(LUẬN văn THẠC sĩ) the impact of customer satisfaction, service quality and brand image on customer loyalty towards the restaurants of the tourist village in ho chi minh city

The results reveal that customer satisfaction, the components of service quality and the brand image of the restaurant have positive impact of customer loyalty... This study had also poi

1

ACKNOWLEDGEMENTS

I would like to express my appreciation to Dr Tran Ha Minh Quan for his motivation, support This thesis would not be completed without his support, enthusiasm He transferred professional knowledge of research methodology to

me has improved my research skills and provided useful guidance throughout my academic career

I greatly appreciate to the board of managers in Van Thanh Tourist Village, Tan Cang Tourist Village who allowed me to conduct the survey at these restaurants

I would like to thank the customers at the restaurants of the Tourist Village in Ho Chi Minh City for their participation of effective data collection

I greatly thanks to Mr Nguyen Van Cuong, who spent hours with me for the interview

Lastly, I offer my regards to all of those who supported me during the research

Ho Chi Minh, Viet Nam

April, 11 th , 2012

Nguyen Minh Hau

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS - HOCHIMINH CITY

NGUYỄN MINH HẬU

MASTER’S THESIS

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS - HOCHIMINH CITY

NGUYỄN MINH HẬU

BRAND IMAGE ON CUSTOMER LOYALTY TOWARDS THE RESTAURANTS OF THE

MASTER’S THESIS MASTER IN BUSINESS ADMINISTRATION

ABSTRACT

Nowadays, together with the social economic improvement, the living standard is increasing and having lots of restaurants operating in Ho Chi Minh City To satisfy the customers’ needs, restaurants try to improve their quality of service and find out the better ways to attract more customers But it seems to be inefficient to keep old customers and attract new customers Why does inefficient state happen and last for a long time in restaurant industry? The researchers pay attention to find the reason for the problem and discover the main factors influencing to customer loyalty in restaurant industry

On the other hand, one of the interesting tourist types is the Tourist Village It exists as the resort or the simpler type: restaurant If resorts mainly exist in the provinces, restaurants of the tourist village popularly exist in Ho Chi Minh city The restaurants of the tourist village possess some advantageous points compare

to the normal restaurants, such as: having a large square, can connect luxurious structure of the restaurant to the use of air, atmosphere and tree building But even though, possessing these advantages, the number of customers come to the restaurants of the tourist village have also decreased Whether may It be influenced by the common rules which have affected to restaurant industry or having another factors aiming at the tourist village not? This is a practical question and to supply a correct answer requires a research to show full of theoretical side, practical side

This thesis was conducted aiming at solving these problems and used interview A main survey was undertaken with a sample of 205 customers in two sites: The restaurant of Van Thanh Tourist Village, The restaurant of Tan Cang Tourist Village The results reveal that customer satisfaction, the components of service quality and the brand image of the restaurant have positive impact of customer loyalty

Based on the findings, it is recommended that the restaurants of the tourist village

in Ho Chi Minh city should consider the long term strategy as well as increasing marketing program

Key words:

Customer loyalty, customer satisfaction, the brand image of the restaurant

TABLE OF CONTENTS

Acknowledgements I

Abstract II

Table of contents .III

CHAPTER I: INTRODUCTION

1.1 Research background .1

1.2 Problem definition 3

1.3 Research questions & objectives 4

1.4 Research delimitation 5

1.5 Research methodology and research design 6

1.6 Significance of the research .6

1.7 Thesis structure .6

CHAPTER 2: LITERATURE REVIEW & THEORETICAL MODEL 2.1 Loyalty concept 8

2.2 Review of previous articles and theses on customer loyalty 14

2.3 Service quality concept 17

2.4 Customer satisfaction concept 19

2.5 The brand image concept 22

2.6 Impact of service quality, customer satisfaction, restaurant image on customer loyalty .27

2.7 Factors contributing to customer loyalty .28

2.8 The conceptual framework 29

2.9 Theoretical model and hypotheses 30

CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research process 32

3.2 Measurement .34

3.3 Preliminary survey 37

3.4 Sampling method 39

3.5 Data analysis method 39

CHAPTER 4: DATA ANALYSIS AND RESULTS 4.1 Descriptive data analysis 40

4.2 Measure assessment 41

4.3 Hypotheses testing 44

4.4 The regression model 44

4.5 Interpretation and Discussion 45

CHAPTER 5: CONCLUSION & IMPLICATIONS 5.1 Overview 47

5.2 Main findings 48

5.3 Theoretical implications 50

5.4 Managerial implications 51

5.5 Future research 53

References 54

Appendix 61

List of tables 72

CHAPTER I: INTRODUCTION

1.1 Research background

When Viet Nam joint WTO in 2007, Viet Nam became a central point for tourist visiting because of its natural atmosphere and beautiful sight as well as characteristic cuisines To attract tourist around the world, hotel and restaurant industries play an important role on bringing value to customers If hotel supplies values related to destination for tourist visiting, restaurant sends characteristic cuisines for tourist As a result, hotel industry has a close relationship to restaurant industry because they aim at one objective as tourist Take this rules, lots of resorts had opened to supply both of hotel and restaurant services Normally, resorts set

up at places where are near to beach and resorts focus on tourist who has the demand on enjoying beautiful landscape and natural atmosphere Restaurant seems

to be one of a small part of resorts to serve customer about cuisine, and hotel plays

a central point to make profit for resort because travelers tend to book room on hotel over night during several days

But in Ho Chi Minh City, resorts have individual characteristic where restaurant services also play dominant role not less than hotel services The reason is due to

the demands of customers In table 1.1, the number of respondent who visit to Ho

Chi Minh city by attractive side is 43% and is smaller than the respondent who visit to other province As a place in which have many small rivers and lack of mountain or beach, Ho Chi Minh City has not a dominant point about beautiful sight compare to many provinces in which have beach or mountain but Ho Chi Minh city can be thought as a place where tourist can enjoy delicious Vietnamese food and cuisines from around the globe, including French, Indian, Mexican, Italian, Japanese, Thai and Chinese For this reason, tourist village in Ho Chi Minh

city had grown and can be seen as a type of resorts In table 1.2, the number of

respondent who visit to the tourist village by attractive side is 36% This is a small

percentage comparing to the respondent of who visit to star hotel and it implies that tourist village has not attractive landscape for visitors

