Determinants of adidass supply chain performance in asia pacific region

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY --- Nguyễn Mỹ Phước FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES IN VI

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HOCHIMINH CITY

-

Nguyễn Mỹ Phước

FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES

IN VIETNAM

MASTER THESIS

Ho Chi Minh City, 2011

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY

-

Nguyễn Mỹ Phước

FACTORS AFFECTING CONSUMERS’ RE-PURCHASE INTENTION TOWARDS RETAIL BANKING SERVICES

IN VIETNAM

Major: Business Administration

Code: 60.34.05

MASTER THESIS

Supervisor: Nguyễn Thị Mai Trang

Ho Chi Minh City, 2011

ACKNOWLEDGEMENT

First of all, I would like to express my deep appreciation to my supervisor Dr Nguyen Thi Mai Trang, a respectable, responsible and resourceful scholar, who had read and re-read my work repeatedly, thanks her for all the patience, valuable guidance, and perspectives throughout the research Without her exceptional support,

I could not have completed my thesis

I wish to express my appreciation Dr Tran Ha Minh Quan, my head teacher, for his encourages

Thanks and love in abundance to my parents, who provided much support in everything

I would like also thank all my best friends who had assisted and supported me, especially in valuable research database, data collection process

ABSTRACT

With the intense competition and increasing globalization in the financial markets, bank management must develop customer-oriented strategies in order to compete successfully in the competitive retail-banking environment The longer a bank can retain a customer, the greater revenue and cost savings from that customer However, customers are also more prone to changing their banking behaviour when they can purchase nearly identical financial products provided by the retail banks In order to stay competitive, bank managers need to understand the factors that influence and determine bank consumers’ re-purchase intention

Purpose: This study identifies and analyses the factors that influence bank

customers’ re-purchase intention in the Vietnamese retail banking industry

Methodology: Sampling technique is used to select the respondents from some banks

in Ho Chi Minh City Multiple regression analysis was used to identify relationship between independent variables (convenience, service quality, competitiveness of price, reputation and tangibles) and the dependent variable (bank customers’ re-purchase intention)

Findings: The findings reveal that Convenience, Service quality, Competitiveness of

price, and Reputation have an impact on bank customers’ re-purchase intention

Practical implications: In general, the results of this research allow service

marketers to develop and implement services marketing strategies to increase bank customers’ re-purchase intention rates, and in turn, increase bank profits

Keywords: Convenience, Service quality, Competitiveness of price, Reputation and

Tangibles, Bank customers’ re-purchase intention, Retail banking services, Vietnam

GLOSSARY

Automated teller machine (ATM) A special device that allows customer to make

debit transactions for electronic payment and delivers cash

Phone Banking Banking services that allow a customer to interact with a financial

institution from a remote location by using a telephone (Telephone banking or Tele- banking)

Internet banking Systems that enable bank customers to access accounts and

general information on bank products and services through a personal computer (PC)

