The impact of store images on consumer loyalty luận văn thạc sĩ

The research successfully explored the significant relationship between Store Service Employee Service and After-sales Service, Store Facilities Physical Facilities and Store Atmosphere,

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY

YZ

NGUYEN VAN CUONG

THE IMPACT OF STORE IMAGES

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY

YZ

NGUYEN VAN CUONG

THE IMPACT OF STORE IMAGES

Supervisor: DR NGUYEN DINH THO

Ho Chi Minh City, July 2011

ACKNOWLEDGEMENTS

Firstly, I would like to express my sincere gratitude to my supervisor, Dr Nguyen Dinh Tho for the patient, dedicated guidance and valuable suggestions for this thesis over the past few months

Also, I am particularly grateful for Mr Tran Khoa Van – GfK Managing Director and GfK management board who inspire the study and contribute valuable figures about retailer evolution in Vietnam

Next, I would like thanks to my colleagues Mr Huynh Phuoc Cuong – Senior Manager of Retail Management and Mrs Nguyen Ngoc Lan Huong – Senior Research Manager in helping me to conduct and analyze the qualitative study

I also would to express my gratitude to management boards of the three consumer electronics retailers: Nguyen Kim, Thien Hoa and Cho Lon for the keen support in letting me collect shopper information during the qualitative research

My heartiest thanks are also sent to Mrs Pham Thi Thanh Nhan, senior assistant of Charles Sturt University Australia (CSU) for her non-stop support on books and online journal article

Finally, I would like to send my deep appreciation to more than 500 postgraduate students of University of Economics Ho Chi Minh City, who contributed valuable ideas and assessment for the whole pilot and main survey

Ho Chi Minh City, Vietnam

July, 2011

Nguyen Van Cuong

ABSTRACT

The area of consumer loyalty has received considerable attention during the past few years, both in academic and practice area Many retail research has been conducted to answer for the questions such as: what is the most accurate definitions of consumer loyalty; are there any models/ generalizations when investigating consumer loyalty; what the management implications would be for those researches

There are many antecedent factors affecting consumer loyalty, store image dimensions were discovered to be among the most important loyalty drivers In order to indentify the key determinant image elements and understand their derived importance, this study was implemented The research successfully explored the significant relationship between Store Service (Employee Service and After-sales Service), Store Facilities (Physical Facilities and Store Atmosphere), Product & Marketing Communication (Merchandising and Advertising & Promotions), Perceived Price and Store Convenience with Consumer Loyalty Also, these independent factors were also discovered that they do not equally affect on consumer loyalty

One qualitative study with in-depth interview and one pilot study were performed before the main survey was conducted in Ho Chi Minh City to assess modern trade consumer electronics retailers The study revealed that five key factors (Store Service, Store Facilities, Product & Marketing Communication, Perceived Price and Store Convenience) positively affect consumer loyalty Besides, the study suggested that Store Facilities and Product & Marketing Programs were the two most important factors to be invested in modern retailing industry

TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION 1

1.1 Research background 1

1.2 Problem statement 2

1.3 Research questions 3

1.4 Research objectives 3

1.5 Research scope 4

1.6 Research methodology and design 4

1.7 The significance of research 4

1.8 Thesis structure 5

1.9 Summary 6

CHAPTER 2 LITERATURE REVIEW and THEORETICAL MODEL 7

2.1 Consumer loyalty definitions 7

2.2 Store image definitions 8

2.2.1 Store convenience 9

2.2.2 Physical facilities 10

2.2.3 Perceived price 11

2.2.4 Employee service 11

2.2.5 Advertising and promotions 12

2.2.6 After-sales service 12

2.2.7 Store atmosphere 13

2.2.8 Merchandising 13

2.3 Store image studies 14

2.4 The relationship between store images and consumer loyalty 15

2.5 Theoretical model and hypotheses 16

2.5.1 Theoretical model 16

2.5.2 Hypotheses 17

2.6 Summary 19

CHAPTER 3 RESEARCH METHODOLOGY 21

3.1 Research process 21

3.2 Qualitative Study 22

3.2.1 Objectives 22

3.2.2 Methodology 23

3.2.3 Sample size and target respondent 23

3.2.4 In-depth interview content 23

3.2.5 Qualitative result 24

3.3 Measurement 26

3.3.1 Measure of consumer loyalty 26

3.3.2 Measure of store convenience 27

3.3.3 Measure of physical facilities 27

3.3.4 Measure of perceived price 27

3.3.5 Measure of employee service 28

3.3.6 Measure of advertising and promotions 28

3.3.7 Measure of after-sales service 28

3.3.8 Measure of store atmosphere 28

3.3.9 Measure of merchandising 29

3.4 Quantitative Pilot study 29

3.4.1 Objectives 29

3.4.2 Methodology 29

3.4.3 Target respondent and sample size 29

3.4.4 Pilot study content 30

3.4.5 Pilot study result 30

3.5 Model and hypotheses modification 34

3.5.1 Model modification 34

3.5.2 Hypotheses modification 36

3.5.3 Variables 36

3.6 Main survey 37

3.6.1 Methodology 37

3.6.2 Target respondent and sample size 37

3.6.3 Questionnaire content 38

3.6.4 Data analysis method 38

3.7 Summary 40

CHAPTER 4 DATA ANALYSIS AND RESULT 42

4.1 Sample characteristics 42

4.2 Cronbach’ alpha reliability analysis 44

4.3 Exploratory factor analysis 46

4.4 Multiple linear regression 49

4.5 Hypotheses assessment and discussion 51

4.6 Summary 53

CHAPTER 5 CONCLUSIONS AND IMPLICATIONS 55

5.1 Conclusions 55

5.2 Managerial implications 56

5.2.1 Store facilities 56

5.2.2 Product and marketing communications 56

5.2.3 Perceived price 57

5.2.4 Store service 57

5.2.5 Store convenience 57

5.3 Limitations and future research 58

5.3.1 Research limitations 58

5.3.2 Future research 58

5.4 Summary 59

REFERENCES 60

APPENDIX 1: Overview of Vietnam Retailing Market 63

APPENDIX 2: Data analysis 64

APPENDIX 3: Questionnaire 69

LIST OF TABLES Table 3-1: Qualitative result – important factor to retain loyal customers 24 