In table 1.3, the structure of average expenditure out of tour for foreign visitors in

the tourist village shows that expenditure to food is 48.3% as the highest value compared to the expenditure to food of other accommodations This means that in tourist village, restaurant which supplies food and beverage play an important source of profit compared to other hotels which have restaurant component

Although tourist village mainly focus on cuisine services which create a large percentage of its profit but tourist can enjoy more values in here rather than normal restaurant Tourist village include restaurant which possesses a large square and hotel as well as yacht service, fish hunting service Because of its sophisticated structure, all of its service values have an impact on customer visiting but restaurant service play a central point to attract customer Although, restaurant is a part of supply chain of tourist village, but restaurant also compete strongly with other restaurant Especially, there are lots of restaurant in Ho Chi Minh city which provide cuisines service not only Vietnamese characteristic but also Asian or Europe characteristic To survive in this competition, restaurant on tourist village should reposition its value on two dimensions:

The first, the restaurant manager should define customer demands Understanding customer demands as well as analyzing factors influencing to customer loyalty is a key to make restaurant’s success

The second, the restaurant manger should define restaurant strength and character

in a relationship with other services of Tourist village Defining their character is very important and it requires define their brand image on customer perception There have been many studies on customer loyalty in restaurant industry to clarify what factors influence in loyalty as well as to supply information for restaurant manager making their solution Previous research on customer loyalty focuses on what main impact on loyalty in restaurant industry Cevded Avcikurt and Murat Dogdubay (2008) studied the determinants of customer loyalty by emphasizing on

the importance of food, service quality, ambiance, convenience Rasha Alli Eliwa (1993) focused on the image of restaurant to customer loyalty

Beside, there has been study on customer loyalty in the tourist village of Viet Nam country Nguyen Thi Tuyet Loan (2011) studied the impact of service quality, customer satisfaction on customer loyalty in the tourist village of Da Lat province This study had also pointed out that some factors have influence in customer loyalty in the tourist village, including price, service quality and customer satisfaction

So far there has been no research on customer loyalty in restaurant of the tourist village To approach the tourist village, determinants of customer loyalty in restaurant can be different from the result of previous research because of its characteristic It is also necessary to research on customer loyalty in restaurant on the tourist village in Ho Chi Minh city so as to out line marketing strategies, increase the profit of restaurant and so far create the compared advantages of the tourist village

1.2 Problem definition

In table 1.4, the number of tourist foreigner respondent who decide to visit

Vietnam by friends, relations in the tourist village is 18.2% and is smaller than other accommodations This means that the impression of visitors to the tourist village is not high and they are not willing to introduce to their relations or friends

It is a signal to consider about the customer loyalty forwards to the tourist village

as well as to the restaurant of the tourist village

In table 1.5, the number of tourist foreigner respondent on best impression

forwards to the tourist village is 30.3 percent for landscape, and 30.3 percent for cheap commodities The percentage of respondent to landscape of the tourist village is smaller than other accommodations so it can be considered that landscape is not an advantage side of tourist village On the other hand, cheap value makes strong impression for visitor forwards to the tourist village compared

to other accommodations So, beautiful side or cheap value is whether a factor influencing to customer loyalty in the restaurant of the tourist village or not?

On the other hand, in restaurant industry, a competition always exists and directly influences in lots of activities of restaurant Facing to competition, the restaurant

of the tourist village in Ho Chi Minh city is not outside from this rule In the restaurant of Tan Cang tourist village, the restaurant managers try to reduce price

of buffet and set menu to attract customer On the other hand, in the restaurant of Van Thanh tourist village, the restaurant managers improve the effectiveness of green areas policy to provide clean value for customers But following to the

internal statistic source of Tan Cang, Van Thanh tourist village (Table 1.6), during

the time of price reducing and green areas policy taken, the total of revenue of restaurant decreased slightly because of the amount of customer reducing So, what are factors which influence in customer loyalty in the restaurant of the tourist village in Ho Chi Minh city?

Another problem is that on the tourist village, restaurant is a part and when managers need an investment, they face financial pressure Beside restaurant investment, manager must figure out what items need improving and should be invested As a result, with the limitation of financial source, what should managers invest to restaurant to bring the most values for customer?

Clearly, keeping customer, creating customer impression is not easy and it must be considered carefully This thesis is to supply basic and useful information for restaurant manager on the tourist village finding out the best solution

1.3 Research questions & objectives

To solve the problems which are mentioned above, this research aims at finding out the answer for the following questions:

 What are the determinants of customer loyalty in the restaurant of the tourist village in Ho Chi Minh city? By defining the factors impacting on customer loyalty, the restaurant manager can make full solution strategies to attract

customer And when considering a systematic solution, it can eliminate the disadvantage side of decisions on marketing

 What is the model to show the level of influences affect to customer loyalty forward to the restaurant of the tourist village? By addressing the model of customer loyalty, the restaurant manager can define what should invest in a line of prior levels It is necessary in accordance with limiting financial source On the other hand, through the model of customer loyalty, it can supply what model for the connection between restaurant service and other services on the tourist village

Based on the above research question, the study objective is to examine:

1 The impacts of customer loyalty in the restaurant of the tourist village in Ho Chi Minh City

2 The model of influences affecting to customer loyalty in the restaurant of the tourist village in Ho Chi Minh City

1.4 Research delimitation

The research was limited in some dimensions:

The research only focused on some factors affecting to customer loyalty, including customer satisfaction, service quality and brand image Next study can focus on the full of image component affecting to customer loyalty By addressing the effect of the image to customer loyalty, restaurant manager can build an image of the restaurant properly

