UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY A STUDY OF SMALL CHARTERED COMMERCIAL BANKS MASTER OF BUSINESS (Honours) Ho[.]
UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY: A STUDY OF SMALL CHARTERED COMMERCIAL BANKS MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY: A STUDY OF SMALL CHARTERED COMMERCIAL BANKS ID: 22110021 MASTER OF BUSINESS (Honours) SUPERVISOR: DR CAO HAO THI Ho Chi Minh City – Year 2014 ACKNOWLEDGEMENTS I would like to express my sincere gratitude to my supervisor, Dr Cao Hao Thi for the valuable advice, critical comments and encouragement he gave me I would like to express my gratitude to my ISB class friends for SPSS directions Your encouragement, excellent guidance, and support have greatly contributed to this thesis Finally, I would like to thank all of the respondents without whom, this research would have been impossible Ho Chi Minh City, March 01, 2014 Vu Thanh Hoan ABSTRACT It is costly to attract new customers so that the managers always try to find ways to retain their current customers and concentrate on different factors which enhances the customer loyalty among the customers of the organizations This research attempts to find the factors of customer loyalty and their relationships with banking industry in one of the developing countries i.e Vietnam, where the large part of banking industry are small chartered commercial banks In order to this, a questionnaire is designed and validated, then based on the data which were gained from the 150 respondents' answers to the designed questionnaire, the analysis is done and the results and the relations among the factors are explained Customer’s Perceived Quality, Customer Satisfaction, Customer Trust, Switching Cost and Customer Commitment are the factors which influence the Loyalty of the customers These factors also influence each other as well The relationships of different factors with each other are also studied and the SPSS software is used to analyze the data gathered from the respondents TABLE OF CONTENTS Chapter Introduction 1.1 Background 1.2 Research problems Research Objectives 1.4 Research Scope 1.5 Thesis structure .4 Chapter Literature Review 2.1 Customer loyalty 2.2 Customer's perceived quality .8 2.3 Customer satisfaction 11 2.4 Switching Cost 13 2.5 Customer Trust 16 2.6 Commitment 17 2.7 Research model and Hypothesis 18 Chapter Research Methodology 21 3.1 Research Process 21 3.2 Measurement scales 22 3.2.1 Perceived quality 22 3.2.2 Customer trust 22 3.2.3 Switching cost 23 3.2.4 Customer satisfaction 23 3.2.5 Customer commitment 24 3.2.6 Customer loyalty 24 3.3 Qualitative research 25 3.4 Sampling method 25 3.4.1 Sampling 26 3.4.2 Data collection 26 3.5 Data analysis methods 26 3.5.1 Cronbach’s alpha 26 3.5.2 Exploratory Factor Analysis 27 3.5.3 Multiple regression analysis 28 Chapter Data Analysis and results 29 4.1 General Information 29 4.2 Measurement assessment 30 4.2.1 Cronbach’s alpha 30 4.2.2 Exploratory Factor Analysis 31 4.3 Hypothesis testing 32 4.3.1 Testing customer satisfaction sub-model 34 4.3.2 Testing customer commitment sub-model 34 4.3.3 Testing customer loyalty sub-model 35 Chapter Conclusions and Implications 38 5.1 Conclusions .38 5.2 Implications .39 5.3 Limitations .41 References 42 Appendix 1: Questionaire 52 Appendix 2: Results of Exploratory factor analysis 58 Appendix 3: Simple linear regression results (S) 60 Appendix 4: Multiple linear regression results (CMT) 62 Appendix 5: Multiple linear regression results (CL) 64 LIST OF TABLE Table 3.1: Scale of perceived quality 22 Table 3.2: Scale of customer trust 22 Table 3.3: Scale of switching cost 23 Table 3.4: Scale of customer satisfaction 23 Table 3.5: Scale of customer commitment 24 Table 3.6: Scale of customer loyalty 24 Table 3.7: Cronbach’s alpha reliability coefficients 27 Table 4.1: General information about respondents 29 Table 4.2: Reliability analysis 30 Table 4.3: Rotated component matrix 31 LIST OF FIGURE Figure 2.1: A conceptual model 19 Figure 3.1: Research process 21 Figure 4.1: Customer satisfaction sub-model 32 Figure 4.2: Customer commitment sub-model 33 Figure 4.3: Customer loyalty sub-model 33 Figure 4.4: Multiple regression results 37 CHAPTER INTRODUCTION This chapter introduces the background of Vietnamese banking industry as well as the status of customer loyalty The research objectives are proposed in this chapter Base on the objectives, research scope is proposed and thesis structure is presented 1.1 Background Loyalty to a bank can be thought of as continuing patronage over time The degree of loyalty can be gauged by tracking customer accounts over defined time periods and noting the degree of continuity in patronage (Yi and Jeon, 2003) During the past decade, the financial service sector has undergone drastic changes, resulting in a market place which is characterized by intense competition, little growth in primary demand and increased deregulation (Bloemer, Ruyter and Peeters, 1998) In the new market place, the occurrence of committed and often inherited relationships between a customer and his or her bank is becoming increasingly scarce (Li-Ting Huang et al, 2007) Several strategies have been attempted to retain customers In order to increase customer loyalty, many banks have introduced innovative products and services (Alam and Khokhar, 2006) However, as such innovations are frequently followed by similar change; it has been argued that a more viable approach for banks is to focus on less tangible and less ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY: A STUDY OF SMALL CHARTERED COMMERCIAL BANKS ID: 22110021 MASTER... their ability in the risk taking, leading to the low ratio of loan over the mortgage value and the loan giving to one customer Small chartered capital commercial banks also have less tangible facilities... more viable approach for banks is to focus on less tangible and less easy-to-imitate determinants of customer loyalty such as customer evaluative judgments like service quality and satisfaction