or other intelligent devices

Table of Contents

List of Figures i

List of Tables ii

CHAPTER 1: INTRODUCTION 1

1.1 Research background 1

1.2 Problem statement 3

1.3 Research objective 4

1.4 Scope and Research methodology 4

1.5 The structure of the research 4

CHAPTER 2: LITERATURE REVIEW 6

2.1 Bank customers’ re-purchase intention 6

2.2 Convenience 7

2.3 Service quality 8

2.4 Competitiveness of price 9

2.5 Reputation 11

2.6 Tangibles 12

Research model 12

CHAPTER 3: RESEARCH METHODOLOGY 14

3.1 Design and sample 14

3.1.1 Qualitative survey 14

3.1.1.1 Qualitative survey procedure 14

3.1.1.2 Results of the focus group 15

3.1.2 Quantitative survey 15

3.2 Sample size 16

3.3 Measurement 17

3.4 Data processing and analysis method 18

3.5 Summary 20

CHAPTER 4: RESULTS AND DISCUSSION 21

4.1 Description of sample 21

4.2 Assessment of scale 22

4.2.1 Reliability testing 22

4.2.2 Exploratory Factor Analysis (EFA) 25

4.3 Research hypothesis testing 27

4.4 Summary 29

CHAPTER 5: CONCLUSIONS AND RECOMMENDATION 30

5.1 Conclusion 30

5.2 Research implications 30

5.2.1 Theoretical implications 30

5.2.2 Managerial implications 31

5.3 Limitations and further research recommendation 33

References 35

APPENDICES 38

Appendix 1: Survey Questionnaire (in Vietnamese) 38

Appendix 2: Survey Questionnaire (in English) 40

Appendix 3: Reliability of Convenience 42

Appendix 4: Reliability of Service Quality 43

Appendix 5: Reliability of Competitiveness of Price 44

Appendix 6: Reliability of Reputation 45

Appendix 7: Reliability of Tangibles (before deleting TAN3 item) 46

Appendix 8: Reliability of Tangibles (after deleting TAN3 item) 47

Appendix 9: Reliability of Consumers’ Re-purchase Intention 48

Appendix 10: Pearson correlation coefficient 49

List of Figures

Figure 1.1: Vietnam’s banking market is in an early stage of development 2 Figure 2.1: Research model 13

List of Tables

Table 3.1: Guidelines for focus group interview 15

Table 3.2: Findings from the focus group interview 15

Table 3.3: Description of factors 157

Table 4.1: Sample description statistic 22

Table 4.2: Reliability statistic and items – total statistic of components 264

Table 4.3: Rotated Component Matrix 26

Table 4.4: Model Summary 267

Table 4.5: Coefficients of independent variables 278

Table 4.6: Summary of hypotheses testing results 288

CHAPTER 1: INTRODUCTION

1.1 Research background

In recent years, the growth of Vietnam financial services sector has been gone up significantly On lending side, “the four large state-owned commercial banks — Vietnam Bank for Agriculture and Rural Development (Agribank), Bank for Investment and Development of Vietnam (BIDV), Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Bank for Industry and Trade (Vietinbank) — continue to dominate Vietnam’s banking system, accounting for 51% of system-wide loans at end-September 2009 (2008: 52%; 2007: 54%) They very actively distributed two-thirds of all loans at subsidised interest rates and thereby defended their market shares The two largest privately owned banks — Asia Commercial Bank (ACB) and Sacombank — recorded exceptionally brisk loans growth in first nine months 2009 (un-annualised): 78% and 62%, respectively.” (Fitch Ratings, 2010)

Under World Trade Organization rules, Vietnam has to open the economy, including financial services, to global competition International banks have looked forward to enter into Vietnam’s young and potential market Consequently, not only competition has become higher in this sector, but also consumer has more options for their financial services needs

However, “Vietnam is largely undeveloped territory for banking services Out of a total population of 84 million people, just 5 million have a personal bank account, and only 2% have ever taken out a bank loan Even in the biggest cities, consumers’ use of bank services is still rare Only about half of Hanoi’s residents and than a third of those living in Ho Chi Minh City have bank accounts City dwellers are eager to embrace modern financial products The number of credit card holders has jumped 300% since 2004, to some 2 million, and demand for loans to finance the

purchase of motorbikes, cars and apartments is heating up” (Edmund, Sunny, and Shinji, 2007)

Figure 1.1: Vietnam’s banking market is in an early stage of development

Source: Swiss Re Sigma Report 2006; Population Research Bureau; Lit Searches; Bain Analysis

Note: Bank assets data for Taiwan, Indonesia and Philippines are for 2003; X-axis is not to scale

Furthermore, loan outstanding in Vietnam is mainly from corporate borrowers Personal loans are still a small number Moreover, only a small percent of population has bank account As a result, the potential for personal consumers is very big

With the lowering of entry barriers and blurring product lines of banks and banks since the financial sector reforms, banks are functioning increasingly under competitive pressures emanating from within the banking system, from non-banking institutions and from the domestic and international capital markets In this era of mature and intense competitive pressures, it is imperative those banks maintain a loyal customer base In order to achieve this and improve their market and profit positions, many retail banks are directing their strategies towards increasing customer satisfaction and loyalty through improved service quality, competitiveness of price, etc In the present competitive Vietnamese banking

Philippines

Vietnam Indonesia

China India

Singapore

Taiwan

Malaysia Thailand Korea

Japan

Australia

context, characterized by rapid change and increasingly sophisticated customers, it has become very important that banks in Vietnam determine factors, which are pertinent to the customers’ selection process This is because if services dimensions can be identified, bank managers should be able to improve the delivery of customer perception of quality during the service process and have greater control over the overall outcome

