Analysis of customer satisfaction of real estate brokerage service of priority source company limited

17 2.5 Research Model of factors affecting to the quality of real estate brokerage services to the satisfaction of customer purchasing real estate .... Core service elements core service

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RESEARCH PROJECT

(BMBR5103)

ANALYSIS OF CUSTOMER SATISFACTION OF REAL ESTATE BROKERAGE SERVICE OF

PRIORITY SOURCE COMPANY LIMITED

AdvisorÕs assessment

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Content Format:

¥! Write out the table of content for the research proposal;

¥! Using Times New Roman (13 Font), 1.5 line spacing, 3.5cm from top margin, 3cm from bottom, 3.5cm from left and 2cm from right and printed by PDF on A4 paper;

¥! Research Project must be printed in colour document with hard cover, and then bind into a book

¥! Plagiarism will receive a ÒFailÓ mark

Table of contents

Chapter 1 Introduction 6

1.1 Executive Summary 6

1.2 Objectives of the research 6

1.3 Subject and scope of the research 6

1.4 Research Methodology 7

1.5 Significance of the study 7

1.6 Structure of the research 7

Chapter 2: Literature Review 8

2.1 Concepts of brokerage and real estate brokerage 8

2.2 Definition of Quality 8

2.3 Service and service quality 8

2.3.1 Definition of service 8

2.3.2 Characteristics of Service 8

2.3.3 Service Quality 9

2.3.4 Measurement of service quality 11

2.4 Customer Satisfaction 15

2.4.1 Definition of customer satisfaction 15

2.4.2 Customer Satisfaction Index 17

2.4.3 Relationship between service quality and satisfaction 17

2.5 Research Model of factors affecting to the quality of real estate brokerage services to the satisfaction of customer purchasing real estate 19

2.6 Summary of Chapter 2 20

Chapter 3: Research Model 21

3.1 Introduction of PRIORITY SOURCE 21

3.2 Demand for real estate 21

3.3 Characteristics of real estate and real estate brokerage 21

3.4 Design of the research 22

3 5 Calibrate measurement scale 23

3.5.1 Measurement scale of service quality of real estate brokerage 23

3.5.2 Customer Satisfaction Measurement Scale 24

3.6 Formal Research 24

3.7 Summary of Chapter 3 24

Chapter 4: Research and Discussion 26

4.1 Research results and tests 26

4.1.1 Sample information 26

4.1.2 Preliminary evaluation of the scale 26

4.1.3 Cronbach's Alpha Reliability Coefficient 27

4.1.3.1 Scale of service quality 27

4.1.3.2 Measurement Scale for customer satisfaction 28

4.1.4 Exploratory Factor Analysis (EFA) 29

4.1.4.1 Measurement Scale for service quality 29

4.1.4.2 Customer Satisfaction Scale 30

4.1.5 Test hypothesis testing 31

4.1.5.1 Test the Pearson correlation coefficient between variables 31

4.1.5.2 Analysis of Variance (ANOVA) testing in linear regression analysis 32

4.1.6 Linear regression analysis 32

4.1.7 Differential analysis for customer satisfaction by demographic variables 33

4.1.7.1 Differential analysis by sex 33

4.1.7.2 Differential analysis by age 33

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4.1.7.3 Differential analysis by purpose of purchase 33

4.1.7.4 Differential analysis by Income 33

4.2 Interpretation of observable variables by comparing with reality 34

4.3 Summary of Chapter 4 36

Chapter 5: Conclusions and Recommendations 37

5.1 Main results 37

5.2 Recommendations 37

5.2.1 Employee Competence component 37

5.2.2 Reliability component 38

5.2.3 Support Services Composition 38

5.2.4 Product component 39

5.2.5 Image component 39

5.3 Limitations and Recommendations 40

Reference 41

Appendices 43

Appendix 1: Questionnaire 43

Appendix 2: Statistics detailing the survey results 45

Appendix 3: CronbachÕ Alpha testing results 47

Appendix 4: Exploratory Factor Analysis (EFA) 50

Chapter 1 Introduction

1.1 Executive Summary

In light of fast-paced socio-economic development of Vietnam over recent years, the demand for residential and commercial real estate across the country and especially in Ho Chi Minh City has been increasing rapidly Real estate is now one of the most actively exchanged commodities, both in terms of transaction value and volume In such context, there is a need for bringing in a third party as commonly known as broker who bridges between the buyers and sellers, landlords and tenants, and other related parties such as legal advisors, financial advisors and government authorities However, in comparison with other markets in the region which are more matured, real estate brokerage in Vietnam is relatively young and brokerage activities are somewhat lack

of professionalism and transparency that pose several risks on the success of the transactions Therefore, in order to meet the demand of the market, to ensure the best interests among the trading parties and increase the liquidity of the market, real estate brokers are emerged to close

of gap of professionalism of the market

Real estate brokerage services at Priority Source Company have just been developing almost 2 years However, the companyÕs founder has over 10 years experience with international real estate brokerage firms such as Colliers International Vietnam and Cushman & Wakefield

Vietnam, as well as some local real estate developers

From that situation, the paper wishes to find out what factor takes part in the quality of real estate brokerage service of Priority Source Company that affect to the satisfaction of customers For that reason, the research aims to analyzing impact of service quality on satisfaction of the customers using real estate brokerage service of Priority Source Company Limited

