The influence of relationship quality on customer loyalty a study of veterinary companies and their agencies in vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Dac Huy THE INFLUENCE OF RELATIONSHIP QUALITY ON CUSTOMER LOYALTY – A STUDY OF VETERINARY COMPANIES AND THEIR AGENCIES IN VIETNAM ID: 21120091 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr PHAM NGOC THUY Ho Chi Minh City – Year 2014 ACKNOWLEDGEMENTS Firstly, I would like to express my sincere gratitude to Dr Pham Ngoc Thuy, my Supervisor, who has given me great guidance, inspiration and especially her motivation, thanks for her valuable advice, suggestions and resources that helping me in accomplishing this study Secondly, I would like to express my sincere thanks to all professors, tutors and officers of MBus Program for valuable lectures, academy knowledge and your experiences transfer throughout the period of courses at International School of Business I want to express my special thanks to all my colleagues, friends, customers in veterinary medicine industry for your advice, cooperation and supports during the pilot and official survey Without your support, I could not successfully complete my thesis Ho Chi Minh City, Vietnam, 30th Sep, 2014 Nguyen Dac Huy ii       ABSTRACT In recent years, the industry of veterinary medicine in Vietnam has been developing significantly The veterinary medicine companies increasingly expand the market and enlarge their agencies system to take the company's image and products to market The purpose of attracting customers is to gain more market-share and bring more profits back to them This research is to identify the determinants affecting customer loyalty in veterinary medicine industry This study was aimed to explore the influence of relationship quality factors on customer loyalty in veterinary medicine industry in southern of Vietnam is done through quantitative methods Formal quantitative research through interviews using a questionnaire with a sample collected in a convenient method of 230 agencies around some provinces in Southern The research results contribute to the theoretical basis of research by understanding the meaning of the factors of relationship quality that affect consumer loyalty in veterinary medicine market Thereby, the results also provide managers with a basis for decisionmaking, investment options to develop new products and services in line with objectives and current strategic Key words: Trust, Commitment, Satisfaction, Customer Loyalty iii       Table of Content Acknowledgement ii Abstract iii CHAPTER 1: INTRODUCTION    1   1.1   Research background    1   1.2   Research problem    2   1.3   Research objectives    2   1.4   Research scope    2   1.5   Research structure    3   CHAPTER 2: LITERATURE REVIEW    4   2.1   A brief introduction about veterinary medicine industry    4   2.2   Research Concepts    6   2.2.1   Relationship quality    6   2.2.2   Trust    6   2.2.3   Commitment    6   2.2.4   Satisfaction    7   2.2.5   Customer Loyalty    7   2.3   Hypotheses &Research model    7   2.3.1   Trust and customer loyalty    7   2.3.2   Commitment and customer loyalty    8   2.3.3   Satisfaction and customer loyalty    9   2.3.4   Moderating Effect    9   2.4   Research model    10   CHAPTER 3: RESEARCH METHODOLOGY    11   3.1   General approach    12   3.2   Research methodology, Data collection and sample size    13   3.2.1   Step 1: Qualitative study    13   3.2.2   Measurement scale    14   3.2.3   Step 2: Pilot    16   3.2.4   Step 3: Quantitative study    17   3.2.5   Sample size of Quantitative research    17   3.2.6   Sampling methodology    18   iv       3.2.7   Questionnaire explanation    18   3.3   Data analysis    19   3.3.1   Exploratory Factor Analysis (EFA)    19   3.3.2   Reliability Analysis    20   3.3.3   Multi-linear regression analysis    21   3.4   Chapter summary    22   CHAPTER 4: DATA ANALYSIS, FINDINGS AND DISCUSSION    23   4.1   Descriptive data analysis    23   4.1.1   Descriptive analysis of Sample charateristics    23   4.1.2   Descriptive analysis of the variables studies    25   4.2   Measurement scale assessment    26   4.2.1   Cronbach Alpha reliability analysis    26   4.2.2   Exploratory Factor Analysis    28   4.3   Hypotheses testing    34   4.3.1   Testing Assumption of Multiple Regressions    34   4.3.2   Evaluate and test the relevance of the model    35   4.3.3   Testing Hypotheses    35   4.4   Discussion    39   4.4.1   Satisfaction and Commitment    39   4.4.2   Company Trust    40   4.4.3   Customer Trust    41   4.5   Summary    42   CHAPTER 5: CONCLUSIONS AND IMPLICATIONS    43   5.1   Research overview    43   5.2   Key Findings    44   5.3   Managerial Implicamtions    44   5.4   Limitations    46   References    47   Appendices .52 v       List of Tables Table 4.1: Descriptive statistics of sample ………………………… …………….31 Table 4.2: Reliability analysis result…………………….