(Luận văn thạc sĩ) factors affecting apartment purchase decision and satisfaction level of customers an empirical study of residential housing market in ho chi minh city, viet nam

In an effort to provide a better understanding of purchasing behavioral decision making context and influences to all apartment participants which are the developers, purchasers, and rea

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

Dong Manh Hung

FACTORS AFFECTING APARTMENT

PURCHASE DECISION AND SATISFACTION LEVEL OF CUSTOMERS: AN EMPIRICAL STUDY OF RESIDENTIAL HOUSING MARKET

IN HO CHI MINH CITY, VIETNAM

MASTER OF BUSINESS (Honours)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

Dong Manh Hung

FACTORS AFFECTING APARTMENT

PURCHASE DECISION AND SATISFACTION LEVEL OF CUSTOMERS: AN EMPIRICAL STUDY OF RESIDENTIAL HOUSING MARKET

IN HO CHI MINH CITY, VIETNAM

ID: 22130027

MASTER OF BUSINESS (Honours) SUPERVISOR: Dr Dinh Thai Hoang

ACKNOWLEDGEMENT

Firstly, I would like to express my gratefulness to my supervisor Dr Dinh Thai Hoang for his professional guidance, intensive support, valuable suggestions, instructions and encouragement during the time of doing my research

I would like to express my deepest gratitude to Dr Tran Ha Minh Quan, Dr Nguyen Dinh Tho, and other professors in the committee for their valuable time as the members of the thesis examination committee Their comments and meaningful suggestions were contributed significantly for my completion of this research

My sincere thanks are given to all of my teachers at International Business School – University of Economics of Ho Chi Minh City for their teaching and guidance during

my master course

ABSTRACT

In the real estate industry, purchasing an apartment is one of the most significant economic decisions that people make, and it requires the purchaser to gather a lot of information regarding its features In reality, a real estate product as an apartment is both a financial asset and

a physical attributes comprising of its intrinsic attributes, extrinsic attributes and other factors that connect it to customer behavioral research and satisfaction level Therefore, better knowledge of the factors influencing purchasers’ behavior will help apartment developers to have better understanding and prediction of purchase decision making in real estate markets In

an effort to provide a better understanding of purchasing behavioral decision making context and influences to all apartment participants which are the developers, purchasers, and real estate agents, this study examined the relationships of these factors: apartment attributes, financial status, apartment service quality, purchasing decision making and customer’s satisfaction level

of 214 respondents who have apartment purchasing transactions in real estate industry in the Ho Chi Minh City with an expectation of strengthening evidence in Vietnam Employing the CFA & SEM analyses, the research findings indicated that there were the positive relationships among apartment attributes, financial status, apartment service quality, purchasing decision and customer’s satisfaction level The study also points out useful practical and managerial implications, which support the real estate companies to have the marketing and sales strategies impacting greatly on customer purchase decision and help policy makers to use suitable policies

to develop the Vietnam real estate industry

Key words: Real estate industry, apartment attributes, financial status, apartment service quality, customer purchasing decision, customer satisfaction level, real estate organizations, HCM city.

CONTENTS

ACKNOWLEDGEMENT

ABSTRACT

ABBREVIATION

Chapter 1: INTRODUCTION……… 1

1.1 Background to the research and research problem 1

1.2 Research objectives 4

1.3 Research methodology and research scope 5

1.4 Research significance 5

1.5 Research structure 6

Chapter 2: LITERATURE REVIEW 7

2.1 Apartment purchase decision 7

2.2 Apartment attributes and apartment purchasing decision 9

2.3 Financial status and apartment purchasing decision 11

2.4 Apartment service quality and apartment purchasing decision 13

2.5 Apartment attributes and customer satisfaction level 15

2.6 Apartment service quality and customer’s satisfaction level 16

2.7 Conceptual model 18

Chapter 3: METHODOLOGY 20

3.1 Research design 20

3.1.1 Research process 20

3.1.2 Measurement scales 22

3.2 Quantitative study 26

3.2.1 Sample 26

3.2.2 Data analysis procedures 27

Chapter 4: DATA ANALYSIS 29

4.1 Respondents’ demographics 29

4.2.1 CFA for the first-order constructs 32

4.2.2 CFA for second-order constructs 37

4.2.3 CFA for the final measurement model 40

4.3 Structural equation modeling (SEM) 45

4.4 Bootstrap method 47

4.5 Discussion 47

Chapter 5: CONCLUSION, IMPLICATIONS, AND LIMITATION 51

5.1 Managerial implications 52

5.2 Limitations and future research 55

REFERENCES 56

APPENDICES 61

LIST OF FIGURES

Figure 2.1 Purchase decisions (Zeng, 2013)……… 8

Figure 2.2 Conceptual model 18

Figure 3.1 Research process 21

Figure 4.1 CFA model of financial status 32

Figure 4.2 CFA model of service quality 34

Figure 4.3 CFA model of purchasing decision 34

Figure 4.4 CFA model of satisfaction level Error! Bookmark not defined. Figure 4.5 CFA model of Apartment Attributes 38

Figure 4.6 Final measurement model 44

Figure 4.7 Structural results (standardized estimates) 46

LIST OF TABLES Table 3.1 Source of data collection 26

Table 4.1 Respondents’ characteristics 30

Table 4.2 The first run of CFA (of financial status, service quality, purchasing decision and satisfaction level) 33

Table 4.3 Summarized of CR, AVE and Cronbach’α (first order constructs) 36

Table 4.4 The first run of CFA of Apartment Attributes 37

Table 4.5 Summarized of CR, AVE and Cronbach’α (Apartment Attributes) 39

Table 4.6 Correlation (of Apartment Attributes) 40

Table 4.7 Summarized of CR, AVE and Cronbach’α (final model) 40

Table 4.8 CFA Summary of eliminated item 42

Table 4.9 Correlations (final measurement model) 43

Table 4.10 Unstandardized structural paths 45

Table 4.11 Regression Weights (bootstrap standard errors) 47

LIST OF APPENDICES

Appendix A List of in-depth interviews’ participants 61

Appendix B Qualitative in-depth interview 61

Appendix C Qualitative in-depth interview findings 64

Appendix D Questionnaire (English Version) 70

Appendix F Correlations among components of apartment attributes, financial status, service quality, purchasing decision and satisfaction level 76

