A study on customer behaviors in chain coffee shops in vietnam

ABSTRACT This research aims to investigate and understand the relationship between price, customer-based brand equity, customer satisfaction, and brand loyalty in the Vietnam’s chain cof

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

-*** -

NGUYEN HUU CUONG

A STUDY ON CUSTOMER BEHAVIORS IN CHAIN COFFEE SHOPS IN VIETNAM

MASTER'S THESIS

Hanoi, 2020

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

-*** -

NGUYEN HUU CUONG

A STUDY ON CUSTOMER BEHAVIORS IN CHAIN COFFEE SHOPS IN VIETNAM

MAJOR: BUSINESS ADMINISTRATION

ABSTRACT

This research aims to investigate and understand the relationship between price, customer-based brand equity, customer satisfaction, and brand loyalty in the Vietnam’s chain coffee shops The chain coffee shops are earning big money and growing fast in Vietnam so that it is necessary to appreciate the importance of customer behaviors to manage this type of business To do that, we set brand loyalty and customer satisfaction as dependent variables and set price, congruence, and quality as independent variables then describe the difference of those relationships in two empirical cases in Hanoi and Ho Chi Minh City

We use the quantitative approach on a sample of 427 respondents in Highlands Coffee and The Coffee House, which are two major Vietnamese coffee shop brands

We utilize the structural equation modeling (SEM) method by SPSS software Descriptive analyses and path analyses of the multivariate regression model support the validity of the proposed model

The findings in this study are that significant positive effects from price, quality, and congruence on customer satisfaction and satisfaction on brand loyalty in Hanoi and Ho Chi Minh City chain coffee shops The analyses also indicate that among three antecedents of customer satisfaction, quality has the most substantial influence, follow by congruence and price Moreover, the analyses tell that in Ho Chi Minh City, customer satisfaction has much higher impact on brand loyalty than in Hanoi Several implications might be withdrawn to coffee shop brands as a consequence of these results

Keywords: Price; Food and Service Quality; Customer Satisfaction; Brand Loyalty; Martketing; Branding; Chain Coffee Shop; Vietnam

ACKNOWLEDGMENT

After two years of studying and researching at Vietnam Japan University, it is

my privilege to be able to write this dissertation From the first interview session for university entrance, I have been keeping the research orientation on the subject, which

I am interested in, customer behavior in the coffee shops industry The study included not only academic but also practical aspects with implications for understanding the customer The subjects and knowledge I gained through coursework sessions also play an essential role in supporting my research activities I hope that my research can contribute to researches on the customer behavior in the coffee shop industry

First of all, I would like express my gratitude to my advisors, Professor Peijun Guo and Professor Nguyen Viet Khoi, for their guidance and comments Especially the time when I was in Yokohama, Japan, my advisors gave me valuable advice about how I should proceed with the researching process Without their prompt and patient instructions, I cannot finish the thesis I want to say thanks to all of my friends, respondents of the questionnaires for their support and encouragement Finally, thanks to my family for emotional and financial support that motivate me for making effort to complete the research Remarkably, thanks to my mother, despite her leg injury recovering period, she has always encouraged and supported me so that I can focus on the study

