THE EFFECTS OF SERVICE QUALITY ON CUSTOMER SATISFACTION AND CUSTOMER LOYALTY - A STUDY OF ADSL SERVICE IN HO CHI MINH CITY

ABSTRACT The main objective of this study examines the factors that impact to the service quality to customer satisfaction and customer loyalty by empirical research through customer who

VIETNAM NATIONAL UNIVERSITY – HOCHIMINH CITY

INTERNATIONAL UNIVERSITY SCHOOL OF BUSINESS

THE EFFECTS OF SERVICE QUALITY ON

CUSTOMER SATISFACTION AND

CUSTOMER LOYALTY -

A STUDY OF ADSL SERVICE IN HO CHI MINH CITY

In Partial Fulfillment of the Requirements of the Degree of

BACHELOR OF ARTS in BUSINESS ADMINISTRATION

Student’s name: NGUYEN THI THANH THANH (BAIU09087)

Advisor: Dr MAI NGOC KHUONG

Ho Chi Minh city, Vietnam

2013

THE EFFECTS OF SERVICE QUALITY ON

CUSTOMER SATISFACTION AND

CUSTOMER LOYALTY

A STUDY OF ADSL SERVICE IN HO CHI MINH CITY

_ Mai Ngọc Khương, Ph.D Hồ Nhựt Quang, Ph.D., Chair

_

Võ Tường Huân, LLM., Secretary

_ Mai Ngọc Khương, PhD

_ Nguyễn Văn Phương, Ph.D

Secondly, my special gratitude conveys to responders who help me answer the questionnaires This research could not be completed if it did not have data which they gave

Moreover, I would like to express my grateful thanks and appreciation to my close friends They have always been there for me whenever I need them They helped me

in data collection process to get data For that all, I thank you

Lastly, but most importantly, I would like to dedicate most sincere thanks to my family members, especially parents who provide the mental and financial support Thank you