1.2 Objectives of the research

General objective: To examine and analyze the impact of service quality components of real estate brokerage on satisfaction of the customers From there, the paper hopes to propose

solutions to improve service quality of real estate brokerage and customer satisfaction for

Priority Source Co Ltd

1.3 Subject and scope of the research

Subject of the research is the quality of real estate brokerage services and key components of customer satisfaction The research extends its scope to literature reviews and reference to other researches on service quality and customer satisfaction Customers referred in this research are those who can be either existing or potential customers of the service offerings of Priority

Source Company While the research scope provides unified results as it only focuses on one specific company, it also contains in itself the limitation that the scope may not be broad enough

to formulate a representation for service quality of brokerage service of real estate market in Vietnam

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1.4 Research Methodology

Regarding research methodology, the research was carried out in two phases:

- Preliminary research using qualitative interview to adjust and add new components to the measurement scale of real estate brokerage service quality and to develop measurement scale for these components

- Afterward, the research used quantitative methods to test scales and research models by

Cronbach's Alpha analysis, exploratory factor analysis (EFA) and linear regression analysis

1.5 Significance of the study

The research topic has significance in assessing customer satisfaction practices for real estate brokerage of the Priority Source Company, specifically as follows:

¥! the research contributes to finding key factors measuring service quality that the client wishes to receive from the Company

¥! the research helps the Company managers to know how the service quality of real estate brokerage of the company is rated by customers, serving as the basis to enhance and improve the service quality and competitiveness to deal with other competitors in the industry

¥! Finally, it provides scale to measure quality of real estate brokerage services for later researches to refer, adjust and contribute when studing real-life situation of other real estate companies in Vietnam

1.6 Structure of the research

This paper is divided into 5 chapters:

Chapter 1: Introduction to Research: Introducing the research and its practical meanings

Chapter 2: Literature Review: Presenting theoretical foundations, previous researches and

models

Chapter 3: Research Model: Describing research process

Chapter 4: Research and Discussion: Presenting results of the research and discuss the results withi reference to real life situation of the Company

Chapter 5: Conclusions and Recommendations: Briefly presenting the conclusion from the

research, giving recommendations, pointing out limitations of the research and propose solutions for future study

Chapter 2: Literature Review

2.1 Concepts of brokerage and real estate brokerage

Brokers are understood as mediating for the two parties to contact, communicate and making a transaction with each other In essence, commercial brokerage is a type of commercial service Article 150 of the Commercial Law 2005 defines commercial brokerage as Òa commercial

activity whereby a trader acts as an intermediary (referred to as broker) between parties selling and purchasing goods or providing commercial services (referred to as principals) in the course

of negotiations and entering into contracts for sale and purchase of goods or provision of

services and shall be entitled to a remuneration under a brokerage contract." Real estate

brokerage is to provide assistance to clients with rights related to real estate Brokers or real estate consultants providing buyers, sellers, lessees and lessors with necessary information about the transaction The content of real estate brokerage services includes many activities such as: searching and providing necessary information about the parties to the principal, conducting introduction and presentation of the target real estate products or services, arranging for the parties to contact each other, help with drafting contract when required The ultimate purpose of the brokerage services is to create favorable conditions for the parties to conclude with a

contract

2.2 Definition of Quality

Armand Feigenbaum defined Òquality is a customer determination, not an engineer's

determination, not a marketing determination or a general management determination It is based upon the customer's actual experience with the product or service, measured against his or her requirements-stated or unstated, conscious or merely sensed, technically operational or entirely subjective-and always representing a moving target in a competitive market.Ó And according to American Society for Quality (ASQ), quality should Òdemonstrates the superiority of goods and services, particularly to the extent that one can satisfy all needs and satisfy customers.Ó

In short, quality is measured by the perception of customers upon using the services, and

meeting the needs and or achieving customer satisfaction means that the customer is recognized for quality of the service

2.3 Service and service quality

Both are basically identical with each other A thorough examination on the definition of service, especially that of Philip Kotler, may help us clearly see the nature of service, the responsibilities and interests of the parties in the relationship of service exchange

2.3.2 Characteristics of Service

Service has some characteristics or properties that distinguish it from other tangible goods

(Ghobadian, Speller & Jones, 1993; Groth & Dye, 1994; Zeithaml et al., 1990) Service has the following features:

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- Intangibility: This is the basic characteristic of service Though this property shows that service

does not typically exist in any physical form, service products are still materialistic The

intangibility nature of service causes many difficulties for management of service production, more difficult for service marketing, and more difficult to identify services

- Variability: service products are often non-standardized Because the quality of services

depends on who provides them, when and where, and to whom, services are highly variable For example, when it comes to service supply, different staff may not create the same service at different working hours On the other hand, consumer is the person who determines quality of the service based on their perceptions: at different periods of time, their perceptions are

different; and among different customers, perceptions of service quality are different Service products are valuable when satisfying the individual needs of the customer Therefore, in service supply, which is often personalized, it is more likely that the service will be removed from the norms or standards Service is intangible at the output, it is therefore likely to be measurable and normative

- Inseparability: service products are associated with supply activities Service products may be

systemically heterogeneous, all derived from the structure of the underlying service evolving into Production process is associated with service consumption Consumers also participate in service supply activities Thus, the production of services must be cautious Only when there are customers and demands, the production process will be carried out

