Các yếu tố ảnh hưởng đến lòng trung thành của khách hàng trong dịch vụ thông tin di động ở khu vực hà nội, việt nam

luận văn, khóa luận, chuyên đề, đề tài, báo cáo,

A RESEARCH DISSERTATION PRESENTED

TO THE FACULTY OF GRADUATE SCHOOL SOUTHERN LUZON STATE UNIVERSITY LUCBAN, QUEZON, PHILIPPINES

THAI NGUYEN UNIVERSITY S.R VIETNAM

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE

DOCTOR IN BUSINESS ADMINISTRATION

Name: Ngo Anh Cuong (Smile) Thai Nguyen, 2013

ACKNOWLEDGMENT

I would like to express our most sincere thanks to the Management Board of the

Southern Luzon State University, Thai Nguyen University, teachers of the school have helped

me facilitate the learning process throughout

I would like to express sincere gratitude and profound Dr Nelly Mendoza,

enthusiastic teacher who have dedicated guidance, encouragement, spending time and

exchange orientation for me during this research

I sincerely thank the Board of the University of Labor and Social affair (ULSA),

colleagues in ULSA, classmates DBA1 facilitated enthusiastic help and share my experience

to help complete the dissertation

Finally, I would like to thank my best friends who have encouraged to complete my

dissertation

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CONTENTS

ACKNOWLEDGMENT i

ABSTRACT v

APPROVAL SHEET xi

Chapter 1: INTRODUCTION 1

1.1 Background of the study 2

1.2 Statement of the problem 3

1.3 Hypotheses 4

1.4 Significance of the study 5

1.5 Scope and limitation 6

1.6 Definition of terms 7

Chapter 2REVIEW OF RELATED LITERATURES AND STUDIES 10

2.1 Mobile telecommunication services 10

2.2 Hanoi mobile communication services 11

2 3 Customer loyalty 16

2.4 Affecting factors to loyal customer 18

2.5 Customer loyalty models 29

2.6 Several topics related to mobilecommunication services 31

2.6.1 Some topics researched in Viet Nam 31

2.6.2 Some topics researched Overseas 32

2.7 Conceptual framework 36

Chapter 3 METHODOLOGY……… ……….39

3.1 Research design 38

3.2 Determination of sample size 40

3.3 Sampling design and techniques 41

3.4 Research instrument 42

3.5 Data gathering procedure 43

3 6 Data processing method 43

Chapter 4: PRESENTATION ANALYSIS AND FINDINGS INTERPRETATION

OF DATA 46

4.1 Respondents profile 46

4.2 Scale values test 48

4.2.1 Services quality 48

4.2.2 Switching Barriers 50

4.3 Preliminary analysis of the component variables 52

4.3.1 Service quality 53

4.3.2 Switching barriers 55

4.4 Hypothesis test 55

4.5 Factors affecting customer loyalty 60

4.5.1 Analyzing relationship between demographics factors with service providers 60

4.5.2 Relationship beween factors affecting loyalty versus demographic factors ….67

4.5.3 Analyzing the Factors that Affect Customer Loyalty……… 75

Chapter 5: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS…… 84

5.1 Summary of results……… ……… 84

5.2 Conclusions 84

5.3 Recommendations 86

5.3.1 Demographic factors……… ……….88

5.3.2 Service quality 87

5.3.2.1 Calling quality 87

5.3.2.2 Pricing structure 87

5.3.2.3 Convenience in procedures 89

5.3.2.4 Value – add services 89

5.3.3 Switching barrier 90

5.3.3.1 Customer relationship 90

5.3.3.2 Attractiveness of other suppliers 90

REFERENCES……… ……….95

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APPENDICES……… ……… 99

Appendix 1: Questionnaire 97 Appendix 2: Descriptive statistics 101 Appendix 3: Relationship beween factors affecting loyalty versus demographic factors ………104Apendix 4: Results of Regression and correlation 160

ABSTRACT

Customer turns to be an important concern for management due to the increasing competition particularly in mobile telecommunication services Customer loyalty plays a very crucial role for achieving the competitive advantage for enterprises According to service providers, service quality - calling quality, pricing structure, value – added service, customer support services, etc, and switching barriers -loss cost, adapting cost, attractiveness of other service providers, etc, are motivational factors to maintain customer loyalty as well as an essential element for business and increasing market share Currently, Hanoi is one of the cities in Vietnam that has a great number of mobile subscribers and suppliers According to the Ministry of Information and Communication, in 2012, there were 9.1 million mobile subscribers in Hanoi In which, ,market share of the service provider as follows: Vinaphone was 31.25%, Viettel was 43.03%, Mobifone was 18.5%, Vietnammobile was 2.57% , Gtel was 4.63% and SPT was 0.02%

The main tool is a questionnaire to gather information on customer loyalty for mobile service providers in Hanoi Because the author can not have list customers of service providers Therefore, the sampling method will be conducted random sample but based on several factors: the market share of vendors, demographic (gender, age group and occupation) factors, types of services (post paid and pre- paid) Customer were selected to intervied for this research to be 400 In addition to information about the customer, the questionnaire was designed to include 42 attributes of mobile communication services that customers usually look for the Likert scale was used to rate these attributes In which, 5 is for strongly agree and 1 is for strongly disagree The Subscribers , as the respondent were interviewed irrespective if they are prepaid and postpaid customers

