1 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY NGUYỄN THỊ MỸ TRANG THE EFFECTS OF SWITCHING BARRIER ON THE CUSTOMER RETENTION A STUDY OF CERAMIC COMPANIES IN VIETNAM MASTE[.]
MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS - HOCHIMINH CITY NGUYỄN THỊ MỸ TRANG THE EFFECTS OF SWITCHING BARRIER ON THE CUSTOMER RETENTION A STUDY OF CERAMIC COMPANIES IN VIETNAM MASTER’S THESIS MASTER IN BUSINESS ADMINISTRATION Ology Code: 60.34.05 Supervisor PhD TRẦN HÀ MINH QUÂN Ho Chi Minh City -2012 123doc ABSTRACT Many previous researches proved that retaining customers plays an important role for business in service sector and end-user or consumers are their oriented-object However, there is a lack of research in the areas of evaluation of B2B customer retention in product sector in Vietnam Therefore, the purpose of this study is to determine critical factors of switching barrier that potential influence on customer retention in business-to-business (B2B) sector in Vietnam ceramic companies Based on previous studies on switching barrier, four major factors will be calculated as move-in cost, benefit/loss cost, interpersonal relationship and the attractiveness of alternatives The overall purpose of this research is to develop a conceptual foundation of customer retention, with the use of the concepts of switching barrier and customer retention, and provide management significance of customer retention for marketers of Vietnam ceramic companies in developing strategies for retaining B2B customers i 123doc ACKNOWLEGEMENTS Although I have taken efforts in this research but it would not have been finished without the kind support and help of people Therefore, I would like to extend my sincere thanks to all of them First of all, I would like to express my sincere gratitude towards my direct supervisor PhD Tran Ha Minh Quan for his great guidance, support and encouragement in completing the research I am very thankful managers of My Duc Ceramics Limited Company for their share opinions, experiences and providing necessary information regarding to the research I would like to express my special gratitude to my family and my friends for the love, support and encouragement during the whole process of my project which helps me in starting the first difficult step and completion of my thesis Finally, my thanks and appreciations also go to my colleagues in developing the project and agents of MDC for their kind co-operation in answering the questionnaires I also thank to person who willingly helped me out with their abilities My heartfelt thanks to you all! Nguyen Thi My Trang Ho Chi Minh City, April 2012 ii 123doc STUDENT DECLARATION I affirm that the research titled ―The effects of switching barrier on the customer retention – A study of ceramic companies in Vietnam‖ is my own work The work is original except where indicated by special reference in the text The research has been conducted in studying by the academic knowledge and with the assistant of my supervisor and MDC‘s managers By this letter, I would like to undertake that it is my own research All data, resources, references using in this research are clearly identify SIGNED: DATE: iii 123doc TABLE OF CONTENT ABSTRACT i ACKNOWLEDGMENTS ii STUDENT DECLARATION iii TABLE OF CONTENT iv LIST OF FIGURES vi LIST OF TABLES vii LIST OF ABBREVIATIONS .viii CHAPTER 1: INTRODUCTION 1.1 Rational of the study 1.2 The statement of the problem 1.3 Research objective 1.4 Research questions 1.5 Scope of the research 1.6 Research methodology 1.7 The structure of the research CHAPTER 2: LITERATURE REVIEW 2.1 Ceramic tile 2.2 B2B customer 2.3 Customer satisfaction 2.4 The relationship between customer satisfaction and customer retention 10 2.5 Customer‘s retention 11 2.5.1 Define of customer retention 11 2.5.2 Benefit of customer retention 12 2.5.3 Switching barrier 13 2.6 2.5.3.1 Switching cost 17 2.5.3.2 Attractiveness of alternatives 19 2.5.3.3 The interpersonal relationship 19 Research model and hypothesis 20 2.6.1 Proposal of research model 20 2.6.2 Initial hypothesis 21 CHAPTER 3: 3.1 RESEARCH DESIGN 23 Research design 23 3.1.1 Research purpose 23 3.1.2 Research approach 23 iv 123doc 3.1.3 3.2 Research process 24 Official research 25 3.2.1 Measurement scale 25 3.2.2 The questionnaire design 27 3.2.3 Research sample and sampling 28 3.2.4 Data collection methods 28 CHAPTER 4: DATA ANALYSIS AND FINDINGS 29 4.1 Characteristics of the samples 29 4.2 Statistical Result 30 4.2.1 Variables for measuring switching barrier 30 4.2.2 Variables for customer retention 32 4.3 Data Analysis 32 4.3.1 Reliability evaluation through Cronbach‘s Alpha 33 4.3.2 Evaluation the measurement scale by using