1.2 Problem statement

The world has been recovering after the global financial crisis happened in 2007 Like other countries, Vietnam economy has been affected at a certain level under this crisis Around the world, many firms and banks have lost ability to pay their debts and gone bankrupt The crisis also has it effects on consumer not only their jobs, finance, etc but also decrease of their confidence level in the economy Consumer behaviour in all industries generally and particularly financial sectors has been changed significantly after the crisis

In the academic world, there is many research conducted to study various issues in service marketing, including consumer behaviour towards services Numerous studies have shown that banks’ profitability is closely associated with customer repurchase intention (Garland, 2002; Anderson et al., 1994) The longer a bank can retain a customer, the greater revenue and cost savings from that customer Maintaining an existing customer is five times cheaper than obtaining a new one as the advertising, sales, and set-up costs can be amortised over a longer customer lifetime Duncan & Elliot (2002) note that customer loyalty is an important factor that contributes to an organization’s earnings and profits Loyal customers normally establish a stable relationship with an organization compared to non-loyal customers (Zeithaml et al., 1996) Customer loyalty can contribute to an increase in

a firm’s revenue; reduce customer defection rates Thus, at the end of the day, the

bank’s assets are not only primarily registered on the balance sheet, but also related

to the fact that customers have been successfully retained

1.3 Research objective

The objective of the research is to examine key factors such as Convenience, Service Quality, Competitiveness of Price, Reputation, Tangibles and their influences on Customers' Repurchase Intention in banking services

1.4 Scope and Research methodology

The survey was carried out in Ho Chi Minh City, which is not only the most developed city in Vietnam but also the most crowded one of Vietnam Qualified respondents for this study are individuals who used or have used services in commercial banks

After determining a set of variables from literature review, focus group helps to create a relevant list of major factors affecting bank customers’ re-purchase intention Through the pilot test, the questionnaire was modified to make clearer and understandable for respondents The questionnaires were distributed directly to

200 qualified respondents The SPSS 16 for Window was used for data processing and analysis Cronbach alpha was used to measure internal reliability Factor analysis was designed to simplify the correlation matrix and reveal a small number

of factors which can explain the correlation; therefore, it was used in this study

to test items for convergent validity and uni-dimensionality Multiple linear regression (MLR) was used to test the research hypotheses

1.5 The structure of the research

The thesis is organized in five chapters Chapter one presents the introduction of the thesis including research background, problem statement and research question, research objectives Research methodology, scope and the structure are also

mentioned Then, chapter two reviews the literature relating to factors affecting on bank customers’ re-purchase intention which are examined in this study Based on the literature review, a list of hypotheses is proposed Chapter three describes the data and methodology of the research Chapter four presents results and discussion Finally, the last chapter presents the major findings of the research, managerial implication and as well as recommendations

CHAPTER 2: LITERATURE REVIEW

This chapter begins with an overview of key factors effecting customers’ purchase intention and hypotheses Then it continues with a specific research model

re-In financial services, the issue of the key factors effecting consumers’ bank selection has been researched a lot by many researchers in many countries There are studies conducted in the USA such as of Khazeh and Decker (1992), Stafford (1996) and Boyd (1994) and so on More research carried out in other countries, in Swiss, Canada, Turkey, Poland, Bahrain, etc

Most of the previous studies the investigators used a broad and in most cases different set of bank It found that of convenience, service quality, competitiveness

of price, and reputation of the bank, are coming back in most of the studies Although tangibles were evaluated low in most previous research, it still has significant importance (Safiek, 2009) In this study, these dimensions are used to predict bank customers’ re-purchase intention towards Vietnamese banking

services

2.1 Bank customers’ re-purchase intention

Repurchase intention is defined as the customers’ decision to engage in future activity with a service provider In banking sector, banking consumers’ purchase intentions were indicators, which showed whether customers had remained with or had defected from banks (Zeithaml et al., 1996) A bank’s ability to attract and retain new customers, is not only related to its product or services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace (Garland, 2002) Customer re-purchase intention

is more than giving the customer what they expect; it is about exceeding their expectations so that they become loyal advocates for your brand Creating customer

re-purchase intention puts customer value rather than maximizing profits and shareholder value at the center of business strategy Bank customers’ re-purchase intention is understood as saying positive things to other people and the customers’ decision to use services with a bank (Zeithaml et al., 1996)

2.2 Convenience

Convenience refers to the degree of a customer’s perception of the time and effort required to reach a service provider Although the bank selection criteria are different, the results of the studies suggest that convenience is the primary determinant in bank selection (Stafford, 1996, Almossawi, 2001) In banking services, convenience is understood as place and time of transaction, such as convenient location of the bank’s branches, ATM network, internet and phone banking services and long opening hours of the bank, several of branches (Safiek,

