The relationship between service quality and customer loyalty: an empirical study on pharmasy customrrs in Ho Chi Minh City

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY X—W HOANG NGOC CAM TU THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY MASTER THESIS OF BUSINESS ADMINISTRATION HO CHI MINH CITY – 2012 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY X—W HOANG NGOC CAM TU THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY Subject: Master of Business Administration Code: 60.34.01.02 MASTER THESIS OF BUSINESS ADMINISTRATION SUPERVISOR: DR TRAN HA MINH QUAN I ACKNOWLEDGEMENT For the completion of this thesis, I would like to extend my deep gratitude to Dr Tran Ha Minh Quan, who gave me intensive support, valuable suggestion, guidance and encouragement during the time I conduct my thesis Through his guiding I found the way to conduct thesis successfully and also the way to solve research problems I also want to say thankful to my classmate at eMBA K19 for their sharing knowledge and honestly support during the time we studied and conducted thesis, their passion to finish thesis and encouragement gave me more strength to get over objection on the way to graduation Last but not least, I am grateful to my husband and my family for their warm encouragement during the time I finished the thesis Although I has tried the best to complete the thesis, but errors could not be comprehensively avoided Therefore, I am looking forward to receiving comments from respectful lecturers and friends, so that I can improve more on the quality of this thesis Hoang Ngoc Cam Tu Ho Chi Minh, 25 October 2012 II COMMITMENT I would like to commit that this thesis, “THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY”, was accomplished based on my independent and serious studies and scientific researches The data was collected in reality and it has clear origins In addition to that, the data would be trust-worthily handled and it has never been released in any menu Hoang Ngoc Cam Tu III CONTENTS ACKNOWLEDGEMENT .I COMMITMENT II CONTENTS III TABLES IV FIGURES V CHAPTER I: INTRODUCTION 1.1 1.2 1.3 1.3.1 1.3.2 Problem Statement Research Objective Contribution .2 Academic Contribution Business Contribution 1.4 Scope and Approach 1.5 Research Structure 2.1 Service Quality 2.2 Customer Loyalty 2.3 Relationship Between Service Quality and Loyalty .11 3.1Research Design 14 3.2 Questionnaire Development .16 3.2.1 Service quality scale 16 3.2.2 Customer loyalty scale .18 3.3 Questionnaire Translation .19 3.4Group Discussion .20 3.5 Target population 21 3.6 Sample size .21 3.7 Selecting the sample and collecting data .22 3.8 Method of data analysis 23 3.8.1 Data cleaning 23 3.8.2 Reliability 23 3.8.3 Confirmatory Factor Analysis (CFA) 24 3.8.3 Structural Equation Model (SEM) 26 3.8.5 Analysis of variance (one-way and two-way ANOVA) .27 IV 4.1 Characteristic of qualified respondents 29 4.2 Normality analysis 31 4.3 Reliability of the measurements .33 4.3.1 Reliable Test of Service Quality (SERVPERF) Measurement 33 4.3.2 Reliable test of customer loyalty scale 36 4.4 Confirmatory factor analysis 36 4.5 HYPOTHESIS TESTING 42 4.6 Analysis of variance 45 4.6.1 The effect of gender on loyalty 45 4.6.2 The effect of age on loyalty 47 4.6.3 The effect of income on loyalty 48 5.1 Discussion on findings 50 5.2 Practical implications .51 5.3 Contribution of the current study 52 5.4 Limitations and Future research .52 REFERENCES VIII APPENDIX XVIII TABLES Table 2-1: Five Dimensions of Service quality V Table 2-2: Loyalty Scale Table 3-1: Survey Items Used in The Study-Service Quality Scale Table 3-2: Survey Items Used in The Study-Customer Loyalty