Factors affecting loyalty of internet customers, evidence form vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Kim Quyen FACTORS AFFECTING LOYALTY OF INTERNET CUSTOMERS: EVIDENCE FROM VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2012 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Kim Quyen FACTORS AFFECTING LOYALTY OF INTERNET CUSTOMERS: EVIDENCE FROM VIETNAM ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR: DR DINH THAI HOANG Ho Chi Minh City – Year 2012 Loyalty of Internet customers in Vietnam - ACKNOWLEDGEMENTS I would not have been able to complete my thesis without the advice, assistance, understanding and encouragement of a number of people I would like to gratefully and sincerely acknowledge their assistance and support First of all, the most important person I would like to thank is my supervisor, Dr Dinh Thai Hoang Thanks to his valuable advice and generous guidance throughout the process of completing this thesis Secondly, I would like to express my gratefulness to Dr Nguyen Dinh Tho for his kindness in supporting me to deal with analyzing data and other issues of the thesis Furthermore, I would like to thank all of the staff at International School of Business – University of Economics Ho Chi Minh City who are always enthusiastic and give me a lot of administrative support, assistance and understanding Finally, I would like to give my gratefulness to all classmates who have been sharing with me all their knowledge and experience as well as happiness and difficulties during MBA course I would not complete my thesis without their encouragement and support In brief, it has been a long journey and I have grown in so many ways I would like to say “thank you” again for the involvement of everyone who has helped me to complete this thesis Loyalty of Internet customers in Vietnam - ABSTRACT For Internet service providers (ISP), it is essential for them to understand the critical factors that influence customer loyalty These issues are critical to the long-term business success of any service provider Based on the literature reviewed in the thesis, this study empirically investigates the impact of factors on customer loyalty A quantitative method via questionnaire survey was used to obtain the views of approximately 300 Internet users in Ho Chi Minh city regarding their opinions and perceptions about their current ISP and their intention to stay with them Multiple linear regression analysis was used to investigate the relationship between customer loyalty and influencing factors mentioned above According to the findings of this research, in order to retain internet service customers, providers need to take into consideration with factors such as network quality, price perception, perceived value and trust The results of this research are important for ISP to enhance and improve their competitiveness, in other words, to become successful and have more loyal customers, which will ultimately result in more profitability Keywords: customer retention, customer loyalty Loyalty of Internet customers in Vietnam -1 TABLE OF CONTENTS ACKNOWLEDGEMENTS ABSTRACT CHAPTER 1: INTRODUCTION CHAPTER 1: INTRODUCTION 1.1 Introduction 1.2 Research background 1.3 The research objectives 1.4 The research questions 1.5 The research model 1.6 The research methodology 1.7 The research structure 1.8 Conclusion CHAPTER 2: LITERATURE REVIEW 10 2.1 Introduction 10 2.2 Customer loyalty with internet service provider 10 2.2.1 Network quality and customer loyalty 11 2.2.2 Price perception and customer loyalty 11 2.2.3 Perceived value and customer loyalty 12 2.2.4 Trust and customer loyalty 13 2.3 Controlling factors 13 