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

PHAM VO THANH DIEPTHE MEDIATING ROLE OF RELATIONSHIP QUALITY IN THE RELATION BETWEEN RELATIONSHIP BENEFITS AND WORD OF MOUTH: A STUDY OF THE AIRLINES TICKET SERVICE THESIS OF MASTER OF B

PHAM VO THANH DIEP

THE MEDIATING ROLE OF RELATIONSHIP QUALITY IN THE RELATION BETWEEN RELATIONSHIP BENEFITS AND WORD OF MOUTH: A STUDY OF THE AIRLINES

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 AND WORD OF MOUTH: A STUDY OF THE AIRLINES

Assoc Prof Dr Nguyen Dinh Tho

HO CHI MINH CITY – 2012

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 andguidance, I would not have reached my final results

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

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

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

Pham Vo Thanh Diep

Ho Chi Minh City, October 2012

I would like to commit that this study, “The mediating role of relationship quality inthe relation between relationship benefits and word of mouth: a case study ofVietnamese airlines ticket service”, has been implemented based on my independentand serious studies and scientific researches The data were collected from reality andthey 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

This study examines the mediating role of relationship quality in the relationsbetween relationship benefits and word of mouth in Vietnamese airlines ticketservice

The model tests the impact of relationship benefits, namely confidence benefits,special treatment benefits as well as social benefits on relationship quality, andrelationship 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 Duongprovince and Ho Chi Minh city The result showed that relationship quality had asignificant impact on positive word of mouth However, relationship quality wasaffected by only two components of relationship benefits including confidencebenefits and social benefits, and was not explained by special treatment benefits.These findings suggest that managers should concentrate on social benefits andconfidence benefits to enhance relationship quality Thanks to the increase ofrelationship quality, word of mouth will be enhanced

Chapter 1: INTRODUCTION1.1 Research background:

In an environment that customers almost decrease their beliefs in advertisements byorganizations, word of mouth becomes significantly effective to the competition ofcompany’s advantage (International Word of Mouth Marketing Conference, 2005).Besides, the Nielsen Global Online Consumer Survey over 25,000 online consumersfrom 50 countries in 2009 showed that the information from acquaintances andcomments 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 therecommendations from people and seventy percent believe in the information

posted by online consumers, meaning consumers’ reliance on word of mouth in thedecision-making process, either from their acquaintances or online consumers whomthey have not known, has increased significantly.

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

In addition with attracting new customers, word of mouth is important for the longterm 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 havingmade 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 toreduce 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 areincreased by positive word of mouth because of reducing the risk associatedacquisitions Garbarino and Strahilevitz (2004) also cite the reduction in perceivedrisk when purchasing online after receiving a site recommendation from friends

Additionally, customers believe heavily on the advices and suggestions of whosehave experienced the service (Kinard and Capella, 2006) Furthermore, consumersoften trust each other more than their communications with firms, thus emphasize theimportance of WOM (Zeithaml and Bitner, 1996).

Despite numerous literatures about the importance of WOM, there is only fewseldom researches analyzing about the antecedents of WOM and specifically theimpact of customer-employee relationships on WOM intentions (Gremler et al.,2001)

1.2 Vietnamese aviation market:

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

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

According International Civil Aviation Organization (ICAO) at Montreal in July 2012assumed that civil aviation activities in Asia-Pacific was the most effective with netincome of nearly U.S $ 11 billion, while the net profit of the European airlinesachieved less than U.S $ 1 billion, and African airlines lost $ 100 million ICAO alsoforecasted that global aviation industry continues to grow 5.4% in 2012 and incoming 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 ingeneral and Vietnam in particular so far

For Vietnamese aviation, the report of Vietnamese General Statistics Office indicatedthat in the first quarter of 2012, the number of air passengers has increasedproximately 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 Chinaand 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 to850,000 - 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 fordevelopment In other words, it is a big chance for airline ticket agents in theirbusiness

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 theairlines head offices The pace among agencies lies on the race of marketingcampaigns, customer services, sales strategies… To stand out from the rest, airlineticket 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 ticketdelivery, convenient payment method,… Interesting enough, often know as agencies’supplier and supporter, the airline head offices are also strong competitors toagencies The types of this challenge are not only low commission but also airlines’official websites Airlines tend to gradually decrease agents’ commission to increasetheir competitive advantages in the growth of low cost carries; another way is toreduce their dependence on agents by using their direct website The website suppliesflights information and itineraries which enable customers to easily make reservationdirectly.