Scale Table 3-3: Assessing fit indices Table 4-1: Variables Table 4-2: Socio-demographic Characteristics of The Qualified respondents Table 4-3: Assessment of Normality Table 4-4: Reliability of Service Quality Measurement (SERVPERF scale) Table 4-5 Reliability of loyalty measurement Table 4-6: Composite reliability Table 4-7: Standardized Regression Weights – Hypothesized Model Table 4-8: Assessing Fit Indices – Modified Model Table 4-9: Regression Weights: (Group number - Default model) Table 4-10: T-test of gender toward loyalty (BI) Table 4-11: ANOVA Test Of Age Toward Loyalty Table 4-12: ANOVA Test Of Education Toward Loyalty Table 4-13: ANOVA test of income toward loyalty FIGURES Figure 2-1: The conceptual Model Figure 3-1: The research process VI Figure 3-2: The translation process Figure 4-1: CFA model Figure 4-2: SEM result (standardized estimate) CHAPTER I: INTRODUCTION 1.1 Problem Statement From 2001 to 2008, Vietnamese pharmaceutical market has increased significantly with average about 19.9% per year, especially in 2008 the growth was up to 25.5% compared to 2007 (Tan et al., 2009) In recent years, with the higher average income, Vietnamese people tend to spend more on healthcare service While average expense for medicine of Vietnamese people in 1998 was just about 5.5 USD, in 2008 the average expense for medicine was 16.5 USD and up to 19.77 USD in 2009 (Tan et al., 2009) The growth in pharmaceutical market is attributed by increasing trend in self-medication, inline with the greater awareness of health issues As end-stage in medicine distribution (along with hospitals), pharmacies has become the most important factor to ensure the good consuming medicine product to most of consumer, the best place for self-medication Especially in rural areas, where patient rather visit pharmacies than hospital for their minor health problem, pharmacies are not only places to buy drug but also places where patient can get fast and effective medicine for their simple disease At pharmacies, patient can be advised how to use medicine safety and effectively In Vietnam, when patient got health problem, most of them will go to pharmacies nearby to take some medicine; this situation make the role of pharmacies become more and more important Adapted to Ministry of Health regulation in 2007, that all pharmacies in Ho Chi Minh City should be improved to GPP (Good Pharmacy Practices) standard to increase service to consumer, pharmacies has been put in a new competition for increasing infrastructure and service quality More and more new GPP pharmacies appeared in HCM city in year 2011 with many formalism of increasing service: pharmacist or doctor available, economic price, gift for loyal customer…etc Pharmacies are doing their best to increase service quality to attract loyal customer to maximize profit Aim at understanding how to improve loyalty pharmacy customer, this research is conducted to clarify relationship between service quality and customer loyalty 1.2 Research Objective To examine if any dimension of service quality, that are tangibility, reliability, responsiveness, assurance and empathy effect on loyalty in pharmaceutical market To investigate if there is any difference on mean of loyalty of pharmaceutical consumer between demographic factors such as income, age, and gender 1.3 Contribution 1.3.1 Academic Contribution XVII 76 Wong, A., Dean, A and White, C (1999), The impact of service quality on customer loyalty in the hospitality Industry, International Journal Of Customer Relationship Management, Vol No 77 Zeithaml, V.A., Berry, L.L and Parasuraman, A (1996), The behavioral consequences of service quality, Journal of