Determinants of customer satisfaction in the apartment industry the cace for the apartment industry in vietnam

This study examined the determinants ofsatisfaction and the effects of customer satisfaction on word of mouth of consumers in the apartment industry in Vietnam, as well as the influence

NGUYEN THI MONG VAN

DETERMINANTS OF CUSTOMER SATISFACTION

IN THE APARTMENT INDUSTRY

THE CASE FOR THE APARTMENT INDUSTRY IN VIETNAM

MASTER’S THESIS

In Business Administration Ology code: 60.34.01.02

Supervisor

Dr Tran Ha Minh Quan

Ho Chi Minh City, 2012

I am also grateful to my classmates and my colleagues, especially Le ThiBich Dao and Ngo van Quan for all of their friendship and encouragement.

I also wish to thank my friends in Becamex subsidiaries for their greatsupport, and to the respondents, without whom, my thesis could not have beenaccomplished

Finally, I am most grateful to my dear husband He is my whole life He is

my greatest inspiration and the source of encouragement to overcome all difficultiesthrough out the duration of this study

In market economy, quality of products or services is the most important tool tosucceed The nature of the quality of goods is intended to satisfy the needs of thehighest enjoyment of goods or services Construction work in general and ofapartment buildings in particular are a type of goods The criteria for the quality of italso must be directed towards those values However, the criteria for the quality ofgoods or construction in general and apartment buildings in particular is extremelydiverse The business activities in the field of real estate are trying to improve thequality of products and services to satisfy the maximum demands of customers,especially in the apartment business This study examined the determinants ofsatisfaction and the effects of customer satisfaction on word of mouth of consumers

in the apartment industry in Vietnam, as well as the influence of background data onthe relationship between satisfaction and word of mouth activity This researchmeasures the factors influencing apartment satisfaction in quantitative researchmethods The scale was evaluated by the factor analysis method to explore EFA andreliability testing (Cronbach's alpha) then multiple regression analysis is used to testthe research model

This study will help to improve the strategies of real estate companies inchoosing the best measures to improve the quality of their company's product, whileincreasing competitiveness and solidify the company's position in the marketplace

As time was short, this study focused its review on the relationship betweensix factors influencing their apartment construction and intention to engage in word

of mouth activity

Keyword: Customer satisfaction, word of mouth, Service quality, apartment

industry.

Acknowledgement 1

Abstract 2

Contents 3

List of Tables 6

List of Figures 7

Chapter 1: INTRODUCTION 8

1.1 Overview 8

1.2 Research background 8

1.3 Problem statement 9

1.4 Purpose of the study 10

1.5 Objectives of the study 10

1.6 Research question 11

1.7 Significance of the study 11

1.8 Structure of thesis 11

Chapter 2: LITERATURE REVIEW 13

2.1 Overview 13

2.2 Overall customer satisfaction 13

2.2.1 Concept of customer satisfaction 13

2.2.2 Determinants of customer satisfaction 14

2.3 Hypotheses and model 16

2.3.1 Customer cost 16

2.3.2 Physical quality 17

2.3.3 Environmental quality 19

2.3.4 Project facilities 19

2.3.5 Regional facilities 20

2.3.6 Service quality 20

2.3.7 Relationship between customer satisfaction and word of mouth 22

2.4 Conclusion 24

Chapter 3: RESEARCH METHODOLOGY 25

3.1 Overview 25

3.2 Research purpose 25

3.3 Research design 26

3.4 Item generation 26

3.4.1 Overall customer satisfaction scale 26

3.4.2 Scale to measure service quality 28

3.4.3 Scale to measure customer satisfaction 29

3.4.4 Scale to measure word of mouth 34

3.5 Pilot test 34

3.6 Main study 35

3.6.1 Sampling 35

3.6.2 Sample size 36

3.6.3 Data analysis techniques 36

3.7 Conclusion 37

Chapter 4: DATA ANLYSIS AND FINDINGS 38

4.1 Overview 38

4.2 Respondents demographics 38

4.3 Scale assessment 39

4.3.1 Reliability testing (Cronbach’s Alpha) 40

4.3.2 Exploratory factor analysis 42

satisfaction 4.3.2.1 Exploratory factor analysis with determinants of customer42 4.3.2.2 Exploratory factor analysis with overall customer satisfaction and word of mouth 45

4.4 Testing research model and hypotheses 45

4.4.1 Testing correlations between all constructs 45

4.4.2 Testing research model and hypotheses 46

4.4.2.1 The relationship between determinants of customer satisfaction in the apartment industry and customer satisfaction 46