- Perishability: service cannot be stocked, stored and transported from one area to another

Consequently, service consumption is limited by time

- Non-refundability: If the customer is not satisfied, they can be refunded but cannot refund the

service used

- Uncertain Demand: The level of uncertainty of demand for services is often a lot more varied

than for tangible products

- Human relationships: The human role in the service is very high and is often evaluated by the

client when evaluating the service

- Individuality: The customer evaluates the service based very much on his/her own personal

There are many definitions of service quality, according to Lehtnen and Lehtinen (1982), that quality of service must be evaluated in two respects, the process of service delivery and the outcome of the service According to Gronroos (1984), the definition of quality of service

includes two elements of service quality: technical quality and functional quality In that service quality relates to what is served and functional quality tells how they are served

Quality service is the most influential factor in customer satisfaction (Cronin and Taylor, 1992)

If the service provider offers to customers quality products that meet their needs, then the

business has initially made the customer happy Advardsson, Thomasson and Ovretveit (1994) argued that Òquality service is a service that meets the expectations of customers and becomes their awareness after they used the serviceÓ According to Lewis and Boom: quality service measure how well the service is delivered to customers corresponding to customer expectations Creating a quality service means the ability to meet with customer expectations consistently These statements demonstrate that quality of service is intangible, the customer perceives it via communication and information exchange related to the expectations of the customer Therefore, customers can only evaluate the quality of the service after purchasing and using the service

Thus, service quality is created throughout the service delivery process Each interaction of customer with service is more or less determinant of customer satisfaction, as shown in Figure 2.1

Figure 2.1: Quality Perceived by customers

(Source: adapted fom B•i Nguy•n H•ng et Al., 2004)

The quality perceived by customer is affected by their expectation (ES: Expected Service) in comparison with the level of service they perceive (PS: Perceived Service) The source of

expectation is the perception of what others are saying (words of mouth), specific needs of each person and the experience someone have had in the past By comparing with the perceived

service through criteria for evaluating service quality, customers will be disappointed if the service does not meet expectation, and satisfied when it does, and get very excited when it

exceeds expectation Below are criteria for evaluating service quality:

a) Functional quality and emotional quality

Perceived Services

¥! Unable to meet with expecttaion (ES>PS):

dissatisfied with service quality

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With this assessment, quality of service is examined in 2 factors: Functional quality is what can

be received (What) and emotional quality is how the quality is received by a human being

Emotional quality by human being is when the customer feels respectful, shown through attitude

of the staff at service and meet the needs of customers

b) Evaluation based on service quality components (RATER)

Quality is assessed on the RATER components includes: the ability to perform a service as promised dependently and reliably (Reliability); qualifications of employee such as:

professionalism, courtesy, respect to customer, communication (Assurance); the appearance of facilities, equipment, personnel, items, materials for communication etc (Tangibility); Staff at service is easy-going, attentive to customer creating empathy (Empathy); readiness to help

customers and prompt service delivery (Responsiveness)

c) Evaluation based on 4Ps

Quality is assessed based on 4Ps including: characteristic features of the service provided

(Product); Mode of communication in the process of providing services (Procedure); Service personnel and processes to complete the service (Provider); How to resolve problems that arise when the service is provided to the user (Problems: How to resolve unusual situation) In sum, service quality is determined by the perception or experience of customers in relation to their individual needs Each customer has a different way of evaluating the service quality depending

on their experience, but the abovementioned are three most common ways used by customers to evaluate service quality

2.3.4 Measurement of service quality

One of the basic characteristics of service quality is that it is difficult to measure or to determine the quality standard, as it heavily depends on human factor Service quality is, first of all, human quality Service products are intangible, quality is thus determined by customers, not by the service providers Customer evaluates the quality of a provided service through assessing the company's service personnel and through their subjective feelings Measurement of service quality varies widely depending on the field of study For service product in general, we can measure service quality because of the unique characteristics of the product based on the service quality model given by PARASUAMAN et al (1985), as shown in Figure 2.2

Figure 2.2 Model of service quality gaps

(Source: Parasuraman et al., 1985:44)

The model offers 5 service quality gaps:

- Gap 1: Appears when there is a difference between the customer's expectations about service quality and the managerÕs experience of such customerÕs expectation The basic point of this difference is that the service provider does not fully understand what constitutes the quality of its service and how it is delivered to its customers to satisfy their needs

- Gap 2: Appears when service companies have difficulty in converting their understandings of customer expectations into service characteristics The main cause of this problem is the level of professional competence of service staff

- Gap 3: Appears when service staffs do not deliver services to customers according to defined criteria In service, employees directly contact with the customer and play a very important role

in the quality creation process However, not all time and all employees are able to fulfill the task according to the criteria set out

- Gap 4: Advertising media and information also have major impact on customer expectations about service quality The promises when advertising and promotional programs can increase customer expectation but will also reduce the level of quality perceived by customers when the services are not carried out in accordance with what was promised

- Gap 5: Appears when there is a difference between the quality expected by the customer and the quality perceived Service quality depends on this gap 5 Once the customer realizes that

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there is no difference between the quality they expect and the quality they perceive during

service consumption, service quality will then be rated as perfect

Parasuraman stated service quality is a function of gap 5 On the other hand, this gap 5 depends

on the previous gaps, which are gaps 1, 2, 3, 4 Therefore, to shorten gap 5 or increase the

quality of service, service management must try to shorten all other gaps This service quality model, according to the researchers, can be expressed as follows:

SQ = F ((G5 = f (G1, G2, G3, G4))

In which, SQ stands for service quality and G1, G2, G3, G4, G5 are quality gaps 1, 2, 3, 4, 5

In reference to theoretical ideas in Gronroos' model (1984), Parasuraman (1985) developed a measure composite, called SERVQUAL, to measure the service quality perceived by customer, and the SERVQUALÕs measurement scale contains 22 pairs of Likert scale items to separately

measure customer expectations and perceptions about service quality Specifically, Service

quality = Level of perception - Expected Value This is one of the most commonly used

models for evaluating service quality in several different areas The SERVQUAL model consists

of 10 components as shown in Figure 2.3

Fig 2.3 Parasuraman, et al.'s Determinants of Perceived Service Quality

Source: Parasuraman, et al (1985, p 48)

Components (or dimensions) of service quality: The service quality model of Prasuraman et Al (1985) gives an overall picture of service quality Parasuraman et Al (1985) argues that for any service, the service quality perceived by the customer can be modeled into 10 components:

1.! Reliability: Expresses the ability to deliver service consistently and timely from the first time

2.! Responsiveness: Expresses the readiness and willingness of employee to provide prompt timely services to customers

3.! Competence: is the possession of the required skills and knowledge to perform the

service The ability to provide service represents when employees contact with and

directly deliver the services to customers, research capabilities to capture relevant

information necessary for customer service

4.! Access: involves creating approachability condition for customers to access services such

as shortening waiting time, multiple locations and convenient opening times for

customers

5.! Courtesy: is the consideration for the customer's property and a clean and neat appearance

of contact personnel, manifesting as politeness, respect, and friendliness

6.! Communication: involves with communicating, translating into any language customers can understand easily, and listening to related issues such as explaining services, cost, resolving complaints, product inquiries

7.! Credibility: Expresses the ability to create trust for customers, make customers trust in the company It may be influenced by company name, company reputation and the personal characteristics of the contact personnel

8.! Security: involves the ability to ensure the safety of customers, including physical safety, financial security an confidentiality

9.! Knowing the customer: expressed through the ability to understand the individual need of customer by understanding the customer requirements, their personal interest and

identification of customers Bracelets

10.!Tangible means: are the physical evidence of the service which may be appearance,

uniform of employee, tool and equipment used to provide the service

The ten-component model of service quality mentioned above has the advantage of covering most aspects of the service However, this model also has the disadvantage of being complex in measurement In addition, as this model is theoretical, some components in service quality

model that may not provide distinctive values Consequently, in 1988, Parasuraman et al

revised the model into five components that are the most common and widely used among

marketing researches According to Parasuraman, service quality cannot be determined in

general but depends on customer's perception of the service and the perception is taken into account across multiple dimensions These researchers have repeatedly tested the model and come to the conclusion that the SERVQUAL scale is composed of five basic components, as shown below:

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Figure 2.4: 5 components SERVQUAL model of Parasuraman

(Source: Parasuraman et al., 1988)

¥! Reliability: demonstrates through the ability to perform service appropriately and timely from the first time

¥! Resposiveness: demonstrates through the readiness, willingness of employees to provide prompt service to customers

¥! Assurance: demonstrates through the professional level and the way to serve courtesy, customer service

¥! Empathy: shows great attention and care for each individual customer

¥! Tangible: demonstrates through the appearance, uniform and custom, tool and equipment used to provide service

Based on references to researches of service quality and inherited from theorical framework developed by Parasuraman et al (1988), Johnston and Silvestro (1990) concluded five other

factors of quality of service, including: (1) Helpfulness, (2) Care, (3) Commitment, (4)

Functionality, (5) Integrity In 1990, Gronroos conducted research and proposed six factors to measure service quality, which are: (1) Professionalism and skills, (2) Attitude and behavior, (3) Accessibility and flexibility, (4) Reliability and trustworthiness, (5) Reputation and credibility, (6) Recovery (i.e ability to resolve complaints)

By 2001, Sureshchandar et al also put forth 5 factors that affect to service quality:

1.! Core service elements (core service)

Figure 2.5 Ð real estate brokerage components affecting customer satisfaction Model

(Adapted from Pham Van Hai & Bui Thi Thanh, 2011)

Considering that this study is quite suitable for the author's next research, however, due to the socio-economic conditions between regions, there are differences in income and infrastructure development Therefore, qualitative research was conducted through expert interviewing

techniques to adjust and supplement the composition of the scale to suit the situation at the Company and the area of conducting research survey

2.4 Customer Satisfaction

2.4.1 Definition of customer satisfaction

There are definitions as follows: "Satisfaction is the level of human sensibility derived from comparing the results obtained from the product with the expectations of the person" (Kotler, 2003) "Satisfaction is the reaction of consumers to estimating the difference between previous

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wishes and after-product use" (Tse and Wilton, 1988) "Satisfaction is the response of consumers

to the fulfillment of their desires" (Oliver, 1997) Although there are many definitions of

customer satisfaction, however, we can understand that customer satisfaction is the satisfaction

of consumers in the consumption of a product or service because it satisfies the consumer

desires, which can either be above and below the desired level Customer satisfaction is the customer's perception of the service provider after using the service (Terrence Levesque and Gordon H McDougall, 1996)