The research was narrowed to the age lower 13 years old The research only focused on adults who had enough knowledge and made decision to revisit or not Next study can widen the framework of age to address factors influencing in young customer loyalty In some cases, children have the power to convince their parents choosing a suitable restaurant of the tourist village

The research did not focus on the variety of customers, not to separate the result follow to age, gender So, the result of this result only supplies the overall picture

of customer loyalty in the restaurant of the tourist village in Ho Chi Minh City

1.5 Research methodology and research design

The study used a survey to receive information of customers This survey was conducted at two sites: Tan Cang tourist village, and Van Thanh tourist village There were total of 230 samples sent to customers who visiting to restaurant of these tourist village There were total of 205 samples which were received to data collection

After receiving data, analysis of variance was used to identify the significant mean

on the customer loyalty

1.6 The significance of the research

As mentioned above, the research not only supplied an overview picture of customer loyalty in the restaurant of the tourist village, but also found out the model of the influences affecting to customer loyalty in accordance with the hierarchy Through the result, managers can make a conclusion what should consider when making a systematic strategy

1.7 Thesis structure

Chapter 1: Introduction This chapter is to supply a brief overview of the research background, problems and objective This chapter also defines the limitation, the method and the significant value of the research

Chapter 2: Literature review and conceptual model The chapter comprises a deep review of literature as well as previous research Based on literature review, conceptual model was built

Chapter 3: Research methodology This chapter focuses on research process, define measurements, preliminary assessment and methods to collect samples and

to analyze data

Chapter 4: Data analysis and results This chapter comprises the official assessment of measure, hypothesis testing in accordance with three restaurant of the tourist village

Chapter 5: Conclusion and implication Main findings are drawn out Next to theoretical implication and managerial implication as well as the recommendations for the restaurant of the tourist village in Ho Chi Minh city

CHAPTER II: LITERATURE REVIEW & THEORETICAL MODEL

This chapter provides an overview of available research on customer loyalty in restaurant industry as well as supplies the relevant theories Based on the literature review, the conceptual framework is built

2.1 Loyalty concept:

2.1.1 Loyalty definition:

Loyalty is a concept which is used in marketing field so much In general, loyalty refer to the attachment of customer to a company’s products, services and people (Jones and Sasser, 1995) So, loyalty plays a central role for a company to keep customer, to make sure repurchasing activity and hence, increasing revenue, profit When more and more companies are established, the competitiveness is very high and the survival, improvement of a company depends on customer loyalty Companies try to keep customer to eliminate the ability of customer switching to another brand So, Nguyen and Leblanc (2001) considered loyalty as the ability of customer resistance to switch to another brand Depend on the type of service or product, loyalty is defined to clear the meaning of customer attachment: In service field, loyalty is considered as the ability of customer returning to service provider and in product field, loyalty refers to customer’s repurchasing activity

In the thesis, the definition of loyalty is regarded to the attachment of customer to

a company’s products, services and people Moreover, its concept focuses on the following main points:

The first, loyalty not only focuses on customer’s repurchasing activity but also the intention to recommend and maintain a positive towards the service provider ((Bloemer at al., 1999, Gremler and Brown 1999, Shoemaker and Lewis 1999) I highly appreciate a customer’s positive attitude because it leads to behavioral customer, not only repurchasing, revisiting products or service bust also decide to the resistance of switching to another brand

The second, because of my thesis focusing on service field, loyalty is more to concentrate on customer’s revisiting to use service than customer’s availability of purchasing to products It shows the effectiveness of a restaurant not only tries to sell foods and relevant services but also to attach customer for long time According to Dick and Basu (1994) and Stank et al., (1999), loyalty is a long term commitment to keep favorable attitude and to repurchase over time

The third, customer loyalty is long term commitment to repurchase products, services over time This side reflects to the main character of customer loyalty It requires that service provider must always focus on customer loyalty and on the returning, possessing customer loyalty also is to possess the value of customer for long time When customers are loyal, they are trust to the services and they are ready to repurchase even though having other brands attracting to them

2.1.2 Loyalty dimensions:

Because the definition of loyalty not only regards to the customer’s repurchase but also focus on the positive attitude to service, products for a long time, so the specialists considered loyalty including behavioral and attitudinal dimensions According to Kandampully and Suhartanto (2004), loyalty is a concept which covers the behavioral and attitudinal dimensions These dimensions focus on how customers respond to products, services as well as the attitude to recommend, introduce products, services to others Researchers found that these dimensions show the importance of customer loyalty to restaurant’s profit The customer’s behavior on repeat dining for a specific restaurant is the behavioral dimension (Bowen & Shoemaker, 1998) Attitudinal dimension refers to a customer’s intention on a a specific restaurant and recommend (Getty & Thompson, 1994) Attitudinal and behavioral dimensions are logically integrated and attitudinal loyalty plays an important role of good indicators to aim at existing of behavioral loyalty This approach implies that restaurants should measure the customers’

loyalty by attitudinal indicators to make sure that customers are welcome to revisit

In the cover of the thesis, this concept is emphasized as attitudinal dimension of loyalty concept and to measure customer loyalty Based on the measurement of customer intention, attitudinal dimension show a positive correlation to behavioral dimension and to overall customer loyalty When customers are pleasure of restaurant’s services, they are loyal and they will revisit to a specific restaurant if they have possible Moreover, when approaching attitudinal dimension, the loyalty being considered as a long term commitment is clearly illustrated Because of having a positive attitude to restaurant’s services, customers have the resistance of switching another brand and when customer’s satisfaction towards specific restaurant is increasing enough full, customers’ commitment is established In this side, loyalty intension is positive correlation to customer satisfaction (Gremler and Gwinner, 2000)

2.1.3 Loyalty prerequisites

As I mentioned above, customer satisfaction is a very important factor to loyalty intention, so customer satisfaction is one of prerequisites of loyalty Beside, service quality also influence to customer loyalty According to Gremler and Brown (1997); Cronin and Taylor (1992), customer satisfaction and service quality are prerequisites of loyalty While customer satisfaction influences customer intention, service quality has an effect on customer satisfaction and directly influences customer loyalty (Lee, 1998) According to Danaher and Mattsson (1998), high customer satisfaction and service quality result in higher customer loyalty

