The relationship between service quality, customer satisfaction, service quality and customer loyalty a study in telecommunication industry of laos

MINISTRY OF EDUCATION AND TRANING MINISTRY OF EDUCATION AND SPORT NATIONAL ECONOMICS UNIVERSITY NATIONAL UNIVERSITY OF LAOS VIETNAM LAOS PADAPPHET SAYAKHOT THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND CUSTOMER LOYALTY: A STUDY IN TELECOMMUNICATION INDUSTRY OF LAOS Specialisation : Industrial Management Code : 62340414 Supervisor : Assoc Prof Dr Truong Doan The A dissertation Submitted to the National Economics University, Vietnam and National University of Laos in fulfillment of requirements for the degree of Doctor of Philosophy in Economics HANOI - 2015 i DECLARATION I hereby declare that this dissertation is my own work and effort The dissertation has not been submitted anywhere for any award All the sources of information used have been well acknowledged Signature PADAPPHET SAYAKHOT ii ACKNOWLEDGMENTS The path toward completion of a doctorate is long and often times can seem quite arduous Yet it has been an enriching and rewarding experience for me both professionally as well as personally I would like to express my thanks and appreciation to the many that have encouraged and lifted my spirits along the way I especially want to thank Associate Professor Dr TRUONG DOAN THE, my principal supervisor, for his patient and proficient guidance He has shared expertise in research methods, inspired me to generate new ideas, and encouraged me to become a higher level scholar My family has also been especially supportive in my journey to pursue a doctorate To my loving wife for the patience she demonstrated, and the encouragement she provided throughout the long process My children were always there to express their love and appreciation for their dad Last but not least, I also would like to offer a special thanks to my friends and colleagues within my business organization who have provided their support along the way.Furthermore, I could not complete this thesis without the assistances and supports from interviewee team and interviewers, please receive my deepthankfulness from my heart i TABLE OF CONTENTS DECLARATION i ACKNOWLEDGMENTS ii TABLE OF CONTENTSTable of contents i ABBREVIATION iv LIST OF FIGURES v LIST OF TABLE vi CHAPTER 1: INTRODUCTION 1.1 Rationale 1.2 Research objectives 1.3 Research questions 1.4 Research framework 1.5 Research method 1.6 Structure of the thesis .5 CHAPTER 2: LITERATURE REVIEW ON THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND CUSTOMER LOYALTY 2.1 Background of service quality, customer satisfaction, and customer loyalty 2.1.1 Service quality 2.1.2 Customer satisfaction .26 2.1.3 Customer loyalty 36 2.2 Review of theory on the relationship between Service quality, customer satisfaction and customer loyalty 38 2.2.1 Service quality and customer satisfaction .38 2.2.2 Service quality and customer loyalty .38 2.2.3 Customer satisfaction and customer loyalty 39 2.3 Telecommunications and Telecommunication Service 40 ii 2.3.1 Telecommunications 40 2.3.2 Telecommunication services 42 2.3.3 The role of telecommunications in economic growth .44 2.4 Quality of Telecommunication Service and customer satisfaction and customer loyalty 51 2.4.1 Quality of Telecommunication Service 51 2.4.2 Dimensions of Quality of Telecommunication Service 55 2.4.3 Quality of Telecommunication Service, customer satisfaction and customer loyalty .57 CHAPTER 3: OVERVIEW OF TELECOMMUNICATION INDUSTRY IN LAOS 60 3.1 Background of Laos .60 3.2 Economy overview 61 3.3 Demographic Outlook .63 3.4 Overview of telecommunication industry in Laos 66 CHAPTER 4: METHODOLOGY 85 4.1 Overview of the research design 85 4.1.1 Approaches of the research 85 4.1.2 Research hypotheses 86 4.1.3 Evaluation indicators for potential constructs 86 4.1.4 Reliability and item analysis 88 4.1.5 Exploratory factor analysis 89 4.2 Main Survey 90 4.2.1 Survey Sample 90 4.2.2 Questionnaires Development 92 4.2.3 Data collection 95 CHAPTER 5.: ANALYSIS AND RESULT 97 5.1 Descriptive analysis of measurement scales .97 5.1.1 Descriptive analysis of customer satisfaction 97 iii 5.1.2 Descriptive analysis of customer loyalty 97 5.1.3 Descriptive analysis of service quality 98 5.2 Exploratory factor analysis 101 5.3 Reliability Analysis 105 5.3.1 Reliability of telecommunication service quality measurement scale 105 5.3.2 Reliability of customer loyalty measurement scale 107 5.4 The relationship between telecommunications service quality and customer satisfaction 108 5.5 The relationship between telecommunication service quality and customer loyalty 114 5.6 The relationship between customer satisfaction and customer loyalty 119 CHAPTER 121 DISCUSSION, CONCLUSION AND RECOMMENDATION 121 6.1 Discussion 121 6.1.1 Service quality scale 121 6.1.2 Relationship between service quality, customer satisfaction and customer loyalty 122 6.2 Conclusion 122 6.3 