More specifically, customer satisfaction is the response of overall perception of a customer to a service provider on the basis of comparing the difference between what they received versus what was expected (Oliver, 1999) On the same point, Kotler (2003) states that SATISFIATION

is defined on the basis of a comparison between the results obtained from the service and the expectations of the customer which is based on the three following levels:

- The level of dissatisfaction: When the level of customer perception is smaller than expected

- Satisfaction level: When the level of customer perception is equal to expected

- Very satisfied level: When the level of customer perception is greater than expected

According to Prof Noritaki Kano, the response to customer expectations is shown as in Figure 2.6:

Figure 2.6: Customer Expection Level Chart

(Adapted from Bui Nguyen Hung et al., 2004)

Implicit requirement (required feature): is a requirement the customer does not tell but presumes the product or service must have Without it, customer will be intolerably disappointed But if

Expectation Satisfied Features

Level 2 Explicit Expectation

One-way features

Expectation Required features Attraction

the service has such attribute, in some case at a high quality level, the customer will take it for granted, and their satisfaction is almost unchanged

Explicit (or pre-exchange) Requirement (one-way feature): is a requirement the customer wants and service provider can meet The higher the quality level of this attribute, the more satisfied the customer

Unrevealed requirements (satisfied feature): is a requirement customers have not expected or thought of Without it, the customer would not be upset, but if there exist such a feature, it will make them extremely excited and encourage them to make a purchase of product or service

Thus, the degree of satisfaction is the function of the difference between the received and

expected results Customers can feel one of the following three levels of satisfaction: If the performance is worse than expected, the customer will be dissatisfied If performance is equal with expectations then the customer will be satisfied If the actual results exceed expectations, the customer is satisfied

2.4.2 Customer Satisfaction Index

Customer Satisfaction Index is used to measure customer satisfaction for several industries and company in many developed countries Customer satisfaction becomes an important asset for businesses and organizations in their efforts to improve service quality, maintain loyalty, and enhance their competitiveness

This indicator can be carried out on the national level (how satisfied the business industry, the industry will be for its customers) or at a level of internal industry at different time periods From there, businesses can know their position, how their customer think of the company in order to make plans for business targets and strategies Customer Satisfaction Index includes several factors (variables), each of which is made up of many specific elements which is typical

to the product or service Customer satisfaction is defined as a comprehensive assessment of the use of a service or after-sales program of a company and this is at the core of the customer

satisfaction measurement model Around this variable is a system of causal relationships derived from initial variables such as customer expectations, company image and product - service, perceived quality and perceived value about the product or service attached to the outcome variables of satisfaction such as loyalty or customer complaints

2.4.3 Relationship between service quality and satisfaction

The relationship between service quality and customer satisfaction is the subject of continuous discussion among researchers over the past decades Many researches which placed emphasis on customer satisfaction in service industries has been made Some authors argued that service quality and customer satisfaction have equal importance so that these two concepts can be used interchangeably However, many studies have shown that service quality and customer

satisfaction are two distinct concepts Parasuraman et al (1993), arguing that there are some differences between quality of service and customer satisfaction, the main difference being the

"causality" Zeithalm and Bitner (2000) claim that customer satisfaction is influenced by many factors such as: product quality, service quality, price, situational factors, personal factors

Service quality and satisfaction, though being different, are two closely related concepts in

service research (Parasuraman and GC 1988) Previous studies have shown that quality of

service is the cause of satisfaction (Cronin and Taylor, 1992; Spreng and Taylor, 1996) The reason is that service quality is related to service delivery, and satisfaction can be measured only

concluded that quality of service is a precondition for satisfaction (Cronin and Taylor, 1992; Spereng, 1996) and a major factor in satisfaction (Ruyter, Bloemer, 1997) According to Philip Kotler (2003), the three pillars of customer satisfaction are the product factor, convenience factor and human factor By which, service quality is a factor affecting to customer satisfaction This shows that customer satisfaction is significantly broader than the service quality

Figure 2.7: Factors affecting to customer Satisfaction

(source: Philip Kotler, 2002)

In the service business sector, we often confuse "satisfaction" and "quality" in a mutually

interchangeable sense In fact, service quality is one of the aspects of a service affecting to

customer satisfaction, that is, the acceptance of service may occur without customers having actual experience with a company (For example, we may know that the Marina Bay Sands Hotel & Casino has a high quality in providing hospitality services although we may have not been there.) Meanwhile, customer satisfaction is measured after the customer had practical

experience Historically, there has been a great deal of researches that have examined the

relationship between customer service quality and customer satisfaction, which, according to Cronin and Taylor (1992), service quality is the strongest contributor to customer satisfaction Any service of higher quality will make the customer more satisfied From there, if the company wants to enhance the customer's satisfaction with their services, the company must improve their

- Quality and features

- Service Quality and

After Sales Services

service quality first In other words, service quality and the customer satisfaction are closely tied

to each other In which, service quality is what exists first and will determine the satisfaction of the customer

Spreng and Mackoy (1996) also point out that service quality is the premise of customer

satisfaction

(Source: SPreng & Mackoy, 1996)

2.5 Research Model of factors affecting to the quality of real estate brokerage services to the satisfaction of customer purchasing real estate

