The valuation of customer satisfaction and service quality in online purchasing in cambodia

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY CHENG BUNKRY THE EVALUATION OF CUSTOMER SATISFACTION AND SERVICE QUALITY IN ONLINE PURCHASING IN CAMBODIA MASTER OF BUSINESS ADMINISTRATION THESIS Ho Chi Minh City – 2011 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY CHENG BUNKRY THE EVALUATION OF CUSTOMER SATISFACTION AND SERVICE QUALITY IN ONLINE PURCHASING IN CAMBODIA Major: Business Administration Major Code: 60.34.05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisor: Dr TRAN HA MINH QUAN Ho Chi Minh City – 2011 Abstract The findings of this research are mostly useful to those (managers, web designers, etc.) who intend to penetrate the Cambodian market with least cost, time and energy The results indicate the most important web quality factors through Cambodian online shoppers’ perspective In these recent years, a significant growth has been noticed in the Internet- based services in the pure Internet businesses as well as the traditional enterprises, which are developing their online services One of the key challenges of online businesses is how they manage service quality, which holds a significant importance to customer satisfaction In addition of success stories, we should be aware of problems; in year 2000 nearly 900 US online firms were shut down, 31% of them were online retailers (Minjoon Jun, 2004) The purpose of this research is to rank the quality factors perceived to be most important in relation to the use of online shops The questionnaire utilized was based on the SERVQUAL instrument that identifies five quality dimensions in service environments I Acknowledgements First of all I would like to express my sincere gratitude to my supervisors, Dr.Tran Ha Minh Quanat University of Economics Ho Chi Minh City, Vietnam, for his intelligent guidance and helpful advice during the whole process, and Mr Dang HuuPhucat University of Economics Ho Chi Minh City, Vietnam, for his very helpful supports on processing data I would like to thank all the participants who contributed to my work, not just for their responses, but also for the good suggestions they made and their kind help Special thanks to my family and friends for their consideration andsupport during all the process Cheng Bunkry II Table of Content CHAPTER 1: INTRODUCTION AND BACKGROUND OF THE STUDY 1.1 Background of the study 1.1.1 E-commerce 1.1.2 Online Retailing 1.1.3 E-commerce in Cambodia 1.2 Problem Discussion 1.3 Research Question 1.4 Demarcation 1.5 Disposition of the thesis CHAPTER 2: LITERATURE REVIEW 2.1 Customer Satisfaction 2.1.1 Definition of Customer Satisfaction 2.1.2 Techniques to measure customer satisfactio 2.2 E-service quality 2.2.1 Conceptualization of e-Services 2.2.2 E-service quality 2.3 SERVQUAL Gaps Model 2.4 Measuring e-Service Quality 2.5 Dimensions and determinants of Service Quality CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research Purpose 3.2 Research Approach 3.3 Research Strategy 3.4 Research Process 3.5 Research Model & Hypotheses 3.6 SERVQUAL dimensions in relation to online Purchasing III CHAPTER 4: RESEARCH RESULT 23 4.1 Sample and Response rate 23 4.2 Service quality measurement 24 4.2.1 Cronbach’s Apha Analysis 25 4.2.1.1 Measuring service quality 25 4.2.1.2 Measuring Customer Satisfaction 27 4.2.2 EFA Factor Analysis 28 4.2.2.1 Measuring service quality 28 4.2.2.2 Measuring Customer Satisfaction 32 4.3Examination research model 32 CHAPTER 5: DISCUSSION AND CONCLUSION 38 5.1 Introduction 38 5.2 Implications for Theory 39 5.3 Implications for Further Research 40 REFERRENCES 41 APPENDIX I: QUESTIONAIRE 43 APPENDIX II: TABLES 45 IV List of Tables Table 2.1: Definition of customer satisfaction Table 3.1: Time of research process 16 Table 4.1: Number of respondents by gender 23 Table 4.2: Number of respondents by age 24 Table 4.3: Cronbach’s apha of scale factor: assurance 25 Table 4.4: Cronbach’s apha of scale factor: reliability 25 Table 4.5: Cronbach’s apha of scale factor: responsiveness 26 Table 4.6: Cronbach’s apha of scale factor: empathy 26 Table 4.7: Cronbach’s apha of scale factor: tangible 27 Table 4.8: Cronbach’s apha of scale factor: satisfaction 28 Table 4.9: EFA analysis result of factors affecting customer satisfaction 29 Table 4.10: KMO and bartlett’s test 30 Table 4.11: EFA analysis of the satisfaction scale 32 Table 4.12: Regression model summary 33 Table 4.13: ANOVA (b) 33 Table 4.14: Coefficients(a) 33 Table 4.15: Hypothesis and research results 36 List of Figures Figure 2.1: Service quality model , source: parasuraman et al (1985, p 44) 10 Figure 3.1: Research process flowchart 17 Figure 3.2: Service Quality and Customer Satisfaction based on servqual .18 Figure 4.1: Hypothesis and research results 36 V Page CHAPTER INTRODUCTION AND BACKGROUND OF THE STUDY Introduction The first chapter in this thesis introduces the background of the selected area This will be followed by a problem area discussion that will help reader to