The mediating role of relationship quality in the relation between relationship benefits and word of mouth: A study of the airlines ticket service

LIST OF ABRREVIATIONS CB: Confidence benefits EFA: Explore factor analysis IATA: International Air Transport Association ICAO: International Civil Aviation Organization MLR: Multiple lin

PHAM VO THANH DIEP

THE MEDIATING ROLE OF RELATIONSHIP QUALITY IN THE RELATION BETWEEN RELATIONSHIP BENEFITS

TICKET SERVICE

THESIS OF MASTER OF BUSINESS ADMINISTRATION

HO CHI MINH CITY – 2012

PHAM VO THANH DIEP

THE MEDIATING ROLE OF RELATIONSHIP QUALITY IN THE RELATION BETWEEN RELATIONSHIP BENEFITS

Assoc Prof Dr Nguyen Dinh Tho

HO CHI MINH CITY – 2012

ACKNOWLEDGEMENT

First of all, I would like to express my most sincere gratitude to Assoc Prof

Dr Nguyen Dinh Tho, my thesis supervisor Without his invaluable advice, patience and guidance, I would not have reached my final results

Secondly, thanks to respectful lecturers of University of Economics Ho Chi Minh City and all members of eMBA class course 19 have supported me in enhancing knowledge during the master of business administration course

Thirdly, I would like to thank the participants who had taken their precious time to answer the questionnaires This thesis would not have been feasible without their valuable and honest feedback

Last but not least, special thanks and love to my husband who is also my eMBA classmate, Nguyen Van Thanh, for his useful discussions and advices while implementing this thesis At the same time, deepest thanks to other eMBA classmates and my two close friends for their voluntary and enthusiastic supports and kindnesses

Pham Vo Thanh Diep

Ho Chi Minh City, October 2012

COMMITMENT

I would like to commit that this study, “The mediating role of relationship quality in the relation between relationship benefits and word of mouth: a case study of Vietnamese airlines ticket service”, has been implemented based on my independent and serious studies and scientific researches The data were collected from reality and they had credible origins The thesis supported the rule of anti-plagiarism

Pham Vo Thanh Diep

TABLE OF CONTENTS ACKNOWLEDGEMENT I COMMITMENT II COMMITMENT II TABLE OF CONTENTS III LIST OF ABRREVIATIONS VI LIST OF TABLES VII LIST OF FIGURES VIII