Based on the presented theoretical basis, and at the same time refer to earlier researches on service quality evalation and the actual conditions of the subject and the field research, the

author proposes evaluation components of service quality including: Products; Employee

competence; Reliability; Brand; Support Services

¥! Product: show diversity, real time updates about real estate listings and price, complete information

¥! Employee competence: reflected in knowledge, professional expertise in brokerage, ability to consult and customer care

¥! Reliability: shows the company's reputation, ability to serve and provide clear and

authentic information to customers

¥! Brand: show the brand and values the Company brings in the perception and experience

of customers

¥! Support Services: Provides value-added services to make transactions convenient, fast and secure

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Figure 2.9: theoretical model of real estate brokerage factors affecting to customer

satisfaction

(Source: Adapted from Le Minh Dan, 2016)

The hypotheses in this research are:

¥! H1: There is a positive relationship between product and customer satisfaction for real estate brokerage service

¥! H2: There is a positive relationship between employee competence and real estate

measurement scales of service quality of real estate brokerage service that consists of 5

components: Product, employee competence, image, reliability, support service

H1 H2 H3 H4 H5

Chapter 3: Research Model

3.1 Introduction of PRIORITY SOURCE

Priority Source Company Ltd Co was established in December 2013 with core businesses in real estate brokerage and real estate related legal consulting The primary market focuses on Ho Chi Minh City real estate market Since its inception, the Company has gradually developed into

an effective micro company in real estate brokerage in Ho Chi Minh City

Address: 35/10 Tran Ke Xuong, Ward 7, Phu Nhuan Ditstrict, Ho Chi Minh City

Contact Office: Level 4, 04 Nguyen Thi Minh Khai Street, District 1, Ho Chi Minh City

Chartered Capital: VND 100 million

3.2 Demand for real estate

Demand for real estate is a kind of special and synthetic needs of human beings This demand is formed and developed on the basis of physical needs (a shelter, a place to settle) and spiritual needs (security needs, property assurance, self-assertiveness, perception and communication) Requirements for real estate depend on the following conditions: income, infrastructure, nature, geography, socioeconomic environment in a particular society, social group where someone lives, works and communicates The need for buying real estate are varied and satisfying this need is to meet all demands simultaneously, including:

¥! The need for a shelter, a place to live

¥! The need for convenience for everyday life of someone

¥! The need for safety, where real estate is deemed as a secured asset

¥! The need to feel the space, to communicate with the surrounding environment

¥! The need for investment and business accommodation

¥! The need for self-assertion, recognition of social achievement

Demand for real estate of society can only grow when the economic, political and cultural

conditions of society are improved and developed Based on the needs of customers, real estate buyers can be classified into the following groups:

¥! As a place to live: buy real estate for residential accommodation, with the purpose of having private houses when getting married or changing workplace or migrating

¥! Short-term investment: buy real estate for resale in the short term

¥! Long term investment: buy real estate for resale in the long term

¥! Other: buy real estate for resort, rental purposes, business location

However, the grouping is only relative because the decision to buy real estate may be just the stimulus of a combination of needs

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3.3 Characteristics of real estate and real estate brokerage

Real estate consists of assets including land, buildings, buildings associated with land, including assets attached to houses, buildings, and other assets attached to land (Article 174, Civil Code 2005) Through trading activities to meet the needs of exchange of goods and services among the society, brokerage in general and real estate brokerage in particular are emerged Real estate brokerage is an activity that assists real estate owners to seek clients, negotiate to finalize a purchase, sale or lease contracts The brokers earn their compensation in form of commission after successful closing of a commercial contract between the parties Real estate brokers are fully independent traders who sell, lease or manage real estate owned by the customer for an agreed fee When selling real estate, the broker performs all the operations from connecting and searching for the needs for buying and selling properties among parties, arranges meetings and negotiations until a deal is successfully closed and the party completes transfer the ownership right of the property to be new owner Real estate brokerage services are tools and means by which real estate brokers and developers can advertise all real estate transactions and projects, either ongoing or in the shortcoming, to all customers with real estate needs

Real estate is a special kind of goods of great value and is therefore subject to government

policies and applicable laws All transfers, sales, changes of ownership must be carried out legally and approved by the competent authority Because of the unique characteristics that can not be relocated, the location of real estate in the sense of value includes: commercial location, security location, potential location, location suitable for living or trading a commodity, will greatly affect the price of real estate Brokers are usually pleasant, honest, and trustworthy, mature, having the right judgment, credible, and enthusiastic in the job Because real estate is a product of very high value, the representative should possess the most convincing expression for the customer

3.4 Design of the research

The research is carried out into two phases:

Phase 1 - Preliminary research:

This phase uses qualitative methodology by expert interview Two employees from commercial leasing and residential sales teams and one from legal consulting team of the company were invited to the interview to discuss if the questionnaire should be adjusted and supplemented in order to fit in actual business practices at Priority Source Company and Ho Chi Minh City real estate market Preliminary research aimed at adjusting and improving observable variables to come up with research model and finalize the questionnaire After eliminating and adding

observational variables by the opinions of the experts, the measurement scale for service quality

of real estate brokerage used for the reasearch included 26 observable variables measuring 5 components of the research model

Phase 2 - Main Research:

This phase was conducted by quantitative research methodology through collecting answers in the questionnaires sent to prospect customers extracted from customer database of Priority

