Factors influencing customer loyalty of vietjet air join stock company

RESEARCH PROJECT (BMBR5103) FACTORS INFLUENCING CUSTOMER LOYALTY OF VIETJET AIR JOIN STOCK COMPANY STUDENT FULL NAME : MAI DUC LOC STUDENT ID : CGS00018509 INTAKE : SEPTEMBER 2014 ADVISOR’S NAME & TITLE : ASSOC.PROF PHAN DINH NGUYEN December 2015 ADVISOR’S ASSESSMENT Advisor’s Signature Page | PLAGIARISM STATEMENTS Topic: FACTORS INFLUENCING CUSTOMER LOYALTY OF VIETJET AIR JOIN STOCK COMPANY, made by: MAI DUC LOC I assured this is my work The data and results referred to in the thesis are honest and have never been published in any other work Page | ACKNOWLEDGE I respectfully sincere thanks to the school board, organizations and individuals imparted knowledge, discussion, providing the necessary documents, together with the answers and help me finish this essay I especially thank to Assoc Prof PHAN DINH NGUYEN, to guide me patiently to complete the thesis Information and advice he is very valuable not only for research but also for my real life And, I am also grateful to all customers, family and friends who helped me in the past years Respect Page | ABSTRACT Research topic: "FACTORS INFLUENCING CUSTOMER LOYALTY OF VIETJET AIR JOIN STOCK COMPANY " was conducted from Oct 2015 to Dec 2015 Research objective:  Determine the wishes of customers for airline  Building a study model to measure customer loyalty based on understanding the factors that affect customer loyalty  Assess customer loyalty with airline service and product  Propose some measures to improve levels of customer satisfaction with airlineing service and product  Research methods: using mainly two methods  Qualitative research: discussions, interviews, edit scale and model  Quantitative research: - Questionnaire design with content including: scales about customer information, 30 scales about measuring factors affecting customer loyalty, scales to determine the level of customer loyalty and ultimately customer proposals for the airlne - Data collection: primary and secondary - Data processing: reliability analysis, factor analysis, Pearson coefficient analysis, regression analysis, ANOVA analysis, establish general pattern and test hypotheses With samples of 150 questionnaires were selected as evenly distributed as in HCM city area The result is shown in the following regression equation: CL = 0,405*SQ + 0,433*PR + 0,175*C Of which: SQ: Service Quality PR: Price Page | C: Convinience Limitations of this topic:  Subjects of study are business customers with its own characteristics on demand service, criteria for evaluating service quality and perceiving price services to individual customers, so research results can not response used simultaneously to all customers  Research scope limited to customers using the service at Vietjet Air Join Stock Company, should not be assessed on overall customer groups in different local and potential customers may not use airline service  Study looks at just the time and number of airline customers use, not understanding customer loyalty in relation to business, financial resources and ethnic factors Page | CONTENTS Chapter One - Introduction 1.Introduction Reasons choose topics: 10 Research objectives 10 3.1 Overall objectives 10 3.2 Specific objectives 10 The significance of science and practical subjects 11 The importance of the research problem 11 Scope of research 11 Chapter Two - Reviewing documents 12 Previous models 13 1.1 Perceived Value 16 1.2 Price 17 1.3 Quality of Service 17 1.4 Brand Image: 18 1.5 Belief 19 1.6 Customer satisfaction 20 1.7 Customer loyalty 21 Research model and Hypotheses 23 Chapter Three - Methodology 24 Page | Research Method 24 Primary data collection 25 2.1 Paper survey as the data collection method 25 2.2 Questionnaire design and data collection 25 Chapter Four - Data Analysis 26 Sample description 27 1.1 Servive Quality (SQ) 28 1.2 Price (PR) 28 1.3 Brand Image (BI) 28 1.4 Percieved Value (PV) 