The impact of loyalty programs service quality and store reputation on customer satisfaction and loyalty

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Bich Phuong THE IMPACT OF LOYALTY PROGRAM’S SERVICE QUALITY AND STORE REPUTATION ON CUSTOMER SATISFACTION AND LOYALTY MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2016 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Dang Bich Phuong THE IMPACT OF LOYALTY PROGRAM’S SERVICE QUALITY AND STORE REPUTATION ON CUSTOMER SATISFACTION AND LOYALTY I D: 22130056 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr.PHAM NGOC THUY Ho Chi Minh City – Year 2016 ACKNOWLEDGEMENTS The completion of this thesis is a remarkable achieve in my life It has been several months and required a great effort for the research I would like to express my gratitude to all ISB staffs that supported necessary materials and helped summit my papers I also wish to express my deeply thank you for the support, patience and encouragement from my family, my colleagues and my classmates helped me to completing this thesis Especially, I would like to give my special thanks to Doctor Pham Ngoc Thuy for supporting and guiding me with this research i STATEMENT OF AUTHENTICATION (Candidate Certificate) I certify that the work in the thesis entitled “The impact of loyalty program’s service quality and store reputation on customer satisfaction and customer loyalty” is the result of my own research and has not been submitted for a higher degree to any university or institution other than International School of Business (ISB) I also certify that the thesis has been written by me Any help and assistance that I have received in my thesis have been appropriately acknowledged Ho Chi Minh City, 20 December 2015 Dang Bich Phuong ii TABLE OF CONTENTS ACKNOWLEDGEMENT i STATEMENT OF AUTHENTICATION ii TABLE OF CONTENTS iii LIST OF FIGURES v LIST OF TABLES vi ABSTRACT vii Chapter 1: Introduction 1.1 Research background 1.2 Research problems 1.3 Research objectives 1.4 Research methodology and scopes 1.5 Significance of the study 1.6 The structure of the study Chapter 2: Literature review and hypotheses 2.1 Customer Loyalty Program 2.2 Customer Loyalty Programs of big retailers in Ho Chi Minh City 2.3 Conceptualization of Loyalty program service quality 10 2.4 Store reputation 15 2.5 Customer Satisfaction 17 2.6 Customer Loyalty 18 2.7 The conceptual model 19 Chapter 3: Research methodology 23 3.1 Research design 23 iii 3.2 Measures of the constructs 24 3.3 Research process 26 3.4 Data analysis method 28 Chapter 4: Data analysis and findings 31 4.1 Sample characteristics 31 4.2 The Cronbach’s alpha test 32 4.3 Exploratory factor analysis (EFA) 35 4.4 Multiple regression analysis 37 4.5 Revised conceptual model 40 4.6 Explanation for the findings results of the hypotheses 42 Chapter 5: Conclusions, inplications and limitations 46 5.1 Conclusions 46 5.2 Managerial implication 47 5.3 Limitations and future research 59 References 51 Apendix 58 Appendix A: Guideline for quanlitative in-depth interview 58 Appendix B: Quentionnaire in English 62 Appendix C: Questionnaire in Vietnamese 66 Appendix D: Histogram, Normal Regression & Scatter plot of Dependent 71 iv LIST OF TABLES Table 2.1: The comparison between the Customer Loyalty Program of three main brand names of supermarket in Ho Chi Minh City: Co.opmart, Big C and Lotte Mart Table 2.2: Hypotheses of the research 21 Table 3.1: Measurement Scales from previous research basements 24 Table 3.2: Measurement Scales for customer satisfaction 25 Table 3.3: Measurement of the variables of customer satisfaction and customer loyalty 25 Table 3.4: Measurement of the variables of store reputation 25 Table 4.1 : Descriptive Statistics for the Sample (N = 209) 31 Table 4.2: The results of Cronbach’ alpha test 33 Table 4.3: KMO