2.4 The research model 13 2.5 Conclusion 15 CHAPTER 3: RESEARCH METHODOLOGY 16 3.1 Introduction 16 3.2 The research approach 16 3.3 Measurement 16 3.4 Sample and Data collection 19 - Loyalty of Internet customers in Vietnam -2 3.5 3.6 Data analysis 20 Conclusion 22 CHAPTER 4: DATA ANALYSIS AND RESULT 23 4.1 Introduction 23 4.2 Preliminarily data analysis 23 4.2.1 Cleaning and screening data .23 4.2.2 Profile of respondents 23 4.3 Evaluating the measuring scales 25 4.4 Multiple Linear Regression analysis 32 4.4.1 Introduction .32 4.4.2 Computing variables 32 4.4.3 Assumption for Multiple Regression 32 4.4.4 Testing hypotheses .35 4.4.5 Controlling variables 37 4.5 Conclusion 39 CHAPTER 5: CONCLUSION AND IMPLICATIONS 40 1.1 Introduction 40 1.2 Conclusion 40 1.3 Implications of the study 41 1.4 Limitations and suggestions for further research 42 REFERENCES 43 APPENDIX A: QUESTIONAIRE 47 APPENDIX B: DATA ANALYSIS 53 - Loyalty of Internet customers in Vietnam -3 LIST OF FIGURES Figure 1: The theoretical model Figure 2: The Histogram 14 33 Figure 3: The Nomal P-P Plot of Regression Standardized Residual 34 Figure 4: Scatterplot 34 - Loyalty of Internet customers in Vietnam -4 LIST OF TABLES Table 1: Research questions and hypotheses Table 2: Measuring scale for variables 15 19 Table 3: The profile of respondents 25 Table 4: The reliability statistics 27 Table 5: KMO and Barlett’s test 29 Table 6a: The pattern matrix of EFA result 30 Table 7b: The pattern matrix of EFA result 31 Table 8: The Cronbach’s alpha result - retest 31 Table 9: Collinearity statistics 35 Table 10: Hypotheses testing 36 Table 11: Regression with controlling variable of gender 37 Table 12: Regression result with controlling variable of income level 38 Table 13: Regression result with controlling variable of using experience 38 - Loyalty of Internet customers in Vietnam -5 CHAPTER 1: INTRODUCTION 1.1 Introduction This research examines the driving forces of internet users’ loyalty and their intention to stay with their current provider among existing Internet Service Providers (ISP) in the context of Vietnam telecommunication sector This chapter will provide general information of research problem as well as research background, identify research objectives and research questions This chapter also briefly outlines research structure 1.2 Research background High-speed internet services are becoming more and more popular and the rapid development of information technologies affects every aspect of our lives The importance of information and communication technology is undeniable as it has been applied in various fields for the purpose of service enhancement Although basic Internet services had existed in Vietnam since the early nineties, until 1997, the first commercial Internet Service Provider (ISP) opened for business – Vietnam Data Communication Company (VDC) which belongs to Vietnam Posts & Telecommunication Groups (VNPT) Since then, Vietnam has been connected by two gateways: one in Hanoi connecting with Hong Kong and Australia, and the other in Ho Chi Minh City, which connects with the United States by Sprint Internet usage remains low in comparison with that of other Asian nations, yet connectivity has increased rapidly over the past few years, thanks to an initiative by the Ministry of Post and Telecommunications According to the internet statistic report of VNIC (Vietnam Internet Center), up to June 2012, the number of internet users in Vietnam is more than 31 million which is equivalent to the scale of 35.4 percent users per capita Over more than fifteen years of formation and development, together with the development of internet services, the