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The study used correlation coefficients and chi-squared test to test the hypothesis and assess the relationship between factors with customer loyalty The multiple regression model was used to evaluate the factors affecting customer loyalty

in the mobile communications market in Hanoi

Results of analyzing demographic factors (occupation, per everage income, subject payment, service providrers and using time) showed that there are relationship between these factors with customer loyalty

Result of analyzing multiple regresstion model showed that there were 7 factors affecting customer loyalty In which, the “service quality” had four component factors: calling quality, Pricing structure, value – add services and convenience in procedures The “switching barrier” had three component factors: loss cost, attractiveness of other suppliers and customer relationship According to Nguyen Duc

Ky and Bui Nguyen Hung, the “calling quality” was the strongest influential customer loyalty However, this factor was only thirth factor affecting customer loyalty after the “customer relationship” and the “loss cost” in this research The

“customer loyalty” was the strongest influential custome loyalty and the “value – add services” was the lowest influential customer loyalty

LIST OF TABLES

Table 3.1 Factors affect customer loyalty in mobile communication services 38

Table 3.2 Subscribers using mobile communication services of Vinaphone are classified by age in Hanoi, 2012………

42 Table 4.1 The distributive sample by the gender and age……… 46

Table 4.2 The distributive sample by the gender and the market share …… 46

Table 4.3 The distributive sample by services type and the market share of service providers

47 Table 4.4 The summary of the distributive sample by gender, age and type of service providers………

47 Table 4.5 Cronbach alpha of component services quality……… 48

Table 4.6 Cronbach‟s alpha of the component switching barriers ………… 51

Table 4.7 How to calculate the average value of the variable……… 52

Table 4.8 The mean value of Service quality……… 54

Table 4.9 The mean value of switching barrier……… 55

Table 4.10 Correlation coeficients of variables……… 57

Table 4.11 Correlation coefficients of switching barrier and customer loyalty variables………

60 Table 4.12 Relationship between gender with service providers……… 61

Table 4.13 Relationship between education of subscribers with selection pervice providers………

62 Table 4.14 Relationship between selection of service provider with occupation of subscrbers………

63

Table 4.15 Relationship between selection of service provider with per 64

LIST OF FIGURES

Figure 1: Proposed integrated model of service Loyalty 29Figure 2: Switching barrier model of customer loyalty 31Figure 3: Customer loyalty about mobile communication service in American 34Figure 4: The model of impacting satisfaction and switching barrier to customer loyalty the mobile communication service in Korea 34Figure 5: The proposed model for mobile communication service in Hanoi 37

LIST OF ILLUSTRATIONS

Ilustration 1-1: The market share of mobile subscribers in Hanoi, 2011 and 2012 13

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LIST OF ACRONYMS VNPT – Post and Telecommunications Corporation

VINAPHONE - Viet Nam Telecom Services Company

VMS - Viet Nam Mobile Telecom Services Company (Mobifone)

VIETTEL - Viettel telecom company

SPT - Saigon Post & Telecommunications (Sfone)

GTEL – GTel Mobile JSC (Gmobile)

HANOI TELECOM: Ha noi telecom Corporation (Vietnammobile)

APPROVAL SHEET

This Dissertation , entitled “FACTORS AFFECTING CUSTOMER LOYALTY IN MOBILE COMMUNICATION SERVICES IN HANOI, VIETNAM”, prepared and submitted by Ngo Anh Cuong in partial fulfillment of the

requirements for the degree of Doctor in Business Administration, has been examined and recommended for acceptance and approval for FINAL EXAMINATION

NELLY MENDOZA, PhD

Adviser Approved by the Committee on Oral Examination with a grade of PASSED on 2013

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Chapter 1 INTRODUCTION

Customers are invaluable assets of the business Customer loyalty is significant

to the future development of a general company or the particular mobile service providers It contributes to maintain stable profits when the subscriber reaches the saturation point, mature market and fierce competition

According to the Nguyen Duc Ky and Bui Nguyen Hung (2007), the developmental history of the mobile communication services market in Europe countries, the United States and some countries in the region such as China, Korea, Taiwan, India, and even in Vietnam showed that the general market has some

notable features: When the market is new and its rapid growth is through technological innovation, the technological cycle is more and more shorter Initially, the mobile services was a the monopolist market (monopoly technology, monopoly of scale…) and it only provided services for postpaid so customers was

tied by service contract of the provider After the market was opened, technology

becomes popular, investment costs decline, new providers enter the market, competitive pricing becomes a practice, value- adding to improve service quality is included as a strategy and customers have many opportunities to select providers Thus, in recent years the it was realized that researches have to be done on the different models about satisfaction and customer loyalty in the mobile communication services These researches were built on the ground of the traditional relationship between service quality and satisfaction-loyalty and analyzing factors affecting to customer behavior In addition, researches in Korea, China, Taiwan have showed that the mobile communication markets in these countries have many similarities with the market in Vietnam