TABLE OF CONTENTS LIST OF TABLES

LIST OF FIGURES

ABSTRACT ……… 1

CHAPTER I: INTRODUCTION……….2

1.1 Background……….……… 2

1.2 The Problem Statement……… 5

1.3 Objectives…….……….6

1.4 Research Questions and Hypothesis……….6

1.5 Scopes and limitations……… 7

CHAPTER II: LITERATURE REVIEW……… 9

2.1 Asymmetric Digital Subscriber Line (ADSL)…….……….9

2.1.1 Definition……… ………9

2.1.2 Benefit of ADSL……… 10

2.2 Customer Satisfaction….……….10

2.2.1 Definition……….10

2.2.2 Importance of Customer Satisfaction……… 11

2.3 Customer Loyalty………12

2.3.1 Definition……….12

2.3.2 Importance of Customer Loyalty……….… 13

2.4 The factors affect to Customer Satisfaction.……… ……….13

2.5 Relationship between Customer Satisfaction and Customer Loyalty………….….17

2.6 Conceptual framework……….……17

3.1 Research Design……… 19

3.2 Target Population and Sample Size………20

3.3 Survey Instrument……… 20

3.4 Operational Definitions and Measurements………21

3.4.1 Customer satisfaction measurement………22

3.4.2 Customer loyalty measurement……… ……22

3.4.3 Empathy measurement……….23

3.4.4 Reliability measurement……… 24

3.4.5 Responsiveness measurement……… 24

3.4.6 Assurance measurement……… 25

3.4.7 Transmission of speed measurement……… 26

3.4.8 Price measurement……… 26

3.5 Data Collection … ……… 26

3.6 Data Analysis…… ………… ……… 27

3.7 Factor Analysis ……… 28

3.7.1 Factor Analysis for Dependent Variables………28

3.7.2 Factor Analysis of Independent Variables……… 30

CHAPTER 4: RESEARCH FINDINGS………34

4.1 Characteristics of Employees and Univarate Descriptive Statistics of Independent and Dependent Variables……… … 34

4.1.1 Characteristics of ADSL user……… 34

4.1.2 Univarate Descriptive Statistics of Independent Variables……….39

4.1.3 Univarate Descriptive Statistics of Dependent Variables………40

4.2 Multiple Regression Analysis……….……….40

4.2.2 Factors affect to Customer Loyalty……… 43

4.3 Simple Linear Regression.……… 45

4.4 Direct and Indirect Effects of Customer Loyalty ……… ………46

4.4.1 Direct effects of Customer Loyalty……… 47

4.4.2 Indirect effects of Customer Loyalty……… 47

4.4.2.1 Indirect Effect between RESPONCE and CUSLOYAL……… 47

4.4.2.2 Indirect Effect between ASSURANCE and CUSLOYAL……… 47

4.5 Path Diagram of Customer Loyalty.………49

CHAPTER 5: DISCUSSION AND RECOMMENDATION……… 51

5.1 Discussion of Findings………51

5.1.1 Relationship and Impact of the six independent factors on Customer Satisfaction……….….51

5.1.2 Relationship between Customer Satisfaction and Customer Loyalty……… 53

5.1.3 Relationship and Impact of the seven factors (including Customer Satisfaction) on Customer Loyalty… ……… 53

5 2 Conclusions and Recommendations……… ……… …….… 56

5.2.1 Conclusions……… 56

5.2.2 Recommendation for further study……… 57

BIBLIOGROPHY………59

APPENDIX……… 64

LIST OF TABLES

Table 1: Dependent variable of Customer Satisfaction……….22

Table 2: Dependent variable of Customer Loyalty………22

Table 3: Independent variable of Empathy………23

Table 4: Independent variable of Reliability……….24

Table 5: Independent variable of Responsiveness……….24

Table 6: Independent variable of Assurance……… 25

Table 7: Independent variable of Transmission of speed……… 26

Table 8: Independent variable of Price……… 26

Table 9: Interpreting Strength of Path Coefficients……… 27

Table 10: KMO and Bartlett's Test of Dependent Variables……….28

Table 11: Total Variances Explained Dependent Variables……… 28

Table 12: Factor Loadings and Reliability of Dependent Variables……… 29

Table 13: KMO and Bartlett's Test of Independent Variables……… 30

Table 14: Total Variances Explained Independent Variables………30

Table 15: Factor Loadings and Reliability of Independent Variables……… 31

Table 16: Summary of General & Demographical Characteristics of Respondents

(N=292)……… ……… 34

Table 17: Univarate Descriptive Statistics of Independent Variables……… 39

Table 18: Univarate Descriptive Statistics of Dependent Variables……… 40

Table 19: Correlation Coefficients between Independent Variables……….40

Table 20: Descriptive Statistics and Variables’ Correlations of the CUSATIS Model……….41

Table 21: Coefficients between IVs and CUSATIS……… 42

Model……….43

Table 23: Coefficients between IVs and CUSLOYAL……… 44

Table 24: Correlation Coefficients between Dependent Variables………45

Table 25: Coefficients between CUSATIS and CUSLOYAL……… 45

Table 26: Direct, Indirect and Total Causal Effects……… 50

LIST OF FIGURES

Figure 1: Vietnam Inflation changing from 2004 to 2012 (compare with December

previous year)……… ………… ……… 2

Figure 2: Market share of ADSL services in Viet Nam (until 11/2012)……….4

Figure 3: Conceptual Model for customer satisfaction and customer loyalty on in ADSL services……… 18

Figure 4: Name of Telecommunications Company……… 35

Figure 5: Gender………36

Figure 6: Marital Status……….36

Figure 7: Age……….37

Figure 8: Academic Standard……….38

Figure 9: Income………38

Figure 10: Path Coefficients of the Structural Equation for Hypothesis Testing……… 49

ABSTRACT

The main objective of this study examines the factors that impact to the service quality to customer satisfaction and customer loyalty by empirical research through customer who use ADSL service in Ho Chi Minh City This study revised SERQUAL scale of Parasuraman to measure the quality of ADSL services with some modifications was used to assess satisfaction and customer loyalty Besides the traditional four dimensions: Empathy, Reliability, Responsiveness and Assurance of SERVQUAL, we added two more dimensions: Transmission of speed and price Sample included 292 customers using ADSL services, divided by the market share of ADSL services provider in Ho Chi Minh City

Based on the results of the deep analysis exploring the direct and indirect effects of six independent and one dependent variables on customer loyalty, these factor is prioritizedly ordered: customer satisfaction, assurance, transmission of speed, responsiveness, price This study shows that customer satisfaction is the biggest factor impact to customer loyalty Moreover, in order to achieve high customer loyalty, ADSL Service Company should have better of assurance, transmission of speed, responsiveness and price Besides, the most effect on satisfaction of customer is responsiveness and assurance and this research has not yet found any evidences can prove the rest factors have a correlation with this variables In contrast, this research also highlighted that customer does not care more about empathy and reliability, that

is reason why empathy and reliability does not affect to customer satisfaction and their loyalty when use ADSL service

The findings help ADSL service provider understand better about the components of ADSL’s service quality, the relationship between service quality, price, transmission

of speed, satisfaction and loyalty of customers about ADSL services, and the level of customer’s evaluation for those factor Therefore, this research may have implication for the ADSL service provider in enhancing their strategies to improve service quality, customer satisfaction and loyalty

CHAPTER 1

INTRODUCTION

1.1 Background

The global financial crises have negative impact to the real economy,

consumption decreased significantly affect to activity in the service sector The slow

growth of the Vietnam economy in the first three months of 2013 took place in the

context of the world economy continues to be affected by the economic downturn

Some countries forced to decrease in 2013 due to the economic situation of the last

month of 2012 was not as expected Dr Vu Gian said “this is also the time of

Vietnam's economy encountered great challenges” Moreover, From 2004 until now,

inflation started to increase again: reaching a peak in 2008 at 19.9%, down 6.6% in

2009, up nearly 12% return in 2010 and remain high in 2011

Figure 1: Vietnam Inflation changing from 2004 to 2012 (compare with

December previous year)

(Source: http://cafef.vn)

However, in the gloom of the global financial crisis still have a few bright spots in the growth revenue of telecommunications sector following the success of Vinasat-1 (4/2008) and Vinasat-2 (5/2012) was launched into orbit According to a survey by McKinsey consulting management global firm, Internet contributed 0.9%

of GDP and contributed 1.6% of total 14.4% of GDP growth in Vietnam In addition, according to Vietnam Internet Association, when broadband network with ADSL service launched (May 2003), number of users has increased 10-fold Fee to use the internet in Vietnam has dropped 100 points since the opening of the service based on value for money, the access speed increase 20 times compared with the first period

