Customer satisfaction, return intention and word of mouth at the coffee bean tea leaf in the vietnamese market

CUSTOMER SATISFACTION, RETURN INTENTION AND WORD-OF-MOUTH AT THE COFFEE BEAN & TEA LEAF IN THE VIETNAMESE MARKET In Partial Fulfillment of the Requirements of the Degree of MASTER OF B

CUSTOMER SATISFACTION, RETURN INTENTION AND

WORD-OF-MOUTH AT THE COFFEE BEAN & TEA LEAF IN THE VIETNAMESE

MARKET

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

CUSTOMER SATISFACTION, RETURN INTENTION AND MOUTH AT THE COFFEE BEAN AND TEA LEAF IN THE VIETNAMESE

WORD-OF-MARKET

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International Business

by Ms.: Nguyen Thi Da Thao ID: MBA05039 International University - Vietnam National University HCMC

INTERNATIONAL UNIVERSITY SOCIALIST REPUBLIC OF VIETNAM SCHOOL OF BUSINESS Independence - Freedom - Happiness

ASSURANCE QUALIFIED THESIS

Student’s Name: Nguyễn Thị Dạ Thảo

Student ID: MBA05039

Title of Thesis: Customer Satisfaction, Return Intention and Word-of-Mouth

at The Coffee Bean & Tea Leaf in the Vietnamese market

Advisor: Dr Trương Quang Được

I assure that the content of this thesis has been qualified all requirements for a research paper and able to participate in the final thesis defense

Approved by

Acknowledgement

The Master Thesis would not be finished without the support and assistance of many people I would like to take this chance to thank all of you that have helped and encouraged during the period of writing this paper Firstly, I would like to express my gratitude to my advisor, Dr Truong Quang Duoc who provided me valuable advice, supported and guided me from the beginning I also would like to thank Mr Khanh who instructed me to deal with data analysis and offered helpful recommendations to my thesis

My thanks also go to all of my friends, younger sisters and colleagues, who helped

me to distribute questionnaires, collect them, encourage and facilitate conditions for me to finish this research

Last but not least, I would like to express my special appreciation to all my family members such as dad, mom and younger sister, who always love, sympathize, support and encourage me

Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City

Copyright Statement

This copy of the thesis has been supplied on condition that anyone who consults it