Recommendation 123 6.4 Limitation of the study and suggestion for future research 124 6.4.1 Limitation 124 6.4.2 Suggestion for future research 124 REFERENCES 126 APPENDIX: QUESTIONAIRES 144 iv ABBREVIATION 2G Second-Generation wireless telephone technology 3G Third-generation technology 4G Fourth Generation ADB Asian Development Bank ADSL Asymmetric Digital Subscriber Line AM Amplitude modulation ASEAN Association of Southeast Asian Nations BMI CDMA Code Division Multiple Access EFA Exploratory factor analysis ETL Enterprise Telecommunications Lao FM Frequency modulation GMS Greater Mekong sub-region GNI Gross national income GSM Global System for Mobile Communications ISPs Internet service providers ITU International Telecommunication Union Lao PDR Lao People’s Democratic Republic LAT Lao Asia Telecom LDB Lao Development Bank LTC Lao Telecommunications MDGs Millennium Development Goals MPT Ministry of Posts and Telecommunications NPTA National Post and Telecommunications Authority NSEDP National Social and Economic Development Plan PAF principal axis factoring UN United Nations v LIST OF FIGURES Figure 1: Research Model Figure Laos' population pyramid for 2011 63 Figure Mobile market growth (2006 – 2014) 68 Figure Fixed-Line MarketGrowth 2006 – 2011 72 Figure Fixed-Line MarketGrowth 2012-2014 73 Figure LaosInternetMarketGrowth (2003-2011) 75 Figure LaosInternetMarketGrowth (2012-2015) 76 Figure LaosBroadband Market Growth (2005-2011) 78 Figure Laos Broadband Market Growth (2012-2014) 79 vi LIST OF TABLE Table Summary previous models on dimensions of telecommunication services quality 56 Table 2: Laos' Population By Age Group, 1990-2020 ('000) 64 Table 3: Laos' Population By Age Group, 1990-2020 (% of total) 65 Table 4: Laos' Key Population Ratios, 1990-2020 65 Table 5: Laos' Rural And Urban Population, 1990-2020 66 Table 6: Mobile market growth (‘000) .69 Table 7: Laos Telecommunications Subscriber MixSubscriber Mix .70 Table 8: Laos Internet Market by Service 77 Table 9: Competitive Landscape .83 Table 10: Telecoms sector in Laos – Historical Data and Forecasts 84 Table 13 Summary of characteristics of the sample 91 Table 11 Items of customer satisfaction and customer loyalty 93 Table 12 Items of telecommunication service quality .94 Table 14 Descriptive Analysis of Customer Satisfaction Items 97 Table 15 Descriptive Analysis of Customer Satisfaction Items 98 Table 16 Descriptive Analysis of Service Quality Items 99 Table 17 KMO and Bartlett's Test 101 Table 18 Total Variance Explained 102 Table 19 Rotated component Matrix 103 Table 20 Constructs measure telecommunication service quality in Laos 104 Table 21 Item-Total Statistics 105 Table 22 Item-Total Statistics 106 Table 23 Item-Total Statistics 106 Table 24 Item-Total Statistics 107 Table 25 Correlation matrix of relevant variables 108 vii Table 26 Model Summaryb 109 Table 27 ANOVAa 109 Table 28 Coefficients 110 Table 29 Dummy variables 111 Table 30 Model Summary 112 Table 31 ANOVAa 112 Table 32 Coefficientsa 113 Table 33 Correlations 114 Table 34 Model Summaryb 115 Table 35 ANOVAa 115 Table 36 Coefficientsa 116 Table 37 Model 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Prepaid Post-paid Monthly expenses for telecommunication (USD/month) Less than 5-10 10-20 20-50 More than 50 Length of use? (months) Less than 6-12 12-24 more than 24 DIRECTIONS: The following set of statements relate to your feelings about telecommunication company which you are consuming there services For each statement, please show the extent to which you believe this has the feature described by the statement Circling a "1" means that you strongly disagree that they have that feature, and circling a ''5'' means that you strongly agree You may circle any of the numbers in the middle that show how strong your feelings are There are no right or wrong answers-all we are interested in is a number that best shows your perceptions about this providers 145 Part Satisfaction and loyalty Strongly disagree I overall satisfy with the services I will go on using this provider If I bought a new service, I would prefer this provider I recommend this provider to people I encourage friends and relatives who plan to buy a telecom service Even if the other providers’biling was cheaper, I would go on using this service Strongly agree 5 5 5 146 Part Service quality Strongly disagree Strongly agree Network This provider has clear call quality I can use the services in every corners of the country and also abroad Value-added services The provider has variety of value-added services It is convenient of use of value-added services Provider’s value-added services are up-todate 5 5 5 5 5 5 5 Customer service Well perform in fixing a problem Customer service representatives are courteous Having consistent advice/instructions from a call center Accurate representation of service and terms Pricing structure 10 The services provided are reasonability of price 11 Having a variety of price schedule 12 It is convenient and free in choosing price schedules Billing system 13 Provision of accurate billing 14 Ease of understanding and resolving billing issues 15 Resolving billing issues quickly [...]