Key factors influence brand trust and brand loyalty a study on smartphone consumers

The results indicate all dependent factors : 1 Brand Identity BI, 2 Brand Identification BID, 3 Customer Satisfaction CS have significant impact on dependent variavles 4 Brand Trust BT a

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Truong Hong Ky

AND BRAND LOYALTY

A STUDY ON SMARTPHONE CONSUMERS

MASTER OF BUSINESS (Honours)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Truong Hong Ky

KEY FACTORS INFLUENCE BRAND TRUST

AND BRAND LOYALTY

A STUDY ON SMARTPHONE CONSUMERS

ID: 22110033

MASTER OF BUSINESS (Honours)

SUPERVISOR: Dr Tran Ha Minh Quan

Finally, I would like to thank all of the respondents without whom, this research would have been difficult to make

Truong Hong Ky

July, 2014

Abstract

In each industry, there is a competition between companies to win customers’ trust and make them become loyal Customers, after getting the satisfaction of the product/service they consume, come to ask for value, belief, social status and life style orientation that company/brand makes

When do customers become more loyal to the brand? The most important reason is that product or service meets their expectation and demand More than that, brand has to come with distinctive message and build a social status that customers need to fulfill their self-defining

This study is conducted to find out the key factors affect brand loyalty and brand trust This

context of this research is technology equipment smartphone The factors found have

explaind how customers maintain loyalty with smartphone product The results indicate all dependent factors : (1) Brand Identity (BI), (2) Brand Identification (BID), (3) Customer Satisfaction (CS) have significant impact on dependent variavles (4) Brand Trust (BT) and (5) Brand Loyalty (BL) Brand Trust also has strong impact on Brand Loyalty

The last part of this study gives some recommendation to brand executives and marketing practitioners to gain trust and win loyalty of customers

2.4.1 Kapferer’s Brand Identity vs Brand Image 9 2.4.2 Brand Identity in other research journal 10

4.3 Exploratory Factor Analysis 30 4.3.1 EFA Analysis results for measurement scales of independent factors (Brand Identity, Brand Identification, Customer Satisfaction) 31 4.3.2 EFA Analysis results for measurement scales of dependent factor

4.4 Multi-Linear Regression Analysis for hypothesis testing 34

4.4.2.1 Testing hypothesis on the impact of

4.4.2.2 Testing hypothesis on the impact of

LIST OF TABLE

Table 6.2: EFA Analysis for independent variables after running 31 Table 6.3: Total Variance Explained for independent factors 32 Table 6.4: Rotated Component Matrix for independent variables 32 Table 7.1: EFA Analysis for dependent variables after running 33 Table 7.2: Total Variance Explained for dependent factors 33 Table 7.3: Rotated Component Matrix for dependent variables 34 Table 8: Collinearity Statistics for two dependent variables 35 Table 9.1: Multiple Regression result with dependent Brand Trust 39 Table 9.2: Research Result of what positively influence Brand Trust 40 Table 9.3: Multiple Regression result with dependent Brand Loyalty 40 Table 9.4: Research Result of what positively influence Brand Trust 42

LIST OF FIGURE

Chapter 1: Research Formulation

This chapter indicates the context of this study, including a short introduction of smartphone industry in Vietnam, the purpose of this study, research problem statement, research scope and methodology

1.1 Background

Vietnam smartphone market is growing fast According to Vietnamese Online Jounal of Investment, in December of 2013, the International Market Rearch GFK showed a result that Vietnam’s smartphone market has the rapid growth in the South-East of Asia Referring to the result, after 9 months of 2013, the growth rate of this market in Vietnam is 156% to 2012 According to Google statistics, at the end of quarter 2 of 2013, the number of smartphone users in Vietnam is 17 millions This number is rising in the near future In the middle of

2013, the proportion of smartphone among handphone device is 38% (*)

This technology industry attract millions of consumer Smartphone becomes a very convenient product with many useful features A good looking and high-rated smartphone is

an image of life style In October of 2013, at a Technology Conference, Thinh Pham, Wada Technological Application Buider Representative, stated that we are watching the age of smartphone Many significant facts are shown First, smartphone users in Vietnam takes 20%

of Vietnam population Second, smartphone is the popular device to access Internet in Vietnam 60% of smartphone users tend to shop online, 97% of them search for information Smartphone users tend to access Internet and social media(**) Smartphone industry turns to

be impactful and so potential In addtion, as the price of a smartphone has become reasonable, smartphone segment can attract more potential consumer in low-price market