No one can deny the fact that Internet in Vietnam has been part indispensable in human life

Using the Internet is becoming popular in Vietnam The number of Internet user increases, a number of Internets service agents are also increasing and time spent on the Internet each day is longer According to Vietnam Internet Network Information Center, until November 2012, Vietnam has about 31.3 million people are using the Internet, with 35.58% of the population Besides, according to reports NetCitizens Vietnam 2011, 62% of users access the Internet every day, and each day they spend an average about 2 hours 20 minutes on the Internet In big cities, people access the Internet more frequently than smaller cities According to reports, users in Hanoi with more than 160 minutes per day for Internet access, compared with HCM (with 150 minutes per day for Internet access) Currently, Vietnam's telecommunications market have many ADSL service providers but market mainly shared between VNPT (61.26%), Viettel (18.96%), FPT (12.62%)

Figure 2: Market share of ADSL services in Viet Nam (until 11/2012)

(Source: www.thongkeinternet.vn) According to Vice Ministry of Information and Communications Le Nam Thang, The development of telecommunications and information technology sector in Vietnam in few years ago showed that this field is a new direction, more potential to create breakthrough to put economy of Vietnam reaching out world Government considered Internet is important infrastructure national, ensuring the development of all the fields in the economic and social life In particular, at seminar:

"Telecommunications - Internet Vietnam 10 years implementation of the Directive 58" due to Buu Dien newspaper organizations in 2010, He said that ADSL will boom

at Vietnam in next 10 year

1.2 Problem statement

ADSL (Asymmetric Digital Subscriber Line) is a broadband network with

a lot of great advantages has been demonstrated But the current reality, this service in Vietnam does not reach as high-speed quality as it is During the seminar with the theme "ADSL- competition and quality", Quach Tuan Ngoc (Director of the Computing Centre - Ministry of Education) had comments very candid when claiming

to be customers using ADSL and confirmed ADSL in Vietnam not guaranteed While

a series of forecasts are positive and optimistic about the telecommunications market

is being opened, besides, a dark corner of the telecom industry gradually revealed From leading business is VNPT, the 2nd business is Viettel or 3rd is FPT which are faced with quite urgent feedback on the quality of service, as well as the customer care Firstly, Customers reflects ADSL service does not guarantee quality as providers committed in contracts Secondly, they ignore the old customer complaints and just focus on expanding new ADSL subscribers, not upgrade the system infrastructure accordingly Next, the quality of is not stable, flicker In addition, network fail, cannot accessible at some time is always complaining of multi-user ADSL service now

At first glance, growth of subscriber line broadband Internet still has a lot

of potential In particular, Ho Chi Minh City is the economic and cultural center of the Vietnam which is a market with very high growth rates lead to keen competition among providers of broadband internet In this situation, the Internet service provider seeks to improve the quality and reduce the cost of service But how many percentages of people in Ho Chi Minh City who use ADSL services feel satisfied and after that they will loyal with their internet services provider or not In addition, in current trends, telecommunications technology developed as quickly as the needs of customers requiring quality of service criteria For this reason, it is necessary to identify the factors effect to customer issue, in terms of customer satisfaction and loyalty Starting from the importance this problem I boldly implement the subject

“The Effects of Service Quality on Customer Satisfaction and Customer Loyalty – A study of ADSL service in Ho Chi Minh City”

1.3 Objectives

1 To understand the overall picture of ADSL service in HCM

2 To identify factors affecting customer’s satisfaction

3 To measuring the direct and indirect effect of customer loyalty through satisfaction

4 Basing on the empirical results of this study, service development and improvement suggestions will be provided for Telecommunication companies

1.4 Research Questions and Hypothesis

The aim of this research is to gain a better understanding of direct and indirect effects of service quality to customer satisfaction and customer loyalty about ADSL service in Ho Chi Minh City, provide more information about the level of the customer satisfaction so that the number of customer loyalty is increased Therefore, this study focuses to main research questions:

Main Research Question:

To what extent are customer satisfaction and their loyalty affected by service quality and other factors?

Main Research Hypothesis:

Customer satisfaction and their loyalty is hypothesized to be directly and indirectly by service quality and the independent variables

Secondary Research Questions and Hypotheses

Question 1:

Which are important factors that influence Customer Satisfaction?

H1: Factors (Empathy, Reliability, Responsiveness, Assurance, Transmission of speed and Price) positively affect Customer Satisfaction

1.5 Scopes and limitations

This study is conducted in the Ho Chi Minh City where major top four telecommunications companies like VNPT, Viettel, FPT and Saigon Postel have been taken

The data of this study is just based on customer perceptions and some recommendations to improve the ADSL service For that reason, the result may be provided relatively, not wholly

Besides, this research is just studied by an undergraduate student and it is the first time conducting the research, so some skills and knowledge are limited In addition, the limitation of time (about 4 months), the results of this research cannot

avoid some mistakes Therefore the content of this study is not profound and extensive and the result of this study can only represented for ADSL service in Ho Chi Minh City

CHAPTER II

LITERATURE REVIEW

2.1 Asymmetric Digital Subscriber Line (ADSL)

2.1.1 Definition

Asymmetric Digital Subscriber Line, The name was coined by Bellcore in

1989, which is a method of transferring data over copper telephone lines Asymmetric digital subscriber line is one of the range of Digital Subscriber Line (DSL) technology While symmetrical DSL (SDSL) upstream and downstream at the same speed, ADSL has different maximum data transfer rates for uploading and downloading data Because most users download data more than they upload, this difference usually does not make a noticeable impact on Internet access speeds but for Web servers or other computers that send a lot of data upstream, ADSL would be an inefficient choice

