands Coffee and The Coffee House are the objects of the study because they are competitors, serve the targeted customer in the same price range Please see Table 4.1 for the presentation of the demographic background of the sample

The next few questions in the surveys explored the behavior of respondents when purchasing products or services of chain coffee shops This study concentrated on the customers who used the service of coffee houses at least three times in the last three months, and the most highest frequency is the group of four times Also, it is surprising that in recent three months, more than 10% of the respondents buy products of coffee shops more than five times Although the direct visits method still prevails, more than half of the customers use the delivery service The delivery has now become a trend and an effective medium for the food and beverage industry Instead of conventional coffee-related products, tea drinks are the most popular for the fact that the coffee shops also have to compete with the bubble tea shops The coffee shops renew their menu and adapt to a new trend, diversify the product line with juice or foods like cakes or snacks Besides, the primary respondents are coming to coffee shops to discuss business and meeting friends or acquaintances Table 4.2 illustrated all the detail about demographic customer behavior

Frequency of buying in last 3 months

Descriptive analysis

The mean and standard deviation of the measurement items in Table 4.3 brought a comparison between the two cases of Hanoi and HCM City The overall mean of the quality variable is above 3.5; this indicates a high level of agreement

The overall mean value of quality factor also shows that Hanoi (4.07) is higher than HCM City (3.58), which revealed that customers in Hanoi appreciate the quality of coffee shops more than in HCM City The congruence factor and customer satisfaction factor also have similar results as the quality factor where Hanoi prevails

The price variable is the only one that the mean value of a customer from HCM City (3.25) higher than that from Hanoi (3.14) The overall mean of the brand loyalty variable demonstrated that though the customer satisfaction in Hanoi exceeded HCM City, the gap between the overall mean of brand loyalty and customer satisfaction in Hanoi is big (0.6) In contrast, that gap of HCM City is narrow (0.29) The next part of the analytical results will further explore this phenomenon and also help in explaining the relationship between variables and have a comparison between the results of Hanoi and HCM City

Analytical results

 Reliability i results: i Table i 4.4 i shows i the i Cronbach’s i alpha i of i five i variables i in i which i all i of i them i generate i a i high i level i above i 0.8 i These i results i confirmed i the i reliability i of i the i measurement i scale, i and i all i of i the i items i met i the i requirement i of i the i cut-off i point i for i Cronbach’s i alpha i These i items i will i then i be i kept i to i run i the i test i of i EFA

Table 4.4 Reliability test in Hanoi

 EFA results After creating Principal Axis Factoring and rotate the model by the Promax i method i with i Kaiser i Normalization, i the i model i converged i in i 5 i iterations i with i 24 i items i as i shown i in i Table i 4.5 i and i Table i 4.6 i All i the i test i for i EFA i also i met i the i requirement i as i follows: i

- KMO i measure i of i sampling i adequacy: i 0.822 i ( i > i 0.5)

- Bartlett's i test i of i sphericity i with i significant i level: i 0.000 i ( i < i 0.05)

- Extraction i sums i of i squared i loadings i with i cumulative i at i 54.309 i % i ( i > i 50%)

- All i factor i loading i has i value i higher i than i 0.5

- Five iterations are equivalent to five variables in the designated model for the CFA factor analysis

Table 4.5: KMO and Bartlett's Test in Hanoi

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .822

Table 4.6: Pattern Matrix in Hanoi

Table 4.7 Results of GOF tests of CFA factor analysis in Hanoi

GOF indices Result Thresholds Fit level

Chi-square/DF 1.472 ≤ 3 Good fit

Figure 4.1 CFA path analysis in Hanoi

Figure 4.1 has shown indicators that summarized the goodness-of-fit i (GOF) i tests i of i CFA i factor i analysis i The i results i and i criteria i are i shown i in i Table i 4.5 i These i results i then i verified i the i measurements i as i satisfied i the i thresholds, i according i to i Hu i and i Bentler i (1999) i All i factor i loadings i of i questionnaire i items i are i also i above i 0.5, i as i in i Figure i 4.1 i This i CFA i factor i analysis i also i deals i with i the i issue i of i convergent i validity i by i examining i composite i reliability i (CR) i and i average i variance i extracted i (AVE) i As i shown i in i Table i 4.6, i CRs i and i AVEs i also i satisfied i their i requirements: i above i 0.7 i and i 0.5, i respectively

