FACTORS INFLUENCING LOCAL CUSTOMER LOYALTY, CASE: LOW COST AIRLINE VIETJET AIR IN VIETNAM In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In International Business By Mr: Đoàn Giang Sơn ID: MBA04033 International University - Vietnam National University HCMC September 2013 FACTORS INFLUENCING LOCAL CUSTOMER LOYALTY, CASE: LOW COST AIRLINE VIETJET AIR IN VIETNAM In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In International Business by Mr: Doan Giang Son ID: MBA04033 International University - Vietnam National University HCMC September 2013 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree Approved: -Chairperson Advisor -Committee member Committee member -Committee member Committee member Acknowledge To complete this thesis, I have been benefited from many people around me First of all, I specially thank my advisor, Mr Ho Nhut Quang, for guiding me patiently to complete the thesis His information and advice are very valuable not only for this research but also for my real life Thank you with all of my honors Next, I would like to thank all of teachers in MBA department of IU, who gave me a lot of knowledge in business field It is lucky for me when I have been trained by professional teachers in professional environment Their experience and knowledge always make me admire Finally, I am very thankful to my family and friends, who always support and encourage me to pass all of difficulties in the periods of studying MBA program Plagiarism Statements I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City Copyright Statement This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author’s prior consent © Đồn Giang Sơn/ MBA04033/2013 Contents Chapter One - Introduction 1 Introduction 1.1 Background 1.2 Rationale of research 1.3 The problem statement 1.4 Research question 1.5 Research objectives 1.6 Research scope: 2.2 Conceptual Model of the thesis study Research methodology 3.1 Research Framework Significant of the research Propose structure Chapter Two - Literature review Previous models Perceived Value 12 Price 13 Service Quality 14 Brand Image: 15 Trust 16 Customer satisfaction 17 Customer loyalty 19 8.1 Customer loyalty definition 19 8.2 The influences of customer loyalty on firm‟s incomes 19 Research model and Hypotheses 21 Chapter Three - Methodology 23 Research Method 23 Primary data collection 24 2.1 Paper survey as the data collection method 24 2.2 Questionnaire design and data collection 25 Reliability and Validity 26 3.1 Reliability test 26 3.2 Validity test 26 Chapter Four - Data analysis and Research results 30 Sample description 30 Descriptive statistic 31 2.1 Price 31 2.2 Perceived Value 32 2.3 Service Quality 32 2.4 Brand Image 33 2.5 Trust 34 2.6 Customer Satisfaction 34 2.7 Customer Loyalty 35 Reliability tests 36 Validity tests 36 4.1 Tests for 1st stage 36 4.2 Tests for 2nd Stage 43 Path Analysis 48 5.1 Influence of Customer Loyalty: H1d, H2d and H3d tests 48 5.2 Indirect influence path analysis 49 Chapter Five - Conclusions and Recommendations 53 Conclusion 53 Suggestions for Vietjet Air 54 2.1 Price policy 54 2.2 Service quality 55 2.3 Brand Image 56 Limitation 56 LIST OF REFERENCES 57 APPENDIX A 63 APPENDIX B 66 LIST OF FIGURE Figure 1: Schematic diagram of research Figure 2: Research framework Figure 3: European Customer Satisfaction Model Figure 4: Model of impacts on Customer Loyalty in commercial airlines industry 10 Figure 5: Model of Steven A Taylor in marketing of heavy equipment 10 Figure 6: SERVQUAL Model 12 Figure 7: Conceptual research model 21 Figure 8: Questionnaire design 25 Figure 9: Respondent gender description 30 Figure 10: Final research model 51 LIST OF TABLE Table 4.1: Number of flight that respondents made with VJ 30 Table 4.2: Number of flights that respondents made in one year 31 Table 4.3: Price descriptive statistic 31 Table 4.4: Perceived Value descriptive statistic 32 Table 5: Service quality descriptive statistic 32 Table 4.6: Brand image descriptive statistic 33 Table 4.7: Trust descriptive statistic 34 Table 4.8: Customer satisfaction descriptive statistic 34 Table 4.9: Customer loyalty descriptive statistic 35 Table 4.10: the Cronbach‟s Alpha of factors 