4.4.2.2 The relationship between overall customer satisfaction and word of mouth in the apartment industry 49

4.5 Conclusion 50

Chapter 5: CONCLUSIONS AND IMPLICATIONS 51

5.1 Overview 51

5.2 Conclusions of the study 51

5.3 Implications of the study 51

5.3.1 Theoretical implications 51

5.3.2 Practical implications 52

5.4 Limitations and recommendations for future research 52

List of References 54

Appendix 1- Questionnaire (Vietnamese version) 60

Appendix 2- Observed variables 63

Appendix 3 - Descriptive statistics of variables 65

Appendix 4 - Reliability analysis- Cronbach’s Alpha 66

Appendix 5 - Factor analysis 69

Appendix 6 - Regression result 71

List of Tables

Table 2.1 Service quality dimension definitions (modified from Zenithal et al.,

1990) 22

Table 3.1 Scale to measure service quality 29

Table 3.2 Scale to measure customer cost 32

Table 3.3 Scale to measure physical quality 32

Table 3.4 Scale to measure environmental quality 32

Table 3.5 Scale to measure project facilities 33

Table 3.6 Scale to measure region facilities 33

Table 3.7 Scale to measure customer satisfaction 33

Table 3.8 Scale to measure word of mouth 34

Table 4.1 Demographic profile of respondents 38

Table 4.2 Reliability of measurement items 41

Table 4.3 EFA result for construct measurement scales (2nd times) 43

Table 4.4 Total variance explained 44

Table 4.5 EFA result for construct measurement scales 45

Table 4.6 Correlation matrix 46

Table 4.7a Model summary 47

Table 4.7b ANOVAb 47

Table 4.7c Coefficients 48

Table 4.8 Summary of hypotheses testing results 49

Table 4.9a Model II summary 50

Table 4.9b Coefficients 50

List of Figures

Figure 1.1 Structure of Thesis 12

Figure 2.1 Research model of customer satisfaction 24

Figure 3.1 Research process 27

Figure 3.2 Response rate 36

Figure 4.1 Means of joining of respondents 39

Figure 4.2 Relationship between determinants of customer satisfaction in apartment industry and customer satisfaction. 47

Figure 4.3 Relationship between overall customer satisfaction and word of mouth in apartment industry 49

Chapter 1: INTRODUCTION 1.1 Overview

This chapter presents an overview of the research, the Background to the study, Problem statement, purpose of the study, objectives of the study, research questions, significance of the study, and structure of thesis

1.2 Background to the study

Customer satisfaction is one of the key issues for companies in their efforts toimprove quality in the market place Most businesses have their own targets forbeing profitable They have carefully planned and implemented strategies, but theyall have something in common – a customer Business purposes are based oncustomers and if the company wants to be successful, it has to concentrate on them.This means determining customers’ needs, responding to their requirements andmaintaining customer satisfaction by assuring quality in company’s operations.Besides, customer satisfaction is so important, because satisfied customers spreadpositive word of mouth which attracts more new customers, and then companieswill sell more and gain high profits (Garson 1993, 5.)

The apartment industry in Vietnam recently formed and flourished in recent years.The development of the apartment industry has contributed greatly to theurbanization of Vietnam Currently, however, the apartment market in Vietnam hasfallen in the general downturn of the economy Project investors such as Hoang AnhGia Lai are decreasing their prices in a number of new apartment projects as much

as 40% Other projects such as the Discovery Complex apartment project in Hanoi,Dai Thanh project, etc are experiencing a similar depreciation

Competition between investors is fierce among apartment products as well as othercommodities in the market Therefore, when consumers decide to buy or investproperty goods, customers will consider many factors that affect their decision tobuy and satisfy their life needs Apartment investors must understand these factors

to build an effective business strategy

VNR survey data of property report (2009-2010) indicates that, the most important

factor for customer satisfaction is the location of the project (gaining an advantageposition of 71.2%) Next is the project design factor In addition to these factors, thedecision to buy is based on the flow of information relating to apartment optionsbefore buying This is where word of mouth has a large influence In order toincrease sales, investors need to understand the factors affecting customersatisfaction and enhance positive communication activities to develop more newcustomers.

1.3 Problem Statement

The Vietnamese economy is developing in accordance with Party economic policy.The population’s incomes was increased dramatically, demand for housing alongwith a growing Current, source of housing supply from many Vietnam and foreignreal estate companies are quite diverse

When Vietnam integrated into the world economy, conceptions about the apartmentindustry gradually changed along with the developing of the economy Today,owning an apartment is proud choice, especially for young people because interiordecorations of apartments that are modern, luxurious and similar to 4 or 5 starhotels Each apartment is designed close to public services, such as supermarkets,Asian and European restaurants, swimming pool, multi gym, postal services,banking, kindergarten, office of the company, etc as a miniature city, so that peoplecan use the utility on the spot without having to go far, etc

In order to meet this demand, many construction companies have invested in thissector Compared to just two years ago, this year the apartment industry hasdiversified profusely

Due to the increased competition experienced between firms, customer satisfactionhas become more important Good product and quality differentiates betweenproducts, ensures consumer loyalty and may lead to increased market share

In Vietnam, empirical studies on the state of customer satisfaction in the apartmentindustry are very scant The increase competition in the apartment industry inVietnam and the growth trend in real estate supply for the past decade, does not

provide empirical support for the claim that customer are satisfied with the qualitydelivered by firms in the industry It is necessary to increase understanding of thefactors that drive customer satisfaction in this industry in order to providemanagement with empirical basis for developing effective marketing strategies.

1.4 Purpose of the study

Currently, customers spend a large amount of money to buy an apartment but thebuild quality and services provided are very low In some apartment projects, aftertwo years from purchase date, the walls are cracked, sanitary ware is rusted , etc.despite, in the purchase apartments contract have recorded in detail of interiorconstruction materials and structural apartment, when building investors havearbitrarily changed without notice to customers A series of accompanying utilityservices such as entertainment place, parking, etc that investors introduced tocustomers when signing purchase contracts that are not included in the utility ofbuilding

It is very necessary to research the service or product quality because of affectingcustomer satisfaction, creating belief in investing and residing in apartment

For the above identified research problem, the main purpose of this study is toanalyze the factors related to overall customer satisfaction and intention to engage inword of mouth activity in apartment industry in Vietnam

1.5 Objectives of the study

The following are the specific objectives of this study:

- To examine the determinants of customer satisfaction in the apartment industry in Vietnam

- To identify the relationship between customer satisfaction and word of mouth communication

communication in the apartment industry in Vietnam?

