(Luận văn) the effects of switching barrier on the customer retention, a study of ceramic companies in vietnam

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS - HOCHIMINH CITY t to ng hi ep w n lo ad y th ju NGUYỄN THỊ MỸ TRANG yi pl al n ua THE EFFECTS OF SWITCHING va n BARRIER ON THE CUSTOMER ll fu m oi RETENTION at nh z A STUDY OF CERAMIC COMPANIES IN VIETNAM z ht vb k jm om l.c Ology Code: 60.34.05 MASTER IN BUSINESS ADMINISTRATION gm MASTER’S THESIS n va y te re PhD TRẦN HÀ MINH QUÂN n a Lu Supervisor Ho Chi Minh City -2012 ABSTRACT t to Many previous researches proved that retaining customers plays an important role for ng business in service sector and end-user or consumers are their oriented-object hi ep 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 w determine critical factors of switching barrier that potential influence on customer n lo retention in business-to-business (B2B) sector in Vietnam ceramic companies Based ad y th on previous studies on switching barrier, four major factors will be calculated as ju move-in cost, benefit/loss cost, interpersonal relationship and the attractiveness of yi pl alternatives The overall purpose of this research is to develop a conceptual foundation ua al of customer retention, with the use of the concepts of switching barrier and customer n retention, and provide management significance of customer retention for marketers of va Vietnam ceramic companies in developing strategies for retaining B2B customers n ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re i ACKNOWLEGEMENTS t to Although I have taken efforts in this research but it would not have been finished ng without the kind support and help of people Therefore, I would like to extend my hi ep sincere thanks to all of them First of all, I would like to express my sincere gratitude towards my direct supervisor w n PhD Tran Ha Minh Quan for his great guidance, support and encouragement in lo ad completing the research y th I am very thankful managers of My Duc Ceramics Limited Company for their share ju yi opinions, experiences and providing necessary information regarding to the research pl ua al I would like to express my special gratitude to my family and my friends for the love, n support and encouragement during the whole process of my project which helps me in n va starting the first difficult step and completion of my thesis fu ll Finally, my thanks and appreciations also go to my colleagues in developing the m oi project and agents of MDC for their kind co-operation in answering the questionnaires at nh I also thank to person who willingly helped me out with their abilities z My heartfelt thanks to you all! z ht vb k jm gm om l.c Nguyen Thi My Trang Ho Chi Minh City, April 2012 n a Lu n va y te re ii STUDENT DECLARATION t to I affirm that the research titled ―The effects of switching barrier on the customer ng retention – A study of ceramic companies in Vietnam‖ is my own work The work is hi ep 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 w supervisor and MDC‘s managers n lo ad By this letter, I would like to undertake that it is my own research All data, resources, ju y th references using in this research are clearly identify yi pl n DATE: ua al SIGNED: n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re iii TABLE OF CONTENT ABSTRACT i t to ACKNOWLEDGMENTS ii ng STUDENT DECLARATION iii hi TABLE OF CONTENT iv ep LIST OF FIGURES vi w LIST OF TABLES vii n lo LIST OF ABBREVIATIONS .viii ad CHAPTER 1: INTRODUCTION y th 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 ju 1.1 yi pl n ua al n va ll fu LITERATURE REVIEW m CHAPTER 2: 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 oi 2.1 at nh z z ht vb jm Define of customer retention 11 2.5.2 Benefit of customer retention 12 2.5.3 Switching barrier 13 gm 2.5.3.1 Switching cost 17 2.5.3.2 Attractiveness of alternatives 19 2.5.3.3 The interpersonal relationship 19 om l.c a Lu Research model and hypothesis 20 n 2.6 k 2.5.1 