Determinants of customer loyalty in mobile telecommunication sector A case of VinaphoneDeterminants of customer loyalty in mobile telecommunication sector A case of Vinaphone

TRƯỜNG ĐẠI HỌC MỞ TP.HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBAVB4 TRAN ANH TUAN DETERMINANTS OF CUSTOMER LOYALTY IN MOBILE TELECOMMUNICATION SECTOR A CASE OF VINAPHONE MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) Supervisor: DR. LE THAI THUONG QUAN Ho Chi Minh City (2011) ii STATEMENT OF ORIGINAL AUTHORSHIP I certify that the substance of this thesis has not already been submitted for any degree and is not currently being submitted for any other degree or qualification. I also certify that, to the best of my knowledge, any help received in preparing this thesis, and all sources used have been acknowledged in this thesis. Tran Anh Tuan March 5 th , 2012 iii ACKNOWLEDGEMENT I owe a debt of gratitude to many people who helped me complete this thesis. I would like to acknowledge the help of all. First of all I would like to thank the Viet-Belgium Master program with all professors and coordinators, especially Belgium professors who come from a far country and bring us not only useful knowledge but also self-confidence and dreams. I also thank all my friends at MBAVB4 for their contribution and support in class and real life. I wish you all the best in your future. Next, I own particular thank to my supervisor, Dr. Le Thai Thuong Quan, for his valuable advice, recommendations and comments in earlier draft of my thesis. I wish to thank Mr. Le Xuan Hien from Service Development Center of Vinaphone for useful information about mobile telecommunication service in Vietnam, especially Vinaphone context. In the process of data collection for this research, many people contributed to the task and I am particularly grateful for their contributions, especially Mr. Le Xuan Hien and his colleagues from Vinaphone, Mr. Tran Dang Khoa and my colleagues from NEO company. Finally, to my family, I would like to express my deepest gratitude to my beloved parents who give me a great encouragement for everything I want to do. My loving thanks to my wife and children for their love and support. This thesis is the dedicated gift for them all. Tran Anh Tuan March 5 th , 2012 iv SUPERVISOR’S COMMENTS The topic has practical meaning and the author has successfully shown the ability to do a marketing/behavioral research. For this, the author has conducted a customer survey and used a very modern technique to analyze and test the hypothesis. In overall, the presentation is clear and the thesis is up to the standard. I approve for the public presentation. Le Thai Thuong Quan v ABSTRACT This study evaluates and investigates the relationships between the quality service of Vietnam’s mobile carrier, the customer satisfaction and customer loyalty. These relationships were tested using a sample of 284 mobile users in HCM City. The result indicates that the call quality and convenience of procedure and support are the major factor that makes customers satisfied and loyal to mobile carrier. The switching cost of does not affect customer loyalty. In addition, factors of customer age and education level and income groups have significant difference on customer satisfaction through convenience of procedure and customer support. Implications for managers and directions for future research are also discussed. vi TABLE OF CONTENTS STATEMENT OF ORIGINAL AUTHORSHIP ii ACKNOWLEDGEMENT iii SUPERVISOR’S COMMENTS iv ABSTRACT v TABLE OF CONTENTS vi LIST OF ABBREVIATIONS ix LIST OF TABLES x LIST OF FIGURES xi Chapter 1 : INTRODUCTION TO THE STUDY 1 1.1 Rationale of the study 1 1.2 Research objectives 2 1.2.1 Research questions 2 1.2.2 Research objectives 2 1.3 Methodology 2 1.4 Scope and Limitations 3 1.5 Implications of research 3 1.6 Structure of the study 4 1.7 Conclusions 4 Chapter 2 : INTRODUCTION TO VIETNAM MOBILE SERVICE MARKET 5 2.1 Overview of Vietnam’s mobile telecom service market 5 2.2 Vinaphone’s profile 9 2.2.1 Brief of history 9 2.2.2 Vinaphone’s Strategy 10 2.2.3 Infrastructure and network coverage 11 2.2.4 Distribution and support system 11 2.2.5 Services and value-added services 12 2.2.6 Price structure & Promotion 13 2.2.7 Achievements 14 2.3 Conclusion 15 vii Chapter 3 : LITERATURE REVIEW 16 3.1 Definition of services 16 3.2 Perceived service quality and customer satisfaction 17 3.3 Customer loyalty 19 3.4 Switching barrier 21 3.5 The testing model and hypotheses 22 3.6 Conclusion 24 Chapter 4 : RESEARCH METHODOLOGY & DESIGN 25 4.1 Research methodology 25 4.1.1 Research approach 25 4.1.2 Research processes 26 4.2 Research Design 27 4.2.1 Research model 27 4.2.2 Questionnaire 28 4.2.3 Data collection 30 4.3 Data analysis 31 4.3.1 Data analysis processes 31 4.3.2 Descriptive statistics analysis 31 4.3.3 Testing model and hypothesis checking 32 4.3.4 The effect of demographic characteristics 33 4.4 Conclusion 33 Chapter 5 : DATA ANALYSIS AND FINDINGS 34 5.1 Descriptive analysis and findings 34 5.1.1 Data collecting result 34 5.1.2 Evaluation of perceived service quality, satisfaction and loyalty 37 5.1.3 Evaluation of switching barrier 40 5.2 Quantitative analysis and findings 41 5.2.1 Assessment of measurement scale 42 5.2.2 Factor analysis 44 5.2.3 Hypotheses and Testing model 45 5.3 The impact of demographic variables 49 5.3.1 T-test for the variable having two group 50 5.3.2 Testing for multiple groups variables 50 5.4 Conclusion 52 Chapter 6 : CONCLUSIONS AND RECOMMENDATIONS 53 6.1 Conclusions related to research questions 53 6.1.1 Service quality measurement 53 viii 6.1.2 Factor of customer loyalty 54 6.1.3 Effect of demographics 54 6.2 Recommendations of the research study 54 6.2.1 Recommendations for Vietnamese mobile carrier 54 6.2.2 Recommendations for Vinaphone 55 6.3 Limitations and recommendation