2009; Huu and Kar, 2000)

Location has special meaning in the financial service industry because it is at the branch or office that banks and the customer are connected; it is where the customers have their accounts Reichheld & Sasser (1990) suggest that a convenient bank location is an important factor influencing customers’ re-purchase intention behaviour because it directly determines whether the customers can access their banks on a regular basis Moreover, Gerrard & Cunningham (2004) investigated the bank switching behaviour of Singapore’s graduates and find that inconvenience is the most important switching factors

In conclusion, convenience is an important factor in guiding customers to choose banks Geographical inconvenience has a negative impact on customers who want their banking services to be delivered on a face-to-face, personal basis (Gerrard & Cunningham, 2004) In contrast, convenience can encourage customers to stay at their current bank and delay the idea of switching, even if the satisfaction rate is not high (Lee & Cunningham, 2001) Therefore, the following hypothesis is proposed:

H1: There is a positive relationship between Convenience and bank Consumers’

Re-purchase Intention

2.3 Service quality

Service quality is defined as a customer's overall impression of the relative inferiority or superiority of the organisation and its service provisions Lewis et al (1989) define service quality as a measure of how well the service level delivered matches customer expectations Perceived service quality is developed from the perspective of a customer’s attitude to judge the overall service prevision Lewis et

al (1989) suggests perceived service quality is a consumer judgement which is derived after comparing consumers’ expectations of service with their perceptions

of actual service performance In general, customer expectations can be established from pervious experiences with the organisation, the competitors of an organisation, the traditional marketing mix, or external influences such as word-of-mouth communication (Parasuraman et al., 1988) In regards to banking, Kamilia and Jacques (2000) note that perceived service quality results from the gap between customers expectations of the service provided by the bank and the perception of the actual services provided by the bank

Many researches find that service quality is related with customer satisfaction which can lead to behaviour consequence For example, Bloemer et al (1998) identify that service quality can directly and indirectly effect customer satisfaction, and that satisfaction has a direct effect on bank customer loyalty Levesque & McDougall (1996) point out that service problems and the bank's service recovery ability have a major impact on customer satisfaction and customers’s intentions to switch banks

In most of the previous research, the service level is an important criterion for consumers when selecting a bank (Almossawi, 2001)

Moreover, Lewis & Soureli (2006) investigated the antecedents of customer loyalty

in retail banking and summarize that service related factors, such as speed of

delivery, efficiency, friendliness, ease of contact and frequent communication can favourably assist banks to enhance customer loyalty The authors’ study reveals that the customers who perceived higher standards of service quality than their expectations are normally satisfied and appear to be loyal toward the bank Leeds’s (1992) study shows that nearly half of the customers switch banks because of poor services In addition, Leeds also shows that improving service quality can increase customers’s re-purchase intention Similar research by Zeithaml et al (1996) confirms that favourable behavioural intentions can be determined by good service quality Furthermore, high service quality can enhance reputation, increase customer re-purchase intention, attract new customers through word-of-mouth, generate repeat sales, create competitive product difference, and improve financial performance & profitability of the firms (Zeithaml et al., 1996)

Therefore, the following hypothesis is proposed:

H2: There is a positive relationship between Service Quality and bank Consumers’

Re-purchase Intention

2.4 Competitiveness of price

Price is an attribute that must be given up or sacrificed to obtain certain kinds of products or services (Zeithaml, 1996) Perceived price normally combines monetary price and non-monetary price together In the financial service industry, price has wider implications than in other services industries For example, in the financial service industry, price includes fee implementation, bank charges, interest rates charged and paid (Gerrard & Cunningham, 2004)

Customers in general are price conscious in their purchasing behaviour Price is an important factor in choice situations as a consumer’s choices typically relies heavily

on the price of alternatives Varki & Colgate (2001) identify that the role of price, as

an attribute of performance, can have a direct effect on customer satisfaction and

behavioural intentions Several studies show that price has an important impact on customers’ re-purchase intention decisions (Garland, 2002, Anderson et al., 1994) Almossawi (2001) identifies price as a critical factor in bank selection for college students Since price has a wider implication to bank customers, Gerrard & Cunningham (2004) show that pricing seems to influence consumers’ behaviour among bank customers more than customers of other services In Colgate et al., (2001) study of bank customers’ switching behaviour in Australia and New Zealand, the authors identify price as the top switching determinant, followed by service failures and denial of services Similar results are found in Anderson (1976) study investigating the factors influencing customers’ bank selection decisions in the United States, it have confirmed that the price is an important item for selecting

a bank Moreover, the factor also confirmed by in the study of bank selection (Khazeh and Decker, 1992) as well