2.6.2 Initial hypothesis 21 3.1 RESEARCH DESIGN 23 Research design 23 3.1.1 Research purpose 23 3.1.2 Research approach 23 iv y CHAPTER 3: te re Proposal of research model 20 n va 2.6.1 3.1.3 3.2 Research process 24 Official research 25 t to ng hi 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 ep CHAPTER 4: DATA ANALYSIS AND FINDINGS 29 Characteristics of the samples 29 w 4.1 Statistical Result 30 n 4.2 lo Variables for measuring switching barrier 30 4.2.2 Variables for customer retention 32 ad 4.2.1 y th Data Analysis 32 ju 4.3 Reliability evaluation through Cronbach‘s Alpha 33 4.3.2 Evaluation the measurement scale by using Exploratory Factor Analysis 36 yi 4.3.1 pl al Some rules in EFA test 36 4.3.2.2 EFA for switching barrier 37 4.3.2.3 EFA for customer retention 40 n ua 4.3.2.1 n va fu The adjusted research model 42 4.3.4 Modeling Testing 42 ll 4.3.3 oi m Correlation coefficient analysis 42 4.3.4.2 Regression Analysis 44 at nh 4.3.4.1 CONCLUSIONS AND RECOMMENDATIONS 48 z CHAPTER 5: z Conclusions 48 5.2 Recommendations 49 ht vb 5.1 jm Benefit/loss cost 49 5.2.2 Interpersonal relationship 50 5.2.3 Move-in cost 51 l.c gm Research limitations 53 om 5.3 k 5.2.1 a Lu REFERENCES 54 APPENDIX 60 n APPENDIX 2: Cronbach's alpha analysis result and Factor analysis result 64 n va APPENDIX 1: Questionnaire 60 y te re v LIST OF FIGURES t to ng hi Figure 2.1: Kim et al (2004) 17 ep Figure 3.1: The suggested research model 21 Figure 3.2: Research process 24 w n Figure 4.1: Sample characteristics 30 lo ad Figure 4.2: Research model 42 ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re vi LIST OF TABLES t to Table 2.1: Define of switching barrier variables 15 ng Table 3.1 :Summary of retention factors and measurement scale 27 hi ep Table 4.1: Descriptive statistics of switching barrier measurement 32 Table 4.2: Descriptive statistics of customer retention measurement 32 w n Table 4.3: Reliability test of switching barrier and customer retention 34 lo ad Table 4.4: Final Reliability test of switching barrier and customer retention 36 y th Table 4.5: Rotated Component Matrixa 38 ju Table 4.6: Rotated Component Matrixa 39 yi pl Table 4.7: KMO and Bartlett‘s Test 40 al ua Table 4.8: Total Variance Explained 41 n Table 4.9: Final EFA analysis result of customer retention 41 va n Table 4.10: Pearson correlation matrix 43 fu ll Table 4.11: Model Summaryb 44 m oi Table 4.12: ANOVAb 45 at nh Table 4.13: Coefficientsa 45 z z ht vb k jm om l.c gm n a Lu n va y te re vii LIST OF ABBREVIATIONS t to ng hi B2B: Business to Business ep B2C: Business to Consumer w n DONG TAM: Dong Tam Group lo ad EFA: Exploratory Factor Analysis y th ju MDC: My Duc Ceramics Limited Company yi VND: Vietnam Dong pl al n ua WHITE HORSE: White Horse Ceramics Company n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re viii CHAPTER 1: INTRODUCTION 1.1 Rational of the study t to ng Infrastructure construction is one of top interests in Vietnam as well as other hi countries in the world Moreover, with high growing rate of urbanization and ep increasing demand for housing of middle class in society pushing up the construction w of public works and high-floor projects by Government and investors Based on that, n lo the building material industry in Vietnam get opportunity to develop and ceramic ad industry is not an exception with the quite stable growth in the last ten years y th ju According to Vietnam building ceramic association, the building material market has yi grown by 10%/year in the last 2000-2005 period and 20%/year in years after pl ua al 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 n n va companies up to now In order to compete and grow in this competitive markets, each ll fu ceramic company must strongly focus on retaining existing customer, special for oi m business customers who tend to be fewer in a number and each is more valuable, and at nh 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 z z should invest on retaining