The marketing factors affect online customer satisfaction the case sunmall website

BMBRS103 THE MARKETING FACTORS AFFECT ONLINE CUSTOMER'S SATISFACTION THE CASE SUNMALL WEBSITE STUDENT’S FULL NAME : NGUYEN THANH PHUONG... Price Place Promotion People Process Physical

(BMBRS103)

THE MARKETING FACTORS AFFECT ONLINE

CUSTOMER'S SATISFACTION THE CASE SUNMALL WEBSITE

STUDENT’S FULL NAME : NGUYEN THANH PHUONG

Advisor’s assessment

Advisor’s signature

Contents LIST OF EIGURES «seo HH1 HghHRgR011181021013010110A1T-1-1101A0100701 3

LIST OF TABLES .cssssscscsossesessecsssscssscssssesssssssssnsecsesassseuuescessssssssssnssasessessssssessersonnssseseestans 4 ABBREVIATIONS .sssssssssssssccssssssssssssescessessecsstecsessuentasuuvecocsauensesouseceessuecsssansecasssseessssaseeeenace 5 ABSTRACT .ssssssecccssssssesessessssesensecssssseesserssscoesctssssuensesssnssneecescsssassenssnssossesersnsneneensnavaanaseesesnaness 6 CHAPTER I - INTRODUCTION .cesssssssssscssssnsscsssrsssssensecessessessssessssnseesssnunenssssseesess 8

1.1) Company Introduction «e-eeseeiiiriieiiiiisree 8 1.2 Research Introduction -ceeeseeeeseiiiiiiiiiriiiiie 9 1.2.1 Background researCh: -.ceeeieierrirriiiiirie 9 1.2.2 Problem statement eeeseseiieeiiiiiieiiiiii 10

1.2.3 Purpose Of the study eeseeeieiiiiiiiie 11

1.2.4 The scope of the research -eeeiiiiiieire 11 1.2.5 Research questÏO'S e-eeeiiiiiriiiiiiriiee 12

CHAPTER II - LITERATURE REVIEW cccsssssssssssssssscsnssesssssrecensseessesneeessssses 13

Z.1 Customer Satisfaction e-eeecerieiieiiiiiiieeiree 13

2.2 O0verview Marketing 7PPS c-eeeeeiieiiiee 13

2.2.1 7Ps Marketing History eceeiieeiiiiriieirii 13

2.2.2 Strategy of marketing 7P eeeeeiiiemiie 14

2.2.3 7P Marketing role and its importance in online shopping 21

CHAPTER HI: RESEACH MODEL AND HYPOTHESES 23

3.1 Research Model seeesesriiiiiiiiiiiiianriee 23

3.2 Research Hypotheses eeieirriieieiiaiane 24 3.3 Instrument(S eeeieeeriieiieiiieiiiiiiiiiiiaiiee 29

3.4 Research Participants eeeeneseeiiiiiiiiiiiiiiee 30 3.5 Procedure for Data Collection and Analyze 30

CHAP'TER IV: ANALYSIS AND RESULTS eeeiniee 32

4.1 Demographic Characteristics of the respondents 32 4.2 Reliability AnaÌySÌS cceieiiiiiriiiiriiialiiiee 33

4.2.1 Correlation ofall variables statistiCs 34

4.2.2 _ Hypotheses Testing: ii 36

CHAPTER V: CONCLUSION coi 38

5.1 Summary and DisCuSSỈOH: eSeieiiiiiiiiie 38

5.2_ Management ImplicatiOIS: is 39 5.3 Limitations and Further Research Recommendation: 40 REFERENCES 5s HH0 TA 41

APPENDIX -< 2 Ha ghen 0101300202100101212113017131740110100.0 45

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LIST OF FIGURES

Figure 1: The Marketing Mix 4P’s and 7P’s Explained

Figure 2: Proposed Research Model of 7P and Customer Satisfaction

LIST OF TABLES

Table 1: Summary of Cronbach’s Alpha of the variables - - 5c 33 Table 2:Summary of Correlations of all variables cccsseiereirrrreeree 35