Table 4.8 Convergent and discriminant validity in Hanoi

CR AVE MSV ASV BL CON QL PR CS

 SEM analysis – Hypotheses results After the conversion of the CFA path to SEM path analysis, the designated model of five variables remains a good-fit level of GOF indices, as shown in Figure 4.2, referring to the same thresholds in Table 4.5

Figure 4.2 SEM path analysis in Hanoi

According to path analyses, four hypotheses in this research are supported by the empirical analysis in Hanoi In particular, Table 4.7 indicates the evaluation of the standardized coefficients of the hypothesized model The t-Test has p-Value at an acceptable level (p < 0.001) means that the hypotheses are supported, and there are effects of exogenous variables on endogenous variables Statistically, the paths starting from a quality, congruence, and price to customer satisfaction are significant with β at 0.32, 0.30, and 0.25, respectively These coefficients mean quality has the most potent effect on customer catisfaction Also, customer satisfaction positively affects brand loyalty (β = 0.34)

Table 4.9 Results of SEM analysis in Hanoi β Coefficient t-Value Hypothesis

Dependent variable: Customer Satisfaction (R-square = 0.34)

Dependent variable: Brand Loyalty (R-square = 0.18)

4.3.2 Statistical results in Ho Chi Minh City

Table i 4.8 i shows i the i Cronbach’s i alpha i of i five i variables i in i which i all i of i them i generate i a i high i level i above i 0.84 i These i results i confirmed i the i reliability i of i the i measurement i scale, i and i all i of i the i items i met i the i requirement i of i the i cut-off i point i for i Cronbach’s i alpha i These i items i will i then i be i kept i to i run i the i test i of i EFA i factor i analysis

Table 4.10 Reliability test in HCM City

After i creating i Principal i Axis i Factoring i and i rotate i the i model i by i the i Promax i method i with i Kaiser i Normalization, i the i model i converged i in i 5 i iterations i with i 24 i items i as i shown i in i Table i 4.11 i and i 4.12 i All i the i test i for i EFA i also i met i the i requirement i as i follows: i

- KMO i measure i of i sampling i adequacy: i 0.884 i ( i > i 0.5)

- Bartlett's i test i of i sphericity i with i significant i level: i 0.000 i ( i < i 0.05)

- Extraction i sums i of i squared i loadings i with i cumulative i at i 59.122 i % i ( i > i 50%)

- All i factor i loading i has i value i higher i than i 0.5

- Five iterations are equivalent to five variables in the designated model for the CFA factor analysis

Table 4.11: Pattern Matrix in HCM City

Table 4.12: KMO and Bartlett's Test in HCM City

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .884

Figure 4.3 has shown indicators that summarized the goodness-of-fit i (GOF) i tests i of i CFA i factor i analysis i The i results i and i criteria i are i shown i in i Table i 4.9 i These i results i then i verified i the i measurements i as i satisfied i the i thresholds, i according i to i Hu i and i Bentler i (1999) i All i factor i loadings i of i questionnaire i items i are i also i above i 0.5, i as i in i Figure i 4.3 i This i CFA i factor i analysis i also i deals i with i the i issue i of i convergent i validity i by i examining i composite i reliability i (CR) i and i average i variance i extracted i (AVE) i As i shown i in i Table i 4.10, i CRs i and i AVEs i also i satisfied i their i requirements: i above i 0.7 i and i 0.5, i respectively

Table 4.13 Results of GOF tests of CFA factor analysis in HCM City

GOF indices Result Thresholds Fit level

Chi-square/DF 1.994 ≤ 3 Good fit

Figure 4.3 CFA path analysis in HCM City

Table 4.14 Convergent and discriminant validity in HCM City

CR AVE MSV ASV PR QL CON BL CS

 SEM analysis – hypotheses results After the conversion of the CFA path to SEM path analysis, the designated model of five variables remains a good-fit level of GOF indices, as shown in Figure 4.4, referring to the same thresholds in Table 4.9