29 1.5 Product (P) 29 1.6 Convinience (C) 29 Quantitative research 30 2.1 Target 30 2.2 Procedure 30 2.3 Result 31 2.4 Reliability and Validity 33 a) Reliability test 33 b) Validity test 33 Hypothesis tests 34 3.1 Multivariable Linear Regression analysis 34 3.2 Path analysis 35 Chapter Five: Results And Disscussion 35 Descriptive Analysis 36 Page | 1.1 Service Quality Descriptive: 36 1.2 Price Descriptive 36 1.3 Brand Image Descriptive 38 1.4 Percieved Value Descriptive 38 1.5 Product Descriptive 39 1.6 Convinience Descriptive 40 1.7 Customer Loyalty 41 Analysis Scale 42 2.1 Cronbach's alpha 43 2.2 Factor Analysis 50 General research model 64 3.1 Research model 64 3.2 Assumptions 65 Testing of the model study 65 4.1 Analysis Pearson correlation coefficient 65 4.2 Regression Analysis: 66 4.3 Anova analysis 70 Chapter Six - Conclusions and Recommendations 72 Conclusion 72 Suggestions for Vietjet Air 72 2.1 Price policy 73 2.2 Service quality 74 2.3 Brand Image 74 APPENDIX 77 Page | CHAPTER ONE - INTRODUCTION Introduction Vietjet air (Vietjet Aviation Joint Stock Company), operating under the name VietJet Air, the airline's first privately Vietnam, with headquarters at Tan Son Nhat International Airport City Ming and branch at Noi Bai International Airport in Hanoi June 12, 2013, VietJetAir signed agreements in principle with the manufacturer Airbus ordered a total of 100 aircraft types for VietJetAir, which has ordered 62 units, 30 units are entitled to purchase and units rent with time receiving to 2022 with a total transaction value under the manufacturer's pricing of about $ 9.1 billion VietJet Air was formed from three main shareholders of T & C, Sovico Holdings and Commercial Airline Joint Housing Development Ho Chi Minh City (HD Airline), with registered capital of an initial 600 billion (equivalent to 37.5 million at the time of contribution) The airline was the Minister of Finance of Vietnam approved license in November 2007 and became 4th Airlines Vietnam, after Vietnam Airlines, Jetstar Pacific and Vietnam Aviation Service Company (VASCO) and is Private airline's first Vietnam December 20, 2007, the Minister of Transport of Vietnam Ho Nghia Dung has awarded a business license for air transportation VietJet Air According to initial plans, estimates VietJet Air officially put into operation in late 2008, but due to fluctuations in gas prices, rising oil should VietJetAir decisions postponed and will begin in November 2009 (the fourth quarter) VietJet Air routes start in the fourth quarter In late April 2009, Sovico Holdings has acquired all shares of T & C Group and become the largest shareholder, owning 70% of shares of VietJetAir February 2010, the airline Air Asia bought 30% shares of VietJetAir Page | 3.2 Assumptions For: The more favorable the higher satisfaction  H1: Service Quality has influence on Customer Loyalty  H2: Price has influence on Customer Loyalty  H3: Convinience has influence on Customer Loyalty  H4: Brand Image has influence on Customer Loyalty Testing of the model study 4.1 Analysis Pearson correlation coefficient It uses a statistic called the Pearson correlation coefficient to quantify the level of strict linear relationship between quantitative variables If between two independent variables correlation must note multicollinearity problem when regression analysis Multicollinearity is the state in which the independent variables are correlated closely The problem of collinear phenomenon that we provide the information model are very similar and very difficult to separate the effects of each variable to the dependent variable Other effects of the fairly tight correlation between the independent variable is that it increases the standard deviation of the regression coefficients and reduce the value of statistical significance tests t of them should the coefficients tend poor reviews more meaning when there is no multicollinearity while the coefficient of determination R