ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE SUPERMARKETS

Tóm tắt :With a population of 91 million consumers and economic growth rate averaged 6.37 percent from 2000 until 2012, Vietnam has been an attractive foreign investment destination. Moreover, consumer preference has been changing along with higher income, becoming sophisticated and improving living standard in recent years. In addition, Nguyen, Nguyen, and Barrett (2007, p. 228) claim that “little has been paid to transitional markets like Vietnam, where supermarkets are still a new retailing system, appealing primarily to upper class consumers in urban areas of the country”. Therefore, supermarket retailers have to take advantage of new innovations to create their competitive advantages. When a customer goes shop at certain supermarket, what make him/her keeping buying? And what are factors affecting his/her loyalty? The retailers had to find out the answer to identify appropriate strategies for achieving their own goals. Based on that, the study was carried out to reveal the impact of service quality, product quality and assortment, layout, perceived price fairness, and convenient location on shopper loyalty. The study was conducted by the survey questionnaire. A sample of 420 consumers are living and working in Ho Chi Minh City. The result revealed that service quality, product quality, perceived price fairness, and convenient location have positive relationships with shopper loyalty.

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Lam Hoang Vu

ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Lam Hoang Vu

ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE

SUPERMARKETS

ID: 60340102

MASTER OF BUSINESS (Honours)

SUPERVISOR: DR NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2012

ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE

SUPERMARKETS

LAM HOANG VU

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

ACKNOWLEDGEMENTS

I would like to express my sincere thankfulness to my research advisor, Dr Nguyen

Thi Mai Trang, who made me believe in myself and gave me the possibility to

complete this thesis Her guidance helped me in all the time of research and writing

this thesis I am sure that this thesis would not have been possible without her support

I also thank Prof Nguyen Dinh Tho I am extremely grateful and indebted to him for

his expert, valuable guidance, insightful comments, and encouragement extended to

me

I would like to express my gratitude to all ISB staffs that supported necessary

materials and helped summit my papers

Especially, I would like to give my special thanks my family for supporting me

spiritually throughout my life

Lam Hoang Vu

Ho Chi Minh City, December 29, 2012

ABSTRACT

With a population of 91 million consumers and economic growth rate averaged 6.37

percent from 2000 until 2012, Vietnam has been an attractive foreign investment

destination Moreover, consumer preference has been changing along with higher

income, becoming sophisticated and improving living standard in recent years In

addition, Nguyen, Nguyen, and Barrett (2007, p 228) claim that “little has been paid

to transitional markets like Vietnam, where supermarkets are still a new retailing

system, appealing primarily to upper class consumers in urban areas of the country”

Therefore, supermarket retailers have to take advantage of new innovations to create

their competitive advantages When a customer goes shop at certain supermarket,

what make him/her keeping buying? And what are factors affecting his/her loyalty?

The retailers had to find out the answer to identify appropriate strategies for achieving

their own goals Based on that, the study was carried out to reveal the impact of

service quality, product quality and assortment, layout, perceived price fairness, and

convenient location on shopper loyalty The study was conducted by the survey

questionnaire A sample of 420 consumers are living and working in Ho Chi Minh

City The result revealed that service quality, product quality, perceived price fairness,