Figure 4.4 SEM path analysis in HCM City

According to path analyses, four hypotheses in this research are supported by the empirical analysis in Hanoi In particular, Table 4.11 indicates the evaluation of the standardized coefficients of the hypothesized model The t-Test has p-Value at an acceptable level (p < 0.001) means that the hypotheses are supported, and there are effects of exogenous variables on endogenous variables Statistically, the paths starting from a Quality, Congruence, and Price to Customer Satisfaction are significant with β at 0.33, 0.31, and 0.30, respectively These coefficients mean Quality has the most potent effect on Customer Satisfaction Also, Customer Satisfaction positively affects Brand Loyalty (β = 0.63)

Table 4.15 Results of SEM analysis in HCM City β Coefficient t-Value Hypothesis

Dependent variable: Customer Satisfaction (R-square = 0.53)

Dependent variable: Brand Loyalty (R-square = 0.40)

As analyzed above, the empirical cases in Hanoi and HCM show that there is a relationship among variables From Table 4.3, the overall mean value of factor loading items in Hanoi is higher than those in HCM City However, the gaps in total mean value between variables in Hanoi are significantly higher than differences in HCM City, which also leads to the different R-square indicators in SEM analyses

The R-square determines the extent exogenous variables explain the endogenous variance variable Still, the significance of the R-square index is trivial for studies that do not have the purpose of building a new model Therefore, the R-square of this study only plays a role as a referential index Thus, it still demonstrates the deep connection between i brand i loyalty i and i customer i satisfaction i in i the i case i of i HCM i City i than i in i case i of i Hanoi i

Table i 4.7 i and i Table i 4.11 i have i proven i that i the i proposed i model i is i valid i The i SEM i analysis i in i both i cases i has i a i high i level i for i the i goodness i of i fit i indices i as i well i as i other i testing i indicators i (p-value, i TLI, i RMSEA) i In i this i study: i

 i PR i → i CS: i (t-Value i > i 1.96) i for i Hanoi i (β i = i 0.25) i and i HCM i (β i = i 0.30); i this i supports i the i hypothesis i 1 i for i both i Hanoi i and i HCM i City

 i QL i → i CS: i (t-Value i > i 1.96) i for i Hanoi i (β i = i 0.32) i and i HCM i (β i = i 0.33); i this i supports i the i hypothesis i 2 i for i both i Hanoi i and i HCM i City

 i CON i → i CS: i (t-Value i > i 1.96) i for i Hanoi i (β i = i 0.30) i and i HCM i (β i = i 0.31); i this i supports i the i hypothesis i 3 i for i both i Hanoi i and i HCM i City

 CS i → i BL: i (t-Value i > i 1.96) i for i Hanoi i (β i = i 0.34) i and i HCM i (β i = i 0.63); i this i supports i the i hypothesis i 4 i for i both i Hanoi i and i HCM i City

At i a i significance i level i of i 0.001, i this i study i succeeded i in i proving i that i quality i and i congruence i dimensions i of i CBBE i have i a i positive i effect i on i customer i satisfaction i However, i the i positive i impact i of i customer i satisfaction i on i brand i loyalty i in i Hanoi i (0.34) i is i much i lower i than i in i HCM i City i (0.63) i The i last i chapter i of i this i research i will i base i on i these i results i to i have i the i discussions, i conclusions, i and i future i research i recommendations.