... telecommunication services setting in Laos, what are the specific quality attributes that measure service quality, and influence customer satisfaction? 2 Using a telecommunication service setting in Laos, how service quality attributes and customer satisfaction influence customer loyalty? 1.4 Research framework Drawing from the literature on the relationships among service quality, customer satisfaction and customer. .. quality and customer satisfaction and customer loyalty has been studied by many researchers in various service fields including of telecommunication Therefore, quantitative approach has been employed to confirm the relationship between service quality and customer satisfaction, service quality and customer loyalty, customer satisfaction and customer loyalty in Laos telecommunication setting Data was collected... of service quality on customer satisfaction and customer loyalty as well as of customer satisfaction on customer loyalty Additionally, in recent research in multinational telecommunication companies’ performance Kommasith (2014) finds that cultural differences are one of the important factors affecting the performance of multinational telecommunication companies in Laos That means although the relationships... review on the relationship between service quality, customer satisfaction and customer loyalty discusses service quality, customer satisfaction, and customer loyalty in depth, and argues why these entities are worthy of investigation in Laos telecommunication context Chapter 3: Overview of telecommunication industry in Laos briefly introduces the background of Laos economy and demography This chapter focuses... constructs of perceived service quality and customer satisfaction, as well as investigate the degree and direction of causal links The current research presents a basis for understanding the service quality and customer satisfaction constructs in the context of industrial technical field service The following sections describe prior research from the service quality, customer satisfaction and customer loyalty. .. also attentiveness and accuracy in the attention to detail of information received from customers in placing requests for service Expressing attitudes of helpfulness, and not appearing too busy to accurately take information about the customer and the nature of problem for which they are calling to request service certainly apply Assurance The assurance dimension was initially based on Parasuraman et al.'s... conceptualized and measured, and argued that the conceptualization and operationalization of service quality SERVQUAL was inadequate They expressed concern about the model's scale construction and, whether the individual scale items actually describe five separate service quality components as intended Cronin and Taylor (1992, 1994) assert that the disconfirmation-based SERVQUAL scale measures neither service. .. conceptual framework of the SERVQUAL scale was derived from work done by researchers such as Sasser, Olsen, and Wyckoff (1978), Gronroos (1982, Lehtinen and Lehtinen (1982) who examined the meaning of service quality, and then principally from Parasuraman et al.'s (1985) exploratory research in this area The underlying theory for Parasuraman, et al.'s (1985) measure of service quality was based on the. .. 2.1 Background of service quality, customer satisfaction, and customer loyalty 2.1.1 Service quality 2.1.1.1 Conceptualization of Service Quality Service quality is a concept that has aroused considerable interest and debate in the research literature because of the difficulties in both defining it and 8 measuring it with no overall consensus emerging on either (Wisniewski, 2001) There are a number of. .. research 7 CHAPTER 2 LITERATURE REVIEW ON THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND CUSTOMER LOYALTY The purpose of this chapter is to review and analyze previous research relative to the concepts of service quality, customer satisfaction and customer loyalty Theory development in service quality over the past few decades has built upon earlier research that was initially ... between Service quality, customer satisfaction and customer loyalty 2.2.1 Service quality and customer satisfaction Several researchers examine links between and among service quality, and satisfaction... quality and customer satisfaction, service quality and customer loyalty, customer satisfaction and customer loyalty in Laos telecommunication setting Data was collected in a survey of telecommunication. .. meaning of service quality, and then principally from Parasuraman et al.'s (1985) exploratory research in this area The underlying theory for Parasuraman, et al.'s (1985) measure of service quality