Table 3-2: Qualitative result – important factor to retain loyal customers 25 

Table 3-3: Cronbach alpha result for pilot study 31 

Table 3-4: Rotated component matrix for pilot study 33 

Table 4-1: Descriptive analysis 42 

Table 4-2: Average number in one household and average household monthly income 44 

Table 4-3: Cronbach alpha result for main survey 44 

Table 4-4: EFA rotated component matrix for main survey 47 

Table 4-5: Total variance explained 48 

Table 4-6: KMO and Bartlett’s Test 49 

Table 4-7: Regression model summary 49 

Table 4-8: ANOVA F test 50 

Table 4-9: Multiple linear regression result for main survey 50 

Table 1-1: Vietnam retail outlet evolution of home technology product 63 

Table 1-2: Organized/ chain store vs independent channel evolution 63 

Table 1-3: Ranking of Retail Market Attractiveness 63 

Table 4-10: Descriptive statistic 64 

Table 4-11: Correlation between Consumer loyalty, Store Service, Store Facilities, Product & Marketing Communication, Store Convenience and Perceived Price 65 

Table 4-12: Communalities 66 

LIST OF FIGURES

Figure 2-1: Theoretical model 17 

Figure 3-1: Research Process 22 

Figure 3-2: Modified theoretical model 36 

Figure 4-1: Result of multiple linear regression 51 

Figure 4-2: EFA Scree Plot 64 

Figure 4-3: Histogram of Consumer Loyalty 67 

Figure 4-4: Normal P-P Plot of Consumer Loyalty 67 

Figure 4-5: Scatter plot of Consumer Loyalty 68 

CHAPTER 1 INTRODUCTION

1.1 Research background

In recent years, the rapid growth of retailers in both quantity and channels (supermarket, hypermarket, exclusive single brand stores) has resulted in a corresponding increase in the competition between retailers The understanding of what motivates consumers to purchase from one stores rather than another becomes increasingly important to retail stores design and management (Black et al., 2002)

In Asia, retailing has been still one of the most attractive industries over the past few years Vietnam, an emerging country with a dynamic economy and a potential entry market with more than 85 million people, will be a prosperous land to invest According

to the Global Retail Development Index 2010 of American consulting company AT Kearney, Vietnam was ranked as the 14th in 30 countries having the most attractive retailing industry worldwide

The retailing industry is still considered as an attractive industry because Vietnam has a young population and promises a robust growth of the industry Furthermore, after joining WTO, Vietnamese government continued encouraging and supporting local retailers to participate and expand in the regional retailing industry to keep pace with neighbor countries like Thailand, Singapore or Malaysia

The growing of retail industry in Vietnam is recorded to be in both channel and outlet development Firstly, regarding number of outlet, according GfK Vietnam (see appendix

1, table 1.1), the total number of retailers selling technology products is expected to increase significantly in 2011 (44%) compared to 2010 Of which, telecom group (mobile phone retailer) has the largest number of retail store (19,347 outlets) Secondly, modern trade channels continued to emerge despite the dominance of traditional channels Consumers have been interested in shopping at supermarkets, hypermarkets and convenience stores because of their pleasant environment as well as their diversified product ranges In addition, modern trade channels try their best to offer consumers a more competitive price to compete with traditional channels Consumers also preferred

to come to modern consumer electronics stores because they could freely look, touch and try products that they wanted GfK retail audit recorded a positive growth in revenue

of organized chain store (modern trade retailers) compared to traditional independent store during the past three years 2009-2011 (See appendix 1, table 1.2) As can be seen, the value share of modern trade channel in consumer electronics and home group retailer increased from 27% in 2009 to 35% in 2010 and is predicted to be 40% in 2011

Consumers seemed to be more willing to make purchases compared to the previous years However, the booming of retail outlet and the developing of modern trade channel make consumers to be more selective in choosing retail stores Consequently, many retailers have tried to find different marketing communication tools to attract new customers as well as retain loyal ones Advertising, sales promotions and other marketing activities have been considered to stimulate demand as well as to boost sales

Despite many approaches applied by different types of retailers, it’s necessary to have a consistent model for retailers to drive their sales, create consumer loyalty and increase benefit The model have to focus on building a proper marketing communication mix, sustaining and developing store physical facilities as well as improving store services

1.2 Problem statement

The rapid growth of modern trade consumer electronics retailer in an emerging country like Vietnam also has some issues to be address In the first place, there are only a few of retailers which are real modern trade according to the definition of worldwide retail industry The others can considered themselves as technical super stores, super market, hyper markets of consumer electronics product because they have some competitive advantages

No matter how big the retailers, each of them find their own strategy to drive their business and create a unique loyalty image in consumer’s mind While big retailer names such as Metro, Big C, Nguyen Kim, Thien Hoa, Tran Anh or Pico always empower their brands by enhancing their stores facilities and improving customer service as a mass merchandiser The other smaller ones, based on their advantages about locations, government relationship or manufacturer relationship, increase their sales and retain their loyal customers by offering different attractive price and in-store promotions which were run monthly or even weekly

There have been a number of failures in retailing industry during the past five years beside the successful names like The Gioi Di Dong, Nguyen Kim or Tran Anh Most of the failures claimed that they were really misled to retain loyal consumers Some invest

a lot on location and facilities, some spend money running price and sales promotions while the other put many efforts to build a good customer service team However, they have some common questions: Why their loyal customers easily switch to competitor stores? How can they identify competitor strength or weakness periodically? Among facilities, services, product & promotions, and price, which one is the key to invest?