TABLE OF CONTENTS ABSTRACT

ACKNOWLEDGMENT

LIST OF ABBREVIATIONS

LIST OF TABLES

LIST OF FIGURES

CHAPTER 1: INTRODUCTION 1

1.1 Background of the research 1

1.2 Problem statement 5

1.3 Research objectives 6

1.4 Scope of the research 6

1.5 Significance of the research 7

1.6 Thesis structure 7

CHAPTER 2: LITERATURE REVIEW 8

2.1 Brand equity 8

2.2 Customer satisfaction 10

2.3 Brand loyalty 10

2.4 Price 11

2.5 Relationship between brand equity, price, customer satisfaction and brand loyalty 12

2.5.1 Brand equity and customer satisfaction 12

2.5.2 Price and customer satisfaction 14

2.5.3 Customer satisfaction and brand loyalty 15

2.6 Research model 17

CHAPTER 3: METHODOLOGY 19

3.1 Research design 19

3.2 Data collection instruments 20

3.3 Data analysis 22

CHAPTER 4: FINDINGS 23

4.1 General results 23

4.1.1 Demographic information 23

4.1.2 Demographic customer behavior 23

4.2 Descriptive analysis 25

4.3 Analytical results 27

4.3.1 Statistical results in Hanoi 27

4.3.2 Statistical results in Ho Chi Minh City 31

CHAPTER 5: DISCUSSION AND CONCLUSION 38

5.1 Discussion 38

5.2 Practical implications 39

5.3 Limitations and future research recommendations 41

REFERENCES 43

APPENDIX 50

LIST OF ABBREVIATIONS

LIST OF TABLES

Table 1.1 Leading coffee shops brand in Vietnam in 2019 3

Table 3.1 Questionnaire scale and construct 21

Table 4.1 Profile of respondents……… 23

Table 4.2 Demographic customer behavior 24

Table 4.3 Descriptive analysis 26

Table 4.4 Reliability test in Hanoi 27

Table 4.5 KMO and Bartlett's Test in Hanoi 28

Table 4.6 Pattern Matrix in Hanoi 28

Table 4.7 Results of GOF tests of CFA factor analysis in Hanoi 29

Table 4.8 Convergent and discriminant validity in Hanoi 30

Table 4.9 Results of SEM analysis in Hanoi 31

Table 4.10 Reliability test in HCM City 31

Table 4.11 Pattern Matrix in HCM City 32

Table 4.12 KMO and Bartlett's Test in HCM City 33

Table 4.13 Results of GOF tests of CFA factor analysis in HCM City 33

Table 4.14 Convergent and discriminant validity in HCM City 34

Table 4.15 Results of SEM analysis in HCM City 36

LIST OF FIGURES Figure 1.1 Total domestic coffee consumption in Vietnam from 2010 to 2018 2

Figure 2.1 Research model……… …….17

Figure 4.1 CFA path analysis in Hanoi .29

Figure 4.2 SEM path analysis in Hanoi 30

Figure 4.3 CFA path analysis in HCM City 34

Figure 4.4 SEM path analysis in HCM City 35

CHAPTER 1: INTRODUCTION

1.1 Background of the research

As a developing country, Vietnam has a massive capacity of agricultural land accounts for 39% in the total area with the contribution to GDP at 15% in 2017 (Statista, 2020) The report by Statista also indicated that the primary labor force of Vietnam is in the agriculture sector, with 40% of employment amounted to approximately 20 million people in 2018 In this sector, the coffee industry is vital for both domestic and foreign markets as Vietnam has been maintaining the position

as the world’s second-largest coffee exporter in consecutive years

In the early twentieth century, coffee was first introduced into Vietnam in the time of colonization by France, coffee production then increased rapidly and became one of the most crucial agricultural products The first instant coffee plant with a manufacturing capacity of 80 tons per year, was established in Dong Nai Province,

in 1969 The two main kinds of coffee beans in Vietnam are Robusta and Arabica, containing 1.6 to 2.7% caffeine and 1 to 1.5% caffeine, respectively, making the taste

of coffee here bitter and healthier than the coffee drinks in the world

According to Tran (2019), in the marketing year of 2018/2019, domestic consumption of coffee is at 3 million bags, and the experts forecast this number will drastically increase due to the fierce competition of both international and local coffee brands in Vietnam The domestic consumption of coffee casts for approximately 10%

of total coffee production, much lower than the exported amount of coffee, which means the local coffee shops still can grow From Table 1.1, we know the upward trend in consuming coffee of Vietnamese consumers from 2010 to 2018, and this upward trend signifies the continuing increase in domestic coffee consumption in the future

Figure 1.1 Total domestic coffee consumption in Vietnam from 2010 to 2018

(Unit: 1000 sixty-kg bags) (Source: statista.com)

There are many newly-built coffee chains in recent years in Vietnam According to Le (2018), coffee chains have competitive advantages in quickly detecting target customers and creating a standardized management system Also, coffee chains have more competency in attracting consumers when they become professional brands Additionally, it is difficult to have a precise number of coffee shops in Vietnam for the fact that the independent coffee shops locate sparsely and have a short life cycle However, the coffee chains have been the trend for business

in coffee shops in Vietnam, along with the evolution of e-commerce and delivery service There are leading brands in the coffee chain market in Vietnam that prevails

in the number of stores and revenue, namely Highland Coffee, Starbucks, The Coffee House, and Trung Nguyen Coffee

American giant coffee shops brand Starbucks, which entered Vietnam in 2013, now runs 60 shops, mostly in Hanoi and HCM City However, Starbucks offers a higher price than local chains like The Coffee House or Highland though they are in the same premium segment Domestic coffee chains in Vietnam manage a wide variety of products, from drinks to foods as well as secure Wi-Fi connection and tranquil space, especially sensitive in market trends and taste of the customer