(*): Retrieved from: bo.html

http://www.baodautu.vn/thi-truong-smartphone-viet-mieng-banh-beo-(**): Retrieved from: -17-trieu-nguoi-vn-dang-dung-smartphone.html

http://vietnamnet.vn/vn/cong-nghe-thong-tin-vien-thong/136651/google-Within the smartphone market in Vietnam, the competition between handphone producers/brands become more fiere and vigorous The prestigous world-wide handphone producers Apple, Samsung, Nokia, LG, HTC… is competing to take over the market of Vietnam Many new-comers like Huawei and Oppo try to get into this potential market Some China producers also launch product targeting low-price market

This industry keeps on growing fast and the penetration phase is almost over In order to maintain competitive advantage, smartphone company has to invest a lot on R&D to meet many new demands of consumer and follow the technology innovation which keeps changing over time As the result, top brand also introduce their newest products to the consumer in Vietnam as the same time as in other potential markets Every quarter of the year, consumer see many new products launched Consumer now have many choices for choosing a smartphone more than ever They are easy to find a smartphone with practical features and inexpensive price The switching cost is not so high to change from a brand to another In 2014, smartphone users tend to look for big screen design and practical function for checking health… Price of a premium smartphone is also going down and become less expensive than before (***)

Besides getting along in the R&D race, main effort of company/brand is to encourage the consumer to buy their product and maintain their loyalty There comes the question that, standing before a many products and brands, what would make the consumer confident to make the dicision of buying or re-purchasing? One perspective is that with a strong platform/core value, reasonable price, good after-sale service, a brand can win the market Other perspective is that consumer tend to buy the brand that is believed to be prestigeous Some people say they base on their acquaintances’ suggestion and advice to make decision

(***): Retrieved from:

http://tuoitre.vn/tin/tuoi-tre-cuoi-tuan/cuoc-song-muon-1.2 Research Problem

All the top management executives have to find way to make the company profitable and hold on its competitive advantage They have to learn their consumer, generate more sale of their product/service and build their brand stronger over time Business administration starts with the organization’s vision and mission and develops with functional department operation Marketing department has a role to help build the core value of company, brand and convey that brand message to customers One way to achieve competitive advantage success of a company/brand is how they differentiate themselves in profitable way

Consumer will consider purchasing and re-purchasing product/service based on their confidence, trust and the degree of loyalty in the company’s brand name In another word, customer has believe that the product or service under that brand name must perform well and satisfy their needs So companies, marketers and brand executives have done many research and learnt the concept of customer satisfaction, customer loyalty and customer’s perceived value Today, customers not only get influenced by company’s promotional programs but also interact with company and other customers Trust and perceived value drive customers to make recommendation and participate in the development of the company

Brand loyalty and trust plays an important role for company success The more loyalty customers are generated, the higher value and more profitable that brand would build to company As in such a rapid-changing industry like smartphone one, facing the competition over time, studying of brand loyalty is necessary

In conclusion, each company/brand should find out what to satisfy their customers and make them become loyal Company and brand executives are required to measure customers’ brand value perception This research is tailored in the smartphone product segment The research result contribute to the technology company the way to keep customers loyal to their brand Company will also know how they would positioning their brand inside customer’s mind

1.3 Research Objective

The thesis is to study brand trust and brand loyalty concept and the factors that impact on brand trust and brand loyalty Specific objective in this research is to examine the impact of the construct Brand Identity, Brand Identification, Customer Satisfaction on Brand Trust and Brand Loyalty

The industry in which this research design is made to study customer’s brand loyalty is technology product – smartphone

1.4 Research Scope

 This research study is mainly based on the customer-viewed perspective of the brand they consume Research scope is narrowed down into Ho Chi Minh City smartphone users

 As the focus of this study is on smartphone consumers, technology company’s brand executive is outside of the scope

 Some specific research questions are below:

What constructs brand trust and brand loyalty?

Discussed managerial implication should be integrated for company?