• How important each store image dimension placing on general consumer loyalty? Resolving this question will assist retailers to prioritize their investment for a marketing communication program Moreover, new retailers or retailers with limited budget can find it useful to firstly spend money for some important factors in a short-term development

• Quantify the importance level of each independent factors in the relationship with consumer loyalty

1.5 Research scope

The research was conducted in Ho Chi Minh City, a commercial and trading center of Vietnam According to GfK retail census 2010, more than 35% of modern trade retail sales are contributed by Ho Chi Minh City

The study focuses on retailers who selling household consumer electronics items such as TVs, DVDs, audio home systems, MP3/MP4, camera, camcorder, mobile phones, refrigerator, washing machine, air conditioner, microwave ovens, vacuum cleaner, desktop PC, laptop and office equipment As stated in the research background, these home-technology retailers were recorded to have significant growth during the past few years in terms of outlet and retail turnover

1.6 Research methodology and design

The study comprises two phases: The pilot study and the main survey The Pilot study includes qualitative and quantitative stages Qualitative stage was conducted to collect the appropriate response scheme from Vietnamese consumers These items will be measured in the pilot quantitative study for their relevance and reliability Finally, the main survey was carried out to test the research hypotheses, answer research questions and fulfill research objectives

Cronbach alpha was used to measure the reliability of the scale, exploratory factor analysis was applied to identified correct factors and multiple linear regression was performed to test the significant relationship between each store image dimension on consumer loyalty

1.7 The significance of research

There are a lot of researches conducted to understand the different impact of store images on retailer preference (Thang and Tan, 2003), retailer purchase intension (Liljander et al., 2009), store satisfaction (Bloemer and Ruyter, 1997) or store evaluation (Decarlo et al., 2007, cited from Jinfeng and Zhilong, 2009) The perceived benefit of consumer loyalty was also compared across nation and culture (Steyn, 2010) However,

a few of them investigate the direct relationship between store images determinants and consumer loyalty

Recently, Jinfeng and Zhilong (2009) explores the impact of selected store images on retailer equity which includes retailer loyalty, retailer awareness, perceive quality and associations Yet, the study is still limited in a certain number of image factors and retailer types

There is also a fact that modern consumers have been increasingly selective in choosing stores and retailers have also raised a demand to differentiate themselves from other competitors by services, personnel, facilities or promotions Thus, our research will establish an applicable loyalty model which investigates the relationship between 8 store images and consumer loyalty The model will be also considered as a marketing tool which identifies the derived importance of each image dimension to consumer loyalty

1.8 Thesis structure

The content of this thesis is as follows

Chapter 1 - Introduction: briefly introduces about research background, problem

definition, research questions and objectives, delimitation, methodology and design

Chapter 2 - Literature Review: provides an overview of the previous literature on

store images in order to understand the key image drivers of consumer loyalty and the different impacts of each image on overall loyalty outcomes The chapter also reviewed various preceding studies about store images and store loyalty before releasing the theoretical model and research hypothesis

Chapter 3 – Methodology: explains the methodology used to assess the research model

and test the hypotheses The study is divided into two phases: pilot study (including qualitative and quantitative pilot study) and main survey Reliability and statistical measurement are also conducted to modify conceptual model and hypotheses Sampling method, sample size, target respondent and data analysis method are also covered in this chapter

Chapter 4 – Data Analysis and Result: represents the key findings of the sample

characteristics This chapter also comprises statistical procedures that were undertaken

to test hypotheses and reveals the applicable model

Chapter 5 – Conclusions and Implications: This chapter includes conclusions,

managerial implications, research limitations and future research

1.9 Summary

The chapter briefly introduced about the research by providing the overview of retailing industry in Vietnam The dynamic of an emerging country together with a huge population placed Vietnam as one of the 25th most attractive retail market in the world (See appendix 1, table 1-3) However, there have been many threats for developing retailers in recently years when they have to compete with big cooperation like Metro, Big C and Parkson with little knowledge about consumers and marketing strategy Consequently, the study aims to deliver a more practical view about the drivers of consumer loyalty by investigating different effect of store images on consumer loyalty This chapter also represented the questions, the objectives and the scope of the study In addition, the methodology and the design of the research were also introduced

CHAPTER 2 LITERATURE REVIEW and THEORETICAL MODEL

2.1 Consumer loyalty definitions

In conceptualizing consumer loyalty, we propose a distinction between repeated visiting behavior and consumer loyalty Repeat visiting behavior is the actual visiting of the store Consumer loyalty is sometimes referred as retailer loyalty in some studies

Reynolds, Darden and Martin (1974-1975) define loyalty as ‘the tendency for a person

to continue over time to exhibit similar behaviors in situations similar to those he has previously encountered” Loyalty is sometimes referred as loyalty patronage – a repeating purchase behavior at a particular store for either the same products or any other products A customer who is loyal to a certain retailer will give this store his or her priority visit in any shopping event

In an earlier study, Jacopy and Chestnut (1978) describe consumer loyalty as the “biased behavioral response, express overtime, by some decision-making unit with respect to one store out of a set of stores, which is a function of psychological (decision making and evaluative) process resulting in brand commitment” Jacopy and Chestnut also differentiate the consumer loyalty with repeat visiting behavior and highlight the important role of store commitment, a necessary condition for consumer loyalty to establish

Lastovicka and Gardner (1977, cited from Chowdhury, 1998) define store commitment

as the pledging and binding of an individual to his/her store choice And once consumers become committed to the store, they turn to be loyal to the store, generating consumer loyalty In another study of consumer commitment, consumer loyalty is defined as a commitment to re-buy or re-patronize a preferred product or service consistently in the future, despite the situational impact or marketing efforts which might let consumer switch their choice (Arnett et al., 2003)

East et al (1995, cited from Styen, 2010), define consumer loyalty as the percentage of purchases of specific product category at a chosen store

According to Pappu and Quester (2006a, b) consumer loyalty is the consumer intention

to be loyal to particular retailer as demonstrated by the intention to purchase from the

retailer as a primary choice As such, consumer loyalty is measured by the feeling of loyal, the top-of-mind store choice, and the commitment not to switch to another store Sirohi et al (1998) explore three measures constructing consumer loyalty intention from consumers They are willingness to repurchase, willingness to purchase more in the future, and willingness to recommend the store to others

James, Walker and Etzel (1975) find loyalty an important objective that every marketers aims for their products, brands and services It helps retailer to prolong their business because of repeated purchase of loyal customers The strength of this loyalty behavior of the customer and target market is the key to success of a particular retail business Loyalty is supposed to be the highest level of patronage motivation

Anderson (1973, cited from Osman 1993) describes consumer loyalty from similarity and contrast theory Once the customers are loyal to their stores, they will remain loyal

as long as the core attributes of the stores fit perceived important store attributes If the performance of some core attributes of the stores decrease, the customers will try to accommodate by matching other alternative attributes to justify their loyalty However, the decrease in perceived important store attributes can be accepted at a certain extent

