Factors affecting customer satisfaction in group buying in vietnam

Research questions According to the research background and motivations outlined before, thisresearch aims to investigate the following questions from the experiences of buyers in online

International School of Business

-Nguyen Thi My Chi

FACTORS AFFECTING CUSTOMER SATISFACTION IN GROUP BUYING

IN VIETNAM

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – 2013

International School of Business

-Nguyen Thi My Chi

FACTORS AFFECTING CUSTOMER SATISFACTION IN GROUP BUYING

IN VIETNAM

ID: 60340102

MASTER OF BUSINESS (Honours)

SUPERVISOR: Dr Tran Ha Minh Quan

Ho Chi Minh City – 2013

Recently, group buying model is developing rapidly and impressively inVietnam as a type of online shopping This study aims at investigating themotivations that influence customer satisfaction as well as service quality of groupbuying This research will find out that service quality, brand, trust and price arecritical factors influenced customer satisfaction with service quality is the mostimportant factor

Keywords: group buying, group buying site, customer satisfaction.

TABLE OF CONTENTS

ABSTRACT i

TABLE OF CONTENTS ii

LIST OF FIGURES iv

LIST OF TABLES v

I INTRODUCTION 1

1 Research background 1

2 Research motivation 3

3 Research questions 4

4 Research objectives 4

II LITERATURE REVIEW 4

1 Group buying 4

2 Service quality 6

3 Online service quality 8

4 Service quality and customer satisfaction 11

5 Price discount and customer satisfaction 12

6 Trust and customer satisfaction 13

7 Brand and customer satisfaction 13

8 Research framework 14

III RESEARCH METHODOLOGY 16

1 Research process 16

2 Research sampling method 18

3 Measurement scales 19

4 Data collection procedure 21

5 Data analysis method 21

5.1 Descriptive analysis 21

5.2 Reliability analysis 22

5.3 Exploratory Factor Analysis (EFA) 22

5.4 Multiple regression analysis 23

IV FINDING AND ANALYSIS 24

1 Sample description 24

2 Evaluation and refinement of measurement scales 27

2.1 Cronbach Alpha Reliability Analysis 28

2.2 Exploratory Factor Analysis (EFA) 30

2.2.1 EFA for independent variables 30

2.2.2 EFA for dependent variable 37

2.2.3 Pearson Correlation Coefficient 38

3 Hypotheses testing 39

3.1 Testing assumptions of Multiple Regressions 39

3.2 Regression analysis 41

3.3 Summary of hypotheses testing results 42

4 Discussions of the findings 43

V CONCLUSIONS AND IMPLICATIONS 45

1 Conclusion 45

2 Implications of this research 45

3 Research limitations and implications for future research 47

REFERENCES 49

APPENDIX A 54

APPENDIX B 60

APPENDIX C 66

APPENDIX D 68

APPENDIX E 70

APPENDIX F 71

LIST OF FIGURES

Figure 2.1 The research model and hypotheses 14

Figure 3.1 Research process 17

Figure D.1 Histogram of SATIS dependent variable 68

Figure D.2 Normal P-P Plot of regression standardized residual 68

Figure D.3 Scatterplot 69

LIST OF TABLES

Table 3.1 Survey item summary 20

Table 4.1 Sample characteristics 24

Table 4.2 Cronbach’s alpha reliability test result 28

Table 4.3 KMO and Bartlett’s Test for independent variables 30

Table 4.4 Rotated Component Matrix 31

Table 4.5 Removal process during EFA 32

Table 4.6 Total Variance Explained 33

Table 4.7 Rotated Component Matrix 34

Table 4.8 Cronbach’s alpha summary after EFA 36

Table 4.9 KMO and Bartlett's Test for dependent variable 37

Table 4.10 Factor loading of satisfaction variable 37

Table 4.11 Pearson correlation coefficients between SATIS and other independent variables 38

Table 4.12 Coefficients a .40

Table 4.13 The summary of overall value 41

Table 4.14 ANOVAa result 41

Table 4.15 The result of testing hypotheses 42

Table C.1 Pearson correlations 66

Table E.1 Descriptive Statistics 70

Table F.1 Measurement scales 71

I INTRODUCTION

In the first chapter, the background of the chosen research subject will be presented, along with problem background and the purpose of this thesis Finally, the research question will be addressed with the research objectives which will be clarified clearly in later parts.