Marketing, Vol 60 XVIII APPENDIX Appendix I: English questionnaire Dear Sir/Madam, This survey is done by the University of Economic Ho Chi Minh City The primary purpose of this study is to improve the understanding the impact service quality on customer loyalty This XIX questionnaire is completely confidential When you finish, please seal your questionnaire in the envelope provided Thank you very much A In relation with your perception, to what extent you disagree or agree with the following statements? Please circle one suitable number for each statement: Strongly Strongly disagree agree ▼ ▼ This pharmacy has modern equipment The installations of this pharmacy are visually agreeable The employees of this pharmacy have an agreeable aspect The equipment of this pharmacy are in view of the service This pharmacy does what it promises 7 When I have a problem, this pharmacy demonstrates interest in it resolution This pharmacy does the service well at first time This pharmacy does the service in the promised time In this pharmacy does not commit errors 10 This pharmacy has a quickly attendance 11 The employees of this pharmacy inform you conveniently 7 7 15 You feel secure when you buy this pharmacy 16 The employees of this pharmacy are always pleasant 12 The employees of this pharmacy aren’t ever occupied to answer to your questions 13 The employees of this pharmacy are always prepared to help you 14 The behavior of the employees of this pharmacy inspires confidence to the customers XX 17 The employees of this pharmacy have sufficient knowledge’s to 18 This pharmacy priority is the customer 19 This pharmacy has personnel attendance 20 This pharmacy has a convenient horary 21 The employees of this pharmacy personnel attendance 22 The employees of this pharmacy answer to your more specific needs 7 24 I consider this pharmacy as my first choice in pharmaceutical services 25 I have only positive things to transmit from this pharmacy 26 I recommend this pharmacy to someone that needs my advice 27 I stimulate my friends and familiars to buy in this pharmacy 23 answer to your questions I pretend to continue to be customer to this pharmacy D Lastly, a couple of questions about you: Gender : □Male Total monthly income 5 millions and 10 millions and 15 millions and 20 millions Your education Primary/Secondary □Female Year birth: of Year ……… … XXI High school Graduate College Post graduate Thank you very much Appendix II: Vietnamese questionnaire Kính thưa Anh/Chị/Bạn, Nghiên cứu thực học viên cao học Trường Đại Học Kinh Tế Thành Phố Hồ Chí Minh Mục đích nghiên cứu nhằm tìm hiểu vai trị chất lượng dịch vụ nhà thuốc đến lịng trung thành khách hàng Mọi thơng tin quý Anh, Chị bạn cung cấp qua bảng câu hỏi để phục vụ cho nghiên cứu nói thơng tin cá nhân giữ bí mật Xin chân thành cảm ơn Xin vui lòng cho biết địa nhà thuốc (nhà thuốc X) mà Anh/Chị bạn thường mua và/ thích mua: Nhà thuốc quận/huyện:………………………… Tỉnh/thành phố:…………………………… A Xin vui lịng cho biết ý kiến phát biểu sau đâyvề nhà thuốc (nhà thuốc X) Rất không Rất đồng đồng ý ý XXII ▼ ▼ Nhà thuốc có trang thiết bị đại Cách trưng bày nhà thuốc nhìn đẹp mắt Nhân viên nhà thuốc ăn mặc gọn gàng lịch Trang thiết bị nhà thuốc đạt tiêu chuẩn để phục vụ cho dịch vụ nhà thuốc Nhà thuốc thực theo họ cam kết Khi gặp vấn đề, nhà thuốc tỏ quan tâm đến việc giúp giải vấn đề Nhà thuốc thực dịch vụ tốt lần Nhà thuốc thực dịch vụ thời gian cam 7 10 Nhà thuốc phục vụ nhanh chóng 11 Nhân viên nhà thuốc thông tin cho cách rõ ràng dễ hiểu 12 Nhân viên nhà thuốc khơng bận rộn mà không trả 7 14 Ứng xử nhân viên nhà thuốc làm cho khách hàng tin kết Nhà thuốc khơng gây sai sót lời tơi 13 Nhân viên nhà thuốc sẵn sàng