1.5 Significance

Research results will indicate the factors that impact on brand trust and brand loyalty Company and the marketing managers can base on that to build optimized brand strategy to win the share of voice and make their company more profitable

1.6 Structure of thesis

The research report consists of five chapters Chapter 1 introduces the overview of the research topic Chapter 2 revises the concepts to study, literature review, research model and hypothesis stated Chapter 3 presents the research methodology to test the measurement scale and run the research model given Chater 4 shows the result of the implementation of the testing and data analysis In this chapter, conclusion is drawn Chapter 5 summarizes the

Chapter 2: Literature Review

This chapter begins with they key concepts applied in this research study that are Brand Loyalty, Brand Trust, Customer Satisfaction, Customer’s Perceived Value approached through two concepts Brand Identity and Brand Identification

2.1 Brand and Brand Loyalty

Brand is a precious asset of every organization and company Brand is a big part of company’s marketing strategy

Every organization has their product and service identified different from other by their

brand A brand can be seen visible on the package of products In the past, a brand is a name,

term, design, symbol, or any other feature that identifies product and service of a company as distinct from others The legal term for brand is a trademark Peter and Jr (2011) call for other attributes to a brand such as its ability to evoke feeling of trust, confidence, security, strength and other desirable characteristics Therefore, a brand is not only a name to tell the product/service apart but also to create sentimental feeling from consumer’s heart and mind

There are various fields of study concerning brand and branding strategy Keller (1993) develop a consumer-based brand equity pyramid He describes that at the first stage when a company penetrate the market, all their efforts are about to get customer’s brand awareness And the highest level is the Keller’s pyramid is building customer’s brand loyalty and leading the market

Every companies have their business performance improved day by day through customer loyalty Loyal customers bring many benefits to company as they increase sales by re-purchasing products/service, decrease price sensitivity and and retaining positive attitude towards brand

In his book “Brand Management”, Le (2010) states that brand loyalty turns in an attaching bond between customer and brand The higher loyalty that consumers gain, the more

successful company grows The core benefits of making consumers more loyal are listed below:

 Reducing marketing cost

In some cases, as some brand is strongly positioned in consumer’s mind, consumer is easy to recognize and buy/use that product or service Loyalty consumer care about brand and what the company is doing to strengthen the brand value and keep their product/service improve day by day It can be assumed that those companies will spend less money than others, i.e on strategy of penetrating new market, promotion…

 Gaining more negotiation power

High loyal consumer asserts the prestige and powerfulness of one brand This gets that company more advantages when doing business with partner and middle distribution channel suppliers A company with many lines of product that win loyalty of consumers tends to make big contracts with distributors and get more profit and reduce cost for exhibition, trade fair and promotion…

 Attracting new customers

Prestigious brand bring to its company a stable volume of customer time over time Loyal customers are willing to try new product, new feature of the brand, make recommendation for their friends When customer hesitates before many products having same function, they will find the more prestigious brand more convincing to take

 Getting over competitors

Switching cost is one factor influence customer’s buying decision Newcomer of one market must spend more time and money to get customer A prestigious brand tend

to be easier to react to its competitors by organizing promoting campaign, sale off, special offer to loyal customer… to make its own customers satisfied with their admiring brand

Brand loyalty certainly bring many benefits to company Customers experiences many stages

psychological perception and behavioral response (Dick and Basu, 1994) In term of attitude, loyalty can be described as general and favourable liking for some personalities of a brand

And behavior of a loyal customer is repurchasing product/service In definition, brand

loyalty is biased behavior response expressed overtime by some decision-making unit with

respect to one or more alternative brands out of a set of such brands (Jacoby and Chestnut, 1978) Then, standing in front of a bunch of products, services with many brand names, a loyal consumer would rather decide to buy the brand they know that it not only fulfills his needs but also evoke his sense of self-definition and share the same value, belief

In general, when customer is loyal to a brand, they tend to re-purchase the product or re-use the service that brand offers They are willing to pay more when the price goes up, spread out word of mouth or positive recommendation to their acquaintances In time of crisis, they can keep buying product and show their gratitude to protect the company

Studying how to gain customer’s loyalty is important to every organization and marketing researchers Some previous studies has proposed the pivot constructs to brand loyalty which are: trust (Morgan and Hunt, 1994), customer satisfaction (Garbarino and Johnson, 1999), perceived value (Sirdeshmukh et al, 2002; Sweeney and Soutar,2001)

2 2 Brand Trust

Brand trust definition comes from the field of social psychology, sociology and marketing Morgan and Hunt (1994) defines trust is the confidence one partner has in the other exchange partner Brand trust is conceptualized as the confident expectations of a brand’s reliability and intentions in situation entailing risk to the consumer (Delgado-Ballester, E., Manuera-Aleman, J L., & Yague-Guillen, M.J ,2003) So a cusomer’s trust towards company and brand would go along with that brand’s reputation, credibility and its ability to fulfill the promises

Regarding brand trust, the authors state that in risky condition, trust can influence on choice and behavior To have trust in a brand means that consumer thinks of the high probability of the positive outcomes that brand will give to himself Contributing to define brand trust,

Chaudhuri and Holbrook (2001) mention the brand has to sofly make consumers rely on the ability of the brand to perform its stated function