square is still quite high During a multiple regression analysis, multicollinearity was diagnosed with selected SPSS Diagnostic Collinearity The matrix below shows the correlation between the dependent variable customer satisfaction with each independent variable are greater than 0.3 On a preliminary, we can conclude the independent variables included in the model can explain the dependent variable customer satisfaction In addition, correlations between the independent variables are greater than 0.3 (except correlations between pairs of variables: Policy products and trust services, policy services and products and the convenience, products and services Policy and Competitiveness of price, product and service catalog provides product and service standards), so the relationship between these variables need to be considered carefully in the linear regression analysis multiples below to avoid multicollinearity between the independent variables Page | 65 Correlations X1 X1 Pearson Correlation X4 Y 559** 463** 750** 000 000 000 000 150 150 150 150 150 548** 492** 695** 720** 000 000 000 Sig (2-tailed) N X2 X3 X4 Y Pearson Correlation X2 X3 548** Sig (2-tailed) 000 N 150 150 150 150 150 559** 492** 512** 631** Sig (2-tailed) 000 000 000 000 N 150 150 150 150 150 463** 695** 512** 551** Sig (2-tailed) 000 000 000 N 150 150 150 150 150 750** 720** 631** 551** Sig (2-tailed) 000 000 000 000 N 150 150 150 150 Pearson Correlation Pearson Correlation Pearson Correlation 000 150 ** Correlation is significant at the 0.01 level (2-tailed) Page | 66 4.2 Regression Analysis: Descriptive Statistics Mean Std Deviation N Y 3.5400 70299 150 X1 3.3360 73833 150 X2 3.7413 66536 150 X3 3.6000 85285 150 X4 3.9550 64771 150 Correlations Y Pearson Correlation Y Sig (1-tailed) N X1 X2 X3 X4 1.000 750 720 631 551 X1 750 1.000 548 559 463 X2 720 548 1.000 492 695 X3 631 559 492 1.000 512 X4 551 463 695 512 1.000 000 000 000 000 X1 000 000 000 000 X2 000 000 000 000 X3 000 000 000 000 X4 000 000 000 000 Y 150 150 150 150 150 X1 150 150 150 150 150 X2 150 150 150 150 150 X3 150 150 150 150 150 X4 150 150 150 150 150 Y Page | 67 Variables Entered/Removedb Model Variables Entered Variables Removed Method X4, X1, X3, X2a Enter a All requested variables entered b Dependent Variable: Y Model Summaryb Model R Std Error of the Durbin- Square Estimate Watson R Square 852a Adjusted R 726 718 37310 2.198 a Predictors: (Constant), X4, X1, X3, X2 b Dependent Variable: Y ANOVAb Model Sum of Squares Mean df Square Regression 53.450 13.362 Residual 20.185 145 139 Total 73.635 149 F 95.990 Sig .000a a Predictors: (Constant), X4, X1, X3, X2 b Dependent Variable: Y Page | 68 Coefficientsa Model Unstandardized Standardized Collinearity Coefficients Coefficients Statistics B Std Error Beta t Sig Tolerance VIF (Constant) 109 202 539 591 X1 405 054 425 7.505 000 589 1.697 X2 433 069 410 6.310 000 449 2.229 X3 175 046 212 3.789 000 602 1.661 X4 - 068 -.039 -.625 533 478 2.092 043 a Dependent Variable: Y Because X4 has Sig, 0,533 (>0,5), reject X4 We have: Y = 0.405X1 + 0.433X2 + 0.175X3 Coefficient Correlationsa Model X4 Correlations Covariances X1 X3 X2 X4 1.000 -.034 -.238 -.556 X1 -.034 1.000 -.377 -.295 X3 -.238 -.377 1.000 -.085 X2 -.556 -.295 -.085 1.000 X4 005 000 000 -.003 X1 000 003 000 -.001 X3 000 000 002 000 X2 -.003 -.001 000 005 a Dependent Variable: Y Page | 69 Collinearity Diagnosticsa Mode Dime Eigenvalue Variance Proportions Condition l nsion Index 1 4.924 1.000 00 00 00 00 00 030 12.740 19 11 03 49 03 022 15.041 01 81 00 46 02 016 17.744 73 03 29 02 11 008 24.602 06 05 68 03 84 (Constant) X1 X2 X3 X4 a Dependent Variable: Y Residuals Statisticsa Minimum Maximum Predicted Value Residual Std Predicted Value Std Residual Mean Std Deviation N 2.1010 4.9351 3.5400 59894 150 -.85095 1.36926 00000 36806 150 -2.403 2.329 000 1.000 150 -2.281 3.670 000 986 150 4.3 Anova analysis 4.3.1 Gender: Test of Homogeneity of Variances Y Levene Statistic 