The degree of consumer loyalty can be measured by using various variables (Bellenger

et al., 1976) Among these variables are: the percentage of purchases of a specified product category at chosen store; the frequency of visits to the store in relation to other stores during a certain specified period; the ratio of ranking between stores; the intention

to shop at a store in the future; the extent of customer’s willingness to recommend the store to their friends

2.2 Store image definitions

Martineau (1958) conducts one of the earliest studies about store images and describes store image as “the personality of the store and the manner in which the store is presented in a personal mind”

Over the decades, many authors propose different store attributes or characteristics definitions that are part of the overall store images Doyle and Fenwick (1974), for instance, distinguish only five elements of store images including product, price,

assortment, styling and location while Bearden (1977) identifies seven dimensions: price, quality of the merchandising, assortment, atmosphere, location, parking facilities and friendly personnel

Marks (1976) and James et al (1976) define store images as a multi-attribute models and image is thus expressed as a function of the salient attributes of a particular stores that are evaluated and weighted against each other

Houston and Nevin (1981, cited from Thompson and Chen, 1998), describe store images

as the “complex of consumer’s perceptions of a store on different attributes”

Engel and Blackwell (1982, cited from Thompson and Chen, 1998) consider store image

as an attitude, or set of attitudes, based upon evaluation of salient store attributes

Additionally, Lewis and Hawksley (1990, cited from Thompson and Chen, 1998) and Osman (1993) define store image as critical components in store choice and consumer loyalty

According to Keaveney and Hunt (1992), store image measurement almost always involves the identification of a number of attributes which are assumed to make up a store’s image

Ghosh (1990) identifies that store image is a composition of the different element of retail marketing mix such as location, merchandise, store atmosphere, customer service, price, advertising, personal selling and sales incentive programs

Despite numerous attempts to define and measure store image constructs, there is no consensus definition and there are still inconsistencies in conceptualization and operationalization The following section will review and consolidate different definitions of some key store images dimensions including: store convenience, physical facilities, perceived price, employee service, advertising and promotions, after-sales service, store atmosphere and merchandising

2.2.1 Store convenience

Many early researches have been developed to assess the role of store convenience (Rich and Portis, 1964, Kelly and Stephenson, 1967, Fisk 1962 and Weale, 1961, cited from

Lindquist, 1975) Most of the studies divide store convenience into localtional and parking convenience

Later, Kunkel and Berry (1968) and Lindquist (1975) separate store convenience into in three types: convenience in general, locational convenience and other convenience factors Locational convenience focuses on the effort to reduce the time to go to and from a store This factor includes accessibilities, good-or-bad location Other factors of store convenience should be considered are parking, opening hours, store layout in terms

of convenience and convenience in general

Location decision is also considered as a key to success of many retailers (Kotler, 2006)

He emphasized the important role of location in the developing of modern retailing industry Generally, a central business district, a shopping center area, a community shopping zone, a commercial shopping street should be focused

2.2.2 Physical facilities

Martineau (1958) finds that factors such as elevators, escalators and counter position play a critical part in defining store layout and architecture In addition, he adds symbols and colors as two parts of physical facilities and describes them as the shape and the color of company symbols or logos

Rich (1963) and May (1971) describe physical facilities of a store as a store layout However, Aron (1963) and Fisk (1962) find that the ease of shopping would also create the quality of physical facilities (Cited from Lindquist, 1975)

Lindquist (1975) consolidates the results of 26 previous authors about store image dimensions and to come up with nine image elements which contribute to image formation or to favorable/unfavorable consumer attitudes toward retailer He defines physical facilities as the attributes covering the facilities available in the store such as elevator, lighting, air conditioning and washroom (rest room) It can also include store layout, aisle placement and width, carpeting and architecture

2.2.3 Perceived price

Perceived price or price of merchandize is a part of merchandise assessment (Kunkel and Berry, 1968) The price of a store could be perceived to be cheaper, more competitive, high, fair, or value for money

Chowdhury et al (1998) adds more value for price evaluation of a store He finds that price or values should be measured under the fairness, value-for-money, the discount or just a cheap/expensive awareness in consumer mind

Price and pricing has been a long lasting discussed topic in any retail management Kotler (2006) stresses price as a key positioning factor and must be described in relation

to the target market, product and marketing mix and the competition He emphasizes that the mark-up and volume will not go together Low-markup often goes with high volume

to represent for mass merchandiser and discount stores Meanwhile, specialty store usually choose high-markup and small volume

2.2.4 Employee service

Employee service is described as sales personnel service by Martineau (1958) He emphasizes that the increasingly success of modern trade come from the dispose of sales clerk in some supermarkets However, shoppers have been variably evaluated the sales personnel in their regular purchasing at some retailers

Kunkel and Berry (1968) clarify the sales personnel description by adding attitude of sales staff, knowledge-ability of sales staff, number of sales personnel and the quality of service they bring to customers

Employee service is also depicted as the sales-clerk service in many researches before

1975 (Myers, 1960, Tillman, 1967, Fisk, 1962 and May, 1971, cited from Lindquist, 1975)

In 1975, Lindquist combines most of his preceding studies to provide a definition of service According to him, employee service is just one critical part of store service which refers to many measurements including service in general, sales clerk service, presence of self-service, ease of merchandise and credit policy of the store

2.2.5 Advertising and promotions

The retailer’s advertising is an especially important factor in expressing the character of the store While the retailers think of factual content of advertising like items, prices, timeliness, quality of merchandise, shoppers can be impressed by the physical appearance, general tone, wording and styles of the advertising The symbolic meaning

of the advertising has to be consistent with the character of the store itself (Martineau, 1958)

Promotion is also specified as sales promotions by Kunkel and Berry (1968) They measure sales promotions through quality or assortment of sales merchandising, special promotion programs, stamps or other promotions In the meantime, advertising is categorized into style or quality of advertising, media and vehicles used and reliability of advertising

Rich and Portist (1964) and Fisk (1962) evaluate advertising of a store by advertising in general and display advertising (Cited from Lindquist, 1975)

Lindquist (1975) proposes another definition of promotion which is considered as a store marketing mix and should cover sales promotions, advertising, display, trading stamps, and symbols and colors

Kotler (2006) recommends retailer to use variety of communication tools to reinforce their store images He highlights the important role of advertising and promotions mix like print-ads, money-saving coupons, frequent shopper-reward programs, in-store sampling