and Bartlett's Test for all variables 35 Table 4.4 : Total Variance Explained for all variables 36 Table 4.5: Rotated Component Matrix for all variables 37 Table 4.6: Correlations or all variables 38 Table 4.7: Model Summary 38 Table 4.8: ANOVA alpha 39 Table 4.9: Coefficients alpha 39 Table 4.10: Finalized hypotheses of the research 41 Table 4.11: Summary of hypotheses testing results 42 Table 4.12: Statistics of frequency of factors that affect customer choosing to shop at a supermarket 44 Table 4.13: The number of supermarket brand that customers participate in the customer loyalty program 45 v LIST OF FIGURES Figure 2.1: The proposed conceptual model for the thesis 21 Figure 3.1: The process of thesis research 23 Figure 4.1: The revised and finalized research model 40 vi ABSTRACT This study empirically examines the impact of loyalty program’ service quality and store reputation on customer satisfaction and customer loyalty, which is carried on at some biggest chains of supermarket at Ho Chi Minh city such as Big C, Co.opmart, Lotte Mart, Metro, Vinmart, The research also explores some of the factors that influence the most towards customer satisfaction in retail industry In the situation that the facilities and the prices of all supermarket brand names are similar, the loyalty program’s service quality and how good of this program plays an important role in attract and retain customers Structural equation modeling is used to test these impacts, utilizing a sample of 250 supermarket customers in Ho Chi Minh City All the customers who are interviewed must have the member card of one or more supermarket that they usually shop at The results indicate that the three elements of loyalty program’s service quality which are Regulation (included Rewards and Policy), Serving (included Staff and Communication) and Personalization play significant role in increasing the customer satisfaction as well as customer loyalty In addition, the findings of this research also provide evidence of the similarity between customer satisfaction and customer loyalty in the mindset of supermarket retailer customer Particularly, the effect of store reputation is negligible and the customers not pay attention to this element in judging their satisfaction as well as their loyalty for a supermarket brand name The customers are persuaded by the Regulation, Serving and Personalization of the loyalty program of one specific supermarket compared to other supermarkets The research findings also engage with some limitations in the strength of measurement scale, the sampling method as well as the fitness between the research model and data It results in the valuable directions for further researches in future vii CHAPTER INTRODUCTION This chapter introduces the background of the Vietnamese supermarket industry as well as the status of customer satisfaction and customer loyalty The research questions and objective are proposed to explore the influence of loyalty program’s service quality and store reputation towards customer satisfaction and customer loyalty Based on this, the proposed delimitation of research and thesis structure is presented 1.1 Research background After nearly nine years of joining the World Trade Organization (WTO), and more than six years commitment for the establishment of retail businesses with 100% foreign capital (from the date 01/01/2009), Vietnam has made a drastic change in the distribution and retail sector by the opening of hundreds of stores and supermarkets Vietnam's retail market has always been rated as promising, attractive for business, investors in and out of Vietnam territory Many international retailers have operated in Vietnam besides the local companies, and there are still many other international groups interested in entering the market And under report of A.T.Keraney (2014), Vietnam retail market is in the top 30 world best new retail markets in the period from 2007 to 2011 Moreover, basing on the 2014 report of Deloitte Southeast Asia Ltd, Vietnam’s retail market is also characterized as being one of the most dynamic markets in the region with high annual growth rates Hanoi and Ho Chi Minh City have been ranked among the top 10 Asian cities for retail expansion in 2014 Over the last few years, Vietnam’s retail sector has also witnessed healthy growth rates, with retail sales growing by 60% from 2009-2013, and forecasted to reach US$109 billion in 2017 The retail market in the country today is not only competition between domestic enterprises but also with large foreign retailers Huge system such as Co.opmart supermarket chain is leading the market but the big retail groups of foreign countries include Big C, Lotte, Metro Cash & Carry, also occupied a considerable market share In the near future, Vietnam is currently undergoing negotiation to participate in the Trans-Pacific Partnership Agreement (TPP), Free Trade Agreement How many times per month you often go shopping at supermarket X? – times – times – 10 times 10 times The reason that you choose shopping at the supermarket X is: Note: There may be multiple choice answers to this question Goods Part B Survey of supermarket’s customer loyalty programs quality Please indicate the level of your agreement of with the following statement about the "X" by marking (√) in the appropriate Box No Box No And with different level type in the box number 2, and Loyalty program at supermarket X has: …good quality gifts …gift of the famous brands …practical gifts, matching …the clear policy, easy to understand …enough time to accumulate points to redeem …easily accumulate points when shopping …remind customers regularly to accumulate off period … full information about the suppliers participating in the promotion for cardholders 63 …remind customers about voucher expiry date 10 …the rights and privileges under each level card 11 …care policy at the levels of card 12 Customer Loyalty Program at supermarket X produce satisfaction for each cardholder Employee of customer loyalty program at supermarket X: 13 …answer the queries of cardholders 14 …attention to feedbacks and comments from the cardholder 15 …get the satisfaction of cardholders 16 …always listen to suggestions of cardholders 17 Loyalty customer service counters of supermarkets X is spacious, comfortable 18 Loyalty customer service counters of supermarkets X is easy to find 19 Information about customer loyalty program posted on website is useful, updated 20 Supermarket X promptly answer questions about loyalty program through the website 21 The quality of goods in supermarkets X is reliable 22 I often hear the words evaluated favorably on supermarket X 23 The after sales service is quite exchange if the customer returns the product ) 24 I feel comfortable when shopping at the supermarket X 25 I am pleased that the supermarket X meets my requirements 26 I am glad that have chosen to shop supermarket X 64 27 Supermarket X would be my first choice when shopping 28 I realized I was loyalty customers of supermarket X 29 I just buy at the other supermarket Part C Your personal information Sexual: □ Male Age: □18–23 Monthly income (VND): □ Under million VND to under 15 million VND □ From 15 to under 25 million VND Above 25 million VND 4.Career: □ Homemaker □ Entrepreneur 5.Marital status: □ Single Thanks for your support 65 Appendix C: Questionnaire in Vietnamese PHIẾU KHẢO SÁT Chào Ơng/Bà, tơi tên Đặng Bích Phương, học viên cao học Viện Đào Tạo Quốc Tế, Trường Đại Học Kinh Tế TP HCM Tôi nghiên cứu Sự ảnh hưởng Chất lượng dịch vụ chương trình khách hàng thân thiết danh tiếng siêu thị đến hài lòng lòng trung thành khách hàng Rất mong Ông/Bà