ABTRAST 1

CHAPTER 1: INTRODUCTION 2

1.1 Research background: 2

1.2 Vietnamese aviation market: 4

1.3 Problem statement: 5

1.4 Research Objectives: 7

1.5 Research question: 7

1.6 Scope and methodology of study: 7

1.7 Practical significances of the study: 8

1.8 Structure of the thesis 8

CHAPTER 2: LITERATURE REVIEW 10

2.1 Relationship quality & relationship benefits: 10

2.2 Relationship quality and word of mouth: 14

2.3 Proposed conceptual model: 17

2.4 Summary 18

CHAPTER 3: METHODOLOGY 20

3.1 Research design: 20

3.1.1 Qualitative research: 20

3.1.2 Quantitative research: 21

3.2 Questionnaire design: 21

3.2.1 Measurement scales: 21

3.2.2 Questionnaire development: 23

3.3 Sample Design: 24

3.4 Methods of data analysis: 25

3.5 Research Process: 25

3.6 Summary: 27

CHAPTER 4: DATA ANALYSIS AND FINDINGS 28

4.1 Descriptions of sample 28

4.2 Reliability and validity of the measurement scale 29

4.2.1 Reliability (Cronbach alpha) 29

4.2.2 Exploratory factor analysis (EFA) 32

4.3 Testing the research model and the hypotheses 36

4.3.1 Testing correlations of constructs: 36

4.3.2 Multiple linear regression analysis of relationship quality scale: 37

4.3.3 Simple liner regression analysis: 41

4.3.3 Summary of Liner regression analysis: 42

4.4 Summary 44

CHAPTER 5: CONCLUSION AND IMPLICATIONS 45

5.1 Discussion 45

5.2 Practical implications 46

5.3 Limitations and further research 47

REFERENCES 49

APPENDIX 1: INITIAL MEASUREMENT SCALE 53

APPENDIX 2: QUALITATIVE RESEARCH 55

APPENDIX 3: VIETNAMESE QUESTIONNAIRE 58

APPENDIX 4: CRONBACH ALPHA ANALYSIS 62

Appendix 4.1: Confidence Benefits (CB) factor: 62

Appendix 4.2: Special Treatment Benefits (ST) factor: 63

Appendix 4.3: Social Benefits (SB) factor: 64

Appendix 4.4: Relationship Quality (RQ) factor: 65

Appendix 4.5: Word of Mouth (WOM) factor: 66

APPENDIX 5: EXPLORATORY FACTOR ANALYSIS (EFA) 67

Appendix 5.1: The EFA implementation of relationship quality scale: 67

Appendix 5.2: The EFA implementation of word of mouth scale: 71

APPENDIX 6: CORRELATIONS 72

APPENDIX 7: MULTIPLE LINER REGRESSION ANALYSIS 73

Appendix 7.1: The result of multiple liner regression analysis: 73

Appendix 7.2: Testing assumptions 74

APPENDIX 8: SIMPLE LINEAR REGRESSION ANALYSIS 76

Appendix 8.1: The result of simple liner regression analysis: 76

Appendix 8.2: Testing assumptions 77

LIST OF ABRREVIATIONS

CB: Confidence benefits

EFA: Explore factor analysis

IATA: International Air Transport Association

ICAO: International Civil Aviation Organization

MLR: Multiple linear regression

RQ: Relationship quality

SB: Social benefits

SLR: Simple linear regression

ST: Special treatment benefits

WOM: Word of mouth

LIST OF TABLES

Table 3.1 The measurement scale of relationship benefits 22

Table 3.2: The measurement scale of relationship quality 23

Table 3.3: The measurement scale of word of mouth 23

Table 4.1 Statistical report of demographic variables 29

Table 4.2 Cronbach alpha coefficients 31

Table 4.3 EFA results of relationship quality scale: 34

Table 4.4 EFA results of word of mouth scale: 35

Table 4.5 Correlation matrix 36

Table 4.6: ANOVA of MLR 38

Table 4.7: MLR Model Summary 38

Table 4.8: Coefficients of MLR 39

Table 4.9: ANOVA of SLR 41

Table 4.10: SLR Model Summary 42

Table 4.11: Coefficients of SLR 42

Table 4.11: Results of linear regression analysis 42

LIST OF FIGURES

Figure 1.1 Degree of trust in forms of advertising 2

Figure 2.1 Proposed conceptual model 18

Figure 3.1 Research process 26

Figure 4.1 The revised research model 43

ABTRAST

This study examines the mediating role of relationship quality in the relations between relationship benefits and word of mouth in Vietnamese airlines ticket service

The model tests the impact of relationship benefits, namely confidence benefits, special treatment benefits as well as social benefits on relationship quality, and relationship quality on word of mouth The research was conducted with a sample

of 220 respondents using airline ticket service in the past six month in Binh Duong province and Ho Chi Minh city The result showed that relationship quality had a significant impact on positive word of mouth However, relationship quality was affected by only two components of relationship benefits including confidence benefits and social benefits, and was not explained by special treatment benefits These findings suggest that managers should concentrate on social benefits and confidence benefits to enhance relationship quality Thanks to the increase of relationship quality, word of mouth will be enhanced

Chapter 1: INTRODUCTION 1.1 Research background:

In an environment that customers almost decrease their beliefs in advertisements by organizations, word of mouth becomes significantly effective to the competition of company’s advantage (International Word of Mouth Marketing Conference, 2005) Besides, the Nielsen Global Online Consumer Survey over 25,000 online consumers from 50 countries in 2009 showed that the information from acquaintances and comments from online customers are the most reliable advertising form

Figure 1.1 Degree of trust in forms of advertising

The report also shows that ninety percent of surveyed consumers trust in the recommendations from people and seventy percent believe in the information

posted by online consumers, meaning consumers’ reliance on word of mouth in the decision-making process, either from their acquaintances or online consumers whom they have not known, has increased significantly

The power of word of mouth is proved and recognized by plenty of previous researches Clearly, its power is an extreme influence, because word of mouth appears as a naturally and normally colloquial situation, it happens any time of day (Gildin et al., 2003) Moreover, its characteristics is spontaneous and independent from any seller (Gildin, 2003), which strongly explains the major reason why word of mouth can influent people’s buying behaviors and final purchase decisions (Kiecker and Cowles, 2001; Buttle, 1998; Bayus, 1985) It also means that WOM acts as a source of information as well as a persuasive communication tool (Schindler and Bickart, 2005; Gildin, 2002; Keller, 2007; Bayus, 1985)

In addition with attracting new customers, word of mouth is important for the long term economic success of company (Hennig-Thurau et al., 2002) It also contributes to decrease the cognitive dissonance of existing customers (Wangenheim, 2005) Cognitive dissonance, experienced by individuals, is even over the concern of having made a wrong decision (Festinger, 1957) Accordingly, spreading word of mouth, customers attempt to convince themselves of the purchase decision they made (Wangenheim, 2005) Obviously, customers use WOM as one of the strategies to reduce their post-decision dissonance (Festinger, 1957)

According to Buttle (1998), WOM can be regarded as a risk reduction strategy Dichter (1966) proves customers’ purchase-intentions for innovative products are increased by positive word of mouth because of reducing the risk associated acquisitions Garbarino and Strahilevitz (2004) also cite the reduction in perceived risk when purchasing online after receiving a site recommendation from friends

Additionally, customers believe heavily on the advices and suggestions of whose have experienced the service (Kinard and Capella, 2006) Furthermore, consumers often trust each other more than their communications with firms, thus emphasize the importance of WOM (Zeithaml and Bitner, 1996)