DISCUSSION AND CONCLUSION

Discussion

This i paper i examined i the i effects i of i price, i quality, i and i congruence i on i customer i satisfaction i and i the i effect i of i customer i satisfaction i on i brand i loyalty i from i empirical i studies i in i the i coffee i chain i market i in i Vietnam i Brand i loyalty i and i customer i satisfaction i are i essential i in i the i field i of i business i and i management i for i the i service i industry i There i have i been i many i papers i on i these i concepts i in i the i world, i not i yet i in i Vietnam i coffee i chains i Therefore, i this i study i fills i the i gaps i by i investigating i the i customer i behavior i of i 427 i coffee i shop i customers i in i big i cities i in i Vietnam i

Mainly, i there i are i four i relationships i examined i in i this i study i The i researcher i incorporated i the i CBBE i factors, i including i staff i behavior, i physical i quality, i lifestyle i congruence, i and i ideal-self i congruence i into i two i dimensions i of i congruence i and i quality i Following i the i model i of i Nam i et i al i (2011), i this i study i confirmed i the i positive i effect i of i congruence i and i quality i on i customer i satisfaction i and i customer i satisfaction i on i brand i loyalty i in i the i coffee i shops i industry i in i Vietnam i The i analysis i results i supported i the i hypotheses i 2, i 3, i and i 4 i in i both i cases i of i Hanoi i and i HCM i City i

This i study i also i contributed i to i the i theoretical i aspect i by i adding i the i new i factor, i price, i to i the i model i to i test i its i effect i on i customer i satisfaction i in i chain i coffee i shops i Surprisingly, i this i factor i is i suitable i for i the i model i as i a i definite i antecedent i of i customer i satisfaction i correspondingly i the i results i of i findings i also i supported i hypothesis i 1 i

Besides, i there i is i a i difference i when i researching i the i model i on i two i cases i of i Hanoi i and i HCM i City i In i both i Hanoi i and i HCM i City, i quality i has i the i most i substantial i effect i on i customer i satisfaction, i while i the i price i has i the i lowest i impact i among i the i three i factors i However, i the i differences i in i effect i from i these i three i independent i variables i are i not i significant.

On i the i contrary, i there i is i a i big i difference i in i the i effect i of i customer i satisfaction i on i brand i loyalty i between i two i cities i The i standardized i coefficient i of i the i case i in i HCM i City i doubled i that i of i the i case i in i Hanoi i for i the i relationship i between i loyalty i and i satisfaction i This i result i is i also i consistent i with i the i R-square i indicator i that i in i the i case i of i Hanoi, i customer i satisfaction i explained i only i one-fifths i of i variance i in i brand i loyalty

From these results, the study confirms that price, quality, and congruence have positive impacts on customer satisfaction, and satisfaction has a positive impact on brand loyalty in chain coffee shops in Vietnam These relationships are significant, and the model is valid when adding price as the new factor to the research model

However, the correlation of satisfaction to loyalty in Hanoi is low in comparison to previous studies, as well as to the case of HCM City This result explains why coffee chain brands are conservative in expansion in the market of Hanoi; the phenomenon of store number is valid for the study.

Practical implications

The findings in this research bring implications to the service industry or the chain coffee shop managers, especially in Vietnam Firstly, as this paper confirms the model by Nam et al (2011), the companies in the service industry should concentrate on the enhancement of food and service quality, the congruence with the customer to improve satisfaction as well as loyalty Primarily, coffee shops in Vietnam should employ critical approaches to assess the factor affecting satisfaction and loyalty, frequently obtain the update on the market trend, as well as the feedback from the customer Along with the congruence in lifestyle and ideal-self of the customer with the brand, coffee shops must improve the customer experience and service quality

The questionnaire results in this paper showed that the majority of customers visiting the coffee shops on the purposes of friends gathering and business meetings A community around the brand or promoting lifestyle or identity for the customer of the brand should also be a good strategy than just focusing on functional usage Moreover, there is concern from the customer in terms of environment-friendly products; the coffee shops should take action to contribute to decreasing the greenhouse effect by reducing the use of plastic cups This strategy is useful to promote a brand image or lifestyle-congruence to the customer

Secondly, as the price has a positive impact on customer satisfaction, the coffee shops in Vietnam should understand the attitude of customers toward the pricing policy of the brand While the market is still growing, and the demand is increasing, many players can compete with others by price, the customer has freedom of choices If the customer considers the price unreasonable, they are unsatisfactory then have more tendency to switch to other brands, this issue is detrimental to the loyalty of the customer to the firms Enhancing the fairness of price as well as include added-value like promotions or price-cut to the regular customer should also be strategic measures