Besides, having many factors influence to customer loyalty, such as: customer emotions, personal relationship or the image of a company According to Magnini and Honeycutt (2005), customer emotions drive customer satisfaction, loyalty and they discussed face recognition and name recall being important to customers and

its effect on customer loyalty Gutek et al (1999) also indicated that customer having a personal relationship with a specific employee whom shows higher levels

of service usage By the way of keeping personal relationship to customers, service provider gets their satisfaction and loyalty In restaurant industry, the image of a restaurant is very important to customer loyalty According to Downs and Haynes (1984), image of restaurant is related to customer loyalty A good image can create good feeling of customer about the overview of service quality and set up customer satisfaction, loyalty

Although having lots of factors influencing to customer loyalty, the main way to retain customers is to improve customer service quality and satisfaction (Berry & Parasuraman, 1991 ; Zeithaml & Bitner, 1996)

2.1.4 The effect of customer loyalty:

According to Markey and Hopton (200, p.135) showed that customer loyalty was very important to the success of a company on three dimensions:

The first, revenue and market share grow by building repeat sales and referrals When customers are swept, they continue to buy products and use services, and the more, increasing customer loyalty, the more, controlling repeat sales On this dimensions, customer loyalty is very significant because it plays a key for company to survive

The second, cost will be reduced because the expense of getting new customer often is higher than the expense of keeping old customer So, company increase customer loyalty is also reducing the total of cost by even though not focusing on expense of new customer, but also having the high revenue and profit

The third, employee retention improves because of the link to customer satisfaction increasing and service quality increasing Researchers had found the link between customer loyalty, customer satisfaction and service quality As a result, customer loyalty improves as the consequence of better service quality The

way to improve service quality is also to be considered as increasing employee retention

2.1.5 Loyalty in restaurant industry:

In restaurant industry, customers loyalty is very important because of the competitiveness is very high and the ability of loosing customer is a common threat to most of restaurants Many researchers pointed out that loyalty is a very important key for restaurant managers to improve the total of revenue and profit Customer loyalty is an indicator for restaurant manager to control customer revisit and win the competitors by keeping stable revenue from customer loyalty and attracting to new customers Having customer loyalty is also a good signal for restaurants manager to make sure the quality of service Specialist had indicated lots of factors to customer loyalty towards specific restaurant:

The first, food is very important to determine customer loyalty (Clark and Wood, 1998) When customers arrive to restaurant, mostly, their first demand is the quality and range or type of food When food is delicious, it effects to customer notice, pleasure To supply this demand, most of restaurants have food and beverage manger and carry out food improvement strategy Nowadays, if restaurants possess a variety of type and delicious food, they seem to be dominant compared to another

The second, front line employee is also attractive and retain customer (Chebat and Slusarczyk, 2005) Front line employees more often meet customer firstly and transfer the character of restaurant to customers Obviously, front line employees have strongly positive influence to customer if they are trained to deal with customers complaints and be aware of customer’s emotion Moreover, front line employees easily create personal relationship to customer and on this method, customer intention to revisit to restaurant if they like and need front line employee’s service

The third, according to Kandampully and Suhartanto (2000), a restaurant image is

an important variable that influences guest’s visiting decisions Because restaurant

is not only a place for enjoying delicious food but also a place for guests making their relationship, showing their style, so restaurant image can create points to their preferences If restaurant image shows the major of customer preferences, customers will be please and ready to revisit and otherwise, they don’t like and choose another restaurant Perceiving of restaurant image strongly impacting on customer preferences, many restaurant try to build their specific image and character to attractive groups of customers whom are suitable

Besides, specialists also indicate other factors influencing to customer loyalty in restaurant, such as: cost/value, the place, etc by the way of forming customer’s experience and determine whether they revisit or not

In conclusion, although having lots of factors to customer loyalty, but they can be summarized into many main groups: The service quality and the image of restaurant The service quality group including quality of food, quality of front employee’s service, cost and value and the place of restaurant can be influence to customer satisfaction, customer loyalty The image of restaurant, including the atmosphere, the structure, the brand name, the decorating can be proper to customer’s preferences and influence to customer loyalty

2.1.6 Measurement of loyalty:

According to Bowen and Chen (2001), loyalty can be measured by three distinctive approaches: 1- Behavioral measurements, 2- Attitudinal measurements, 3- Composite measurements

Behavioral measurements refer to a customer’s repurchase (Bowen and Shoemaker, 1998) Based on the amount of purchasing time or revisit time, researcher can determine the degree of customer loyalty This measurement is suitable to the product field, when can easily count the number of time which customer buys products

Attitudinal measurements refer to emotional and psychological attachment (Baloglu 2002) Based on the positive or negative attitude, researchers can determine the overall of customer loyalty This measurement is proper to the service field, when emotional, attitudinal side play an important role to customer loyalty

Composite measurements are the combination of behavioral and attitudinal dimensions According to Bowen and Chen (2001), in this measurement, loyalty is determined by preferences, frequency of purchase or visit and propensity of brand switching

2.2 Review of previous articles and theses on customer loyalty

2.2.1 Review of previous articles on customer loyalty:

According to Fassnact and Daus (2004, p.5-7), factors which impact on customer loyalty are classified into three groups:

The first, company related determinants focus on the factors refer to the supplier itself or the goods, services It means that based on restaurant reputation or its product quality, its service quality, customers choose to attach to company In this group, reputation or brand image of the restaurant is very important because it provides the symbol for customer loyalty

The second, relationship related determinants focus on the factors refer to the relationship between customer and supplier By the way to provide service or product, this relationship is built and to influence in customer loyalty Based on their experiences, their trust and commitment, customers choose restaurant to attach for long time