ADSL is a new modem technology that converts existing twisted-pair telephone lines into access paths for high-speed communications of various sorts ADSL transmits more than 6 Mbps to a subscriber, and as much as 640 kbps more in both directions

■ Subscriber Line: data is carried over a single twisted pair copper ‘loop’

to the subscriber’s premises

ADSL broadband connection is provided mass and quickly when has required from customer Speed rates and price are specified; the user can only select

on the regulation of providers and cannot be negotiated about it If customer wants high transmission of speed, they have to pay more than people who use ADSL service with lower transmission of speed

2.1.2 Benefit of ADSL

With the increase in bandwidth of access networks in recent years, Asymmetric Digital Subscriber Line (ADSL) provides most residential consumers (1) rapid access media connection to the Internet for Web-based activities, such as surfing website, online shopping, Voice over Internet Protocol, (2) high transmission of speed, (3) high speed when access to the Internet, (4) high speed video conferencing, (5) optimize bandwidth by auto handshake, (6), Uses existing copper pairs, (7) your internet service provider can be always on-line and there should be no drop out, (8) Optimizes use of Bandwidth Resource

2.2 Customer Satisfaction

2.2.1 Definition

Definitions of customer satisfaction have been widely discussed from the view of many researchers and organizations who increasingly desire to measure it

According to Roberts-Lombard (2009) defines customer satisfaction as

“the degree to which a business’s product or service performance matches up to the expectation of the customer” In addtion, customer satisfaction is defined as the consequnce from comparison between two items “customers’ expectation” and

“customers’ perceptions” (Minazzi, 2008) On the other hand, it indicates the difference between customer’s expectation about service’s quality and customer’s experience or perceptions after service is delivered

Another definition is identified by Hansemark and Albinson in 2004, he declared that “satisfaction is an overall customer attitude towards a service provider,

or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some needs, goals or desire”

Therefore, to meet the objectives of the research topic, the definition of customer satisfaction with ADSL service is stated as follows:

 When using the service, If the ADSL’s product or service performance matches or exceeds the expectations, the customer is satisfied, in contrast, the customer is dissatisfied if performance of service quality

is low

 Satisfaction based on personal experience of the consumer with the ADSL’s product or service they are using

2.2.2 Importance of Customer Satisfaction

Customer satisfaction is an important factor determining the success of the telecommunications company to have a good relationship with customers, so it is very important to measure it

In the telecommunication business, present problem is customers are easy switch to a competitor For that reason, understanding of customers’ requirements is important because it helps the ADSL service provider known about of the way customers define the quality of the ADSL service So it is easier for service providers

to catch up customer need and satisfy them Knowing of customers’ satisfaction level and their requirements will also help company to finding out the way to develop (Hayers, 2008)

Moreover, customer satisfaction is measured with the aim of improving a product’s quality and strengthening a company’s competitive advantage (Cravens et al., 1988; Garvin, 1991), repeat purchases intention and willingness to spread word-of- mouth (Fornell, 1992; Halstead and Page, 1992) Dissatisfied customers, on the

other hand, have a profound negative impact, having some studies show that dissatisfied customers talk to 8 to 16 people about their issues

2.3 Customer Loyalty

2.3.1 Definition

There are many the definitions of customer loyalty differently Each research conducted by different researchers, in different period of time, and different business condition leads to the different in definition of customer loyalty As Jacoby and Kyner (1973) mentioned, there must be a complex thinking behind loyalty

Besides, According to Kim & Yoon (2004) customer loyalty has been defined that “it is normally the willingness of customer to maintain their relations with a particular firm or service/product” In initial days, Cunningham (1956) defined brand loyalty simply as “the proportion of purchases of a household devoted to the brand it purchased most frequently” From tradition view, customer loyalty is included both behavioral and attitudinal components (GuillÈn, Nielsen, Scheike & MarÌn, 2011)

Customer loyalty has been measured by (1) cognitive components (Huddleston, Whipple, Mattick, & Lee, 2009), (2) affective elements (Chowdhury, Reardon, & Srivastava, 1998), (3) trust and commitment (Haelsig, Swoboda, Morschett, & Schramm-Klein, 2007), (4) purchase intention (Bloemer & Odekerken-Schröder, 2002; Cronin et al., 2000), (5) positive word-of-mouth communication (Bloemer & Odekerken-Schröder, 2002; Cronin et al., 2000; Eakuru & Mat, 2008), (6) complaining behavior (Bloemer & Odekerken-Schröder, 2002; Ibrahim & Najjar, 2008; Zeithaml et al., 1996), (7) price insensitivity (Bloemer & Odekerken- Schröder, 2002; Ibrahim & Najjar, 2008), (8) switching behavior (Eakuru & Mat, 2008; Ibrahim

& Najjar, 2008), (9) first choice (Lee & Overby, 2004; Zeithaml et al., 1996), and (10) do more business (Zeithaml et al., 1996)