36 Table 4.11: KMO and Barlett‟s test for Independent variables 37 Table 4.12: Total variance Explained for 1st Stage 37 Table 4.13: Rotated component matrix for 1st Stage 38 Table 4.14: Correlation between indirect factors and direct factors 39 Table 4.15: R-square value in H1a, H2a, H3a test 40 Table 4.16: ANOVA in H1a, H2a, H3a test 40 Table 4.17: Coefficients values in H1a, H2a, H3a test 40 Table 4.18: R-square Value in H1b, H2b, H3b test 41 Table 4.19: ANOVA in H1b, H2b, H3b test 41 Table 4.20: Coefficients in H1b, H2b, H3b test 42 Table 4.21: R-square value in H1c, H2c, H3c test 42 Table 4.22: ANOVA in H1c, H2c, H3c test 42 Table 4.23: Coefficients in H1c, H2c, H3c test 43 Table 4.24: KMO and Barlett‟s Test for 2nd Stage 43 high To redemy that issue, Vietjet Air could try to look for other suppliers who are able to give better offers 2.2 Service quality Through survey of this research, passengers expressed their bad mood about Vietjet on time performance (mean of QLT5 = 2,9194) The long delay flights may cause much stress for both passenger and Airline There are varied reasons which cause flights delay, for example: bad weather, technical check, operational change, security activity, V.I.P flights, The worst case occurs when the flight is decided to cancel One of the frequent reasons of delay flights is come from technical problem Now Vietjet Cooperation has eight planes and they are being used in dense operational schedule; therefore the time for maintenance is not enough Vietjet should consider a better operational schedule and more concentrated in maintenance, because it will help to reduce the delay flights It is not only make passenger feel more comfortable but also help to reduce the expenses for delay flights - Customer Service Nowadays, customer service is the key weapon that a company uses to maintain relationship with customer and to win the competitors (Ahmad Amiz et al., 2010) Although Vietjet Air is operating in low cost airline model but customer service is still very important The company should pay more attention in training staffs to have better service The two major roles in airline customer service are ground staffs and cabin attendants These two departments need to be more and more professional in the whole service progress such as: greeting customers, willing to help when customer need, always smiling and being expert in solving irregular circumstances 55 2.3 Brand Image According to the finding in chapter 4, passengers performed that Vietjet Air is not really the first carrier they think about when they have decided to fly (mean of IM2 = 2,9851) It is the fact that Vietjet Air has not built an enough strong Image to attract customers The consequence is that Vietjet Air may loose a lot of potential customers; so it will impact the revenue of carrier Therefore, Vietjet Air need to focus more and more in building a strong brand through business operations and maketing strategies Limitation This final thesis does an investigation about the customer perception and experience on Vietjet Air In the research, a new model was built to define the factors influence Customer Loyalty by using survey method Although the model was tested and given out a positive result, it still has several limitations which should be ameliorated in further researches The author suggests some improvements for those researches as follow: - Added factors There were three direct factors and three indirect factors influence Customer Loyalty in this research, but they have not represented for most of the aspects which have impact on the loyalty Therefore, it should be added more in future models such as: commitment or customer expectations - Wider survey collection The survey using in this research was conducted only in Tan Son Nhat airport, therefore it will not perform the accurate evaluation of customers because each airport has different service policy Besides that, the different cultures 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trung thành khách hàng” Xin Anh/Chị vui lòng điền vào bảng câu hỏi Mọi đánh giá Anh/Chị nguồn thông tin quý giá Xin chân thành cám ơn Anh/Chị THƠNG TIN CHUNG Xin vui lịng cho biết độ tuổi Anh/Chị: i