Despite numerous literatures about the importance of WOM, there is only few

seldom researches analyzing about the antecedents of WOM and specifically the impact of customer-employee relationships on WOM intentions (Gremler et al., 2001)

1.2 Vietnamese aviation market:

Aviation industry has made significant contributions in promoting economic development, increasing foreign currency income, improving the balance of payments, expanding the exchange of goods and cultures, as well as promoting Vietnamese image to the world Therefore, the Government has confirmed that Vietnam's aviation industry is a key economic sector and promoted investment in modernizing and enhancing the service quality of this industry Vietnam has the advantage of strategic location (in the Asia-Pacific region) which accounts for 50%

of the volume of air transport worldwide (Ministry of transport – middle airports corporation, 2010)

According International Civil Aviation Organization (ICAO) at Montreal in July

2012 assumed that civil aviation activities in Asia-Pacific was the most effective with net income of nearly U.S $ 11 billion, while the net profit of the European airlines achieved less than U.S $ 1 billion, and African airlines lost $ 100 million ICAO also forecasted that global aviation industry continues to grow 5.4% in 2012 and in coming the years to come with the speed of 6% in 2013 and 6.4% in 2014.) This is an advantage information for the development of the world's aviation industry in general and Vietnam in particular so far

For Vietnamese aviation, the report of Vietnamese General Statistics Office indicated that in the first quarter of 2012, the number of air passengers has increased proximately 4.4% compared with the same period in last year

Based on the Investment newspaper, the International Air Transport Association (IATA) forecast that in 2014, Vietnam will become the third fastest growing market

of passenger and international merchandise transport in the word, only behind China and Brazil

By 2015, the Vietnamese aviation market will have 34 - 36 million passengers; by

2019, it will reach 52-59 million passengers Besides, the freight will increase to 850,000 - 930,000 tons in 2015 and from 1.4 to 1.6 million tons in 2019

With all above information, Vietnamese aviation promises a huge potential for development In other words, it is a big chance for airline ticket agents in their business

1.3 Problem statement:

Airline ticket agents are considered as the airline representatives to make reservations and sell tickets Airline ticket agents hold stressful duties, because they relate directly to customers and timely solve their travel problems Moreover, sometimes, they also put up with many complaints which are actually not their faults, such as the flight delays or cancellations,… Due to the unexpected problems

of the flight at any time, airline ticket agents must work at nights, weekends, or even on holidays

Besides the work pressure, the airline ticket agents also face against strong intensity

of competitive pressure from the others airline ticket agents and, even from the airlines head offices The pace among agencies lies on the race of marketing campaigns, customer services, sales strategies… To stand out from the rest, airline ticket agencies try to have super offers or policies For example, they try to post

more online ads, make more cold calls, provide 24/24 online support, free ticket delivery, convenient payment method,… Interesting enough, often know as agencies’ supplier and supporter, the airline head offices are also strong competitors

to agencies The types of this challenge are not only low commission but also airlines’ official websites Airlines tend to gradually decrease agents’ commission

to increase their competitive advantages in the growth of low cost carries; another way is to reduce their dependence on agents by using their direct website The website supplies flights information and itineraries which enable customers to easily make reservation directly

To overcome above challenges, it leads to the thirst of seeking a wise advertising method to survive agents’ business This best choice has to be low in cost, and enable airline ticket agents to not only take care of the existing customer relationships but attract new customers also

How effective is the positive WOM method to make customers change a brand, an agent or customers attitudes? WOM is much more effective than other ways First,

to affect brand switching, it is seven times over the printing, quadruple direct sales, and double broadcast channel (Katz and Lazasfeld, 1955) Secondly, to create customer’s positive attitude, Day (1971) indicated that WOM is nine times productive, while Mangold(1987) defines it as five times

According to Zeithaml et al (1985), word of mouth is the most effective mean to convey information, and even more important to the services sector Indeed, even Philip Kotler (2007) also assumes that service buyers tend to rely more on word of mouth than on advertising when selecting a provider

Thus, analyzing and identifying factors influent the positive word of mouth is essential for airline ticket agents Based on my best knowledge, there is no study about this in Vietnam yet

1.4 Research Objectives:

The overall objective of this thesis is to examine the mediating role of relationship quality in the relations between relationship benefits and word of mouth Specifically:

1 The relationship between confidence benefits and relationship quality

2 The relationship between special treatment benefits and relationship quality

3 The relationship between social benefits and relationship quality

4 The relations between relationship Quality and word of mouth

1.5 Research question:

This research aims to answer the following questions:

- Do confidence benefits affect to relationship quality?

- Do special treatment benefits impact on relationship quality?

- Do social benefits impact on relationship quality?

- Does relationship quality impact on word of mouth?