1.7 Significance of the study

This study is significant in evaluating customer satisfaction in the apartment

1.8 Structure of Thesis

The study is organized into five chapters (Figure 1.1)

Figure 1.1 Structure of Thesis METHODOLOGY

Chapter two reviews relevant literature, concepts and theoretical framework: overallcustomer satisfaction, factors influence on customer satisfaction, research model,

hypothesis and chapter summary.

Chapter three provides the methodology of this section It focuses on the research perspectives, data collection It identifies the hypotheses and explains in detail the main constructs and concepts as well as their indicators and measurements Chapter four presents the data analysis and resulting and findings

Chapter five presents the conclusions and implications

CHAPTER 2: LITERATURE REVIEW

2.1 Overview

The previous chapter introduces an overview of the study background, the research

of objective and the research questions This chapter provides a detail review of relevant literature This chapter covers brief concept and theoretical framework: overall customer satisfaction, determinants of customer satisfaction, research model, hypothesis and chapter summary.

2.2 Overall customer satisfaction

2.2.1 Concept of customer satisfaction

Customer satisfaction is a key element in the business strategies and goals of allbusinesses in today’s competitive market (Gro’nroos, 1984; Lovelock & Wirtz,2007; Anderson, Fornell, and Lehman, 1994) There are many concepts of customersatisfaction defined by many authors ‘‘Satisfaction is a person’s feeling of pleasure

or disappointment resulting from comparing a product’s performance (outcome) inrelation to his or her expectation’’ (Kotler & Keller, 2006 p 144) Satisfaction is a

‘‘psychological concept that involves the feeling of well-being and pleasure thatresults from obtaining what one hopes for and expects from an appealing productand/or service’’ (WTO, 1985) Customer satisfaction is “as an attitude-likeadjustment following a purchase act or a series of consumer product interactions”Youjae Yi (1990 cited in Lovelock & Wirtz 2007) Customer satisfaction is ‘‘aconsumer’s post-purchase evaluation and affective response to the overall product

or service experience’’ (Oliver, 1992) ‘‘Satisfaction is merely the result of thingsnot going wrong; satisfying the needs and desires of consumers.’’(Besterfield 1994);According to Gyasi and Azumah (2009) satisfaction is “The process of customeroverall subjective evaluation of the product/service quality against his/herexpectation or desires over a time period.”

Admittedly, satisfaction is more complicated to define to accurately fit everycontext and measure In the words of Oliver (1997), “everyone knows what

[satisfaction] is until asked to give a definition Then it seems, nobody knows”.From marketing perspectives, customer satisfaction has multi-dimensionality Theobject of customer satisfaction may be varied and can be related to differentdimensions of multiple experiences with product/service provider (Surenshchandar

et al 2002 cited in Satari, 2007) Besides, the product or service quality there can be

several dimensions (Gro¨nroos, 2000, 2001; Edvardsson, 2005), such as what the

product offers, product or service reliability, timeliness, friendliness of the serviceproviders, and the like Therefore, depending on the purpose one wants to achieve,one can relate satisfaction to any object of interest

Hence, there are a lot of definitions of customer satisfaction as well as a lot ofcontroversies about it Providing a precise definition of satisfaction is difficult.However, we can understand customer satisfaction as follow: "This is the response

of consumers to meeting consumer’s needs" (Oliver 1997, 13) This definitionimplies that satisfaction is consumers’ satisfaction in the consumption of products orservices because that meet their expectations, including the level of satisfaction onboth the desired level, equal to the desired level and also less than the desired level.Thus, in order to meet the research objectives, the definition of customer satisfaction

in apartment industry is defined as follows:

- The expectations of customers resident in apartments compared with reality

of their experience

- Benefits received when living in that apartment

2.2.2 Determinants of customer satisfaction.

Many factors drive customer satisfaction that need to be examined in order toreliably measure it Satisfaction is an overall customer attitude towards products, or

an emotional reaction to the difference between what customers anticipate and whatthey receive, regarding the fulfillment of some need, goal or desire (Hansemark andAlbinsson, 2004) Satisfaction is a person’s feeling of pleasure or disappointmentresulting from comparing his/her expectation of a given experience with the product

or service If performance fails to meet expectations, the customer will be

dissatisfied If the performance matches the expectations, the customer is satisfied.

If the performance exceeds expectations, the customer is highly delighted (Kotlerand Keller, 2006)

In the apartment industry, determinants of customer satisfaction have not to datebeen well researched Sale (2008) observed that building features, such as number

of bedrooms, size and location of kitchen, quality of housing units were stronglyrelated to customer satisfaction Also satisfaction with neighborhood facilities such

as schools, health care, shopping and community social centre has been noted to be

an important factor of customer satisfaction The research of Djebarni and Albed(2000) assessed and compared residents’ satisfaction with their housing andenvironment in the three housing schemes in Yemen They gave variables in model

of housing satisfaction measurability are housing environment (the dwelling unit,neighborhood and community services) and housing quality (dwelling interiorschedule, dwelling exterior schedule, and dwelling environment schedule) In theinterview, residents showed that the level of satisfaction with their neighborhoods isthe most important issue The most important factor combined with neighborhoodsatisfaction was privacy, a reflection of the cultural background in Yemeni society

Oh (2000) in her study on housing satisfaction in Bandar Bare Bang, Malaysia,revealed that while the residents were satisfied with the space and cost of houseowned, they were dissatisfied with the size of the kitchen, plumbing, and publicfacilities such as recreational areas, playground, taxis and bus services in the area.The research of Tsembelis et al (2003) indicated that housing satisfaction wasinfluenced by the surrounding neighborhood, patterns of social interaction,satisfaction with the management practice of repair, tenant involvement, besides thequality of home itself

The study of Phillips et al (2005) examined the role of residential satisfaction(satisfaction with dwelling unit, estate, and district) in mediating the effects ofdwelling conditions (interior environment and exterior environment) on

psychological well-being He provided dwelling conditions factors that affect onolder residents satisfaction and psychological well-being.