Regards Reichheld and Sasser (1990), loyal customers are willing to (1) choose company’s products instead of attractive alternatives from competitors, (2) expense money to buy products across the firm’s product line offerings, (3) introduce the firm’s goods and services to other customers, and (4) provide the enterprise with recommendation according to their needs and expectation

Based on the definitions above and applying on this research, we view customer loyalty with ADSL service if they have high purchase intention (repurchase intention), less price sensitivity (price insensitivity), feedback to the firm (word-of-mouth, complaint behavior), and no switching behavior

2.3.2 Importance of customer loyalty

In the early days the goal of loyalty was loyalty with brand as well as the respect of tangible goods (Cunningham, 1956; Day, 1969; Kostecki, 1994; Tucker, 1964)

But now a day, Customer loyalty plays an important, if not a critical part in

a successful of ADSL Service Company Loyal customers provide firms a consistent source of revenue (re-purchases) and less promotional expenses (reducing cost), it lead to increasing profitability Furthermore, firms spend more than five times as much to get a new customer than to maintaining an existing one (Kotler & Keller, 2006; Wills, 2009) Thus, loyal customer is linked to the success and maximizes profit

of a firm (Sankuru & Mat, 2008)

Bansal and Gupta (2001): Building customer loyalty is only way of building sustainable competitive advantage Building loyalty with customers has become a marketing strategy in all industries including ADSL services

2.4 The factors affect to Customer satisfaction

The primary factor determining customer satisfaction is perceived quality; the second factor is the perceived price (Anderson et al., 1994; Lien and Yu, 2001; Aga and Safakli, 2007; Clemes et al., 2008) From the customer perspective, customer

needs are constantly changing; so companies must provide products and services have quality to meet the needs and expectations of customers

Besides, Service quality and customer satisfaction are very important concepts that telecommunication companies must understand if they want to remain competitive and grow In today’s competitive environment delivering high quality service is the key for a sustainable competitive advantage Understanding service quality and delivering higher levels of service quality is an effective strategy that allows service providers to position themselves more effectively in the marketplace Furthermore, Customer satisfaction does have a positive effect on profitability and remaining customer loyalty

Service quality has been the subject of considerable interest by both practitioners and researchers few years ago, provoked by the initial work by Parasuraman et al 1985 After reviewing some related theories and researches, this survey adopted SERVQUAL survey, which is a survey instrument, based on extensive research carried out by Parasuraman, Zeithaml and Berry (1990) because it

is widely used, and the model is very specific and detailed In addition, Customer satisfaction depends on such dimensions as reliability, responsiveness, assurance, empathy and tangibles and on additional elements like price, personal and situational factors that may occur during the service supply (Bateson, Hoffman 2000) Furthermore, Industry factors such as transmission of speed and price might influence ADSL penetration According to telecommunication union (2003), (1) Fixed ADSL price might be a key to increase ADSL service demand In other saying, lower prices can contribute to higher ADSL satisfaction (2) Higher ADSL satisfaction if higher speed In addition, ADSL is especially service which customer can be served at their house, they do not need to go to office of ADSL company so tangible dimension (SERVQUAL) do not apply for in study On thing considered, In this study we use empathy, reliability, responsiveness, assurance, in addition, we add transmission of speed and price to evaluate customer satisfaction and their loyalty when they using ADSL services

Reliability dimensions:

That dimension mention the execution and completion of company's promised service quality and accuracy between the company and the customer Bitner, M.J., and Zeithaml, V.A (2003) conduct that the reliability is ability to perform service dependably and accurately In ADSL services this means that (1) providing services as promised (2) Delivering services complete free of errors Acoording to Philip Kotler (1999), customer has access as long as they wanted to use ADSL, with an acceptance transmission of speed (3) Performing services right when introduced new product or service first time

Responsiveness dimensions:

According to Philip Kotler (1999); Bitner, M.J., and Zeithaml, V.A (2003) responsiveness is eager to help customers and bring prompt service In the other words, this dimension reflects the willingness or readiness of employees to provide quick services to customers The company helps customers with pleasure in providing them with a good, quality and prompt service For examples, Provide 24/7 service, immediately respond to customer’s requests

Assurance dimensions:

This dimension mentions the knowledge, elegance and ability of employees to convey trust and confidence Parasuraman et al (1988) reported assurance as an essential dimension of service quality after reliability and responsiveness towards satisfaction In addition, Arasli et al (2005) identified that assurance dimension has the strongest impact on customer satisfaction that leads to positive word of mouth outcome

Employees of company’s ADSL service with high qualifications will made customers more satisfaction, maintains good effect to customer’ loyalty in the future Moreover, the employee skilled workers are able to gain the trust to the customers If the customers feel dissatisfy with the employees, that can create a rather large chance that the customers will stop using current ADSL service and find out other provider

Transmission of speed:

Data transmission services are identifiable elements transmission techniques for ADSL service that customers can feel when using the service (including download/ upload service, quality of cable net, quality of transmission speed is stable overtime) In this detention, Customer will more satisfaction if they receive high and stable transmission of speed

Price:

Zeithaml (1988) found that from the consumer's perspective, prices are seen as consumer awareness about gives up or sacrificed something in order obtain a product or a service In addition, Kollmann (2000) indicated that price plays an important role in the telecommunications market, especially for the ADSL service