1.6 Scope and methodology of study:

The study would focus on positive word of mouth when customers directly buy airline ticket Furthermore, to ensure the adequate information for the study, the surveyed candidates will be selected, including only customers directly buying and using airline ticket service in the past 6 months, their family members and people who don’t work in the airlines or airline ticket agents The study is conducted in Binh Duong and Ho Chi Minh City

The study should be conducted through 2 main phases: (1) The qualitative research

is used to construct and improve the Vietnamese questionnaire (2) The quantitative research is used to collect, analyze survey data as well as estimate and test the model Specifically, the study uses the 11.5 SPSS software to analyze the reliability and validity of measurements by Cronbach’s alpha coefficient and exploratory factor analysis (EFA); and test the model as well as hypothesis through the regression analysis

1.7 Practical significances of the study:

The research provides information and scientific arguments to support airline ticket service providers to enhance the quality of relationship with customers, through the suitable selection of essential benefits brought for customers It helps reduce costs and increase efficient business Furthermore, the research also shows the important role of word of mouth in business

Specifically, the study indicates the relations between relationship benefits constructs and relationship quality and between relationship quality and word of mouth

The study also contributes the theories related to word of mouth in the airline ticket service in Vietnamese context

In short, the study has a practical significance for individuals or enterprises that care for or related to airline ticket service

1.8 Structure of the thesis

Chapter 1: Introduction

This chapter presents a background of the important role of word of mouth and Vietnamese aviation industry Introduction chapter will also provide problem statement, the research questions, research objectives, scope and methodology of

the study as well as practical significances of the study

Chapter 2: Literature review and proposed research model

This chapter presents that an extensive literature review assess different measurements of relationship quality as well as word of mouth Subsequently, the research framework and hypotheses will be proposed in this chapter

Chapter 3: Research methodology

This chapter presents the methodology of empirical study

Chapter 4: Data analysis and results

This chapter presents the analysis of gathered data which to test the hypotheses and answer the research questions

Chapter 5: Conclusions and implications

This chapter will present implications of this study and will end the research with

limitation and suggestions for future research

Chapter 2: LITERATURE REVIEW

This chapter presents that an extensive literature review assesses different measurements of relationship quality as well as word of mouth Subsequently, the research framework and hypotheses will be proposed in this chapter

2.1 Relationship quality & relationship benefits:

2.1.1 Relationship quality:

Conceptualizations of the relationship quality have been recommended in many past studies For example, Baker et al (1999) indentified cooperation as a component of relationship quality; meanwhile Dorschar et al (1998) assumed that the dimensions

of relationship quality consist of orientation and opportunism However, there has been general agreement that the key elements of relationship quality are satisfaction, commitment and trust (Dorsch et al., 1998; Smith, 1998; Baker et al., 1999; De Wulf et al., 2001; Hennig-Thurau et al., 2002) Moreover, those three components as measurements for relationship quality are more specific constructs than the others, such as cooperative norms This component is academically conceptual distinct constructs, but consumers have problems in distinguishing them and tend to “lump them together” (Crosby, Evans, & Cowles, 1990; De Wulf et al., 2001) Furthermore, customers usually examine relationship quality in aspect of trust, satisfaction, and commitment in service contexts (Crosby et al., 1990; Hennig-Thurau et al., 2002; Caceres and Paparoidamis, 2007) For all these reasons, in this study, trust, satisfaction and commitment are the most appropriate variables in describing relationship quality measurements, which express the overall nature of relationships between customers and service providers (Hennig-Thurau et al., 2002)

2.1.2 Relationship benefits

According to Zineldin (2006), the relationship benefits offer consumers the value beyond their expectations Consequently, it can deeply impress them (Kinard and Capella, 2006; Reynolds and Beatty, 1999) Moreover, it can affect or even control the customers’ behaviors, such as their beliefs, loyalties, and commitments This influence has been proved by the research of Morgan and Hunt (1994), or Hennig-Thurau et al (2002) Both of these researches indicated that the more benefits provided to the users, the more commitments the providers would receive Therefore, relationship benefits bring advantages to the customer-provider relationships

Thanks to its advantages, relationship benefits are said to add quality to the relationship quality (Hennig-Thurau et al., 2002) Specifically, it creates a better value perception, which is the key to open further relations (Blackwell et al., 1999; Hennig-Thurau et al., 2002) This key brings in satisfaction and commitments, two elements of a relation quality In return, the relation quality coordinates the relations between relationship benefits and WOM (Hennig-Thurau et al., 2002) The author therefore comes to the conclusion that relationships contributes to the relationship quality

Based on Gwinner et al (1998), relationship benefits include three dimensions of

benefits that are confidence, special treatment, and social benefits Each of them plays an important role in supplying the core value for customers

Confidence benefits:

Confidence benefits have been found to be the most important components of all relationship benefits (Berry, 1995; Bitner, 1995; Kinard and Capella, 2006) According to Gwinner et al (1998), confidence benefits is an aspect of customer’s sense about less anxious and more comfortable in recognizing what to expect when using service Besides, confidence benefits eliminate risk and increase awareness of

expectations from service providers (Kinard and Capella, 2006) The more confidence benefits customers perceive, the stronger feeling of security and comfort

in promoting relationship they have with service providers (Gwinner et al., 1998) It likely leads to enhance the result of perception of relationship quality Obviously, Hennig-Thurau et al., (2002) found the positive relationship between confidence benefits and one relationship quality variable – commitment In the research of Kim

et al (2006) in the restaurant industry suggest that overall customer confidence enhances relationship quality According to Patterson and Smith (2001), confidence benefits express the customers’ desires in maintaining a sustainable relationship with service providers and feeling confident in their core service supply Thus, the author hypothesizes that:

H1 Confidence benefits are positively related to relationship quality

Special Treatment Benefits:

In all elements of relationship benefits, special treatment benefits are the most tangible components that concern to monetary and non-monetary benefits offered

by a specific service firm as a result of the relationship between customers and providers (Gwinner et al, 1998; Reynolds and Beatty, 1999; Patterson and Smith, 2001; Hennig-Thurau et al., 2002) This is special excess value, favor or advantage offered beyond customer’s expectation (Gwinner et al, 1998; Reynolds and Beatty, 1999; Patterson and Smith, 2001; Hennig-Thurau et al., 2002) When the service provider succeeds in providing special treatment benefit to its customer at high level

of face-to-face interaction, each customer is treated as a specialized segment (Dolen

et al., 2004), it may make the relationship quality better This point is demonstrated

in many previous studies Specially, special treatment benefits positively affect on relationship components, namely satisfaction (Reynolds and Beatty, 1999) and commitment (Hennig-Thurau et al., 2002) In addition, the research of Hyun (2010) shows that tangible aspects of the service offered such as price breaks or quicker services positively influence to relationship quality Thus, it can be seen that special

treatment benefits and relationship quality has a positive relationship Therefore, we hypothesize that:

H2 Special treatment benefits are positively related to relationship quality

Social benefits:

The second most important benefits to the customer are social benefits (Gwinner et al., 1998) Social benefits are the benefits that customer receive thanks to the long - term customers’ relationships with service providers such as being recognized by employees of service firms, familiar with employees and developing a friendship with service providers (Gwinner et al., 1998) In other words, social benefits are quite natural emotion because they bases on the relationship between customers and provider (Hennig-Thurau et al., 2002) This aspect may involve in strengthening friendships among services employees and customers, knowing customer’s name, and identifying customer preferences(Berry, 1995; Gwinner and Gremler, 2000) Therefore, the raising of social benefits in relationship between customer and providers will reinforce cooperation and develop the customers’ experience in utilizing service (Bitner, 1995)

Commitment is seen as mediated factor in the relationship between social benefits and WOM (Hennig-Thurau et al., 2002) Besides, personal interactions and friendships between customers and employees have been proved as a factor to enhance satisfaction levels (Price and Arnould, 1999; Gwinner and Gremler, 2000)

In addition, the results of previous research have showed that there exists the positive relationship between social benefits and relationship quality constructs such

as commitment (Goodwin and Gremler, 1996; Goodwin, 1997) and customer satisfaction with the service provider (Hennig-Thurau et al., 2002) Finally, according to Bendapudi and Berry (1997), customers increase their trust levels when they feel social bonds with employees Thus, social benefits directly positively affected relationship quality

This connection is reaffirmed by the research of Kim et al (2001), in which they

conclude that stronger social relationships with customers result in higher relationship quality This kind of bond is important enough to be equal to a business relation (Crepiel, 1990) In the research of Gremler (2001), he even recommends companies the attempts to have the tight relationships with customers Kinard and Capella, in their research 2006, support this point of view by stating the unavoidable exist of communication in business and its influence on the relationship quality The above clues allow the author to reach the third hypothesis:H3 Social benefits are positively related to relationship quality.

2.2 Relationship quality and word of mouth:

2.2.1 Word of mouth

There are many researches and definitions for word of mouth One of the first researchers to address WOM is Arndt (1967) who defined WOM as the noncommercial communication between person to person that related to brand, product or service Some years later, Westbrook (1987) described WOM as

“informal communications directed at other consumers about the ownership, usage,

or characteristics of particular goods and services and/or their sellers” Anderson

et al (1998) defined word-of-mouth (WOM) as “an informal communication

between private parties in which products and services are evaluated” Most

recently, East et al., (2008) assumed WOM as “informal advice passed between

consumers” Also according to East et al., (2008), WOM is defined as “is usually interact, swift and lacking in commercial bias” As the above definitions, word of

mouth is considered as non-commercial exchange; hence most of the verbal acts are originated from spontaneous senders, instead of sponsor (Stern et al, 1994)

Believing in its non-commercial purpose, the listeners take WOM as a true, reliable and helpful source of information (Day, 1971; Murray, 1991) In compared with common promoting, he stated that WOM could be nine times effectively turn negative perception into positive ones Same proof from the research of Murray

(1991), it shows that words from family, friends or colleagues are more favorably received than commercial promotional resources Shed (1971) emphasized the value

of WOM In his research, WOM outweighed advertising in drawing customers’ attention and decision