In Vietnam, the mobile communication market has been transforming from a monopolistic market to competitive market with participation more and more service providers Therefore, customers have many opportunities to choose services less bound to the service provider The change of service providers by customers becomes phenomenal and increasing

To develop positively and sustainably for Vietnam‟s mobile market, service providers need to find ways to maintain valuable and loyal customer

1.1 Background of the study

According to the suppliers of telecommunications services, service quality, with wide network coverage, network capacity and customer care are the key driving force to maintain customer loyalty However, survey results of the Strategy Analytics with 215 suppliers who have been representing 75% of mobile subscriber worldwide poses a challenge in developing strategies to retain customers Whereby in 2011, there are 44% of global mobile subscribers to change service providers, the highest ever, with an average churn time is 27/1 Compared with a decade ago, the time for loyal subscribers with the service provider has halved (www.vnpt.com.vn/new)

So, research on factors affecting customer loyalty in mobile telecommunication services in Viet Nam is significant to discover new scale and a new theoretical model for managers In practice, they "retain" customers, as customers become more loyal then it brings the urgency especially to the three big service providers: Vinaphone, Mobiphone, and Viettel and three small and new suppliers: Gtel, Hanoi telecom and SPT as the mobile communication market in Viet Nam is on its saturation phase Likewise, research result will provide information for management to formulate effective strategy for the use of telecommunications

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resources and helping suppliers of mobile telecommunication services plan and implement more effective follow-up market activities and customer care services

1.2 Statement of the problem

Nowadays, with so many interested investors joining the market, the competition in mobile communication is becoming stiff The monopoly situation of the cellular phone market is gradually lost and was replaced by a structure where there

is strong competition resulting to a battle of strategies to attract and retain customers

by improving quality basic services, value – added services, advertising, promotion, pricing strategy and customer care Each mobile communication company tries to outdo its competitor to attract more customers which eventually provides the end users various options to choose to suit their needs

As mentioned, in Viet Nam, the mobile communication market has been moving from a monopoly market - under the control of the State, to the competitive market with faster growth of the mobile technology The technology cycle is shorter and the investment cost is decreased which has brought challenges to the new service providers when they enter this market Before 2003, there were only two service service providers in Viet Nam‟s mobile communication service: Vinaphone and Mobifone So, customers had paid high charge while they did not have many choices

of providers Currently, there are six service providers in Viet Nam‟s mobile communication service: Vinaphone, Mobifone, Viettel, Gtel Mobile, Sfone, and Vietnammobile Therefore, there is great competition in attracting subscribers The competition between service providers in the mobile communication are mainly base

on tariff reduction and continuous promote programs so that it makes waves move to provider That is the main reason why subscribers have been not loyal to the suppliers

as in the monopoly market before 2003

To increase the competitiveness of the service providers as well as to increase the market demand, the dissertation would like to seek answers to the following:

- Identify factors and quantify by scales to analyze factors affecting to customer loyalty on mobile communication market in Hanoi

- Research and analyze the factors affecting customer loyalty by statistical methods: analyze the relationship between the different factors that affects customer loyalty; to use regression and correlation method for assessing the impact of each factor to customer loyalty;

- Survey to assess the customer loyalty for the suppliers of the mobile communication services;

- Based on findings, the dissertation proposes some solutions to improve customer loyalty for the mobile communication services of the supplies

1.3 Hypotheses

Mobile communication service quality is a latent variable It cannot be measured directly but it can be determined by the following components: call quality; value – add service; price structure; convenience and customer service support Thus, measuring customer satisfaction model is a combination of component scales in mobile communication service quality

H1: Service quality has a positive effect on customer satisfaction

H1.1: Increasing the call quality will increase the satisfaction level on service quality;

H1.2: More reasonable price structure will increase the satisfaction level on service quality;

H1.3: Increasing the value - added service quality will increase the satisfaction level on service quality;

in cost), attractiveness of other providers and customer relationship

H2: Customer satisfaction has a positive effect on loyalty

H3: Switching barriers has a positive effect on loyalty

H3.1: Loss cost affects the decision of the customer to change provider;

H3.2: Adapting cost is a switching barrier to the customer;

H3.3: Higher move – in cost is a switching barrier to the customer;

H3.4: Attractive offers of other providers are switching barrier to the customers;

H3.5: Customer relationship is a switching barrier to the customer

1.4 Significance of the study

In Viet Nam, the previous research on customer loyalty has been mentioned to build customer loyalty models for mobile communication services of the providers in Viet Nam However, these studies have been not done detailed analyses on the factors affecting loyalty of customers to the mobile providers

Although previous studies have mentioned some factors affecting customer loyalty such as service quality; customer satisfaction; switching barriers; and cultural differences but some other factors such as gender, age and occupation of the customer has not been mentioned by these research

On the other hand, these do not have a research about loyal customer of the mobile communication service of the providers in Hanoi So, objectvie of the dissertation will be:

The dissertation will identify factors affecting customer loyalt Specifically, the component factors of service quality factors and switching barrier will impact how the customer satisfaction and loyalty