The loyalty-switching transition can be affected by changing price perceptions (Colgate et al., 2001) Keaveney (1995) finds that approximately thirty percent of the customers surveyed had switched firms due in part to poor service price perceptions Customers tend to focus on the competitiveness of price Price increases that are perceived as competiveness by customers may result in re-purchase intention actions In general, it can be concluded that favourable price perceptions can affect customers’ re-purchase intention In the banking industry, Gerrard & Cunningham (2004) suggest that price plays a more influential role in influencing customers’ re-purchase intention behaviour Therefore, the following hypothesis is proposed:

H3: There is a positive relationship between Competitiveness of Price and bank

Consumers’ Re-purchase Intention

2.5 Reputation

Reputation has been described as a social identity, and an important and intangible resource that can significantly contribute to a firm's performance and its survival Zeithaml et al (1996) define reputation as brand equity or customer equity, and combine it with the credibility and faithfulness of the firm Reputation is a key asset

to firms because it is valuable, distinctive, difficult to duplicate, non-substitutable, and provides the firm with a sustainable competitive advantage

Competition offers customers many varieties and choices in the market Thus, reputation is identified by firms in the services sector as an essential part of their competitive strategies Reputation has been analysed by economists relating to product quality and price Product quality and services produce benefits not only by lowering costs, but also by increasing competitiveness through the establishment of

a good reputation and the attraction and re-purchase intention of customers In addition, reputation can enhance customer loyalty, especially in the retail banking industry where quality cannot be evaluated before purchase Nguyen & Leblanc (2001) conclude that reputation may be used as a strategic tool to predict the outcome of the service-production process, and as the most reliable indicator of the ability of a service firm to satisfy a customer's desires Weigelt & Camerer (1988) note that a positive reputation is a strategic tool that can be used by banks to earn additional profits A positive reputation can provide a halo effect for the firm as it positively influences customer evaluations, increases future profits, acts as a barrier

to imitation, links to intention to purchases a service, and strengthens the competitive capability of firms

Moreover, according to a study of Anderson et al (1976), one of the ranking determinant factors of selecting a bank in the USA is the reputation of the bank In a study by Boyd et al (1994) reputation was even perceived to be the most

highest-important selection criterion in the US This factor is also confirmed by the research

by Kennington (1996) in Poland, and Almossawi (2001) in Brahrain as well

A good reputation can strengthen customers’ trusts and confidences in a bank, while

an favorable reputation can increase the probability of bank customers’ re-purchase intention Therefore, the following hypothesis is proposed:

H4: There is a positive relationship between Reputation and bank Consumers’

Re-purchase Intention

2.6 Tangibles

Tangibles relate to the effect of physical facilities, equipment, and appearance of personnel, and empathy correspond to the element of human interaction and intervention in delivery of the service (Parasuraman et al., 1988) In the banking industry, Spiros et al., (2003) suggests that tangibles have significant affect on customers’ re-purchase intention behaviour Therefore, the following hypothesis is proposed:

H5: There is a positive relationship between Tangibles and bank Consumers’

Re-purchase Intention

Research model

In conclusion, the hypotheses are summarized as follows:

H1: There is a positive relationship between Convenience and bank Consumers’

Re-purchase Intention

H2: There is a positive relationship between Service Quality and bank Consumers’

Re-purchase Intention

H3: There is a positive relationship between Competitiveness of Price and bank

Consumers’ Re-purchase Intention

H4: There is a positive relationship between Reputation and bank Consumers’

CHAPTER 3: RESEARCH METHODOLOGY

This chapter outlines the research methodology used to test the hypotheses developed in chapter two The research plan includes sampling method, estimating sample size, method of data collection, and questionnaire design Finally, factor analysis and Multiple Linear Regression (MLR) are discussed

3.1 Design and sample

The study survey involved two stages: a qualitative study by focus group and the main survey