The study of Tu and Lin (2008) identified the internal evaluative structure withwhich Taipei City's residents assessed the quality of their residential environment inhigh-density and mixed-use settings In the study, The principal component analysisresult reveals a multidimensional evaluative structure of residential environmentquality perceived by Taipei City's residents, which consists of six evaluation scales(i.e urban planning and design, security and social relationship, transportation andcommercial services, residential atmosphere, environmental health, and facilitymanagement) with eleven underlying factors

Amole (2009) investigated the characteristics of residence halls in Nigeria thatcorrespond with high levels of residential satisfaction among students His studyindicated that the variables which explained satisfaction were the social qualities ofthe residences (especially, the social densities) the kitchenette, bathroom, andstorage facilities and some demographic characteristics of the students

In 2009 Nahmens and Ikuma surveyed customer satisfaction with service quality,and assessed the correlations between various factors on home buyer expectationsand their perceptions of service quality

The study of Yau et al (2009) used the Building Quality Index (BQI) developed byThe University of Hong Kong to indicate determinants of building performance.Those are architecture, building services, operations and maintenance, externalenvironment, and management approaches

Based on the above review of the literature, in this study will examine customers’satisfaction through the following determinants are customer cost, physical quality,environmental quality, service quality, project facilities, and region facilities

2.3 Hypotheses and model

2.3.1 Customer cost

Customer cost refers to the price of a product and includes the purchase costs, usecosts and post-use costs that customers must absorb to own the product In this

study, customer cost relates to the expense of initial purchase as well as the expense

of subsequent maintenance

Price is seen as consumer awareness of abandonment or sacrifice of something inorder to own a product or a service (Zenithal, 1988) Price of the product or servicecan be greatly influenced by the perception of product quality, service, satisfactionand value Some Researchers have found that there is a significant relationshipbetween price and satisfaction customers (Varki and Colgate, 2001) They showedthat after buying a product, the perceived price positive impact on customersatisfaction

In the apartment industry, customer cost plays an important role in conveyingcustomer satisfaction In which, price and support credit is one of the importantfactors Based on the above literature, the first hypothesis between feeling aboutcustomer cost and the level of customer satisfaction covariant relations, as specific:

H1: Customer cost has a significant positive direct effect on overall customer satisfaction.

2.3.2 Physical quality

Quality of housing is a combination both of user requirements and user satisfaction.The main source of many problems occurs as a result of health, safety and physicalproblems caused by the condition of the apartment The quality of the walls, qualitythe floors, windows, doors and paint are all indicators of the apartment (Ukoha andBeamish 1997, Salleh, et al 2011)

In apartments, the quality of the walls is important Major cracks result in majorrepairs The materials use for the walls also affect building temperature While,materials of floor in apartment are fully cemented, residents can use other materialsbased on their preference

Besides that, quality windows provide good ventilation and air circulation Ifwindows are unable the temperature in apartment will rise, and residents will feeluncomfortable This also can affect mental health, especially for children and elders

Besides, in order to distinguish an apartment were in a good quality or not werebased on the architecture from internal and external aspects and also the nearby area(Sale 2011) Internal architectural features include the dwelling size (Turkoglu1997,Chi and Ann 1979, Liu 1999), the size of the living room, bedroom, the kitchen,toilets and washing area (Sale et al 2011, Poke, Abdul-Mushin 2010), the number ofbedroom (Ibex and Amole 2010, Nurhayatii Sebli, Bujang Ahmad Ariffian 2008and Ilesanmi 2010), the location of the bedroom and the size of the dining room(Ukoha and Beamish (1997) laundry and washing area (Mohit et al 2010).

The combination of size of living room, bedroom, dining room, toilets andbathroom, kitchens are the main issues studied by various scholars since 1980s.Number and location of bedroom, kitchen, commode, laundry, and washing areamust be considered carefully to construct quality apartments

Lighting is also a basic need It was rated a priority concern for users after healthand safety Lightings is really emphasized in new construction It influences mentalhealth, while the lack of it will contribute to mental disorder (Ibem and Amole2011) Lighting indicators consists of the following:

a) Natural lighting (Djebarni and Abed 1998, Liu 1999, Calvert 2009, Ibem andAmole 2011, Pacione 1984, Ilesanmi 2010, Savasdisara et al 1989, JianGe, KazunoriHokao 2006)

b) Artificial lighting (Djebarni and Abed 1998, Chi and Ann 1979)

c) Quality of lighting (Kincaid 1994)

Natural lighting is adequacy of daylight distribution within the apartment Artificiallighting is powered by electrical energy such as the lamp Nowadays, artificiallightings is found everywhere in an apartments in the living room, bedrooms, toiletsand in all public areas of the building Both natural lighting and artificial lightingaffect the quality of lighting in the apartment It cause physical and mental (Jeongand Lee 2006)

Besides, the basic requirement in apartment such as water pressure, sewerage is afundamental of the quality of apartment that can affect human psychology, social

and economic (Nurhayatii Sebli, Bujang Ahmad Ariffian 2008) Similarly, todrainage, it is important to avoid any health problem and cleanliness problem It willtake care by the apartment management Therefore, the physical quality has acontribution on customer needs The second hypothesis is proposed as follows:

H2: Physical quality has a significant positive direct effect on overall customer satisfaction.