The dissertation conduct to analyze relationship between demographic factors with customer loyalty aims to provide practical information for administrators, new service providers who want to join or maintain their position in the mobile communication service market

Finally, the disertation result can help service suppilers to indentify key factors related

to customer satisfaction and customer loyalty while helping service providers develop and implement marketing stratergies to improve customer loyalty and limited switching wave between service providers The disdertation will also provide important information for mobile service providers so they can formulate specific strategies and plans for executing more effective marketing strategies and customer care

1.5 Scope and limitation

The scope of the study is the customers who have been using mobile in Hanoi

It includes prepaid and postpaid So, researches of the dissertation do not reflect for other provinces in the country That is one of the limitations of the dissertation

There is a big competition between providers in the mobile communication services market, so the findings apply only at the time of the study It does not effectiveness of the factors affecting the customers loyalty in the mobile information services in the long term

Mobile communication services provider is an enterprise to be licensed network

setting, providing the ground mobile communication service by the Ministry of Information and Communication

Prepaid subscriber is individuals, representative enterprises or organizations who

use prepaid mobile communication services: subscribers use prepaid mobile services and other prepaid subscribers as prescribed by the Ministry of Information and Communication

Postpaid subscriber is individuals, representative enterprises or organizations

who use mobile communication services of providers but paying the charge in the end

of the month (No 24 the Circular of the Ministry of Information and Communication, 2012)

Call quality depends on customer perception: call quality is clear; not without

dropping the call when the call is done; not happen congestion when the call is

connected; not losing when your messages send and receive; the scope of coverage

Value – added service are types of services and convennience as internet,

waiting call, international roaming… and convenience of use of value-added services, value-added services are up-to-date…

Convenience in procedures are subscription and change procedures as ease of subscribing and changing service and staff friendliness, when subscribing and changing

Price structure is pricing and other prices as reasonability of price, variety of price schedule and possibility of freely choosing price schedules

Customer services support are variety of customer support systems, speed

of complaint processing, ease of reporting complaint and friendliness when reporting complaint

Loss cost is perception of loss in social status and performance associate with

the churn of service from an existing carrier as difficulty of changing number and loss

of benefits such as mileage program

Adapting cost is perception of cost of adaptation, associated with switching

to a new carrier as inconvenience of having to learn a new service and need to search for information on new carrier, when switching carrier

Move – in cost is perception of economic cost involved in switching to a new

carrier as cost of replacing mobile device and subscription fee for new membership

Attractiveness of other providers are alternative vendor‟s reputation, image

and service quality, according to the customer perception as reputation, image and overall service quality…

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Customer relationship is customer perception of social and psychological

rapport with service providers as trust, intimacy and level of communication…

Chapter 2 REVIEW OF RELATED LITERATURES AND STUDIES

This chapter provides the reader with sufficient theory to assimilate the continuing part of this study It will begin briefly by a background of mobile telecom market and customer loyalty, then discusses why loyal customer is important and finally proposes a model for determining customer loyalty, which is going to be evaluated in following chapters

2.1 Mobile telecommunication services

Mobile telecommunication services are clearly exhibiting signs of an abrupt industry paradigm change and symptoms of a market in transition Bolstered by the rapid development of information and communication technologies (ICT) and high demand from customers, the paradigm of mobile telecommunication services is now shifting from voice-centered communication to a combination of high-speed data communication and multimedia Furthermore, factors such as the growth of the wireless Internet contribute to emphasize the appearance of a transition period in the mobile telecommunication services market

This change of paradigm and the symptoms of a market in transition are driving the industry‟s restructuring efforts and intensifying competition between companies Mobile carriers are coming to a full realization of the importance of a customer-oriented business strategy as a condition for sustaining their competitive edge and maintaining a stable profit level, and, indeed, for their very survival When the number of subscribers has reached its saturation point, creating and securing new customers is not only difficult but also costly in terms of marketing Hence, it is becoming an industry-wide belief that the best core marketing strategy for the future

2.2 Hanoi mobile communication services

According to the 2009 population and housing census of the General Statistics Office, the Hanoi populations are 6.5 million people So, the mobile communication services market in Hanoi has very big potentia In 2012, there were six providers about mobile communication service in Hanoi with big three providers (Vinaphone, Viettel and Mobifone) and small three providers (Gtel, Sfone and Vietnammobile)

* Viet Nam Telecom Services Company (Vinaphone)

As a member unit of Vietnam Post and Telecommunications Corporation (VNPT), in 1999 VinaPhone was the first network to cover service in 100% of provinces and cities After 7 years, in June 2006, VinaPhone was once again the first mobile network to cover service in 100% of districts nationwide, including districts in mountainous or remote areas Currently VinaPhone provides services with 6 prefix numbers (091, 094, 0123, 0125, 0127, 0129) for about over 36 million of real subscribers

VinaPhone's traditional slogan “never stop reaching far” has been delved into customers' mind VinaPhone's statement “available everywhere” shows the

commitment for developing and reaching far to help customers more successful in anywhere they go VinaPhone shall not only a bridge of communication but also a bridge of emotion for millions of customers