2.2.6 After-sales service

After-sales service or post-transaction service is evaluated by the satisfaction of consumers after purchasing This service includes such areas as warranty service, returns policy, the support post-purchasing service staffs (Lindquist, 1975)

After-sales service is often measured by a person who delivers the post-purchasing service like set-up and installing staffs, customer phone service (Fisk, 1962, cited from Lindquist, 1975)

Kotler (2006) describes post-purchase service through the items like shipping and delivery, gift wrapping, adjustment and repair, interior decorating, credit, rest room and baby-attendant service

2.2.7 Store atmosphere

Martineau (1958) finds that store atmosphere is a part of layout and architect As such, store atmosphere is defined as what consumers pay attention to including product display, crowds, size of a store, in-store decoration and shopping atmosphere

Kunkel and Berry (1968) add two more dimensions to Martineau definitions about store atmosphere: customer type and store congestion in his behavioral study about store images

Later, Lindquist (1975) proposes an emotional description for store atmosphere According to him, store atmosphere should be measured by a customer’s feeling of warm, acceptance or ease during the purchasing

According to McGoldrick (2003), store atmosphere should contain four dimensions: visual or sight (color, brightness, size and shape), aural or sound (volume and pitch), olfactory or smell (scent and freshness) and tactile or touch (softness, smoothness and temperature)

Kotler (2006) defines store atmosphere as the design of space to create certain effects to shoppers Specifically, by creating store atmosphere in buying environment, shop owners try to generate emotional effect in consumers to enhance purchase possibilities

2.2.8 Merchandising

There are five attributes to be considered when we assess merchandising of a store (Lindquist, 1975) They are quality, selection of assortment, styling or fashion, guarantees, and pricing Merchandising is also understood as the good and services offered by retailers

Kunkel and Berry (1968) define merchandising by three separate categories: price of merchandise, quality of merchandise and assortment of merchandising (product assortment)

Thang and Tan (2003) use three criteria to measure merchandising quality of a store: merchandise mix quality, value-for-money merchandise and availability of merchandise

2.3 Store image studies

Many empirical studies related to store images are conducted to understand the relationship between different dimensions of store images and consumer store choice, satisfaction and loyalty

Hansen and Deutscher (1978), two professors of The Ohio State University, on the basis

of Lindquist works, implement an applied research for both department stores and grocery stores in metropolitan area Their conceptual framework bases upon the notion

of attribute, components and dimensions There are nine dimensions (merchandise, service, clientele, physical facilities, convenience, promotion, store atmosphere, institutional and post-transaction satisfaction), twenty components and forty one attributes to be tested among customers from two store types The study highlights the different importance level of each image dimensions towards particular type of retail store The difference of demographic factors also results in the gap in evaluation

Lewis and Hawksley (1990) find that psychological factors play key roles in forming store image Self-image consumers, for instance, try to bring their real self-concept towards buying process to be satisfied and attain a desired role in life Several attempts have been made to determine whether there is a linkage between a consumer’s self-image and store image

Hirschman and Stampfl (1980, cited from Thompson and Chen, 1998) suggest that consumers may match themselves with retail stores according to their perceptions of their own and of the stores’ innovation Thompsons and Chen (1998) identify the correlation between the value of “enjoyment and happiness” and “quality of life” with store associations like “price, reputation and quality” in a study about customers at fashion retail stores

In a study about the relationship between store image and store preference, Thang and Tan (2003) explore the impact of eight image dimensions (merchandising, atmosphere, in-store service, accessibility, reputation, promotion, facilities and post-transaction) on store preference through consumer perception as a mediating factor

2.4 The relationship between store images and consumer loyalty

Lessig (1973) not only examines the relationship between store image and consumer loyalty but he can also predicts consumer loyalty from store image information by observing and investigating loyalty groups from distinct clustered household Moreover,

by using multi-store loyalty measures, Lessig can gain the possible insight about the factors which underlie consumer loyalty and emphasize the value of loyal patronage across various retail outlets

Osman (1993) proposes a model of retail image influences on loyalty patronage behavior He identifies that loyalty patronage is linked to customers’ store image and past purchase experience He postulates that loyalty patronage is the result of past purchase experiences and the consumers’ favorable image of the store If the customer is satisfied with their purchase at the store, he or she will return to the store for next purchases This past experience will help customers to form his or her perception of the store

Some researches about consumer loyalty focus on the impact of service quality on consumer loyalty intentions, a measurement of consumer loyalty Sirohi et al., (1998) find a significant relationship between service qualities and repurchase intention & willingness to recommend - 2 measures of loyalty intentions

In the study of consumer perceptions and store loyal intentions at supermarket, Sirohi et

al (1998) explore that: the perception of value for money has a positive effect on consumer loyalty intentions of consumers; service quality constructs (store operations, store appearance, and personnel service) have direct positive effect on consumer loyalty intentions; and perceived value of competitor has a negative effect on consumer loyalty intentions (the higher the perceived value of competitor, the lower the consumer loyalty intentions)

Bloemer (1997), in a study about consumers of a department store in Switzerland, indentifies the significant relationship between store images and consumer loyalty through the mediating role of store satisfaction He also postulates that the relationship between manifest satisfaction and consumer loyalty is stronger than the relationship

between latent satisfaction and consumer loyalty by testing the combined effect of store satisfaction, store choice involvement and store deliberation

Orth and Green (2009) find the direct and indirect influences of store image (price/value, service, atmosphere, product quality, selection, convenience) on store satisfaction and consumer loyalty through mediating role of consumer trust including management practices and policies and front line employees

Recently, Jinfeng and Zhilong (2009) identify the relationship between five selected store images (convenience, institutional factors, physical facilities, perceived price and employee service) and consumer loyalty This retailer equity study not only reveals the relationship among the dimensions of retailer equity (retailer associations, awareness, perceived quality and loyalty), but it also tests the effect of selected store image on each dimension of retailer equity However, the functions of other store image dimensions like merchandising, advertising and promotions, after-sales service and store atmosphere are not included in the research The research is also limited within hypermarket Other retail categories need to be further studied such as department store, convenience store

and grocery store

2.5 Theoretical model and hypotheses

2.5.1 Theoretical model

The model is established by inheriting four store image dimensions from Jinfeng and Zhilong (2009) retailer equity model and retaining another four additional image factors from a consumer perception study of Thang and Tan (2003) The model represents the relationship between eight dimensions of store images (store convenience, physical facilities, perceived price, employee service, advertising & promotions, after-sales service, store atmosphere and merchandising) and consumer loyalty