The third, customer related determinants focus on the factors refer to customer characteristics Customers tend to choose restaurant which is proper to their condition living and their preferences It also analyses why with the same restaurant and its service, but one group of customers like and to be loyal but

another group does not like and not to be loyal In this group, affect and involvement are the determinants of customer loyalty

Fassnacht and Daus (2004, p.8-9) also grouped the determinants of customer loyalty in empirical researches: Product and service quality; Product line availability accessibility; Image and Reputation; Customer loyalty program; Intensity and quality of business relationship; Own experiences and recommendations from others; Trust; Commitment; Economic switching barriers; Psychological and social barrier to switching; Socio-demographic customer attributes; Affect; Involvement; Importance of the product for the customer; Pattern of customer’s behavior; Expectations; Utility from consumption / Business relationship; Attractiveness competitor offers / Incentives to change; Proactive improvement As a result, product and service quality; image and reputation; trust; commitment; proactive improvement are the determinants which had been concentrated to reveal It implies the important impacts of service quality, product quality, image and reputation as well as trust, commitment, proactive improvement on customer loyalty

2.2.2 Review of previous theses on customer loyalty in restaurant industry:

There are many articles and theses researching the impact on customer loyalty in restaurant industry

On the thesis of customer loyalty in the specialty restaurants: An example from Istanbul by Cevded Avcikurt and Murat Dogdubay (2008), they presented the model of five independent variables affecting to customer loyalty, including food quality, service quality, ambiance, convenience and the overall (satisfaction from all things together)

The result of the research was food quality, service quality, ambiance, convenience and the overall (satisfaction from all things together) positive influencing to customer loyalty Although, this research defined food quality as a

part different from service quality but the conclusion also focus on service quality, satisfaction as the key factors to customer loyalty

On the study of customer loyalty and the image of the Fine dining restaurant by Rasha Alli Eliwa (1993) presented the model of two independent variables affecting to customer loyalty, including customer satisfaction and the image of the restaurant

The result of the research was customer satisfaction and the image of the restaurant positive impacting on customer loyalty This result implied that the image of restaurant as a key factor to drive customer loyalty in restaurant industry

On the study of factors influencing customer loyalty towards fast food restaurants

in Malaysia by Hossein Nezakati, Yen Leee Kuan and Omid Asgari (2011), they stated nine factors influencing customer loyalty: product quality, product attribute, brand name, store environment, service quality, promotion, price, trust and satisfaction Those factors could be grouped into four main groups: Service quality including product quality, product attribute, service quality, promotion, price; the image of restaurant including store environment, brand name; the customer trust and the customer satisfaction

On the research of factors influencing customer loyalty towards fast food restaurants by Hossein Nezaki, Yen Lee Kuan and Omid Asgari (2011), the model

of customer loyalty were:

Customer loyalty = constant value + 0.586 * product quality + 0.285 * promotion + 0.219 * brand name + 0.407 * product attribute + 0.326 * store environment + 0.3 * service quality + 0.361 * price + 0.455 * brand trust + 0.385 * customer satisfaction This research implied that in the fast food restaurant, lots of factors affect to customer loyalty and the brand, customer satisfaction, product quality, service quality as the main factors

Based on previous articles and theses, there are three main groups of factor influencing to customer loyalty: Customer satisfaction, service and product quality, brand and image of the restaurant Although, these factors are researched and discussed too much, but when approaching customer loyalty in the restaurant

of the tourist village is a new article, so it is necessary to review the influence of these factors to customer loyalty

2.3 Service quality concept:

2.3.1 Service quality definition:

Service is a concept which is used to differentiate with product Compared with product, service is considered as intangible, heterogeneous, unable to be kept in stock, etc Gronroos (1990) defined service as follow: “A service is a process consisting of a series of more or less intangible activities that normally, but not necessarily always, take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems” This concept implies that service is a type of the relationship between provider and customer which including lots of activities on several dimensions from resources, goods, systems to solutions

Based on the above concept, service quality can be thought as the quality of service activities In this view, service quality is different from product quality based on the difference between service and product However, many researchers had different approach to service quality concept When customers buy product, they have their judgment about a product overall quality According to Zaithaml (1998), service quality as the customer judgment about the overall excellence of product This concept implies that service quality being related to overall sides: employee’s performance, feature, product quality, conformance, etc to reflect how customers perceive service value So, service quality and customer satisfaction are

closely related (Lee, 1998) Service quality has an impact on customer perception

as well as influence in customer purchasing choices (Bruck et al, 2000)

In this thesis, service quality can be understood more widely than product quality

If product quality aim at the quality of product, to supply information about whether product is good or not, service quality exposes more features impacting

on customer According to Gravin (1987), service quality includes the eight dimensions: performance, feature, reliability, conformance, durability, serviceability, aesthetics, and perceived quality Moreover, Gravin also suggested that controlling few dimensions will result in managing customer perception of quality which will lead to higher customer satisfaction On the other hand, Brady and Cronin (2001) indicated different dimensions of service quality, including organizational, technical and functional quality, the service product, the service delivery, the service environment, the responsiveness, the empathy, the assurances and the tangibles related with the service experience This approach helped to insight in service quality by focusing on main factors which strongly influence to customer perception In general, although many researchers had pointed different dimensions but they also agreed that service quality is a concept of overall quality and being related to customer satisfaction

2.3.2 Service quality in restaurant industry:

In the restaurant industry, service quality is also considered as overall quality which restaurant brings values to customers, including food, employee’ service, price, the image of restaurant, the environment, atmosphere, etc Moreover, service quality is very important because restaurant industry is a type of service industry and so, all activities of restaurant will result in customer perception very much Although, food quality is considered to be an important part of the product quality (Siguaw & Enz, 1999) and being a significant determinant of dining satisfaction (Yuksel, 2002) but when the customer’ living standard improve quickly, more and more customers pay attention to the image of restaurant which

satisfy the value of customer Customer intend to choose proper restaurant including overall service quality insteal of choosing restaurant with delicious food

So, Henson and Trail (1993) pointed out food quality into four attributes as: food safety, nutrition, value and package