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

How effective is the positive WOM method to make customers change a brand, anagent or customers attitudes? WOM is much more effective than other ways First, toaffect brand switching, it is seven times over the printing, quadruple direct sales, anddouble broadcast channel (Katz and Lazasfeld, 1955) Secondly, to create customer’spositive attitude, Day (1971) indicated that WOM is nine times productive, whileMangold(1987) defines it as five times

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

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

1.4 Research Objectives:

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

1.5 Research question:

This research aims to answer the following questions:

1.6 Scope and methodology of study:

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

The study should be conducted through 2 main phases: (1) The qualitative research isused to construct and improve the Vietnamese questionnaire (2) The quantitativeresearch 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 andvalidity of measurements by Cronbach’s alpha coefficient and exploratory factoranalysis (EFA); and test the model as well as hypothesis through the regressionanalysis.

1.7 Practical significances of the study:

The research provides information and scientific arguments to support airline ticketservice providers to enhance the quality of relationship with customers, through thesuitable selection of essential benefits brought for customers It helps reduce costsand increase efficient business Furthermore, the research also shows the importantrole of word of mouth in business

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

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

In short, the study has a practical significance for individuals or enterprises that carefor 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 andVietnamese aviation industry Introduction chapter will also provide problemstatement, 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 differentmeasurements of relationship quality as well as word of mouth Subsequently, theresearch 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 andanswer the research questions

Chapter 5: Conclusions and implications

This chapter will present implications of this study and will end the research withlimitation and suggestions for future research

Chapter 2: LITERATURE REVIEW

This chapter presents that an extensive literature review assesses differentmeasurements of relationship quality as well as word of mouth Subsequently, theresearch 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 paststudies For example, Baker et al (1999) indentified cooperation as a component ofrelationship quality; meanwhile Dorschar et al (1998) assumed that the dimensions ofrelationship quality consist of orientation and opportunism However, there has beengeneral 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 asmeasurements for relationship quality are more specific constructs than the others,such as cooperative norms This component is academically conceptual distinctconstructs, but consumers have problems in distinguishing them and tend to “lumpthem together” (Crosby, Evans, & Cowles, 1990; De Wulf et al., 2001) Furthermore,customers usually examine relationship quality in aspect of trust, satisfaction, andcommitment 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 describingrelationship quality measurements, which express the overall nature of relationshipsbetween customers and service providers (Hennig-Thurau et al., 2002)

2.1.2 Relationship benefits

According to Zineldin (2006), the relationship benefits offer consumers the valuebeyond their expectations Consequently, it can deeply impress them (Kinard andCapella, 2006; Reynolds and Beatty, 1999) Moreover, it can affect or even controlthe customers’ behaviors, such as their beliefs, loyalties, and commitments Thisinfluence 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 benefitsprovided 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 therelationship quality (Hennig-Thurau et al., 2002) Specifically, it creates a bettervalue 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, twoelements of a relation quality In return, the relation quality coordinates the relationsbetween relationship benefits and WOM (Hennig-Thurau et al., 2002) The authortherefore comes to the conclusion that relationships contributes to the relationshipquality

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

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

Confidence benefits:

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

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

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

et al (2006) in the restaurant industry suggest that overall customer confidenceenhances relationship quality According to Patterson and Smith (2001), confidencebenefits express the customers’ desires in maintaining a sustainable relationship withservice providers and feeling confident in their core service supply Thus, the authorhypothesizes that:

H1 Confidence benefits are positively related to relationship quality

Special Treatment Benefits:

In all elements of relationship benefits, special treatment benefits are the mosttangible 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 offeredbeyond customer’s expectation (Gwinner et al, 1998; Reynolds and Beatty, 1999;Patterson and Smith, 2001; Hennig-Thurau et al., 2002) When the service providersucceeds 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 manyprevious studies Specially, special treatment benefits positively affect on relationshipcomponents, namely satisfaction (Reynolds and Beatty, 1999) and commitment(Hennig-Thurau et al., 2002) In addition, the research of Hyun (2010) shows thattangible aspects of the service offered such as price breaks or quicker servicespositively influence to relationship quality Thus, it can be seen that special

treatment benefits and relationship quality has a positive relationship Therefore, wehypothesize 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 etal., 1998) Social benefits are the benefits that customer receive thanks to the long -term customers’ relationships with service providers such as being recognized byemployees of service firms, familiar with employees and developing a friendship withservice providers (Gwinner et al., 1998) In other words, social benefits are quitenatural emotion because they bases on the relationship between customers andprovider (Hennig-Thurau et al., 2002) This aspect may involve in strengtheningfriendships among services employees and customers, knowing customer’s name, andidentifying customer preferences (Berry, 1995; Gwinner and Gremler, 2000)