In the model, store convenience, physical facilities, perceived price, employee service, advertising & promotions, after-sales service, store atmosphere and merchandising play the role of independent variables Consumer loyalty is dependent variable Figure 2-1 represents the theoretical model of the study

Figure 2-1: Theoretical model

2.5.2 Hypotheses

Store convenience: store convenience represents for the time consumers spend to go to

or from the store The more convenience the store is the easier to purchase good or get services in the store Chang and Tu (2005) support the relationship between store convenience and customer satisfaction Store convenience is further categorized as general convenience, locational convenience, and parking (Lindquist 1975) When consumers find it more convenience to shop, they will be likely to shop more frequently with higher satisfaction, showing their loyalty to the store Our hypothesis is thus:

Hypothesis H1: The convenience of a store positively affects consumer loyalty

Physical facilities: physical facilities can place direct or indirect effect on perceived

service quality of a store and affect customers’ evaluation of other intangible value (Reimer and Kuehn, 2005) Yoo et al (1998) indentify the indirect impact of store

Consumer Loyalty

H6 H7 H8 Merchandising

H5

facilities on store attitude under the meditational effect of store emotion including positive emotions (attractive, proud, contended, excited, satisfied and pleased) and negative emotions (nullified, ignored, anxious, angry and displeased) Store facilities are also viewed store appearance which is supposed to have positive effect on consumer loyalty intentions (Sirohi et al., 1998) Base on these arguments, we hypothesize that:

Hypothesis H2: The physical facilities of a store is positively related consumer loyalty Perceived price: The perception of value for money is postulated to have positive

relationship with loyalty intentions (Sirohi et al., 1998) Similarly, Jinfeng and Zhilong (2009) find the significant effect of perceived price and consumer loyalty when they study the influence of store images on retailer equity Store price and values are also found to have impact on consumer loyalty through the mediating role of consumer trust and satisfaction (Orth and Green, 2009) Our hypothesis is:

Hypothesis H3: There is a positive relationship between perceived price and consumer

loyalty

Employee Service: employee is defined as in-store service and employee attitude which

are identified to have direct impact on consumer loyalty (Jinfeng and Zhilong, 2009; Thang and Tan, 2003) Sihori (1998), in the same way, successfully tests the positive effect of personnel service on consumer loyalty intentions In addition, salesperson service is also found to have direct effect to consumer in-store emotion and indirectly create consumer store attitude (Yoo et al., 1998) We thus posit that:

Hypothesis H4: The better the employee service at a store the more generated loyalty

from consumers

Advertising and promotions: store promotion is indicated to have direct influence on

store preference In other words, the more favorable the consumer perception of the promotions at the store is, the higher the consumer preference will be (Thang and Tan, 2003) Kunkel and Berry (1968) find 12 factors of store images, in which sales promotions and advertising is indicated as 2 separate dimensions and are principle for future retailing loyalty research Thus, we hypothesize that

Hypothesis H5: There is a positive correlation between advertising & promotion at a

store and consumer loyalty

After-sales service: Lindquist (1975) defines after-sales service as service in general

including self-service, ease of merchandise return, delivery service and credit policy of a store The post-transaction, consequently, creates credibility and influences the perception of the consumer about their past purchase satisfaction which can generate loyalty patronage behavior in future (Osman, 1993) We consequently hypothesize that

Hypothesis H6: The more favorable the after-sales service at a store is, the higher loyal

the consumer will be

Store atmosphere: store atmosphere describes the environment that is brought by visual

displayed of merchandise and ease of mobility within the store (Ghosh, 1994, Bearden, 1977) Kunkel and Berry (1968) find that a well-planned store atmosphere must fulfill various criteria from store layout, external and internal decoration, customer type and merchandise display The store atmosphere enhances the desire to purchase of customers, triggering repeating purchase and build up loyalty (Nelson, 1958) Our hypothesis is thus

Hypothesis H7: There is positive relationship between store atmosphere and consumer

loyalty

Merchandising: the components of merchandising are the quality, selection or

assortment, styling and fashion of merchandising (Lindquist, 1975; Nevin and Houston, 1980) A strong merchandise mix provides consumers a wider choice of products and services and enhances the ability of a store to fulfill their needs and wants (Golledge et al., 1966; Hanson, 1980) This reduces consumers’ time to visit other competitors’ stores and thus create loyalty (O’Kelley, 1981, Beatty et al., 1966) We posit that

Hypothesis H8: Store merchandising positively impacts consumer loyalty

2.6 Summary

The chapter reviewed previous studies about store images dimensions and consumer loyalty Besides, the definitions of store convenience, physical facilities, perceived price, employee service, advertising and promotions, after-sales service, store atmosphere and

merchandising were also examined through the earlier scholars Although, there were many studies about store images, consumer loyalty as well as the relationship between store images and consumer loyalty, the studies of Martineau (1958), Kunkel and Berry (1968), Lindquist (1975), Chowdhury (1998), Thang and Tan (2003), Jinfeng and Zhilong (2009) were found to be among the most fundamental ones

The chapter proposed a theoretical model with eight independent variables (eight store images) and a dependent variable (consumer loyalty) Eight hypotheses were also stated

to illustrate the positive relationship between each store image and consumer loyalty

CHAPTER 3 RESEARCH METHODOLOGY

3.1 Research process

The research process was initiated with literature review The literature review built the model and research hypotheses After that, qualitative study was conducted to obtain the corrected items in Vietnam consumer context The findings from qualitative result supplemented previous studies and generated the final item scale for the quantitative pilot study The pilot study was conducted to test the reliability of measured scales by Cronbach Alpha measurement and to identify the modification of theoretical model and hypotheses when necessary After finalizing the modified model and hypotheses, the main survey was implemented Again, reliability was assessed in a larger sample size by alpha score Then, the main survey results revealed the findings and hypotheses testing process Finally, conclusions and managerial implications were delivered based on the results of main survey

