Factors affecting the customers purchase intention the case of online groupon (online purchasing group) in HCMC

This research aims to identify factors affecting customer’s purchasing intention for the case of online groupon online purchasing group in Ho Chi Minh City when they buy a product or ser

FACTORS AFFECTING THE CUSTOMER’S PURCHASE INTENTION - THE

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International Business

By

Mr Lu Van Phan Nho

ID: MBA04025 International University - Vietnam National University HCMC

September 2013

FACTORS AFFECTING THE CUSTOMER’S INTENTION - THE CASE OF

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International Business

by

Mr Lu Van Phan Nho ID: MBA04025 International University - Vietnam National University HCMC

September 2013 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree

I would like to express my great appreciation to all the teachers of the Master’s program in the International University, who imparted their knowledge and experience to

me during the past two years

I would like to give special thanks to my beloved family which has been my inspiration throughout the past time and always been the endless source of joy in my life

It is also my pleasure to have the opportunity to study with classmates from MBAIU04 who have shared with me their impressive knowledge and skills during the challenging courses of the MBA program

Finally, I would like to thank the members of the Examination Committee for taking time and giving valuable comments so that I could improve this thesis

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 Ho Chi Minh 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

© Lu Van Phan Nho/MBA04025/2011-2013

Table of Contents

Chapter One – Introduction 1

1.1 Research Backgroud 2

1.2 Problems Of Research 5

1.3 Research Questions 6

1.4 Research Objectives 6

1.4.1 General objectives 6

1.4.2 Specific objectives 6

1.5 Research Scopes and Limitations 7

1.6 Significant Of Research 7

1.7 Structure of Research 7

Chapter Two: Literature Review 9

2.1 Previous Research 10

2.1.1 Charles Dennis, Bill Merrilees, ChanakaJayawardhena, Len Tiu Wright’s model 10

2.1.2 Philip K.Hellier-Gus, M Geursen-Rodney A Carr-John A.Rickard’s model 11 2.2 Chen And Dubinsky’s Model 12

2.3 Conceptual Model of Thesis 12

2.4 Related Concepts 14

2.4.1 Purchasing intention 14

2.4.2 Perceived customer value 14

2.4.4 Customer Service 18

Chapter 3 Research Methodology 19

3.1 Research Methodology 20

3.1.1 Research frameworks 21

3.2 Qualitative Research Methods 21

3.3 Quantitative Research Methods 22

3.3.1 Questionnaire design 22

3.3.2 Measures 22

3.3.3 Sampling design 23

3.4 Data Analysis Techniques 23

3.4.1 Descriptive statistics 24

3.4.2 Reliability tests 24

3.4.3 Exploratory factor analysis 24

3.4.4 Correlation testing 26

3.4.5 Regression analysis 26

3.4.6 Path analysis 29

Chapter Four: Data Analysis and Finding 31

4.1 Profile of Sample 32

4.2 Characteristics of Sample 32

4.2.1 Gender 32

4.2.2 Age 33

4.2.3 Experience of online shopping 33

4.2.4 Highest education 34

4.2.5 Monthly income 34

4.3 Descriptive Statistics 35

4.3.1 Valence of Experience 35

4.3.2 Trust 36

4.3.3 Product Price 37

4.3.4 Perceived Product Quality 37

4.3.5 Perceived Customer Value 38

4.3.6 Websites Brand 38

4.3.7 Customer Intention 39

4.4 Reliability Tests 39

4.4.1 Valence of Experience 39

4.4.2 Trust 40

4.4.3 Product Price 41

4.4.4 Perceived Product Quality 42

4.4.5 Perceived Customer Value 43

4.4.6 Website Brand 44

4.5 Exploratory Factor Analysis (EFA) 45

4.5.1 Exploratory factor analysis for independent variables (IDVs) 46

4.5.2 Exploratory factor analysis for Perceived Customer Value 49

4.6 Revision of Research Model And Hypotheses 50

4.7 Reliability Tests After Exploratory Factor Analysis 51

4.7.1 Reliability test for Trust & Perceived Quality after EFA 51

4.7.3 Reliability test for Easy to Use Website after EFA 52

4.7.4 Reliability test for Customer Services after EFA 53

4.7.5 Reliability test for Website Brand after EFA 53