Therefore, the raising of social benefits in relationship between customer andproviders will reinforce cooperation and develop the customers’ experience inutilizing service (Bitner, 1995)

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

In addition, the results of previous research have showed that there exists the positiverelationship between social benefits and relationship quality constructs such ascommitment (Goodwin and Gremler, 1996; Goodwin, 1997) and customersatisfaction with the service provider (Hennig-Thurau et al., 2002) Finally, according

to Bendapudi and Berry (1997), customers increase their trust levels when they feelsocial bonds with employees Thus, social benefits directly positively affectedrelationship 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 higherrelationship quality This kind of bond is important enough to be equal to a businessrelation (Crepiel, 1990) In the research of Gremler (2001), he even recommendscompanies the attempts to have the tight relationships with customers Kinard andCapella, in their research 2006, support this point of view by stating the unavoidableexist of communication in business and its influence on the relationship quality Theabove clues allow the author to reach the third hypothesis: H3 Social benefits arepositively 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 firstresearchers to address WOM is Arndt (1967) who defined WOM as thenoncommercial 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 fromspontaneous senders, instead of sponsor (Stern et al, 1994)

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

(1991), it shows that words from family, friends or colleagues are more favorablyreceived 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 thisimpact 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 inthis 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’ satisfactionlevel (Bolfing, 1989; Engel et al., 1969; Hartline and Jones, 1996; Richins, 1983;Tybout et al., 1981; Westbrook, 1987) Together with product performance, thesatisfaction degree will directly decide the type of WOM (Singh and Pandya, 1991;Tanner, 1996; Hartline and Jones, 1996) Beyond customer’s expectation, it will bepositive WOM, otherwise negative WOM (Singh and Pandya, 1991) The existence

of these two kinds has been examined and proved in various context, such ashospitality (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 positiveWOM (Arndt, 1967) Meanwhile, it should be noted that bad WOM spreads widerand faster than good one Here are the figures illustrating the dominance of negativeWOM The rate of info transmission between negative WOM and positive WOM is

2:1 (Technical Assistance Research Program, 1986) Only one customer is notcontent, 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 isonly in two – way relations between provider and customer Then, in 1988, Singhfound the existence of negative WOM by putting customer’s feedback into multi-relation among provider-customer-social network This existence has beenconsolidated by the modern theorists They has defined that customers’ punitiveactions include: feedback to provider, relation break, or release in social network

Desatnick (1987) gave out the specific rate: over 90% disappointed customers willnever do business with their unsatisfied providers again 13% of these will pass theirbad experiences to 9 – 20 people Combined with the fact that the listeners tend tovalue WOM more than advertisements, negative WOM can be compared with firebecause 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 ofmouth

2.2.2 Relationship quality and word of mouth

Increasing positive word of mouth seems to be important for enterprises Theresearch of Gremler et al (2001) indicates that positive word of mouth could beenhanced 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 aboutthe providers (Griffin, 1995; Reynolds and Beatty, 1999) Thus, the important impact

of relationship quality on word of mouth communication can not be denied Manyprior researches have pointed out that the elements of relationship quality includingsatisfaction, commitment and trust affect word of mouth (Anderson and Sullivan,1993; Anderson and Weitz, 1989; Dwyer et al., 1987; Hennig-Thurau et al., 2002; Suiand Baloglu, 2003) Besides, previous research on hotels and luxury restaurants hasindicated that relationship quality has positively impacted to positive WOM (Kim etal., 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 usedConfidence Benefits, Special Treatment Benefits, Social Benefits, Functional Quality,Technical Quality, Relationship Quality, Word of Mouth as the key elements of theirstudy

Within their framework, technical benefits and functional benefits are twodimensions of service quality (Choi et al., 2004; Ferguson et al., 1999; Gronroos,1984) These two components are the most tangible benefits that customers can easilyrealize In contrast, relationship quality is an intangible concept that describes thefeeling 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 thatsignificantly differed from service quality, and was a better predictor of behavioralintentions than service quality

Thus, adapting to Vietnamese context, the author only choose relationship quality

factor for the research of positive word of mouth of airline ticket service It would

also be appropriate in accordance with the limitation in time and resources for the

author while carrying out this study

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

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

CHAPTER 3: METHODOLOGY

The content of this chapter presents the design of research, questionnaire, sample sizeand the methods of data analysis Besides, it also shows all steps of conductingresearch 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, analyzesurvey 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 manyprevious studies related to word of mouth and have been measured in theinternational market Thereby, the set of the observed variables was formed for thefirst 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 waspractical to ensure the Vietnamese respondents be able to easily and correctlyunderstand the questions The original meaning of English version was overseen bysome friends in my eMBA class and two close friends, who had obtained theproficiency in English