1 Research background

In the past, consumers must go to the store and buy commodities directly Ittakes much times and also brings the inconvenience to consumers, especially whoare far away from the store Nowadays, as the Internet has been developing, morebuyers are enjoying online shopping because the Internet services are as aconvenient way to shop Consumers can buy goods, even services, online, wheremakes more options for them Consumers who have a want for some favor services

or goods could be gathered when making an online shopping (J Chen, Chen, &Song, 2002; Pi, Liao, Liu & Lee, 2011) Additionally, it offers many advantages,such as facility, rapidity, a 24-hour opening and unrestricted geography

Due to the advantages of Internet, in the context of electronic commerce,online group buying becomes more and more popular According to Rezabakhsh et

al (2006), “central idea of online group-buying is the aggregation of geographicallydispersed consumer purchasing power from all over the countries that have acommon interest in a certain product and come together on the group-buying sites toget price discounts” In addition, joining online group buying, consumers not onlyget competitive advantages of quantity system price and delivery service, but alsohave chances to share shopping experiences with other buyers

In Vietnam, according to electronic information website Maskonline, websitephagia.com appeared officially on June 2010, making an underground river to thefield of electronic commerce in the country Some months later, many other groupbuying sties were born to compete each other, as cungmua.com, muachung.vn,nhommua.com, etc According to Vu Hong Quang, a representative of the Southern

VC Corp which owns muachung.com, after just 7 months of operation, his sitealready has 100.000 members Muachung.com’s main competitor, nhommua.comhas the same number of registered users but even some of the newer sites have60.000 members According to uncompleted statistics, up to now, Vietnamesemarket has about 97 sites that offer group buying services (E-Money, 2011)

Deals sites can create a winning situation all around that give benefit to threesites: business, coupon site and consumer Businesses get some much needed traffic,the coupon sites get a commission for pulling in that traffic and consumers get agood deal And Vietnamese are loving this model

Group buying model adopts “tipping point” mechanism This mechanismrequires a minimum number of participants for each deal There are two conditionsmake a transaction happens: the number of actual participants exceeds the minimumnumber and the potential buyers have prepaid for the deal (Cohen, 2009) A dealusually includes price discount of the product or service When the number ofpeople reaches a certain limitation, customers will get direct discounts on goods orservices or they can buy vouchers with attractive prices (E-Money, 2011)

According to action.vn, group buying model is as a balloon inflated roundtwo years ago, but it is now flat and gradually has to transform to survive (May2012) Even Groupon in the U.S., the first group buying model in the world, alsohad bitterly announced dismal sales declines in the last 6 months In Vietnam, the

group buying model is facing to changes to overcome this difficult period In thepast, the majority of the initiators were main buyers in online group buying.However, because of the impact of global economic recession, many initiators areaggressive being the roles of vendors holding the products or services to supply toconsumers This research doesn’t focus on analyzing the reason why initiator acts asvendor, however, vendor role of initiator is considered as a part of group buyingmechanism to evaluate service quality later.

in recent difficult environment

In previous studies, some of them discussed online group buying in operatorpoint of view: Wei et al (2011) proposed a management model in online groupbuying’s process, Matsuo (2009) proposed an effective pricing mechanism fortraders, Anand and Aron (2003) using analytical economic models to study thephenomenon of online group buying The other discussed from consumer point ofview: Liao et al (2012) focused on consumers’ demands and preference of stuff inonline group buying, Tsai et al (2011) found out that trust in virtual community andwebsite quality are the determinants of online group buying’s intention, etc

As the review above, there is no study focus on service quality of groupbuying even it is the critical factor affecting customer satisfaction Therefore, thisresearch will try to figure out how to measure service quality of a group buyingservice toward customer satisfaction It also provides the main factors along withservice quality to enhance customer satisfaction of group buying service.

3 Research questions

According to the research background and motivations outlined before, thisresearch aims to investigate the following questions from the experiences of buyers

in online group buying:

(1) What are online service quality dimension in group buying service and how do they affect customer satisfaction?

(2) What are factors that affect customer satisfaction in Vietnamese group buying service and how do they affect to customer satisfaction?