4.7.6 Reliability test for Perceived Customer Value after EFA 54

4.8 Correlation Testing 55

4.9 Regression Analysis 57

4.9.1 Linear regression of Model 1 57

4.9.2 Linear Regression of Model 2 59

4.9.3 Linear regression of Model 3 61

4.10 Hypotheses Testing Result 63

4.11 Relationship between Independent and Dependent Variables 64

4.12 Path Analysis 64

Chapter 5: Conclusions and Recommendation 66

5.1 Summary 67

5.2 Conclusion 67

5.2.1 Easy to Use Website 69

5.2.2 Customer Service 69

5.2.3 Trust and Perceived Product Quality 69

5.2.4 Perceived Price 70

5.2.5 Perceived Customer Value 71

5.2.6 Website Brand 71

5.2.7 Purchase Intention 71

5.3 Limitation And Recommendation For Future Research 72

Appendix 1: The Questionnaires 76 Appendix 2 – Exploratory Factor Analysis 79

List of figures

Figure 1: Definition of group online purchasing 3

Figure 2: Statistics of Sales 4

Figure 3: Statistics of Sales 2 4

Figure 4: Charles Dennis, Bill Merrilees, ChanakaJayawardhena, Len Tiu Wright’s model 10

Figure 5: Philip K.Hellier-Gus, M Geursen-Rodney A Carr-John A.Rickard’s model 11

Figure 6: Chen and Dubinsky’s model 12

Figure 7: Conceptual model 13

Figure 8: Research frameworks 21

Figure 9: Percent of accept or reject questionnaires 32

Figure 10: Revised Conceptual Research Model 50

Figure 11: Diagram of relationship between independents and dependent variable 64

List of table

Table 1: Interpreting Strength of Path Coefficients 30

Table 2: Frequency of gender 32

Table 3: Frequency of age 33

Table 4: Frequency table of experience of online shopping 33

Table 5: Frequency table of highest education 34

Table 6: Frequency table of monthly income 34

Table 7: Descriptive statistics of Valence of experience 35

Table 8: Descriptive statistics of Trust 36

Table 9: Descriptive statistics of Product Price 37

Table 10: Descriptive statistics of Perceived Product Quality 37

Table 11: Descriptive statistics of Perceived Customer Value 38

Table 12: Descriptive statistics of Website Brand 38

Table 13: Descriptive statistics of Customer Intention 39

Table 14: 4.4 Reliability Test of Valence of Experience 39

Table 15: Reliability test of Trust first time 40

Table 16: Reliability test of Trust second time 41

Table 17: Reliability test of Product Price 41

Table 18: Reliability test of Perceived Product Quality 42

Table 19: Reliability test of Perceived Customer Value first time 43

Table 20: Reliability test of Perceived Customer Value second time 44

Table 21: Reliability test of Website Brand first time 44

Table 24: Total Variance Explained for IDVs 46

Table 25: Rotated Component Matrix of IDVs 47

Table 26: KMO and Bartlett's Test 49

Table 27: Total Variance Explained of PCV 49

Table 28: Rotated Component Matrix 49

Table 29: Reliability Test of Trust & Perceived Quality after EFA 51

Table 30: Reliability test of Product Price after EFA 52

Table 31: Reliability test of Easy to Use Website after EFA 52

Table 32: Reliability test of Customer Services after EFA 53

Table 33: Reliability test of Website Brand after EFA 53

Table 34: Reliability test of Perceived Customer Value after EFA 54

Table 35: Pearson's Correlation Coefficient of four independent variables and PCV 55

Table 36: Pearson's Correlation Coefficient of WB and PCV with PI 56

Table 37: Independent and dependent variables of three models 57

Table 38: Model Summary and ANOVA table of Model 1 57

Table 39: Coefficients for first model 58

Table 40: Model Summary and ANOVA table of model 2 59

Table 41: Coefficients for second model 60

Table 42: Model Summary and ANOVA table of Model 3 61

Table 43: Coefficients for Third model 62

Table 44: Hypotheses Testing Result 63

Table 45: Direct, Indirect, and Total Causal Effects 65

Table 46: Final results 68

Abstract Starting from a simple business concept, group online purchasing has become a successful business model and expanded worldwide A number of researches in this topic have been conducted in various countries however only few studies have been made in this field for Vietnamese groupon websites