and convenient location have positive relationships with shopper loyalty

TABLE OF CONTENTS

ACKNOWLEDGEMENTS II

ABSTRACT III

CHAPTER 1: INTRODUCTION 1

1.1 BACKGROUND 1

1.2 RESEARCH PROBLEMS 2

1.3 RESEARCH QUESTIONS AND OBJECTIVES 3

1.4 RESEARCH DELIMITATION 3

1.5 THESIS STRUCTURE 3

CHAPTER 2: LITERATURE REVIEW 4

2.1 SHOPPER LOYALTY 4

2.2 THE ANTECEDENTS OF SHOPPER LOYALY 5

2.2.1 Service quality 5

2.2.2 Product quality and assortment 6

2.2.3 Layout 7

2.2.4 Perceived price fairness 7

2.2.5 Convenient location 8

2.3 RESEARCH MODEL AND HYPOTHESES 8

CHAPTER 3: METHODOLOGY 10

3.1 RESEARCH PROCESS 10

3.2 MEASUREMENT SCALES 11

3.2.1 Shopper loyalty 11

3.2.2 Service quality 11

3.2.3 Product quality and assortment 12

3.2.4 Layout 12

3.2.5 Perceived price fairness 13

3.2.6 Convenient location 13

3.3 QUALITATIVE RESEARCH 13

3.3.1 Sampling 14

3.3.2 Data collection 14

3.3.3 In-depth interviews result 14

3.4 SAMPLING METHOD 15

3.4.1 Sampling 16

3.4.2 Data collection 16

3.5 DATA ANALYSIS METHODS 16

3.5.1 Cronbach’s alpha 16

3.5.2 Exploratory Factor Analysis (EFA) 17

3.5.3 Multiple Regression Analysis 18

CHAPTER 4: DATA ANALYSIS AND RESULTS 19

4.1 DESCRIPTIVE ANALYSIS 19

4.2 MEASURE ASSESSMENT 20

4.2.1 Cronbach’s alpha 20

4.2.2 Exploratory factor analysis 21

4.3 HYPOTHESES TESTING 23

4.4 TESTING THE EFFECTS OF DEMOGRAPHIC VARIABLES 24

4.5 DISCUSSION OF FINDINGS 25

CHAPTER 5: CONCLUSION AND IMPLICATION 29

5.1 CONCLUSION 29

5.2 MANAGERIAL IMPLICATIONS 30

5.3 LIMITATION OF STUDY AND FUTURE RESEARCH 31

REFERENCES 33

APPENDICES 38

Appendix A: Questionnaire 38

Appendix B: Codified Variables 40

Appendix C: First Time Running – Eigenvalues 44

Appendix D: First Time Running – Factor Loadings 45

Appendix E: Second Time Running – Eigenvalues 46

Appendix F: Second Time Running – Factor Loadings 47

Appendix G: Third Time Running – Eigenvalues 48

Appendix H: Charts of Testing Hypotheses 49

Appendix I: Result of Affecting of Demographic Variables 51

LIST OF FIGURES Figure 2.1: A Conceptual Model 8

Figure 3.1: Research Process 10

Figure H.1: Histogram of Shopper Loyalty 49

Figure H.2: Normal P-P Plot of Shopper Loyalty 49

Figure H.3: Scatterplot of Shopper Loyalty 50

LIST OF TABLES

Table 3.1: Scales of Shopper Loyalty 11

Table 3.2: Scales of Service Quality 12

Table 3.3: Scales of Product Quality and Assortment 12

Table 3.4: Scales of Layout 13

Table 3.5: Scales of Perceived Price Fairness 13

Table 3.6: Scales of Convenient Location 13

Table 3.7: Cronbach’s Alpha Reliability Coefficient 17

Table 4.1: Sample Description 19

Table 4.2: Reliability Analysis 20

Table 4.3: Factor Loadings 22

Table 4.4: Results of Pearson Correlation 23

Table 4.5: Results of Standard Multiple Regression 24

Table 4.6: Creating and Recoding Variables 24

Table 4.7: Results of Hypotheses Testing 26

Table I1: Model Summary of Testing Male 51

Table I2: Model Summary of Testing Younger 51

Table I3: Model Summary of Testing Student 51

Table I4: Model Summary of Testing Low Income 52

CHAPTER 1 INTRODUCTION

This chapter introduces the background of the Vietnamese supermarket industry as well

as the status of shopper loyalty The research questions and objective are proposed to explore the factors determining customer loyalty Based on these, research delimitation

is proposed and thesis structure is presented

1.1 Background

According to “Vietnam Retail Analysis (2008-2012)” (2010), the researchers claimed that “fast pace growth in Vietnam’s retail market has made the country an attractive destination for multinational retailers Vietnam holds the 4th position among 30 countries attracting foreign investors As per the WTO agreement, the government has removed limitation on capital invested by the foreign investors.” “The value of retail sales in Vietnam has rapidly risen over the past few years” “The retail sales are expected to surge at a CAGR of around 20% during 2010-2012.”