understand the insight of the research area The problem discussions end with a research problem and specific research question In the end of the first chapter we will also present the disposition of the thesis 1.1 Background of the study This section will provide the background of the research area This section contains some idea of e-commerce and online retailing as one of the important factor in e-commerce Also, a brief introduction of e-commerce situation in Cambodia is brought here This section also shows the importance of service quality and its relationship with customer satisfaction 1.1.1 E-commerce E-commerce has many definitions In business today electronic commerce is one of the common topics of discussion (Daniel, Wilson & Myers 2002) Is not very far from what TawfikJelassi& Albrecht Enders in 2005 believed is “Electronic commerce deals with the facilitation of transactions and selling of products and services online, i.e via the Internet or any other telecommunications network".This was an academic definition for e-commerce, what practitioners believe is: "Ecommerce is often referred to as e-business In order to perform one or more of the business functions Internet based ecommerce systems use World Wide Web based application solutions These business functions include information provision, communication, buying, selling, Page distribution, customer service, delivery and payment processing among producers, suppliers and their customers etc Using e-commerce systems organizations can market their products and services online and provide a range of services that customers themselves can perform without direct human assistance Its allows customers to conduct a wide range of activities such as changing address, securing a credit card or loan, learning from other customers, personalizing a service agreement and purchases without human assistance (Molla and Licker 2001) Electronic commerce is a new way of conducting, managing and executing business transactions using computer (Kalakota and Whinston 1996) 1.1.2 Online Retailing The rapid growth of the electronics retailers worldwide as we have known today Although B2B plays a larger role in part of electronic commerce rather than B2C, both of them go pass the bricks and mortar Even if online visitors, most of them just try to search more informationinstead of buying These sites are e-CRM (customer relationship management) necessary tools for retailers to survive in a competitive market, value added services are necessary to keep the difference with their competitor After the emergence of many e-commerce companies start up the website to the pioneers in this field, but in the mid-2000 many bubbles burst The story of the surviving company will lead us to a better understanding of the strengths and powers.Customers are the lifeblood of an organization, so their satisfaction is the primary goal of the company 1.1.3 E-commerce in Cambodia In Cambodia the Internet is mainly used in the universities for research purposes, the internet stations throughout the cities are used for limited activities such as checkinge-mail and making long distance phone calls Thus the entryof electronic commerce in Cambodia is in its early stages Clearly, E-commerce is something new for this country, but it’s expected to grow steadily in the near future Page 39 retailers should build websites without huge flashes, graphics, and images which may increase the size of page and take more seconds to appear Besides, the structure of the website plays a big role here, as the number of clicks for achieving the desired information depends on the design of the website Hence, it is important for managers to consider the different ways of reaching specific information on the website Second, 24 hours user accessibility factor indicate that websites are expected to be available all the time and all the days of the week Managers should insist on reputation of website and try to avoid the non-responding situations If anything happened that made the website down for a while; relevant information about the problem and the time it would be backed should be provided Third, assurance dimension implies that customers should be aware of privacy limits and security policies Managers should allocate specific space for introducing protection and privacy policies that are accessible for customers and give a thorough understanding about the way website is kept secure 5.2 Implications for Theory The main purpose of the study is to findwhich the online service quality dimensions impact on Cambodian customers’ perspective in online retailing sector and aim to rank what are the order of Service Quality dimensions that impact on Cambodiancustomers’ perspective in online retailing sector Theoretically, this study extends the knowledge body of service quality and customer satisfaction by enriching the Cambodian’s preferences in online retailing sector, and based on existing theories, this study tested five key service quality dimensions in online retailing context More