* Viettel telecom company (Viettel)

Viettel Telecom Company (Viettel Telecom) is affiliated companies of the Viettel telecom military corporation, it was founded April 5, 2007 with merging between the Viettel internet company, Viettel landline and Viettel mobile phone

Viettel‟s slogan is “ Say it your way” that is mean, Viettel is not only meet the

specifics but also expressed interest and listening to customer needs On the other hand, for Viettel‟s staffs, the slogan also expressed interest, listening to the needs, opinions and creative ideas of the individual and allows them to express their own way

Early in 2012, EVN Telecom has been merged by Viettel, so Viettel has became a mobile communications provider with the largest market share in Vietnam Currently, Viettel is one of the leading mobile communications suppliers in Vietnam with 10 subscriber numbers (098, 097, 096, 0163, 0164, 0165, 0166, 0167, 0168, 0169) and over 47,4 million subscribers

* Viet Nam Mobile Telecom Services Company (VMS - Mobifone)

Vietnam Mobile Telecom Services Company - VMS, a state-owend company under Vietnam Posts and Telecommunications Corporation, was founded in April 16th 1993, VMS has become the first GMS 900/1800 mobile telephony services provider in the brand name MobiFone, marking the beginning momentum of the mobile telephony industry in Vietnam MobiFone specializes in building, developing network and providing mobile telephony

The contingent of 3.000 MobiFone staff in ready to effectively meet every demand of customers MobiFone is the first and exclusive mobile telephony services provider in Vietnam which is selected as of the best mobile operator in three consecutive years (from 2005-2008) in the Vietnam Mobile Awards Ceremony

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organized by E-chip Mobile Magazine, Especially in 2009, MobiFone was honored to receive the Excellent Op erator 2008 granted by Vietnam Ministry of Information and Communications

Currently Mobifone provides services with 8 prefix numbers (090, 093, 0122,

0124, 0126, 0128, 0121, 0120) for about 21 million of real subscribers

Mobifone‟s slogan is “Every time, every where” to say that Mobifone‟s

mobile services are ready to serve anytime and anywhere customes want

* Other suppliers

Other suppliers include SPT ( prefix number is 095); Gtel (prefix numbers are

099 and 0199) and Vietnamobile (prefix numbers are 092 and 0188) Three suppliers have a very low market share so they are very difficult to compete the largest suppliers

According to Information and Communication department, in 2011, SPT‟s market share accounted for only 0.1 percent; Vietnamobile was 8,04% and Gtel was 3,21% In 2012, SPT had decreased 80% market share compared to 2011; Vietnamobile had decreased to 20% but Gtel had increased 1,42% In the first 6 months of 2012, Viettel‟s market share were 43,03%; Vinaphone were 31,25% and Mobiphone were 18,5% Thus, the market share of three largest service providers does not change basically and only increasing less than 1%

Ilustration 1-1: The market share of mobile subscribers in Hanoi, 2011 and 2012

2011 2012 Source: Department of Hanoi telecom

In 2012, service providers have been in competition to attract new subscribers and maintain the old subscribers The popular competition of service providers are on product promotion for new roaming subscribers For example, when the customer is a new roaming subscriber, they will receive 100% of value‟s card in the first month and 50% in the next several months from their provide Meanwhile, old subscribers did not receive this promotive progams So, they changed providers When new subscribers were used up amount in their account they will leave the network, pause

to switch to another provider With this form, the customer can own more than one subcriber‟s provider

In effect, the number of subscribers increased rapidly but loyal subscribers has

no significant increase The competition on charges of mobile service providers lessen the customers loyalty to the network or company Subscribers are willing to give up current suppliers to move to the new vendor if they have attractive promotional programs

To attract new subscribers, service providers have been applying many promotion programs with discounted rates increasing But after the end of promotion programs, the subscriber used up money in their account, they leaving the vendor,

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suspension or transferring other service providers has increased significantly The subscriber leaving the vendor was more than new joining subscribers Active subscriptions were increasing or decreasing irregular So, revenues did not increase with growth subscribers

This competition is opposite to the trend integration of the mobile communication industry in Vietnam In 2011, inactive subscription compared to the total was very large rate About 25% are was 'virtual' subscribers, suspensive subscribers or the customer may be use two – three mobile subscribers at the same time

According to regulations of the Ministry information and communications, providers have big share market (Viettel, Mobifone and Vinaphone) their charges will

be decided by government Small providers (Sfone, Gtel mobile, Vietnam mobile) are allowed to decide their charges The charge is competitive advantage of the small provider but their service quality is not guaranteed because their investment does not keep pace with subscriber growth or restrictions on the coverage Conversely, big providers have stable service quality but their charges and rates are controlled so they should not attract customers Currently, running customers in promotion programs of the provider that is becoming very popular (especially young customers) and represented by data activity actually subscribers increased or decreased between the promotion and no promotion period

In addition, this competition also requires providers who have greater resources to maintain and develop their mobile communication services This competitive form suits three big service providers: Vinaphone, Mobifone and Viettel And other provides (Sfone, Gtel mobile, and Hanoi telecom) still compete with three

big service providers but they will be very difficult so they are new and small suppliers