customers, especial for difficult times But striving to vb ht maintain unprofitable customers is not a good business strategy Companies should jm identify 20% of potential customers who bring 80% of profits to business In ceramics k gm industry, agents are company representatives who create 80% of revenues to l.c companies So we need a research to find the critical factors adjusting to their om retaining Its aims to help organizations build effective customer retention strategy in a Lu a way that both firms and the customer get the most out of exchange, providing both n parties with long term benefits va n 1.2 The statement of the problem customer retention And although many companies have realized the economical advantage of keeping existing customers against acquiring new ones, almost ceramic y (Colgate et al., 2007; Reichheld and Sasser, 1990) but relatively little research on B2B te re Many previous studies have identified the benefits of retention to an organization PART 2: SERVEY OF CUSTOMER RETENION Please give your opinion about these issue following, assuming that you are going to agree Strongly Agree ep Neutral hi The measure of switching barrier Disagree ng Strongly t to Code disagree switch to other suppliers w It takes time and costs for learning about new n lo Mov.1 products, services and processes of new ad suppliers y th ju You could spend money and time to change yi the business‘s plan or strategy when moving pl Mov.2 n ua al to new providers have the profit in the first time with new oi m providers ll fu Mov.3 n va You may spend a lot of money and couldn‘t nh It takes time to convince customers to use or at Mov.4 z buy products of new providers z providers about supporting equipment, sales k va n y te re Ben.9 n providers You will miss benefit of loyal customer of Ben.8 a Lu You will miss promotion programs of current Ben.7 om equipment with new providers l.c It takes time and cost to invest on new gm policy, etc Mov.6 jm Mov.5 ht vb It takes time to negotiation with new current providers You will miss sales policy (commission, 61 transportation, debit or payment term, sponsor, etc.) from current providers You will lose the business opportunities with t to ng Ben.10 contractors, architectors or designers who will hi be introduced by current providers ep You will lose business with customers who w n Ben.11 interest in products and/or services of current lo ad providers y th ju You will reduce the diversity of goods in your store yi Ben.12 pl al n ua You are familiar with current providers and Int.13 n va its products and/or services ll fu You have relationship with current providers Int.14 oi m and its staffs nh at You have to build personal relationships with Int.15 z new providers z can deliver as well as this supplier and, if you k jm Att16 ht vb You feel uncertain about whether other suppliers The quality of products and services of new providers is better than that of current n a Lu Att17 om l.c you will get gm choose another suppliers you not know what n va providers y Att19 new providers is suitable for you New provider has sales policy (commission, transportation, debit or payment 62 te re Business strategy, image and reputation of Att18 term, sponsor, etc) better than current providers New providers want to create more favorable Att20 advantage for your business t to lo agree Strongly n Agree w Strongly Neutral ep Disagree hi The measure of customer retention Code disagree ng With the current providers, please give us your idea with the question below: ad ju y th Overall, you feel difficult in switching to Gen.21 other providers yi pl providers n ua al You will continue to business with current Gen.22 va n You are likely to recommend the current ll providers to others fu Gen.23 oi m at nh z Thank you for your time and your support z ht vb k jm om l.c gm n a Lu n va y te re 63 APPENDIX 2: CRONBACH’S ALPHA ANALYSIS RESULT I Reliability 1.1 Move-in cost t to ng Case Processing Summary hi ep % N w