specifically, concerning research question one the majority of the findings for this study supported the existing literature The new findings were discovered from quantitative empirical data.It also increased and enhanced understanding about relative importance service quality dimensions Page 40 5.3 Implications for Further Research With the development of e-commerce and web technology, some areas which are not covered in this study are interesting and need to be explored In addition, the limitation and shortcoming of this study also provide implications for future research Future research could add extensions to this study This research needs further analysis While this research yields a number ofvery interesting results, we believe that there are a number of things that should be done to confirm our results as well as to expand our hypotheses Firstly, with the number of Internet users now over 45 thousand, a small group of online users in Phnom Penh, Cambodia is not enough Hence, research with larger samples that pose the same or similar questions would be appropriate Secondly, various languages, religions, cultures and a host of other factors may be important to user's impression of the quality of a web site At the end, in this competitive market, service quality is one of the key elements which bring value added for companies Online retailers are focusing on making their websites more appealing in order to increase their stickiness Practitioners need to understand the factors that make people to visit a website; spend some time and make them purchase online Researchers all around the world are talking about "loyal customers": they spread the good word-of-mouth, not to shift to competitor easily, spend more money and are cheaper to attract Practitioners should be aware of all factors which are affecting the behavior of their customers Respecting this critical issue for e-business, we believe more studies are needed to fulfill our e-world with superior facilities and make life easier and better Page 41 REFERRENCES Berry and Parasurama (1991) Refinement andreassessment of the SERVQUAL scale Journal of Retailing, 67(4), 420–450 Churchill and Surprenant(1992) “An Investigation into the Determinant of CustomerSatisfaction”, Journal of Marketing Research, Vol.19, pp.491504.Research Strategy in Studies of Information Systems”, MIS Quarterly, 1989, pp.3350 Cooper and Schindler 2003,Business Research Methods; Eighth edition; ISBN: 007-249870-6 ; McGraw-Hill higher Education; Cox J and Dale, 2001, ‘Service quality and e-commerce: an exploratoryanalysis; Managing Service Quality; Vol.11 No pp 121±131 Daniel, Walson and Myers, (2002) “Adoption of E-Commerce by SMEs in the UK” International Small Business Journal, Vol 20(3):253–270 Ingrid FecÏikovaÂ; 2004, An index method for measurement of customersatisfaction; The TQM Magazine; Vol 16 No pp 57-66 Kalakota, R., Whinston, A.B., (1996), frontiers of electronic commerce, Addisonwesleypublishing company, Inc Khalifa and Liu 2003, “Determinant of satisfaction at differentadoption stages of internet –based services” Journal of the association forinformation systems Vol.4 No 5, pp 206-232 Kolter, Marketing Management, International Edition, Prentice-Hall, EnglewoodCliffs, NJ pp.36 Molla and Licker, 2001 “E-commerce System Success: An attempt to extend andrespecify the Delone and McLean Model of IS Success” Journal of Electronic commerceResearch, Vol 2, No Parasuraman,A.Zeithaml, Valarie A Malhotra, Arvind , Feb2005; E-S-QUAL: A Multiple-Item Scale for Assessing Electronic Service Quality; Journal of Service Research, Vol Issue 3, p213-233 Parasuraman et al.’s (1985), “A conceptualmodel of service quality and its implications for future research,” Journal ofMarketing 49 pp 41–50 Page 42 Parasuraman, et al., 1988, “SERVQUAL: Amultiple-item scale for measuring consumer perceptions of service quality”,Journal of Retailing, Vol 64 No 1, pp 1240 Parasuraman, A., Zeithaml, V.A and Berry, L.L (1990), DeliveringQuality Service Balancing Customer Perceptions and Expectations, Free Press, New York, NY Parasuraman, A Zeithaml, V.A and Berry, L.L (1993) More on improving service quality measurement, Journal of Retailing, 69(1), pp.140–147 Parasuraman, A., Zeithaml, V., Berry, L.L., (1994) Reassessment ofexpectations as a comparison standard in measuring service quality:implications for further research Journal of Marketing 58 (1), 111–125 Parasuraman&Grewal (2000), “The Impact of Technology on the Quality-ValueLoyalty Chain”, A Research Agenda Journal of the Academy of Marketing Science, 28(1), 168-174 Pather, Erwin &Remenyi, 2002, “Measuring E-commerce Effectiveness: A conceptual Model”, Proceeedings of SAICSIT 2003, Pages 143-152 Saunders, Lewis &Thornhill, 2003, Organisational justice, trust and the management of change An exploration , Personnel Review Vol 32 No 3, pp 360375 TawfikJelassi& Albrecht Enders, 2005; Strategies for e-businesse-strategy; Edinburgh Gate Van Riel, Lijander&Jurriens in 2001 “” Exploring consumer evaluations of eservices: a