Table 3: Model Summary of all hypoflieses che 36

Table 4: Coefficients of all hypotheses - - cành, 36

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Price Place Promotion People Process

Physical evidence

ABSTRACT

With strongly competition in the current economic condition, making a right strategy

to get more customers is always big question for any company, especially, top managers Understanding customer and providing what customer’s need is the right way to keep loyal customers and earn more new customers The 7P marketing mix seems to be a guideline and an effective step for managers looking through it before

making strategic plan

PGFV Company is a new comer in online shopping industry They find out that people in Vietnam, they now are changing the way shopping and more switch to

buying products via internet They recognize that online shopping market in Vietnam

is big and still have a change for them penetrating the market 7P marketing mix

variables are basic step to design the good strategy The aim of this research was to know the influences of 7P marketing mix variables, which consists of product, price, promotion, place, people, physical evidence and process on attracting consumer’s satisfaction in determining appropriate marketing strategy of and improve Sunmall website in Vietnam

Questionnaires were delivered to 500 respondents in different background of educational degrees, gender, years of age as well as monthly income

403 samples were returned and put into further researched and analyzed practices The reliability analysis, descriptive analysis, and hypothesis testing were statically measured in the study with the support of SPSS software

The results showed that among seven independent elements involved in examining

with dependent element, there were only 3 elements supported These independent variables include Price, process, and physical evidence The more price strategy will keep company attracting more customers Quickly process and react customer requirement is factor that can bring more customer loyalty Last but not least, well

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designed website and stores will make customer recognizing the business and increasing customer satisfaction

CHAPTER I - INTRODUCTION

1.1 Company Introduction

The company in case, PGFV Ltd Company is a Vietnamese startup company which was found in June 2014 The company is located in Ho Chi Minh City, Vietnam Its original business was not related to IT as well as Internet Recently, the company was launched an online service, Sunmall.vn, in order to enter the Internet market The main idea of the service is to provide the premium product from different

brand from Korea for customers; it tries to provide the better service and product

quality to customers

The issue in this case is that there are many companies doing e-commerce but they are unsuccessful for many reasons such as: lack of capital, poor marketing strategy,

lack of skill and experience, insufficient market research, no website traffic In

addition, online purchasing is also not a common method of buying goods and services in this country Buying online is somehow untruthful to consumers and people would like to pay in cash and have a look at the product before buying These behaviors prevent people to get used to online shopping

| Currently, there are two big cities in Vietnam, which are Hanoi, the capital, and Ho Chi Minh city, the biggest city located in the South Both have the population of more than 15 million people and are the main markets of online shopping business (tuoitre.vn) Currently, sunmall.vn operates in Ho Chi Minh City with more than 50 types of products in supply network There are many big competitors, who have succeed in the industry such as: Lazada, chotot, vatgia, etc The market is getting tougher as new comers are entering In which, there are some big players in online service business not only in Vietnam but also in the world Therefore, the challenge for Sunmall.vn is quite high ,

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1.2 Research Introducfion

1.2.1 Background research:

‘Nowadays, the Internet is being widely used in daily life The existence of the Internet brought many advantages to individuals’ daily lives With the help of the medium, people can communicate, learn, entertain, buy products and get services Of course the disadvantages of it have long been discussed; as the virus threat, the risk of personal information theft, spamming etc However since the advantages outweigh the drawbacks, most of the people cannot resist bringing it to the center of their lives, Since the beginning of the Internet, individuals have shown interest to the Internet According to Internet World Stats’ statistics (2015) today more than three billion people linked to the Internet This number shows that 50 percent of the world population uses the Internet Especially, Asia countries dominate a large number of users Consequently, the Internet can be used for the competitive advantage by

organizations and actually it is a powerful source to use (Hamill, 1997; p.300)

‘The Internet have been using for several different purposes Besides that, it has also brought a different dimension to commercial activities The Internet has created a new market for both customers and organizations, and has been an alternative market

to the traditional market Web sites provide a chance to search information about products/services, place a comment or give orders (Hoffman and Novak, 1996; 51) Therefore, the previous experiences of marketing has turned into a different segment

Now organizations are taking consider to provide different payment methods,

different shipping alternatives and even different web interfaces for different geographic ,

