Customer engagement in a facebook brand community a study of airline consumers in vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Minh Hoang Long CUSTOMER ENGAGEMENT IN A FACEBOOK BRAND COMMUNITY: A study of Airline consumers in Vietnam ID: 22130038 MASTER OF BUSINESS (Honors) SUPERVISOR: DR NGUYEN THI MAI TRANG Ho Chi Minh City, Year 2016 Acknowledgement Firstly, I would like to express my gratefulness to my supervisor Dr Nguyen Thi Mai Trang for her professional guidance, intensive support, valuable suggestions, instructions and encouragement during the time of doing my research I would like to express my deepest gratitude to ISB Professors Committee for their valuable time as the members of the proposal examination committee Their comments and meaningful suggestions were contributed significantly for my completion of this research My sincere thanks are given to all of my teachers at International Business School – University of Economics Ho Chi Minh City for their teaching and guidance during my master course i Abstract Customer engagement is a group of factors that can affect the customer satisfaction, loyalty The advent of Web 2.0 and in particular the social network media in recent years have led to an explosion of interest in customer engagement Attracted by a great amount of users, companies have created brand communities in social networks With the abilities to creating the interaction among individuals and firms in brand communities, social media can use to better serve customer and satisfy the needs In Vietnam, former researches measuring the loyalty and satisfaction of customers engaged in social networking sites, such as Facebook, are still rare This research aims to fill this gap by testing these hypotheses in airline industry and raising recommendations for its applications in practice Key words Customer engagement, brand community, facebook, customer loyalty, customer satisfaction ii CONTENTS Acknowledgement i List of Figures vi List of Tables vii Introduction Research background Statement of the problem Research objectives Research scope Structure of the research Literature review Brand Community (BC) Online brand community (OCB) 10 Customer engagement 10 Customer engagement in brand community 12 Perceived relationship benefits of customer engagement in brand communities 12 Relationship outcomes of customer engagement in brand communities 14 Proposal model and hypotheses 16 2.7.1 Proposal model 16 2.7.2 Hypotheses summary 17 Chapter summary 18 Methodology 19 Research method 19 Research design 19 3.2.1 Sample 19 3.2.2 Measurement scale 20 Research procedure 24 iii 3.3.1 Qualitative phase 25 3.3.2 Main survey - Quantitative research 26 Chapter summary 27 Data analysis and results 28 Data statistical analysis 28 Cronbach’s alpha reliability test 29 Exploratory factor analysis (EFA) 32 Reliability test after EFA 36 Modified Model and Hypotheses 36 Testing research model using structural equation modeling (SEM) 37 4.6.1 Confirmatory factor analysis (CFA) 37 4.6.2 Structural equation model 42 Hypotheses evaluation 45 Chaper summary 46 Conclusion and implication48 Key findings and research contributions 49 5.1.1 Impact of customer engagement behavior 49 5.1.2 Measurement model 49 Managerial implications 50 5.2.1 Customer engagement behaviors 50 5.2.2 Perceived relationship benefits 51 5.2.3 Relationship Outcomes 51 Limitations and future research 52 APPENDIX 1: List of in-depth interview’s participants 62 APPENDIX Questionaire 65 APPENDIX3 CFA ………………………………………………………………………….67 APPENDIX Maximum Likelihood Estimates 77 iv List of abbreviations ATAG Air Transport Action Group BC Brand Community CE Customer engagement CEB Customer engagement behavior IATA International Air Transport Association JPA Jetstar Pacific Airlines OCB Online brand community VJ VietJet Air VNA Vietnam Airlines v LIST OF FIGURES Figure 2.1 The conceptual Model 17 Figure 3.1 The Research Process 25 Figure 4.1 The Revised Model 37 Figure 4.2 Diagram CFA 39 Figure 4.2 The structural model result 43 vi LIST OF TABLES Table 3.1 Source of measurement scale 20 Table 3.2 Sources of data collection 27 Table 4.1 Description of sample 29 Tables 4.2 Cronbach’s alpha results .30 Tables 4.3 Retest Cronbach’s alpha results 32 Table 4.4 Pattern Matrix – EFA first round 34 Table 4.5 Pattern Matrix – EFA last round 35 Table 4.6 Cronbach's alpha of new measurements 36 Table 4.7 Composite Reliability and Average Variance Extracted 40 Table 4.8 Discriminant validity test 41 Table 4.9 Fitness of conceptualized model 42 Table 4.10 Result of hypothesis testing 44 Table 4.11 Standardized regression weight of hypothesis 44 vii INTRODUCTION Research background The globalization of competition, saturation of markets, and development of information technology have enhanced customer awareness and created a situation where long-term success is no longer achieved through optimized product price and qualities Instead, companies build their success on a long-term customer relationship by satisfying customer’s needs and transferring customers to loyal customers In recent years, customer engagement has been viewed as a hot issue to build long-term customer relationship (Sashi, 2012) Customer engagement (CE) is difined as “the engagement of customers with one another, with a company or a brand The initiative for engagement can be either consumer- or company-led and the medium of engagement can be on or offline.” (Roebuck, 2012) Customer engagement can be the variety activities as joining the brand’s fan group, take part in brand’s contest, disscussing about products or like brand’s facebook, commenting on website, etc Firms that have more engagement of customer can improve customer satisfaction and loyalty (Brodie, Ilic, Juric, & Hollebeek , 2011; Gummerus, Liljander, Weman, & Minna, 