number of ISPs has also remarkably increased, which leads to severe competition among ISPs, especially in a developing country like Vietnam Until now, there are more than ten ISPs operating in Vietnam including VDC/VNPT, Viettel, FPT, Netnam, SPT, - Loyalty of Internet customers in Vietnam -6 Hanoi Telecom, VTC, G-Tel, Vishiped and CMC TI in which three of the leading companies: VDC/VNPT, Viettel, FPT have obtained more than 85 percent of total Internet service market share in Vietnam As a result, ISPs must try their best to develop their marketing strategy and improve their business performance to increase their level of competitiveness From the above statistics, we can understand that the competition of Internet services in Vietnam is a severe war among three big ISPs: VDC/VNPT, Viettel and FPT Beside the diversification of services, enhancing the customer satisfaction and customer loyalty is considered to be the most effective way to compete in the market, especially in telecommunication industry which is on the verge of saturation point in some years’ time Customer loyalty are believed to be the most effective weapons for providers to complete with other rivals because these factors are the primary variables that impact customers’ intention to stay with their current providers (Khatibi, Ismail & Thyagarajan, 2002) The providers which satisfy customers can expect higher market shares and greater profitability and, in turn, encourage their customers to become loyal (Khatibi, Ismail & Thyagarajan, 2002) Aaker (1991) has discussed the role of loyalty in the brand equity process and has specifically noted that brand loyalty leads to certain marketing advantages such as reduced marketing costs, more new customers and greater trade leverage Expanding loyal customers can assist in generating a business’s profitability because the cost of retaining existing customers is less than that of acquiring new ones (Reichheld, Teal, 1996) Therefore, understanding how and why a sense of loyalty develops in customers remains one of the crucial management issues of our day By assessing the Internet service users in Ho Chi Minh city, this research will give useful information of a range of factors impact on Vietnamese internet users’ perceptions of their current ISPs, from which factors effecting customer loyalty, especially in telecommunication sector, will be derived In other words, this research provides ISPs the direction and valuable understandings of what factors should be taken into account to become successful - Loyalty of Internet customers in Vietnam -45 Lovelock, CH (1983) Classifying services to gain strategic marketing insights Journal of Marketing 47(3), – 20 Mohd R.B Yaacob (2011) Determinants of Customer Satisfaction towards Broadband Services in Malaysian 1(2), 123 – 134 Monroe, KB (1991) Pricing – Making Profitable Decisions McGraw-Hill, New York Morgan, RM & Hunt, SD (1994) The commitment-trust theory of relationship marketing Journal of Marketing 58(3), 20 -38 Murphy, JA (2001) The lifebelt: The definition guide to managing customer retention Jonh Wiley & Sons Ltd., Chichester Newman, WL (2006) Social Research Methods: Qualitative and Quantitative Approaches Pearson Education, Inc, Boston, USD Pallant (2007) SPSS Survival Manual: A Step by Step Guide to Data Analysis Using SPSS for Windows (Version 15) Allen & Unwin, Crows Nest, NSW Ranaweera, C., & Neely, A (2003) Some moderating effects on the service qualitycustomer retention link Internatonal Journal of Operations and Production Management 230-248 Ravald, A & Gronroos, C (1996) The Value Concept and Relationship Marketing’, European Journal of Marketing 30(2), 