is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author‘s prior consent

© Nguyen Thi Da Thao/ MBA05039/2012—2014

CONTENTS

CHAPTER ONE: INTRODUCTION 1

1 Background: 1

2 General information of The Coffee Bean & Tea Leaf: 2

3 Rationale for study: 3

4 Research Problem / Questions: 4

5 Research Objectives : 5

6 Significance of the research: 5

7 Scope and limitation: 5

8 Research Methodology: 6

9 Structure of the Thesis: 6

CHAPTER TWO: LITERATURE REVIEW 8

1 Customer Satisfaction: 8

2 Service Quality: 9

3 The relationship between customer satisfaction and service quality: 9

4 Measurement of Service Quality in the restaurant industry: 10

5 The relationship between Food Quality ( Beverage Quality) and Customer Satisfaction: 12

6 The relationship between Price _Value and Customer Satisfaction: 13

7 Return Intention and Word-of-mouth: 14

8 The relationship between customer satisfaction and behavior intentions (return intention and word-of-mouth): 15

9 Conceptual Framework: 16

10 Research Hypothesis: 17

CHAPTER THREE: METHODOLOGY 18

1 Research Process: 18

2 Research Design: 18

3 Data Collection Method: 19

3.1 Sample Selection: 19

3.2 Questionnaire Design: 20

3.3 Pilot Test: 22

3.4 Distributing Questionnaire: 22

4 Data Analysis: 23

CHAPTER FOUR: ANALYSIS & RESULTS 26

1 Response Rate: 26

2 Sample Characteristic: 26

3 Descriptive Statistics: 34

4 Reliability Analysis: 39

4.1 Reliability 39

4.2 Tangibles 41

4.3 Assurance 42

4.4 Responsiveness 43

4.5 Empathy 44

4.6 Beverage Quality 44

4.7 Price and Value 45

4.8 Satisfaction 46

5 Exploratory Factor Analysis: 47

5.1 Independent Variables: 47

5.2 Dependent Variable: 57

5.3 Confirmation of Conceptual Framework: 59

6 Pearson product-moment correlation coefficient: 59

7 Regression Analysis: 61

8 Reliability Analysis: 64

8.1 Return Intention 64

8.2 Word-of-mouth 65

9 Exploratory Factor Analysis: 65

9.1 Return Intention 65

9.2 Word-of-mouth 67

10 Pearson product-moment correlation coefficient: 68

10.1 Correlation between customer satisfaction and Return Intention 68

10.2 Correlation between customer satisfaction and Word-of-mouth 69

11 Simple Linear Regression Analysis: 70

11.1 Return Intention: 70

11.2 Word-of-mouth: 72

12 Important Difference among Gender, Age Group in Overall Satisfaction: 73

12.1 Important Difference among Gender 73

12.2 Important difference among Age Groups 74

CHAPTER FIVE: CONCLUSIONS & RECOMMENDATIONS 77

1 Conclusions: 77

2 Recommendations: 78

2.1 Improving Price and Value is the first importance 78

2.2 Improving Assurance of Service Quality is the second importance 79

2.3 Improving Responsiveness of Service Quality is the third importance 80

2.4 Improving Beverage Quality is the fourth importance 80

2.5 Improving Tangible is the fifth importance 81

2.6 Improving Empathy is the sixth importance 81

2.7 Improving Reliability is the seventh importance 81

3 Limitations and Future Research: 82

REFERENCES 83

APPENDIX A – QUESTIONNAIRE (ENGLISH VERSION) 94

APPENDIX B – QUESTIONNAIRE (PHIÊN BẢN TIẾNG VIỆT) 99

LIST OF FIGURE

Figure 1: Structure of the thesis 7

Figure 2: The Conceptual Framework 17

Figure 3: Research Process 18

Figure 4: Gender Differences 27

Figure 5: Nationality 28

Figure 6: Age 29

Figure 7: Average Income per month 30

Figure 8: Frequency Level 31

Figure 9: With Whom 32

Figure 10: Favorite Location 34

LIST OF TABLE

Table 1: Frequency Analysis by SPSS – Gender Differences 27

Table 2: Frequency Analysis by SPSS – Nationality 28

Table 3: Frequency Analysis by SPSS – Age 29

Table 4: Frequency Analysis by SPSS – Average Income per month 30

Table 5: Frequency Analysis by SPSS – Frequency Level 31

Table 6: Frequency Analysis by SPSS – With Whom 32

Table 7: Frequency Analysis by SPSS – Favorite Location 33

Table 8: Meaning of Mean toward Interval Scale 35

Table 9: Descriptive Statistics of Dimension ― Reliability 1-5‖ 35

Table 10: Descriptive Statistics of Dimension ―Tangibles 1-10‖ 36

Table 11 : Descriptive Statistics of Dimension ―Assurance 1-6‖ 37

Table 12: Descriptive Statistics of Dimension ―Responsiveness 1-6‖ 37

Table 13: Descriptive Statistics of Dimension ―Empathy 1-5‖ 37

Table 14: Descriptive Statistics of Dimension ―Beverage Quality 1-4‖ 38

Table 15: Descriptive Statistics of Dimension ―Pride and Value 1-4‖ 38

Table 16: Descriptive Statistics of Dimension ―Return Intention 1-3‖ 39

Table 17: Descriptive Statistics of Dimension ―Word of Mouth 1-3‖ 39

Table 18: Reliability Analysis applied to Reliability 40

Table 19: Reliability Analysis applied to new Reliability 41

Table 20: Reliability Analysis applied to Tangibles 42

Table 21: Reliability Analysis applied to Assurance 43

Table 22: Reliability Analysis applied to Responsiveness 43

Table 23: Reliability Analysis applied to Empathy 44

Table 24: Reliability Analysis applied to Beverage Quality 45

Table 25: Reliability Analysis applied to Price and Value 46

Table 26: Reliability Analysis applied to Satisfaction 47

Table 27: KMO and Bartlett's Test – 37 variables 47

Table 28: Result of Principal Component Analysis – Independent Factors – 37 variables 49 Table 29: Result of Rotation Method as Varimax with Kaiser Normalization – 37 variables 50

Table 30: KMO and Bartlett's Test – 36 variables 51

Table 31: Result of Principal Component Analysis – Independent Factors – 36 variables 52 Table 32: Result of Rotation Method as Varimax with Kaiser Normalization – 36 variables 54

Table 33: KMO and Bartlett's Test – 35 variables 54

Table 34: Result of Principal Component Analysis – Independent Factors – 35 variables 55 Table 35: Result of Rotation Method as Varimax with Kaiser Normalization – 35 variables 57

Table 36: KMO and Bartlett‘s Test 58

Table 37: Result of Principal Component Analysis – Dependent Factor 59

Table 38: Result of Pearson Correlation Coefficient 60

Table 39: Variables Entered/Removedb 61

Table 40: Model Summary of Multiple Linear Regression 62

Table 41: Coefficients 62

Table 42 : ANOVA 62

Table 43: Reliability Test applied to Return Intention 64

Table 44: Reliability Test applied to Word-of-mouth 65

Table 45: KMO and Bartlett's Test 66

Table 46: Result of Principal Component Analysis – Return Intention 67

Table 47: KMO and Bartlett's Test 67

Table 48: Result of Principal Component Analysis – Word-of-mouth 68

Table 49: Result of Pearson Correlation Coefficient between Customer Satisfaction and Return Intention 69

Table 50: Result of Pearson Correlation Coefficient between Customer Satisfaction and Word-of-mouth 70

Table 51: Model Summary of Simple Linear Regression 70

Table 52: ANOVAb 71

Table 53: Coefficientsa 71

Table 54: ANOVA 72

Table 55: Coefficientsa 73

Table 56: Test of Homogeneity of Variances - Gender 74

Table 57: One-way ANOVA Test - Gender 74

Table 58: Test of Homogeneity of Variances – Age Groups 74

Table 59: One – way ANOVA Test – Age Groups 75

Table 60: Multiple Comparisons – Age Groups 75

Abstract Purpose – This research is carried out to find out main factors contributing on the

customer satisfaction of The Coffee Bean & Tea Leaf in the Vietnamese market and discover the relationship of it towards return intention and word-of-mouth endorsement These factors are measured by DINESERV model which is developed from SERVQUAL instrument to gauge service quality in the restaurant industry Moreover, the conceptual framework also combines with two addition elements which are studied from other papers

Design/methodology/approach – Adopting a case study approach, data were

collected through secondary and primary data A questionnaire was distributed to

420 participants (including 42 foreigners and 378 Vietnamese at fourteen branches

of Coffee Bean in Ho Chi Minh City

Findings – There are seven key elements resulting in customer satisfaction at The

Coffee Bean & Tea Leaf in the Vietnamese market, concluding Reliability, Tangibles, Assurance, Responsiveness and Empathy ( Service Quality ) , Beverage Quality and Price and Value In addition, the customer satisfaction also has a positive correlation influencing their return intention and word-of-mouth endorsement