Delgado-Ballester, E., Manuera-Aleman, J L (2001) state that trust is a feeling of security based on the belief that his behavior is guided and motivated by favourable and positive intentions towards the welfare and interests of the partner Trust is based on the two general dimensions : brand reliability and brand intentions towards the individual

 Brand reliability shows the customer’s belief that the brand has the capacity to respond to customers’ needs When brand is trusted by customer, this will increase his brand repurchase intentions on the next buying occasion

 Brand intention is the belief that the brand will never take advantage of customer’s vulnerability Consumers infer how the brand will behave in case problems arise in

some situations and circumstances

2.3 Customer Satisfaction

Customer Satisfaction is one important construct to brand loyalty

There comes a stage that is important for enhancing to brand’s product and its promises to customer That is when customer buy product, use the service and have real experiences with them Oliver (1981) insists that customer satisfaction assessment must be based on concrete and real exchange or trade When customers have the perception of good quality in the firm’s offerings, they gain their trust and the intention to get loyal Then, they will have the response and evaluation for the brand In the future, they will have their decision of buying due to their experience with the brand in the past

Customer satisfaction is an emotional status in which what customer desire and expect from a company’s product or service are satisfied or exceed their expectation (Brown, 1990) The outcome of satisfaction are repeated purchasing, loyalty and positive word of mouth Anderson et al (2004) describes satisfaction as accumulated general emotional evaluation of

customer have is based on their comparison between their previous expectation and actual performance of product/service, between price and quality

2.4 Brand Identity and Brand Identification

Perceived Value is one pivot construct to brand loyalty Sweeney and Soutar (2001) developed multiple item scale to measure consumer perceived value According to Sweeney and Soutar (2001), perceived value has some dimensions that makes it differ from customer satisfaction They argued that value perceptions can be generated without the product or service being bought or used They also conducted exploratory factor analysis and got 19 items revealing into for dimensions: quality, price, social and emotional

While quality and price can simply be described as functional value of product and service, social and emotional factor are exceptionally perceived by customer beyond their satisfaction Thus, social value and emotional value is derived from product’s ability to enhance one’s social self-concept and creates personal feeling

These values of company are perceived by customer after company’s attempt to build branding strategy A brand can be created and viewed as a human being that have many characteristics and emotions Up to now, there have been many concepts towards brand on this view of consumer: brand personality, brand image and brand identity In this research, the author refers to focusing on brand identity and brand identification Time over time, companies plan and execute many marketing communication mix including activities of packaging, pricing, advertising, distributing All these activities will create brand personality along with brand identity, brand image, brand identification

2.4.1 Kapferer’s Brand Identity vs Brand Image

Some new learners of branding may be confused between brand identity and brand image Some explaination below would clarify this

Marketing communication is the process in which a company sends out a message and customers receive it Strong marketing communication results in positive attitude toward

describes the gap between brand identity and brand image He defines brand identity is brand message the company sends out to the customers and brand image is the perception of the customers create about the brand

On the customer’s side, brand image is the sum of impressions that customers perceive a brand and identify of differentiate the brand from others (Kapferer, 2008) Brand image is held in customer’s memory with the effect of brand associations (Keller, 1993) It strengthens the link between customer and brand and also intention of customers to buy or repurchase some products

2.4.2 Brand Identity in other research journal

Bhattacharya and Sen (2003) and He (2009) suggests that brand identity with its prestige and distinctiveness leads to stronger customer relationship It is because brand identity of first and finest represents strong brand name and get customer’s higher level of trust and expectation

According to Bhattacharya and Sen(2003), brand or corporate identity are the characteristics

of being distinctive and relatively enduring of that brand The more distinctive and prestigious the brand identity is, the stronger and more attractive it becomes

Company’s product or service must satisfy the customer’s needs for core value Beyond this need, customers express their needs to become unique (Berger and Heath, 2007, Ruvio, 2008; Tian et al., 2001) People have their own motivation and need for distinctiveness in their identities (Tian et al., 2001) Therefore, a distinctive brand identity fulfills this need of customer To get this request fulfilled, customers have the tendency to ignore the rising up price For example, Apple Company usually launchs 2 new version of Iphone every year Even they change little feature of Iphone, many consumers hung for switching to the new version It can be proved that the customers are satisfied with Apple brand identity and consider the price less

smartphone under well-known brand costs more than 12 millions VND For the intention of purchasing, consumer would read the review on magazine and online, compare between the company’s brand performance and ask for advice from friends Therefore, a brand with higher distinctive characteristics and more well-known awareness by consumers will come

on top of the intention of buying

In this research, the author would use individual customers as the unit of analysis In other words, we are on the customer’s side and take the customer’s perspective of brand characteristics This means brand executives of Vietnamese handphone brand are not

involved Then, the author bases more on the definition of Bhattacharya and Sen (2003)

which says brand identity is all characteristics of a brand or company that makes the brand name more differential So the prestigious and unique manner of these brand characteristics would be examined through how customers receive/perceive the attempt of marketing communication from the company