This research aims to identify factors affecting customer’s purchasing intention for the case of online groupon (online purchasing group) in Ho Chi Minh City when they buy

a product or service via Groupon Website

The literature review comprises of theoretical framework for the research model, the measurement of five factors mentioned in the model, and questionnaires for the study

of customer’s purchasing intention though Groupon websites

After data were collected, SPSS software was used for analyzing the primary data The results showed that the following factors Easy-to-Use Website, Trust and Perceived Product Quality, Customer Service, Product Price, Website Brand and Perceived Customer Value have positive impact on Customer’s Purchase Intention

Although there are still limitations in terms of this study, the author hopes that the research findings could be a useful source of reference for managers of Groupon websites when they want to improve service quality and increase Customer Perceived Value

Keywords: Online Purchasing Group or Groupon, Customer Purchase Intention, SPSS, Easy to Use Website, Customer Services, Trust, Perceived Price, Perceived Product Quality, Valence of Experience, Website Brand, and Perceived Customer Value

Chapter One – Introduction

The first chapter provides an introduction on the current research and

comprises of 9 sections Research background, rationale of research, research

problem as well as research question, objectives, methodology, scopes and

limitations, significance of research and structure are presented in this chapter

1.1 Research Backgroud

Generally understood as “Groupon = Group + Coupon”, the Groupon is a win model Not only online shopping companies/groups are benefited from the Groupon model, but vendors/supplier/producers and customers (who sell the good or service to the online shopping companies/groups) also do Specifically, customers have the opportunity

win-win-to buy goods and service at a lower price, approximately 10% win-win-to 60% lower as compared

to normal price Vendors/suppliers/producers can take advantage of the chance to approach and attract more customers with less expense as compared to other traditional selling channels The time duration for selling goods are significantly reduced due to the stimulated demand over a short time Online shopping companies could make profit by grouping the online purchasing of goods and services at dealed discount rate For example, for a 55% discount rate product, Groupons earn 5%, and the rest 50% for the customers Although the profit margin is low for each deal, Groupons could generate high profit thanks

to the high number of deals made

Most promotion campaigns are offered in certain periods of time, therefore they create high attraction and spread Under the pressure of quantity, customers have to gather

in groups to be able to buy that goods or services

Figure 1: Definition of group online purchasing

Thanks to recent aggressive development of informatics technology and social network as well as the introduction of smart mobile devices and most importantly, e-commerce, customers are getting familiar with and fond of online shopping

According to a recent study of website dealcuatui.com currently there are approximately more than 100 website offering online Groupon and over 14 websites gathering deals from offering Groupon service shopping in Vietnam This reflects the development potential of Groupon market in the country Hence, it is important for online shopping groups to have a deep understanding about the factors influencing the online buying intention of customers, for example brand of online purchasing groups, type of product, variety of products, price, delivery policy, method of payment, guarantee policy, website design to name just a few Especially in the context of current downturn of many online purchasing groups, the development suggestion basing on empirical findings from this study is expected to contribute to the understanding of this market and support for

Price of products or services ⬇

40 – 90% %

Supplier products and services

Group of consumer

operation and management decisions to attract more customers and increase sales for some online purchasing groups in Ho Chi Minh City

According to the recent survey made by the website dealcuatui.com, there are 15 most popular Groupon websites on the market, among them are nhommua.com, hotdeal.vn, muachung.vn and cungmua.com In 2011, over 6700 deals and 4.2 million vouchers were sold (statistic in 2011) The amount saved for customers is more than VND 1.200 billion

(statistics of web dealcuatui.com)