Nowadays, fast-pace economic development in Vietnam encourages competition in various business and service sectors Many big firms try to invest substantial financial sources to gain market share and revenue despite losing profit, especially in creating chain businesses Other than the growth of convenient store

markets, supermarkets, and food chains, the coffee chain market is among the growing sector in terms of the number of stores and revenue

fastest-In 2019, Euromonitor evaluated Vietnam’s chain coffee shop industry has a business volume at above one billion US$ for the improvement in living standards and urbanization This data shows that the coffee chain sector is essential In comparison, according to Statista, the revenue in the hot drinks market in Vietnam amounts to 8.817 billion US$ in 2020 In this hot drinks market, the most prominent industry is coffee, which has a business volume of 5.682 billion US$ According to a report by BMI Research, Vietnam’s coffee consumption increased remarkably from 0.42 kilograms per person per year in 2005 to 1.39 kilograms per person per year in

2015 Therefore, domestic coffee chains play a crucial part in the coffee market

However, Euromonitor also reported in 2019 that the five leading brands in the coffee chain market account for 15.3% of market share, with Highlands holding 7.2% Among the leading chains, Highlands Coffee, The Coffee House, and Starbucks are the biggest in earning revenue Table 1.1 shows the revenue and number of stores from leading coffee shop brands in Vietnam in 2019

Highlands Coffee The Coffee House Starbucks Revenue

(Unit: billion dong)

(Source: VIRAC) Highlands Coffee and The Coffee House are brands that originated from Vietnam, while Starbucks is a foreign competitor However, Highlands and The Coffee House consider their targeted customer is the middle class with a pricing segment of 30000 to 60000 VND This study then chooses these two Vietnamese brands to be objects for collecting empirical data The conclusions from the research might be useful findings for Vietnamese brands, especially Highlands Coffee and The Coffee House, to understand the behavior of their customers

Besides, the phenomenon to research on the coffee chain market is the scenario approach There is a big difference between the number of stores between the two cities of Vietnam, Hanoi and HCM City Currently, the Coffee House has 32 stores

in Hanoi and 88 in HCM City Also, Highlands Coffee maintains 81 and 111 stores

in Hanoi and HCM correspondingly This data incurs curiosity if there is a difference

in customer behavior between two cities

Highlands Coffee is the number one coffee chain in Vietnam The founder of Highlands, CEO David Thai, started the business in 1998 and opened the first store

in 2002, but it gained much brand awareness and investment after 2012 From that time, Highlands continually expands its business, from 50 stores in 2012 to 300 stores

in 2019 The strengths of Highlands are its attractive location in bustling districts, comfortable space, and high-quality products Moreover, Highlands has the ambition

to bring Vietnamese coffee to the global; recently, they opened their first outlet in the Philippines As a leading coffee shop in Vietnam in a long time, Highlands has continuously been improving brand awareness and quality, especially on the delivery system or corporate social responsibility campaign Moreover, Highlands is prevalent not only on in-shop foods and drinks but also on roasted&ground coffee, instant coffee, and ready-to-drink coffee, which are its signature products Highlands connects with food reviewing website Now.vn or Foody.vn for delivery service in addition to traditional telephone booking or its website

The Coffee House (TCH) is a young and unique brand starting from 2014, currently holds second place in the Vietnamese market of the coffee chain CEO Nguyen Hai Ninh shared three strengths of TCH for attracting customers are the socializing space, staff behavior, and convenience TCH also identified that its strategic competitor is Highlands Coffee in the same segment TCH is also continuously adapting its menus with the current trend, and especially, they had the acquisition with the Ten Ren brand to compete with milk tea shops Gradually, TCH sets up the foundation for long-term growth from the raw materials to customer service Besides, TCH also serves the customer with roasted coffee beans or subscription combos in diversifying menus They concentrate much on convenient delivery service experience, especially on developing the TCH app on smartphones, even on Momo, an e-wallet app that generates many users in Vietnam recently