Practical implications – Managers of The Coffee Bean & Tea Leaf in Vietnam can

understand customer‘s expectation to meet and satisfy them in good ways which determine their return intentions and positive word-of-mouth towards this brand Thanks to it, Coffee Bean can increase the revenue and develop their reputation in the Vietnamese market

Originality/value – The influence of customer satisfaction towards return intention

and word-of-mouth should be considered importantly From this, managers of Coffee Bean try to satisfy customers and meet their expectation

Keywords – customer satisfaction, return intention, word-of-mouth, The Coffee

Bean & Tea Leaf, DINESERV model, service quality

Paper type - Research paper

CHAPTER ONE: INTRODUCTION

This is the first part of the research Background of the studied field and general information of the company are presented Some components such as research question and objectives, significance of the research, scope and limitation, methodology and structure are then continued

1 Background:

Coffee is a product that was first introduced in Vietnam from the 19th century and since then coffee has become habitual and familiar with the Vietnamese The bitter and strong taste inside the tongue, the flavor of almond and the pervasive smell of land besides a cup of coffee make people ecstatic Just like that coffee has gone into the heart of the Vietnamese gently and fervidly

The coffee culture in Vietnam is different from this in many Western countries Like the French, the Vietnamese enjoy a cup of coffee leisurely and lightly If coffee is considered as an instant drink made by a machine - a method bringing enthusiasm to work

by American, it is a cultural style in Vietnam: sip and thought They make a cup of coffee

by a filter, wait for falling drop by drop and just drink small sips whereas smoking, reading newspapers, listening to the music, chatting friends , talking to working partners and sometimes think about life and people… The French drink coffee before going to work every morning while the Vietnamese take at least thirty minutes for every time of drinking and can drink anytime in day Indeed, coffee takes an important role in the life and culture

of the Vietnamese

After joining into WTO in 2007, Vietnam has welcomed a variety of international brands coming to develop Food and beverage industry is no exception Big brands have brought colorful outlook for the retail dimension in Vietnam with initial expansion of large shopping malls and cinemas Since then, Vietnamese culture has been influenced by these

international trends and more and more new standards and lifestyles have developed Instead of gathering and dining at home after work, current young people prefer to be out of home and experience new and strange things This leads to a considerable growth in demand for innovative and complicated products, particularly in food and beverages With the generosity to spend on food & beverage, shopping and entertainment, the young are contributing to rise to a contemporary café culture It is not only a cup of coffee in traditional environment as of the old, but it needs more and more

In recent year, Vietnam is seen as a potential market with the population of more than 90 million people, long coffee cultural tradition and more than half of population is the young with stably increased salary, a lot of global coffee brands rush to Vietnam to make business After the success of coffee chain Highlands with European style, many brands such as Angel-In-Us (Korea), Gloria Jean‘s Coffee (Australia), The Coffee Bean & Tea Leaf (America) and now Starbuck (America)… gradually expand their shops in two big cities of Vietnam In order to develop successfully in this market, such brands have applied the concept ―Glocalization‖ to their products to be appropriate Vietnamese culture as well as suitable methods to attract young people

The young people want to show their rank when enjoying a cup of coffee with a piece of cake at beautiful views, unique design and in friendly, comfortable and warm environment Each The Coffee Bean & Tea Leaf is a consequence of this application It is a

―third place‖ (Ray Oldenburg ,1999) where people can spend time with friends, partners, relatives, family or even by themselves enjoying true coffee with a new flavor, in modern environment and gaining pleasant memories

2 General information of The Coffee Bean & Tea Leaf:

The Coffee Bean & Tea Leaf is American brand established by Mr Herber B Hyman in 1963 at California Since then, the brand is proud of providing more than 22 kinds of excellent coffee and 20 kinds of high-class tea all over the world The Coffee Bean

& Tea Leaf had officially joined into Vietnamese market from 2008 with the entry mode as franchising by Viet Café Trading Co Up to now, there are fourteen branches in Ho Chi Minh City and two branches in Hanoi With ―self-served ―style, this brand had brought a new wave with unique taste of American coffee that is made by machine and a variety of other drinks Beautiful locations, special design, interactive ambience, friendly and efficient waiters are the same formulae that decide the style of The Coffee Bean and Tea Leaf

3 Rationale for study:

In current competitive market of Vietnamese coffee industry, customers can have choices among various service providers They can select on the basis of trust, products, service or efficiency (Sachdev et al, 2004) More and more money to be paid, more and more quality customers need to consider Keiser (1988) said that long-term financial capability and sustainable business success depend on the ability of providing high quality

In the restaurant industry generally and coffee shops particularly, customers usually see service quality, food quality, physical environment and price and value as key factors of restaurant experience in evaluating restaurant quality It was discovered by Dabholkar, Shepherd and Thorpe (2000) that perceived service quality has been recognized as the most important determinant among potential candidates affecting customer satisfaction According to Spreng and Mackoy (1996), service quality also results in customer satisfaction Service quality and customer satisfaction have long been accepted as taking an important role on business success and survival in the currently increasing competitive conditions

Moreover, customer satisfaction is usually considered as a predictor of customer‗s behavior intentions such as purchase and loyalty intentions, willingness to deliver positive word of mouth, referral and complaint intentions by many authors (Olsen, 2002; Kang, Nobuyuki and Herbert, 2004; Söderlund and Öhman, 2005) It is not sure that a satisfied customer can revisit a restaurant but it is guaranteed that a dissatisfied customer will never

return In this industry, positive word-of-mouth also plays a more convincing role as an annoyed customer will destroy and dissuade other potential customers against a particular provider Therefore, it is quite essential for coffee shops to provide customers with the highest satisfaction so it can lead to a growth of repeat customers, brand loyalty and attracting new customers by developing firm‘s reputation More particularly, the cost of retaining existing customers by improving products and services of the brand is totally lower than the cost of winning new customers (Krishnan et al, 1999)