Source: dealcuatui.com

Figure 2: Statistics of Sales

It is estimated that the e-commerce sales only accounts for from 0.3% to 0.5% of total retail sales in Vietnam The figure 3 is not commensurate with the potential, as there are more than 31 million people using the Internet, equivalent to 35.5% of the population Results of the "Study Monitoring Consumer Electronic Commerce 2012" by Visa has revealed that Vietnamese have gradually getting used to online shopping and gaining more trust in online security measures Therefore, the room for development of Groupon market

in Vietnam is very promising, which is the driver for this research

1.2 Problems of Research

It can be seen that the online purchasing group market in Vietnam developed quickly and was quite thriving in the early stage by taking advantage of the newness of the model and interest of Vietnamese consumers Moreover, online purchasing groups could easily approach to a large number of buyers since internet has become popular Especially many students and officers prefer online purchasing group service due to some advantages: lower price, free delivery, convenience, time saving to name just a few

Currently there are many opposite opinions and even doubts about the success of this modern selling channel Some state that Groupon hardly gets success in Viet Nam due

to some reasons such as difficulties in making payment, poor customer care, unguaranteed product quality, limited knowledge and experience of related partners and so on

Unfortunately, so far the online purchasing group has not performed stably (see figure 3 The reasons may come from the negative effects of economic crisis that forced buyers to pay a lot of attention to their spending Besides, the quality of products and service do not satisfy customers Therefore in order to run a good business, it is highly recommended for online shopping groups to take into consideration about the customer’s

buying intention, provide attractive service package to increase customers’ awareness and offer suitable methods of payment

From the above reasons, I choose topic as follow:

FACTORS AFFECTING THE CUSTOMER’S PURCHASE INTENTION - THE CASE OF ONLINE GROUPON (ONLINE PURCHASING GROUP) IN HCMC The purpose of this study is to define factors affecting customers’ purchase intention, and then apply business strategy that is most suitable for the enterprise’s real situation Moreover, online Groupon is a field of my favorite

1.3 Research Questions

From problem statement, the research raises the following research question Which factors will affect the customer’s intention of online purchasing group (online Groupon)

To answer the research question, thesis objective will be

- To review theories, previous research so as to build conceptual model for the research

- To identify factors that have direct and indirect impact on the customer’s intention toward online Groupon

- To give some suggestion and recommendation for current website in other to increase customer’s intention of online Groupon

1.5 Research Scopes and Limitations

This thesis mainly focuses on intention of customer whom officers and students from eighteen to fifty years old in Ho Chi Minh City Because officers and students are target customers of online Groupon method Moreover, Ho Chi Minh City is the main economic city and a city is the most population in Vietnam

Secondary data I just collect about 3 years from 2010 to 2013

1.6 Significant of Research

This thesis is expected to bring the following significant:

To me: This thesis gives me the opportunity to qualify for graduation Master In addition, by doing this thesis, it is a good opportunity for me to apply theories, research methodology, collection data, analysis data that I have studied into the practical situation Therefore, these things will help me orientate my career With the enthusiastic support of advisor, I can study more knowledge and experience to do research from him

To the online Groupon industry: I hope that this research can find some factors affecting to customer’s intention of online Groupon after I can give suggestion for the marketing strategy of company to rate up customer’s intention As a result, I hope the Groupon industry can develop quickly

1.7 Structure of Research

The thesis will be design included five chapters as follow

Chapter One: Introduction The first chapter provides an introduction on the current research and comprises of 9 sections Research background, rationale of research, research problem

as well as research question, objectives, methodology, scopes and limitations, significance

of research and structure are presented in this chapter

Chapter Two: Literature Review This chapter focuses on introducing the concepts and theories relating to research problem of the thesis such as Purchase Intention, Perceived Customer Value, Valence Of Experience, Easy-To-Use Websites, Customer Services, Trust, Perceived Product Quality, Perceived Price, Website Brand, etc

Chapter Three: Research Methodology This chapter provides detailed explanation of the employed research methodology and statistical method in this thesis, including the research process, questionnaire design, sampling design, survey method in addition to statistical techniques for data analysis

Chapter Four: Data Analysis and Findings The previous chapter discussed the research methodology, Continuous, this chapter will describe the profile of sample, present the data analysis by Statistical Package for the Social Sciences (SPSS version 20) and discuss about the finding of this research

Chapter Five: Conclusion

In this last chapter, the author’s individual conclusions about final results of the thesis and recommendations for future research are presented