According to Soriano (2002), service quality in the restaurant industry is summarized into four dimensions as follows:

1 Quality of food: menu variety, innovative food, presentation of food, fresh ingredients and food consistency

2 Quality of service: equipment, appearance of employees, courtesy of employees, waiting time before being seated, waiting time before food arriving, and waiting time before paying the bill

3 Cost/ Value: competitively priced food and wine

4 Place: appearance, ambience of atmosphere of a restaurant, bathroom, telephone service parking

In this thesis, I focus service quality based on the content which Soriano reffered

to four dimensions

2.3.3 Measurement of service quality:

Based on Soriano view, the measurement of service quality is: quality of food, quality of service, cost/value and place

2.4 Customer satisfaction concept:

2.4.1 Customer satisfaction concept:

In the competitive business, lots of companies take note to marketing activities with the outcome as customer satisfaction Fornell (1992) defined satisfaction as

an overall evaluation dependent on the total purchase and consumption experience

of the target product or service performance compared with repurchase

expectations over time This definition insights overall evaluation is a substance of satisfaction In restaurant industry, customers receive lots of values from restaurant’s activities and the total of values will result customer satisfaction This definition also pointed out the relationship between customer satisfaction and customer’ total purchase On the other hand, Oliver (1997, 1999) referred to satisfaction as pleasurable fulfillment which is sensed by customers in the consumption, including need, desire, goal, etc It means that satisfaction is a result when customers satisfy their need, desire or goal

Customer satisfaction is an evaluation between cost and benefit and play an important role in maintaining a relationship between service provider and customers Customer satisfaction helps to increase the customer motivation of choosing and continued buying products or services

Customer perception is used to measure customer satisfaction According to Lee (2008), five emotions perceived by customer as below to show satisfactory:

Satisfaction: Customer accept product or service

Content: Product or service bring a happy or positive feeling to customer

Relieved: Product or service remove negative state

Novelty: Product or service bring freshness or exciting to customer

Surprise: Product or service bring unexpectedly pleased to customer

In this thesis, I mainly focus on the overall evaluation of customer as a concept of customer satisfaction

2.4.2 Customer satisfaction in restaurant industry:

Customer satisfaction is a key factor for restaurant’s managers to attach customers and make sure stable revenue increasing McColl-Kennedy and Schneider (2000) and Reichheld and Sasser (1990) pointed out that customer satisfaction is important for a restaurant success Moreover, Cacippo (2000) considered that if customer loyalty increase by 5%, it will result in increasing profits by 25% These figures show the importance of customer satisfaction to restaurant success Also,

customer satisfaction theories, applied by consumer behaviorists (Almanza et al., 1994; Johns and Tyas, 1996) to food service implied that customer satisfaction leads to positive behavioural intentions as well as repurchase or return patronage

In restaurant industry, customers are very important because they can spread words of mouth to others about whether they satisfy or not A restaurant can not survive without a special source of customer and so, customer satisfaction play a key determinant to create groups of loyal customer A very satisfied customer is nearly 6 times to be loyal with the restaurant more than a normally satisfied customer So, when restaurant’s manager creates a small increasing in the level of customer satisfaction, it will result in enough improving in customer loyalty and make a significant change in restaurant revenue According to Jone (1990), highly satisfied customers are much more loyal than satisfied customer

As mentioned above, customer satisfaction is a total evaluation between cost and benefit and Lee (2008) also pointed five emotions perceived by customers as signals for satisfaction In restaurant industry, perceived price fairness is considered an important factor for customer satisfaction (Anderson at al, 1994) Price fairness is to show benefit of service being strongly big than cost which customer must pay Personal factors also play an important role to determinant customer satisfaction According to Zeithmal and Bitner (1996), customer satisfaction is influenced by service quality, product quality, price and personal factor On the other hand, Greywitt and Tewet (2004) focused on customer dining experiences and pointed out four factors to influence in customer satisfaction: environment: 24%, meal: 30%, service: 26%, and cost: 21% Mill (2004) continued to list nine attributes of customers’ expectations towards restaurants as: quality of service, availability of parking, food quality and satisfactory preparation, convenient hours of operation, helpful employees, reasonable prices, cleanliness of operation, food safety and responsiveness to the customer’s complaints

2.4.3 Measurement of customer satisfaction:

Although, customer satisfaction is determined by lots of factors but in the cover of this thesis, mainly focus on the overall evaluation of customer to show the degree

of customer satisfaction The overall evaluation can be determined by customer respond Customers have their private perception of service quality and one of the ways to measure their satisfaction is to consider the outcome of their perception as well as the overall evaluation

2.5 Restaurant brand image concept:

2.5.1 The image concept:

According to Oxenfeldt (1974-75), image is an overall impression and a combination of factual and emotional material Image not only supplies a shape but also create a way to think and feel about the objective Oh (1995) also stated that customer not only hold their opinion about a store but also will feel certain ways towards it This concept implies that image is very important to customer by creating customer feeling way Image can help a store having positive impression

in customer as well as making what customer continue to feel or think based on certain way Lindquist (1975; Oh, 1995) pointed out nine categories as attribute groups to store image as follows: Merchandise, service, clientele, physical facilities, convenience, promotion, store atmosphere, institutional factor, post transaction satisfaction Through nine attribute groups, a store image is described not only a shape but also all activities to meet customer feeling

The restaurant image also influence too much in customer perception This image not only creates beautiful or professional material but also transfer signals to customer feeling Based on nine attribute groups which are mentioned above, the restaurant image can be described as follows:

Merchandise: refer to all goods and service of restaurant, including food, price, style of menu, guarantees

Service: refer to all service activities, including delivery service, waitress service

or service policies of restaurant

Clientele: refer to social class appeal, restaurant personnel

Physical facilities: refer to elevator, lighting, air conditioning, wash room, carpeting, etc

Convenience: refer to general convenience, location convenience, and parking Promotion: refer to advertising, display, symbols and colors