As specified in the first chapter, the objects in this paper are two major brands in Vietnam, focusing on the premium segment of the coffee shop market The purpose of using this service is flexible recently In this study, the effect of the price should be compatible with the result of congruence, where customers nowadays consider coffee shops as a place to show their lifestyle and class They are willing to pay high or even excessive amounts of money to choose the brand with an attractive location, nice view, or appealing store design to take pictures, impress people or partners, and share social media experience Moreover, it is even more persuasive with the case of young students who have low or no salary but still frequently pay to keep using the service of fancy coffee shops

From the success of two Vietnamese brands in this study, Highlands Coffee and The Coffee House, it is useful to take good care of the customer in perspectives of price, food and service quality, and the congruence of the customer These brands are among the few Vietnamese coffee brands able to compete with foreign competitors, franchised shops, and milk tea stores The failures of The Kafe, Gloria Jeans, and even Starbucks Coffee in Vietnam proved that this market is unique, and understanding customers and fast adaption to new trends are the keys to success This coffee chain service in Vietnam has potential and a high growth rate, customer behavior also changes frequently Without adequate market understandings and a well-targeted segmentation strategy, it is difficult to achieve a sustainable business

Also, as elaborated in the detailed results, tea drinks the majority of the customer choosing favorite products at coffee shops these days The coffee shops in Vietnam should build a brand image, not just focus on conventional coffee shops It is useful for Vietnamese coffee shops to diversify the menu and combo to satisfy customer tastes As the two brands in this study, Highlands Coffee and The Coffee House, they have good feedback and impression from the customer on coffee drinks, but they still maintain adequate awareness on their signature juice or tea drinks

Besides, this study confirms the difference in customer behavior in Hanoi and HCM City verified the motives of chain coffee shops in Vietnam to focus more on

Southern Vietnam Many people believed that because HCM City is more modern than Hanoi, there are more stores of coffee shops brand in HCM City However, this study indicated another aspect of customer behavior Customers in Hanoi are ordinary and similar to HCM City in terms of price, quality, congruence, and satisfaction towards coffee shop brands However, the relationship between satisfaction and loyalty in Hanoi is weaker than that in HCM City This problem of satisfaction- loyalty from the geographical area incurs the need for coffee shops brand to cope with expanding in the Hanoi market The study suggests the coffee shops continue what they are doing best in terms of price, food and service quality, community, and marketing activities to enhance customer satisfaction Notably, coffee chains should promote the perks of being a loyal customer or the connection of the brand to the customer in the media Also, it is the right strategy of coffee chains to grow slowly in Hanoi while the customer still reluctant to be loyal to a brand The significant uniqueness of the Hanoi market is the demand of customers for a better space and atmosphere in coffee shops In future, the customer in Hanoi will also share the same idea on satisfaction and loyalty with the customer in HCM City, which also makes a change to their standard and behavior On the other hand, the milk tea shops or independent coffee shops are still prevalent in Hanoi, which poses threats to the coffee chains This study appreciates the potential of the Hanoi market and considers enhancing service quality as an optimal solution for coffee chain brands.

Limitations and future research recommendations

Though the research design and results of this research are compelling, there are still limitations to better research orientation in the future First, under time and resource constraints, especially the spread of coronavirus, we employed the convenience method to collect online questionnaires, and the majority of respondents are young customers who might have lower loyalty behavior than other groups

In this study, we ran the data separately in two cases of Hanoi and HCM City

Typically, we tested this comparison between two cases that are tested by multigroup function in AMOS, but there are no significant differences In this research, all the hypotheses are positive; therefore, it is a complicated technique to employ AMOS and compare between two cases As to match with the research objectives and goals, it is optimal to run the model twice and separately for Hanoi and HCM City