C V (2012) states that although the nation has faced a difficult year, the retail market in

2011 still grew and made up 15-16 percent of Vietnam’s GDP with an increase of 29.3 percent over the previous year Currently, there are approximately 900 supermarkets, shopping malls, and convenience stores, along with a system of 9,000 traditional markets in Vietnam Moreover, the spending and consumption habit of Vietnamese people has change a lot in the last few years

As stated in “Vietnam Retail Market Forecast to 2014” (2012), “the modern retail channels are expected to play a crucial role in future growth” Moreover, it is estimated that the retail sale will continue to grow at a CAGR of around 26% during 2012-2015

In addition, the report also mentioned that Vietnam is one of the world’s five most lucrative retail markets Therefore, Vietnam’s retail market will attract a number of foreign investors as well as international brands

These researches have pointed out that Vietnam has been considered to be one of the most potential markets in Asia In addition, foreign firms (like Big C, Metro) have been

entered the Vietnam retails That means the domestics retailers have to face the toughest challenges when the foreign firms entering Vietnam retail market The issues are how the domestic retailers survive and develop in the local retail market

1.2 Research Problems

Yang, Do, Wang, Chang, and Hung (2011, p 209) claim that 2009 was considered as a crucial landmark for the Vietnamese retail industry with 100% foreign owned retailers allowed under Vietnam’s commitment to WTO It leads to a new development period and rapid growth in Vietnamese retail market Domestic retailers have to compete with foreign multinational retailers on market share In there, foreign firms take advantages

of capital and experience to reign over a share of supermarket chains For example, Metro has a plan to invest $100 million - $ 120 million for each outlet; Big C use $17 million to open supermarket in central Hue And domestic firms have competitive advantages in proximity locations and understanding local customers As a result, domestic firms have to enter an extreme race to compete against foreign ones In order

to increase competitive advantages, they choose to expand stores to improve their distributions For example, Saigon Co.op confidently increases the outlets to reach 120

by 2012; Citimart also hopes to expand 10 more outlets in 2012 Therefore, the appropriate strategies are the most important issue which both parties must consider in order to prevail

According to “Nielsen Shopper Trends” (2011), Vietnam has been faced with inflationary pressures It has led to some changes in shoppers’ behaviors that have become more price-sensitive (www.nielsen.com) That means they has focused more on value and their demands have been affected by a general increase in price Otherwise, Vietnamese shoppers still keep shopping at the certain store based on what they are looking for Consequently, it is necessary to explore the factors which determine consumer loyalty to attract and retain customers It also helps the firms make decisions

in order to select the most appropriate strategies for their goals

1.3 Research Questions and Objectives

This research is to identify, measure factors affecting shopper loyalty and determine the relationship among them The proposed research questions are as follows:

- Are there identifiable factors affecting shopper loyalty?

- What is the relationship between these factors and shopper loyalty? Which will

influence shopper loyalty the most?

The research objectives are:

- To identify factors affecting shopper loyalty in the Vietnamese supermarket

- To determine the impact of each factor on shopper loyalty

1.4 Research Delimitation

This study focuses on individual shoppers in Ho Chi Minh City, who have more shopping options than other Children below 16 years old are not chosen to be respondents Moreover, the study focuses on attitudinal loyalty Therefore, this sample cannot represent for Vietnam nationwide In addition, there are five factors including service quality, product quality and assortment, layout, perceived price fairness, and convenient location which are considered as the antecedents of shopper loyalty

1.5 Thesis Structure

This thesis is organized as follows:

- Chapter 1 presents the research background, research problems, research questions and objectives, research delimitation, and thesis structure

- Chapter 2 introduces research model and its hypotheses as well as its literature review

- Chapter 3 illustrates the methodology conducted in this paper

- Chapter 4 presents research results is based on data collected

- Chapter 5 summarizes the research results, provide the findings and recommendations

CHAPTER 2 LITERATURE REVIEW

This chapter is an overview of shopper loyalty and its antecedents which have been conducted by previous researchers Based on these studies, a conceptual model is proposed

2.1 Shopper Loyalty

Oliver (1996, cited in Donio', Massari, and Passiante, 2006, p 446) defines customer loyalty as “a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior” In addition, Goodwright (n.d.) defines that