1.715 df1 df2 Sig 148 192 Page | 70 ANOVA Y Sum of Squares Between Groups df Mean Square F 674 674 Within Groups 72.961 148 493 Total 73.635 149 Sig 1.366 244 Because Sig = 0.244 >0.05, There are no different trend between male and female 4.3.2 Ages Test of Homogeneity of Variances Y Levene Statistic df1 df2 105 Sig 148 746 ANOVA Y Sum of Squares Between Groups df Mean Square 442 442 Within Groups 73.193 148 495 Total 73.635 149 F Sig .894 346 Sig = 0.346 > 0.005, there are no different trend between ages Page | 71 CHAPTER SIX - CONCLUSIONS AND RECOMMENDATIONS This final chapter will represent the conclusions for the whole research Some recommendations will be pointed out based on the results of analysis in previous chapter And finally, this chapter also shows the limitation of research and suggestions for further research Conclusion The success of an Airline is much depending on customer loyalty It is very important to keep customer stay with company Base on the objective to pointed out key factors which have influence on customer loyalty, this research was conducted by collecting the survey from Vietjet Air passengers And the results of the survey have indicated some findings as below: - The three direct factors Price, Service Quality and Convinience have positive relationship with Customer Loyalty In there, Price has the most influence on Customer Loyalty This implied that the company can keep customer continue cooperating with their reasonable price policies The other two factors have less influence on Customer Loyalty when compare to Price, but there is not a big different between the influence of Price and Service Quality - There are three factors Price, Service Quality and Convinience But influence of another factor, Perceived Value, on Brand Image is not clear And based on the results of path analysis, Perceived Value also does not have influence on Customer Loyalty Therefore, this factor is removed from the model - The Price factor has the most influence on customer loyalty It is indicated that, customer has a higher Trust on Vietjet Cooperation when it supply a more reasonable price policy Page | 72 Suggestions for Vietjet Air The results of the survey in this research showed how strong the direct factors influence Customer Loyalty Thence, the survey also indicated that there are several issues occurring impact to the customer decision on flying with Vietjet Air Some suggestions below may help company operate better to win more and more loyalty of customer: 2.1 Price policy Ticket price plays an important role in customer decision Therefore, the company should engage to invite customer the more reasonable price than competitors‟ In reality, customers have realized that the ticket price of Vietjet Air is more reasonable when compare with others‟ (mean of PR5 = 4,0179) It is a positive signal of Vietjet Air in customer‟s mind So, Vietjet Air could keep going with competitive ticket price Reducing costs is one of the key methods in operating business of a low cost carrier (Malighetti et al., 2009; Murphy) and it will make the difference.To be able to that, Vietjet Air need to review all the operated departments to cut off any unnecessary part Thence, the company could reduce the operation cost and therefore the company can build a good competitive price policy In the result which was shown in chapter 4, Customers think that food and gifts sold in flight not have a reasonable price (mean of PR3 = 3,1045) Vietjet provides a plentiful list of food and gifts for passenger in flight but the payment for them is a little high To redemy that issue, Vietjet Air could try to look for other suppliers who are able to give better offers Page | 73 2.2 Service quality Through survey of this research, passengers expressed their bad mood about Vietjet on time performance (mean of SQ2 = 2,48) The long delay flights may cause much stress for both passenger and Airline There are varied reasons which cause