Today, with the rise of the technology, significant portion of commercial activities take place over the Internet Since commercial activities' main goal is to sale, sale can

be realized by the purchase of a different party, as we know customers Therefore, for electronic commercial activities, it is important to understand what marketing factors

affect online customers' behavior and directly provide suitable plan to attract more

customers

Philip Cotler, marketing expert, have studied on this topic Theories about marketing mix have been used to understand customer behaviors and develop an effective marketing strategy Moreover, it is impossible to think marketing without the Internet

in today's world.“Online marketing is the topic that have been researched and made applications many times by researcher from past to nowadays Studies on online shopping investigated the marketing factors that influence online shopping as well as motives for, value of and antecedents of online buying As a result, the academic researchers and the business world started to focus on the consumer side of the online purchasing behavior and a lot of researches and articles were prepared to make guidance for the development of online shopping.,

1.2.2 Problem statement

There are millions of people online any time and they all are a potential consumer in the online market Since there are so many providers, the most important thing for organizations is to understand what are consumer wants and needs in this competitive business environment based on marketing mix

‘In the Internet shopping market since there is no face-to-face contact, analyzing and identifying marketing factors that influence the consumer satisfaction is vital Moreover, consumers have new demands in the Internet medium Therefore, it becomes more important to answer consumer's demands to retain the customer \

Being aware that customers are performing a major role in marketing, finding out

how the marketing factors that are essentially affecting the purchasing intentions are important Analyzing the process of shopping activities, how consumer decide and

make purchasing over the Internet and what they buy need to be identified by online

providers in order to satisfy and succeed in the competitive business environment Customer satisfactions are influenced by different factors such as price, product,

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place, promotion, people, process, and physical evidence so they show different

customer satisfactions

Previous research streams on online shopping satisfaction, investigated main factors

influencing online shopping adoption However there has been limited number of studies marketing factors affect online customers’ satisfaction regarding online shopping website In this study, research has been found out the marketing factors influence customers satisfaction through launching Sunmall.vn website and studied

on the findings of the research

1.2.3 Purpose of the study

The purpose of this research is to examine and approach whether items in terms of price, product, place, promotion, people, process, and physical evidence will have any influence on the online customer satisfactions under sunmall.vn website."

It is expected that the finding of the research will give an overall view of what marketing factors most attract online customer on Sunmall.vn website Then, PGFV

management team be able to use the projective result as reference on developing a better marketing strategies to retain and attract more online customers in Vietnam 1.2.4 The scope of the research

This study is conducted in the collaboration with PGFV Company The focused area

of the study is in Vietnam and in online shopping market Therefore, the result of this study is most probably valid only in the case of studied company To define the scope of the research, these following points need to be kept in mind:

- The geographical market is Vietnam, a developing country where online services is on the development

- Vietnamese culture and purchase behaviors has significant effects on the studied case

- The target market is online shopping in Vietnam

- The case company is an Internet-based startup company

First, the Vietnamese market has specific characteristics which are different from

other foreign market In which, culture and purchase behavior of Vietnamese

consumers are determinant factors Thus, any generalization to other markets should

consider the cultural and market-related differences Additionally, the research is conducted with a startup company and in a small market segment The result of the research may not be correct in other configurations However, by taking a comprehensive literature review on related topics, this research tries to build a

common understanding about the subject The constructed framework would be

useful in other similar cases

The results in this research are aimed to equip the case company with background knowledge regarding its target business Therefore, main readers of this study are the

managers of the company For academic purposes, this study is also useful for the

ones who look for some specific areas of research, for example the Vietnamese

market, the online shopping market and services

1.2.5 Research questions

The aim of this study is to investigate the marketing factors that affect online

customer’s satisfaction through Sunmall website Therefore, the following

questions will be addressed in the scope of study:

How does price influence to online buying satisfaction?

Does product take any affect customers regarding buying decision through internet?

How does place take influence on online shopping satisfaction?

What is the impact of promotion on online buying satisfaction?

What is the relation between people and electronic commerce?

How does process take influence on buying decision of online customers? How does physical evidence take influence on online shopping satisfaction?