giúp tôi cần cậy 15 Tôi thấy an tâm mua nhà thuốc 16 Nhân viên nhà thuốc nhã nhặn 17 Nhân viên nhà thuốc có đủ kiến thức để trả lời câu hỏi 7 19 Nhà thuốc phục vụ theo nhu cầu riêng biệt khách 18 Ưu tiên số nhà thuốc khách hàng hàng XXIII 20 Nhà thuốc có thời gian hoạt động thuận tiện cho 21 Nhân viên nhà thuốc phục vụ theo nhu cầu riêng biệt 7 khách hàng 22 Nhà thuốc đáp ứng nhu cầu đặc biệt 23 Tôi có ý kiến tốt nhà thuốc 24 Tôi giới thiệu nhà thuốc tới người cần lời khuyên 25 Tơi khuyến khích bạn bè người thân mua nhà thuốc 26 Tôi dự định tiếp tục khách hàng nhà thuốc 27 Tôi xem nhà thuốc làlựa chọn cần nhà thuốc B Xin cho biết vài thông tin Anh, Chị bạn: Giới tính: □ Nam □ Nữ Tuổi: …………… Thu nhập (triệu đồng/tháng): □ < 10 □ > 10 < 15 □ > 15 < 20 □ > 20 Học vấn: □ Phổ thông □ Trung Cấp □ Cao Đẳng □ Đại học □Sau đại học Xin chân thành cảm ơn quý Anh, Chị Bạn Appendix 3: Confirmatory Factor Analysis (CFA) results XXIV Model Fit Summary CMIN Model Default model Saturated model Independence model NPAR 76 378 27 CMIN 761.750 000 5616.556 DF 302 351 P 000 CMIN/DF 2.522 000 16.002 RMR, GFI Model Default model Saturated model Independence model RMR 091 000 881 GFI 829 1.000 137 AGFI 786 PGFI 663 071 127 RFI rho1 842 IFI Delta2 913 1.000 000 TLI rho2 899 Baseline Comparisons Model Default model Saturated model Independence model NFI Delta1 864 1.000 000 000 000 Parsimony-Adjusted Measures Model Default model Saturated model Independence model PRATIO 860 000 1.000 PNFI 744 000 000 PCFI 785 000 000 NCP Model NCP LO 90 HI 90 CFI 913 1.000 000 XXV Model Default model Saturated model Independence model NCP 459.750 000 5265.556 LO 90 382.256 000 5026.116 HI 90 544.923 000 5511.413 FMIN Model Default model Saturated model Independence model FMIN 2.832 000 20.879 F0 1.709 000 19.575 LO 90 1.421 000 18.684 HI 90 2.026 000 20.489 RMSEA Model Default model Independence model RMSEA 075 236 LO 90 069 231 HI 90 082 242 AIC 913.750 756.000 5670.556 BCC 931.410 843.834 5676.830 PCLOSE 000 000 AIC Model Default model Saturated model Independence model BIC 1187.230 2116.204 5767.714 CAIC 1263.230 2494.204 5794.714 ECVI Model Default model Saturated model Independence model HOELTER ECVI 3.397 2.810 21.080 LO 90 3.109 2.810 20.190 HI 90 3.713 2.810 21.994 MECVI 3.462 3.137 21.103 XXVI Model Default model Independence model HOELTER 05 122 19 HOELTER 01 128 20 Regression Weights: (Group number - Default model) TG4 TG3 TG2 TG1 RS4 RS3 < < < < < < - TG_ TG_ TG_ TG_ RS_ RS_ Estimate 0.823 0.836 0.818 1.026 S.E C.R P 0.073 0.071 0.076 11.274 11.846 10.76 *** *** *** 0.061 16.898 *** S.E 0.061 0.072 0.068 C.R 16.898 14.277 13.082 P *** *** *** 0.088 0.094 0.089 13.647 13.895 13.593 *** *** *** 0.112 0.083 0.118 8.703 12.712 10.808 *** *** *** 0.14 0.138 0.151 0.138 10.381 10.375 10.262 9.927 *** *** *** *** 0.076 0.074 0.075 12.034 13.479 13.959 *** *** *** Regression Weights (continue) RS3 RS2 RS1 AR4 AR3 aAR2 AR1 EM4 EM3 EM2 EM1 RE5 RE4 RE3 RE2 RE1 BI5 BI4 BI3 BI2 < < < < < < < < < < < < < < < < < < < < - RS_ RS_ RS_ AR_ AR_ AR_ AR_ EM_ EM_ EM_ EM_ RE_ RE_ RE_ RE_ RE_ BI_ BI_ BI_ BI_ Estimate 1.026 1.035 0.89 1.204 1.304 1.212 0.978 1.059 1.277 1.452 1.429 1.549 1.372 0.915 0.999 1.051 XXVII BI1 EM5 < < - BI_ EM_ 1.001 1.004 0.069 0.087 14.404 11.504 *** *** Correlations: Estimate RS_ < > TG_ < > RE_ 0.75 RS_ < > TG_ < > RS_ 0.641 AR_ < > TG_ < > AR_ 0.695 TG_ < > TG_ < > EM_ 0.674 RE_ < > RS_ < > RE_ 0.891 RS_ < > AR_ < > RE_ 0.873 AR_ < > EM_ < > RE_ 0.806 EM_ < > APPENDIX 4: STRUCTURAL EQUATION MODEL RESULTS Regression Weights: Estimate S.E C.R P AR_ EM_ EM_ BI_ BI_ BI_ BI_ BI_ 0.951 0.861 0.898 0.812 0.819 0.812 0.898 0.898 Estimate S.E C.R P 1.212 0.089 