Appendix G Final measurement scales 77

ABBREVIATION

AVE Averaged variance extracted

CFA Confirmatory Factor Analysis

CR Composite reliability

ExtrinA Extrinsic attributes

EnvirA Environment attributes

FinanSta Financial status

IntrinsA Intrinsic attributes

LocA Location attributes

HCM Ho Chi Minh City

PurchasD or PurchaseDecision Purchase decision

SatisfLev Satisfaction level

SEM Structural equation modeling

SerQua Service quality

SPSS Statistical Package for the Social Sciences

Chapter 1: INTRODUCTION 1.1 Background to the research and research problem

Vietnam’s economy has been growing rapidly since the late 1990s when significant economic reformed and the country’s Open Door Policy were implemented Vietnam’s growth rate is on average 6.4% in the last decade (The World Bank, 2015) Following these changes, Vietnam’s residential housing industry also experienced fast development and expansion However, Vietnam population was nearly 91 million people in 2014 and the population increased

by 1.06 percent annually (The World Bank, 2015) Additionally, the urbanization rate in Vietnam is also increasing at 3.3 percent annually and 33.1 percent of the population is living in urban areas (Thanh Nien News, 2014) In most of the big cities in Vietnam, particularly in Ho Chi Minh City, the business center of Vietnam, has around 7.9 million people in 2014 and the urbanization to its suburbs is quite fast Thus, the increasing in population and rapid urbanization

in the developing countries like Vietnam create the house or apartment shortage at critical levels (Morel, Mesbah, Oggero & Walker, 2001) Moreover, an increasing house or apartment demand often surplus the pace of its supply (Zang, as cited in Phan, 2012) As a result, the demand for a house or an apartment is the urgent demand for each individual and households

The real estate market in Vietnam has been significantly fluctuating since 1990 It might

be seen as three times fever and declining prices in the two decades (Phan, 2012) After the economic depression in the period of 2012-2013, the real estate market has been shown signs of recovery The successful real estate transactions in Hanoi in 2014 are 11,450 transactions (up by more than 2 times compared to 2013) and in HCM City are 10,350 transactions (up 30% compared with 2013) (Manh Tung, 2014) In general, Vietnam real estate market has taken advantages of population increasing and rapid urbanization which created a huge house or

apartment demand, but nevertheless it still faces many difficulties The large real estate outstanding loans and a big number of inventories created a serious crisis (Xuan Than, 2014), particularly the apartment inventories and land inventories The apartment current inventories are roughly equivalent to 26.000 billion VND and land inventories are roughly equivalent to 28,500 billion VND (Manh Tung, 2014)

There are amended land laws and VND 30 trillion credit package to home buyers in an effort of Vietnamese government to rescue the real estate market As a result of those efforts, Vietnam’s residential housing market is experiencing a recovery period This trend is in line with the efforts of Vietnamese government which are trying to renovate real estate industry in Vietnam However, there are still ongoing challenges for the economy (CBRE Vietnam, 2014)

Up to 2014, Vietnam has 92.690 billions VND real estate inventories; 19.210 unsold apartments (7.520 in HCM City); 13.516 unsold low buildings (755 in HCM City) (CBRE Vietnam, 2014) Trinh Dinh Dung (as cited in Nguoi Dua Tin News, 2014) states that only government’s effort is not adequate for rescuing Vietnam’s real estate market One of the key reasons of this crisis is the real estate market supply does not meet customers’ demands as the house or apartment builders lack correct information of their customers of choice and real estate market conditions (Trinh Dinh Dung, as cited in Nguoi Dua Tin News, 2014) To survive and develop in this tough market, marketers and analysts of this industry are required to have an in-depth understanding of home or apartment purchaser’s decision criteria (Ratchatakulpat, Miller & Marchant, 2009) and

their satisfaction levels regarding housing attributes and service quality (Torbica & Stroh, 2001)

The problem regarding the lack of correct information of their customers of choice and real estate market conditions encourages the real estate companies to focus on the need of understanding their customers There is an issue of how to know deeply the customer insight and

their making decision behavior in purchasing an apartment Bettman, Luce & Payne (1998) emphasizes that customer choices are the process of selection, consumption, and disposal of any products and services which can often be difficult and are important to the consumer, to marketer, and to policy makers He also states that “customer decision making is one of the most important areas of customer behavior and it requires gathering a lot of regarding information” (p 187) Thus, having the information of customer decision making will help the real estate companies to have the marketing strategies impacting greatly on customer mind This is one of the keys in the success of any businesses

In the recent decades, the concept of real estate purchase decision has been further developing in various articles and literature on managerial disciplines; thus, prompting more real estate developers use suitable reactions on their customer’s buying decision to achieve the home sales targets and customer’s satisfaction (Piron, 1993; Spetic, Kozak & Cohen, 2005) Kupke (as cited in Abdullah, Nor, Bazlin, Jumadi & Arshad, 2012) identifies real estate purchase decision

as one of the biggest decision in one’s life and it would change that person’s lifeas the process involves a long time commitment Basing on the real estate’s special characteristics, an apartment purchasing decision defines itself as a unique behavioral process which is different from other normal business purchasing decisions; and understanding how the purchasers behave

is quite valuable for better suppliers’ reactions (Kinnard, as cited in Phan, 2012)

Moreover, the national and cultural characteristics play a very significant role in house purchase decision, that mean finding which is applied in specific context may not extend to another context (Opoku & Abdul-Muhmin, 2010) Vietnam market – transitional market has very specific cultural characteristics Vietnam is considered a collectivist culture (Hofstede, as cited in