Restaurant atmosphere: refer to customer feeling of warmth, acceptance

Institutional factors: refer to reputation, reliability

Post transaction satisfaction: refer to customer satisfaction

The restaurant image has an impact on customers’ buying behavior (Kandampully

& Suhartanto, 2000) The image of restaurant influences in customer perception and create customer satisfaction as well as customer loyalty According to Normann (1991), the image influence customers’ minds through the combination

of advertising, public relation, physical image, word of mouth, and customer experiences with the goods and services

In the cover of this thesis, the restaurant image is concentrated to research as the dimension of image impact to customer perception Following to the this way, brand image concept is considered as refer to restaurant reputation on customer perception

2.5.2 The brand image concept:

Brand can be conceptualized as a “name, symbol, term or sign that are intended to identify the goods and services of one particular firm” (Kotler, 1991, p 442) Based on brand, customer can identify the characteristics of the restaurant and brand can be stored on customer perception Customer can remember the name or the symbol of the restaurant before they get their decision to visit Brand is very important and possesses strong power because it is the key to influence in customer decision Brand equity can be conceptualized as “marketing effects that

are uniquely attribute to the brand” (Keller, 1993, p.1) Brand equity implies the strength of brand in relationship with the effect of marketing Brand equity is the value of a company and is an objective of marketing strategy The more, the brand equity restaurant is strong, the more customers attend to use its services So, how

to improve brand equity is a key question in marketing field Brand knowledge can

be considered as the key to creating brand equity Based on the knowledge of brand, customer can evaluate or compare among restaurants and choose the appropriate restaurant Keller (1993) suggests that brand knowledge consists of brand awareness and brand image Brand awareness is a concept which reflects the strength of a brand’s presence in the customer’s mind (Pappu, Quester and Cooksey, 2005) Brand image is an important part of brand knowledge and can be conceptualized as perception about a brand as reflected by the brand associations that linked to the brand in a customers’ memory (Aaker, 1991, Keller, 1993)

As mentioned above, brand image is a concept to refer the impacting of brand associations to customers’ memory According to Gronroos (2000, p.287), “a brand is not first built and then perceived by the customers Instead, every step in the branding process, every brand messages, is separately perceived by customer and together add up to a brand image, which is formed in customers’ minds” So, brand image reflects the impact of a brand to customers’ mind by branding process, brand messages Reputation is a statement of strong brand image and must be built not just one time but for long time All actions of a company and especially, the actions aim at marketing strategy have an influence in brand image

by perception of customers with their attitudes, their emotions Keller (1993) also pointed out the structure of brand image, as figure 2.1 From the model, a brand image results from the favorability, strength and uniqueness of brand associations that held by the customer (Keller, 1993) Brand associations include attitudes, attributes and benefits about a brand

Brand attitude is the overall evaluation of a customer whom has about brand (Wilkie, 1986) Brand attitude reflects the perception of a customer forwards to the

brand Brand attributes refer to what customer thinks the product is or descriptive features that characterize the product Brand attributes include non product related and product related Product related attributes are those that “relate to a product’s physical composition” (Keller, 1993, p.4) Non product related attributes defines

as “external aspects of the product or service that relate to its purchase or consumption” (Keller, 1993, p.4) User imagery can be considered as a non product related attribute when associated with the characteristics of demographics

or psychographics Brand benefit refers to what customers think the product or service can bring value to them Brand benefit includes functional, symbolic, experiential side (Jaworski and MacInnis, 1986) Functional benefits are the effectiveness of satisfying customer needs associated with the problems prevention or removal (Kim, Forsythe, Gu and Moon, 2002) Symbolic benefits are associated with underlying needs of social approval, self esteem and self concept (Keller, 1993) Experiential benefits relate to how customer feels when using the product, service and often satisfy cognitive stimulation and sensory pleasure needs (Orth and De March, 2007)

Through the structure of brand image, the important point can be concluded that its concept related to overall perception, evaluation to supplier image Brand and image are the concepts which are closely connected Customers perceive the image of a supplier and form their perception By this way, brand image has been set up and in return, it influences in customer loyalty

Figure 2.1: The structure of brand image

2.5.3 Measurement of the restaurant brand image:

Strength of brand association

Type of brand associations

Attributes Benefits Attitudes

Non product related

Product related

imagery

User imagery Price

Functional

Symbolic Experiential

The restaurant brand image can be measured by customer perception and evaluation of restaurant brand Based on the structure of brand image, the measurement can focus on brand attitude, brand benefit from customer perception

2.6 Impact of service quality, customer satisfaction, restaurant image on customer loyalty:

2.6.1 Impact of service quality on customer loyalty:

Service quality is a key factor for restaurant manager to create and improve customer loyalty By the perception of customer to service quality, customer define what goods and services are good and they continue to use or purchase goods or services long time So, Lee (1998) reasonably concluded that the perceived product and service had an effect on customer satisfaction and directly influenced customer loyalty Nowadays, service quality is defined as the method for manger to control customer loyalty and create long time relationship with customer Lack of service quality will result in lack of basic foundation of customer satisfaction and will lead to the decreasing in customer attention So, the hypothesis is given that the component of service quality has a positive impact on customer intention to revisit specific restaurant (H2)

2.6.2 Impact of customer satisfaction on customer loyalty:

To research this relationship, Fornell (1992) examined 27 different businesses and stated that loyal customers are not necessarily satisfied customers, but satisfied customers likely tend to be loyal customers It means that satisfaction influence in loyalty and the way to increase the amount of loyal customer is to improve customer satisfaction Following to this view, Jones (1990) also pointed out that highly satisfied customers are much more loyal than satisfied customers and any

drop in total satisfaction results in a major drop in loyalty So, the hypothesis is given that the customer satisfaction has a positive impact on customer intention to revisit specific restaurant (H1)

2.6.3 Impact of the brand mage of restaurant on customer loyalty:

Lessing (1973) had examined the relationship of restaurant image and customer loyalty As a result, the image is considered as an influence to customer loyalty Reputation is a statement of strong brand image, so brand image may impact on customer loyalty On the other hand, Tepci (1999) and Fassnacht and Daus (2004) also pointed out the impact of reputation to customer loyalty So, the hypothesis is given that the brand image of restaurant has a positive impact on customer intention to revisit specific restaurant (H3)