Exploratory Factor Analysis 36 4.3.2.1 Some rules in EFA test 36 4.3.2.2 EFA for switching barrier 37 4.3.2.3 EFA for customer retention 40 4.3.3 The adjusted research model 42 4.3.4 Modeling Testing 42 4.3.4.1 Correlation coefficient analysis 42 4.3.4.2 Regression Analysis 44 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 48 5.1 Conclusions 48 5.2 Recommendations 49 5.2.1 Benefit/loss cost 49 5.2.2 Interpersonal relationship 50 5.2.3 Move-in cost 51 5.3 Research limitations 53 REFERENCES 54 APPENDIX 60 APPENDIX 1: Questionnaire 60 APPENDIX 2: Cronbach's alpha analysis result and Factor analysis result 64 v 123doc LIST OF FIGURES Figure 2.1: Kim et al (2004) 17 Figure 3.1: The suggested research model 21 Figure 3.2: Research process 24 Figure 4.1: Sample characteristics 30 Figure 4.2: Research model 42 vi 123doc LIST OF TABLES Table 2.1: Define of switching barrier variables 15 Table 3.1 :Summary of retention factors and measurement scale 27 Table 4.1: Descriptive statistics of switching barrier measurement 32 Table 4.2: Descriptive statistics of customer retention measurement 32 Table 4.3: Reliability test of switching barrier and customer retention 34 Table 4.4: Final Reliability test of switching barrier and customer retention 36 Table 4.5: Rotated Component Matrixa 38 Table 4.6: Rotated Component Matrixa 39 Table 4.7: KMO and Bartlett‘s Test 40 Table 4.8: Total Variance Explained 41 Table 4.9: Final EFA analysis result of customer retention 41 Table 4.10: Pearson correlation matrix 43 Table 4.11: Model Summaryb 44 Table 4.12: ANOVAb 45 Table 4.13: Coefficientsa 45 vii 123doc LIST OF ABBREVIATIONS B2B: Business to Business B2C: Business to Consumer DONG TAM: Dong Tam Group EFA: Exploratory Factor Analysis MDC: My Duc Ceramics Limited Company VND: Vietnam Dong WHITE HORSE: White Horse Ceramics Company viii 123doc CHAPTER 1: INTRODUCTION 1.1 Rational of the study Infrastructure construction is one of top interests in Vietnam as well as other countries in the world Moreover, with high growing rate of urbanization and increasing demand for housing of middle class in society pushing up the construction of public works and high-floor projects by Government and investors Based on that, the building material industry in Vietnam get opportunity to develop and ceramic industry is not an exception with the quite stable growth in the last ten years According to Vietnam building ceramic association, the building material market has grown by 10%/year in the last 2000-2005 period and 20%/year in years after Therefore, Vietnam ceramic tile is an attractive market drawing investors in both domestic and overseas as its potential profits and has had the participation of 20 companies up to now In order to compete and grow in this competitive markets, each ceramic company must strongly focus on retaining existing customer, special for business customers who tend to be fewer in a number and each is more valuable, and gaining new ones as the more customers company has, the more profits it get Business is in a constant race to increase profits Therefore, ceramic companies should invest on retaining customers, especial for difficult times But striving to maintain unprofitable customers is not a good business strategy Companies should identify 20% of potential customers who bring 80% of profits to business In ceramics industry, agents are company representatives who create 80% of revenues to companies So we need a research to find the critical factors adjusting to their retaining Its aims to help organizations build effective customer retention strategy in a way that both firms and the customer get the most out of exchange, providing both parties with long term benefits 1.2 The statement of the problem Many previous studies have identified the benefits of retention to an organization (Colgate et al., 2007; Reichheld and Sasser, 1990) but relatively little research on B2B customer retention And although many companies have realized the economical advantage of keeping existing customers against acquiring new ones, almost ceramic 123doc ... century The mosaics of Spain, Italia, and ceramic tile of England, Netherlands and Germany are all prominent landmarks in the history of ceramic tile Nowadays some countries in Asia such as Malaysia,... 123doc companies still focus on developing new customers rather than maintaining old customers and invest on customer satisfaction more than retaining customers Their own decisions base on the traditional... STUDENT DECLARATION I affirm that the research titled ? ?The effects of switching barrier on the customer retention – A study of ceramic companies in Vietnam? ?? is my own work The work is original except