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CHAPTER II - LITERATURE REVIEW

Customer satisfaction can be viewed as a relationship of perceived value of service

and the expected value by customers If the perceived value of services matches

customer perceived expected value, then customer is said to be satisfied Kotler and

Armstrong (2013: P37) define customer satisfaction as “the extent to which a product’s perceived performance matches a buyer’s expectation.”

2.2 Overview Marketing 7Ps

2.2.1 7Ps Marketing History

According to Dr Philip Kotler, marketing mix is defined as a set of tools and tactical

marketing that companies collaborate to create the desired response in key markets (Kotler and Armstrong, 2004)

The concept of marketing mix proposed in the Conference of the American Marketing Association (American Marketing Association) 1953 by Borden and started and become popular in 1964 after he published articles "The concept of Marketing-Mix" From the 12 components of the Borden’s marketing mix, E.Jerome McCarthy (1960) shaped model systems 4Ps: price, product, distribution and promotion Sometime later, Booms and Bitner (1981) added 3 Ps (people (People), service process (Process) and tangible media (Physical Evidence) to form the original 4Ps to model 7P These concepts sometimes represent marketing mix interchangeably as they are accepted by many researchers and marketers

Approach Components Authors Application

4Ps Product McCarthy (1960) | Mass product

Price Promotion Place

7Ps 4Ps Booms & Bitner Service firms

(1981) People

Price: This is about how to set the suitable price for the product Price should not be

too high so that customers can afford buying, but not too low so that the company can have profit (Kotler and Armstrong, 2004, p.107)

Moreover, Kotler et al (2008, 663) presents seven different strategies for adjusting the price; discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing and international pricing For example from discount and allowance pricing could mention a quantity dis-count

and seasonal discount which are important also for sunmall.vn Quantity discount means lower prices for those who buy big amounts of products or services Seasonal

discounts are given when demand is low for certain products For example in spring, winter clothes are often sold on sale, because they are not needed anymore (Kotler

et al., 2008, 663.) Kotler et al (2008, 664) divides segmented pricing into four different categories Customer-segment pricing means different prices for different customers For example entrance fee to an amusing park is cheaper for children than for adults Product-form pricing is that different forms of certain product have different prices For example fresh pineapple and canned pineapple are basically the same product but in different forms and also priced differently Time pricing is usual form for example for electric companies who offer electricity at night with lower price

According to Kotler et al (2008, 665) pricing is also a psychological issue Many people measures with price the quality of the product By price is meant the amount that customer pays for the product or service When thinking of pricing, especially in e-commerce, there are many things which need to be considered carefully For example in Sunmall website it is not enough that they get a little bit more money from the customer than what Sunmall website have to pay for example for a employees, advertisement and products of suppliers Need to be noticed that there are two kinds

of costs; variable costs and fixed costs (Kotler et al 2008, 642)

Promotional pricing is used in a short term way, when companies want to increase their sales (Kotler et al 2008, 666) Stores can for example lower the price of cheese temporarily which gets people to come to the store, and may be at the same time, they buy something else Geographical pricing have to be thought of when doing business throughout the country or the world For example transport costs effects on the decision whether the price is same for European companies and American companies when the distance is bigger In dynamic pricing the customer’s situation is individually thought and the price is set based on that (Kotler et al 2008, 668) In international pricing is effected the whole situation in one certain country Pricing needs to be adjusted for example by the regulations and laws of the country and also costs need to be thought which also vary a lot from country to another (Kotler et al

2008, 671.)