In 2009, the Gtel joint Vietnam mobile communication service market with name is Beeline Total investment capital for entering this market was 450 million dollars However, Gtel has not competed with other providers (Viettel, Vinaphone and Mobifone) After three years nearly, they have left the mobile communication market

so their profit is declining

Unlike Gtel, Sfone is mobile communication service provider with name is Sfone Despite SPT has owned brand and certain customers but they could not prevent the withdrawal from the mobile communication market Currently, SPT only is operated in Ho Chi Minh City and not operated in Hanoi Thus, mobile communication service market only deals on the competition of the three big providers The remaining two mobile companies which are still active but they have been facing many difficulties to develop and attract new subscribers and maintain old subscribers

2 3 Customer loyalty

Loyalty as a concept has its root from the consumer behavior theory and is something that consumers may exhibit to brands, services or activities Therefore, customer loyalty has been studied both in the academic field and real business world for years Often, customer loyalty is used as oppose to brand loyalty to emphasize that loyalty is a feature of people, rather than something inherent in brands Customer loyalty has been found in the literature to be a competitive tool for many companies This is even much more pronounced in today‟s highly globalised, industrialised and competitive markets As has already been discussed in the background to the study,

Customer loyalty now is one of the key factors that will help a company sustains its long-term success (Andres Kuusik, 2007) The main reason why companies now focusing on customer loyalty is that the cost to keep existing customers is much cheaper than obtaining new customers

Rust, Zeithaml, and Lemon (2000, 2004) defined customer equity as the discounted lifetime values of a firm‟s customer base According to their view, customer equity is made up of three components and key drivers: Value equity that refer to quality, price, and convenience While brand equity are customer brand awareness, customer brand attitudes, and customer perception of brand ethics Lastly, the relationship equity is loyalty programs, special recognition and treatment programs, community-building programs, and knowledge building programs

Jim Novo (2011) described customer loyalty as a tendency of a customer to choose a particular brand of business or product to fulfill their needs We also can describe this situation as „brand loyalty‟ because customers tend to choose a certain brand more often than others The choices and purchase action is a kind of evidence

that show customer loyalty to a certain brand Customer loyalty is a result of customer retention programs that always giving encouragement to remain active choosing their brand as exclusive brand

Customer loyalty is astrategy that creates mutual rewards to benefit firms and customers (Reichhed & Detrick, 2003) With loyalty customers, companies can maximize their profit because loyal customers are willing to purchase more frequently, spend money on trying new products or services, recommend products and services to others, and give companies sincere suggestions Proactive loyalty occurs when a consumer is often bought the brand and settles for no other substitute while situational loyalty exists when the buyer purchases a brand for a special occasion Some scholars classified customer loyalty into the behavior loyalty and the attitude loyalty (Wong and Sohal, 2003; Mattila, 2004) Behavior loyalty focuses on the long-term choice probability for a brand, for example, repeat purchase probability Attitudinal loyalty focuses on brand recommendations, resistance to superior products, repurchase intention, and so on

Rauyruen and Miller (2007) also explain customer loyalty as a merged concept of behavior loyalty (willingness of customer to repurchase from and continue relationship with the company) and attitudinal loyalty (emotional attachment and advocacy of customer toward the company)

2.4 Affecting factors to loyal customer

The success of company sales are ensured by customer loyalty, which can be influenced by management action In emerging business competition the loyalty of customers had shown as a main feature in getting continue competitive advantage Customer respect oriented business organization will attract and develop loyal customer A company can develop long lasting, jointly profitable associations with

* Customer satisfaction

Satisfaction and customer loyatlty cannot substitute for each other According

to the Bloemer and Kasper (1995); Oliver (1999), the customer may be loyal without high satisfaction level (in case of a little choice) and he is satisfied but no loyal (in case of multiple choices) And some researchs have shown that there was the existence of the relationship between satisfaction and customer loyalty The high customer satisfaction will result in increased loyalty for the firm and that customers will be less prone to overtures from competition (Fornell, 1992) Jones and Sasser (1995) also said that increase customer satisfaction will create stronger effect on customer loyalty The relationship between satisfaction and customer loyalty was weak when customer satisfaction was low, to be moderate when customer satisfaction was mediate and to be strong when customer satisfaction was high So, it can be assumed that the relationship between loyalty and satisfaction are different at different levels of satisfaction (Coyne, 1989) The customer satisfaction is one of the significant determine of loyal customer

Satisfaction is defined by different studies in different ways According to Spreng at al.1996, Customer satisfaction is the emotional state of products and services have been used Satisfaction can be obtained because of what was expected

If the supply of a firm were according to expectations of customers, they would be satisfied The amount of high and low satisfaction depends upon the level of supply that meets the level of expectation or fall above/below to that level (Gerpott, Rams & Schindler, 2001) Customer satisfaction is used for indication of future possible revenue (Hauser, Simester & Wernerfelt, 1994).Customer satisfaction is the necessary foundation for the company to retain the existing customers (Guo, Xiao &Tang, 2009) The customers who are unsatisfied with the received services would not be expected to have long run relationships with the company (Lin & Wu, 2011)