Figure 3-1: Research Process

3.2 Qualitative study

3.2.1 Objectives

Our theoretical model was proposed by developing Jinfeng & Zhilong (2009) and Thang

& Tan (2003) studies The former research tests store convenience, physical facilities, perceived price and employee service within the context of selected ten Chinese hypermarkets The later one evaluates advertising and promotions, after-sales service, store atmosphere and store merchandising by the assessment of shoppers from six biggest department stores in Singapore Thus, in order to apply the model in Vietnam

Theoretical Model

& Hypotheses Literature Review

Qualitative Pilot Study (n = 6)

Quantitative Pilot Study (n = 101)

Main Survey (n = 300)

Model & Hypotheses Modification

Reliability Measurement

Testing Hypothesis

Conclusions &

Implications

context to test the combined effects of eight factors on consumer loyalty, a preliminary qualitative study need to be conducted to obtain the appropriate responsive items from Vietnamese consumers Later, these corrected items would be used in our main survey with structured quantitative questionnaire

3.2.2 Methodology

Mall intercept interview: intercept interview were applied at three mass merchandisers

in Ho Chi Minh City (Nguyen Kim, Thien Hoa and Cho Lon) to firstly get the contact information of target respondents The contact information included full name, address, phone number, purchased items and willingness to participate in a coming face-to-face interview

Face-to-face interview: Once the interviewers got the necessary information from

respondents They would arrange an appointment for face-to-face in-depth interviews The interviews were conveniently conducted at respondents’ home

3.2.3 Sample size and target respondent

6 target respondents were selected including male and female aging from 18-60 years old They were all purchasers from one of the three intercept retailers

3.2.4 In-depth interview content

Interview length: the in-depth interviews lasted from twenty to thirty minutes

In-depth questionnaire was designed to preserve respondents’ own schema of the measured store image dimensions The following were the questions and guideline of our in-depth interview

1 Thinking of a consumer electronics retailer, where would you purchase most often during the past 12 months?

2 Do you remember the address or location of the store? (We ask this questions in order to help respondents to recall their most-often-visited/purchased retailer)

3 What products did you buy at <Retailer Name> during the past 12 months? Please list all that you could remember

4 Do you think that you are a loyal customer of <Retailer Name>? Why?

5 According to you, which of the following factors (store convenience, physical facilities, perceived price, employee service, advertising and promotions, after-sales service, store atmosphere and merchandising) are important for a store to retain their loyal customers? For each of the factor, please give your specific ideas and suggestions

3.2.5 Qualitative result

All respondents could recall the names and the locations of their most-often-purchased stores during the past 12 months Nguyen Kim, Thien Hoa, Cho Lon, Phan Khang, Ideas, Metro were the most-often purchased places

Televisions, DVD players, MP3/ MP4 players, washing machines, refrigerators, air conditioners, mobile phones, digital cameras, personal computers, electric fans were items that were purchased

5 out of 6 respondents claimed to be loyal customers of their most-often-purchased stores because of various promotion programs offered, competitive price and dedicated after-sales services However, one respondent considered them not to be loyal to any stores because she tends to switch the store frequently to obtain different occasional promotion offers

Table 3-1: Qualitative result – important factor to retain loyal customers

1 2 3 4 5 6

Store convenience Yes Yes Yes

Physical facilities Yes Yes Yes Yes Yes

Perceived price Yes Yes Yes Yes Yes Yes

Employee service Yes Yes Yes Yes Yes Yes

Advertising and promotions Yes Yes Yes Yes Yes Yes

After-sales service Yes Yes Yes Yes Yes Yes

Store atmosphere Yes Yes Yes

Merchandising Yes Yes Yes Yes Yes

Table 3-1 showed the results of claimed important factors that a store should have to retain loyal customers

Respondents also provided various ideas and comments for each of the factor Verbatim have been collected, re-coded and shown in the following table 3-2

Table 3-2: Qualitative result – important factor to retain loyal customers

Factors Respondent's description

Consumer loyalty

I always buy at the store The store is mind top-of-mind choice

I always recommend the store to others

I think I am a loyal customer of a store

I am in the list of loyalty customer at the store

…

Store convenience

The store is close to my home The store is located at convenient place The store has easy parking lot and helmet keeping The store has convenient opening hours

…

Physical facilities

The store is spacious The store has eye-catching interior design The store has elevators

The store has appropriate lighting and air quality The store has kid playground while parents is shopping The store has recreation zone

The store has area for taking rest The store has automatic information desk The store has hygienic rest room

The store is clean and hygienic The store have fast/efficient check-out counters

Customer service staffs are working very well via telephone

The store has many advertising on newspaper and magazine

Products have longer warranty at the store Purchased products are installed at home carefully

…

Store atmosphere

The store has eye-catching interior design The product are displayed attractively and appropriately In-store environment is exciting

I like crowded shopping environment of the store

…

Merchandising

Brands and products are easy to find Products have good warranty Product origin is clarified The store has variety popular/ famous brand and The store has many product ranges

The store have products that we need (not out of stock) The store have new arrival products

The store offer high quality brands and products

…

3.3 Measurement

The measurement of each of the following item was developed by adopting scales from previous studies and adjusting from qualitative study All items were measured on 7-point Likert-type scales

3.3.1 Measure of consumer loyalty

Consumer loyalty was evaluated based on the overall commitment of a loyal customer to

a specific retailer including the top-of-mind decision, self-loyal consideration, store switching consideration and recommendation Four items adopted from the studies Pappu & Quester (2006b) scales were found to be matched with what represented in qualitative findings We, thus, retained the following four items

• The store would be my first choice

• I consider myself loyal to the store

• Even in the case of price increase, I also would like to buy products from the store

• I would recommend the store to my friends

3.3.2 Measure of store convenience

Store convenience was measured by consumer’s perception about the shopping convenience offered by a store including accessibility, parking lot, flexible opening hours and bag-keeping counter Jinfeng and Zhilong (2009) proposed the following 4 items to assess store convenience: The store is easily accessible; the store has convenient parking lot; the opening hours of the store is convenient; the store has bag-keeping counter

However, the qualitative results showed the necessary to add “helmet keeping” and the remove “bag keeping counter” Consequently, we adjusted and adopted the following 3 items for store convenience