The apartment is not only a place to live but also a place to rest, relax andcommunicate with the community So, environmental quality should be noted.Consequently, the third hypothesis is proposed as follows:

H3: Environmental quality has a significant positive direct effect on overall customer satisfaction.

2.3.4 Project facilities

In general, project facilities are necessary to enhance resident's daily activities.Moreover, most daily activities occur in the apartment building, so the basic utilitiesare the necessity in designing apartment Utilities and services elements are parkingplace, lobby, ladder, lift, etc

In apartment building, ladder and lift are necessary They are essential for access

Storage space in apartments is connected with apartment satisfaction Most of theapartments lack adequate storage space Parking is also a vital contribution tocustomer satisfaction From above problem, the forth hypothesis is proposed asfollows:

H4: Project facilities have a significant positive direct effect on overall customer satisfaction.

2.3.5 Region facilities

In the apartment industry, region facilities factor is related to location According toNicola (2003) appropriate location and accessibility of to service delivery andinfrastructure are the key attributes to make the house adequate and meet theinhabitants’ needs Convenience of location will give benefits to owners as well asusers because it will be easy for them to do their daily activities conveniently It alsowill contribute to better living condition Mohit et al (2010), Kellekci & Berkoz(2009), Pushpa and Rosadah (2008) state that location choice near to the towncentre genuinely influences user preference Turkoglu (1997) and Kellekci &Berkoz (2009) found that accessibility to educational institutions such as primaryand secondary school, for instance, clinics and hospitals are crucial indicators thatinfluences user preference Mohit et al (2010), Calvert (2009), Ibem and Amole(2011) assert that proximity to recreational parks is listed as quality in housing.Users can spend their time relaxing and chatting with neighbors there

Mohit et al (2010), Salleh (2011) and Kellekci & Berkoz (2009) ascertained thatusers prefer strategic locations near shopping centers and markets or shops becausethey can go shopping easily by walking So, it is important to assess region facilitiesthat influence the residents' preference as well as to enhance the quality of theapartment From above problem, the fifth hypothesis is proposed as follows:

H5: Region facilities have a significant positive direct effect on overall customer satisfaction.

2.3.6 Service quality.

Satisfaction also depends on product and service quality Kotler and Keller (2006)

stated that quality is the totality of features and characteristics of a product orservice related to satisfying implied needs.

For decades, many researchers have developed a service perspective (Zeithaml,

2009, Ramsaran and Fowdar, 2007) Chang (2008) notes that the concept of servicequality should be generally approached from perspective of the customers becausethey may have different values, different ground of assessment, and differentcircumstances Parasuraman, Zeithaml and Berry (1990) says that service quality is

an extrinsically perceived attribution based on the customers’ experience of theservice encounter Especially, Lu and Sock, 2008 showed that improved servicequality will help companies ensure greater customer satisfaction If a companyprovides superior service, it will increase profitability and encourages positive word

of mouth recommendations to potential customers (He stein and Gamier, 2006)

In this study, the service quality assessment base on the model of Zenithal et

al that model consists of five components with five characteristic (Table 2.1) as:Appearance, Reliability, Timeliness, Knowledge and Empathy Although, servicequality and satisfaction are two different concepts, they are closely related to eachother The previous study has shown that service quality is the cause of satisfaction(Cronin and Taylor, 1992) because quality relate to service delivery, satisfactiononly to be assessed after using that service However, service quality are improvedgood but not based on customer needs, consumer has never been satisfied with thatservice Therefore, quality is must ultimately be evaluated from the customer’sperception The sixth hypothesis is proposed as follows:

H6: Service quality has a significant positive direct effect on overall customer satisfaction.

Table 2.1 Service quality dimension definitions (modified from Zeithaml et al., 1990)

Service quality Original definition Tailored definition for

Appearance Visual impression of the service Visual impression of the

organization: facilities, home builder: niceequipment, and personnel brochures, Well decorated

sales office, sales personnel,etc

Reliability Consistency of performance and Consistency of performance

dependability and dependability of the

service before, during andafter the home-buyingprocess

Timeliness Timeliness of service Timeliness of the service

before, during and after theHome buying process.Knowledge Possession of the required skills Appropriate knowledge and

and knowledge to perform the skills required to performservice Ability to inspire trust the service before, duringand confidence and after the home-buying

process

Empathy Politeness, respect and Politeness, respect and

friendliness of contact friendliness of the salespersonnel Individualized personnel or any otherattention – making the effort to builder’s employee thatknow customers and their directly interacts with theneeds home buyers

2.3.7 Relationship between customer satisfaction and word of mouth

Word of mouth has an important influence on the consumers’ behavior and salesgrowth because through word of mouth, the company can get more customers fasterthan by advertising and direct mail (Procter and Richards, 2002) Especially,information received through word of mouth is reliable because consumers haverecognized product characteristic with previous purchasing experiences Consumershave been found to rely on word of mouth to reduce the level of perceived risk andthe uncertainty that are often associated with service purchase decisions (Murray,1991) Compared to purchasers of goods, Murray (1991) found that servicepurchasers have greater confidence in personal sources of information as well as agreater repurchase preference for personal information sources