Firstly, in order to analyse consumers’ re-purchase intention in the Vietnamese retail banking industry, a questionnaire was designed The questionnaire was developed based on the findings from the literature review and feedback from the focus group A thorough review of the literature and the focus group discussion helped to identify the factors for bank consumers’ re-purchase intention Secondly,

a mini survey was conducted from a sample of 10 respondents to test the draft of the questionnaire Finally, the main survey was undertaken

3.1.1 Qualitative survey

3.1.1.1 Qualitative survey procedure

In order to develop additional insights into the factors affecting bank consumers’ purchase intention, it was necessary to conduct focus group interviews Focus group discussions were also used to assist in developing the appropriate and relevant survey questions This study used a mini focus group with 10 respondents The participants were asked to explain the factors that influence their re-purchase intention towards retail banking During the discussion, they were encouraged to identify any additional factors and provide comments on any factors suggested by other participants

re-Table 3.1: Guidelines for focus group interview

1 Convenience What are items of banks’ convenience represented?

2 Service quality What are items of banks’ service quality represented?

3 Competitiveness of price What are items of banks’ price represented?

4 Reputation What are items of banks’ reputation represented?

5 Tangibles What are items of banks’ tangibles represented?

6 Bank consumers’

re-purchase intention What will you do if you intend to re-purchase services with banks?

3.1.1.2 Results of the focus group

The results given from the focus group are summarized in Table 3.2 as follows:

Table 3.2: Findings from the focus group interview

Ease of transaction with banks

2 Service quality Services are offered on time and fast

Understand consumers’ needs and offer right services Safety

Bank staff’s attitude

3 Competitiveness of price Loan and deposit interest

Fees charged

Banks’ reputation Size of banks

Appearance of banks’ employees

6 Bank consumers’

re-purchase intention Say positive things with other people Recommend to other people

Continue to use the bank’s services

3.1.2 Quantitative survey

The respondents were encouraged to make comments on any questions that they thought were ambiguous or unclear Some minor wording modifications to the

questionnaire were made as a result of this process A final version of the questionnaires is in Appendix 1 of this study

Then the main survey was undertaken by face-to-face interviews with a sample of

200 questionnaires were collected in the commercial banks’ rest areas in Ho Chi Minh city during business hours (8 am to 5 pm) Respondents aged less than 18 years were excluded from the survey, as it was perceived they might have encountered difficulties interpreting the survey questions The questionnaires were collected immediately upon completion The use of an intercept survey has the advantage of immediate retrieval and capturing of customers' experiences with the participating banks After explaining the purpose of the survey and obtaining consent, the respondents were asked to fill out the questionnaire In general, most respondents were willing to assist in this survey

3.2 Sample size

In order to make generalisations with confidence about the constructs under investigation, the appropriate sample size has to be considered Sample statistics need to be reliable and represent the population parameters as closely as possible with a narrow margin of error For factor analysis, the minimum sample size should

be at least five times the number of items to be analysed (Hair, et al., 2006) Since there are 26 items to be analysed in this study, at least 130 completed questionnaires were required For multiple regression analysis, Garson (2006) recommends that the sample size should be at least equal to the number of independent variables plus

104 for testing regression coefficients, and at least 8 times the number of independent variables for testing the R-square respectively Therefore, the 5 independent variables in this study require at least 149 completed questionnaires in order to test the regression coefficients and the R-square Therefore, this study required useable responses of at least 150

3.3 Measurement

The questionnaire consists of two sections which required respondents to circle the number that most accurately reflects their perception of each statement (See Appendix 1) The first section asks their rating about factors (convenience, service quality, competitiveness of price, reputation, tangibles) of a specific bank and their re-purchase intention The second section investigates respondents’ demographic information, such as gender, age, educational level and income The original questionnaire was translated into Vietnamese A five-point Likert scale was adopted The descriptors ranged from 1 (strongly disagree) to 5 (strongly agree)

Table 3.3: Description of factors

1 Convenience

(adopted the scale

developed by Safiek, 2009;

Huu and Kar, 2000)

COV1: Location of the bank’s branches is convenient COV2: Location of the bank’s Automatic Teller Machines (ATM) network is convenient

COV3: I can make transaction easily with the bank via the Internet and phone banking services offered

COV4: Opening hours of the bank is long enough COV5: Number of the bank’s branches is big

2 Service quality

(adapted the scale

developed by Spiros et al.,

5 Tangibles

(adapted the scale

developed by Spiros et al.,

2003)

TAN1: The bank has up to date equipments TAN2: The bank’s physical facilities are visually appealing