Swierczek & Thai, 2003) People relationships prevail over important decision, where everyone

cares, supports, and takes responsibility for members of their family and acquaintances Vietnamese purchasers always consult with their colleagues and/or seniors, family members before reaching an agreement or a decision (McKinney, 2000) Therefore, apartment’s developers in Vietnam should give a special examination on consumer apartment-purchasing behavior from the consumers’ perspective to deeply understand their customers

Up to present time, the numerous studies have been undertaken about the perceptions of apartment purchasers in terms of the apartment attributes, financial status, service quality, purchasing decision and customer satisfaction level in other countries (Haddad, Judeh, Haddad, 2011; Zeng, 2013; Opoku & Abdul-Muhmin, 2010) However, these studies restricted themselves to identify these concepts separately In addition, very few scholars do the research about this issue in Vietnam - a collectivist culture in making important purchasing decision To the best of the author’s knowledge, the study of Phan (2012) to investigate the key factors affecting the house purchase decision of customers in Vietnam This study, however, focuses only on the house attributes’ effects on purchase intention, not on customer apartment-purchasing behavior and their satisfaction level Thus, this research aims to investigate how apartment purchasers make purchase decisions basing on their satisfaction level about apartment attributes and service quality of apartment developers in real estate industry in HCM City

1.2 Research objectives

The overall objective of this study is to examine the role of the factors such as apartment attributes, financial status, service quality that effect on apartment purchase decision and satisfaction level of customers who have apartment transactions in the real estate industry in Ho Chi Minh City, Vietnam Specifically, it investigates:

- The relationship between apartment attributes and apartment purchasing decision;

- The relationship between financial status and apartment purchasing decision;

- The relationship between apartment developers’ service quality and apartment purchasing decision;

- The relationship between apartment attributes and satisfaction level

- The relationship between apartment developers’ service quality and satisfaction level

1.3 Research methodology and research scope

In this research, two phases of study were undertaken: a qualitative study and a quantitative study The questionnaire was translated from English into Vietnamese Through qualitative study, in-depth interviews with six people were conducted in order to adjust the items closing to features of Vietnamese cultures and to make the improvement for the official questionnaire In the quantitative study, the author collected data by using a convenience sampling approach and employed self-administered survey For analyzing the collected data, SPSS 16 and Amos 22 were used to test the model For the reliability and validity, the researcher used CFA Then, SEM was used to test the hypothesized model

Due to the limitation of time, this research is therefore limited to Vietnamese customers who have apartment purchasing transactions in real estate industry in the Ho Chi Minh City; since it is one of the biggest cities in Vietnam and most of real estate companies centralize here

1.4 Research significance

Based on the research results, some useful managerial implications were suggested to help the real estate companies to have the marketing and sales strategies impacting greatly on customer purchase decision and help policy makers to use suitable policies to develop the Vietnam real estate industry

1.5 Research structure

This thesis is organized into five chapters The introduction chapter presents background

of the research, research problem, and research objectives Besides, the significance that this thesis contributes to management practice as well as scope of the research and methodology of data analysis are also mentioned in the first chapter The following chapter reviews and synthesizes the theories in the literature of research’s concepts, including apartment purchase decision, and its relationships with apartment attributes, financial status, service quality and customers’ satisfaction level This chapter also describes the conceptual model and hypotheses The third chapter mentions about research methodology used to empirically test the research model Chapter four presents the results of data analysis and analyzes them for their relevance to the research questions or hypotheses The last chapter is organized to conclude about research hypotheses, research problems It also suggests implications for theories, implications for policies and practices based on the findings; and points out some limitations for further research

Chapter 2: LITERATURE REVIEW

This chapter mainly introduces the theories, which are proposed by many scholars in academic field and are related to all the concepts and research model The author firstly clarifies the definitions of purchase decision and then the relationships among purchase decision with apartment attributes, financial status, service quality and customers’ satisfaction level conducted

by previous studies are also discussed for proposing a conceptual model and hypotheses

2.1 Apartment purchasing decision

Purchase decision is a stage of customer purchasing behavior carried out over the course

of a set period of time (Piron, 1993; Kotler & Keller, 2009) The customer purchase behavior has recently gained much attention from marketers and researchers because of the significant role it plays in anticipating operational success and achieving sustainable competitive advantage (Parasuraman, Zeithaml & Berry, 1985) The researches in this field and the experiences of successful marketers give evidences to understand how customers decide to purchase and where

to purchase products Figure 2.1 shows the purchase decision-making process and indicates the customer’s purchasing behavior experiences in each stage of that decision making process (Zeng, 2013) Generally, the process of selecting a specific product to purchase involves several comparisons to match customer characteristics and purchase characteristics of that product Therefore, customer individually may adapt different criteria to evaluate which product can best meet their need based on the type of purchase and how consumers anticipate each will perform according to the various criteria (Blackwell, Roger, Miniard, Paul, Engel & James, as cited in Zeng, 2013)

Although there are five stages of purchasing decision process: need recognition, information search, evaluation of alternatives, purchase, post-purchase evaluation, some of

customers do not always go through all the steps involved from the need concept to competitive supplier to specific shop choice; their past experiences and their preferred brand sometimes enable consumers to make a choice immediately (Blackwell et al., as cited in Phan, 2012) In addition, consumers in different market segments might make different purchase decisions based

on their perceptions of the attributes they consider important (Kotler & Keller, 2009)

Figure 2.1 Purchase decisions (Zeng, 2013)

Purchasing an apartment is one of the most significant economic decisions that people

Judeh & Haddad, 2011) In reality, real estate is both a financial asset and a physical attributes comprising of its intrinsic attributes, extrinsic attributes and other factors that connect it to customer behavioral research (Anastasia & Suwitro, 2015) With this view, the apartment purchase decisions are different from other business decisions due to “the innate, durable and long-term characteristics of real estate” (Kinnard, as cited in Phan, 2012, p.1) It is a highly differentiated product with “each specific site unique and fixed in location” (Kinnard, as cited in Phan, 2012, p.1) Therefore, better knowledge of the factors influencing purchasers’ behavior will help apartment developers to have better understanding and prediction of purchase decision making in real estate markets (Daly, Gronow, Jenkins & Plimmer, as cited in Anastasia & Suwitro, 2015)