flights delay, for example: bad weather, technical check, operational change, security activity, V.I.P flights, The worst case occurs when the flight is decided to cancel One of the frequent reasons of delay flights is come from technical problem Now Vietjet Co- operation has eight planes and they are being used in dense operational schedule; therefore the time for maintenance is not enough Vietjet should consider a better operational schedule and more concentrated in maintenance, because it will help to reduce the delay flights It is not only make passenger feel more comfortable but also help to reduce the expenses for delay flights - Customer Service Nowadays, customer service is the key weapon that a company uses to maintain relationship with customer and to win the competitors (Ahmad Amiz et al., 2010) Although Vietjet Air is operating in low cost airline model but customer service is still very important The company should pay more attention in training staffs to have better service The two major roles in airline customer service are ground staffs and cabin attendants These two departments need to be more and more professional in the whole service progress such as: greeting customers, willing to help when customer need, always smiling and being expert in solving irregular circumstances 2.3 Brand Image According to the finding in chapter 4, passengers performed that Vietjet Air is not really the first carrier they think about when they have decided to fly (mean of IM2 = 2,9851) It is the fact that Vietjet Air has not built an enough strong Image to attract customers The consequence is that Vietjet Air may loose a lot of potential customers; so it will impact the revenue of carrier Therefore, Vietjet Air need to focus more and more in building a strong brand through business operations and maketing strategies Page | 74 REFERENCES Paurav Shukla, 2010, Essential of Marketing Research: Part II Paurav Shukla & Ventus Publishing APS Peng, Leong Yow & Wang, Qing (2006) Impact of Relationship Marketing Tactics (RMTs) on Switchers and Stayers in a Competitive Service Industry, Journal of Marketing Management, 22, 25-59 Regina Virvilaite, Violeta Saladiene, Dalius Skindaras, (2009), “The relationship between Price and Loyalty in services industry”, ISSN 1392-2785, 96-104 Reichheld FF & Sasser WE, 1990, Zero Defections: Quality Comes to Services, Harvard Business Review, 105-111 Roger Hallowell, (1996) "The relationships of customer satisfaction, customer loyalty, and profitability: an empirical study", International Journal of Service Industry Management, (4), 27 – 42 Saunders M., Lewis P (2007), Research Methods for Busisness Students Harlow, England, FT Prentice Hall, Pearson Education Schlesinger, L and Heskett, J (1991) "Breaking the cycle of failure in service", Sloan Management Review, 17–28 Selnes, F (1993), “An examination of the effect of product performance on brand reputation, satisfaction and loyalty”, European Journal of Marketing, 27 (9), 19-35 10 Steven A Taylor, Kevin Celuch, Stephen Goodwin, (2004) "The importance of brand equity to customer loyalty", Journal of Product & Brand Management, 13, 217 – 227 11 Teboul, J (1991) Managing Quality Dynamics, Prentice-Hall, London, UK 12 Tiernan, S., Rhoades, D.L., Waguespack, B Jr (2008), "Airline service quality: exploratory analysis of consumer expectations and operational performance in the USA and EU", Managing Service Quality, 18 (3), 212-224 Page | 75 13 To Ha, 2013, “Hang Khong lo chong vo”, http://hcm.24h.com.vn/thi-truong- tieudung/hang-khong-lo-chong-vo-c52a522762.html, accessed in 24th Feb 2013 14 Torbica Z M and Stroh R C (2001) “Customer satisfaction in home building”, 15 Journal of Construction Engineering and Management, 127 (1), 82-86 16 Zahorik, A.J and Rust R.T (1992), “Modeling the impact of service quality of profitability: a review”, Advances in Services Marketing and Management, 49- 64 17 Zeithaml, V.A (1988), "Consumer