19 – 30 Reichheld, FF & Teal, T (1996) The Loyalty Effect Havard Business School Press, Boston Reynolds, FD, Darden, WR & Marktin, WS (1974 – 1975) Developing an image of the store-loyal customer: A life-style analysis to probe a neglected market Journal of Retailing 50(4), 73 – 84 Sekaran, U (2000) Research Methods for Business: A skill building approach John Wiley & Sons, Inc, Chichester Tabachnick, B.G & Fidell, L.S (1991) Using Multivariate Statistics 3ed, NY: HarperCollin - Loyalty of Internet customers in Vietnam -46 Ticehurst, GW & Veal, AJ (2000) Business Research Methods: A Managerial Approach Pearson Education Pty Limited, Frenchs Forest, NSW Wang, Y Lo, H & Yang, Y (2004) An Integrated Framework for Service Quality, Customer Value, Satisfaction: Evidence from China’s Telecommunication Industry Information Systems Frontiers 6(4), 325-40 Woo, K.S & Fock, H.K.Y (1999) Customer satisfaction in the Hong Kong mobile phone industry Journal of Service Industry 19(3), 162 – 74 Zikmund, WG (2000) Business Research Methods Dryden Press, Fort Worth, TX - Loyalty of Internet customers in Vietnam -47 APPENDIX A: QUESTIONAIRE QUESTIONAIRE Dear respondents, I am a student of the master program of International School of Business University of Economics Ho Chi Minh city I have been doing a research to identify factors whose impact on customer loyalty in telecommunication industry Please kindly share your valuable ideas about the issues in this questionnaire All your ideas shall strongly contribute to our research Section 1: Please select the appropriate answer for each question in this section: Who is your current Internet Service Provider? (Please choose only one answer – X)  VNPT  Viettel  FPT  Others (Please specify):…………… How long have you been with your ISP?  50 What is your job?  Students  Employees -  Female  Business owners  Others Please specify: … What is your average income per month (VND)?  Less than 5.000.000  5.000.000 – 10.000.000  Over 10.000.000 – 15.000.000  More than 15.000.000 - Do you have additional comments about others factors that affect your loyalty with a ISP? Please share with us your kind ideas ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… Thank you so much for your contribution! - Loyalty of Internet customers in Vietnam -50 PHIẾU KHẢO SÁT Kính chào anh/chị, Tôi Nguyễn Thị Kim Quyên – học viên cao học chương trình thạc sĩ Viện Đào Tạo Quốc Tế (ISB) – Trường Đại Học Kinh Tế Tp.HCM Tôi thực đề tài nghiên cứu yếu tố tác động đến trung thành khách hàng với nhà cung cấp dịch vụ Internet thị trường thành phố Hồ Chí Minh Rất mong anh/chị dành thời gian thực bảng khảo sát bên Phần trả lời anh/chị giữ bí mật, có thơng tin tổng hợp báo cáo công bố Nếu anh/chị quan tâm đến đề tài, báo cáo sau hoàn thành gởi đến anh/chị để tham khảo Mọi đóng góp cho đề tài vui lòng gửi địa chỉ: kimquyennt@gmail.com Chân thành cảm ơn anh/chị Phần 1: Anh/ chị vui lịng chọn câu trả lời thích hợp cho câu hỏi sau: Anh/chị sử dụng dịch vụ Internet nhà cung cấp nào? (X)  VNPT  Viettel  FPT  Khác:……………… Anh/chị sử dụng dịch vụ Internet nhà cung cấp bao lâu?  Ít năm  Từ đến năm  Từ đến năm  Hơn năm Phần 2: Anh/chị vui lòng đánh giá mức độ đồng ý với phát biểu Anh/ chị khoanh tròn vào mức độ đánh giá theo qui ước sau: Hồn tồn khơng đồng ý Không đồng ý Hơi không đồng ý Trung lập (khơng có ý kiến) Hơi đồng ý Đồng ý Hoàn toàn đồng ý Mục NQ1 NQ2 NQ3 NQ4 PP5 PP6 PP7 Ý kiến Chất lượng mạng (Network quality) Tốc độ truyền tải liệu nhanh Tính hiệu đường truyền ln ổn định Thời gian kết nối dịch vụ đáng tin cậy Tơi kết nối mạng Internet nhanh vào lúc Quan niệm giá (Price perception) Giá dịch vụ sử dụng phù hợp Giá dịch vụ nhà cung