………… ……….…….33 Table 4.3: EFA analysis result for variables after handling ………… …… ……35 Table 4.4: Describe the correlation among variables ………………… … …….39 Table 4.5: Multiple regression result ……………………………… …… ……43 Table 4.6: Hypothesis testing result …………………………… ………… ……44 Table 4.7: Summary result of the hypotheses…………………… ……… .….46 vi       List of Figures Figure 1: Research model …………………………………… ……………………10 Figure 2: Research process …… ……………………………………… …… …13 Figure 3: Research model after testing EFA ……………………… ………… …34 Figure 4: Multiple regression result ………………………………… ………… 38 vii       CHAPTER 1: INTRODUCTION 1.1 Research background Nowaday relationship quality is a critical success factor that influences the competitiveness of an organization Relationship quality is one of the important outcomes of marketing activity.Hennig-Thurau and Alexander (1997) argued that relationship quality represents the relationship between the firms and the customers (p 737 – 764) Nowadays because of competitive environment among companies,losing customers is very costly for companies (Athanasopoulou, 2009, p 583-610).Researchers have concluded that there is more times expensive to acquire new clients than to keep existing ones So that, companies have made efforts to developing and maintaining a long-term relationships with their customers in order to create customer loyalty Scant empirical research has been completed that has examined the group environment, or the affective states within it, such as trust, commitment, satisfaction and price as explaining the effects of relationship quality Vietnam is an agricultural country, so the livestock sector has a huge role in the economy, contributing an important part in the economic development of Vietnam During the recent years, the industry of veterinary medicine in Vietnam has been developing rapidly Recent statistics show that there are now over two hundreds veterinary medicine companies that are associated with customers systems with thousands of agencies and stores stretching from the north to the south (Yellow pages Vietnam, 2014) Several medicine companies, besides selling their products, are striving to attract and retain customers by offering the best services which are strongly based on the business relationships The companies need to understand how they can create and deliver values in business to business relationships beyond selling products On the other side, customers need to understand how to create, build and manage portfolio of supplier relationships to develop overall return on relationships 1.2 Research problem This study will research the influence of relationship quality and customer loyalty especially between veterinary medicine companies and their agencies in Vietnam It will focus deeply on three factors of relationship quality affect to the customer loyalty They are: trust, commitment, satisfaction If yes, how each factor influences on customer loyalty – positive or negative? 1.3 Research objectives The objectives of this research are to: - Identify factors of relationship quality impacting on customer loyalty between the veterinary medicine companies and their agencies in Vietnam veterinary medicine industry - Measure the impact levels of three factors of relationship quality namely trust, commitment, satisfaction on customer loyalty, - Analyze the differences of those relationships between groups of duration of cooperation and number of partners 1.4 Research scope The unit analysis in this research is organization so this research was investigated on the owners and director of the veterinary agencies       In terms of geography, this research carried out from Hue to Ca Mau province The period of conducting the survey was last from 10 June, 2014 to early July, 2014 1.5 Research structure The research consists of five parts: - Chapter I: Introduction This chapter introduces the research background, management problem, research problem, research objectives, research significance, and research scope as well as research structure - Chapter II: Literature review This chapter reviews previous related theories and research, as well as to select