2.4.3 Brand Identification

Brand executive must learn the relationship between customers and brand to measure and validate the performance of their marketing communication Brand management requires this Consumer’s identification with brand show the way customer interact with brand, their behavior and brand commitment As customer realizes that brand express their identity, they create a strong relation with brand

Brand identification is conceptualized as “customer’s identification with a company as an active, selective, and volitional act motivated by the satisfaction of one or more self-definitional needs”(Bhattacharya CB, Sen S.,2003) The authors state that brand identification is not imposed by company but sought out by customer who question for self-definitional need of fulfillment In other words, consumer perceives brand values as his own Consumer identity is expressed and communicated to other people through brand

Tuskej et al (2013) simply defines consumer’s brand identification as “perception of sameness” between brand and themselves As stated above, a brand can be conceived as one

such as honesty, elegance, excitement, sincerity, creativeness, friendliness…The more customer identify with a brand, the higher degree between his self-schema and the schema he holds for that brand

For example, fashion brand along with the specific concept and design would call for customer’s desire for fashion, for self-expression and their social role Those electronic brand,

in another way, would also call for fashionable desire and the professional look A smartphone can be conceived as the helpful assistand and a helpful friend

2.5 Research Model and Hypothesis

In Vietnam smartphone market, companies are on the running race to win customer’s loyalty Via some loyalty test and program, they may learn how their brand positions in mind of customer There are cognitive side and action response of customer to show their loyalty to brand And brand communication must fulfill both of these sides

There is a strong relationship between Brand Trust and Brand Loyalty Among all, trust is the key factor to every long-term relationship In business, many marketing researches have proved the positive impact of brand trust on brand loyalty On his study on brand choice, Erdem and Swait (2004) points out that brand trust increase probability of inclusion of a brand in the consideration buying set and brand choice So brand trust has a direct effect on customer perceptions and purchase intentions In addtion, Punniyamoorthy, M.M., & Raj, M (2007) came up with the result that brand trust, along with functional value, emotional value, social value, customer’s satisfaction and commitment, has the significant influence on brand loyalty

The first hypothesis is:

H1: Brand Trust positively influences Brand Loyalty

Brand value, brand image, brand personality are identified and perceived by customers In this research, we approach the progress of the way customers absorb brand value by studying two concepts: brand identity and consumer’s brand identification

A brand which is well-known and has high value results in brand trust Firstly, a strong brand identity would reduce customer’s worry of risk Secondly, there are two cognitive processes

of the development of trust (Doney and Cannon, 1997) The first process is calculative by means of calculating the costs/rewards of the target brand acting in an untrustworthy manner The second process takes place when a brand is capable of fulfilling its value promises Berens at al.(2005); Simoes et al.(2005) continued the research on brand identity and advocated that strong corporate identity engenders trust This come to a hypothesis proposed within this research study:

H2: Brand Identity positively influence Brand Trust

Brand loyalty has both psychological/cognitive side and loyal action responses So customer must refer to the brand that is more prestigious and valuable to make decision of buying product It is assumed that brand identity has a huge impact on customer’s cognitive loyalty and may greatly influence customer when they re-purchase product or service Brand identity certainly affect potential customer when they first consider a new brand to consume And loyal customers are willing to pay more for their favourite brand even the price rises up as the brand positioning and characteristics remain unchanged

Brand identity includes values, aim and moral image of the company And when the value and moral image is getting worse and negative, customer stop buying product from that company

Bhattacharya CB, Sen S (2003) proposed that the link between customer’s perception of company’s identity and their reaction to company depend on how they know and trust the identity So we can draw the following hypothesis:

H3: Brand Identity positively influence Brand Loyalty

Consumer’s identification with the brand means consumer find the sameness between themselves and brand Consumer can be inspired by the historical stories about brand Consumer can find that brand message, slogan express their lifestyle, belief and value For

example, Levi has a slogan “I will not sit at home collecting dust” This influences a young generation who likes to go exploring the world to learn and fulfill their self-defining In electronic industry, Sony sends out its message “Make Believe” Coming from Japan which

is a country of prestige and honor, Sony brand shows the characteristics of a fighter: always stand up and win the glory