Chapter Two: Literature Review

This chapter focuses on introducing the concepts and theories relating to

research problem of the thesis such as purchase intention, perceived customer

value, valence of experience, easy-to-use websites, customer services, trust,

perceived product quality, perceived price, brand, etc

Source: Charles Dennis, Bill Merrilees, ChanakaJayawardhena, Len Tiu Wright (2009)

Figure 4: Charles Dennis, Bill Merrilees, ChanakaJayawardhena, Len Tiu Wright’s

model

As can be seen from the model, Purchase Intention in e-commerce depends on factors such as attitude of buyer, which can be affected by image of product and customer service; and trust that the customers have towards products or service

2.1.2 Philip K.Hellier-Gus, M Geursen-Rodney A Carr-John A.Rickard’s model

Source: Philip K.Hellier-Gus, M Geursen-Rodney A Carr-John A.Rickard (2003)

Figure 5: Philip K.Hellier-Gus, M Geursen-Rodney A Carr-John A.Rickard’s

model

This model was developed by Philip K.Hellier-Gus, M Geursen-Rodney A

Carr-John A.Rickard The model illustrates factors determining the intention of repurchasing a

service of existing customers As illustrated, customer satisfaction and Brand Preference

are the key factors for repurchase intention Besides, other factors are considered such as Perceived Quality, Perceived Value, Perceived Equity, Customer Loyalty, and expected switching cost

2.2 Chen and Dubinsky’s Model

Source: Chen and Dubinsky (2003)

Figure 6: Chen and Dubinsky’s model Chen and Dubinsky (2003) examined the Perceived Customer Value and found some interesting factors such as Valence of Experience, Perceived Risk, Product Price, e-tailer reputation and Perceived Product Quality Valence of Experience includes ease of Use of Website, Relevant Information, and Customer Service

2.3 Conceptual Model of Thesis

The thesis model is mainly based on Chen and Dubinsky’s model The research

will testify and validate the model proposed by the above authors (Chen and Dubinsky,

2003) A modified model, suggested as the figure below, will be investigated

Figure 7: Conceptual model Where: H is hypotheses

H1: “Website Brand” has positively impact on “Purchase Intention”

H2: “Perceived Customer Value” has positively impact on “Purchase Intention”

H3: “Valence of Experience” has positively impact on “Perceived Customer Value”

H4: “Trust” has positively impact on “Perceived Customer Value”

H5: “Product Price” has positively impact on “Perceived Customer Value”

H6: “Perceived Product Quality” has positively impact on “Perceived Customer Value”

H7: “Valence of Experience” has positively impact on “Purchase Intention”

H8: “Trust” has positively impact on “Purchase Intention”

H9: “Product Price” has positively impact on “Purchase Intention”

H10: “Perceived Product Quality” has positively impact on “Purchase Intention”

PURCHASE INTENTION

2.4 Related Concepts

2.4.1 Purchasing intention

Purchase intention is an individual’s decision to purchase something It can be

defined as “the likelihood that a consumer will buy a particular product resulting from the

interaction of his or her need for it, attitude towards it and perceptions of it and of the company which produces it” (definition of http://www.salesopedia.com) Purchase intention could also be explained as “a plan to purchase services or product” (Monash University, 2009) or “the likelihood, the probability of buy a product or service” (Dodds et al., 1991)

2.4.2 Perceived customer value

Perceived Customer Value has been acknowledged as an important concept in

marketing research, it can be defined “The worth that a product or service has in the mind

of the consumer The consumer's perceived value of a good or service affects the price that

he or she is willing to pay for it For the most part, consumers are unaware of the true cost

of production for the products they buy Instead, they simply have an internal feeling for how much certain products are worth to them Thus, in order to obtain a higher price for their products, producers may pursue marketing strategies to create a higher perceived value for their products.” (Definition of http://www.investopedia.com) For this reason, companies have invested aggressively in market research to get deeper insight into customer’s thinking and behavior The statement reflects the view on the trade-off between

quality and relative price (Cravens, Holland, Lamb & Moncrieff, 1998 cited in Chen and

Dubinsky, 2003)