Products: Which means combined "goods and services” that companies give to key

markets The decision about the company's products must be designed with

appropriate features that satisfy customers (Kotler and Armstrong, 2004, p.107) Services have mostly three common basic features (Grénroos, 2000, 47) Firstly, services are a process and these processes consist of functions or a series of functions, not from things Secondly, services are produced and consumed at the same time Third issue is that the customer takes part into the process of producing the service Grénroos (2000, 49) presents two ways, how services are classified Firstly services can be divided into groups which underline humanity and technology, secondly services which are provided from time to time or constantly create the second group Customers are not buying only the certain product but there comes so much more with it Product can be divided into three different levels which each of them in- creases the value of the product (Kotler et al 2008, 500-501) The first level is core product, the real product that customer is buying The next level is an actual product which includes all the supplementary material; for example packaging, brand, quality Third level is augmented product which includes for example delivery, credit,

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warranties and aftersales In Sunmall website all these aspects are also considered quite precisely and after sales play an important role when creating of Sunmall a

strong brand which tells about quality

Distribution: This includes activities aimed at making the company's products to key consumers Decision on distribution of the company includes the channels, coverage, location, inventory, shipping, warehousing (Kotler and Armstrong, 2004 p107) Nowadays the location is not necessarily so vital anymore for every company, it depends a type of the company Internet has made everything easier and access to other side of the globe can be even easier via Internet than visiting the store in down

town Although place is an important aspect to think in business but more vital is the

availability and accessibility (Krishna, Gopala Raghavan & Reddy, 2010, 85) Products need to be available for the customers and accessibility needs to be simple Selling can be direct selling at the place via sales people but it can also happen for example via catalogues, telephone or trade fairs and many uses combination of

different selling tactics (Tracy, 2004) The most important aspect is to find out the

most effective way to do business, the key is to find out what sells and how to sell it

to the customers (Krishna et al., 2010, 85)

Promotions: This means that the activities to convey the beauty of the product and convince buyers to buy its key The promotion activity in the mixture as advertising, sales, promotions, (Kotler and Armstrong, 2004, p.107)

Krishna et al (2010, 79) defines promotion as a tool which is used to build the company’s image and difference from competitors Buyer’s behavior is one aspect which need to be taken considered of There is a rule which says:

“Whatever method of marketing and sales you're using today will, sooner or later, stop working Sometimes it will stop working for rea-sons you know, and sometimes

it will be for reasons you do not know In either case, your methods of marketing and sales will eventually stop working, and you'll have to develop new sales, marketing and advertising approaches, offerings, and strategies (Tracy, 2004.)”

Promotion is used because of informing, reminding and persuading (Krishna et al.,

2010, 80) Promotion means selling the product so promotion is everything that companies do in order to attract their customers and get their products sold Companies need to inform their customers for example about their new product, remind about the great advantage what there exists if they buy it from them and of course persuade in order to close the deal and either create a new customer relationship or strengthen an old one

Krishna et al (2010, 81) presents a promotional tool which every company should use when promoting their company Promotional tool is a promotional-mix where

should take into consideration for example aspects from advertising, personal selling

and public relations In working on sales, there is no one certain right answers

Markets live all the time and markets are huge which includes millions of different

opinions Companies need to develop among them or they are not going to manage

It is brutal game but customers determine the way

People: Including those related to services either directly or indirectly This mainly relates to staff (contact center employees, representatives, and management staff) (Bernard et al 1981)

Every company has their own alignments and policies concerning of their actions When thinking of personnel, this is a tough question for example what the right capacity is, needed qualification of the employees, is there need for further education, what is the right way to choose the personnel and of course how is all this going to

be managed (Dienstleistungsmarketing, 2012) People section is important part for every company People section forms of personnel and of customers It is crucial for

a company to have a motivated and qualified staff because they are the people who basically can increase or decrease the selling of the company If customers don’t like the person who they are doing business with and the person gives an incompetent feeling for the customer, it effects directly to the results (Krishna et al, 2010, 86.)

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Companies should have on their service only people, who have right training for the work and who knows about the products, which they are doing business with If this

is not the case, a wise employer provides the right training for employees so people are able to do their work properly and customers will get professional image of the company, good service and they remain satisfied Especially people who works in customer service should have good communication skills and to be suitable for customer service If customer works with the company for the very first time and the first impression is poor because of poor customer service, has it clear reflections to the business According to Krishna et al (2010, 87) by providing a good training for

all employees and taking into service only people who have the right attitude towards

the job and managing the company as an inspiring style, provides good results Quality is one important aspect which determines whether the customers choose the company to do business with or not According to Grénroos (2000, 63) quality is determined by the customers thus quality is everything what customers think it is Process: This relates to the operational aspects of the service such as: receive and process orders, timing and sequence of activities leading to the experience of

consumers of services Create a process of effective services is essential for the

success of a service company (Bernard et al 1981)