There are various customer decision-making models have been proposed in the literature

in recent decades However, many researchers believe that a specific, situation and oriented model is needed in studying purchasing (Erasmusm, Boshoff & Rousseau, as cited in Koklic & Vida, 2009) They also admit that there are lacks studies of purchasing decisions that consumers are most concerned about “behavioral purchasing decision making” Additionally, the studies about real estate purchasing behavioral decisions in Vietnam are not yet to be found in public literatures Thus, this study will provide a better understanding of purchasing behavioral decision making context and influences to all apartment participants which are the developers, purchasers, and real estate agents

product-2.2 Apartment attributes and apartment purchasing decision

The abundance of apartment developers provides several choices for apartment customers

to consider, but they can not make a purchase decision if there are no criteria to help them to evaluate That is why the study of Hawkins, Mothersbaugh and Best (2011) mentions that the

apartment features or its attributes which are similar to customers’ expectations are the typical criteria to help them to value their choices In general, apartment customers seem to evaluate the main attributes of the apartment which they perceive as the most valuable, value these different attributes, and then assess their willingness to pay for these desirable attributes (Kotler & Keller, 2009) There are several real estate attributes have been researched in many previous studies as affecting factors on apartment customers’ purchasing decision making (Ratchatakulpat et al., 2009; Haddad et al., 2011; Opoku & Abdul-Muhmin, 2010; Alonso, 2002; Pope, 2008; Spetic et

al., 2005; Wang & Li, 2006) Basing on the researches, Zeng (2013) and Ratchatakulpat et al

(2009) identify the main housing attributes into four categories: intrinsic housing attributes, extrinsic housing attributes, environment attributes, and location attributes Firstly, intrinsic housing attributes include housing size, housing type, internal house design and so on (Cupchik, Ritterfeld & Levin, as cited in Zeng, 2013, & Ratchatakulpat et al., 2009) Secondly, extrinsic attributes include: exterior design and exterior space (Bhatti & Church, as cited in Zeng, 2013 & Ratchatakulpat et al., 2009) Environmental attributes depict themselves things as neighborhood (Cheshire & Sheppard; Fierro, Fullerton & Donjuan-Callejo; Pasha & Butt, as cited in Zeng,

2013, & Ratchatakulpat et al., 2009) and pollution (Yusuf & Resosudarmo; Zabel & Kiel, as cited in Zeng, 2013) Location attributes comprise of the distance to the nearest central business district, schools, and transport (Chay & Greenstone; Pasha & Butt; Pope & Jaren, as cited in Zeng, 2013, & Ratchatakulpat et al., 2009) As many researchers in these studies use Rosen’s hedonic model (1974) to examine customers’ preferences for housing structural amenities and attributes and the residential apartment is investigated as a special product which is valued for its utility-bearing attributes or characteristics or other housing purchase factors (Bitter, Mulligan, & Dall'erba, 2007; Taylor, 2008; Fierro et al., 2009) The potential home buyers firstly identify the

major attributes and benefits which are similar to their expectations, and then value the importance of each attribute and benefit After valuing which attributes will deliver the most perceived value for them, they prefer to pay money for these most valuable attributes (Bao & Wan, 2007; Farmer & Lipscomb, 2010; Sunding & Swoboda, 2010)

In summary, it is indicated that many attributes of residential houses presented can have director indirect, positive or negative impacts on consumers’ housing purchase choice decisions (Alonso, 2002; Opoku & Abdul-Muhmin, 2010; Spetic et al., 2005; Wang & Li, 2006) However, the researchers also realize that the relative importance of various housing attributes might vary across national contexts Hence, based on the literatures, it is hypothesized:

H1 Customer’s residential apartment purchasing decision in Vietnam is positively influenced

by apartment attributes

2.3 Financial status and apartment purchasing decision

Purchasing an apartment is considered as “the biggest financial decision in one’s life” and would affect the household’s budget as the process involves a long time commitment starting from the very first down payment to the monthly payment in the future (Abdullah et al., 2012, p.1) Thus, financial status is an important influencing factor to apartment’s customer to considering Xiao and Tan (2007) state that if the apartment customers know their current financial situation, will helps ensure them buy an apartment they can comfortably afford These researchers also divide financial status into “financial” element of real estate which requires an access to a relative large amount of “capital” and as well as “borrowing costs” (Xiao & Tan,

2007, p 865) It means that financial status is not only in term of money or capital, but it is also the costs to use for purchasing an apartment Additionally, financial status comprises “house price”, “mortgage loans”, “income” and “payment term” (Opoku & Abdul-Muhmin, 2010; Hou,

2009) Adair, Berry and McGreal (1996) and Daly et al (2003) clarify that financial factor for purchasing an apartment should be measured further than “house price” owning to the apartment’s special characteristics and its transactions in term of payment They further add

“interest rate”, “maximum mortgage”, “maximum monthly payment”, and “length of time payment” into financial status The apartment purchasers now have diversified attitudes, strong bargaining power, extensive alternatives of available choices, and lower switching costs As a result, they are very critical and sensitive to take purchase decisions from an apartment’s prices and transaction paying methods (Opoku & Abdul-Muhmin, 2010)