4 Research objectives

The main objective of this research is to investigate the usefulness andapplicability of theoretical model in measuring online group buying quality andcustomer satisfaction:

- Analyze the method used to measure service quality of group buying and the influence of the measure to customer satisfaction

- Analyze factors influencing customer satisfaction in group buying inVietnam

II LITERATURE REVIEW

In this chapter, some literatures are reviewed concerning the online service quality This research will continue by presenting some popular scales such as SERVQUAL and E-S-QUAL Finally, the purposed research model for the adoption

of the group buying will be presented.

1 Group buying

Nowadays, multiple types of electronic commerce have been developingstrongly Group buying is one of those diversified types, and has made animpressive speed of progression in recent years (Matsuo, 2009) Group buying (i.e.collective buying, group purchase) has existed in marketplaces for several decades

It is defined as the purchase from a group of consumers who seeks to get products

or services at the cheapest price but in the best quality Group buying model canhelp many buyers gather into collective buying groups, even though they are notnear or they do not know each other (Kittipong et al., 2011)

In the past, members of group buying were restricted They could only askfor the person who they are familiar with to join group buying (Liao et al., 2012).Yuan (2004) also pointed out that the main reason of this issue is the difficulty infinding a group of people with the same demand all the time in traditional markets.Therefore, one of advantages of online group buying is that many buyers can formgroups on the Internet in a short period of time and buy goods or services at adiscounted price even if they don’t know each other (Matsuo, 2009) Besides,geographical limitations are also a problem in traditional market (Liang & Lim,2011) However, with the growth of Internet, consumers with the same interests canconverge together easily through Internet without any difficulty as they meet

directly (Yuan, 2004) Thus, the other advantage of online group buying is thatonline group buying can overcome the geographical limitations that the traditionalgroup buying could not do like that.

Erdogmus and Cicek (2011) mentioned that there are two different types ofonline group buying systems: dynamic pricing and stable pricing In the dynamicpricing type, the discount prices can be changed basing on the price-quantity tablesdefined by the sellers If in a predetermined time, a group of buyers could begathered, then consumers could get the product or service at the same discountedprice

In the second type of the online group buying, stable pricing, “the selleroffers a certain product or service at a large discount price, but the price is static,does not get lower as the number of the buyers increases (Erdogmus & Cicek, 2011,p.309)” However, the discount price is only applied when the total number of thebuyers who buy the deal is greater than the predetermined limit of the minimumrequired number of buyers Due to the second type of online group buying is a newform of marketing at the connection of promotion and pricing and grows rapidly(Erdogmus & Cicek, 2011), as well as it is more popular in Vietnam than the firsttype, this research will focus on the context of the second type of online groupbuying

According to Zhou (2005) and Chen (2007), there are two roles in the onlinegroup buying chain One is main buyer or it is also called initiator Theresponsibilities of main buyer are that he/she posts the issue about the requirement

of group buying, and then calculates the qualities of demand as well as price toorder the products which are buyers expected The other role is follower who is

gathered in a group by main buyer Follower is mostly consumer in online groupbuying chain.

Lai (2002) pointed out one new facet of group buying model Recently, due

to the economic situation on the world, the role of initiator in group buying is able

to be a main buyer or a seller Initiator can buy good or service from supplier orvendor, then sells vouchers to consumers, or initiator can sell good or servicedirectly to consumers As a result, correspond to the second type of group buying,initiators here are the voucher suppliers, sometimes are the product vendors also

Consequently, in this research, service quality of group buying will beexamined throughout the process from buyers (consumers) start to buyvouchers/services from initiators till consumers finish using services or get theproducts

2 Service quality

In this part, some definitions and dimensions of service quality are reviewedfor the purpose of choosing the suitable measurement for the research Firstly,Parasuraman et al (1988) defined service quality as the ability of the organization tomeet or exceed customer expectations However, there is the difference betweencustomer expectations of service and perceived service (Zeithaml et al., 1990).Zeithaml et al (1990) explained that perceived service quality derives fromcomparisons of customer expectations with their perceptions of service delivered bythe suppliers If expectations are greater, then perceived quality is less thansatisfactory and hence customer dissatisfaction occurs (Parasuraman et al., 1985;Lewis and Mitchell, 1990)

In the past, many studies have attempted to discover the global or standarddimensions of service quality such as Parasuraman et al., 1985, 1988; Paulin andPerrien, 1996; Pitt et al., 1999; Sasser et al., 1978 Among them, Parasuraman etal.’s (1985) research has been the most prominent because of its affect on otherresearches later on Through a series of focus group sessions, that study uncoveredten dimensions of service quality that are generic and relevant to services in general:

tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding the customer, and access.