Price perception can be evaluated by the fairness of the price paid (Lien and Yu, 2001) So, customers are more satisfied on the price of a product or service if the price they paid is reasonable or cheap (Clemes, et al., 2008) In this research, we define customer’ perceived price as customer measured of what is given or sacrificed

to get services from the ADSL provider

2.5 Relationship between customer satisfaction and customer loyalty

Empirical studies in previous service research have concluded that there is

a significant interrelationship between perceived service quality or customer satisfaction with customer loyalty (cf Anderson, Fomell and Lehman 1994; Boulding, Kalra, Staeling and Zeithaml 1993; Cronin and Taylor 1992; Fornell 1992; Magi 1995)

Lam & Burton (2006) suggested that customer satisfaction are leading factor to determiant customer loyalty Firstly, Ehigie (2006) found that there is a significant positive correlation between customer satisfaction and customer loyalty

As such, customer satisfaction in this research plays an intermediary between service quality and customer loyalty Secondly, Gronholdt, Martensen, and Kristensen (2000) administered a study on sixty companies and conduct that customer loyalty was influenced by customer satisfaction In addition, the results showed a slight increase

in customer satisfaction lead to customer loyalty go up Hence, there seems to be support for the rather straightforward claim: "satisfy your customers, and you will gain their loyalty."

According to Grönroos (2000) and (Zairi), 2000), A satisfied customer is six times more likely to repurchase a product and share his experience with five or six other people, further unsatisfied customer can banishmore business from the organization than ten highly satisfied customers do (Mohsan, 2011) They assert that high level of customer satisfaction will result in increased loyalty for the firm and is positively associated with profitability, rebuy intentions, good impact to words of mouth From the results of the above empirical researches, customer satisfaction is refers as a foremost determinant of customer loyalty In conclusion, for success and survival in today’s competitive environment, customer satisfaction is of paramount importance for all ADSL enterprise because consumer satisfaction is the first step to achieve consumer loyalty

2.6 Conceptual framework

Figure 3: Conceptual Model for customer satisfaction and customer loyalty on in

ADSL services

The present study is an exploratory and descriptive type of research study and this study needs to conduct the data with large sample size to get the objective result So, this research will be applied Quantitative approach to be the main method

to collect data This means that this study is based on survey Data was collected from sample in the target population Most of questions in the survey were used 5 point Likert scale to measure in which 1 is “strongly disagreed” and 5 is “strongly agreed” Quantitative research is exploited to study how much customers satisfy with ADSL service quality factors, and examine the influence of customer satisfaction on customer loyalty In addition, the data are analyzed and interpreted by using the statistical, mathematical tools and computational techniques Therefore, the result of research that was given could be more scientific and valid It could help our decision making more power

Statistical tools (SPSS) were used for data input and analysis in this study Data analysis were applied as below:

3.2 Target Population and Sample Size

Target population of this research was customer who is using ADSL service in HCM City A well-structured questionnaire was prepared to obtain the opinions from the respondents A sample of customers were selected which base on market’s percentage of top four telecommunications companies (VNPT, Viettel, FPT and Saigon Postel) in Ho Chi Minh City to analysis I had the contact with some customer by online (using internet) and offline (face to face) to collect data The questionnaire is the most suitable tool with the sample size about 332 and 292 were collected with reliability and validity for the research

3.3 Survey Instrument

Survey was built base on the six dimensions about ADSL service quality, including Empathy, Reliability, Responsiveness, Assurance, Transmission of speed and Price and two dependent variables, including customer satisfaction and customer loyalty In order to ensure reliability and validity of the research, most questions apply Likert-type scale rate ranged from (1) strongly disagree, (2) disagree, (3) uncertain, (4) agree and (5) strongly agree

Firstly, researcher based on the research: “Measuring service quality, satisfaction and loyalty of customer about ADSL service” of Tran Huu Ai (2012), Ho Minh Sanh (2009), on other hand, I changed and added some factors and items in

order to create suitable and accurate survey Secondly, the draft of questionnaire was sent to advisor Dr Mai Ngoc Khuong in order to correct mistakes and give comments Next, researcher revised questionnaire will sent again to advisor to approve Third, the questionnaire was pre-tested by 20 people who are use ADSL services in order to measure the reliability of the measurement The pilot test with the small sample size (N=20) could help researcher to detect potential problems of the measurements in questionnaire and revise it again to avoid Halo Effect Finally, the final questionnaire complete and use to be delivered to customer

3.4 Operational Definitions and Measurements

Operational definitions of each variable was measured and developed in chapter II

In this research, customer satisfaction and customer loyalty were known as dependent variables Besides, empathy, reliability, responsiveness, assurance, transmission of speed and price were known as independent variables Each item was measured on five- point Likert scale with 1 is “strongly disagreed”, 2 is “disagreed”, 3

is “neutral”, 4 is “agreed”, 5 is “strongly agreed” Questions of individual demographics were also included in the questionnaire such as: company name, gender, marital status, age, academic standard, and income A copy of the survey is showed in Appendix (both Vietnamese and English version)

The Cronbach’s alpha test is applied for each dimension in the study George and Mallery (2003) provide the following rules of thumb:

Cronbach’s Alpha < 0.5: Unacceptable 0.5 < Cronbach’s Alpha< 0.6: Poor
 0.6 < Cronbach’s Alpha< 0.7: Questionable 0.7< Cronbach’s Alpha< 0.8: Acceptable 0.8< Cronbach’s Alpha< 0.9: Good