portal site”, International Journal of Service Industry Management, vol 12, No.4, pp 359-377 Yi (1990), “ A critical review of consumer satisfaction”, Review of Marketing 1990, American Marketing Association, Chicago, IL Page 43 APPENDIX I: QUESTIONAIRE SURVEY QUESTIONNAIRES This research is conducted as partial fulfillment towards the completion of requirement for the Master of Business Administration degree at University of Economics Ho Chi Minh City The main objective of this research is to evaluate on Customer Satisfaction and Service Quality in Online Purchasing in Cambodia To achieve this objective, I wish to seek your support and cooperation in participating in this survey by completing the questionnaires Thank you for your kind cooperation and valuable assistance in participating in this survey Part I: Personal Information Please indicatein which of these age groups you are? ƒ18–25 Please indicate your gender? Part II: Measuring Customer Satisfaction and Service Quality in online purchasing For each statement, please circle the number provided that best describes your opinion (1 = Very disagree, = Neutral, = Very agree) STATEMENTS Assurance An email address for queries and complaints is provided Full product or service characteristics are available Full details of product or service pricing are available The user can make a purchase without web site registration Different payment options are stated clearly A complete overview of the order is presented before final purchase decision All relevant order confirmation details are sent by e-mail within 24 hours Page 44 Reliability The security policy is accessible The web site contains company details 10 External validation of trust worthiness is important 11 Brand image is important Responsiveness 12 Access is fast 13 Opening of new screens is kept to a minimum 14 It is easy to print from the web 15 Information is found with a minimum of clicks Empathy 16 The home page features options for new and registered users 17 A customer platform is provided for exchange of ideas 18 Links are provided to pages on related products and services 19 Searches on related sites are provided Tangibles 20 Scrolling through pages and text is kept to a minimum 21 Web site animations are meaningful 22 Access to anticipated delivery times is available at all times 23 Colours, pictures and images are consistent, relevant and clear 24 Terms and conditions of sales are accessible Satisfaction 25 You satisfy with the current speed connection 26 You satisfy with your current PC 27 You desire to have the well-function and good-looking web 28 You desire to print or download information directly from web Page 45 APPENDIX II: TABLES Table 4.1: Number of respondents by gender Male Valid Female Total Table 4.2: Number of respondents by age 18-25 26-35 Valid 36-45 Over 45 Total Table 4.3: Cronbach’sApha of scale factor: Assurance Item Deleted ASS1 ASS2 ASS3 ASS4 ASS5 ASS6 ASS7 Apha = 879 Page 46 Table 4.4: Cronbach’sApha of scale factor: Reliability REL1 REL2 REL3 REL4 Apha = Table 4.5: Cronbach’sApha of scale factor: Responsiveness RES1 RES2 RES3 RES4 Apha = Table 4.6: Cronbach’sApha of scale factor: Empathy EMP1 EMP2 EMP3 EMP4 Apha = 809 Page 47 Table 4.7: Cronbach’sApha of scale factor: Tangible TAN1 TAN2 TAN3 TAN4 TAN5 Apha = 875 Table 4.8: Cronbach’sApha of scale factor: Satisfaction SATIS1 SATIS2 SATIS3 SATIS4 Apha = 859 Table 4.10: KMO and Bartlett’s Test KMO and Bartlett's Tes Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Page 48 Table 4.9: EFA analysis Result of factors affecting Customer Satisfaction ASS1 ASS3 ASS2 ASS4 ASS5 ASS6 ASS7 TAN5 TAN3 TAN4 TAN1 TAN2 REL1 REL2 REL4 REL3 RES2 RES4 RES3 RES1 EMP3 EMP1 EMP4 EMP2 Eigevenvalues Variance Cronbach Alpha Extraction Method: Principal Component Analysis Page 49 Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Table 4.11: EFA analysis of the satisfaction scale Component Matrix (a) SATIS2 SATIS3 SATIS4 SATIS1 Extraction Method: Principal Component Analysis a components extracted KMO and Bartlett’s Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Table 4.12: Regression model summary Model R 803 a Predictors: (Constant), M_TAN, M_EMP, M_RES, M_REL, M_ASS Page 50 Table 4.13: ANOVA (b) Model Regression Residual Total a Predictors: (Constant), M_TAN, M_EMP, M_RES, M_REL, M_ASS b Dependent Variable: M_SATIS Table 4.14: Coefficients(a) Model (Constant) M_ASS M_REL M_RES M_EMP M_TAN a Dependent Variable: M_SATIS ...MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY CHENG BUNKRY THE EVALUATION OF CUSTOMER SATISFACTION AND SERVICE QUALITY IN ONLINE PURCHASING IN CAMBODIA Major: Business... noticed in the Internet- based services in the pure Internet businesses as well as the traditional enterprises, which are developing their online services One of the key challenges of online businesses... down the focus The purpose of this study is to find the most important service quality dimensions that influence customer satisfaction online purchasing in Cambodia In the literature, we will introduce