Consumer’s trust and the relation between consumer and brand remains together He, H., Li, Y., Harris, L (2012) states brand identification represents affective attachment to the brand, which provides a favorable platform for brand trust development The following hypothesis

is as below:

H4: Brand Identification positively influence Brand Trust

Brand identification is the key construct in customer-company relationship Bhattacharya CB, Sen S.(2003) propose that brand identification can also affect brand loyalty As the attachment to brand is strengthened over time, customer repeatly purchase the company’s product, feel free and confident to try other brand line product, buy the accessories, join the event of the company

In the research on brand relationship, Tuskej et al (2013) finds that consumer brand identification influences positive consumer’s word of mouth Spreading positive word of mouth is among brand loyalty actions It can assume brand identication has an impact on brand loyalty The hypothesis is drawn as below:

H5: Brand Identification positively influence Brand Loyalty

Jones and Suh (2000) note that consumer satisfaction can lead to brand loyalty and brand trust Consumers becomes more loyal and trustful when there is a perception of good quality

in the firm’s offerings When consumer meet the inconvenience using product or service, their trust reduces Moreover, complaint, negative word of mouth and rumor tend to negatively impace on consumer trust also

H6: Customer Satisfaction positively influences Brand Trust

In the electronic industry, when consumer sees that his expectation before buying a product

is satisfied, he will consider the repeated purchase in the future Garbarino and Johnson(1999) ensured customer satisfaction as a key construct to brand loyalty According

to that research, overall satisfaction will result in future intention Consumer centainly changes his product and service when they do not feel happy anymore

Gustafsson et al (2005) also shows the effects of satisfaction and commitment on loyalty.The last hypothesis is:

H7: Customer Satisfaction positively influences Brand Loyalty

Table 1: List of Hypothesis

Hypothesis Statement of Hypothesis

H1 Brand Trust positively influences Brand Loyalty

H2 Brand Identity positively influence Brand Trust

H3 Brand Identity positively influence Brand Loyalty

H4 Brand Identification positively influence Brand Trust

H5 Brand Identification positively influence Brand Loyalty

H6 Customer Satisfaction positively influences Brand Trust

H7 Customer Satisfaction positively influences Brand Loyalty

Figure 1: Proposed Research Model

Table 2: Summary of the concept studied

(Author/Year)

Scale Measurement (Author/Year)

1 Brand Identity Kapferer, 2008

Bhattacharya and Sen, 2003

Bhattacharya and Sen (2003)

2 Brand Identification Bhattacharya and Sen, 2003

Tuskej et al (2013)

Bhattacharya and Sen (2003)

3 Customer Satisfaction Brown, 1990

Anderson et al, 2004

Anderson et al, 2004

4 Brand Trust Morgan and Hunt, 1994

Chaudhuri and Holbrook, 2001 Delgado-Ballester, E., Manuera-Aleman, J

L., & Yague-Guillen, M.J ,2003

Chaudhuri and Holbrook, 2001

5 Brand Loyalty Jacoby and Chestnut, 1978

Dick and Basu, 1994

Jacoby and Chesnut, 1978

Chapter 3: Research Method

This chapter describes the reseach process, methods used, sample design and data collection method

3.1 Research Process

Research scope and the context were well identified after research problem and research objective were defined Several theories and concept were reviewed After that, the author chosed main concept to propose the influences of them on brand trust and brand loyalty within the industry of communication equipment – smartphone The draft questionaire was also designed by choosing the measurement scale from the previous research study Then, research design came to the next two phases: a pilot study and main survey

- Pilot study was made in one round It was an in-depth interview with some smartphone users who have strong interest in using a brand of phone Other people see and tell the perception of each brand identity means to them Others have used several brands and experienced the quality and service They also helped to edit the wording, improve the questionaired before sending out the main survey

- Main survey was conducted via both direct and indirect way:

 Direct way: some surveys are completed by interviewing the respondents, some are sent to the audience

 Indirect way: using email invitation to Internet Survey to conduct the audience responses with the support of Google Docs Website

Received data was processed and analyzed by using Exploratory Factor Analysis and Cronbach alpha reliability analysis to validate data and check the reliability of the measurement scale To test hypothesis, the author used multiple regression Main findings was reported in chapter 4

Research procedure is summarized as the following 6 steps:

- Step 1: Development of research model and consolidated questionaire Research model drawed the correlation between the concepts based on literature review Measurement scale was adopted from previous study