the research’s factors and formulate the research hypotheses and model - Chapter III: Research methodology This chapter provides general method how the research is designed and implemented - Chapter IV: Data analysis and findings This chapter will translate primary data collected from survey, analyze data as well as discuss the result findings in connection with literature review - Chapter V: Conclusion, implication, limitation and future research This chapter will conclude the research finding, provide research implication and give the further suggestion as well as research limitation       Day, G S (1969) A two-dimensional concept of brand loyalty.Journal of Advertising Research.9 (3) Doney, P.M., Cannon, J.P., 1997 An examination of the nature of trust in buyer-seller relationships.Journal of Marketing 61(2), 35-52 Du Plessis, L (2010) Customer relationship management and its influence on customer loyalty at Liberty Life in South Africa.University of Johannesburg Dwyer, R F., Paul, H S., and Sejo, O (1987) Developing buyer-seller relationship Journal of Marketing.51 (April), 11-27 Dwyer, F R., and Sejo, O (1987) Output sector munificence effects on the internal political economy of marketing channels Journal of Marketing.24 (November), 347 Friedman, B., Kahn, P., and Howe, D (2000) Trust online, Communications of The ACM, 43, 34-40 Fukuyama, F (1996) Trust: The Social Virtues and the Creation of Prosperity Simon and Schuster, New York, NY Gambetta, D (1988) Trust: Making and Breaking Cooperative Relations Blackwell, New York, NY Grounaris, S P., Tzempelikos, N P and Chatzipanagiotou, K (2007) The relationships of customer-perceived value, satisfaction, loyalty and behavioral intentions.Journal of Relationship Marketing 6(1): 63 Huang, H H and Chiu, C K (2006) Exploring customer satisfaction, trust and destination loyalty in tourism Journal of American Academy of Business.10(1): 156–159 Kothari, S P., A J Leone, and C Wasley (2005) Performance matched discretionary 49       accrual measures Journal of Accounting and Economics 39 (1): 163-197 Krejcie and Morgan, (1970) Determining sample size for research activities Journal Article, Educational and Psychological Measurement 607 - 610 Lagace, R., Robert, D., and Jule, B G (1991) The Relevance of Ethical Salesperson Behavior on Relationship Quality: The Pharmaceutical Industry The Journal of Personal Selling & Sales Management.11 (4), 39 Liang, C C L and Wang, W W W (2005) Integrative research into the financial services industry in Taiwan: relationship bonding tactics, relationship quality and behavioral loyalty Journal of Financial Services Marketing.10(1): 65–83 List of veterinary company in Vietnam (2014) Retrieved from http://yellowpages.vnn.vn/business/tagcategory_listings.asp?page=2&classcode=102 53210&i=0 Luarn, P and Lin, H (2003) A customer loyalty model for e-service context J Electron Comm Res., 4: 156-167 Moorman, C., Gerald, Z., and Rohit, D (1992) Relationships between providers and users of market research: the dynamics of trust within and between organizations Journal of Marketing Research.24 (August), 314-28 Morgan, R M and Hunt, S D (1994) The commitment-trust theory of relationship marketing.The Journal of Marketing 20-38 Nandhakumar, J and Baskerville, R (2006) Durability of online team working: patterns of trust, Journal of Information Technology & People, 19, (4), 371-389 Narus, James A and James C Anderson (1986) “Turn Your Industrial Distributiors into 50       Partners”, Harvard Business Review, 64 (March-April): 66-71 Rauyruen, P., Kenneth, E M and Nigel, J B (2007) Relationship Quality as a Predictor of B2B Customer loyalty Roberts-Lombard, M (2009) Customer retention strategies implemented by fast-food outlets in the Gauteng, Western Cape and KwaZulu-Natal provinces of South Africa: a focus on Something Fishy, Nando’s and Steers African Journal of Marketing Management.1(2): 070–080 Rootman, C (2006) The influence of customer relationship management on the service quality of banks Nelson Mandela Metropolitan University Rousseau, D.M., Sitkin, S.B., Burt, R.S., and Camerer, C (1998) Not so different after all: a cross-discipline view of trust The Academy of Management, 23, (3), 393-404 Salami, M P (2005).Impact of customer relationship management (CRM) in the Iran banking sector.International Journal of Organizational Innovation.2(1): 225–251 Tucker, W T (1964) The development of brand loyalty.Journal of Marketing Research.