“customer loyalty is when an organization receives the ultimate reward for the way it interacts with its customers; and competitive advantage can be achieved through customer loyalty”

Donio' et al (2006, p 446) propose three conceptualizations of customer loyalty: “as primarily an attitude that sometimes leads to a relationship with the brand”, “as mainly expressed in term of revealed behavior”; and “ buying moderated by the individual’s attitudes”

In short, customer loyalty is one of the most important issues of the firms The customer will chose one product/service instead of one of other competitors In other way, when the firm delivers superior value and wins customer loyalty, it ensures that the firms can

be continued profitable That means market share, profitability will be going up and the cost of attracting new customer will go down (Fraenkel, 2009)

Costabile (2001, cited in Donio', 2004, p 447) describes the dynamic model of customer loyalty in which customer loyalty is considered as an outcome of attitudinal dimensions including customer satisfaction, trust and commitment In there,

“satisfaction with purchases, and consequential habit formation, explains most of a person’s ongoing propensity to buy one or a product from a specific firm”

Gounaris and Stathakopoulos (2004, cited in Nguyen, Nguyen, and Barrett, 2007, p 229) claim that there are three main different perspectives of loyalty such as attitudinal, behavioral and reasoned action Moreover, the attitudinal approach posits that loyalty is based on psychological commitment, purchase intention, and word-of-mouth recommendations In this research, shopper loyalty refers to strong feelings about loyalty and commitment relative to their supermarkets, to continue purchasing goods in the same supermarket and recommend it to others (Baker et al., 2002; Sirohi et al., 1998; Zeithaml et al., 1996, cited in Nguyen et al., 2007, p 229)

2.2 The Antecedents of Shopper Loyalty

2.2.1 Service quality

Service quality is defined as “an overall assessment of service by the customers” (Lewis and Booms, 1983, cited in Ganguli and Roy, 2010, p 405) In the retail industry, service quality is measured by interacting between customers and firm employees That means “quality evaluations are not made solely on the outcome

of a service; they also involve evaluations of the process of service delivery” (Parasuraman, Zeithaml, and Berry, 1988, p.42) Kandampully (1998, p 443) states that service quality is a critical and indispensable factor in persuading customers to use a particular service provider instead of another In addition, customers in service industries will switch into other firms if they have the feeling of disconnection from the current service provider for many reasons including inconvenience, core service failures, failed service encounters, and response to failed service encounters (Keaveney, 1995, cited in Pollack, 2009, p 45) Therefore, in order to gain customer loyalty, many organizations find it

essential to maintain service quality on a regular basis (Kandampully, 1998, p 443) Pollack (2009, p 45) reveals that service quality is a significant predictor

of word-of-mouth and intention to re-purchase Consequently, it is expected that the higher service quality will be more loyal to supermarket

H1: There is a positive relationship between service quality and shopper

loyalty

2.2.2 Product quality and assortment

Garvin (1987, cited in Yuen and Chan, 2010, p 225) proposes eight dimensions

of product quality such as performance, features, conformance, reliability, durability, serviceability, aesthetics, and customer-perceived quality The recognition of product can be considered as an initial stage for developing customer satisfaction and creating customer loyalty (Eduardo, Arturo, and Jorge, 2008) Kotler and Keller (2006, cited in Yuen and Chan, 2010, p 227) claim that the better the possibility of delivering quality products, the higher the level of maintaining customer satisfaction “which encourages customers to make their next purchases”

Mantrala et al (2009, p 71) state that by striking appropriate balance among variety, depth, and service levels, the retailers expect to satisfy the customer needs by delivering the right merchandise in the right store at the right time When the retailer doesn’t meet the expected assortment, customers will switch to another one which leads to the loss of both current and future sales In addition, the more congenial the merchandise on the shelf is organized to the customers’ preference (Alba and Hutchinson, 1987, cited in Mantrala et al., 2009, p 74), the easier the information about the items is processed (Fiske and Taylor, 1991, cited

in Mantrala et al., 2009, p 74)