The evaluation of Perceived Customer Value from the perspective of the

consumption experience has been suggested as important by previous researchers

(Anderson & Narus, 1998 cited in Chen and Dubinsky (2003) Four major element in the

pre-purchase state that have significant influence on a consumer‘s value perception and

purchase intention include Valence of Experience, Perceived Product Quality, Trust, and

Perceived Price We will study deeper about each of these elements in the following

sections Perceived Customer Value in the case of online buying could be either positively

or negatively influenced by these factors

2.4.2.1 Valence of Experience

Valence of experience is defined in the research model as “consumer’s emotional

or attitudinal state aroused by the pre-purchase on-line shopping experience” (Chen and Dubinsky, 2003)

Consumer perception is considered as “the process of sensing, selecting, and

interpreting stimuli from the “external”, physical world into the “internal” world” (Wilkie,

1994) Hence, one can infer that external signal, such as what consumers experience when

they are shopping online, can influence of valence of experience, it can influence

consumer’s internal perception of customer value Prior works support this argument

(Donovan et al, 1994) In the model proposed in this study, a similar positive influence of Valence of Experience on Perceived Customer Value

2.4.2.2 Perceived Product Quality

As summed up from previous studies, the Perceived Product Quality can be defined

as “the consumer’s judgment about a product’s overall excellence or superiority” (Dodds

et al, 1991; Sweeney et al 1999 and Chen and Dubinsky, 2003)

A product is comprised of “cues” which can be classified into two main categories

“extrinsic” and “intrinsic” Intrinsic cues refer to product-related physical attributes such

as packaging, price, etc With reference to extrinsic cues, they are the base for consumer’s

inference to product quality (Bolton and Drew, 1991 cited in Chen and Dubinsky, 2003)

They suggested that there is a positive association between Perceived Product Quality and Perceived Customer Value

Importantly, consumer’s Perceived Product Quality is different from objective quality Objective quality is the actual technical characteristic of the product, while Perceived Product Quality is in fact an assessment and highly subjective, depending on the

consumption setting (Zeithaml, 1988 cited in Chen and Dubinsky, 2003)

2.4.2.3 Trust

It is really difficult how to determine “Trust”, researchers were presented something about “Trust” Trust may be simply understood as consumer’s belief in the good

nature of a product or service that leads to the intention to purchase Moorman et al (1992)

defined trust as “Trust is a willingness to rely on an exchange partner in whom one has

confidence” (Moorman et al., 1992) Trust is central to e-shopping intentions (Fortin et al., 2002; Goode and Harris, 2007; Lee and Turban, 2001) Trust also is safety of the

computer and financial information and privacy individually identifiable information on

the Internet (Bart et al., 2005; Jones and Vijayasarathy, 1998), (SwamiNathan et al., 1999)

Twitch standing that these constructs differ, in the interests of simplicity we consider them here to be related aspects of the same concept, which the name ‘trust’: e-Consumer trust in

an e-retailer will positively influence intention to online shopping As e-shoppers become

more experienced, trust grows and they tend to shop more and become less concerned about

security (Chen and Barnes, 2007; OxIS, 2005)

2.4.2.4 Product Price

“Price is defined as the consumer’s perception of the product’s price compared to

other brands of the same product with similar specifications” (Sweeney et al., 1999)

Price is one of the important factors to consider in buying process while customers

search and compare price of various options (Zeithaml., 1998 cited in Chen and Dubinsky,

2003) Unlike traditional selling channels, in online selling, the number of intermediaries

are reduced and there is less need for physical facilities and staff, the cost of selling online

is lower than selling though traditional channels, while the speed of transaction is improved and hence this motivates customers to shop via online channel Porter (1985) suggests an effective way to enhance customer value that is achieving price leadership In addition,

Chen and Dubinsky mentioned there is an inverse relationship between “Product Price” and “Perceived Customer Value”

2.4.3 Easy to Use The Website

“Easy-to-use website is defined as the degree to which the user expects the use of the website to be free of effort” (Chiou et al., 2010)

Online shopping involves customers from different background, including various geographic areas However, since information displayed on website is not always

comprehensible (Coupey, 1994 cited in Chen and Dubinsky, 2003), it is important for a

website to be user-friendly Poor layout and store environment, an unfriendly on-line user interface with unnecessary information or too many required processing steps may discourage customers on on-line shopping On the other hand, an ideal human-web

interaction makes the shopping experience more enjoying for customers, and hence,

improve customer retention and time spent on site exploration (Novak et al, 2000 cited in