WOM impacts throughout the buying cycle Since 1966, Britt has recorded this impact from the base of Sociology At the first stage, the WOM influence the phase

of attention, interest, expectation,… (Lynn, 1987; Stock and Zinsner, 1987; Woodside et al., 1992; Webster, 1991; and Zeithaml et al, 1993) In the next stage, WOM continues affecting the evaluation, conviction, desire… WOM has a role in this phase thanks to the fact that people use WOM as their own information resource, hence voluntarily grant it their trust (Murray, 1991) In the final stage, buying or not, Magold (1987) proved that the influence of WOM is stronger than the others’ one

File et al (1994) affirmed the impact of WOM to the business Interesting enough, this impact could be a double-edged sword, depending on the customers’ satisfaction level (Bolfing, 1989; Engel et al., 1969; Hartline and Jones, 1996; Richins, 1983; Tybout et al., 1981; Westbrook, 1987) Together with product performance, the satisfaction degree will directly decide the type of WOM (Singh and Pandya, 1991; Tanner, 1996; Hartline and Jones, 1996) Beyond customer’s expectation, it will be positive WOM, otherwise negative WOM (Singh and Pandya, 1991) The existence of these two kinds has been examined and proved in various context, such as hospitality (Cadotte and Turgeon, 1988), purchasing (Swan and Oliver, 1989), non-profit organization (Cermak et al., 1991), health service (Headley and Miller, 1993),…

Ironically, listeners tend to be driven by the negative WOM rather than the positive WOM (Arndt, 1967) Meanwhile, it should be noted that bad WOM spreads wider and faster than good one Here are the figures illustrating the dominance of negative WOM The rate of info transmission between negative WOM and positive WOM is

2:1 (Technical Assistance Research Program, 1986) Only one customer is not content, he could retell it to 9 – 20 people (Desatnick, 1987)

In case of having negative WOM, a business future can be in danger (File et al., 1994) It is one of three kinds of unhappy customers’ penalty In the research of

1970, Hirschman defined the penalties of uncontented customers as a feedback to provider or a transaction stop However, there was no place for WOM because this feedback is only in two – way relations between provider and customer Then, in

1988, Singh found the existence of negative WOM by putting customer’s feedback into multi-relation among provider-customer-social network This existence has been consolidated by the modern theorists They has defined that customers’ punitive actions include: feedback to provider, relation break, or release in social network

Desatnick (1987) gave out the specific rate: over 90% disappointed customers will never do business with their unsatisfied providers again 13% of these will pass their bad experiences to 9 – 20 people Combined with the fact that the listeners tend to value WOM more than advertisements, negative WOM can be compared with fire because of its spreading speed and destruction

It could not be denied the importance of word of mouth as well as the negative word

of mouth that was evidenced in plenty of previous researches However, there is still a limit on the number of researches about the relevant factors to positive word

of mouth

2.2.2 Relationship quality and word of mouth

Increasing positive word of mouth seems to be important for enterprises The research of Gremler et al (2001) indicates that positive word of mouth could be enhanced by building relationship between customers and employees In addition, customers who have sense of relationship quality with service providers become

supporting customers of company by expressing their positive word of mouth about the providers (Griffin, 1995; Reynolds and Beatty, 1999) Thus, the important impact of relationship quality on word of mouth communication can not be denied Many prior researches have pointed out that the elements of relationship quality including satisfaction, commitment and trust affect word of mouth (Anderson and Sullivan, 1993; Anderson and Weitz, 1989; Dwyer et al., 1987; Hennig-Thurau et al., 2002; Sui and Baloglu, 2003) Besides, previous research on hotels and luxury restaurants has indicated that relationship quality has positively impacted to positive WOM (Kim et al., 2001) Hence, we hypothesize that:

H4 Relationship quality is positively related to word-of-mouth

2.3 Proposed conceptual model:

Based on the ideas derived from the previous researches of Sandy et al (2011) in

“Generating positive word-of-mouth in the service experience”, they have used Confidence Benefits, Special Treatment Benefits, Social Benefits, Functional Quality, Technical Quality, Relationship Quality, Word of Mouth as the key elements of their study

Within their framework, technical benefits and functional benefits are two dimensions of service quality (Choi et al., 2004; Ferguson et al., 1999; Gronroos, 1984) These two components are the most tangible benefits that customers can easily realize In contrast, relationship quality is an intangible concept that describes the feeling of customers about providers in terms of trust, commitment and satisfaction (Gwinner et al., 1998)

According to Roberts et al (2003), relationship quality was a distinct construct that significantly differed from service quality, and was a better predictor of behavioral intentions than service quality

Figure 2.1 Proposed conceptual model

H1 Confidence benefits are positively related to relationship quality

H2 Special treatment benefits are positively related to relationship quality

H3 Social benefits are positively related to relationship quality

H4 Relationship quality is positively related to word-of-mouth

2.4 Summary

This chapter summarizes the results of the previous studies concerning to relations between word of mouth and relationship quality, and relationship benefits constructs and relationship quality Most of them are important background for this research Studies also showed that many factors related to relationship quality and word of mouth at different levels Sandy at el (2011) proposed the model of 3 factors influencing the word of mouth, including functional quality, technical