Later, these ten dimensions were improved and reduced to five dimensions:

tangibles, reliability, responsibility, assurance, and empathy (Parasuraman et al.,

1988) Then, a new global measurement for service quality, SERVQUAL was

developed by Parasuraman et al (1988) basing on those five dimensions After that,many researchers use the SERVQUAL scale to measure the service quality not only

in a specific industry but also in various service industries such as hospital, food,train ticket, etc

Anyway, SERVQUAL measurement is not a perfect scale in all cases.Because the SERVQUAL measurement does not include the unique facets of onlineservice quality as one prior study pointed out, such as customer-to-Web-siteinteractions, since this instrument was constructed based mainly on customer-to-employee interactions At the beginning, the five dimensions of SERVQUAL werefound to be valid in the traditional service market However, when some academicresearchers applied the SERVQUAL scale to measure e-service quality, it has beenconsidered problematic and may not be quite appropriate The reason is that thereare some differences between e-service and traditional service in some aspects, such

as the absence of sales staff, the absence of traditional tangible element, and service of customers As a result, the SERVQUAL is not suitable for measuring e-

self-service quality, and it is meaningful to renovate SERVQUAL scale into a newvaluable instrument for measuring e-service quality Below part will review someonline service quality dimensions which are developed from this scale.

3 Online service quality

Parasuraman et al (2002) defined online service quality as the extent towhich a website facilitates efficient and effective shopping, purchasing, anddelivery We can recognize that it includes broadly all phases of a customer’sinteractions Santos (2003) argues that online service quality is an overall customerassessment and judgment of online service delivery in the virtual marketplace It ismuch easier for customers to compare different service offerings than throughtraditional channels (Santos, 2003) In this study, service quality provided by groupbuying sites – a special type of retail web sites – is focused on Because thedefinition of e-service quality by Parasuraman et al (2002) cares almost enoughphases of online service, so it has been used by many researchers, and it is alsoapplied for the context of this study in building a conceptualization of online servicequality

Yang (2001) considered service quality as an important factor to decide thesuccess of online retail businesses because it influences to consumers’ onlineshopping experiences The result of one empirical evidence of Kim et al (2006)proved that poor service quality would affect online retailers negatively Whenonline shoppers don’t believe in shopping and handling charges, over 60 percent ofthem will exit before completing the buying transaction For example, incompleteproduct information (e.g missing links and non-working buttons) leads to customerfrustration and in turn to existing Nonetheless, some online retailers lose a valuable

opportunity to build customer loyalty because of poor service quality (Wachter,2002).

Besides online service quality becomes a hot topic in research field,measuring and monitoring online service quality in the virtual world are alsoconsidered as an importance Many researchers have already built online servicequality measurement basing on analyzing its dimensions For example, Dabholkar(1996) conducts a research work on the dimensions of e-service quality focusing onwebsite design, reliability, delivery, ease of use, enjoyment and control Next, Yooand Donthu (2001) develop SITEQUAL scale to measure online service quality ofwebsite including the four dimensions: ease of use, aesthetic design, processingspeed, and interactive responsiveness Compare with the traditional dimensions ofservice quality, Cox and Dale (2001) proposed six new dimensions of onlineretailing service quality, including website appearance, communication,accessibility, credibility, understanding and availability

As we can recognize, these scales just focus on evaluating web site qualitysuch as design, usage and performance It lacks of information about serviceattributes completely In addition, web site quality is just a small part in the servicequality chain of group buying model Group buying must pay attention to otherattributes to satisfy customers besides web site quality For example, the fourdimensions of SITEQUAL by Yoo and Donthu (2001) do not capture all aspects ofthe buying process, and thus do not provide a comprehensive evaluation of a site(Parasuraman et al., 2005)

From limitations of measuring online service quality in above analyses, in

2005, it is the first time the meaning of service is comprehensive in a research ofParasuraman et al because it contains all aspects of online service, in which pre-

and post- web site service are described About the measure of online servicequality, the one used in that research of Parasuraman (2005) named E-S-QUALincludes all phases of a customer’s interactions with a website There are fourdimensions of E-S-QUAL: efficiency, fulfillment, system availability and privacy.