Cronbach’s Alpha> 0.9: Excellent

The result of pilot test with N=20: Cronbach’s alpha of Customer

satisfaction is 857, Customer Loyalty is = 878, Cronbach’s alpha of 6 independent

variables from 854 to 955 The result shows that those factor is highly reliable The included items with each factor are highly consistent Besides, the Cronbach’s alpha coefficient (reliability) of the all sample are listed below

3.4.1 Customer Satisfaction measurement

Table 1: Dependent variable of Customer Satisfaction

The first and last items were adopted from Tran Huu Ai (2012) Researcher added the remaining item The reliability test of this research showed a Cronbach’s alpha coefficient of 810 This dimension factor has good Cronbach's Alpha It proves that this factor in high reliability and their internal consistency among data is good

3.4.2 Customer Loyalty measurement

Table 2: Dependent variable of Customer Loyalty

Variable Items Cronbach’s alpha = 810, N=292 Customer

Satisfaction

CS1 I appreciate the facilities as well as the company's

technology is very good and modern CS2 Company’s ADSL products and services meet the needs

and expectations of me CS3 I am satisfied with the process serving of the company CS4 I am satisfied with the equality of treatment between

customers CS5 I appreciate the quality of the Company's ADSL service in

The first items were added by researcher, these are “I will say good things about this ADSL service to others” The last five items adopted from Ho Minh Sanh (2009) The reliability test of this research showed a Cronbach’s alpha coefficient of 893 This value was high, above 70, so it could be concluded that these items were internally consistent and measured the same thing

3.4.3 Empathy measurement

Table 3: Independent variable of Empathy

The six items were adopted from Tran Huu Ai (2012); these are E3, E4, E5, E6, E8, and E9 Researcher added the last three items; these are E1, E2, and E7

The reliability test of this research showed a Cronbach’s alpha coefficient of 890

demand about ADSL CL3 I encourage friends and relatives to use the company's ADSL services

CL4 I will convince family and friends to use the company's ADSL services

CL5 I will maintain a contract with the ADSL company that I joined

CL6 I still use Company's ADSL services, if selection again

Variable Items Cronbach’s alpha = 890, N=292

Empathy E1 Employees of the company listens and understands the needs

of clients E2 Customer care of the ADSL company I joined are good E3 The company is always interested customers anytime, anywhere

E4 Company respects the rights of clients E5 When there is a problem, Company overcome immediately when required

E6 The company are ready to support technical for customers 24/24

E7 Staff calls customers by name, very intimate listening E8 The company have rich service, options appropriate to the needs of customers

E9 Company satisfy the need to use of me

This value was high, above 70, so it could be concluded that these items were internally consistent and measured the same thing

3.4.4 Reliability measurement

Table 4: Independent variable of Reliability

Almost items were adopted from Tran Huu Ai (2012) Only one items, these are “Staff is committed to fulfill promises in timely manner” added from researcher The reliability test of this research showed a Cronbach’s alpha coefficient

of 873 This value was high, above 70, so it could be concluded that these items

were internally consistent and measured the same thing

3.4.5 Responsiveness measurement

Table 5: Independent variable of Responsiveness

Variable Items Cronbach’s alpha = 873, N=292

Reliability REL1 Easy to register the service

REL2 Service charges are always right as contract REL3 After installation, the first time use the ADSL service

perfectly good REL4 From installation to now, operating system of company’s

ADSL services is always stable REL5 Data transmission speeds are true as the company's

commitment REL6 Staff is committed to fulfill promises in timely manner REL7 The company willing to meet all requirements about

ADSL service REL8 The company always cares about consumer’s ideas

Variable Items Cronbach’s alpha = 871, N=292

Responsiveness RES1 The procedure of installing is quick and convenient

RES2 The company’s staff willing to serve everywhere, every time

RES3 The company’s staff always have quick respond customer’s question

RES4 Employees in company are willing to meet requirements

The four items were adopted from Tran Huu Ai (2012), these are “The procedure of installing is quick and convenient”, “The company’s staff willing to serve everywhere, every time”, “The company’s staff support remote technical is very good”, “Service is stable when using” The other item was added by researcher

In the Responsiveness dimension, there is good Cronbach’s Alpha (value = 0.871) It

is shows that set of items is internally consistent and the initial factor is well set

3.4.6 Assurance measurement

Table 6: Independent variable of Assurance

The second and three item that is “I am pleased with the attitude and spirit

of service of employees in Company”, “Qualifications of staff are high” was adopted from Tran Huu Ai (2012) The remaining items were add by researcher because of their necessarily for measuring this variable Reliability factor has good Conbach’s Alpha; therefore, the initial factor including 8 items are well designed These items have close relation with each other

of customers RES5 The company’s staff support remote technical is very good

RES6 Employees give their customers shorter waiting time or fast service turnaround

RES7 Service is stable when using

Variable Items Cronbach’s alpha = 907, N=292

Assurance A1 Employees in company have knowledge and ethic

A2 I am pleased with the attitude and spirit of service of employees in Company

A3 Qualifications of staff are high A4 Employees of the company creates trust for customer A5 Employees in company are very experienced in solving or diagnosing the customers problem