Source The collected data is then used to test hypotheses of the research model

The research process is shown in Figure 3.1 This process consists of 03 main parts: Formulating measurement scale; Testing measurement scale; and testing hypothesis

Figure 3.1: Research Procedure

(Source: adapted from Le Minh Dan, 2016)

3 5 Calibrate measurement scale

3.5.1 Measurement scale of service quality of real estate brokerage

Pham Van Hai and Bui Thi Thanh (2011) have provided the measurement scale for service quality of real estate brokerage service, which consists of five components (product, employee competence, image, reliability, and support services) with 29 observable variables However, since Priority Source is a newly established company with a limited pool of customers, the scale

is adjusted and supplemnted accordingly As the company core business line is in commercial real estate brokerage, and the company just stepped in residential and industrial sales recently, this research after consulting with the experts in each sector, the measurement scale is adjusted and added to include the following observable variables:

Product component:

1 Real estate products are diversified (P1)

2 Real estate products are offered at competitive prices on the market (P2)

3 Real estate products offered for sale meet with market demands (P3)

4 Real estate products provide clear and sufficient information (P4)

5 Real estate product listings are always up-to-date (P5)

Employee Competence Component

1 Employees are always ready and willing to serve customers (E1)

2 Employees are very friendly and polite (E2)

3 Employees possess with good knowledge of real estate (E3)

4 Employees have good knowledge of related sectors (E4)

5 Employees always meet the needs of customers (E5)

Theories of Service Quality:

SERVQUAL

Customer Satisfaction

Initial Scale ExpertÕs Opinions

Scale Adjustment

Official Applicable Scale

Quantitative Research

(n=137)

Scale Measurement: Reliability Analysis,

25

6 Employees resolve customerÕs complaints properly (E6)

7 Employees always advise in the best interests of customers (E7)

Image Component:

1 Brand and reputation of PRIORITY SOURCE is reliable (I1)

2 Priority Source is often on top of mind of the customers when they have demand for real estate (I2)

3 Priority Source strives to serve customers with high sense of responsibility (I3)

Reliability Component:

1 The products are transparent and legitimate (L1)

2 The transaction procedure is clear and convenient for customers (L2)

3 Priority Source advises asking price of properties on the market correctly (L3)

4 Customers information during the transaction is treated with high confidential (L4)

5 Priority Source provides services promptly and timely (L5)

Component of Support Services:

1 Planning information and transaction legality are verified for customers (S1)

2 Bank loans are recommended to customers (S2)

3 Site inspections are arranged with customers (S3)

4 Prepare contracts properly and explain in detail (S4)

5 Consult with payments upon purchasing real estate in a transparent and risk free manner (S5)

6 Complete transaction documentation (S6)

After adjusting, the measurement scale of service quality of real estate used for the research included 26 sets of observable variables for evaluating the five-component model

3.5.2 Customer Satisfaction Measurement Scale

Based on Hayes's (1994) scale for assessing overall customer satisfaction when using brokerage services, the scale used in this research consists of 4 observable variables:

1 Customers are satisfied with diversified real estate products which meet the demands (CS1)

2 Customers are satisfied with employee competence (CS2)

3 Customers are satisfied with the reputation of PRIORITY SOURCE (CS3)

4 In conclusion, customers are satisfied with Priority SourceÕs real estate brokerage service (CS4)

In addition to demonstrating customer satisfaction for real estate services quality, the Customer Satisfaction Scale is also used to test the relative impact of factors on the measurement scale for service quality of real estate broker services

researchers, such as Hoelter (1983), proposed a sample size of 200 Based on Hatcher (1994), the research is then estimated to achieve a minimum sample size of 130, carried out in a

convenient manner In order to achieve n = 130 (26 variables x 5), 800 copies of questionnaire

were emailed to customers who are extracted from existing and prospective customer database

of the company After filtering, 137 responses are eligible

3.7 Summary of Chapter 3

This chapter presents the adjustment results of the measurement scales based on findings of previous researches and the input of company experts Research methodology is conducted in 2 phases:

- Preliminary research which expert interview technique in qualitative research were used to supplement and modify the questionnaire to suit the reality

- Official research: is a quantitative study which make it necessary to refer to previous

researches as a basis for selecting sample size n = 137 The result of this chapter is the outcome

of measurement scales of service quality with 26 observable variables measuring 5 components

of real estate service quality and 4 observable variables measuring customer satisfaction scale

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Chapter 4: Research and Discussion

4.1 Research results and tests

4.1.1 Sample information

137 samples were analyzed for the analysis The statistics have the following results:

Regarding the sex of respondents: There are 90 males (65.7%) and 47 females (34.3%)

As per Table 4.1, most real estate buyers aged between 29 and 50, which is also the age range of wealth accumulation after several working years The purpose of buying home is mainly to settle which accounted for 65% In addition, the purpose of buying real estate as long term investment

is increasing in accordance with the increase of income increase, accounting for 24.1%

Table 4.1: Allocated by income, purchase purpose and income

Long term investment

4.1.2 Preliminary evaluation of the scale

As discussed in Chapter 3, the measurement scales for service quality of real estate brokerage consists of five components:

(1) Product: There are 5 observable variables, encoded by P1 to P5

(2) Employee Competence: There are 7 observable variables, encoded by E1 to E7

(3) Images: There are 3 observable variables, encoded by I1 to I3

(4) Reliability: There are 5 observable variables, encoded by R1 to R5

(5) Support Services: There are 6 observable variables, encoded by S1 to S6

Customer Satisfaction Scale is measured by 4 observable variables encoded by CS1 to CS4 Scales will be pre-evaluated through two tools, the Cronbach's Alpha Reliability Coefficient and the Discovery Factor Analysis (EFA) The Cronbach's Alpha coefficient is used to filter and remove variables that are not eligible for analysis The key selection criterion of the scale is to have an alpha reliability of 0.6 or higher (Numnally & Buntein 1994) Variables with item-total correlation less than 0.3 will be discarded

Next, in the EFA analysis, if the KMO coefficient (Kaiser - Meyer - Olkin) must be within the range (0.5 <KMO <1), the factor norms will then be considered appropriate (Hoang Trong &

Chu Nguyen Mong Ngoc, 2008) Factors loading less than 0.5 will be omitted, to ensure the practicality of the study (Hair & ctg, 1998) The methododoly used is the Principal Components Analsysi, the Varimax rotation, the standard extraction when Eigenvalue is 1, then only elements greater than 1 are retained in the analysis model The scale is accepted when total deviation is equal to or greater than 50% (Gerbing & Anderson, 1988)

4.1.3 Cronbach's Alpha Reliability Coefficient

4.1.3.1 Scale of service quality

The analysis result of Cronbach's Alpha of measurement components for service quality of real estate brokerage service are shown in Table 4.2, with the results as follows:

Product component has Cronbach's Alpha of 0.839> 0.6 The observed variables in this

component had the lowest total correlation coefficient of 0.570> 0.3 Therefore, the

measurement variables in this component are used for further EFA analysis

Employee competence component has Cronbach's Alpha employees of 0.83> 0.6 However,

observation variable E4 (Employee with good knowledge of related fields) has a value of 0.261

<0.3, which should be rejected After the second run, the remaining 6 observed variables has Cronbach's Alpha coefficient of 0.849> 0.6 The observed variables in this component had the lowest total correlation coefficient of 0.573> 0.3 Therefore, these measurement variables are used to further analyze the EFA

Image component has Cronbach's Alpha of 0.815> 0.6 The observed variables in this

component had the lowest total correlation coefficient of 0.616> 0.3 Therefore, the

measurement variables in this component are used for further EFA analysis

Reliability component has Cronbach's Alpha of 0.828> 0.6 The observed variables in this

component had the lowest total correlation coefficient of 0.580> 0.3 Therefore, the

measurement variables in this component are used for further EFA analysis

Support Service component has Cronbach's Alpha of 0.754> 0.6 However, observation

variable S4 (drafting proper contract and explain changes in detail) has a value of 0.058 <0.3, which should be rejected After the second run, the remaining 5 observed variables have

Cronbach's alpha of 0.823> 0.6 The observed variables in this component had the lowest total correlation coefficient of 0.552> 0.3 Therefore, these measurement variables are used to further analyze the EFA

To sum up, after verification by Cronbach's Alpha reliability coefficient, two variables E4 and S4 were excluded because the total variable correlation was less than 0.3 Results of the

remaining 24 observable variables of the 5 components of service quality of real estate

brokerage service are retained for further EFA analysis

Table 4.2: Cronbach's Alpha Coefficients of measurement scale for service quality

Observed

variables

Average scale

if rejected variable

Variance of the scale if rejected variable

Correlation of total variables

Alpha if rejected variable

Product component

CronbachÕs Alpha = 0,839

4.1.3.2 Measurement Scale for customer satisfaction

The composition of customer satisfaction has Cronbach's Alpha of 0.762> 0.6, as shown in Table 4.3 The observed variables in this component had the lowest total variance of 0.442> 0.3 Therefore, the measurement variables in this component are used for further EFA analysis

Table 4.3: Cronbach's Alpha coefficient of customer satisfaction component

Observed

variables

Average scale

if rejected variable

Variance of the scale if rejected variable

Correlation of total variables

Alpha if rejected variable

Customer Satisfaction component

4.1.4 Exploratory Factor Analysis (EFA)

4.1.4.1 Measurement Scale for service quality

The scale for service quality is measured by 26 observable variables and after checking with Cronbach's Alpha reliability coefficient, two variables are eliminated As a result, there are only

24 observable variable to measure 5 components of the scale of service quality, which are

eligible for further exploratory factor analysis (EFA)

After using SPSS 21.0 to run the first exploratory factor analysis (EFA), T4 variable was

dropped due to loading simultaneously two components at the same level with similarity The results of the 2nd run with 23 observable variables are as below:

Upon testing KMO coefficient, the results show that KMO = 0.715> 0.5, which makes this model suitable As Sig = 0.000, the variables are correlated in the overall to enable this testing statistically significant With Principle Components analysis and the Varimax rotation from 23 observable variables, the extracted variance is 64,109%> 50%, at the value of Eigenvalue = 1,887> 1, which therefore make the above model eligible for Exploratory Factor Analysis EFA The results presented in Table 4.4 show that the variables in the Rotated Component Matrix have

a loading coefficient greater than 0.5 (a minimum of 0.697), which is appropriate to continue applying for the research

Table 4.4: Results of EFA analysis of the service quality scale