TAN3: The bank’s employees are well dressed and appear neat

6 Bank consumers’

3.4 Data processing and analysis method

After collecting questionnaires, all analyses were conducted using SPSS statistical software version 16 for Windows Data description was conducted to present an overview of respondents’ socio-demographic in this survey

Reliability

Reliability can be used to assess the degree of consistency between multiple measurements of variables Examining the internal consistency or homogeneity among the items is the common measurement of reliability (Cooper & Schindler, 2006) According to Churchill (1979), Cronbach’s Alpha is one of the most widely used measures to test internal consistency and is considered adequate if it exceeds 0.60 On the other hand, the alpha of 0.60 and 0.70 or above is considered to be the

threshold indicating internal consistency of new scales and established scales respectively (Nunnally, 1988 – cited in Spiros, 2003) Churchill (1979) also notes that for the purpose of consistency, the coefficient alpha should be calculated prior

to any further data analysis Cronbach’s alpha was applied in this study to test the reliability of the measures

Explore Factor Analysis (EFA)

Content validity is used to assess the correspondence between individual items and the concept (Hair et al., 2006) The objective is to ensure the selection of scale items include theoretical and practical considerations A display of content validity indicates that the items are adequate and are representative of the concept they intend to measure (Churchill, 1979)

Factor analysis is a multivariate statistical method whose primary purpose is to define a structure within a set of observed variables It is an interdependence technique in which all variables are simultaneously considered (Hair et al., 2006) Factor analysis techniques can be achieved from either an exploratory or confirmatory perspective (Hair et al., 2006) Exploratory factor analysis is normally used when the underlying dimensions of a data set are unknown Confirmatory factor analysis is appropriate for theory building by testing hypotheses about the structure of a data set that has been formed by prior research Due to the unknown nature of the data structure in this study, exploratory factor analysis was adopted Kaiser-Meryer-Olkin Measure of Sampling Adequacy (MSA) This approach intends to quantify the degree of interrelations among the variables and the appropriateness of factor analysis (Hair et al., 2006) The index ranges from 0 to 1, reaching 1 when each variable is perfectly predicted without error by the other variables (Hair et al., 2006)

Sig (Bartlett’s test of sphericity) must be lower 0.05 (Hair, et al., 2006) Regarding number of factors, it required that communality > 0.5, default eigenvalues > 1 and total cumulative variance > 50%

Multiple linear regression (MLR)

It was used in this study to test the research hypotheses Multiple Regression was employed with ENTER method to examine the influence of independent factors to specific dependent factor by carefully considering the weight of each respondent variable contribute to the construct that is being qualified Regression inputs were the scores of each scale, the score was computed by the mean value of observed variables in each scale

3.5 Summary

The chapter shows the research methodology used to test the hypotheses developed

in chapter two Sampling method, estimating sample size, method of data collection, and questionnaire design are used for the research Factor analysis and Multiple Linear Regression (MLR) are used for data analysis

CHAPTER 4: RESULTS AND DISCUSSION

This chapter gives an overview of the results from data processing Data description presents an overview of respondents’ socio-demographic in this survey The Cronbach’s alpha was used to measure internal reliability Factor analysis is designed to simplify the correlation matrix and reveal a small number of factors which can explain the correlation; therefore, it was used in this study to test items for convergent validity and uni-dimensionality Multiple linear regression (MLR) was used to test the research hypotheses

4.1 Description of sample

A total of 180 usable questionnaires were obtained from consumers who used or has used services of banks in Vietnam, Bank of Vietnam Agricultural and Rural Development (Agribank), Viet Thai Joint Venture Bank (VinaSiambank), Asia Commercial Bank (ACB), East Asia Bank (EAB), Vietnam Bank for Industry and Trade (Vietinbank), Bank for Foreign Trade of Vietnam (Vietcombank), Saigon Thuong Tin Bank (Sacombank), etc Respondents are widely diverse by different income group, age groups, gender

Out of 180 respondents, 79% were females and 21% were males 53% of respondents were in range of 26 to 30 years old, 19% were from 18 to 26 years old, the age ranges of 31 to 40, 41 to 50 and over 50 took 15%, 12% and 1%, respectively In term of income rage, respondents had monthly income under VND5 million (7%), from VND5 to 10 million (46%), from VND10 to 20 million (34%) and higher VND20 million (13%) Most of respondents’ educational qualification was university graduation (89%), following by post-graduation (7%) and below university graduation (4%)