In addition, Parasuraman et al (2005) also developed an e-recovery service qualityscale as long as E-S-QUAL named E-RecS-QUAL as a subscale for problemresolution with three dimensions: responsiveness, compensation and contact

From that time, E-S-QUAL and E-RecS-QUAL become an instrument to usepopularly because of their strong effects on customer satisfaction However,according to Kim et al (2006), the compensation dimension in this instrumentcannot be measured without actual problems to resolve, and then this dimension will

be eliminated from the model used in this research Summarily, this research willmeasure service quality of group buying by totally six dimensions:

- Efficiency: the ease extent that customers can access and use the website in purchasing transactions

- Fulfillment: the extent that the site can keep its promises about order delivery and item availability

- System availability: the availability of the website whenever customerswould like to access without functioning problems such as missing links, non-workingbuttons

- Privacy: the safety extent that the site can protect customer information

- Responsiveness: the effective control ability of the site when facing up to problems and returns from customers

- Contact: the support availability of the site whenever customers need tocontact

4 Service quality and customer satisfaction

According to Spreng and Mackory (1996), service quality and customersatisfaction are inarguably the two concepts that are so difficult to explain inmarketing theory and practice In 2001, Yang argued that when comparing theperformance of a product or service with their expectations before purchasing, if itexceeds the expectation, the satisfaction of customers would be increased However,four years later, Saha and Zhoa (2005) gave out a new definition of satisfaction like

“a collective outcome of perception, evaluation and psychological reactions to theconsumption experience with a product or service”

The appraisal-emotional response-coping attitudinal framework of Bagozzi(1988) thought that service quality is a construct oriented to awareness, whilesatisfaction is an emotional construct It is the reason that many researcherssuggested service quality is an antecedent of satisfaction After that, in 2003,Woldfinbarger and Gilly discovered a positive relationship between overall servicequality and satisfaction in case of fixed web retailing; also, Montoya-Weiss et al.found out an evidence to prove the relationship between service quality andsatisfaction by analyzing the determinants of online channel preference for a multi-channel service provider

One of the targets of research question in this study is that to define howservice quality dimensions affect to customer satisfaction Yang et al (2004) has astudy about online service quality dimensions and their relationships withsatisfaction At the result, it confirms that the most often-cited service qualitydimensions leading to customer satisfaction are: responsiveness, ease of use(efficiency) and service reliability (fulfillment) Yang and Tsai (2007) also have aresearch that measure the affect level of E-S-QUAL scale on customer satisfaction

and confirmed that the factors representing efficiency, fulfillment andresponsiveness have the strongest effects, followed by contact and then privacy.Moreover, according to Kim et al (2006), a website needs to contain many differentbrowser functionalities although system availability dimension is found to make astrong impact on customer evaluation, otherwise it may lead to customer frustrationand dissatisfaction From these points of view, we can extract the summary thatthere is relationship between E-S-QUAL scale of online service quality andcustomer satisfaction and can build following conceptual hypotheses:

H1a: Efficiency has a positive impact on online customer satisfaction.

H1b: Fulfillment has a positive impact on online customer satisfaction.

H1c: System availability has a positive impact on online customer satisfaction.

H1d: Privacy has a positive impact on online customer satisfaction.

H1e: Responsiveness has a positive impact on online customer satisfaction H1f: Contact has a positive impact on online customer satisfaction.

Especially, in this research, customer satisfaction was defined as the overallevaluation in the consumption experience of product or service after the customerused the group buying website

5 Price discount and customer satisfaction

The most benefit that group buying service can give customers is discountedprice Group buying sites must provide buyers with rare resources which the buyerscould not get from any other online purchasing sites (Kittipong et al., 2011) Peoplecome to group buying sites and buy product or service if they could find a cheaperand more reasonable price compared to other sites When the buyer perceives that

with the cheaper price, they could still get the valuable product or service, the pricesatisfaction of the buyer is increased, and he or she is more likely to join andpurchase on group buying sites Thus, price is considered as a hypothesis to analyze:

H2: Price discount has a positive impact on online customer satisfaction.