Confidence Benefits

Special Treatment

Relationship Quality

Social Benefits

quality and relationship quality which are affected by 3 components of relationship benefits, namely confidence benefits, special treatment benefits and social benefits This research based on the theoretical model of generating positive word of mouth research by Sandy et al (2011) Due to the limitations of time and resources, the author does not mention the service quality factor including functional quality and technical quality in this research

CHAPTER 3: METHODOLOGY

The content of this chapter presents the design of research, questionnaire, sample size and the methods of data analysis Besides, it also shows all steps of conducting research through the research process

3.1 Research design:

This research was conducted through two main stages: (1) qualitative research aims

to build the basic questionnaire, (2) quantitative research aims to collect, analyze survey data, as well as estimate and verify research model

3.1.1 Qualitative research:

The first draft questionnaire was constructed based on the numerous theories of many previous studies related to word of mouth and have been measured in the international market Thereby, the set of the observed variables was formed for the first draft questionnaire in this study

However, to suit the local context and the comprehension of Vietnamese respondents, the English questionnaire was translated into Vietnamese This translation was practical to ensure the Vietnamese respondents be able to easily and correctly understand the questions The original meaning of English version was overseen by some friends in my eMBA class and two close friends, who had obtained the proficiency in English

After that, to make sure that the questionnaire was suitable for participated respondents The author conducted focus group of 7 clients who have directly bought airline ticket service in the last 6 months The purpose of this step was to check whether the content and meaning of words used in the measurement scales suited with Vietnamese market, specifically airline ticket agency

3.1.2 Quantitative research:

3.1.2.1 Pilot test:

After implementing focus group to form the draft questionnaire in Vietnamese context The questionnaire was conducted by direct survey method in which interviews were made to 100 respondents (n=100), who were the subjects of the study The purpose of this pilot quantitative test was to evaluate the quality of questionnaire and quality of answering, such as customer could understand the questionnaire, or they were willing to provide information,… In addition, it also tested the consistency of the measurement scales to have possible adjustments Based on the analysis results by cronbach’s alpha and exploratory factor analysis, the measurements were reliable and valid, no items were omitted Thus, the final questionnaire, which used the next step, was constructed as initial scales

3.1.2.2: The main study:

After the pilot study, the main study was conducted by face to face interviews with respondents at Binh Duong and Ho Chi Minh city These participants have been direcly bought airline ticket in past six month The purposes of this study were to assess the measurement scales, to test the hypotheses and to confirm the proposed research model

3.2 Questionnaire design:

3.2.1 Measurement scales:

This study used measurements from existing scales:

Relationship benefits scale comprised three main components which were measured

by 13 observed variables The first scale was confidence benefits which were measured by four observed variables to reflect the level of customers’ confidence

and less anxiety as well as perception of their expectations The second was special treatment benefits which were measured by five observed variables to express the priority of benefits related to discount, special deal, better price, faster service The third was social benefits which were measured by four observed variables to show the degree of relationship between customers and providers, such as ability customer recognition, development of friendship The scale was based on Gwinner

et al (1998), and Reynolds and Beatty (1999)

Table 3.1 The measurement scale of relationship benefits

CB1 I have more confidence the service will be performed correctly

CB2 I have less anxiety when I buy the service

CB3 I know what to expect when I go in

CB4 I get the service provider’s highest level of service

ST1 I get discounts or special deals that most customers do not get

ST2 I get better prices than most customers

ST3 The service provider does services for me that they don’t do for

most customers

ST4 I am placed higher on the priority list when there is a line or

queue for this service

ST5 I get faster service than most customers

SB SOCIAL BENEFITS

SB1 I am recognized by certain employees of the service provider

SB2 I am familiar with the employee(s) who perform(s) the service

SB3 I have developed a friendship with the service provider

SB4 The service provider knows my name

Relationship quality reflected the degree of customers’ satisfaction, trust and commitment Relationship quality scale in this study regarded to the measurement scale of Doney and Cannon (1997), Hennig-Thurau et al (2002), Morgan and Hunt (1994) and Oliver (1997) which included six observation variables

Table 3.2: The measurement scale of relationship quality

RQ RELATIONSHIP QUALITY

RQ1 Overall I am satisfied with this service provider

RQ2 My feelings toward this service provider are very positive

RQ3 This service provider can be trusted

RQ4 This service provider is trustworthy

RQ5 My relationship with the service provider is something I am

very committed to

RQ6 I believe the service provider and I are both committed to the

relationship Word of mouth expressed the customers’ positive responses to service provider in terms of saying positive things, recommending to another person The scale included three observation variables which were based upon measurements of Zeithaml et al., (1996)