H2: There is a positive relationship between product quality and assortment

and shopper loyalty

2.2.3 Layout

According to Aghazadeh (2005), there are three principles of layout including circulation, coordination, and convenience Among these, circulation includes many factors such as location, size, shape, and character of merchandise which control the traffic flow throughout the store Coordination is the ability to control customer movement or predetermined impression on the customer by combining goods and space; and to create the desired atmosphere Finally, convenience is arranging items to cater to various customer needs by emphasizing on the management’s policy, the character of the merchandise, and the character of the customers

Huddleston, Whipple, and VanAuken (2004, p 225) point out that “a store with

a consistent layout in different geographical areas and stores with wide aisles and less congestion are more likely to satisfy customers” In addition, Wilson (2007,

p 126) reveals that store layout has a great impact on customers “when a store remodeled or a new store is built” Thus, we propose that there is a positive relationship between layout and shopper loyalty

H3: There is a positive relationship between layout and shopper loyalty

2.2.4 Perceived price fairness

Pan and Zinkhan (2006, p 230) state that “shopping channels are significantly different in terms of the general price levels for products sold” “Low prices, in the form of either price promotions or general price levels, can create store traffic and increase category sales” However, there are consumers who are willing to pay more for quality called price-seeking (Tellis and Gaeth, 1990, cited in Pan and Zinkhan, 2006, p 230)

Zeithaml (1998, cited in Bei and Chiao, 2001, p 129) states that the perceived price is based on the consumer’s viewpoint which “is more meaningful than monetary price” If consumers realize that the price of a service or product is fair, they will be encouraged to continue to re-purchase (Lee, 1998, cited in Bei and Chiao, 2001, p 130) Bei and Chiao (2001) point out that perceived price

H3 (+)

SHOPPER LOYALTY

CONVENIENT LOCATION

H5 (+)

PERCEIVED PRICE FAIRNESS

H5: There is a positive relationship between convenient location and shopper

loyalty

2.3 Research Model and Hypotheses

Based on the above studies, a conceptual model is proposed Details about a conceptual model and it hypotheses as follows:

Figure 2.1: A Conceptual Model

H1: There is a positive relationship between service quality and shopper loyalty

H2: There is a positive relationship between product quality and assortment and shopper

loyalty

H3: There is a positive relationship between layout and shopper loyalty

H4: There is a positive relationship between perceived price fairness and shopper loyalty H5: There is a positive relationship between convenient location and shopper loyalty

CHAPTER 3 METHODOLOGY

This chapter includes five parts: the first part is research process in which is the way to conduct research will be presented; the second part is measurement scales; the third part

is the results of in-depth qualitative research interviews; the forth part is sampling methods; and the last part introduces the methods to analyze data

3.1 Research Process

This study is conducted as given in the chart below (Figure 3.1)

Figure 3.1: Research Process

Quantitative research

Testing of hypotheses (Standard multiple regression)

Assessment of measurement (Cronbach alpha, EFA)

Research model Problem

definition

Measurement scales

Qualitative research

Literature review

Official scales

The starting point of the process is the identification of research objectives based on the definition of problems in retail markets So, the end point is the results of hypotheses testing by using standard multiple regression

1 I care about the long-term success of this store

2 I have faith in this store

3 This store gives me a feeling of confidence

4 I trust this store

5 I would expend effort on behalf of this store to help it succeed

6 I say positive things about this store to others

7 I am “emotionally attached” to the store

8 I feel loyal to this store

9 I have a sense of belonging to this store

10 I am going to do my shopping in this store in next few weeks

11 I will recommend this store to someone who seeks advice

12 I am very committed to this store

13 Shopping in this store is my first choice

14 I encourage my relatives and friends to go to this store

3.2.2 Service quality

Service quality was measured base on Allaway et al (2011, p 193), it shows in Table 3.2

Table 3.2

Scales of Service Quality

1 This store has helpful employees

2 This store has friendly employees

3 The employees at this store(s) are polite to me

4 This store has an adequate number of employees available to assist me

5 This store is service oriented

6 In general, I am satisfied with the service offered at this store

7 My shopping experiences at this store have always been pleasant

3.2.3 Product quality and assortment

Nine scale items of Allaway et al (2011, p 193) are used to measure product quality and assortment (see Table 3.3)