dành vài phút để trả lời Phiếu khảo sát Sự hỗ trợ Ông/Bà quan trọng cảm kích Thơng tin cá nhân Ơng/Bà giữ bí mật hồn tồn Trong q trình thực phiếu khảo sát này, Ơng/Bà có thắc mắc nào, xin vui lòng liên lạc với thông qua địa email: phuongdang1989@gmail.com số điện thoại 0985958939 Phần A Khảo sát việc tham gia chương trình khách hàng thân thiết siêu thị Ông/Bà tham gia chương trình Khách hàng thân thiết (KHTT) siêu thị chưa? ả lời tiếp bảng câu hỏi) ảm ơn kết thúc khảo sát) Xin vui lịng cho biết Ơng/Bà tham gia chương trình khách hàng thân thiết siêu thị Lưu ý: Có thể có nhiều lựa chọn trả lời cho câu hỏi ghi rõ):………………… Ông/Bà thường mua sắm siêu thị nhất? ghi rõ):………………… Gọi X siêu thị mà Ơng/Bà thường xun mua sắm có thẻ KHTT: 66 Xin vui lịng cho biết Ơng/Bà tham gia chương trình khách hàng thân thiết siêu thị X bao lâu? ới năm – năm – năm năm Xin vui lịng cho biết Ơng/Bà mua sắm siêu thị X trung bình lần tháng? – lần – lần – 10 lần Trên 10 lần Lý mà Ông/Bà lựa chọn mua sắm siêu thị X là: Lưu ý: Có thể có nhiều lựa chọn trả lời cho câu hỏi ẻ ần nhà ạng ất lượng ệt tình ều khuyến (vui lịng ghi rõ):………………… Phần B Khảo sát chất lượng chương trình khách hàng thân thiết siêu thị Xin cho biết mức độ đồng ý Ông/Bà với phát bi ểu sau “X” cách đánh dấu (√) vào tương ứng, với: Ơ số 1: Hồn tồn khơng đồng ý Ơ số 5: Hồn tồn đồng ý Cịn với mức độ khác đánh vào ô số 2, Chương trình Khách hàng thân thiết siêu thị X có: …quà tặng có chất lượng tốt …quà tặng thương hiệu tiếng …quà tặng thiết thực, phù hợp 67 …thể lệ rõ ràng, dễ hiểu …đủ thời gian tích điểm đổi quà …cách thức tích điểm dễ dàng mua sắm …nhắc nhở khách hàng thường xuyên thời hạn đổi điểm tích lũy …thông tin đầy đủ nhà cung cấp tham gia khuyến cho chủ thẻ …nhắc nhở khách hàng thời hạn sử dụng phiếu quà tặng 10 …quyền lợi ưu đãi theo cấp độ thẻ 11 …chính sách chăm sóc theo cấp độ thẻ 12 Chương trình KHTT siêu thị X tạo hài lòng cho chủ thẻ Nhân viên chương trình Khách hàng thân thiết siêu thị X: 13 …giải đáp thắc mắc chủ thẻ 14 …quan tâm đến góp ý, nhận xét chủ thẻ 15 …nhận hài lịng chủ thẻ 16 …ln lắng nghe đề xuất chủ thẻ 17 Quầy dịch vụ khách hàng thân thiết siêu thị rộng rãi, thoái mái 18 Quầy dịch vụ khách hàng thân thiết siêu thị X dễ tìm, dễ thấy 68 19 Thơng tin chương trình KHTT đăng website siêu thị X hữu ích, cập nhật 20 Siêu thị X kịp thời trả lời thắc mắc chương trình KHTT thơng qua website 21 Chất lượng hàng hóa siêu thị X đáng tin cậy 22 Tôi thường nghe lời đánh giá bình luận tốt đẹp siêu thị X 23 Các dịch vụ sau bán hàng tốt (hồn tiền đổi trả khách hàng khơng hài lịng sản phẩm…) 24 Tơi thấy thoải mái mua sắm siêu thị X 25 Tôi thấy hài lịng siêu thị X đáp ứng u cầu tơi 26 Tơi thấy vui lựa chọn siêu thị X để mua sắm 27 Siêu thị X lựa chọn mua sắm 28 Tơi cho khách hàng thân thiết siêu thị X 29 Tôi mua hàng siêu thị X siêu thị khác Phần C Thông tin cá nhân Ơng/Bà: Giới tính: □ Nam Nhóm tuổi: □ 18 – 23 tuổi □ 41 tuổi Mức thu nhập tháng: (VND) 69 □ Dưới triệu 15 triệu □ Từ 15 đến 25 triệu Nghề nghiệp: □ Nội trợ □ Doanh nhân (vui lịng ghi rõ):…………………… Tình trạng nhân: □ Độc thân Cảm ơn hỗ trợ quý Anh/Chị 70 Appendix D: Histogram, Normal Regression & Variable: Customer Satisfaction and Loyalty 71 Scatter plot of Dependent 72 ... "The impact of loyalty program’s service quality and store reputation on customer satisfaction and loyalty" Research will bring a deeper understanding of the factors that contribute to the loyalty. .. impact of information on the customer satisfaction 2.4 Store reputation The reputation of a business is essential to its survival The reputation of a store may be interpreted by its actions and. .. program’s service quality and store reputation on customer satisfaction  Measure the influence of customer satisfaction on customer loyalty 1.4 Research methodology and scopes The research was conducted