In approach to satisfaction as a post-choice evaluative judgment regarding a specificpurchase selection, satisfaction is understood by its transaction specific component(Oliver 1981) Another approach sees satisfaction as the customers’ evaluations ofmultiple experiences with the same product or service provider over time (Boltonand Drew 1991), given that this cumulative construct incorporates previousexperiences and the cumulative satisfaction construct will contain an element ofcustomer attitude (Westbrook and Oliver 1991) Subsequent studies, however, havedemonstrated that, in addition to the cognitive view, customer satisfaction alsocontains emotional components (Oliver and Westbrook 1993) A recent study(Martin et al 2008) agrees with Zeelenberg and Pieters (2004) in suggesting thatemotionally based satisfaction is a stronger predictor of future behavioral intentionsthan traditional cognitive measures The level of customer satisfaction has an effect

on two purchase behaviors, namely, repurchase intentions and word of mouth(Oliver 1980) The likelihood of customers distributing word of mouth will depend

on their satisfaction level for at least two reasons First, the extent to which theproduct or service performance exceeds the customer’s expectations might motivatehim or her to tell others about his or her positive experience Secondly, to the extentthat the customer’s expectations are not fulfilled, possibly creating a customer regretexperience and this customer will engage in word of mouth behavior as a form of

“venting” his or her negative emotions, such as anger and frustration, warningothers, and/or seeking retaliation (Oliver 1997) Indeed, there are a lot of studiessupporting for the significant effect of satisfaction on word of mouth (Brown et al

2005, Swan and Oliver 1989) Thus, based on the above definitions and suggested

relationships in the literature, the following hypothesis is formulated: H7 Overall customer satisfaction has a significant positive direct effect on word of mouth.

Basing on the above literature review and research question, to test the model ofcustomer satisfaction and intention to engage in word of mouth activity Thisresearch uses customer satisfaction model developed by Zadkarim S and Emari H

(2011) because this model describes the basic components of customer satisfaction

in apartment industry ( Figure 2.3) The researcher also assumes that there should be

some adjustments of the measurement scale in order to make the research model

more suitable for the apartment industry in Vietnam

Figure 2.1 : Research model of customer satisfaction

RegionCustomer cost Facilities

The theoretical studies show that customer satisfaction in the apartment industry

depends on customer cost, physical quality, environmental quality, project facilities,

region facilities and service quality. Service quality item is an important item

proposed in the research model

2.4 Conclusion

This chapter has examine theoretical framework of customer satisfaction Six

factors - customer cost, physical quality, environmental quality, project facilities,

region facilities and service quality - are considered to influence customer

satisfaction and intention to engage in word of mouth activity On that basis, a

customer satisfaction model with seven research hypotheses has been proposed The

next chapter will present the research methodology

CHAPTER 3: RESEARCH METHODOLOGY 3.1 Overview

The previous chapter presents the theoretical framework for the research, proposed research model along with the research hypothesis This Chapter presents research methodology used to build and assess the measurement scales, the statistical techniques employed to analyze the data, and testing the research hypotheses and research model as well.

3.2 Research purpose

The study purpose is a broad statement of what the research hopes to achieve.According to purpose, study could be broadly divided into descriptive, exploratory

and explanatory (Saunders et al., 2003; Cooper and Schindler 2006).

Descriptive research: It portrays and accurate profile events or situation It involves present facts about a phenomenon as it is perceived or as it is in reality Explanatoryresearch: Explanatory research establishes causal relationship between variables It studies problems and situations with the main purpose of explaining relationships between variables (Saunders et al, 2003) They are also used when the purpose of the study is to answer ‘why’ in a given context

Exploratory study: This is conducted to explore and find out what is happening or toseek new insights about a phenomenon in a new light” (Robson, 2002) It is usedwhen a researcher wants to know a deeper understanding of a problem, or where thearea of study is so new It, therefore, involves the use of methods like searching forlibrary materials, asking for experts’ opinions, and conducting focus groupinterviews

Since the purpose of the study involve both qualitative and quantitative results, themethodology has been proposed by many authors to be appropriate in some cases.This study combines all three: explanatory, descriptive and exploratory purposes.Firstly, the study is descriptive in that it seeks to describe in detail the determinants

of customer satisfaction in the apartment industry, thus giving an in-deptunderstanding of the reality of customer satisfaction with apartment quality in

Vietnam and to better understand relative importance of quality dimensions to thecustomer Secondly, the study is explanatory since it will seek to determine theimpact of factors influencing overall satisfaction Thirdly, this study is exploratory

in that it is still unknown in apartment industry in Vietnam, whether customer aresatisfied and what are their perception of the apartment industry in Vietnam

3.3 Research design

The research design of this study is shown in figure 3.1 The current study employs

a descriptive method Data for this study was collected using a survey technique.This technique “provides a quick, efficient and accurate means of assessinginformation on a population, especially in the case of a lack of secondary data”(Zikmund, 1997- cited in Quan, 2006)

3.4 Item generation

Measurement scales used to measure the research constructs in this study werebased on previous studies that were discussed in the literature review Eightconstructs - physical quality, customer costs, environmental security, projectsituation, project facilities, word of mouth, service quality, and customer satisfaction

- were operationally defined in order to test the research model

3.4.1 Overall customer satisfaction scale

In the last decade, number of national and international barometers have beenintroduced The development of national customer satisfaction barometers can besummarized as follows (Johnson et al., 2001):

1 The first attempt to develop and install a national measure for customersatisfaction was reported in Sweden in 1989 Professor Claes Fornell was the mainarchitect of the Swedish National Customer Satisfaction Barometer

2 The national quality and satisfaction barometer of Germany (The GermanCustomer Barometer––Quality and Satisfaction) focuses mainly on the micro-economicallevel of business organizations and it was established in 1992

Figure 3.12 Research process

Literature review

The first draft ofquestionnaireGroup discussions

3 Professor Claes Fornell supervised the conduct of the preliminary analysis of theAmerican Customer Satisfaction Index (ACSI) in 1993 This particular index constitutes

an effort to adopt the Swedish satisfaction barometer in America, with Someimprovements, revisions, and reconciliation The ACSI provides complete data since1994