In addition, process means all the systems which are used when company delivers the

service for their customers Process is all the steps that need to be taken from thinking

of buying to the final purchasing decision The company needs to convince the customer that their products and services are high-qualified and they are trustworthy When service and even every minor technical aspect works, it keeps customers happy and they become involvement with the company and their products (Kumar, 2010, 49-50.) When PGFV company gets a question about a online shopping they are offering for, a customer expects the answer the sooner the better

Gilbert (2003, 115) presents a figure from Boom and Bitner from 1981 about the marketing mix for services There process-section has explained to include all the

policies and procedures that company follows, the function of all the mechanics and

in nowadays electronics, employees’ ability to make circumspect decisions, how customer take part into the whole process, is the process rightly directed to the

customer and all the steps that need to be taken in the whole process of the company

Physical Evidence: is the entire environment, in which, the service is presented and provide to consumers It includes tangible value which creates awareness of services and company service providers (Bernard et al 1981) Three sizes physical environment represents the relationship between the service and the environment: Environmental conditions such as temperature, sound, smell, space and functionality

such as maps, equipment, decorations, signs, symbols and artifacts such as signatures,

personal contacts (Bernard et al 1981)

Moreover, physical evidence is everything that can be seen or touched around the company The quality of catalogues can effect on decision whether to buy something from one company or from the other Everything near the company is under supervision from the point of view of customers; furniture, the outfit of the premises, whether customer can get a cup of coffee during the visit or not, everything can effect

to the customer (Krishna et al., 2010)

Krishna et al (2010, 88) divides physical evidence into two categories; peripheral evidence and essential or dominant evidence By peripheral is meant almost insignificant issues for the company which can mean a lot for the customer and give

a certain image for the company Krishna, et al 2010 used as an example a movie ticket For the cinema it is only a system to supervise the customers so everyone who wants to see a film has to buy a ticket but for a customer it can be more For example Finnkino in Finland prints on the other side of the ticket usually a discount for example to the nearest pizzeria That way the ticket is not only a way to see the movie

for customer but he or she can also get other types of benefits of it which can improve

company’s image Essential evidences are those which give a direct image about the quality of the company, for example premises in the airplane

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2.2.3 7P Marketing role and its importance in online shopping

The increase in the number of internet users have made online marketing's role is growing The spread brand and promote your products have become easier than traditional methods Shopping habits of users are also changed By internet marketing

tools, modern businesses can freely adjust as well as control the behavior of

consumers easily

By using free online tools like fan page, website, email, social networks People can cut the cost and time to reach potential customers Also based on the available

tools can now calculate and evaluate performance and customer behavior In addition,

it help business approaches to the target customer, retrench geographical gap, and keep away from intermediate cost, takes time

Based on the online marketing tools, businesses have high competitive advantage Spread and promote brand products is now easier via the Internet Moreover, they also create the popularity for products and services of enterprises Businesses can approach customers around the world through a mouse-click that traditional marketing cannot do

Can access, purchase, exchange of information anytime in unlimited time

Payments are easy and diversify

Moreover, internet is considered the good choice for providing information The huge amount of information to be uploaded, millions of access per day so that the display

of information on the internet is essential

If more than 10 years ago that we do every morning such as: read the newspapers and listen to the radio, but now those things is done through mainly Internet The number

of people watching TV, listening to the radio, read newspapers are declining sharply due to the user's network access more quickly and be more active People use the internet daily to find information online, shopping, or even learn about a company

they want to cooperate

HUTECH LIBRARY

Marketing online helps customer shopping become easier, and faster than before It improves the efficiency of the work day

Marketing online is a great opportunity in the business, if the enterprise not take this trend, enterprises will lose a large numbers of potential customer Therefore, developing online marketing strategy is very necessary

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CHAPTER III: RESEACH MODEL AND HYPOTHESES

negative critical incidents However, Chen & Chang (2005) suggest value (price) is

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