Valid 100.0 0 121 100.0 n 121 lo ad Excluded(a) Cases y th ju Total yi pl a Listwise deletion based on all variables in the procedure n ua al n va Reliability Statistics fu ll Cronbach's Alpha N of Items oi m at nh 896 z z ht vb Item Statistics mov3 3.3140 69562 121 mov4 3.2149 90560 121 mov5 3.2397 76403 121 mov6 3.3306 91641 121 n a Lu n va y te re 64 om l.c 73659 121 mov2 3.3388 gm 77192 121 k mov1 3.4215 jm Mean Std Deviation N Item-Total Statistics Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted t to 16.4380 11.198 667 885 mov2 16.5207 10.935 772 870 mov3 16.5455 11.133 780 870 16.6446 10.098 751 873 16.6198 11.138 690 882 10.318 693 883 ng mov1 hi ep w n mov4 lo y th 16.5289 ju mov6 ad mov5 yi pl n ua al 1.2 Benefit/loss-cost n va fu Case Processing Summary ll oi m N % at nh 121 100.0 z Valid z Excluded(a) ht vb Cases jm 121 Total 100.0 k om l.c gm a Listwise deletion based on all variables in the procedure Reliability Statistics n a Lu Cronbach's Alpha N of Items y te re n va 843 65 Item Statistics Mean Std Deviation N t to ng 3.3058 87410 121 ben8 3.2975 90041 121 ben9 3.2727 83666 121 ben10 3.4628 85675 121 ben11 3.3719 87685 121 ben12 3.2893 78992 121 hi ben7 ep w n lo ad ju y th yi pl n ua al n va ll fu Item-Total Statistics Deleted Deleted Corrected Item-Total Cronbach's Alpha if Item nh Scale Variance if Item oi m Scale Mean if Item Correlation Deleted at z 16.6942 9.614 816 ben8 16.7025 11.977 ben9 16.7273 9.917 794 ben10 16.5372 10.701 600 ben11 16.6281 10.352 652 ben12 16.7107 11.041 597 z ben7 777 ht vb 323 875 k jm gm 783 om l.c 822 n a Lu 811 822 n va 66 y deliminating it te re Must be deleted Ben8 because of not fulfill the requirement Here is the result after Reliability Statistics Cronbach's Alpha Based on Cronbach's Alpha Standardized Items N of Items t to ng 875 875 hi ep w Item-Total Statistics n lo Scale Variance if Item Corrected Item-Total ad Scale Mean if Item Deleted y th 13.3967 ju ben7 Deleted yi ben10 13.2397 ben11 13.3306 ben12 13.4132 Squared Multiple Cronbach's Alpha if Correlation Item Deleted 817 793 820 7.597 798 778 826 8.217 616 386 870 703 495 849 596 362 873 n ua al 7.341 n va 7.773 8.594 ll fu 13.4298 pl ben9 Correlation m oi 1.3 Interpersonal relationship at nh Case Processing Summary z z % ht vb N jm 121 100.0 Total n a Lu a Listwise deletion based on all variables in the procedure om l.c gm Excluded(a) k Cases 100.0 121 Valid n va te re Reliability Statistics y Cronbach's Alpha 859 67 N of Items Item Statistics Mean Std Deviation N t to ng 3.1405 84957 121 int14 3.2727 87560 121 int15 3.3554 85498 121 hi int13 ep w n lo ad ju y th Item-Total Statistics yi pl Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted n ua al Scale Mean if Item Deleted va 6.6281 int14 6.4959 2.285 int15 6.4132 2.561 n int13 2.569 834 810 729 696 838 ll fu 700 oi m at nh z z vb ht 1.4 Attractiveness of alternatives jm k Case Processing Summary gm % om l.c N 121 100.0 n va Excluded(a) 100.0 n Cases 121 a Lu Valid y te re Total a Listwise deletion based on all variables in the procedure 68 Reliability Statistics Cronbach's Alpha N of Items 863 Item Statistics t to ng hi Mean Std Deviation N ep 87323 121 att17 2.6446 81506 121 att18 2.5537 84607 121 att19 2.2810 76619 121 att20 2.6694 86012 121 w att16 2.4215 n lo ad ju y th yi pl n ua al n va Item-Total Statistics Scale Variance if Item Deleted Corrected Item-Total Correlation ll fu Scale Mean if Item Deleted 10.0165 7.816 att19 10.2893 7.241 att20 9.9008 7.557 786 806 652 841 563 864 817 803 ht att18 vb 7.603 z 9.9256 z att17 at 6.844 nh 10.1488 oi m att16 Cronbach's Alpha if Item Deleted 613 852 k jm gm om l.c 1.5 Customer retention – General Case Processing Summary a Lu % n N 121 100.0 Cronbach's Alpha N of Items y Total 772 a Listwise deletion based on all variables in the procedure 69 te re Excluded(a) 100.0 n Cases 121 va Reliability Statistics Valid Item Statistics t to ng hi Mean Std Deviation N ep w 82146 121 gen22 3.1570 83674 