13.59 *** BI < - TG 0.293 0.095 3.081 AR1 < - AR_ BI < - RE 0.061 0.218 0.28 0.78 EM4 < - EM BI < - RS -0.454 0.364 -1.247 0.21 EM3 < - EM 0.978 0.112 8.703 *** BI < - AR 0.856 0.425 2.017 0.04 EM2 < - EM 1.059 0.083 12.71 *** BI < - EM 0.553 0.214 2.579 0.01 EM1 < - EM 1.277 0.118 10.81 *** TG4 < - TG RE5 < - RE TG3 < - TG 0.823 0.073 11.274 *** RE4 < - RE 1.452 0.14 10.38 *** TG2 < - TG 0.836 0.071 11.846 *** RE3 < - RE 1.429 0.138 10.38 *** TG1 < - TG 0.818 0.076 10.76 *** RE2 < - RE 1.549 0.151 10.26 *** RS4 < - RS RE1 < - RE 1.372 0.138 9.927 *** RS3 < - RS 1.026 0.061 16.898 *** BI5 < - BI RS2 < - RS 1.035 0.072 14.277 *** BI4 < - BI 0.915 0.076 12.03 *** RS1 < - RS 0.89 0.068 13.082 *** BI3 < - BI 0.999 0.074 13.48 *** AR4 < - AR BI2 < - BI 1.051 0.075 13.96 *** AR3 < - AR 1.204 0.088 13.647 *** BI1 < - BI 1.001 0.069 14.4 *** AR2 < - AR 1.304 0.094 13.895 *** EM5 < - EM 1.004 0.087 11.5 *** Standardized Regression Weight Estimate BI < - TG 0.294 Estimate AR1 < - AR 0.825 XXVIII BI < - RE 0.045 EM4 < - EM 0.654 BI < - RS -0.439 EM3 < - EM 0.604 BI < - AR 0.704 EM2 < - EM 0.698 BI < - EM 0.409 EM1 < - EM 0.786 TG4 < - TG 0.822 RE5 < - RE 0.592 TG3 < - TG 0.677 RE4 < - RE 0.827 TG2 < - TG 0.707 RE3 < - RE 0.835 TG1 < - TG 0.65 RE2 < - RE 0.812 RS4 < - RS 0.779 RE1 < - RE 0.781 RS3 < - RS 0.754 BI5 < - BI 0.793 RS2 < - RS 0.809 BI4 < - BI 0.697 RS1 < - RS 0.753 BI3 < - BI 0.762 AR4 < - AR 0.729 BI2 < - BI 0.786 AR3 < - AR 0.828 BI1 < - BI 0.805 AR2 < - AR 0.842 EM5 < - EM 0.664 Covariances: Estimate TG TG TG TG RS AR EM RS RS AR < > < > < > < > < > < > < > < > < > < > RE RS AR EM RE RE RE AR EM EM 663 751 693 606 757 631 525 911 744 660 Correlations: Estimate TG_ < > RE TG_ < > RS TG_ < > AR 750 641 695 S.E C.R P 096 106 094 090 104 089 080 108 099 088 6.925 7.068 7.334 6.715 7.301 7.108 6.548 8.405 7.496 7.464 *** *** *** *** *** *** *** *** *** *** XXIX Estimate TG_ RS_ AR_ EM_ RS_ RS_ AR_ < > < > < > < > < > < > < > EM RE RE RE AR EM EM 674 891 873 806 951 861 898 Variances: Estimate S.E C.R P TG 1.219 158 7.703 *** RS 1.126 152 7.386 *** AR 816 120 6.819 *** EM 663 116 5.712 *** RE 641 123 5.200 *** Squared Multiple Correlations: Estimate BI 919 Appendix 4: Structural Equation Model results (continue) Model Fit Summary CMIN Model NPAR CMIN DF P CMIN/DF Default model 76 761.750 302 000 2.522 Saturated model Independence model 378 000 27 5616.556 351 000 RMR, GFI Model Default model RMR 091 GFI 829 AGFI 786 PGFI 663 16.002 XXX Model RMR GFI AGFI PGFI Saturated model 000 1.000 Independence model 881 137 071 127 RFI rho1 842 IFI Delta2 913 TLI rho2 899 Baseline Comparisons Model Default model Saturated model Independence model NFI Delta1 864 1.000 000 1.000 000 000 CFI 913 1.000 000 000 Parsimony-Adjusted Measures Model Default model Saturated model Independence model PRATIO 860 000 1.000 PNFI 744 000 000 PCFI 785 000 000 Model Default model Saturated model Independence model NCP 459.750 000 5265.556 LO 90 382.256 000 5026.116 FMIN Model Default model Saturated model Independence model FMIN 2.832 000 20.879 NCP F0 1.709 000 19.575 HI 90 544.923 000 5511.413 LO 90 1.421 000 18.684 HI 90 2.026 000 20.489 RMSEA Model Default model Independence model RMSEA 075 236 LO 90 069 231 HI 90 082 242 PCLOSE 000 000 XXXI AIC Model Default model Saturated model Independence model AIC 913.750 756.000 5670.556 BCC 931.410 843.834 5676.830 BIC 1187.230 2116.204 5767.714 CAIC 1263.230 2494.204 5794.714 ECVI Model Default model Saturated model Independence model ECVI 3.397 2.810 21.080 LO 90 3.109 2.810 20.190 HI 90 3.713 2.810 21.994 HOELTER Model Default model Independence model HOELTER 05 122 19 HOELTER 01 128 20 MECVI 3.462 3.137 21.103