4 It should be noted that the European Union is interested in the development andinstallation of a comparative system of national satisfaction indices since 1998 Thepreliminary study in a limited number of industry sectors was conducted within 1999,while results for the European Customer Satisfaction Index (ECSI) were published in2000

5 Other individual efforts of establishing national satisfaction indices in theEuropean area concern Denmark, Austria, France, The Netherlands, Switzerland, andothers

6 Both Taiwan and New Zealand measure and report the customer satisfaction of alimited number of companies since 1995 Also, the preliminary survey for the installation

of a permanent satisfaction barometer in South Korea was conducted in 1998, while inMalaysia, a pilot survey is planned for the next year

In this study customer satisfaction was measured using a scale developed by Oliverand Swan (Burns and Neisner, 2006), because it was necessary to modify the items

to relate to apartment buying experience All items were measured using five-pointscales ranging from one “Strongly disagree” to five “Strongly agree”

3.4.2 Scale to measure service quality

To measure service quality in the apartment industry and customer satisfaction, theresearcher has used the five SERVQUAL dimensions modified to measure servicequality (Table 2.1) The purpose of SERVQUAL is to measure current servicequality with diagnostic abilities It is not predictive This assessment model wasused in this study with some modifications to reflect the housing industry domain.This model (Table 2.1) defines service quality as it relates to the discrepancybetween apartment buyer’s service expectations and service experienced Apartment

buyer’s service expectations are influenced by past experiences, communication(builder’s advertisement, brochures, etc.) and personal needs Service experienced isthe actual service apartment buyers received from their builders during the entireprocess from sale through to the of the warranty period.

This model also identifies five dimensions that apartment buyers use to assessservice quality and represent the evaluative criteria of the current study To quantifythe five dimensions of service quality in the home building context, it was necessary

to tailor the original definitions and provide a simple, conceptually sound definition

of each dimension of service quality within the home-building process However,after discussion with group of customers, some complement and elimination havebeen done In this study, because service quality factor is research on overall, itsscale consists of 5 items as follows: (table 3.1)

Table 3.1 Scale to measure service quality

Company ensure consistency of performance and dependability SERQ1

I feel safe in my transaction with company SERQ5

3.4.3 Scale to measure customer satisfaction

Philips et al 2005 proposed that assessment of dwelling conditions include at leastten dwelling attributes (e.g lighting, levels of crowding and temperature) and tenneighborhood attributes (e.g lighting in corridor, lobby, public space, stairs, lift,escalator, air and noise pollution)

Djebarni and Al-Abed (2000) suggested a model to measure residents’ satisfaction

by two variables (housing environment and housing quality) Housing environment

items are dwelling unit, neighborhood and community services Housing qualityitems are interior schedule, dwelling exterior schedule and dwelling environmentschedule.

In the research of Tu and Lin (2008), environmental quality was measured by sixvariables These variables are citywide housing status (dwelling types), inhabitantdensity in typical residential zones (dwelling unit , avenue floor area per dwellingunit, avenue floor area per person), mixed use intensity, and spatial features intypical residential zones (typical block size, building height, side walk, streetscope)

Assessment of service quality in the model of Nahmens and Ikuma (2009) identifiedfive dimensions These dimensions are apparent (visual impression of the serviceorganization: facilities, equipment and personnel), reliability (consistency ofperformance and dependability), timeliness (timeliness of service), knowledge(possession of the required skills and knowledge to perform the service, and ability

to inspire trust and confidence), and empathy (politeness, respect and friendliness ofcontact personnel, individualized attention, making the effort to know customersand their needs)

In the study of Yau et al (2009), a list of building factors that fit the institutionaland cultural settings of apartment buildings in Hong Kong was identified for thedevelopment of the Building Quality Index (BQI) These factors are architecture(size, plan shape, headroom, windows, noise reduction, and open space), buildingservices (water supply, drainage, refuse disposal, lift), external environment(density, adjacent use, air quality, aural quality, visual obstruction, thermalcomfort), operations and maintenance (cleaning, pest control, refuse handling,drainage condition, unauthorized alteration, water quality), and managementapproaches (owners’ duties, documentation, emergency preparedness)

Residential satisfaction in the research of Amole (2009) conceptualized as influenced

by objective and subjective measures of housing attributes and the demographiccharacteristics of the students Objective physical variables include the

morphological configuration of the hall, number of persons in the bedroom, andpresence or absence of a reading room, common room, kitchenette and a balcony(terrace at the back of the bedroom) Subjective variables include attitudes aboutcomfort, bedroom furnishings, number of persons in the bedroom, number ofpersons on the floor, privacy in bedroom, sanitary facilities, number of personsusing the sanitary facilities, the kitchenette in general, design of the hall, number ofpersons in the hall, and the location of the hall.

Opoku and Muhmin (2010) suggested numerous specific housing attributes andhouse purchase factors These are financial/economics, private living space,aesthetics, local environment, air quality, public living space, building design,proximity to relatives, outdoor space, and street location

Customer satisfaction in the model of Zadkarim S and Emari H, (2011) include sixdimensions These dimensions are grouped under different questions Thesedimensions are: “customer cost” (includes the price and credit), “physical quality”(includes the cracks, kitchen, lighting [electronic lighting and window to outside],water[ plumbing facilities, water quality and water pressure], drainage, commode,internal architecture), “environmental quality” (includes the traffic, noise andregional security), “project facilities” (includes the parking, lobby, externalstaircase, lift, front and warehouse), “region facilities (includes the existence ofpark, primary school and at least 5 shop