perceptions of price, quality, and value: a means-end model and synthesis of evidence", Journal of Marketing, 52, 2-22 18 Zeithaml, V.A and Bitner, M.J (1996), Services Marketing, McGraw-Hill, New York, NY 19 Zeithaml, V.A., Berry, L.B., Parasuraman, A (1996), "The behavioral consequences of service quality", Journal of Marketing, 60, 31-46 Page | 76 APPENDIX EVALUATE THE FACTORS INFLUENCING CUSTOMER LOYALTY OF VIETJET AIR Hello passengers, Now I am conducting a research about customer loyalty of the Vietnamese low cost Airline, Vietjet Please help me complete this questionnaire by choosing a number in each statement below All of your evaluations are very worth for me I am thankful to all of you for help GENERAL INFORMATION Your age: a Page | 77 To complete the questionnaire below, please make only one stick for each statement which is most suitable with your opinion The scale is from absolutely disagree to absolutely agree Code Explaination 12 34 SERVICE QUALITY (SQ) SQ1 Vietjet staffs/crews have formal attitude and professional working skills SQ2 Vietjet flights have been operated ontime based on estimate schedule SQ3 Vietjet provide flight information clearly and easily to understand SQ4 Vietjet staffs/crews show their enthusiasm while serving customers SQ5 Vietjet Air has a good policy to support disability passengers PRICE (PR) PR1 Vietjet ticket price is reasonable PR2 The fee for luggage is reasonable PR3 Food, baverage and gifts sold in flight have reasonable price PR4 Ticket price policy is suitable for every subject 10 PR5 Vietjet ticket price is more competitive than other airline‟s BRAND IMAGE (BI) 11 BI1 Vietjet is the famous airline in Vietnam market 12 BI2 When making decision to buy air ticket, Vietjet is your first think about 13 BI3 It is easy for you to recognize Vietjet Air‟s logo and Slogan 14 BI4 Vietjet‟s Advertises are attractive 15 BI5 You imagine good quality when seeing Vietjet‟s logo and signboard PERCEIVED VALUE (PV) 16 PV1 You feel safe and comfortable when flying with Vietjet 17 PV2 Vietjet staffs are very responsible 18 PV3 Vietjet‟ service is worthy with your payment 19 PV4 You think that taking flight with Vietjet is better than other means of transport 20 PV5 Vietjet‟s policies are reasonable Page | 78 PRODUCT (P) 21 P1 Vietjet Air has divesity classcification of ticket for choosing 22 P2 The attached benefits for each kind of ticket are reasonable with their price 23 P3 Compensation policies for customers in case of delayed or canceled flights that is suitable 24 P4 Vietjet Air operates many domestic and international flight routes 25 P5 Vietjet Air has a various time schedule for each flight to chose CONVINIENCE (C) 26 C1 Vietjet has more ticket agent 27 C2 There are many payment method for choosing when you buy Vietjet Air’ ticket 28 C3 Vietjet Air’s ticket is flexible for changing date, route of flight, or name of passenger 29 C4 Online check-in system of Vietjet Air is popularity 30 C5 Vietjet Air has linked with many bank in Vietnam CUSTOMER LOYALTY (CL) 31 CL1 You are willing to fly with Vietjet Air in future 32 CL2 It is easy for you to ignore Vietjet‟s mistake 33 CL3 You are willing to introduce Vietjet to your families/friends 34 CL4 It is defficult for you when deciding to fly with other Airlines 35 CL5 You are going to be Vietjet frequent customer Page | 79 ... measure of airlines in the eyes of customers - Based on the study of customer loyalty with the services of Vietjet Air Joint Stock Company in recent years, the author will propose a number of measures... Research topic: "FACTORS INFLUENCING CUSTOMER LOYALTY OF VIETJET AIR JOIN STOCK COMPANY " was conducted from Oct 2015 to Dec 2015 Research objective:  Determine the wishes of customers for airline ... buy Vietjet Air? ?? ticket  Vietjet Air? ??s ticket is flexible for changing date, route of flight, or name of passenger Page | 29  Online check-in system of Vietjet Air is popularity  Vietjet Air