cấp X rẻ so với nhà cung cấp khác Dịch vụ nhà cung cấp X tương xứng với Đánh giá bạn 1 2 3 4 5 6 7 7 1 2 3 4 5 6 7 - Loyalty of Internet customers in Vietnam -51 PP8 PP9 giá So với nhà cung cấp khác, dịch vụ nhà cung cấp X tương xứng với giá Tôi sẵn sàng trả nhiều tiền cho chất lượng dịch vụ tốt PV13 Giá trị cảm nhận (Perceived value) Nhân viên chăm sóc khách hàng ln có hỗ trợ cần thiết cho khách hàng Nhà cung cấp X xử lý, khắc phục cố dịch vụ cách nhanh chóng Nhà cung cấp X ln thơng báo thơng tin cần thiết để tơi sử dụng dịch vụ cách tiện lợi Tôi cảm thấy tiện lợi ln nhận PV14 Nhìn chung, dịch vụ nhà cung cấp X tương PV10 PV11 PV12 hỗ trợ cần thiết nhà cung cấp X 7 7 7 7 7 7 xứng với giá cà , thời gian nổ lực khác TT15 TT16 TT17 TT18 Lịng tin (Trust) Tơi tin nhà cung cấp X ln sẵn sàng sẵn lịng hỗ trợ khách hàng Tôi tin nhà cung cấp dịch vụ thực cam kết với khách hàng Tôi tin nhà cung cấp có đủ khả kiến thức để thực nghĩa vụ với khách hàng Tôi tin nhà cung cấp đặt lợi ích khách hàng lên hàng đầu CL19 Lịng trung thành (Customer loyalty) Tơi giới thiệu với người khác nhà cung cấp X nhà cung cấp dịch vụ Internet tốt CL20 Tôi tiếp tục sử dụng dịch vụ nhà cung cấp CL21 Nhà cung cấp X lựa chọn sử dụng dịch vụ Internet CL22 Tôi sẵn sàng mua dịch vụ khác cung 7 cấp nhà cung cấp CL23 Tôi khuyến khích người thân bạn bè sử dụng dịch vụ nhà cung cấp - Loyalty of Internet customers in Vietnam -52 Phần 3: Anh/chị vui lòng cung cấp số thông tin cá nhân cách chọn câu trả lời thích hợp Tơi cam đoan nội dung bảo mật sử dụng cho mục đích nghiên cứu - Giới tính anh/chị: - Anh/ chị thuộc nhóm tuổi nhóm đây?  < 25 -  25-35  Nữ  36 -50  >50 Nghề nghiệp anh/chị gì?  Sinh viên -  Nam  Nhân viên  Chủ doanh nghiệp  Nghề tự khác: ……… Thu nhập trung bình tháng (VND) anh/chị bao nhiêu?  Ít triệu  Từ đến 10 triệu  Từ 10 đến 15 triệu  Hơn 15 triệu - Ngoài yếu tố đề cập đây, anh/chị nghĩ yếu tố ảnh hưởng đến trung thành anh/chị với nhà cung cấp dịch vụ Internet? Vui lòng chia sẻ với ý kiến quý báu anh/chị ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… ………………………………………………………………………………………… Cám ơn anh/chị nhiều! - Loyalty of Internet customers in Vietnam -53 APPENDIX B: DATAANALYSIS I EFA Total Variance Explained Extraction Sums of Squared Initial Eigenvalues Loadings Factor Total % of Cumulative Variance % 13.033 56.667 56.667 1.426 6.199 62.866 1.021 4.437 67.304 834 3.627 70.931 740 3.220 74.150 662 2.879 77.029 618 2.689 79.717 551 2.394 82.111 497 2.159 84.271 10 439 1.909 86.179 11 366 1.591 87.770 12 343 1.491 89.261 13 331 1.438 90.699 14 312 1.355 92.054 15 293 1.275 93.329 16 269 1.168 94.497 17 263 1.144 95.641 18 229 996 96.637 19 193 839 97.476 20 189 820 98.297 21 167 725 99.022 22 141 615 99.637 23 084 363 100.000 Extraction Method: Principal Axis Factoring Total 12.727 1.077 640 516 426 % of Variance 55.336 4.684 2.781 2.241 1.854 Rotation Sums of Squared Loadingsa Cumulative Total % 55.336 9.269 60.019 10.118 62.800 10.665 65.042 10.284 66.896 9.884 - Loyalty of Internet customers in Vietnam -54 -EFA AFTER DELETING ITEMS Total Variance Explained Factor Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadingsa Total % of Variance Cumulative % Total % of Variance Cumulative % Total 11.224 56.118 56.118 10.925 54.625 54.625 8.230 1.308 6.542 62.660 974 4.872 59.497 9.561 1.003 5.017 67.677 627 3.137 62.634 8.689 813 4.067 71.744 501 2.505 65.139 8.241 700 3.500 75.244 448 2.239 67.378 7.721 600 2.998 78.242 594 2.968 81.210 518 2.588 83.799 433 2.163 85.962 10 380 1.901 87.863 11 359 1.796 89.660 12 320 1.602 91.261 13 311 1.555 92.816 14 278 1.388 94.204 15 272 1.361 95.565 16 251 1.255 96.820 17 200 1.000 97.820 18 181 907 