The empirical studies have shown that customer relationship and service quality are distinct concept Sureshchandar et al, (2002) found that there was strong relatioship between service quality and customer satisfaction Spreng and Mackoy (1996) showed that service quality effected on customer satisfaction

So, the customers‟ own perceptions of service quality are the main factor to effect customer satisfaction And service quality is determined as the customers‟ satisfaction or dissatisfaction formed by their experience of purchase and use of the service In the mobile communication service quality has been measured by call quality, pricing structure, mobile devices, value-added services, convenience in procedures, and customer support (e.g., Kim, 2000; Gerpott et al., 2001; Lee, Lee, & Freick, 2001)

Service quality is defined as a function of "the ability to perform the promised service dependably and accurately, the willingness to help customers and provide prompt service, the knowledge and courtesy of employees and their ability to inspire trust and confidence, the individualized attention the firm provides its customers and the physical facilities, equipment, and appearance of personnel" This definition led to

of service quality, customer expertise, and perceived switching costs yield additional insight into the change in relative importance of technical and functional service quality in customers‟ decision to be loyal They concluded that some relationship exist between service quality and customer loyalty

The SERVQUAL model (Parasuraman, Ziethaml & Berry, 1988) suggests that the differences between customers‟expectations about the performance of a general class of service providers and their assessment of the actual performance of a specific firm in that class results in perceptions of quality This is also widely known as gap analysis Meanwhile, Aydin and Ozer (2005) showed that perceived service quality is necessary but not sufficient condition for customer loyalty

Call quality depends on the customer perception The call quality of the provider usually are evaluated as good as when it ensures the elements: not without dropping calls, not occur when connecting to network congestion calls, clear voice quality, wide coverage

Prices depend on factors as product quality, service quality, supplier‟s reputation, brand and other services (payment discount, warranty…) Today, customers tend to pay for products and services they buy at a higher price if it's good

to meet customer needs So, prices have a certain influence to total customer satisfaction To attract and retain customers, suppliers must be diverse service types and the type would correspond to a different price Therefore, service providers must build the pricing structure for their products The pricing structure is the factor to impact customer loyalty and it impacts directly the provider‟s profit The supplier will have many competitive advantages if they have reasonable price‟s structure strategic: the calling charges are reasonable; The value – add service of the charge is reasonable…

Value-added service is one of the factors to differentiate service providers in the market Value-added services are one of the factors for customer to select service providers and it is also the factor affecting customer loyalty With the call quality and pricing structure are the same, customers will select the providers have more value-added services than other providers

The convenience in business services is important, it not only deals with reaching customer services but also it reflects to how using customer services At the same time, if the customer customers approach easily the provider's services, they will they will feel more satisfied

Convenience in procedures are a problem to note customer when they use provide services So, the vendor must have a specific business strategies to meet the customer demands when they use vendor services: the flexibility in changing the products and services, the system channel distributors located in convenient locations, convenient to the customer involved using new products

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As the provider service quality is the same, customer support service will be a competitive advantage for the vendor The customer service includes customer support systems and customer support processes to complaint and lawsuit When customer support service is good, the customer feels secure, trust to using supplier service so providers improve customer satisfaction The service providers must have support customer programs when they use supplier‟s products Usually, when the customer has a demand for new products, they will tend to choose the service providers have good customer care services: the attitude of the friendly staff, staff expedited the love customers' requirements, etc

Thus, customers determine satisfaction level of any purchased service by the perceptions of quality received Therefore, customer satisfaction assessment captures service quality and in this study, the previous factors used to measure service quality (call quality, billing, customer support, etc) of mobile telecoms will be used to assess customer satisfaction

In addition, there are many benefits for a company from a high customer satisfaction level It heightens customer loyalty and prevents customer churn, lowers customers‟ price sensitivity, reduces the costs of failed marketing and of new customer creation, reduces operating costs due to customer number increases, improves the effectiveness of advertising, and enhances business reputation

* Switching Barriers

The switching barrier refers to the difficulty of switching to another provider that is encountered by a customer who is dissatisfied with the existing service, or to the financial, social and psychological burden felt by a customer when switching to a new carrier (Fornell, 1992) Therefore, the higher the switching barrier, the more a customer is forced to remain with his or her existing carrier

And according to Jones et al (2000), the switching barrier as any factor which makes it difficult or costly for consumers to change providers In their empirical study they examined three types of switching barriers: strong interpersonal relationships (the strength of the personal bonds that may develop between the employees of a supplier and the customer), high switching costs (the customers perception of the time, money and effort associated with changing supplier) and attractiveness of alternatives, which refers to whether viable alternatives exist in the market