6 Trust and customer satisfaction

Many prior studies considered that trust was a critical factor for customers tocreate and keep relationships with vendors (Deng, Lu, Wei & Zhang – 2010).Kauffman, Lai & Lin (2010) has a new concept to define trust There are two peoplethat related to trust definition: trustor and trustee When trustor believe that trustee

is sincere and honest, and will not try to harm or trick trustor, leading to tangible orintangible damage, it means that trustor gives trust to trustee For example, when acustomer trusts a service or good provider, customer will expect to raise satisfactionand loyalty towards the vendor (Kassim & Abdullah, 2008) As a whole, if customerdoes not trust the vendor, customer will possibly be dissatisfied with that vendor.Deng et al (2010) & Kim et al (2009) think that trust will affect to satisfaction inlong term Hence, we have this hypothesis:

H3: Trust will positively affect customer satisfaction toward group buying service.

7 Brand and customer satisfaction

Today, brand is the official introduction of the company and the product thatcompany provides customers According to Mowen (2001), brand is a promise or aset of guidelines that reflects the image of a company, it makes customer think of

what the company does Brand gives the specific value to bring the company to the

market, therefore it distinguishes the company from others

Hammond (1999) supposed that branding is a relationship that was built on

understanding and satisfaction For example, when customers know about a famous

brand of product well, they tend to be satisfied with that product when purchasing in

that group buying site rather than other sites that have other brands of this product

Therefore, this research proposes one more hypothesis:

H4: Brand of product or service will positively affect customer satisfaction

in group buying service.

8 Research framework

Base on above literature reviews, the relationship between factors affect to

customer satisfaction and customer satisfaction is briefly described in the figure 2.1:

H1dPrivacy

H4H1e

Contact

Figure 2.1 The research model and hypotheses

The hypotheses of this research include:

H1a: Efficiency positively relates to online customer satisfaction.

H1b: Fulfillment positively relates to online customer satisfaction.

H1c: System availability positively relates to online customer satisfaction H1d: Privacy positively relates to online customer satisfaction.

H1e: Responsiveness positively relates to online customer satisfaction H1f: Contact positively relates to online customer satisfaction.

H2: Price discount positively relates to online customer satisfaction.

H3: Trust will positively affect customer satisfaction toward group buying service.

H4: Brand of product or service will positively affect customer satisfaction

in group buying service.

III RESEARCH METHODOLOGY

This chapter presents brief description of the research methodology used for the research This includes the research process, research measurement, sample selection methods, data collection methods and data analysis methods.

1 Research process

Due to the underlying study, the researcher has simply chosen quantitativeapproach for achieving the purpose of the study Quantitative research approach isbased on the development of testable hypotheses and theory Base on idea ofKenova and Jonnasion (2006), quantitative investigations tend to measure “howoften” or “how much” Through utilizing this method, the researcher would measureservice quality and the level of customer satisfaction in group buying in Vietnam

To collect the quantitative data, the survey method has been used and eventually thedata has been analyzed by using statistical techniques

The research process of this study is described in the figure 3.1

Research problem Research objective Research scope

LITERATURE REVIEW

Research model

& hypotheses

Questionnaire development

Conclusion and implication

Figure 3.1 Research process

Firstly, research problem was defined, and then research objective and

research questions were identified to be the target of solving defined research

problem After that, this study conducted a literature review to review some relevanttheories about factors influencing customer satisfaction to find out the suitable one

to Vietnamese group buying model and built the hypotheses for this study Fromthis, a preliminary questionnaire was developed basing on questions used in someprevious studies Next step is research design with 2 sub-steps:

 Pilot study: a study was conducted by interviewing around 10 customersface to face about the content, the number and the structure of questions in preliminarysurvey to test the survey and measure before launching the main survey

 Main survey: was conducted in many methods such as sending onlinesurvey through mail, social network, or sending the hard copy of survey directly tocustomer of group buying service Data collection was done two weeks later

After that, collected data was cleaned and used to test reliability of scale andvalidity of questionnaire through Cronbach’s alpha coefficient and ExploratoryFactor Analysis (EFA) method Multiple regression method was used to evaluatethe hypotheses which the implication and finding were stated and reported

2 Research sampling method

The respondents are selected through purposive sampling Purposivesampling used is judgment According to Sekaran (2006), judgment involved thechoice of subjects who are in the best position to provide the information using nonprobability methods Therefore, group of people who have knowledge aboutparticular problem can be selected as the sample element The target respondent isgroup buying customer because after they try service, they can evaluate it exactlyfrom customer perspective

According to DeCoster, J (2004), minimum sample size used in statisticanalysis should be is equal to or greater than five times of the number ofindependent variables, but not less than 100 to generate reliable results:

n >= 100 and n >= 5k (where k is the number of variables)