In investigating customers’ apartment selection criteria, several studies have adopted the hedonic price model created by Rosen (as cited in Taylor, 2008) which is employed by numerous organizations to study the demand for housing amenities and attributes (Taylor, 2008; Fierro et al., 2009) The similarity of these researches is that customers seem to purchase their houses by equating the marginal utility of each house attribute to its marginal price (Rosen, as cited in Zeng, 2013) Therefore, an apartment should be considered as a product which is valued for its utility-bearing attributes or characteristics or other apartment purchasing factors However, purchasing an apartment will not be an easy decision because it will strongly affect the household’s budget Paying a big amount of money at once for an apartment seems to be impossible for most of young family in developing countries (Xiao & Tan, 2007) In order to perfectly match the customer’s needs, the willingness to pay, the ability to pay, and apartment developer’s price expectations, the apartment’s equilibrium price should be focused more on terms of payment (Sunding & Swoboda, 2010) The comparisons of apartment purchasers then will be used to evaluate the costs of purchasing an apartment and the costs of renting it to have the better choice Ratchatakulpat et al (2009) realize if a purchaser evaluates the costs to use

capital to purchase is cheap and easy to achieve, he or she will shift from renting to purchasing

an apartment Intelligent customers are assumed to be utility maximizing, within the bounds of search costs and limited knowledge, mobility, and income (Kotler & Keller, 2009) They estimate which offer will deliver the most perceived value and make purchase decisions based

on their estimate (Hawkins et al.; Solomon, as cited in Zeng, 2013) So, this study is going to examine both apartment attributes’ costs and paying methods can create more perceived value to stimulate customers’ willingness to pay to purchase an apartment Given this diversifying results, the current study proposes and tests the second hypothesis:

H2 The customer’s apartment purchasing decision is positively influenced by customer’s

financial status

2.4 Apartment service quality and apartment purchasing decision

Service quality has been recognized as a key factor which helps organizations to take their advantages for increasing their business competiveness successfully The concept of service quality is firstly developed by Parasuraman et al (1985) with five sub-constructs (reliability; responsiveness; assurance; empathy; and tangibles) of service quality model which is subsequently applied by several researchers during the development of the market disciplines (Gannage, as cited in Nahmens & Ikuma, 2009; Kotler & Keller, 2009) Nahmens & Ikuma (2009) state that apartment developers provide housing services to customers and customers perceive these service processes in terms of interactions, activities and dynamic events in the residential housing systems In these processes customers search for information, customers will evaluate and compare services from different residential housing suppliers, and select which alternative they believe better They conclude that an apartment purchasing decision can be shifted or modified with the circumstances of the person and/or consumption situation derived

from the quality attributes of apartment developers Thus, the quality of services provided by apartment developers also has an influence on home buyers’ purchase decisions and post-purchase satisfaction (Torbica & Stroh, 2005; Forsythe, 2008; Nahmens & Ikuma, 2009)

In the developing residential housing service market, understanding what customers are looking for, and how they will evaluate services is important Housing customers need service quality from service providers Defining quality factors of an apartment will expand the concept of perceived customer value of housing services and describe it as a source of competitive advantage The customers’ perceptions affect the way they value particular services choose between different providers and evaluate service delivery (Schiffman, Hansen & Kanuk, 2012) Nahmens & Ikuma (2009) and Forsythe (2008) adopt the five main dimensions of service quality to assess service quality in construction housing in US in order to analyze home buyers’ perceived service quality and find out whether the actually received service quality met or exceeded home buyers’ expectations Basing on their works, the five dimensions of SERQUAL model are divided to 21 housing service quality attributes These service quality items are used

to measure the quality of the services provided by apartment’s developers and how consumers perceive service quality value during the design and construction process Torbica and Stroh (2001) and Nahmens & Ikuma (2009) investigate home buyers’ perceptions of service quality and realize that the customers will strongly make a purchase decision if they feel satisfy with the service quality in the US Moreover, house buyers’ overall service quality satisfaction is significantly influenced by all five dimensions (reliability, responsiveness, assurance, empathy, and tangibles) Furthermore, Atterhog (2005) admits that residential house service providers could increase customer satisfaction and purchase decision by effectively reducing the gaps between customers’ service quality expectations and perceptions This researcher has also

identified housing service quality as an antecedent of housing purchase decisions and has revealed major service quality factors involved in the purchasing stages that have a significant influence on consumers’ value perception and purchase decision in apartment purchasing process setting Therefore, based on the literatures, it is hypothesized:

H3 Consumer’s apartment purchasing decision is positively influenced by the service quality

provided by apartment developers

2.5 Apartment attributes and customer satisfaction level

Customer satisfaction level is generally defined as being a function of customer expectations and perceived performance, or of perceived product attributes’ quality (Oliver, as cited in Zeng, 2013) and it is consequently a subjective evaluation of the degree to which the customer’s expectations concerning a particular service encounter are met (Mossel & Valk, as cited in Zeng, 2013) In customers’ satisfaction/dissatisfaction studies, these behaviors will have been given attention where customers’ satisfaction refers to the difference between pre-purchase expectations and perceptions of post-purchase (Peter & Olson, as cited in Nahmens & Ikuma, 2009) Dissatisfaction level occurs when product attributes’ performance is less than expected and it is more likely to result in customers’ satisfaction when product attributes’ performance is better than expected (Peter & Olson, as cited in Nahmens & Ikuma, 2009) Intuitively, it is expected that the customers’ satisfaction level is the quality of customer comparison between their expectations about an apartment and apartment attributes provided by real estate developers

Previous research has identified the relative importance of key dimensions of housing attributes to overall customers’ satisfaction level (Nahmens & Ikuma, 2009) and in the context

of real estate industry Longenecker et al (as cited in Nahmens & Ikuma, 2009) state that

customer satisfaction should be considered in post-purchase evaluation which includes a number

of antecedents such as housing attributes, performances and services Customer expectations are significantly influenced by the value received from an apartment and apartment services provided by real estate developers A number of research illustrate that the house buyer’s overall satisfaction is based on the total housing attribute offering from housing developers which meet consumers’ needs and wants (Torbica & Stroh, 2001; Forsythe, 2008) They find out the more positive customers’ perceptions of housing attributes in real estate industry, the greater the likelihood that overall home – purchasers’ satisfaction to be high Similarly, Opoku & Abdul-Muhmin (2010) realize that the following aspects of housing attributes can significantly influence house buyers’ expectations of their new house: housing structure, housing sales dealer, workmanship, housing construction, materials, price and appreciation value As a result, investigating the positive relationship between apartment attributes and apartment owners’ post-purchase satisfaction may help the marketers to provide the right housing products and services

to both potential home buyers and house owners who intend to buy a second house Hence, the fourth hypothesis is:

H4 The overall satisfaction level of consumers after the purchasing decision is positively

influenced by the evaluations of housing attributes

2.6 Apartment service quality and customer’s satisfaction level

Basing on the literature of housing industry and service quality, study by Nahmens & Ikuma (2009) reveals that there are some service quality determinants that can satisfy and dissatisfy housing customers The predominant satisfiers are attentiveness, responsiveness, care and friendliness and the predominant dissatisfies are integrity, reliability, responsiveness, availability, and functionality Other work by Power and Associates (as cited in Nahmens &

Ikuma, 2009) illustrates that the services provided by sales staff and daily housing maintenance services after sales were the two most important contributors to meeting householders’ selection criteria and overall satisfaction in Florida Moreover, they state that certain works such as quickening transaction process, will have an important effects to please housing customers; however other activities, such as avoiding inefficiency, chaos, incompetence and isolation on housing services, will lessen customer dissatisfaction Thus, in order to maintain and expand their apartment customer base, it is critical for real estate developers to understand the criteria customers which are used to evaluate housing services and how these impact on their perceptions

of overall apartment service quality, and satisfaction with those services provided by apartment developers

This above theory implies to the relationship between apartment service quality and customer satisfaction level Torbica and Stroh (as cited in Zeng, 2013) mention that customer satisfaction is the consequence of an evaluation process that compares pre-purchase expectations about an apartment with perceptions of performance during and after apartment consumption experience Similarly, Nahmens & Ikuma (2009) illustrate the significant positive relationship between housing service quality and satisfaction Thus, they mention that in order to create loyal customers and keep competitive advantage, real estate companies must monitor satisfaction, make changes in their operations, and exceed consumers’ expectations Intuitively, the more positive customers’ perception of housing service quality, the better their overall satisfaction with the apartment developer is likely to be The strength of this relationship depends on the evaluation given by customers to overall attributes of apartment service quality Thus, it is hypothesized:

H5 The overall satisfaction level of customers after the purchasing decision is positively

influenced by their evaluations of the service quality provided by apartment developers

2.7 Conceptual model

Figure 1 depicts a conceptual model explaining the role of antecedents of apartment purchasing decision such as apartment attributes, financial status, apartment service quality on purchasing decision and customer satisfaction level of customers who have apartment transactions in the real estate industry in Ho Chi Minh City, Vietnam Specifically, the model proposes that apartment attributes, financial status, apartment service quality have positive impacts on purchasing decision and customer satisfaction level

Figure 2.2 Conceptual model

Satisfaction level Purchase decision

These are all hypotheses that were proposed in the study:

H1 Customers’ residential apartment purchasing decision in Vietnam is positively

influenced by apartment attributes

H2 The customer’s apartment purchasing decision is positively influenced by

customer’s financial status

H3 Consumer’s apartment purchasing decision is positively influenced by the service

quality provided by apartment developers

H4 The overall satisfaction level of consumers after the purchasing decision is positively

influenced by the evaluations of apartment attributes

H5 The overall satisfaction level of customers after the purchasing decisions is positively

influenced by their evaluations of the service quality provided by apartment developers

In summary, this chapter presents theoretical background of each concept in the model Based on discussion of literature review, purchasing decision is affected by apartment attributes, financial status, and apartment service quality Then, the influence of these antecedents (e.g

apartment attributes and apartment service quality) on customer satisfaction level is also considered The relationship of these factors already tested by many previous scholars is presented for the conceptual model Hence, there are five hypotheses proposed for this research The next chapter will discuss about methodology that used to analyze the data and test hypotheses of the research model

Chapter 3: METHODOLOGY

This chapter presents detail information of a research methodology of this study First, it starts with research process and sample description Then, measurement scales are presented to develop questionnaires, followed by data collection method After that, in-depth interview is conducted to help measurement scales clearer and understandable Through the final questionnaire, the data of quantitative survey is used to test the measurement and structural models

3.1 Research design

3.1.1 Research process

Due to the special characteristics of the real estate industry (e.g the innate, durable and long-term characteristics of real estate) which require real estate companies to have strong marketing competencies to cope with this market to suppliers to achieve a sustainable competitive advantage (Kinnard, as cited in Phan, 2012), two phases of the study were undertaken: a qualitative study and a main survey in Ho Chi Minh (HCM) city; since it is one of the biggest cities in Vietnam and most of real estate companies centralize here (see Figure 3.1) The survey questionnaire was originally designed in English and then translated into Vietnamese by the researcher with the support of some English experts The qualitative study was undertaken by in-depth interviews during a week with six customers who have apartment purchasing transactions in real estate industry in the Ho Chi Minh City The researcher arranged

a meeting with each of interviewees in the suitable places (e.g real estate offices, cafés, and interviewees’ own homes) For each interviewee, the researcher alternately read each item of the measurement scale and asked for his or her understanding If the interviewee didn’t understand the questions, the researcher would have asked the reasons of misunderstanding and asked for

the suggestions from the interviewees The in-depth interviews would be conducted by one by one until the researcher got no more suggestions

Based on the feedback of respondents, the survey questionnaire was slightly modified to make it clearer and more understandable (see Appendix A, B, & C) After the questionnaire was modified, the self-administrated quantitative survey with convenience sampling was conducted

to collect data for testing the research’s hypotheses

Figure 3.1 Research process

Translation Draft Questionnaire

Revision Final Questionnaire

Research

Problem

Research Model & Hypotheses Literature Review

Analysis

Participants self-completed a survey with all items were measured by five-point Likert scale, anchor points including “strongly disagree” (=1), “disagree” (=2), “neither disagree nor agree” (=3), “agree” (=4), and “strongly agree” (=5) The questionnaire was mainly delivered to respondents via electronic mail, Google survey and hard copies (see Table 3.1) SPSS and AMOS were used to test the measurement and structural models

3.1.2 Measurement scales

As mentioned above, the final questionnaires consisted of five main measurement scales:

apartment attributes, financial status, apartment developers’ service quality, apartment

purchasing decision, and customer satisfaction level

Apartment purchasing decision (Coded as PurchaseDecision in CFA & SEM model)