A6 Privacy of customers information is maintained A7 Company is widely known

A8 I feel safe and satisfy when using this ADSL service

3.4.7 Transmission of speed measurement

Table 7: Independent variable of Transmission of speed

Those items were adopted from Ho Minh Sanh (2009) The reliability test

of this research showed a Cronbach’s alpha coefficient of 899 Transmission of speed

dimension still gets good reliability and it has the consistency among multiple variables with entire scale

3.4.8 Price measurement

Table 8: Independent variable of Price

The first three items adopted from Tran Huu Ai (2012) Researcher added the last items The reliability test of this research showed a Cronbach’s alpha

coefficient of 854 This value was high, above 70, so it could be concluded that these

items were internally consistent and measured the same thing

TS5 Rarely dropouts

Variable Items Cronbach’s alpha = 880, N=292

Price P1 Initial installation charges of company is cheap (connection

fee) P2 The monthly subscription is not high P3 The flow rates is reasonable

P4 Company is having competitive pricing compared to others

The data collection method used to obtain the desired information from primary sources has been through questionnaire has been used as an instrument In order to conduct this study, 332 customers of ADSL services in Ho Chi Minh City have been surveyed for a period of haft one month in May 2013 Survey was delivered directly (offline) and indirectly (online) to customer who is using ADSL services with directions and precise contents to help them give answer correctly

The secondary data was collected and described in literature review in order to ensure needed data that will be collected in survey

3.6 Data Analysis

After collecting the data, this dissertation will explore many kind of statistical analysis in order to assess direct and indirect relationships among customer satisfaction and customer loyalty, how the factors that affected to customer satisfaction and customer loyalty, and presentation the data such as:

Table 9: Interpreting Strength of Path Coefficients

(Source: Adopted De Vaus (2002) Analyzing Social Science Data)

3.7 Factor Analysis

In order to improve and obtain the highest reliability and validity for all measures of this study, factor analysis was applied for both dependent variables and independent variables The factor analysis conducted to reduce numbers of factor that correlated to overall customer satisfaction and loyalty to simplify the decision maker

to make an improvement, instead looking on specific items

3.7.1 Factor Analysis for Dependent Variables

In this part, factor analysis was applied for the group of 2 dependent variables including 11 items of Customer Satisfaction, and Customer Loyalty Method involves inspecting the correlation matrix for coefficients of 50 and above, and calculating the Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) and Barlett’s Test of Sphericity

Table 10: KMO and Bartlett's Test of Dependent Variables

According to KMO and Bartlett's Test the Kaiser-Meyer-Olkin Measure of Sampling Adequacy is 907 (According to Pallant (2005), to be significant, value has

to be 6 or above) and Bartlett's Test of Sphericity value is significant at 000 levels Therefore, this factor analysis is considered appropriate

Table 11: Total Variances Explained Dependent Variables

In order to determine how many components to extract, it is needed to consider the Kaiser’s criteria In this regard, only components that have eigenvalue of

1 or more are considered appropriate for retaining This can be identified by the Total Variance Explained in table 11 We can see that the first 2 components recorded eigenvalues above 1 These 2 components explain 62.3 percent of the total variance including component 1 explains 52.682 percent, and component 2 explains 9.599 percent of the total variance

Table 12 showed Factor Loadings of each item in independent variables and Reliability of those variables

Table 12: Factor Loadings and Reliability of Dependent Variables

Component Initial Eigenvalues Rotation Sums of Squared

Loadings Total % of

CL1 I will say good things about this ADSL service

to others

.877

CL2 I will introduce products and services of ADSL

company that I am using for anyone who seek

information or have demand about ADSL

.872

CL3 I encourage friends and relatives to use the

company's ADSL services

.870

3.7.2 Factor Analysis of Independent Variables

In this part, factor analysis was applied for the group of 6 independent variables including 31 items of responsiveness, transmission of speed, assurance, price, empathy, and reliability

Table 13: KMO and Bartlett's Test of Independent Variables

Table 14: Total Variances Explained Independent Variables

CL4 I will convince family and friends to use the

company's ADSL services

.873 CL5 I will maintain a contract with the ADSL

company that I joined

.871

CL6 I still use Company's ADSL services, if

selection again

.880

CS1 I appreciate the facilities as well as the

company's technology is very good and modern

.716 CS2 Company’s ADSL products and services meet

the needs and expectations of me

.722 CS3 I am satisfied with the process serving of the

Note: Extraction Method: Principal Component Analysis

In order to determine how many components to extract, it is needed to consider the Kaiser’s criteria In this regard, only components that have eigenvalue of

1 or more are considered appropriate for retaining This can be identified by the Total Variance Explained In the table 14, the first 6 components recorded eigenvalues above 1 These 6 components explain 64 percent of the total variance including component 1 explains 45.945 percent, component 2 explains 5.359 percent, component 3 explains 4.260 percent, component 4 explains 3.089 percent, component

5 explains 2.812 percent, component 6 explains 2.486 percent of the total variance

Table 15 showed Factor Loadings of each item in independent variables and Reliability of those variables

Table 15: Factor Loadings and Reliability of Independent Variables

RES2 The company’s staff willing to serve

everywhere, every time

.905 RES3 The company’s staff always have quick

respond customer’s question

.896

RES4 Employees in company are willing to meet

requirements of customers

.899 RES5 The company’s staff support remote

technical is very good

.896 RES6 Employees give their customers shorter

waiting time or fast service turnaround

.899 E2 Customer care of the ADSL company I joined 900