(pre-1986), (000003), 32 Uncles, M D and Gilles, L (1997) Editorial International Journal of Research in Marketing.14, 399-404 Westbrook, R A (1980) A Rating Scale for Measuring Product / Service Satisfaction.Journal of Marketing.44 (Fall), 68-72 Zeithaml, V A., Leonard, L B., and Parasuraman, A (1996).The behavioral consequences of service quality.Journal of Marketing.60 (April), 31-46 51       Appendix 1: English Quantitative Questionnaire Dear Sir/Madam, My name is Nguyen Dac Huy, a student of Master of Business program of ISB, University of Economics Ho Chi Minh City I am conducting a research with topic “The influence of relationship quality on customer loyalty – A study of veterinary medicine companies and their agencies in Vietnam” It’s highly appreciated your cooperation in completing the questionnaire below There is no matter of right or wrong answers but your feedback will greatly support my research Your data will be treated with the strictly confidence and assessed anonymously and will not be shown in the research Thank you for your great support Nguyen Dac Huy MBus Candidate International School of Business (ISB) PART 1: GENERAL INFORMATION How many veterinary medicine companies your agencies have cooeperate with q1 to       q5 to 10     Which veterinary medicine company you understand most ? 52       q> 10   q Bio-Pharmachemie qHanvet qVemedim q Bayer Vn qAnova q Others: …… ……………… Reason to choose this company: q Original products q Good relationship q Others: …………………………….………… How long have you cooperated with this company ? q< year q - years q 5- 10 years q> 10 years Call “X” is the veterinary medicine company mentioned above to answer the question in part PART II: INFORMATION ABOUT COMPANY Totally disagree Disagree Neutral Agree Totally Agree Please indicate the level of agreement of the He/ She for the following statement by ticking (√) in the box corresponding to: Your agency is concerned about X’s welfare Your agency considers how its actions will affect customers and X Your agency trusts in the service of X X is well-known for fair dealings 5 X is very dependable, especially about important things Box 1: Complete disagree Box 5: Complete agree As for the other levels in the box number 2, and 4respectively 53       Although times change and the future may be somewhat uncertain, you know X will support your agency / company X is honest X is a faithful business partner Your agency is secure in dealing with new business situations because we know that X will support your agency 10 The behavior of X is very consistent 11 X follows through on their promises 12 You can expect X to tell you the truth 13 You believe X to be fair in doing business with you Your agency is committed to the preservation of good working 14 relationships with X 15 Your agency believes in X as partners Your relationship with X could be described as one of high 16 commitment 17 In your agency, you expect to have long term relationship with X This is one of the best experiences I had in products and services 18 of X This experience of products and services of X is exactly what I 19 need 20 My choice was a wise one If I could it over again, I would choose products and services 21 of X This experience of products and services from this veterinary 22 company has worked out as well as I thought it would I’m sure it was the right thing for me to use products and service 23 of this veterinary company 24 I will transact with X again for future needs 25 I will recommend other people to cooperate with X I will say positive things to other people about the products and 26 services provided X 54       I will continue to cooperate with X even if the service charges are 27 increased moderately 28 I have strong preference to X I will keep cooperating with X regardless of everything being 29 changed somewhat I am likely to pay a little bit more for using the products and 30 services of X PART III: OTHER INFORMATION He / She tell us the following information to serve the classification and presentation of statistical data How long have the agency operated q< year q 1- years q - 10 years q> 10 q 500 M – B VNĐ q> years Average sales per month of the agency: q< 100 M VNĐ q100 -500 M VNĐ B VNĐ How many staffs working at the agency: q 1-3 persons q 4-10 persons q>10 persons Thank you so much for your kind support! 