Apartment purchasing decision was measured by four items, accessing customer purchasing behavioral process (Piron, 1993)

Apartment purchasing decision (adapted from Piron, 1993) Coding

1 I experienced a desire to purchase an apartment PurchasD1

2 I felt like I had to purchase it from the first time I saw the apartment PurchasD2

3 The urge to purchase an apartment overcome me PurchasD3

4 I have purchased an apartment PurchasD4

Satisfaction level

The scale of satisfaction level was adapted from Nahmens & Ikuma, (2009) to Vietnam context by eliminating unsuitable items and splitting items to help respondents to understand Thus, the final measurement scale for this construct has five items, accessing customer post-purchasing behavior

Satisfaction level (Adapted from Nahmens & Ikuma, 2009) Coding

1 I personally feel good that I have bought an apartment SatisfLev1

2 I am pleased that I have bought an apartment SatisfLev2

3 The attributes of the apartment that I have bought meets my expectations SatisfLev3

4 The services provide by suppliers of the apartment that I have bought meets

my expectations

SatisfLev4

5 My purchase decision is much better than other buying decisions in the past SatisfLev5

Apartment developers’ service quality

Nahmens & Ikuma (2009) developed measurement scale for apartment developers’ service quality from the scales of Parasuraman et al.(1993), Forsythe (2008), Kotler & Keller, (2009) (as cited in Nahmens & Ikuma, 2009) This scale was adapted to be suitable in Vietnam real estate market These items are referred to as component services of apartment and have a large impact on end customers, and this should be taken into account when developing the specifications for the apartment services provided by developers

Apartment service quality (adapted from Nahmens & Ikuma, 2009) Coding

1 Providing service as promised SerQua1

2 Readiness to respond to home buyers’ requests SerQua2

3 Secure housing transaction SerQua3

4 Employees who are consistently courteous SerQua4

5 Availability of after sales service SerQua5

6 Convenience of service office hours SerQua6

Financial status

The scale of financial status was developed by Ratchatakulpat et al., (2009) from the measurement scales of Adair et al., (1996), Daly et al., (2003) (as cited in Ratchatakulpat et al., 2009) These items were adapted to Vietnam context by eliminating unsuitable items to help

respondents to understand Thus, the final measurement scale has four items, accessing a relative large amount of capital, borrowing costs and payment terms

Financial status (Adapted from Ratchatakulpat et al., (2009) Coding

1 Apartment price FinanSta1

2 Maximum mortgage FinanSta2

3 Interest rate FinanSta3

4 Income payment duration FinanSta4

Apartment attributes

Measurement scales for the four components of apartment attributes would be used from those developed by Adair et al., (1996), Daly et al., (2003), Abelson & Chung (2005) (as cited in Ratchatakulpat et al., 2009) It comprises intrinsic apartment attributes, extrinsic apartment attributes, environment attributes, and location attributes The apartment attributes measurement scales were adjusted closing to features of Vietnamese cultures Therefore, intrinsic apartment attributes were measured by five items, reflecting structure of an apartment, size and number of rooms, layout & decorate style, and architectural materials extrinsic apartment attributes were measured by three items, including appearance of the whole building, garden and size of garden, and exterior spaces Environment attributes and location attributes were measured by eleven items (five items for environment attributes and six items for location attributes respectively), reflecting the quality of living environment and the means of apartment location

Apartment attributes (adapted from Adair et al., 1996; Daly et al., 2003;

Abelson & Chung, 2005, as cited in Ratchatakulpat et al., 2009)

Coding

Intrinsic apartment attributes

1 Area of structure of the apartment IntrinsA1

2 Size of rooms in the apartment (living room, bed room, kitchen…) IntrinsA2

3 Number of rooms in the apartment (living room, bed room, kitchen…) IntrinsA3

4 Layout & decorate style of the apartment IntrinsA4

5 Architectural materials IntrinsA5

Extrinsic apartment attributes

1 The appearance of the whole building ExtrinA1

2 Presence of garden and size of garden ExtrinA2

3 Exterior spaces refer to public area, such as the public aisle, elevator,

recreation room

ExtrinA3

Environment attributes

1 Air quality of the living area EnvirA1

2 Surrounding noise EnvirA2

3 Width of road and passages EnvirA3

4 Rain water drainage system EnvirA4

Location attributes

1 Location close to schools and nurseries LocA1

2 Location close to health centre and hospital LocA2

3 Location close to market, shopping centre LocA3

4 Location close to recreation places LocA4

5 Location close to workplaces LocA5

6 Location that you feel easy to get transportation vehicles LocA6

Finally, the completed questionnaire in English version and Vietnamese version were presented in Appendix D and E

3.2 Quantitative study

3.2.1 Sample

The model and hypotheses were tested using data set collected from customers who have apartment purchasing transactions in real estate industry in the Ho Chi Minh City Due to limited time, the convenience sampling approach with self-administrated questionnaires was conducted

in Ho Chi Minh City

About sample size, the size of the sample was necessarily big enough to guarantee statistical significance Hair, Black, Babin, Anderson and Tatham (as cited in Prajogo, 2007) stated that the minimum sample for appropriate use for statistical analysis is equal to or greater than five times of number of variables, but not less than 100 The model in this study consisted

of thirty-nine variables so that the necessary sample size should be: n=37*5=185 observations The author delivered 337 questionnaires to participants in order to obtain a sample size of about

185 After data collection, total 299 responses from respondents who have apartment purchasing demand and have had apartment business transactions in HCM City were collected; the response rate was approximately 88.72 percent (Table 3.1)

Table 3.1 Source of data collection Source Distributed Collected Response rate Eliminated Valid

Paper 68 64 94.11% 6 58 Online 269 235 87.36% 79 156 Total 337 299 88.72% 85 214

Then, total 85 questionnaires were eliminated because they were invalid (45 respondents who do not have apartment purchasing demand and have not had apartment purchasing transactions in real estate industry in the Ho Chi Minh City; 14 respondents just chose one option

questionnaires were used as valid data for this research In comparison with minimum sample size, this number of data was satisfactory