Currently, The Coffee Bean & Tea Leaf is the only international brand that possesses the most branches in comparison with contemporary ones such as Angel-in-us or Gloria Jean‘s Coffee (coming to Vietnam from 2008) However, with the entrance of Starbuck and Dukin Donut last year and McCafe this year, the coffee market in Vietnam is more and more ebullient and severe In order to survive in this environment as well as expand the market share in the industry, it is essential for The Coffee Bean & Tea Leaf to develop appropriate strategies effectively Meeting customer‘s expectations effectively as well as increasing customer satisfaction are key elements in the business success From the above reasons, the research is focused on assessing customer satisfaction, return intentions and word-of-mouth endorsement at The Coffee Bean and Tea Leaf so that this brand can provide suitable and strategic improvements

4 Research Problem / Questions:

The research problem in this study is to find out how The Coffee Bean and Tea Leaf can satisfy customers and how this satisfaction influences on return intentions and word-of-mouth endorsement Based on research problem, some questions are developed as the followings:

1 Which are determinants influencing customer satisfaction at The Coffee Bean and Tea Leaf?

2 How much is each determinant contributing in this satisfaction?

3 How much does customer satisfaction contribute in the development of customer‘s return intentions and word-of-mouth endorsement?

6 Significance of the research:

It is necessary for the managers of The Coffee Bean & Tea Leaf to understand clearly about customer‘s expectations and perceptions towards this brand Thanks to it, they will have detailed and suitable strategies to invest their resources effectively as well as make changes to decisive quality dimensions that influences strongly to customer satisfaction This plays an important role in increasing sale revenue of the company and expanding market share in the industry due to maintaining of old customers (repurchasing) and wining new ones (word-of-mouth endorsement) Moreover, other coffee shops can see and learn from the case of The Coffee Bean & Tea Leaf and apply these valuable lessons for their shops (Both international brands and Vietnamese brands)

7 Scope and limitation:

The research is focused on customers of The Coffee Bean & Tea Leaf including the Vietnamese and Foreigners with the age from 18 to 45 in Ho Chi Minh City These customers have had experience with products and service of this shop and return one more

to enjoy it This paper is limited to evaluate satisfaction and behavior intentions of customers in Hanoi as well as other customer groups that are not belonging to the interviewed age

8 Research Methodology:

This paper is collected from both primary and secondary data With the second kind, surveys are carried out at fourteen branches of The Coffee Bean & Tea Leaf in Ho Chi Minh City It is distributed to a sample of 420 customers who has enjoyed any product of The Coffee Bean & Tea Leaf After collecting data, some methods such as Cronbach‘s Alpha, Exploratory Factor Analysis and Regression Analysis are used to analyze and find out appropriate strategies for improvements

9 Structure of the Thesis:

There are five parts in the research Part one provides introduction of field studied and the topic chosen, research question and objectives, significant of the study, scope and limitation also are presented Part two includes review of literature review of many authors and identifies the conceptual framework of the thesis Methods and techniques used to choose sample, collect data, design a questionnaire, measuring scale are showed in Part three – Methodology Part four explains result of analysis and the final part gives recommendation and conclusion of the paper

CHAPTER ONE: INTRODUCTION

CHAPTER TWO: LITERATURE REVIEW

CHAPTER THREE: METHODOLOGY

CHAPTER FOUR: ANALYSIS & RESULTS

Figure 1: Structure of the thesis CHAPTER FIVE: CONCLUSIONS &

RECOMMENDATIONS

CHAPTER TWO: LITERATURE REVIEW

This chapter provides a review of literature that introduces theories and dimensions relating to the field of this paper such as service quality, customer satisfaction, Measurement of Service Quality in the restaurant industry, Food Quality, Price and Value, Return Intention and Word-of-mouth From these, the conceptual framework and hypothesis will be built

1 Customer Satisfaction:

There are many reasons explaining the attention of measuring customer satisfaction

as the ability of establishing customer loyalty, growing positive word of mouth, leading to repeat purchases and broadening the market share and profitability of the firms (Cronin and Taylor, 1992; Halstead and Page, 1992; Fornell, 1992; and Oh and Parks, 1997).Therefore, the nature of customer satisfaction has been conceptualized by several authors Yuksel and Yuksel (2002) stated that both researchers and managers pay a lot of attention to the topic of customer satisfaction According to Olive (1997), the feelings of satisfaction occur when customers compare their actual performance with expectation of any product or service Similarly, Kotler (2000) defined satisfaction as the feeling of a person of pleasure or disappointment when comparing perceived performance in relationship with his or her expectation Satisfaction can be associated with feelings of acceptance, happiness, relief, excitement, and delight (Hoyer and MacInnis, 2001).Or Khalifa and Liu (2003) presented that customer‘s positive assessment after post-purchasing results in customer satisfaction Based on this review, customer satisfaction is described as the result of cognitive or affective assessment process (Giese & Cote, 2000) where some standards will be used to compare with actual performance If customers perceive lower than their expectations, they will be dissatisfied On the other hand, if customer‘s perceptions meet expectations, they will be satisfied Otherwise, if customers perceive more than their expectations, they will be delighted

2 Service Quality:

Since there are too restaurant choices available, customers do not hesitate to leave bad restaurants and select better ones if they cannot provide good service quality That is why the significance of service quality is more and more increased in recent years The concept also has been debated from both academicians and practitioners (Negi, 2009) and in the services marketing filed Traditionally, Lewis and Booms (1983) defined that service quality assesses how well service level that the provider can meet customer‘s expectations

on an appropriate basis It can be understood as the comparison between what customers want to be offered and actual service they receive (Parasuraman, Zeithaml and Berry, 1985, 1988) Or Eshghi, Roy and Ganguli (2008) said that service quality is a general evaluation

of customers toward a service Sharing the same opinion, Parasuraman et al (1985, 1988), Johnston (1995), Zeithaml and Bitner (1996), Ueltschy, Laroche, Tamilia and Yannopoulos (2004) and Fogli (2006) descried service quality is the whole impression of customers relating to inferiority / superiority of services delivered from the supplier