- Step 2: Conducting an in-depth interview to get support from the real smartphone users This step is to check the relevance of the concept to the interviewee and how they understand the questionaire After this, final questionaire was decided The in-dep interviewees also recommend the audience for the author to send the questionaire

to Sample population is created

- Step 3: Send the main survey and collect the data after 1 month Based on the advice and sugestion from the in-depth interview, the main survey were sent to the sample population, main via indirect way using Google survey

- Step 4: Test the reliability of the measurement scales using Cronbach Alpha Analysis This is used to test the internal consistency among variables o the same construct Cronbach Alpha coefficient above 0.7 is good

- Step 5: Test the validity of the scale with Exploratory Factor Analysis (EFA) This test is to explored the inter-relationships among set of variables The inter-correlation

is considered strong when correlation matrix for evidence of coefficients is 0.3 Barlett’s test is significant (p<0.5) and KMO is good if being greater than 0.6 and ranging from 0 to 1

- Step 6: using the linear regression analysis After Cronbach Alpha and EFA Test, multiple regression analysis is employed to test the impact of independent factor on dependent factor

Figure 2: Research Process

3.2 Measurement Scales

All the constructs are measured by the Likert Scale ranging from 1 – 5 (from Strong Disagree

to Strong Agree) Measurement scale and items used in the research are adopted from the previous or related literature and research Some of them are modified to be used in the research’s context and situation

Brand Identity – Brand Identification

To measure these constructs, we use Likert scale with the measurement scale taken by Bhattacharya and Sen (2003)

Brand Identity

Brand Identification

When someone criticizes brand Z, it feels like a personal insult BID1

I am very interested in what others think about brand X BID2

When someone praises brand X, it feels like a personal compliment BID4

If a story in the media criticized brand X, I would feel embarrassed BID5

Customer Satisfaction

To measure overall satisfaction, we will apply the three items generally used in the literature

(Anderson et al, 2004)

Customer Satisfaction

I would prefer to buy X’s if there is another brand as good as X BL3

If I can not distinguish of another brand and X, I still think that buy X is advisable BL4

3.3 Data Analysis Methods

3.3.1 Source of Data Summary

In this research, primary data would rather be used due to its newly updated characteristic Besides, primary data is taken more precise for getting the trends, behaviors and habits of the target audience

This research also mainly uses quantitative data They produce results that are easy to

3.3.2 Sampling

- Sample size: 217

- Scope and context of research: Smartphone industry

- Interviewee: people in Ho Chi Minh City who use smartphone

3.3.3 Data Analysis Method

After gathering date, all the responses will be checked Unqualified responses will be deleted After that, data will be coded and process with SPSS 16: Cronbach Alpha Reliability, Exploratory Factor Analysis (EFA) and Multiple Regression Analysis

(1) Data coding and entering to SPSS software

(2) Test reliability of measurement scales with Cronbanch’s alpha analysis

This is run to test to reliability of the measurement scales The scales is good when Cronbach’s alpha coefficient of each scale is larger than 0.7

(3) Test relationship among factors with Exploratory Factor Analysis

EFA is run to explore the correlation among a set of variables in order to identify the number

of underlying factors Some requirement for this test are:

- Sample size must be over 95 as there should be a ratio of at least 5 cases for each variables There are 19 items/variables in this research questionaire

- The sample should be checked to see whether it is big enough If the Kaiser-Meyer-Olkin value (KMO) is equal or above 0.5, the sample is adequate

- The Bartlett’s test of sphericity is significant with p<0.05 This makes factor analysis appropriate

- Number of factors are determined when:

 Components have an eigenvalue of 1 or more

 Total variance explained by these components is above 50%

 Factor loading criteria is equal or more than 0.5 to ensure a practical significance (4) Regression analysis to see the impact of independent variables to dependent variables Multiple Linear Regression suits this research model testing Some assumptions of this method are:

- No outliers are found

- Normality and linearity exists

- The R-Square is likely can tell how much of the variance in the dependent variables was explained by the reasearch model From the R-Square, we can draw a formula to see how much each independent variable influences dependent variables

Chapter 4: Research Result and Discussion

Research methodology and the measurement scale were presented in chapter 3 This chapter outlines the official assessment of measures and hypothesis testing along with the result and explanation There are four parts in this chapter that are descriptive data analysis, assessment

of measures run with Reliability test and Exploratory Factor Analysis, hypothesis test and discussion of the result