for further research 55 REFERENCES 57 APPENDIX 1: QUESTIONAIRES (VIETNAMESE) 59 APPENDIX 2: QUESTIONAIRES (ENGHLISH) 62 APPENDIX 3: FACTOR ANALYSIS 65 APPENDIX 4: DEMOGRAPHICS TEST 73 ix LIST OF ABBREVIATIONS Abbreviation Description 3G Third-generation technology ARPU Average Revenue Per User BTS Base Transceiver Station CDMA Code Division Multiple Access CFA Confirmatory Factor Analysis EFA Exploratory Factor Analysis GSM Global System for Mobile GSO General Statistics Office MIC Ministry of Information and Communications SEM Structural Equation Modeling SPSS Statistical Package for Social Science VAS Value-added Service x LIST OF TABLES Table 3 - 1: Theoretical mobile customer loyalty model 23 Table 4 - 1: Variables definition and measurements 28 Table 5 - 1: Statistics of respondent characteristics 35 Table 5 - 2: Statistics towards mobile carriers (per cent of using) 36 Table 5 - 3: Statistics on service quality, customer satisfaction and customer loyalty . 39 Table 5 - 4: Statistics on switching barrier effect 41 Table 5 - 5: Cronbach's alpha of the scale of the survey 42 Table 5 - 6: List of factors 45 Table 5 - 7: Path coefficients of the structural model 47 [...]... provincial VNPT companies to provide services Along with the cooperation of 64 provincial VNPT companies, each province has at least one transaction office, big city like Ho Chi Minh City and Ha Noi has nearly 20 points Totally, Vinaphone has transaction office nationwide with more than 200 transaction office These transaction points are also the supporting point of Vinaphone Besides the official transaction... Research On Asia (ROA) Holdings, an independent Tokyo-based market research and consulting company specializing in wireless and mobile markets in Asia, reported that the churn rate of Vietnam is in the two tops of Asian which surpasses 10% Two source of information seems consistent to each other and in accordance with the market Figure 2 - 5: Asian churn rate vs prepaid penetration in 2011 2.2 Vinaphone s... objectives: To measure the perceived the service quality, customer satisfaction and customer loyalty toward each mobile operators in Vietnam, especially Vinaphone To find out the determinants of customer loyalty and to verify the model of Vietnam mobile customers To find out the effect of demographic characteristics on customer loyalty, than propose a guideline for customer segmentation of Vinaphone 1.3... high customer satisfaction which results in strong customer loyalty According to Johnny (2001), evolution of the conceptualization and measurement of service loyalty can be classified into three phases At the first phase, customer loyalty was defined as a behavior of customer, showed by repetitive purchase in terms of volume and value In the next phase, customer loyalty measured by incorporating behavioral... especially for post-paid subscribers In an empirical study of mobile instant messages in China, Deng et at (2009) pointed 22 out switching cost has a positively influence on customer loyalty Kim et at (2004) analyzed the adjustment effect of switching barrier on customer satisfaction and customer loyalty They found that switching cost is a factor directly affecting customer loyalty, and its influence... examine the relations among service quality, value, image, satisfaction and loyalty in China telecoms They found that service quality directly influence both value perception and image perception, then value and image influence satisfaction, and both satisfaction and value are significant determinants of loyalty Customer satisfaction depends on how customers perceive service quality (Gerpott et al.,... includes prepaid, postpaid, long-term prepaid, 356 day prepaid services which depend on payment type Besides the basic services, Vinaphone is considered as the leader in value-added service (VAS) provider The VAS services are divided into following catalogues: Voice VAS service include: short dialing, international call, international roaming, national roaming, call forwarding, call restriction, call... shop, and internet users who use mobile phone Descriptive analysis is applied to measure the perceived service quality of mobile carriers Cronbach’s alpha and Exploratory Factor Analysis (EFA) of SPSS software, Confirmatory Factor Analysis (CFA) and SEM mode of AMOS software are used for factor analysis, hypotheses checking and measure the demographic characteristics effect 1.4 Scope and Limitations... behavioral and attitudinal simultaneously A sustainable loyalty could only be attained when customers enjoyed a high level of positive attitude toward the object, together with high level of repeat patronage behavior Lastly, service loyalty is the composite of three kinds of attributes: namely behavioral, attitudinal and cognitive attributes Service loyalty is determined by the degree to which a customer. .. was made of water-drop circles connecting to one another softly but closely and meaningfully The water-drops connecting to one another express the connectivity and spreading, which are business characteristics of Vinaphone The image of three connecting water-drops creates a stable and powerful posture (Source: Vinaphone website) 2.2.2 Vinaphone s Strategy The vision of Vinaphone is to be the leading . customer satisfaction and customer loyalty toward each mobile operators in Vietnam, especially Vinaphone  To find out the determinants of customer loyalty and to verify the model of Vietnam mobile. alpha and Exploratory Factor Analysis (EFA) of SPSS software, Confirmatory Factor Analysis (CFA) and SEM mode of AMOS software are used for factor analysis, hypotheses checking and measure. toward the operators.  What are determinants of customer loyalty in Vietnam mobile market?  What are the differences between customer behaviors toward loyalty base on their demographic characteristics?