Ping (1993, 1997, 1999), following Johnson´s (1982) concept structural constraints, uses the term structural commitment as a measure of the extent to which

as the customer has to remain in a relationship Ping argues that structural commitment includes alternative attractiveness, investment in a relationship and switching cost Fornell (1992), without proposing a formal definition of the concept, provides a list of factors that can constitute such barriers (i e., if they are prevalent they will hinder customers to defect from a relationship): search costs, transaction costs, learning costs, loyal customer discounts, customer habit, emotional cost, cognitive effort and financial, social and psychological risk Klemperer (1987) distinguishes between three types of switching costs One is transaction costs incurred when the customer changes supplier For example, if you change stock-broker, you have to close one account and open another with the new supplier, entailing some effort The second is learning costs Suppose the new stockbroker uses other routines

or other contractual rules than the first one, then you have to learn these new rules, which can be seen as a switching cost The third is artificial switching costs and concerns what the firm does to retain customers – for example frequent flyer programs or discount coupons valid for the next purchase Artificial switching costs are entirely at the firm discretion

as loss cost, adaptation cost, and move-in cost Loss cost refers to the perception of loss in social status or performance, when cancelling a service contract with an existing carrier; adaptation cost refers to the perceived cost of adaptation, such as search cost and learning cost; and move-in cost refers to the economic cost involved

in switching to a new carrier, such as the purchase of a new device and the subscriber fee The switching cost also can include attractiveness of other providers and customer relationship Attractiveness of other providers depend on customer perception It can understand as image, band, reputation and service quality of the provider And customer relationship that is customer perception when they communicate with providers: caring and visiting to customer; the intimate and trust provider; and level of communicating information with the supplier

Attractiveness of alternatives means the reputation, image and service quality

of the replacing carrier, which are expected to be superior or more suitable than those

of the existing carrier Attractiveness of alternative carriers is intimately linked to service differentiation and industrial organization If a company offers differentiated services that are difficult for a competitor to match or to provide with equivalents, or

if few alternative competitors exist in the market, customers tend to remain with the existing company (Bendapudi & Berry, 1997)

Interpersonal relationship means a psychological and social relationship that manifests itself as care, trust, intimacy and communication (Gremler, 1995) The interpersonal relationship built through recurrent interactions between a carrier and a customer can strengthen the bond between them and finally lead to a long-term relationship Companies are not alone in desiring a sustained relationship Many customers wish to establish, develop and continue with a company aninterpersonal relationship that provides value and convenience (Gwiner, Gremler, & Bitner, 1998) Therefore, relationship-specific investment helps increase customers‟ dependence, and thus magnifies the switching barrier (Jones, Mothersbaugh, & Betty, 2000)

Also switching barriers can be seen as positive or negative for providers Hirschman (1970) explains these two concepts saying that positive switching barriers are related to „wanting to be in a relationship‟ while negative switching barriers are related to „having to be in a relationship‟ Jones et al (2000) said that some switching barriers can be seen as more positive in their nature and others as more negative Both from a theoretical and managerial viewpoint, it is of great importance to explicitly distinguish between positive switching barriers, which are related to wanting to be in

a relationship, and negative switching barriers reflecting having to be in a relationship Psychologically, it should make a great difference whether one maintains

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a relationship because a perception that the supplier is superior in services and products (a positive reason), or because it is too expensive to leave the supplier, there

is a monopoly on the market or the supplier is powerful (negative reasons)

As negative switching barriers, it can be switching costs Research marketing

or economics mention switching costs as an important switching barrier Switching costs refer to various types of costly obstacles of changing supplier High switching costs tend to lock customers to suppliers and we thus classify switching costs as negative switching barriers From the economics literature we would like to add the degree of monopoly on the market, and supplier power, which, when high, may lock the customer to the supplier Moreover, investment in the supplier by the customer generally how much time, money and effort invested in the relationship) is also considered a negative switching barrier, since it tends to lock the customer to the supplier, especially if the customer has made physical investments in equipment Since investment locks the customer to the supplier, we classify high investments in the relationship by the customer as negative switching barriers

The positive switching barrier classify attractiveness of other alternatives If the chosen supplier is better than the other available alternatives the customer, stays with, or is locked to the supplier, because the supplier is perceived to be better than other potential suppliers That is, there is a positive motivation to stay with the supplier Positive interpersonal relationships are also viewed as positive switching barriers They could be said to be a part of the product offered, especially if it is a service It can be expected that customers stay with suppliers because of such positive relationships We classify loyal customer discounts and customer habit (cf Fornell 1992) as positive switching barriers, since they are positive aspects of the product or service bundle offered They resemble the artificial switching barriers mentioned by

Klemperer (1987) and Nilssen (1992) Fornell also mentions financial, social and psychological risk We would put these under the heading of positive switching barriers These risks should occur in a comparison of what you get from the current supplier and the probability that you will get the same utility from other suppliers Thus, if one perceives high risks in a change of supplier this is here classified as a positive switching barrier

- Gender is also one of the factors affecting to customer loyalty But this factor

is not clearly showed to impact on customer loyalty in the mobile communications services market

- The education level is also one of the factors affecting the customer in the mobile communications market The customer is high education level to be less likely

to change their provider and charge rates are not problems most concerned that service quality is the main factor to loyal customer with their providers Conversely, the customer is limited education level to be often changing their supplier The charge rate is main factor to select new provider The service quality is also caring customer group but it is not factor to change their provider

- Occupation is also the factor affecting to customer loyalty to providers The customer has a stable job and income they are less changing their suppliers In