This research has 47 variables, as a result, the minimum sample size required

to run EFA in this research is:

n = 5 x 47 = 235

Otherwise, Tabachnick & Fidell (2001) stated that the minimum sample size

in case of multiple regression should be:

n = 50+8m (where m is the number of independent variables)

Apply this formula for 9 independent variables of this research, we have theminimum sample size for multiple regression as follow:

n = 50 + 8 x 9 = 122

Summarily, with 47 variables and 9 independent variables, this researchneeds 235 samples at least to take EFA and regression Hence, 300 surveys weredistributed to target respondents to take the data for analysis

3 Measurement scales

The questionnaire consists of 56 survey questions which are structured intothree sections: section A, B and C Nominal scale is used in section A and C withmany mutual exclusive and collectively exhausted categories (Sekaran, 2006).Section C (5 questions) includes respondent demographic details such as gender,age, level education, income level Section A includes 4 questions of buying habitsuch as frequency to buy deal, product/service bought usually About section B,ordinal scale is used as a measurement with multiple choices for respondents to

choose in 47 questions The purpose of the questionnaires is to obtain the majorinformation which is described in part B such as service quality, price, brand andtrust In section B, the respondents are asked to tick one answer through questions atthe space provided The respondents were also asked to indicate their degree ofagreement or disagreement for each item in this section A five point Likert scalewill be used with 1 = “strongly satisfied” to 5 = “strongly dissatisfied” Table 3.1has shown the items of the questionnaire.

Table 3.1 Survey item summary

variable

Section A: General information

2 The most frequent online purchase item(s) 1 Nominal

Section B: Evaluation of customer satisfaction

5 Customer satisfaction 4 Likert – 5 levels

Section C: Personal information

The questionnaire was adapted and developed in English, then was translatedinto Vietnamese to distribute to respondents

4 Data collection procedure

The executing method of data collection for this research is quantitative Theresponses of respondents through questionnaire will be the primary data for thisresearch 300 questionnaires were distributed using e-mail, facebook or directly inhard copies on October 15th, 2012 Two weeks later, 287 responses were received inboth online survey and hard copies, and finally 270 samples were useable because

17 responses were rejected due to uncompleted answers

5 Data analysis method

SPSS Version 20 (Statistical package for Social Science) was used toanalyze the collected data in which Cronbach’s alpha reliability analysis, EFA andmultiple regression analysis function were enabled to support this research

satisfaction Using 5-point Likert scale, when the score was equal to 3 referred toacceptable/neutral, the score was greater than 3 is considered good or agreement,whereas when the score was lower than 3, it is considered not good and need to beimproved or as an disagreement.

5.2 Reliability analysis

Cronbach’s alpha reliability analysis method was used to test the reliability

of the measurement scales The scales are reliable when Cronbach’s alphacoefficient of each scale is equal to or bigger than 0.7 (Pallant 2005) Besides, thoseitems which have the value of Corrected Item-to-total Correlation less than 0.3could be discarded in order to improve reliability level of the measurement scale

5.3 Exploratory Factor Analysis (EFA)

The primary objectives of EFA are to determine the number of factorsaffecting the measures and the strength of the relationship between each factor andeach observed measure (DeCoster, J., 2004) In this research, Principal ComponentAnalysis (PCA) was used as a method to extract the factors with Varimax as arotation technique

The result is considered to be acceptable when following conditions are met(Pallant, 2005):

 The sample size should be equal to or greater than 150, and there should

be at least five cases for each variable In this research, 47 variables are used, hence therequired minimum sample size for EFA is 235 The valid responses are 270, thereforedata of this research are considered valid for EFA

 Factor analysis is appropriate to data if:

 The Kaiser-Meyer-Olkin value (KMO) is 0.6 or greater.

 The Bartlett’s test of sphericity is statistically significant: p < 0.05.

 The number of factors is determined when:

 The components have an eigenvalue of 1 or more.

 The total variance explained by these components should be above 50%

 Factor loading criteria should be 0.5 or more to ensure a practical significance

5.4 Multiple regression analysis

In this research, Multiple Linear Regression method was used to test theresearch model and hypotheses Pallant (2005) explains the conditions to accept theresult are:

 The sample size is: n > 50 + 8m (where m is the number of independent variables)

 No multicollinearity is found

 Normality and linearity should exist.

 Heteroskedasticity does not exist.