2.7 Factor contributing to customer loyalty:

According to Tepeci (1999), customer loyalty can be created by many factors, as bellows:

Awareness: Guest awareness can result in their loyalty At the awareness stage, people who are potential customer know that restaurant exists and also during this stage, the restaurant provide information to create customer awareness about its service (Aaker, 1991; Tepeci, 1999) The more the customer is aware of the restaurant service, the more the posibility that potential customer visit and use restaurant service (Tepeci, 1999)

Reputation: When restaurant has their reptutation, it can easily attract to more customer by word of mouth activity (Rogerson, 1983) Reputation also is considered that restaurant keeps their promise on service quality and customer can

be pleased with the satisfaction on their expectations In maintaining reputation, the promised quality of service must be delivered (Tepeci, 1999)

Image: Building a positive image is also considered the step to retain customer loyalty (Tepeci, 1999) The image can create special character to distinguish its service from their competitors’ service So, it creates a key source of customers who like its image as well as its characters According to Berry at al., (1988) the image not only is the name but also includes excellent service, atmosphere, colors, symbols

Promotion: Customers intent to choose restaurant which has promotion strategy strongly because they evaluate profit will be more than cost So Tepeci (1999) stated that promotion is one of reason for customer attending restaurant Promotion can create new value for customer as well as create a special symbol for restaurant compared with their competitiors

Perceived quality: According to Elliott (1996), customer feels comfortable with familiar restaurant and versus unfamiliar restaurant and this causes brand-leading products which makes price premium over their competition It implies that customers tend to choose familiar restaurant because they understand service quality from their experience and expect a good quality for the next time By this way, customer loyalty is developed

Innovation: According to Tepeci (1999), managers should consider which innovation is implemented Innovation creates new value for customers and it can refresh service quality to make customer exciting But innovation must be carefully considered because it also could create dissatisfied factors to customer

In general, innovation is a positive impact on customer loyalty Innovation help to maintain a restaurant current market share (Victorino et al, 2005)

2.8 The conceptual framework:

In the cover of this thesis, the impacts on customer loyalty are, as bellows:

Service quality: As mentioned above, effect of service quality to customer loyalty

is strong Service quality includes quality of food, quality of service, cost/value and place

Customer satisfaction: As mentioned above, satisfaction directly influence customer loyalty and many researchers also pointed out that the more the satisfaction develop, the more the loyalty increase Customer satisfaction is considered as an overall evaluation on food, service, value which compared to cost

The brand image: As mentioned above, brand image is an important factor to customer loyalty and it creates a key source of customers who like its brand image

as well as its characters The brand image of restaurant which is measured includes customer attitude forward to the brand of restaurant and the brand benefit

2.9 Theoretical model and hypotheses

Return to research questions, theoretical model attempt to define the main factors impacting on customer loyalty in the restaurant of The Tourist Village in Ho Chi Minh city Because of the conceptual framwork, I only focus on the influence to attitudinal dimension of customer loyalty

Through review of above literature, I assume the hypothesises, as bellows:

Hypothesis 1: The overall customer satisfaction has a positive impact on customer intention to revisit specific restaurant (H1)

Hypothesis 2: The service quality has a positive impact on customer intention to revisit specific restaurant (H2)

H2a: The quality of product has a positive impact on customer intention to revisit specific restaurant

H2b: The quality of service has a positive impact on customer intention to revisit specific restaurant

H2c: Cost and value of service has a positive impact on customer intention to revisit specific restaurant

H2d: Place and atmosphere has a positive impact on customer intention to revisit specific restaurant

Hypothesis 3: The image of restaurant has a positive impact on customer intention

to revisit specific restaurant (H3)

So, the research model is:

The brand image

(H3)

(H1)

(H2)

- The quality of product

- The quality of service

- Cost and value

- Place and atmosphere

CHAPTER III: RESEARCH METHODOLOGY

In chapter II, review of literature was presented In chapter III, research methodology is presented and this chapter includes five parts: research process; the measurement; the preliminary assessment of measurement; the sampling method and the data analysis method

3.1 Research process

The research process included a preliminary survey and a main survey The preliminary survey was conducted by means of questionnaires sent to 20 customers who used services at Tan Cang restaurants Based on the outcome of this survey, the mean of questionnaire was checked This survey also checked the appropriate measurement scales which was made with the real situation of the restaurants on the Tourist village The main survey was undertaken by means of questionnaires sent to 230 customers at Tan Cang and Van Thanh restaurants The survey was a quantitative research Cronbach alpha and exploratory factor analysis was used to test the hypotheses

The method of creating questionnaire was based on the measurement of dependent and independent variables after checked in real situation at the Tan Cang Restaurant of the tourist village

Figure 3.1: The model of research process

Preliminary survey

Main survey

Testing of hypotheses (Conbach alpha, EFA, regression)

The final questionnaire (Qualitative research)

Quantitative research (n=205)

The draft questionnaire

3.2 Measurement

3.2.1 Measurement of customer loyalty

Four items were taken to measure customer loyalty based on Aydin and Ozer (2005); Wulf et at.(2001) and Morgan and Hunt (1994)

Scale of customer loyalty

I intend to continue to arrive and use services at this restaurant

for a long time

LOY1

Even if another restaurant’s price is lower, I am willing to

continue selecting this restaurant

LOY2

I am willing to say positive things about this restaurant LOY3

I will encourage friend and relative to arrive and use services at

this restaurant

LOY4

3.2.2 Measurement of customer satisfaction

Four items were taken to measure customer satisfaction based on Mouri (2005); Oliver (1997) and Fornel (1992)

Scale of customer satisfaction:

I am satisfied with the overall services quality of this

I am satisfied with the performance of the front line

employees of this restaurant CS3

I am comfortable with the relationship with this

restaurant

CS4