Compared with product quality, there are a lot of difficulties to measure service quality physically because of four special characteristics of service such as intangibility, inseparability, heterogeneity and perishability (Bitner, Fisk and Brown, 1993) So, service quality is considered as a significant advantage to differentiate itself from its competitors (Ladhari, 2008) Similarly, it was also agreed by Yeo (2008) that a lot of firms are fostered

to supply higher and higher service quality to customers in this severely competitive industry

3 The relationship between customer satisfaction and service quality:

During the past few years, there has been an increased insistence on service quality and customer satisfaction in business and academia There is a strong correlation existing between service quality and customer satisfaction although these two concepts are totally different (Sureshchandarl, Rajendran and Anantharaman, 2003) Several authors have

demonstrated that service quality takes an optimal role in leading customer satisfaction with

a service encounter (Stevens, Knutson, & Patton, 1995; Qu, 1997; Pettijohn, Pettijohn, & Luke, 1997) It is not an exception in the restaurant settings

In other words, Parasuraman et al (1985) pointed out that the level of perceived service quality is in direct proportion to customer satisfaction The higher service quality is, the higher customer satisfaction is This is in line with Saravana and Rao (2007) and Lee, Lee and Yoo (2000) who believed that customer satisfaction is based upon the level of service quality delivered from the provider

It was agreed that the connection between service quality and satisfaction is totally undoubtful (Bitner, 1990; Bolton and Drew, 1991; Parasuraman et al., 1988) There are many studied topics of customer satisfaction based on service quality, especially in the restaurant industry such as research of Inkumsah (2011), Khan and Shaikh (2011), Andaleeb and Conway (2006), Yüksel and Yüksel, F (2003) All of them show that service quality is an important factor contributing to customer satisfaction.

4 Measurement of Service Quality in the restaurant industry:

The evaluating of service quality in the restaurant field is quite difficult because it is not only assessing from service outcome but also from service delivery process Therefore,

it is essential to develop a suitable measurement to recognize all characteristics of the service quality in the field

As discussed earlier in the literature review, there are a lot of definitions of service quality, so there are also many measurements of service quality One of the best-known measures of service quality available is SERVQUAL instrument that compares the differences between customer‘s expectations and their actual performance (Parasuraman , Zeithaml and Berry, 1985,1988)

The first version SERVQUAL model was introduced from 1985 by Parasuraman and his colleagues through a series of publication where they conceptualized service quality

model throughout five gaps that can influence customer‘s assessment of service quality in four different industries (retail banking, credit card, securities brokerage and product repair and maintenance) Perceived service does not meet consumer‘s expectation with a negative

gap In contrast, service can exceed expectation of customers with a positive gap

Parasuraman et al (1988) then developed SERVQUAL model that is two-part survey including a set of 97 statements showing various sides through ten dimensions to assess expectation and perception of customers of service quality in service and retail business They reduced from 97-item instrument to 34-item grouped in seven dimensions After many researches carried out, the authors had refined and finalized SERVQUAL model

as 22-item instruments through five components They include Tangibles, Reliability, Responsiveness, Assurance and Empathy The final instrument was divided into 2 parts One part including 22 items measures customer‘s expectation whereas the other measures their perceptions The expectation scale gauges the extent that customers think a certain company in an industry should have service quality attributes The perception scale gauges the extent that customers feel actual performance towards service quality attributes of some company (Zeithaml and Parasuraman, 2004)

During the last few years, several authors have used SERVQUAL instrument to gauge service quality in their researches (Ladhari, 2008) It has also been applied in the restaurant industry by Bojanic and Rosen (1994), Lee and Hing (1995), Kivela, Inbakaran and Reece (1999), Yüksel and Yüksel (2003), Andaleeb and Conway (2006), Markovic, Raspor, Segaric (2009), Ryu and Han (2010), Markovic, Raspor and Dorcic (2011) Despite

of wide usage, this instrument has been still received criticism from academics (Carman 1990; Babakus and Boller 1992; Teas 1994) Therefore, many modified SERVQUAL is developed and applied for different industries suitably Accordingly, DINESERV instrument was created by Stevens, Knutson and Patton (1995) to evaluate how customers see a restaurant‘s quality Stevens et al (1995) still retained five dimensions of SERVQUAL

and developed 22-items in the context of restaurant as well as added seven extra restaurant specific items DINESERV instrument included 29 variables and is gauged on a seven-point scale Reliability was seen as the most significant dimension, followed by tangibles, Assurance, Responsiveness and Empathy They are defined as below:

Figure : The Five Dimensions of DINESERV (Stevens et al., 1995)

a Reliability: Ability to implement promised services dependently and accurately

b Tangibles: Physical facilities, equipment, appearance of personnel

c Assurance: Knowledge and courtesy of employee and their ability to convey trust

and confidence

d Responsiveness: Willingness to help customers and supply prompt service

e Empathy: Caring and individualized attention

The allocation of 29 items in five dimensions of DINESERV is showed in Figure such as: five attributes representing Reliability; ten representing Tangibles; six representing

Assurance; three representing Responsiveness and five representing Empathy ―By

administering the DINESERV questionnaire to guests, a restaurant operator can get a reading on how customers view the restaurant‘s quality, identify where problems are, and get an inkling of how to resolve them‖ (Kim, Ng and Kim, 2009)