After that, to make sure that the questionnaire was suitable for participatedrespondents The author conducted focus group of 7 clients who have directly boughtairline ticket service in the last 6 months The purpose of this step was to checkwhether the content and meaning of words used in the measurement scales suitedwith 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 Vietnamesecontext The questionnaire was conducted by direct survey method in whichinterviews were made to 100 respondents (n=100), who were the subjects of thestudy The purpose of this pilot quantitative test was to evaluate the quality ofquestionnaire and quality of answering, such as customer could understand thequestionnaire, or they were willing to provide information,… In addition, it alsotested the consistency of the measurement scales to have possible adjustments Based

on the analysis results by cronbach’s alpha and exploratory factor analysis, themeasurements were reliable and valid, no items were omitted Thus, the finalquestionnaire, 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 withrespondents at Binh Duong and Ho Chi Minh city These participants have beendirecly bought airline ticket in past six month The purposes of this study were toassess the measurement scales, to test the hypotheses and to confirm the proposedresearch 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 weremeasured by four observed variables to reflect the level of customers’ confidence

and less anxiety as well as perception of their expectations The second was specialtreatment benefits which were measured by five observed variables to express thepriority of benefits related to discount, special deal, better price, faster service Thethird was social benefits which were measured by four observed variables to showthe 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

most customers

queue for this service

Relationship quality reflected the degree of customers’ satisfaction, trust and

commitment Relationship quality scale in this study regarded to the measurementscale 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

Table 3.3: The measurement scale of word of mouth

WOM WORD OF MOUTH

my advice

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 answerthe questions related to agent’s airline ticket service Or they have already directlybought agent’s airline ticket, but for from long time in the past, they might not recallhow they have been served by service employees In addition, respondentsthemselves, or their family members working in airlines or airline ticket agencieswere not appropriated in the survey because it would exist bias; for instance, if theybought airline ticket from their own business or their family business, they alwayscommunicated positive things for it, even in case of bad service

The second part included questions related to measurement scales which areconfidence benefits, special treatment benefits, social benefits, relationship qualityand word of mouth Each item was measured on 7-point Likert scales which rankedthe 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 withnon-probability sampling methods Unsuitable questionnaire was graduallyeliminated 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 scalethrough cronbach’s Alpha and the validity of them by exploratory factor analysis; testmodel and hypotheses by regression analysis

3.5 Research Process:

The research process showed in Figure 3.1

Translate into Vietnamese

Cronbach’s Alpha

Exploratory factor analysis (EFA)

Liner regression

3.6 Summary:

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

who had directly bought airline ticket in the past six months The questionnaire included 22observation variables, using the 7-point Likert scale After cleaning data, all was analyzed toevaluate the reliability and validity of the measurement scales by Cronbach alpha’s coefficientsand exploratory factor analysis, test the proposal model and hypotheses All analysis waspracticed 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 andhypotheses by liner regression processed in SPSS 11.5 software

20 millions was used The results were as follows: 43.6% (96 respondents) below vnd

5 million, 39% (79 respondents) from vnd 5 - 10 million, 17.7% (39 respondents)from vnd 10 - 15 million, as few as 2.7% from vnd 15 - 20 million, and 0% over 20millions In the academic aspect, the majority was college or graduate level with thenumber of 149 respondents (67.7%) Next was postgraduate with 63 respondents(28.6%) The rest were high school or vocational school with 8 respondents (3.7%)

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 bytwo 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 checkingwhether the questions could contribute to the measurement of theoretical concepts ornot 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 therest 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 theCronbach alpha coefficient varies from .70 to .80 The reliability of scale wasaccepted with Cronbatch Alpha bigger or equivalent to 0.6 (Nunnally & Bernstein

Although the correlation coefficient among the items in scale was appropriated, thecontribution of each question in scale was different - some worked better than theother 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 orshould be retained

Based on the item-total correlation to solve the problem, the question that was lesscontributed to measurement concept has weak correlation with total, should keep theitems strongly correlated with total Any variables that had item-total correlation lessthan 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 wasadequate (table 4.2) Cronbach’s alpha coefficient of each components was largerthan 0.6 and Corrected Item - Total correlation was greater than 0.3 Overall, theCronbach’s alpha coefficients showed the good indexes on the measurement scale(the smallest alpha was Confidence Benefits with 0.7811) In addition, alpha if itemdeleted 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 SocialBenefits (SB) was measured by 4 items (SB1 - SB4) and had a Cronbach alpha of0.9032 Relationship Quality (RQ) was measured by 6 items (RQ1 - RQ6) and had a