Also, there are limitations to the questionnaires of this research, possibly common method variance However, we try to reduce that potential by adopting scale items for variables from highly cited sources, using one source for one construct, as explained in chapter three Moreover, we follow the rule for the survey items, which require maintaining the adjective and adverb from the adopted scale Thus, the results from this research is valid in the framework and context from the designed surveys

There are possibly other factors that also are compatible with the model and contribute to complete it like brand trust or brand awareness, which also have effects on satisfaction or loyalty Therefore, this paper recommends future researches to add factors that are suitable for the model to study the coffee chain industry Also, this paper only examined the direct relationship between variables Future research, which might concern the indirect influence of factors affecting brand loyalty, also can employ the same approach to investigate this relationship—especially investigating the role of mediation factors like customer satisfaction

Besides, since this study concentrates more on the behavioral aspects of brand loyalty than the attitudinal dimensions, further studies on this subject might divide the brand loyalty variable into two constructs to research the effect of antecedents in more detail

Additionally, there are many similar businesses to the coffee chain in Vietnam that could be potential subjects for researchers to study customer satisfaction and brand loyalty, for example, the food chains or electronic device seller chains in Vietnam This paper tried to compare the cases of Hanoi and HCM City and indicated a different result in Vietnamese coffee shop brands Prospective researchers also can conduct studies to analyze the cases between domestic and foreign brands like Starbucks Coffee, franchisees, and milk tea shops, to research this model The future attempts on this topic should also pay attention to the effect of other demographical backgrounds or expand the sample to research on this type of model

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“Survey about coffee chains in Vietnam”

“This i questionnaire i is i developed i as i partial i completion i of i the i Master i graduation i thesis i of i a i student i at i Vietnam i - i Japan i University i The i questions i aim i to i gather i information i related i to i customer i behaviors i towards i chain i coffee i shops i in i Vietnam

This i survey i is i designed i in i the i Vietnamese i language i and i needs i 5 i minutes i to i complete i All i information i collected i by i this i survey i will i be i treated i confidentially i and i will i be i used i for i research i purposes i only

The i survey i contains i two i parts, i please i tick i in i the i box i that i mostly i suits i your i answer

Thank i you i very i much i for i your i kind i cooperation!”

1.1 What is your city of residence?

( ) Hanoi ( ) HCM City ( ) Others 1.2 What is your gender?

( ) Less than 22 years old ( ) From 22 to 32 years old ( ) Over 32 years old 1.4 Which of the following brand do you most frequenly visit or prefer when choosing a coffee shop?

( ) Highlands Coffee ( ) The Coffee House 1.5 What is your frequency of visiting or buying products from coffee shops in the

1.6 In which way do you purchase a product from coffee shops? (Multiple answers)

( ) Coffee drinks ( ) Tea drinks ( ) Juices ( ) Cakes and snacks 1.7 What is your purpose of visiting coffee shops? (Multiple answers)

( ) Demand for drinks ( ) Meeting friends, acquaintances ( ) Business meetings

“In this section, a 5-point Likert scale with anchors ranging from strongly disagree (1) to strongly agree (5) is used Please answer about the brand which you have chosen in question 1.4.”

Agreement level Strongly disagree Disagree Neutral Agree Strongly

2.1 The price of this brand is higher than other brands

2.2 The price of this brand is lower than other brands

The price of this brand is more affordable than other brands

The price of this brand is more expensive than other brands

The drinks and foods served by this coffee-shop brand suit my taste

Employees of this coffee chain are helpful (e.g introducing menu to customer)

This coffee shop brand provides comfortable seats and tables

2.8 Employees of this coffee chain listens to me

This coffee shop brand gives me a visually attractive space

2.10 Employees of this coffee chain are friendly to me

Ideal-self and Lifestyle Congruence

The image of this brand is consistent with how I’d like to see myself

Staying with this coffee shop brand supports my lifestyle

The image of this brand is consistent with how I would like others to see me

This coffee shop brand is totally in line with my lifestyle

The typical guest of this coffee shop brand has an image similar to how I’d like to see myself

2.16 This coffee chain reflects my personal lifestyle.