55       Appendix 2: Vietnamese Quantitative Questionnaire PHIẾU KHẢO SÁT Kính chào Anh/Chị! Tôi tên Nguyễn Đắc Huy, học viên cao học Viện Đào Tạo Quốc tế, ĐHKT TPHCM Hiện nghiên cứu mức độ gắn bó khách hàng cửa hàng / đại lý thuốc thú y công ty thuốc thú y nước Xin Anh/Chị vui lòng trả lời câu hỏi sau Lưu ý câu trả lời hay sai, tất ý kiến phản hồi có giá trị cho nghiên cứu PHẦN I: THÔNG TIN TỔNG QUÁT Cửa hàng Anh/Chị mua sản phẩm từ công ty thuốc thú y? q đến q đến 10 q > 10 Cho biết tên Cty Anh/Chị thường mua thuốc với số lượng lớn so với Cty khác? Cty …… ……………………………………………………….…… Gọi “X” công ty thuốc thú y Anh/Chị vừa nêu để trả lời câu hỏi phần sau Lý mua thuốc đây: 56       q Nguồn thuốc q Có quan hệ tốt q Khác (xin ghi rõ): …………………………….………… Thời gian Anh/Chị có quan hệ mua hàng với Cty “X”: q < năm q - năm q 5- 10 năm q > 10 năm Tôi xem xét liệu hoạt động công ty X có ảnh hưởng đến cửa hàng X Tôi tin tưởng vào dịch vụ công ty X Công ty X biết đến giao dịch mua bán công 5 Công ty X đáng tin cậy, đặc biệt vấn đề quan trọng Công ty X hỗ trợ cửa hàng dù có vấn đề xảy tương lai Công ty X trung thực Công ty X đối tác kinh doanh trung thành Cửa hàng đảm bảo đối phó tình hình kinh doanh có X hỗ trợ cho 10 Hành vi công ty X quán 11 Công ty X thực cam kết 12 Tôi mong đợi công ty X nói thật với 13 Tôi tin tưởng công ty X công giao dịch với 14 Cửa hàng cam kết trì quan hệ tốt đẹp với công ty X Ô số 5: Hoàn toàn đồng ý Còn với mức độ khác đánh vào ô số 2,   57       Hoàn toàn đồng ý Cửa hàng quan tâm đến lợi ích công ty X Ô số 1: Hoàn toàn không đồng ý Đồng ý Không đồng ý Xin cho biết mức độ đồng ý Anh/Chị với phát biểu sau công ty thuốc “X” cách đánh dấu (√) vào ô tương ứng, với: Trung dung Hoàn toàn không đồng ý PHẦN II: THÔNG TIN VỀ NHÀ CUNG CẤP 15 Cửa hàng xem công ty X đối tác 16 Mối quan hệ cửa hàng với công ty X có tính cam kết cao 17 Cửa hàng mong muốn có mối quan hệ lâu dài với công ty X 18 Công ty X đáp ứng yêu cầu từ cửa hàng cách nhanh chóng 19 Quan hệ cửa hàng công ty X mong muốn 20 Tôi thực thích công ty X 21 Nếu chọn lại, chọn hợp tác với công ty X 22 Chất lượng sản phẩm dịch vụ công ty X mong đợi 23 Tôi chắn việc lựa chọn cộng tác với công ty X điều đắn 24 Tôi tiếp tục giao dịch với công ty X tương lai 25 Tôi giới thiệu người khác hợp tác với công ty X 26 Tôi nói tốt công ty X với người khác 27 Tôi tiếp tục hợp tác với công ty X chi phí có tăng nhẹ 28 Tôi ưa thích mua hàng công ty X 29 Tôi trì hợp tác với công ty X có số thay đổi 30 Tôi sẵn sàng trả nhiều để sử dụng sản phẩm công ty X PHẦN III: THÔNG TIN KHÁC Xin Anh/Chị cho biết thêm số thông tin sau để phân loại trình bày kết thống kê đề tài Thời gian hoạt động cửa hàng: q < năm q 1- năm q - 10 năm năm Doanh số bán trung bình/tháng cửa hàng: 58       q > 10 q < 100 triệu q100 – 500 triệu q 500 triệu – tỷ tỷ Số lượng nhân viên cửa hàng Anh/Chị có: q 1-3 người q 4-10 người q >10 người Xin chân thành cám ơn hợp tác Anh/Chị! 59       q > Appendix 3: The result of EFA Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 725 Approx ChiSquare 665.980 df 66 Sig .000 Component SATIS21 816 SATIS23 779 SATIS20 747 COMMI17 693 LOYAL27 834 LOYAL30 782 LOYAL26 688 LOYAL25 672 TRUST02 866 TRUST01 804 60       TRUST09 819 TRUST06 799 61       Component Total Initial Eigenvalues Extraction Sums of Squared Loadings % of Variance Cumulative % Total % of Variance Cumulative % 3.446 28.718 28.718 3.446 28.718 28.718 1.728 14.400 43.118 1.728 14.400 43.118 1.352 11.267 54.385 1.352 11.267 54.385 1.321 11.007 65.392 1.321 11.007 65.392 860 7.163 72.555 655 5.458 78.014 594 4.950 82.964 554 4.613 87.577 450 3.747 91.324 10 394 3.285 94.609 11 331 2.755 97.364 12 316 2.636 100.000 62       Appendix 4: The result of multiple regression Model R 377a 142 Model Sum of Squares Model R Square Adjusted R Square 129 df 59591 Mean Square F Standardized Unstandardized Coefficients Coefficients Regression 11.941 3.980 B Residual Collinearity Statistics 000b 11.209 Satcom Comtrust 155 064 163 2.433 016 946 1.058 Custrust 176 074 157 2.388 018 972 1.029 Total Beta Sig Std Error 72.086 203 988 385 84.027 206 297 083 (Constant) t Sig Tolerance VIF 355 63       Std Error of the Estimate 2.565 011 239 3.560 000 938 1.067 ... between companies and agencies in Vietnam veterinary medicine industry With the duration as long-term partnership, the relationship between companies and their agencies is strong and sustainable... impacting on customer loyalty between the veterinary medicine companies and their agencies in Vietnam veterinary medicine industry - Measure the impact levels of three factors of relationship quality. .. support the management decision and actions In this part, information is to capture the time agency in operation, the average sales of agency and the number of staffs in each agency 3.3 Data analysis