121 gen23 3.1488 86276 121 n gen21 3.2231 lo ad ju y th yi pl ua al Item-Total Statistics n va Scale Variance if Item Deleted Deleted n Scale Mean if Item Cronbach's Alpha if Item Correlation Deleted ll fu Corrected Item-Total 2.297 gen22 6.3719 2.136 gen23 6.3802 2.054 560 742 627 671 635 661 at nh 6.3058 oi m gen21 z z ht vb k jm gm II Factor Analysis l.c 2.1 Switching barrier om Kaiser-Meyer-Olkin Measure of Sampling Adequacy .841 n a Lu KMO and Bartlett's Test Approx Chi-Square 1786.669 Sig .000 70 y 171 te re df n va Bartlett's Test of Sphericity Total Variance Explained t to Extraction Sums of Squared Loadings ng Initial Eigenvalues Rotation Sums of Squared Loadings hi Component ep Total w % of Variance Cumulative Total % % of Variance Cumulative % of Total % Variance Cumulative % 44.855 44.855 8.522 44.855 44.855 4.112 21.641 21.641 2.030 10.683 55.537 2.030 10.683 55.537 3.366 17.718 39.359 8.215 63.753 1.561 8.215 63.753 3.196 16.821 56.180 71.075 1.391 7.322 71.075 2.830 14.895 71.075 75.972 n 8.522 ad lo 1.561 1.391 y th 7.322 930 4.897 790 4.156 621 3.268 550 2.897 86.292 468 2.461 88.754 10 452 2.381 91.134 11 343 1.806 92.941 12 328 1.725 94.665 13 254 1.336 96.001 14 215 1.132 97.133 15 163 857 97.990 16 128 671 98.662 17 110 579 99.240 18 094 493 99.733 19 051 267 100.000 ju yi pl 80.127 ua al 83.395 n n va ll fu oi m at nh z z ht vb k jm om l.c gm a Lu Extraction Method: Principal Component Analysis n n va y te re 71 t to Rotated Component Matrix(a) ng Component hi ep w n lo ad ju y th yi mov2 785 mov3 761 mov1 757 mov4 744 mov6 677 mov5 639 411 pl al 899 att16 831 att19 n ua va att18 684 n 676 ll fu att17 -.440 626 oi m att20 nh ben7 797 at ben9 823 z 730 z ben11 vb 651 ben12 510 ht ben10 jm 496 721 om int15 l.c 831 int14 gm 880 k int13 n a Lu Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations va n After dropped Ben 12, here is the result: te re KMO and Bartlett's Test y Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square 72 829 1697.256 df 153 Sig .000 t to ng Total Variance Explained hi ep Extraction Sums of Squared Loadings Initial Eigenvalues Component w Total n % of Variance % of Variance Cumulative % of Total % Variance Cumulative % 45.206 8.137 45.206 45.206 4.085 22.694 22.694 1.906 10.588 55.794 1.906 10.588 55.794 3.322 18.457 41.151 1.539 64.342 1.539 8.549 64.342 2.968 16.487 57.638 y th 8.549 1.385 7.693 72.035 1.385 7.693 72.035 2.591 14.397 72.035 923 5.127 77.162 741 4.115 81.277 618 3.434 490 2.723 461 2.560 10 407 2.259 92.254 11 332 1.845 94.098 12 297 1.650 95.748 13 216 1.199 96.947 14 165 918 97.865 15 130 721 98.586 16 110 611 99.197 17 094 521 99.718 18 051 282 100.000 ad lo 45.206 8.137 Cumulative Total % Rotation Sums of Squared Loadings ju yi pl ua al 84.711 87.434 n n va 89.994 ll fu oi m at nh z z ht vb k jm Extraction Method: Principal Component Analysis om l.c gm n a Lu n va y te re 73 Rotated Component Matrix(a) t to ng Component hi ep w n lo ad mov2 787 mov3 765 mov1 762 mov4 745 mov6 680 mov5 653 ju y th yi att19 890 att16 823 att17 694 pl 664 att18 al -.437 ua att20 804 n ben11 826 va ben9 649 n ben7 414 720 fu 653 ll ben10 m int13 881 oi int14 835 nh int15 722 at z Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization z ht vb a Rotation converged in iterations gm Total Variance Explained k jm 2.2 Customer retention Extraction Sums of Squared Loadings l.c Initial Eigenvalues om Component 68.714 68.714 2.061 530 17.656 86.370 409 13.630 100.000 68.714 68.714 n va 2.061 n a Lu Total % of Variance Cumulative % Total % of Variance Cumulative % y 74 te re Extraction Method: Principal Component Analysis Component Matrix(a) t to ng Component hi ep w n 848 gen22 842 gen21 796 lo gen23 ad ju y th yi pl n ua al Extraction Method: Principal Component Analysis a components extracted n va ll fu m oi Rotated Component Matrix(a) nh at Dummy category z z ht vb a Only one component was extracted The solution cannot be rotated k jm om l.c gm n a Lu n va y te re 75