In this study, the scales of customer satisfaction dimensions were generated via aseries of focus groups Specifically, the focus group comprised teams of apartmentcustomers in Vietnam Focus group participants were instructed to formulatequestions by using the dimensions suggested by past research (Amole, 2008;Djebarni and Al-Abed, 1998; Zadkarim and Emari, 2011 and etc.) Some changeshave been made to make the scale more relevant to the real estate service inVietnam

Table 3.2 scale to measure Customer Cost

Service fees in apartment (security, electric, water, garbage, COST2parking, etc) are very reasonable

Company gives support to customer interest rate for buying COST3apartment

Table 3.3 scale to measure Physical quality

Kitchen of apartment is designed reasonably PHYQ1Apartment’s design ensure lighting ( electronic lighting and PHYQ2window to outside)

Apartment’s water (plumbing facilities, water quality and PHYQ3water pressure) are good

Apartment’s internal architecture is designed luxurious PHYQ5

Table 3.4 scale to measure environmental quality

Apartment’s traffic is convenient and ensure firefighting or ENVQ1rescue standard

Table 3.5 scale to measure Project facilities

Apartment project’s lobby is designed wide and reasonable PROF1

In Apartment, parking is adequate to resident demand and PROF2security

Apartment project’s external staircase is designed reasonable PROF3Apartment project’s lift is good and safe PROF4Front attractiveness and quality are designed beautiful PROF5

Table 3.6 scale to measure Region facilities

There are many recreational activities (play area, gym, etc.) REFA1around the apartments to meet customers’ need

There are many public services (supermarket, cafeteria, REFA2primary schools, etc.) is really feeling for customers

Apartment located close to shopping areas, business (at least 5 REFA3shops, public transportation within a 5 km radius of the center)

Table 3.7 scale to measure Customer satisfaction

I am satisfied with my decision to use this apartment SAT1

My choice to use this apartment was a wise one SAT2

If I could do it over again, I’d choose a different company SAT3Using this apartment has been a good experience SAT4

3.4.4 Scale to measure customer satisfaction

To measure word of mouth in the apartment industry, this study adapted the scale

developed by Babin, Lee, Kim, and Griffin (Babin et al., 2005) Word of mouth

intentions (WOM) were assessed using three items (Table 3.8) The items measured

agreement using a 5-point Likert scale

Table 3.8 scale to measure word of mouth

Intentions to say positive things to others WOM1Recommend the apartment projects to another consumer WOM2Encourage friends and relatives to buy the apartment WOM3from this project

3.5 Pilot test

The purpose of the pilot test was to refine the questionnaire to help respondents to

avoid problems in answering questions and to increase the quality of data obtained

This phase was carried out through two steps In the first step, an exploratory study

was made with the purpose of assessing the first draft of the measurement scale The

first draft of questionnaire was made in Vietnamese Two mini group discussions

were conducted In the first discussion five real estate experts from five real estate

companies were invited The purpose of this step was examine the clarity of the

instrument and to be sure that it was sufficient to cover the study matter in reality,

from the perspective of a property professional Some amendment were made as a

result suggestions of the real estate managers

The other discussion was conducted with the participation of 15 customers The

purpose of this step was the same as that of the first, but in this case from the

customer’s perspective Some questions were adjusted on the recommendation of

the participants, such as to make the terms in the questionnaire more concrete and

3.6.1 Sampling

Some considerations for selecting the scope and methodology for sampling are cost,the accuracy of results, the speed of data collection and the availability ofpopulation elements (Donald & Pamela, 2003)

The first step in sampling is to ensure that the population is correctly defined Apopulation is the total collection of elements from which we wish to draw someconclusion

Due to the tremendous limitations of time, budget, and knowledge, this study uses aconvenient sampling technique, specifically which is a non-probabilistic samplingtechnique This is one of the least reliable sampling techniques, but it is the cheapestand easiest, and the most feasible for this study In this study the target population islimited to customers that bought apartment for residence or investment in BinhDuong province, Hochiminh city Apartment projects were chosen mainly in Ho ChiMinh City Binh Duong province, as this place has many apartment projects andcustomers have resided in apartment In Ho Chi Minh city, the apartment projectsare (1) The Manor, (2) Sai Gon pearl (3) Hung Vuong Plaza, (4) The Everich; InBinh Duong province, apartment projects are (1) New Horizon, (2) Phu CuongApartment, (3) The Canary apartment, (4) The IJC Aroma apartment

Interviewers can interviewed any customer who agrees to take part in the interview

3.6.2 Sample size

The sample size is determined by the level of precision and confidence desired inestimating the population parameters, as well as the variability in the populationitself (Canava et al 2001) Tho & Trang (2008, p 350) suggest that the issue of

‘how large’ a sample size should be, has not been entirely resolved, but does depend

on the statistical methods used (e.g Maximum likelihood, generalized least squaresand asymptotically distribution free) For EFA the sample size must be at least 4 or

5 times the number of variables in the factor analysis (from page 263 of HoangTrong Nguyen Mong Chu Ngoc research data analysis with SPSS, StatisticalPublishing House, 2005) However, some researchers suggested that the minimumsample size should be from 100 to 150 responses if using the Maximum Likelihood(ML) method Based on the number of observed variables in this study, sample sizemust be 250 or more

The sample size for this study is 250 questionnaires This number was decided afterconsidering some previous researches To obtain the desired sample size, a total of

400 self-administered questionnaires were distributed to the respondents byemployees of Becamex IJC real estate trading floor After 01 months of data collection,

237 questionnaires were returned; making effective response rate 59 % (Figure 3.1)

Non - response rate 41%

Firstly, the measures of each constructs were refined by Cronbach’s alphacoefficients The purpose of this test was to provide a preliminary evaluation and