5 The relationship between Food Quality ( Beverage Quality) and Customer Satisfaction:

Furthermore, several researchers have revealed the relationship between food quality and customer‘s satisfaction Sharing the same opinion, Kivela, Inbakaran and Reece (1999), Raajpoot (2002), Sulek and Hensley (2004) said that quality of food is the most significant factor of the whole restaurant experience It is also a complete requirement to meet customer‘s needs and expectation in the restaurant (Peri, 2006)

Several authors have agreed with the opinion that customer satisfaction with food quality is the most important determinant predicting customer‘s return intention to a given

restaurant (Oh, 2000; Qu, 1997; Pettijohn, Pettijohn and Luke, 1997) According to Pettijohn et al (1997), the majority of customer satisfaction is determined by food quality It was found by Soriano‘s (2002) that quality of food and fresh ingredients is one of essential reasons that foster customers to revisit a restaurant Among relative elements making up food quality such as presentation, health options, taste, freshness, variety and temperature, Namkung and Jang (2007) mentioned that food presentation influences the appetite of customers and their actual experience of food quality Beside food presentation, taste also plays a key role in customer satisfaction and their future actions in revisiting restaurants (Kivela et al., 1999)

Based on a review of the marketing literature of Bitner and Hubbert (1994), Churchill and Surprenant (1982), it was stated that there is a close relationship between customer satisfaction and customer perceptions on food quality Therefore, food quality is seen as one of key attributes that can be influential in restaurant customer satisfaction and predict behavior intentions (Weiss, Feinstein and Dalbor, 2004)

6 The relationship between Price _Value and Customer Satisfaction:

In addition, price and value also take an important role in determining customer satisfaction and their repurchase intentions Yuksel and Yuksel (2002) explained that not only because of food, service quality and comfortable atmosphere that affect customer‗s decision for their revisit, but also because the price that customers pay represents value for money Value is totally different among different customers It can be described as low price or anything customers want for a product/service or the quality customers receive for the price

According to Soriano‘s (2003), the demanded level of quality in restaurant is determined by the price to be paid Customers find a better value for their money together with increasing expectations of getting a better quality and service Customers are likely to expect high quality if they pay high price On the contrary, if the price is low, it can make

customers doubtful of the ability that restaurant provides Johns and Howard (1998) described that price and value are considered by customers as part of the service bundle Moreover, customers tend to consider internal reference price in this current competitive market It was defined as price / price scale in consumer‘s memory that is used as a standard for judging or comparing actual prices (Grewal, Monroe and Krishnan, 1998) This shows that the owners need to balance the price offering for the restaurant and the price market hopes to pay to avoid negative deviation (Andaleeb and Conway, 2006)

7 Return Intention and Word-of-mouth:

As discussed above, it takes more cost to maintain existing customers than attracting new customers, so the return intention of a customer is quite significant for the company Boulding, Kalra, Staeling and Zeithaml (1993), Soderlund and Ohman (2003) discovered that intentions are subjective judgements about how a person treat in the future and often used as dependent variables in many service research and satisfaction models Repurchase intentions are the willingness of customers to buy the same products/ services again and again or to buy different products/ services of the same company because they believe that company offers (Lee, Lee and Feick, 2001) In the context of restaurant, return intentions is replaced to describe the willingness of customers to visit restaurants one more time to use products and services they provide

According to Ng (2005), Word-of-mouth endorsement includes people sharing their evaluation of their experiences It is defined by Gremler, Gwinner and Brown (2001) that this represents the image of the company and its services that is shared by customers Word-of-mouth can be positive or negative Positive word-of-mouth can generated from satisfying service encounter whereas negative one can generated from dissatisfying encounters (Susskind, 2002) It may affect customer‘s decision relating to using a product/service of the company (Gremler et al., 2001)

It is reported from Struebing (1996) that attracting new customers through mouth, growing the percentage of retained customers and growing expenditure or usage by existing customers are contributing to revenue streams It is also believed that an overall growth in revenue results only by increasing advertising and promotional effort (Danaher and Rust, 1996) According to these authors, positive word-of-mouth suggestions from family, friends and colleagues always take an important role in the sale

word-of-8 The relationship between customer satisfaction and behavior intentions (return intention and word-of-mouth):

It is stated by Mittal and Kamakura (2001) that customer‘s desires for future purchase are determined by customer satisfaction Wirtz (2003) concluded that customer satisfaction results in repurchasing, positive word of mouth, loyalty, and bringing long term profitability for firms Also, Matzler, Bailom, Hinterhuber, Renzl, and Pichler (2004) devoted to identify that reducing price sensitivity, increasing cross-buying, positive word of mouth and customer loyalty are some beneficial consequences of customer satisfaction

A high level of customer satisfaction will lead to an increase in repeat customers It is critical for providers to evaluate customers‘ satisfaction levels and to apply that knowledge for understanding and maintaining long-term customer‘s retention and competitiveness When customers are satisfied and pleasant, they tend to be loyal When they are loyal, they not only buy more but also tell other customers about good things The research of Bain & Company in Harvard Business Review (2001) showed that the customer retention‗s increase

by 5% can lead to the growth of profits by 25% to 95% Conklin (2006) also discovered that gaining a new customer will cost six to seven times more than keeping an existing one

It is stated that this repurchase/return intentions is influenced greatly by customer satisfaction (Maxham, 2001) Many authors such as Hume (2008), Mittal and Kamakura (2004) pointed out that elements of service quality and customer satisfaction affect positively to return intentions Or Stevens et al., (1995) also described that the high

customer satisfaction with service quality that is in the top position will create intentions to revisit the dining unit After a research of customer satisfaction with restaurant attributes and return intention in the United States, Weiss (2003) finalized there are a great impact between these two concepts The level of customer satisfaction can gauge how often customers return to the restaurant