We also use R-square value to express how much of the variance in the dependent variable was explained by the model

IV FINDING AND ANALYSIS

In this chapter, the evaluation of measures and the result of testing hypotheses are described There are four parts in this chapter: sample description, evaluation and refinement of measurement scales, hypotheses testing and result explanation.

1 Sample description

300 surveys were sent to target respondents who used to join group buyingwebsites to purchase product or service And there were 287 responses in which 17were not valid because respondent did not answer over 30% of mandatory questions

or they filled in the same option for all questions As a result, 270 valid answerscould be used to analyze, means that validity rate was 90% The samplecharacteristics are showed in the table 4.1

Table 4.1 Sample characteristics

Group buying purchasing frequency

Budget for 1 time purchase

of them were 26-35 years old, under 18 and over 35 years old people are few Thisresult showed group buying service just focused on youth Mostly young people areinterested in this kind of service.

The highest levels of income were under 5 millions VND per month (38.1%)and from 5 to 10 millions VND per month (36.7%) It leaded to the result that most

of them spend not much money in a purchase time (about 100.000 VND to 500.000VND), accounting for over 63% of the sample Very few respondents spent morethan 500.000 VND for each purchase (over 12%) and next one was under 100.000VND (23.3%) It showed a tendency towards buying normal and not much valuableproducts of online customers

The percentage of the respondents who purchased product or service ongroup buying sites for more than one time in a month was very high, accounting for

79.1% of the sample The remaining of the respondents (about 20%) were joingroup buying service one time or less than one time in six months or longer Thismay expressed a tendency towards building a long-termed purchasing relationshipwith loyal online customers.

As shown in Table E.1 (Appendix E), mean scores of 9 variables wereranged from 2.42 to 3.56 on a five-point scale Efficiency was evaluated bycustomers at the highest mean score of 3.56, followed by brand (3.40), contact(3.35), system availability (3.25), price (3.22) and fulfillment (3.14).Responsiveness had the lowest mean score at 2.42, followed by trust (2.85) andprivacy (2.96) These results indicated that brand, contact, system availability andprice were considered as the items that need to further enhance Specially,responsiveness, trust and privacy were the things of group buying sites that reallyneed to be improved because of the mean scores were behind acceptable level (3).Ability to offer a safe service to online customers is one of the most difficulties ofonline purchasing web sites in Vietnam Due to the limited privacy to reduce risk,they also miss customers’ trust and are facing problem to attract customers to join.The target set for online purchasing web sites is improving security program forsites to make customers feel safe in transactions Moreover, customer care serviceafter purchasing is still low, it caused responsiveness had the lowest mean score incustomers Usually, web sites would no longer take care customers after they soldout product/service or vouchers So responsiveness also needs to be improved much

2 Evaluation and refinement of measurement scales

This research will use Cronbach Alpha Reliability and Exploratory FactorAnalysis (EFA) to assess the reliability of measurement scales and the validity ofsample data.

2.1 Cronbach Alpha Reliability Analysis

This research will use Cronbach’s alpha to examine the reliability ofvariables in the questionnaire through following coefficients:

 Cronbach’s alpha coefficient: the scale is reliable when this coefficient is0.6 or more

 Corrected Item – Total correlation: variables are acceptable when this coefficient is 0.3 or more

Base on reliability test results in table 4.2, all the measurement scales havethe Cronbach’s alpha coefficient larger than 0.6 In addition, all the Corrected Item-Total Correlation values were over 0.3 Therefore, the scale designed in thisresearch is meaningful in statistic and has the necessary reliability It also meansthat those four factors of customer satisfaction have enough conditions to be used inlinear regression analysis later

Table 4.2 Cronbach’s alpha reliability test result

Efficiency: Cronbach’s alpha = 0.824

2.2 Exploratory Factor Analysis (EFA)

According to the research model, there are 9 factors with 43 observedvariables that influence to customer satisfaction of group buying service Aftersurveying, EFA method with Varimax rotation was used to analyze 43 observedvariables of these 9 factors and 4 variables of customer satisfaction factor KMO(Kaiser-Meyer-Olkin) test and Bartlett test were also used to measure thecompatibility of sample

2.2.1 EFA for independent variables

Table 4.3 KMO and Bartlett’s Test for independent variables

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .911

Approx Chi-Square 6857.424 Bartlett's Test of Sphericity df 903