Table 3.3: The measurement scale of word of mouth

WOM WORD OF MOUTH

WOM1 I say positive things about the service provider to other

WOM2 I recommend the service provider to someone who seeks

my advice

WOM3 I encourage friends and relatives to do business with the

service provider

3.2.2 Questionnaire development:

The questionnaire in this study includes 3 main sectors

The first sector related to questions which its main purpose is to eliminate respondents who could be not appropriated for this survey For instance, the first

clarifying question was customers who directly buying and using airline ticket service in past 6 months If they never buying airline ticket, they obviously could not answer the questions related to agent’s airline ticket service Or they have already directly bought agent’s airline ticket, but for from long time in the past, they might not recall how they have been served by service employees In addition, respondents themselves, or their family members working in airlines or airline ticket agencies were not appropriated in the survey because it would exist bias; for instance, if they bought airline ticket from their own business or their family business, they always communicated positive things for it, even in case of bad service

The second part included questions related to measurement scales which are confidence benefits, special treatment benefits, social benefits, relationship quality and word of mouth Each item was measured on 7-point Likert scales which ranked the degree from “totally disagree” to “totally agree”

The third sector related to private questions of respondents such as gender, age, monthly income and educational level

To achieve the sample size (n= 220), over 500 questionnaires were interviewed with non-probability sampling methods Unsuitable questionnaire was gradually eliminated because of the inappropriate respondents or the blank answers

3.4 Methods of data analysis:

After collecting, the unqualified questionnaires were eliminated, otherwise kept, encoded, entered, cleaned and analyzed by SPSS 11.5 software

The data was analyzed in order to examine the reliability of the measurements scale through cronbach’s Alpha and the validity of them by exploratory factor analysis; test model and hypotheses by regression analysis

3.5 Research Process:

The research process showed in Figure 3.1

Figure 3.1 Research process

3.6 Summary:

The study used both qualitative and quantitative research methods Qualitative research was implemented by focus group of 07 customers Quantitative research included the preliminary survey with 100 customers to adjust and complete the formal questionnaire and the formal quantitative research with the sample size of

220 Respondents of the thesis were the people at Ho Chi Minh and Binh Duong City who had directly bought airline ticket in the past six months The questionnaire included 22 observation variables, using the 7-point Likert scale After cleaning data, all was analyzed to evaluate the reliability and validity of the measurement scales by Cronbach alpha’s coefficients and exploratory factor analysis, test the proposal model and hypotheses All analysis was practiced by SPSS 11.5 software

CHAPTER 4: DATA ANALYSIS AND FINDINGS

This chapter presented the results of data analysis in evaluating measurements scales by cronbach’s alpha and exploratory factor analysis; testing research model and hypotheses by liner regression processed in SPSS 11.5 software

Table 4.1 Statistical report of demographic variables

4.2 Reliability and validity of the measurement scale

In this study, the reliability and validity of the measurement scale were evaluated

by two methods: Cronbach alpha coefficient analysis and Exploratory Factor Analysis (EFA)

4.2.1 Reliability (Cronbach alpha)

The Reliability of Scales was assessed by Cronbach’s Alpha tool as its checking whether the questions could contribute to the measurement of theoretical concepts

or not This tool usage purpose was to reject irrelevant items or scales

The questions that measured the same concept had to be in the relationship with the rest Cronbach's alpha coefficient was a statistical test of the correlation level

among the questions in same scale A measurement scale is acceptably good if the Cronbach alpha coefficient varies from 70 to 80 The reliability of scale was accepted with Cronbatch Alpha bigger or equivalent to 0.6 (Nunnally & Bernstein 1994), cited in Nguyen Dinh Tho 2011)

Although the correlation coefficient among the items in scale was appropriated, the contribution of each question in scale was different - some worked better than the other Cronbach's alpha coefficients just indicated the association among the variables in the same scale, but didn’t reveal whether the questions needed to be removed or should be retained

Based on the item-total correlation to solve the problem, the question that was less contributed to measurement concept has weak correlation with total, should keep the items strongly correlated with total Any variables that had item-total correlation less than 0.3 are evaluated poorly (Nguyen Dinh Tho, 2011)

After using Cronbach’s Alpha tool for five components – Confident Benefit (CB), Social Benefits (SB), Special Treatment Benefits (ST), Relationship Quality (RQ) and Word of Mouth (WOM), the result showed that the reliability of scales was adequate (table 4.2) Cronbach’s alpha coefficient of each components was larger than 0.6 and Corrected Item - Total correlation was greater than 0.3 Overall, the Cronbach’s alpha coefficients showed the good indexes on the measurement scale (the smallest alpha was Confidence Benefits with 0.7811) In addition, alpha if item deleted was not much difference compared with Cronbach’s alpha coefficients, thus

no items were rejected

In detail, Confidence benefits variable (shorted as CB) was measured by 4 items (CB1 -CB4) and had a Cronbach alpha of 0.7811 Special Treatment Benefits (ST) was measured by 5 items (ST1 - ST5) and had a Cronbach alpha of 0.9288 Social Benefits (SB) was measured by 4 items (SB1 - SB4) and had a Cronbach alpha of 0.9032 Relationship Quality (RQ) was measured by 6 items (RQ1 - RQ6) and had a