3.2.2 Data analysis procedures

The author used SPSS 16 for calculating Cronbach’s alpha and Amos 20 for running CFA to test the reliability for each measurement component separately and the validity for all scales Additionally, based on composite reliability (CR), the author evaluated the measurement scale’s reliability among constructs in the research model According to CFA results, average variance extracted (AVE) was used to conclude the convergent validity and correlation between items (r) was used to identify the discriminate validity Thus, to implies that the measurement is good, Cronbach’s alpha for each construct should be at least 0.6 (Nunnally & Burnstein, as cited

in Prajogo, 2007); the factor loading should be 0.5 (Hair et al., as cited in Prajogo, 2007); the minimum value of AVE is 0.5 (Molina, Montes & Ruiz-Moreno, as cited in Chong, Ooi, & Tan, 2010); and the composite reliability should be over 0.7 as recommended by Nunnally (as cited in

Chong et al., 2010) Considering the convergent and discriminated validity, the inappropriate

items would be removed if necessity Moreover, the CFA would indicate the model fit if CMIN/DF was less than 2 with p-value larger than 5%, and the comparative fit index (CFI) analyzed the model fit by examining the discrepancy between the data and the hypothesized model, while adjusting the issues of sample size inherence in the chi-squared test of model fit, and the normed fit index A CFI value of 0.90 or larger was generally considered to indicate acceptable model fit The non-normed fit index (NNFI; also known as the Tucker-Lewis index-TLI) resolved some of the issues of negative bias, though NNFI values may sometimes fall beyond the 0 to 1 range Values for both the NFI and NNFI should range between 0 and 1, with a cutoff of 95 or greater, indicating a good model fit The root mean square error of approximation

(RMSEA) avoided issues of sample size by analyzing the discrepancy between the hypothesized model, with optimally chosen parameter estimates, and the population covariance matrix A value of 0.06 or less was indicated an acceptable model fit RMSEA was smaller than 8% (Nguyen Dinh Tho & Nguyen Thi Mai Trang, 2008) Then, structural equation modeling (SEM) tested the hypothesized model and estimated path coefficients for each proposed relationship in the structural model Finally, bootstrap was used to re-test the suitable and reliability of the model

As being mentioned above, five measurement scales were sufficient for convergent and discriminant validity, were analyzed by the Confirmatory factor analysis before the hypothesized

model was tested by SEM The first-order constructs were financial status, apartment developers’ service quality, apartment purchasing decision behavioral process, and satisfaction level The

second-order construct were apartment attributes, which consisted of four sub-components: intrinsic apartment attributes, extrinsic apartment attributes, environment attributes, and location attributes

In summary, this chapter described the research process, measurement scale construction, calculation of sample size, and research method conducted to analyze the collected data This study was designed into two stages: first was qualitative study (in-depth interview), second was quantitative study (main survey) The in-depth interview was conducted to modify the measurement scale and the questionnaire was adjusted slightly and before the quantitative survey Main survey had sample size which included total 214 valid questionnaires that were used for data analysis with CFA and SEM The next chapter will present data analysis of main survey

Chapter 4: DATA ANALYSIS

Chapter 4 presents the analysis results of the sample size n=214 This process used SPSS

to review the sample’s characters and the descriptive statistic tested the normal distribution of variables basing on respondents’ demographics Then, AMOS was used for confirmatory factor analysis to examine the reliability and validity of the first order constructs, the second order construct and the final measurement model In addition, structural equation modeling was used

to test the conceptual model and bootstrap method was used to measure the parameter estimates Based on the analysis’s results, the explanation for finding research was finally discussed

4.1 Respondents’ demographics

The collected data were analyzed using the SPSS – Statistical Software Package This part aimed to provide the general information of respondents who have apartment purchasing demand and have had apartment business transactions in HCM City The results of the demographics analysis were summarized in table 4.1 Initial analysis of data indicated that there was quite equal between female and male Female was higher with 55.6% of respondents and male seized 44.4% of respondents More than half of the respondents who took part in this study were young people from 25 to 35 years old with 62.1% of total sample This number indicates that the current customers who has been purchasing apartment is very young Age ranged from below 25 to over 50 years old, with 5.6% of respondents were below 25 years old, 29.9% of people were from 36 to 50 years old, and only 2.3% of people were older than 50 years old It is quite different with gender, marital status had a dominant ratio for married (75.2 percent) and a lower ratio for single (15.9 percent) Divorced or separated people was a very small part of

marital status with 8.9 percent of respondents Family size was also used to figure out the numbers of family members of dominated group The respondents who have two or three members were the biggest groups with 35.5% and 41.1% respectively Fewer respondents have one (4.7%) and have more than three members (18.7%) Education was divided in four groups The frequency of education level also indicates an equal ratio with 42.1% for college and 43.9% for university There was a very small part of education level with 7.0 percent of respondents who just finished high school and 7.0% of them have post-graduated degree The career profile was also diversified into different portions with 11.2% of respondents are workers, 51.4% of them are officers, 26.6% of them are manager or business owner, and 10.7% of people are working as freelances Income per month of most of respondents was very high, fluctuated between 9 million VND and more than 14 million VND Specifically, 48.1% of respondents revealed that their income ranged from 9 to 14 million VND, 41.6% people earned more than 14 million VND, and the last portion with the lowest percentages was the respondents with the income less than 9 million VND per month with 10.3% of sample size Almost people in these groups firstly were able to care about basic needs (food, clothing…) and now they moved their attention to another stage of needs, a house Hence, this might affect the affordability of their purchasing decision and on the sense of satisfaction level Moreover, this demographic profile might not reflect the picture Due to research topic as mentioned above, these information only help researcher have a better understanding about respondents

Table 4.1 Respondents’ characteristics

Female Total

95

119

214

44.4 55.6

100

Demographic profile Category Frequency Percentage (%)

25 – 35

36 – 50 Over 50 Total

100

Married Other Total

100

2

3 More than 3 Total

100

College University Postgraduate Total

100

Officer Manager/Business owner

Other Total

100