• The store is easily accessible

• The store has convenient parking lot and helmet keeping

• The opening hours of the store is convenient

3.3.3 Measure of physical facilities

There were various store physical facilities which are reviewed in previous researches and identified in the in-depth interviews However, three most popular items were retained by inheriting Lindquist (1975) scale

• Facilities for rest at the store are comfortable

• Elevator, rest room and lightings at the store are comfortable

• The placement of the aisles is appropriate

3.3.4 Measure of perceived price

Perceived price was measured by the belief and feeling about the price of a retailer in the consumer’s mind Consumers can assess a store’s price through its value-for money product, the competitiveness and the cheapness of the price The finding from qualitative study matches with Chowdhury et al (1998) scale with 3 adopted items

• The store offer value-for-money products

• I can buy products at cheaper price at the store

• The prices at the store are very competitive

3.3.5 Measure of employee service

Employee service was evaluated based on the quality of services provided by a sales staff at a store The friendliness, warm-hearted attitude and the honesty of employees were measured in the following three items of Chowdhury et al (1998) scale

• The store's employees are very friendly

• The store's employees are warm-hearted in consulting customers

• The store's employees are honest with customers

3.3.6 Measure of advertising and promotions

We adopted 3 items developed by Kunkel & Berry (1968) and Thang & Tan (2003) scales for advertising and promotions

• The store has attractive promotions programs

• The store often celebrates events for loyal customers

• The store has many advertising programs

3.3.7 Measure of after-sales service

Post-transaction of a store is a key measurement for the quality of after-sales service Lindquist (1975) developed three items to measure post-transaction satisfaction: delivery, warranty and return policy However, the qualitative results revealed that return policy would not be applied in consumer electronics industry Instead, “assembling or installing service” should be measured Thus, we adopted the following three items

• Free of on-site delivery and assembling

• Offer considerate warranty service

• After-sales service staffs are friendly and helpful

3.3.8 Measure of store atmosphere

Store atmosphere was measured by different criteria of internal, external design and store congestion The eye catching design, the product display and in-door movement would be the key assessment for store atmosphere These three items were adopted and modified from Kunkel and Berry (1968) scale

• Has eye-catching interior design

• Products display is appropriate

• In-door movement is easy

• The store has wide range of brand and product

• The store usually has products of new arrival

• The store always has product I need (no out-of-stock)

• The store offer prestige and high quality products

3.4 Quantitative pilot study

3.4.1 Objectives

A pilot study was conducted to test the reliability of measured scales by using Cronbach alpha Also, the items would be tested for the appropriate loading on their predefined constructs by using exploratory factor analysis with principle component analysis and Varimax rotation method

3.4.2 Methodology

Face-to-face interview was applied with a structure questionnaire The interviews were conducted conveniently in 2 post-graduate classes of university of economics Ho Chi Minh City Questionnaires were delivered to all of the students to fill in

3.4.3 Target respondent and sample size

Target respondent: Respondents were qualified to the pilot study if they must purchase

at least one consumer electronics item during the past 12 months and were decision makers in selecting retail store

Sample size: 101 qualified questionnaires were collected out of 120 questionnaires sent

out The unqualified cases were ones who did not complete the survey or who were not valid after the screening

3.4.4 Pilot study content

The pilot study comprised two sections

Section 1: Screening

• Respondent gender & age

• Purchasing consumer electronics items during the last 12 months

• Is decision marker/ joint-maker in selecting retail store

Section 2: store image assessment

• Recall most-often-purchased store

• Store convenience evaluation

• Physical facilities evaluation

• Perceived price evaluation

• Employee service evaluation

• Advertising and promotion evaluation

• After-sales service evaluation

• Store atmosphere evaluation

• Merchandising evaluation

• Consumer loyalty evaluation

3.4.5 Pilot study result

3.4.5.1 Cronbach alpha reliability analysis

Table 3-3 showed the Cronbach alpha result for all of the items used in the theoretical model As can be seen, all the alphas of overall constructs were in an acceptable range from 0.8044 (Store Convenience) to 0.9516 (Physical Facilities) The Cronbach alpha of each construct was also higher than the alpha-if-item-deleted of each item in that construct Corrected-Item-Total-Correlation of all items was higher than 0.30, satisfying

the minimum standard of reliability (Nunnally and Bernstein, 1994, cited from Nguyen, 2011)

Table 3-3: Cronbach alpha result for pilot study

Scale Mean if Item Deleted

Scale Variance

if Item Deleted

Corrected Item-Total Correlation

Alpha if Item Deleted

Store Convenience: Alpha = 0.8044

CONV1_The store is easily accessible 9.5842 9.5053 0.5499 0.8018 CONV2_The store has convenient parking lot and

helmet keeping

9.9109

8.3620

0.6944

0.6787 CONV3_The opening hours of the store is

convenient 9.8713 9.0933 0.7101 0.6698

Physical Facilities: Alpha = 0.9516

FACI1_Facilities for rest at the store are comfortable 9.4059 10.0436 0.9597 0.8809 FACI2_Elevator, rest room and lightings at the store

are comfortable

9.6931

9.4349

0.8748

0.9440 FACI3_The placement of the aisles is appropriate 9.7525 10.1681 0.8563 0.9441

Perceived Price: Alpha = 0.8664

PRIC1_The store offer value-for-money products 8.4158 10.6053 0.6353 0.8596 PRIC2_I can buy products at cheaper price at the

store

8.9208

8.2937

0.7808

0.7837 PRIC3_The prices at the store are very competitive 8.6040 7.9216 0.8459 0.7182

Employee Service: Alpha = 0.8934

EMPL1_The store's employees are very friendly 9.1485 8.7277 0.7381 0.8923 EMPL2_The store's employees are warm-hearted in

consulting customers

9.1287

8.6933

0.8294

0.8127 EMPL3_The store's employees are honest with

customers

9.3267

8.6022

0.8020

0.8350

Advertising and Promotions: Alpha = 0.8644

PROM1_The store has attractive promotions

programs

9.2277

8.7176

0.6950

0.8523 PROM2_The store often celebrate events for loyal

customers

9.4851

8.3523

0.7349

0.8164 PROM3_The store has many advertising programs 9.3069 7.9149 0.7990 0.7558

After-sales Service: Alpha = 0.9385

AFTE1_Free of on-site delivery and assembling 9.9901 7.7499 0.8910 0.8957