Indeed, Ranaweera and Prabhu (2003) concluded that customer satisfaction and trust has a great and dramatic impact on customer repurchase intention and positive word-of-mouth

to examine their impacts on customer satisfaction Moreover, in the recent research studied

by Ng (2001), this also revealed that customer satisfaction has positive influence on return intention and word-of-mouth Taking these findings in consideration, next part of this framework explains the future behavior intentions of customer satisfaction

From the mentioned conceptual framework, the main hypotheses are stated:

H1: Overall Service Quality has an important positive influence on Customer Satisfaction 1.1: ―Reliability‖ has an important positive influence on Customer Satisfaction

1.2: ―Tangibles‖ has an important positive influence on Customer Satisfaction

1.3: ―Assurance‖ has an important positive influence on Customer Satisfaction

1.4:―Responsiveness‖ has an important positive influence on Customer Satisfaction

1.5: ―Empathy‖ has an important positive influence on Customer Satisfaction

H2: Beverage Quality has an important positive influence on Customer Satisfaction

H3: Price and Value has an important positive influence on Customer Satisfaction

H4: Customer Satisfaction is positively related to Customer Return Intention

H5: Customer Satisfaction is positively related to Word-of-Mouth Endorsement

H6: Overall Satisfaction is different between female and male

H7: Overall Satisfaction is different among Age Groups

Return Intention

Word-of-mouth

H4

H5

CHAPTER THREE: METHODOLOGY

This chapter provides a comprehensive analysis based on process, methods and techniques used in the research to collect data, how to select sample, how to prepare and design questionnaire, measuring scale and methods applied to treat raw data

Literature

Review

Conceptual framework

Questionnair

e Design

Pilot Test

Redesign questionnaire Collecting

Data

Cronbach‘s Alpha EFA

Linear

Regression

Analysis

One-Way ANOVA test

Recommendati

on &

Conclusion

widely used way to collect data in social work research Survey is a systematic method of gathering data that takes full advantage of questionnaires Respondents are asked to define what they know, trust, fell or what they have done or predict their future behaviors

Moreover, the research is quantitative and cross-sectional in nature Quantitative associates numbers and statistics whereas the second measures a sample at a single point in time (data are gathered on variables concurrently) According to Naoum (2007), the nature

of quantitative research help results analyzed more objectively With this kind, primary data

is generated by a limited numbers of pre-determined items that are resulted from experiments, structured observations and survey questionnaire (Krysik and Finn, 2010)

As mentioned in the literature review, elements of DINESERV model and two additional ones from other studies are brought together to evaluation factors affecting customer satisfaction as well as define relationship between it and future behavior intentions

at The Coffee Bean & Tea Leaf

3 Data Collection Method:

It is essential to gain data from two sources of secondary and primary data

 Secondary Data or called as Desk Study approach: are gained from other different sources that are not by first hand (Naoum, 2007) This information can be showed in a statistical or descriptive format They are from academic literature reviews of several authors, public journals, previous thesis of IU students and articles on the Internet

 Primary Data or called as Fieldwork Research (Naoum, 2007) Among three main approaches of Fieldwork, survey approach is chosen in this paper A large number of customers at The Coffee Bean & Tea Leaf are asked to complete questionnaire within a limited time frame to obtain data for this survey

3.1 Sample Selection:

The study adopts rule of 150 and STV ratio (Hutcheson and Sofroniou, 1999; Bryant and Yarnold, 1995) Rule of 150 asks at least 150-300 cases whereas STV ratio

recommends sample should be at least five time the number of variables and variables ratio should be no lower than 5 So,

subjects-to-Sample size = 5 * number of variables = 5 * 44 = 220

From both of rule, the research selects a sample of 420 customers from fourteen shops of The Coffee Bean & Tea Leaf in Ho Chi Minh City Because of limitations of time, money and workforce, non-probability is the sampling method used for this research With this kind, the author chooses sample from a group of entire population who possesses same characteristics according purpose of the research In order towards target customers of Coffee Bean, quota and judgmental sampling is applied to interview 30 people at every branch (the total of 14 branches is 420 people including 378 the Vietnamese and 42 foreigners) between the ages from 18 to 45 These customers have had experienced the service and just enjoyed any product of The Coffee Bean & Tea Leaf and are willing to participate in this survey

3.2 Questionnaire Design:

The questionnaire including 54 questions divided into two parts It begins with the introduction part where the researcher presents about name, topic and purpose of this questionnaire survey as well as ensures respondents‘ information will treated confidentially and used for academic result

After this part, participants are required to supply demographic information as gender, nationality, age, income, frequency of visiting Coffee Bean and people they often go together as well as location of favorite shop in the chain of Coffee Bean via seven questions

of multiple choices

Part two is aimed to determine factors relating to customer satisfaction and correlation between it and return intention as well as word-of-mouth endorsement that is showed in 50 questions with the same measuring scale is guided Questionnaire is formatted in close-ended and short questions with multiple choices that are easier for respondents to answer

and convenient for the author to collect and analyze data The first 30 attributes are applied from DINESERV of Steven et al (1995) study with some adjustments to make it applicable

to service quality of a coffee shop They are Reliability, Tangibles, Assurance, Responsiveness and Empathy Two items such as paying as planned and overall satisfaction are chosen from Andaleeb and Conway‘s (2006) research Attribute as reasonable price item is applied from Dining Experience Survey of Kivela, Reece and Inbakaran (1999) whereas one as the overall value of experience at Coffee Bean is adapted from the study of Ng (2001) and they are modified to fit the research‘s purpose The attribute as appropriate portion size is selected from Yuksel & Yuksel‘s (2002) paper The author also adapts four attributes of Beverage Quality and three items as satisfaction with service quality, beverage quality and priority over choosing Coffee Bean when drinking from literature reviews of several authors presented in Chapter 2 and group discussion Then, two questions ask customers‘ return intentions are selected from Kivela, Reece and Inbakaran (1999) while the last three question about word-of-mouth endorsement are adapted from Kim, Han, and Lee (2001)