4.1 Descriptions of sample

After the questionnaires were sent, the researcher received 75 responses by paper survey and the other 142 responses were collected according to Google Docs Application on Internet The final sample size was 217 ( n=217) Data were captured and put into SPSS 16 software Variables are measured by the scale with many observed variables (multi-item scale) The form of Likert 5 point scale is used to measure the applied concept with 1= Strongly Disagree and 5= Strongly Agree

According to the descriptive analysis, the majority participates in this research is young people aging from 22 – 30 The majority is those who have bachelor degree or MBA Most

of the interviews prefer to use Apple brand Besides, most of the interviewees are officer and their income are from 5 million VND to 10 million VND Detail description is as below

- Gender: Among 217 qualified respondents, 117 respondents (53.9%) were male and 100 (46.1%) were female

- Age: 36 of smartphone consumers aged from 16-21; 143 aged from 21-30; 40 aged from 31-40 and 10 aged over 40

Figure 3.2: Age

- Degree: 21 respondents have high school degree 140 graduated from university and college and Other 56 respondents have MBA Degree

Figure 3.3: Degree

- Job Position: 41 respondents were student 152 respondents were working officer

19 respondents were team leader and the other 5 were organization manager

Figure 3.4: Job Position

- Income: 38 respondents earned less than 5 million VND a month 100 respondents had their income ranging from 5 to 10 million VND a month 39 respondents had their income ranging from 10 to 15 million VND a month 38 respondents eared over 15 million VND a month

4.2 Measurement scale assessment

The reliability test results are shown in Table 5 It is proven that all the measurement scales was reliable All the constructs were valid as they suit the requirement of Reliability test The highest was 0.915 (Customer Satisfaction) and the lowest was 0.821 (Brand Identification)

Table 5: Reliability analysis results

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item Deleted

Cronbach's Alpha if Item Deleted

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item Deleted

There were 4 items measuring Brand Identity (from BI1 to BI4) Cronbach’s Alpha value

was 0.852 All of the items had high Corrected Item-Total Correlation (the least value – BI1 was 0.575) If item BI1 is deleted, the Cronbach’s Alpha will increase to 0.858 But the change is small So the items of this scale were accepted

There were 5 items measuring Brand Identification (from BID1 to BID5) Cronbach’s

Alpha value was 0.821 All of the items had high Corrected Item-Total Correlation (the least value – BID5 was 0.531) So the items of this scale were accepted

There were 3 items measuring Customer Satisfaction (from CS1 to CS3) Cronbach’s Alpha

value was 0.915 All of the items had high Corrected Item-Total Correlation All the items of this scale were accepted

There were 3 items measuring Brand Trust (from BT1 to BT3) Cronbach’s Alpha value

was 0.873 All of the items had high Corrected Item-Total Correlation There is no items that can be deleted to make the Cronbach’s Alpha higher Then the items of this scale were accepted

There were 4 items measuring Brand Loyalty (from BL1 to BL4) Cronbach’s Alpha value

was 0.844 All of the items had high Corrected Item-Total Correlation There is no items that can be deleted to make the Cronbach’s Alpha higher Then the items of this scale were accepted

After the reliability tests were processed, all the measurement scales for all independent variables and dependents variables were tested and proved to be valid The next data processing is EFA test

4.3 Exploratory Factor Analysis

The criteria to accept the result is that KMO > 0.5 and Sig < 0.05

The first analysis is to test the discriminant validity among independent and dependent variables The following is EFA test

The first EFA Testing is for 3 independent variables: Brand Identity, Brand Identification,

Table 6.1: Correlation Matrix

Up to the correlation matrix, there is a discriminant between independent and dependent constructs

4.3.1 EFA Analysis results for measurement scales of independent factors

(Brand Identity, Brand Identification, Customer Satisfaction)

The results for independent variables showed that KMO indicator was high It was 0.843

In addition, Chi-Square of Berlett’s test reached the value of 1454.810 and Sig is 0.000

Due to this result, EFA method was applicable in this research

This table 6.1 below shows the results for the first EFA testing

Table 6.2: EFA Analysis for independent variables after running

Bartlett's Test of Sphericity

In order to identify how many factors could be extracted from 12 items, extraction

method PCA (Principal Component Analysis) with Varimax Rotation was run to find the

result

Table 6.3: Total Variance Explained for independent factors

Cumulative

% of Variance

Extraction Method: Principal Component Analysis

According to the above result table, there were extracted 3 factors Eigenvalue for each factors was bigger than 1 and the final Eigenvalue was 1.155 Total extracted variance for three factors was 69.725% This means these extracted factors could explain 69.725% variation of the data

Table 6.4: Rotated Component Matrix for independent variables