Chen and Dubinsky 2003)

2.4.4 Customer Service

“The degree of Customer Service is received through the means of access afforded

by the website” (Griffth and Krampf, 1998 cited in Chen and Dubinsky, 2003)

As compared to traditional marketplace, e-commerce entails different shopping experience for customer For example, technology enables consumers to do the buying online in the lack of direct interaction with sellers Griffth and Krampf (1998) mentioned

customer service mainly through the means of access afforded by the website Customer

service offered could be seen under forms of contact information such as e-mail addresses, hotline, telephone number, or whether the service is offered 24 hours per day, and the responsiveness and helpfulness of customer support staff

Chapter 3 Research Methodology

This chapter provides detailed explanation of the employed research

methodology and statistical method in this thesis, including the research process,

questionnaire design, sampling design, survey method in addition to statistical

techniques for data analysis

So, the research process will be followed the figure 8 at next page

3.1.1 Research frameworks

Figure 8: Research frameworks

3.2 Qualitative Research Methods

The purpose of qualitative research is to explore, adjust, supplement the observed

variables and measured research concepts Cavana et al (2001) suggested “A questionnaire

should be piloted with a reasonable sample of respondents coming from the target population Pilot testing can help detect the weakness in questionnaire design” Therefore,

the author will carry out an in-depth interview with a website manager and with customers who usually use group online purchasing and some managers of selling website (n = 30)

Problem Statement

Research Objective

1 To review the theory and

build concetual model

2 Identify factor (direct and indirect)

that effect online groupon consumer's

intention

3 Result and finding

Method: Read book, previous researchs => chooseappropriate theory and collect secondary data,

Analyze and identify model => conceptual model =>make a questionare for survey, manager interview, pilotsurvey Choose sample size and collection primary data,based on primary data use SPSS software for descriptivestatistic, test hypotheses and regresstion

Give suggestion and recommendation

It is expected that the interview results would provide some suggestions for the research topic

Research’s preliminary results will be based on for designing an official questionnaire Once the questionnaire was modified, it will be sent to the above mentioned people On the other hand, the author collects secondary data from sources such as: books, eBooks, articles and scientific journals as well as from other previous researches

3.3 Quantitative Research Methods

3.3.1 Questionnaire design

Questionnaire was designed to collect data information of customers who used online purchasing group The questionnaires (at Appendix 1) are distributed under two versions: hardcopy version and online version Each version has two parts, in which “part 1” includes eight sub-sections In detail, sub-sections measure the build involving in the research conceptual model by some questions, in my questionnaire have some question were searched for empirical studies of researchers For this reason, the “part 1” is most important to help collecting primary data for analysis The “part 2” focuses mainly on individual information and hence this part will be used for describing characteristics of respondents

3.3.2 Measures

Five points of Likert scale are used as measurement of answers in the questionnaire: from “1”-“Strongly Disagree” to “5”-“Strongly agree” Previous researches presented that the five point of Likert scale is understandable to respondents and enable them to express

their views (Marton and Williams, 1986)

3.3.3 Sampling design

3.3.3.1 Sample

The theoretical research model was limited in exploring the Purchasing Intention

of consumers, who have bought at least once or know very well about online group purchasing (groupon) in Ho Chi Minh City Therefore, the focus is mainly on officers and students from eighteen to fifty years old in Ho Chi Minh City, who are also the target of online groupons Online questionnaire is created using Google Docs and is sent to these target respondents email or social network such as Facebook The hard copy versions are distributed to target officers and students by author’s friends, classmates and colleague

3.3.3.2 Determination of sample size

In fact, researchers have given many formula for determine the sample size The decision to choose the sample size will be dependent on statistical analysis method In this thesis, the author will use the EFA analysis and multiple regression following the research

of Tabachnick and Fidell in 1996:“The general process for creating a prediction equation

involves gathering relevant data from a large, representative sample from the population What constitutes "large" is open to debate, and while guidelines for general applications

of regression are as small as 50 + 8* number of predictors”