2012) Customer engagement (CE) generate enhanced corporate performance, including sales growth (Neff, 2007 as cited in Brodie et al., 2011), and profitability (Voyles, 2008 as cited in Brodie et al., 2011) As a result, customer engagement becomes a competitive advantage in the globalization economic Aviation is one of the most important aspects of global economic nowadays Aviation provides the rapid worldwide transportation network, which makes it essentials for global business and tourism The total value of goods transported by air represent 35% of all international trade and 52% of international tourists travel by air (ATAG, 2014) Come up with the globalization process, airlines industry is in the difficulty situation Volatile fuel pricing, intense competition, security concerns and a focus on the environmental impact of air travel have resulted in airline profitability taking a nosedive Therefore, increasingly airlines are looking to have a far more direct and real-time connection with their customers and prospective customers Leung, Schuckert and Yeung (2013) state that social media is a suitable tools for marketing purpose in the airlines bussiness In the global trends, the social networks are increasingly replacing traditional media for marketing and communications They have become a major factor in influencing various aspects of consumer behavior including awareness, information acquisition, opinions, attitudes, purchase behavior, and postpurchase communication and evaluation (Mangold & Faulds, 2009) The application of social media and web 2.0 is changing the communication between business and consumer and consumer to consumer significantly (Au, 2010; Jones & Yu, 2010) This reality is shown by airlines’ increasing social media engagement of customers (Kepes, 2014) With airline industry, social media is playing an increasing important role in daily operations (NIIT, 2013) Passengers are increasingly using the web and mobile devices to research, book and pay for trips AITA (2014) reports that more than 50% passengers go online to book flights From the airlines side, the world airline industry is switching to promoting booking deals and flight promotions on Facebook and other social media websites For examples, passengers can book their flights via Facebook or Twitter on KLM Royal Dutch Airlines, JetBlue or Virgin America (Consumerreports.org, 2015) This new trend put airlines in the effort of building customer engagement to firms’ social media In Vietnam, air service industry affected economic growth significantly According to the statistics of IATA by Tyler (2014) - IATA’s Director General, Vietnam’s aviation market is forecast to be the world’s 7th fastest-growing in the period of 2013-2017, with annual growth rates of 6.9 percent and 6.6 percent expected for international passengers (Tyler, 2014) In the trend of transitioning and developing Vietnam’s economy, a restructuring plan of Vietnam’s th air service industry was approved by the Ministry of Transport aim to gain the position in ASEAN aviation market and raise the passengers carried by airlines achieving 3.23% of all overall the domestics transport market share (Viet Nam Government Portal, 2015) Hence, there is a tough competition between airlines companies from the time government authorized the operation of private airlines as the commitment between Vietnam and WTO in 2007 Up to now, there are four major air carries in Vietnam: Vietnam Airlines (VNA), Jetstar Pacific Airlines (JPA) and VietJet Air (VJ) and Vietnam Air Services Company (VASCO) (Civil Aviation Administration of Vietnam, 2015) Customers have choices to APPENDIX EFA ANALYSIS KMO and Bartlett's Test Kaiser-Meyer-Olkin Adequacy Bartlett's Test of SphericityApprox Commu CEB1 CEB2 CEB3 CEB4 CEB6 TEB1 TEB2 TEB3 SB1 SB2 SB3 SB4 SB5 EB1 EB2 EB3 ECO1 ECO2 ECO3 ECO4 SF1 SF2 SF3 68 SF4 WOM1 WOM2 WOM3 CM1 CM2 CM3 Extraction Factoring Total Variance Explained Rotation Sums of Initial Eigenvalues Factor 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Extraction Method: Principal Axis Factoring 70 APPENDIX EFA ANALYSIS KMO and Bartlett's Test Kaiser-Meyer-OlkinMeasureof Adequacy Bartlett's Test of Sphericity a When factors are correlated, sums of squared loadings cannot be added to obtain a total variance Pattern Matrix a Factor TEB2 CEB4 CEB1 CEB2 CEB3 CEB6 TEB3 TEB1 SB5 SB1 SB4 SB3 SB2 SF1 SF2 SF4 SF3 ECO1 ECO4 ECO3 ECO2 t's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity CEB1 CEB2 CEB3 CEB4 CEB6 TEB2 SB1 SB3 SB4 SB5 EB1 EB2 EB3 ECO1 ECO2 ECO3 ECO4 SF1 SF2 SF3 SF4 WOM1 WOM2 WOM3 CM1 CM2 CM3 Total Variance Explained Factor 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 73 25 26 27 Extraction Method: Principal Axis Factoring Factor Matrix a Factor CEB1 TEB2 CEB2 CEB4 WOM3 WOM1 SF1 CM2 CEB6 CEB3 SF3 SF2 SB4 SF4 ECO1 SB5 SB1 ECO4 ECO3 ECO2 SB3 CM1 CM3 EB1 EB2 EB3 WOM2 Extraction Method: Principal Axis Factoring a factors extracted 10 iterations required Factor TEB2 CEB1 CEB4 CEB2 CEB3 CEB6 SB5 SB1 SB3 SB4 SF1 SF2 SF4 SF3 ECO1 75 ECO4 ECO3 ECO2 CM1 CM3 CM2 WOM2 WOM1 WOM3 EB2 EB1 EB3 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations 76 APPENDIX MAXIMUM LIKELIHOOD ESTIMATES 77 ... Transport Action Group BC Brand Community CE Customer engagement CEB Customer engagement behavior IATA International Air Transport Association JPA Jetstar Pacific Airlines OCB Online brand community. .. examines consumer engagement in a virtual brand community is an aspect of interactive process of sharing, learning, socializing, advocating, and co-developing Sashi (2012) develops a model of customer. .. activities to attract and retain customers Basing in on this problem, this research aims to examine the engagement of customer on facebook brand community in the context of Vietnam? ??s airline industry