Table 3.3

Scales of Product Quality and Assortment

1 The products at this store are of high quality

2 The products at this store are very satisfactory compared to other stores

3 I shop this store because its products are superior to its competitors

4 This store has products that are not available at other stores

5 This store has good quality merchandise

6 This store has the right merchandise selection

7 This store is well stocked across its different departments

8 This store offers the assortments of product I am looking for

9 This store has an extensive assortment of products

3.2.4 Layout

Scale items of layout are adapted from Allaway et al (2011, p 194) A good layout allows the customers easy to navigate and they don’t feel pressure to choose an item (see Table 3.4)

Table 3.4

Scales of Product Quality and Assortment

1 Finding the product I need is easy

2 The width of aisles at this store allows for easy cart navigation

3 It is easy to locate the different departments within this store

4 This store has a leasing layout

3.2.5 Perceived price fairness

The items of prices were suggested by Allaway et al (2011, p 194) (see Table 3.5)

Table 3.5

Scales of Perceived Price Fairness

1 I am satisfied with the general price level of merchandise at this store

2 This store provides a good value for the money

3 I am satisfied with the price/quality ratio offered at this store

3.2.6 Convenient location

Allaway et al (2011, p 194) introduced that the item of “This store is located where it can be easily reached” and “I am satisfied with the location of this store” are used to measure convenient location of the store (see Table 3.6) Table 3.6

Scales of Convenient Location

1 This store is located where it can be easily reached

2 I am satisfied with the location of this store

3.3 Qualitative Research

The purpose of qualitative research is to explore factors affecting shopper loyalty and their items Scales of shopper loyalty and the antecedents are adapted from Allaway et

al (2011) and Nguyen et al (2007) According to Vishnevsky and Beanlands (2004, p 235), “the term ‘qualitative research’ encompasses a number of research methods within the naturalistic paradigm that take different approaches to the research design” There are three commons of qualitative designs such as ethnography, phenomenology and grounded theory In there, Polit, Beck, and Hungler (2001, cited in Vishnevsky and Beanlands, 2004, p 236) supposed that “the main resource of data collection of phenomenology is in depth-discussions with both the researcher and informant participating fully” Therefore, phenomenology would be suitable for this research Method of sampling, data collection and the results of in-depth interviews will be presented in the next section

3.3.3 Results

Details are as follows:

In measurement scales of shopper loyalty:

 The item of “I trust this store” and the item of “I have faith with this store” had similar meanings So, the item of “I have faith with this store” was eliminated

 The item of “I feel loyal to this store” and the item of “I am emotionally attached to the store” had similar meaning Therefore, the item of “I am emotionally attached to the store” was discounted

 The item of “I am very committed to this store” and the item of “I have a sense of belonging to this store” had similar meaning So, the item of “I have

a sense of belonging to this store” was eliminated

 The meaning of the item of “I encourage my relative and friends to go to this store” included the item of “I say positive things about this store to others” and the item of “I will recommend this store to someone who seeks advice”

 The item of “This store gives me a feeling of confidence” and the item of “I would expend effort on behalf of this store to help it succeed” were not necessary

In measurement scales of service quality, the item of “This store is service oriented” was replaced by item “This store always improves service quality” because it is quite difficult for the responses to understand

In measurement scales of product quality and assortment, the item of “The products at this store are of high quality” and the item of “This store has good quality merchandise” had similar meaning Therefore, the item of “This store has good quality merchandise” was eliminated

All items were measured by a seven-point Likert scale, anchored by 1: strongly disagree and 7: strongly agree

3.4 Sampling Method

After conducting qualitative research, the survey via questionnaire is completed This study includes 31 variables, in which 24 variables are independent and 07 dependent variables According to Hair, Black, Babin, and Anderson (2010), a general rule, the sample size should be 100 or greater and the minimum sample should have a desired ratio of 5 observations per variable

n > 100 samples and n=5k (where k = the number of variables)

Therefore, the minimum sample size is n = 5*31 = 155

For standard multiple regression analysis, Tabachnick and Fidell (1991) proposed that the desired level is:

n > 50 + 8m (where m = number of independent variables) Hence, the required sample is:

3.5 Data Analysis Methods

All accepted questionnaire were reviewed for completion, coded and input the raw data

in IBM SPSS Statistic version 20 The reliability and validity of measurement scales were evaluated by using Cronbach’s alpha and exploratory factor analysis Then, multiple regression analysis is used to provide for interpreting the results of its application from a managerial and statistical viewpoint (Hair et al., 2010) The list of codified variables is shown in Appendix B

3.5.1 Cronbach’s alpha

According to Connely (2011, p 45), “Cronbach’s alpha is used as only one criterion for judging instruments or scales It only indicates if the items “hang together;” it does not determine if they are measuring the attribute they are

supposed to measure Therefore, scales also should be judged on their content and construct validity”

George and Malley (2003, cited in Matkar, 2012, p 94) provide the following techniques:

3.5.2 Exploratory factor analysis (EFA)

Norris and Lecavalier (2010, p 9) supposed that “EFA is based upon a testable model and can be evaluated in terms of its fit to the hypothesized population model; fit indices can be generated to help with model interpretation” Moreover,

“EFA’s purpose is to identify latent constructs underlying a set of manifest variables”

Hair et al (1998, cited in Lee and Hooley, 2005, p 376) claimed that with samples of 350 or more, a factor loading of the attribute higher than 0.3 is significant In addition, with samples of 200, a factor loading of 0.4 or greater will take to indicate Therefore, the researchers must carefully consider the sample size for choosing significant factor loadings Factors with a total eigenvalue of 1 or greater will take into account; hence, any factors with an eigenvalue of less than 1 are discounted (Kim and Mueller, 1978, cited in Lee and Hooley, 2005, p 376)

Based on these studies, any factors with eigenvalue greater than 1 will be retained In addition, any factor loadings of 0.3 or higher on a factor are counted

3.5.3 Multiple regression analysis

Hair et al (2010, p 156) claimed that there is the difference between the actual and predicted values of dependent variable That means the random error will occur when predicting sample data It is called the residual (ε or e)

Based on these studies, the multiple regression formula will be

Y = a + β1X1 + β2X2 + … + βnXn + ε Where in: Y: is the dependent variable

R2 indicating how much variance of the dependent variable is accounted for by the full regression model Therefore, the higher the value of R2, the greater the explanatory power of the regression equation (Hair et al., 2010)

CHAPTER 4 DATA ANALYSIS AND RESULTS

This chapter presents the descriptive of collected data The reliability and validity of data will be assessed by using Cronbach’s alpha and EFA After that, the hypotheses and the effect of demographic variables on shopper loyalty will be tested by the collected data Consequently, this chapter includes four parts: descriptive analysis, measurement assessment, hypotheses testing, and testing the effect of demographic variables

4.1 Descriptive Analysis

A sample of 402 shoppers includes 162 men (40.3 per cent) and 240 women (59.7 per cent), aged from under 18 to over 50 years old with majority being in the age group of

19 to 29 years old In terms of income, the majority of shoppers had a monthly income

of VND 5,000,000 or less with 63.7 percent All respondents go shopping at their favorite supermarket at least once a month

Table 4.1 shows the demographic characteristics of the sample with regards to gender, age, careers, income, buying frequency per month, and favorite supermarkets

16-20 3 0.7 97.3

Table 4.2

Reliability Analysis

Scale Mean

if Item Deleted

Scale Variance

if Item Deleted

Corrected Total Correlation

Item-Cronbach's Alpha if Item Deleted

4.2.2 Exploratory factor analysis

All the variables were run through the Principal component analysis, using the varimax rotation method After three times of running factor analysis, the results shown that all remained variables have higher factor loadings than 0.3 and a significant loading on an acceptable factor Details are as follows:

First time running factor analysis, there are seven factors with the eigenvalue that are higher than 1 (see Appendix C) The variables var16, var17, var21, var25, var26, var27, and var62 have a cross-loading The variable var61 loads on both factor 2 (0.568) and factor 7 (0.284) Therefore, they are deleted from the analysis (see Appendix D) and the loadings recalculated

Product quality and