Base on above formula, my questionnaire have total 33 questions

 N ≥ 8*33 + 50 ≥ 314 (Respondents)

3.4 Data Analysis Techniques

After data collection is completed, the Statistical Package for Social Sciences (SPSS) version 20.0 will be used for analysis The process of primary data analysis procedure includes techniques such as: Characteristic of Sample, Descriptive Statistic,

Reliability Test, Exploratory Factor Analysis, Correlation Testing, Multiple Regression Analysis and Path Analysis

3.4.1 Descriptive statistics

The benefit of descriptive statistics is that it provides simple summaries about the sample and about the observations It highlights the main features of the data collection,

mostly quantitatively

The main components of descriptive statistics that will be used in this study are the

minimum value, maximum value, standard deviation and mean of variables

3.4.2 Reliability tests

The reliability and validity of measurement scale, Cronbach’s alpha was used in

this research “Coefficient alpha, as introduced in Cronbach (1951), is a frequently used

statistic in empirical research involving tests with various items Under the assumption that the items are parallel, that is, the measurements have identical true scores and uncorrelated errors having equal variances” (Alex J.Koning & Philip Hans Franses., 2003) Value of Cronbach’s alpha ranges from 0 to 1 The higher the value of Cronbach’s

alpha the more reliability Nunnally (1978) suggested a coefficient alpha of “0.6 is satisfactory in the early stages of research Moreover, Hair et al (2009) pointed out a coefficient alpha which is greater than 0.7 is highly satisfactory for most research purposes and the item that has Item-total correlation lower than 0.3 will be removed to increase the

reliability and validity of measurement”

3.4.3 Exploratory factor analysis

“In multivariate statistics, Exploratory Factor Analysis (EFA) is a statistical

is a technique within factor analysis whose overarching goal is to identify the underlying relationships between measured variables.”(Source: en.wikipedia.org)

“Consider the accordance of EFA: KMO (Kaiser-Meyer-Olkin), is a criteria for

evaluating the accordance of the data for EFA” (HoàngTrong, et al, 2005,) The EFA will

appropriate if score of the KMO great than 0.5 to apply factor analysis appropriately (Field,

2005) When we approve the hypothesis of Bartlett’s test of sphericity (H0) for the overall significance of all correlations within a correlation matrix When sig ≤ 0.05 the hypothesis

H0will be rejected so, this data will be appropriated

“Eigenvalue is sum of squared loadings for a factor, also referred to as the latent

root It represents the amount of variance accounted for by a factor.” (Hair et al 2009)

The criteria to determine the number of factors are extracted: all extraction factors must

have Eigenvalue >1 will be kept in model analysis (Kaiser, 1960, Rummell, 1970 cited in

HoàngTrọng et al, 2005)

“Factor Loadings is correlation between the original variables and the factors, and the key to under-standing the nature of a particular factor Squared factor loadings indicate what percentage of the variance in an original variable is explained by a factor” (Hair et al, 2009) Hair et al, 2009 said that factor loadings in the range of ±0.30 to ± 0.40

are considered to meet the minimal level for inter-pretation of structure and factor loadings bigger than 0.5 are considered practically significant In my thesis just only factor loadings bigger than 0.5 will be kept In addition, after run EFA for factors if any question has factor loading depend on two factors I will remove this question when difference lower than 0.3,

if this question have difference bigger than 0.3 I will put this question into factor has big

index (Kaiser1970)

According to Hair et al (2009) in the natural sciences, factors should be stopped when at least 95% of the variance is explained In the humanities, the explained variance is commonly as low as 50-60% In this thesis I would like to choose Total Variance Explained must be bigger than 50%

3.4.4 Correlation testing

Correlation coefficient also known as r, R, or Pearson's r that indicates the strength

of the association between any two metric variables That is defined as the (sample) covariance of the variables divided by the product of their (sample) standard deviations

-1 ≤ r ≤ 1 The sign (+ or -) indicates the direction of the relationship The value can range from -1 to +1 with + 1 indicating a perfect positive relationship and -1 indicating a perfect negative or reverse relationship If r = 0, the two variables doesn’t have a linear relationship So, Absolute value of r indicates to show the closely of linear relationship

Formula 1