98.727 19 168 838 99.565 20 087 435 100.000 Extraction Method: Principal Axis Factoring - Loyalty of Internet customers in Vietnam -55 II REGRESSION Model R R Square a 778 605 Model Std Error of the Estimate 600 81508 Unstandardized Coefficients Std Error 234 071 Change Statistics R Square Change F Change 605 df1 107.710 Standardized Coefficients t Sig .203 -1.476 3.162 141 002 (Constant) Networkquality B -.345 224 Priceperception 376 072 309 5.211 000 Perceivedvalue 159 067 139 2.363 019 Trust 255 074 225 3.433 001 Model Adjusted R Square Correlations Zero-order Partial Beta Part Collinearity Statistics Tolerance VIF (Constant) Networkquality 693 185 119 341 2.931 Priceperception 706 297 195 399 2.507 Perceivedvalue 643 140 089 405 2.468 Trust 697 201 129 327 3.058 - Loyalty of Internet customers in Vietnam -56 -REGRESSION WITH CONTROLLING VARIABLE OF GENDER Model R R Square 784a 615 80619 (Constant) Networkquality Priceperception 378 Perceivedvalue 615 df1 89.526 Standardized Coefficients Beta t Sig .203 -2.122 3.202 035 002 071 311 5.305 000 164 067 143 2.457 015 Trust 250 074 220 3.398 001 Gender 098 036 100 2.689 008 Model 608 Std Error of Change Statistics the Estimate R Square Change F Change Unstandardized Coefficients B Std Error -.507 239 225 070 Model Adjusted R Square Correlations Zero-order Partial Part Collinearity Statistics Tolerance VIF (Constant) Networkquality 693 188 119 341 2.931 Priceperception 706 302 197 399 2.508 Perceivedvalue 643 145 091 405 2.470 Trust 697 199 126 327 3.060 Gender 088 159 100 999 1.001 - Loyalty of Internet customers in Vietnam -57 REGRESSION WITH CONTROLLING VARIABLE OF USING EXPERIENCE Model R R Square 780a 608 Square the Estimate 601 81355 Change Statistics R Square F Change Change 608 86.905 Priceperception 375 072 308 5.207 000 Perceivedvalue 161 067 141 2.396 017 Trust 241 075 213 3.221 001 Shortexp -.146 102 -.055 -1.435 152 Correlations Zero-order Partial Standardized Coefficients Beta df1 (Constant) Networkquality Model Std Error of Unstandardized Coefficients B Std Error -.217 250 222 071 Model Adjusted R t Sig .201 -.870 3.138 385 002 Part Collinearity Statistics Tolerance VIF (Constant) Networkquality 693 184 117 341 2.933 Priceperception 706 297 195 399 2.507 Perceivedvalue 643 142 090 405 2.469 Trust 697 189 121 321 3.112 Shortexp -.222 -.085 -.054 943 1.060 - Loyalty of Internet customers in Vietnam -58 REGRESSION WITH CONTROLING VARIABLE OF INCOME Model R Adjusted R Std Error of Square the Estimate 599 81743 R Square 778a 606 Unstandardized Coefficients Model Change Statistics R Square F Change Change 606 df1 85.747 Standardized Coefficients Beta t Sig .203 -1.587 3.146 114 002 072 309 5.194 000 162 068 142 2.395 017 Trust 253 075 223 3.395 001 Lowinco 063 101 023 622 535 B Std Error (Constant) Networkquality -.387 224 244 071 Priceperception 376 Perceivedvalue Model Correlations Collinearity Statistics Zero-order Partial Part Tolerance VIF (Constant) Networkquality 693 185 118 341 2.932 Priceperception 706 297 195 399 2.507 Perceivedvalue 643 142 090 403 2.482 Trust 697 199 128 326 3.064 Lowinco 012 037 023 994 1.006 - ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Kim Quyen FACTORS AFFECTING LOYALTY OF INTERNET CUSTOMERS: EVIDENCE FROM VIETNAM ID: 60340102... relationship between customer loyalty and its affecting factors in Vietnamese Internet service market Four factors are assumed to have positive effect on loyalty of Internet customers Data are... remains one of the crucial management issues of our day By assessing the Internet service users in Ho Chi Minh city, this research will give useful information of a range of factors impact on Vietnamese