Likert scale is the measuring scale used in the part two of questionnaire among several kinds of approach to scaling responses in survey research Five -point method in Likert scale are: (1) Strongly Disagree, (2) Disagree, (3) Neutral, (4) Agree and (5) Strongly Agree

Each dimension is allocated in the questionnaire as the following:

Since questionnaire is delivered in Vietnam and mainly to Vietnamese customers, so it

is translated to Vietnamese After being translated from English to Vietnamese by the researcher, it is considered and consulted by some people that are good at English and business field to minimize translation variances as well as modified to be suitable in the context of Vietnam

3.3 Pilot Test:

It is essential for a questionnaire to be piloted with a suitable sample from a target population Pilot test will help discover weakness of questionnaire design (Cavana, Delahaye and Sekaran, 2001) Fink (1995) also recommended that the number of a sample for a pilot test should not less than 10 for most customer questionnaires It is aimed to check the meaning of questions, content in the context of coffee shops in Vietnam and easily –understood measuring scale to have a better questionnaire revision Moreover, Baker (1994) also explained that 10-20% of the sample size of the actual research should implement te pilot test In this research, a pilot test are conducted with participation of 42 people who have knowledge of English, business and marketing field and experience service at The Coffee Bean & Tea Leaf After their feedbacks, the questionnaire will be re- composed and deliver to bigger sample Moreover, after delivering to 50 people, some misunderstood questions are considered and repaired until I have the best questionnaire

3.4 Distributing Questionnaire:

Final questionnaires (two versions: Vietnamese and English) are distributed to Vietnamese and Foreign customers at The Coffee Bean & Tea Leaf from 19.00 PM to 22.00

PM some days in a week It takes about four weeks for the survey to be completed The researcher takes a role as a customer and asks for help from others to participate in the survey that only takes five minutes to finish and do not cause any disorders to normal business of coffee shops

4 Data Analysis:

After collecting data, the process of analyzing data will start In order to gain objectives of the paper, some methods as Cronbach‘s Alpha, Corrected Item-Total Test, exploratory factor analysis-EFA, multiple regression analysis through SPSS are carried out

 According to Gleim and Gleim (2003), Cronbach‘s Alpha is a coefficient used to check internal consistency of variables in each factor It is presented as a number from 0 to 1 It seeks to gauge how closely variables are related to each other and thus measures the same concept If variables in a factor correlate, the value of alpha will increase However, a high coefficient alpha does not usually mean a high level of internal consistency A common acceptable rule of thumb (George and Mallery, 2003) for describing internal consistency using Cronbach‘s Alpha as bellows: α ≥ 0.9 is considered as excellent; 0.7 ≤ α < 0.9 is considered as good, 0.6 ≤ α < 0.7 is considered as acceptable; 0.5 ≤ α < 0.6 is considered as poor and α < 0.5 is considered as unacceptable

 Parallely, a corrected item-total correlation test is carried out to verify whether any individual item in the factor is not consistent to the general characteristic of the whole group (Churchill, 1979) Pallan (2007) stated it will increase Cronbach‘s Alpha score for the factor if deleting items below 0.3 that is considered as the minimum value of an item-total correlation So, this test help the author remove garbage attributes before building a completed and corrected measuring scale

 After Cronbach‘s Alpha, exploratory factor analysis is used to decrease a large number of variables into a smaller set of variables, check the relationship or

construct of variables and set up new underlying dimensions that group correlated items (Williams, Brown and Onsman, 2012) Many tests are used to evaluate the appropriateness of the data for factor analysis before the formation of new factors such as Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and Bartlett's Test of Sphericity According to Tabachnick and Fidell (2007), Hair, Anderson, Tatham and Black (1995), it is necessary for KMO index to be 0,5<KMO<1 It shows the factor analysis is suitable whereas KMO index below 0.5 means the factor analysis is not appropriate with the data Moreover, the Bartlett's index should be lower than 0.5(p<.05) that explains variables are correlated enough to perform factor analysis Next, Principal Component Analysis is used to identify factor extraction and Rotation Method as Varimax with Kaiser Normalization is continued to decide whether a variable is related to more than one factor (William et al., 2012) According to Laten Root Criterion developed by Hair, Anderson, Tatham, and Black (1998), the Eigen value should be greater than 1 whereas item loading within each construct should be greater than 0.05 In addition, Gerbing and Anderson (1988) also reported that Cumulative Percentage of Extraction Sums of Squared Loadings should be greater than 50%

 Prior to Multiple Regression Analysis, Pearson product-moment correlation coefficient is necessary to be analyzed It was stated by Pearson correlation coefficient helps to identify the general relationship between independent factors and the dependent factor and correlation among independent ones It can lie from -1 to +1, with -1 expressing a perfect negative correlation, +1 expressing a perfect positive correlation, and 0 expressing no correlation at all Also, a correlation coefficient of 1 means that a variable has a relationship with itself In addition, the sign level should be less than 05 that indicates a relationship considered to be significant

 Then, based on the underlying dimensions (factors) derived from the exploratory factor analysis and result of correlation from Pearson correlation Coefficient, multiple regression analysis is used to predict and check the strength of thirty-five associations between dependent and independent variables (Hair et al., 1998)

 Finally, One-way ANOVA test is used to find out whether there is any difference among Gender and Age Groups in Overall Satisfaction