People are coming to coffee shops these days for a variety of purposes, not only for having a drink but a place to gather, socialize with friends and acquaintances Therefore, it is necessary to study the significance of customer satisfaction and

loyalty Both Highlands Coffee and TCH share the same idea about the difference in the Hanoi and HCM market in Vietnam Despite success in HCM City, many coffee shop brands are skeptical about expanding business in Hanoi CEO of TCH appreciated that customers in Hanoi prefer the attractive open space However, not many brands can provide though the potential of doing business in this city is very high Therefore, this research hopes to study customer behavior in Hanoi and HCM City and contribute findings to the coffee shop brands

1.2 Problem statement

From academic perspectives, brand equity, customer satisfaction, and brand loyalty are vital for promoting sustainable development to the companies A satisfied and loyal customer does not only repeat their purchasing behavior but also but showing a willingness to spend extra money on their favored brand (Hoyer and MacInnis, 2008) Nowadays, loyalty also transforms into sharing positive comments

on the brand, referring the brand to networks and family members These advantages from customer behavior bring word-of-mouth effect and brand image, which contribute to the sustainable growth of a brand

For service industry as coffee chains in Vietnam, the price is high in relation

to the customer expenditure Therefore, it is vital to focus on CBBE and brand loyalty while the demand is still growing Coffee shops nowadays is a premium service which customer are willing to pay big money and become a regular customer Given the example of fast-food chains in Vietnam like the KFC or Golden Gate, despite charging a much higher price than a local restaurant, they still have a large number

of patronages However, food chains or coffee chains face many difficulties in competing with competitors Thus, it is of great value for them to focus on educating loyal customers and gaining customer satisfaction, which helps to keep customer stay

Kelleri (1993)i conceptualizedi thei modeli ofi CBBE,i andi Nami eti al.i (2011)i

employedithisi concepti toi studyithei effecti ofibrandiequityionicustomeri satisfactioni

andi brandi loyaltyi fromi empiricali datai ini thei UK.i Besides,i Tui eti al.i (2012)i alsoi

researchedi onisatisfactioni andiloyaltyi oficustomersi iniStarbucksi Coffeeiini Taiwani

byi structurali equationi modelingi (SEM)i method.i However,i therei isi noi ori littlei

researchi toi investigatei thei relationshipi betweeni brandi equity,i price,i customeri

satisfaction,i andi brandi loyaltyi ini thei Vietnamesei market.i Withi thei existingi

literaturei ini thei fieldi ofi Vietnami coffeei chains,i thisi researchi aimsi toi helpi ini

understandingi thei customeri behaviori ofi Vietnamesei customersi byi makingi ani

investigationionifactorsiaffectingibrandiloyalty.iIniaimoreicommonisense,iitiwilli

helpitoilearniwhetheriWesternimodelsiofibrandiequity,icustomerisatisfaction,iandi

loyaltyi arei significanti fori explainingi thei Vietnamesei customeri behaviori towardi

brands.i i i i i i i i

Theitheoreticalicontributioniofithisiresearchiisithat:itheiresearcheriaddsiainewi

factori pricei oni thei existingi modeli toi investigatei thei impacti ofi pricei oni customeri

satisfaction.i Weiexaminei howi theipriceicontributesitoi customeri satisfaction,ibrandi

loyalty,iandibrandiequity.i i

Theipracticalicontributioniofithisiresearchiisithatiweibringiinsightsiforibrandi

managementi ini chaini coffeei shops,i especiallyi spottingi thei differencei ini customeri

behavioriinitwoiscenarios.iItiisialsoihelpfuliforitheipersoniaimingitoisetiupiaicoffeei

shopi ini Vietnami ini thei futurei becausei ofi thei vitali rolei ofi investigatingi customeri

behavior,inamelyicustomerisatisfactioniandiloyalty

This paper offers an understanding of the importance of factors affecting brand loyalty and customer satisfaction from an empirical study in Vietnam Future research can further test with more factors or in other markets in Vietnam to gain knowledge about customer behavior

1.3 Research objectives

Thisistudyihasithreeiobjectivesiasifollows:i

 Toi investigatei thei effecti ofi price,i congruencei andi qualityi oni customeri

satisfactioniinichainicoffeeishopsiiniVietnami

 Toi investigatei theieffecti ofi customeri satisfactioni oni brandi loyaltyiini chaini

coffeeishopsiiniVietnami

 iToidescribeitheicustomeribehaviorifromianalysisiresultsiinitwoiscenariosiofi

coffeeichainsiiniHanoiiandiHCMiCity

1.4 Scope of the research

This study focuses on three objectives, as mentioned above Therefore, the research samples concentrated on the customer of Highlands Coffee and The Coffee House in Hanoi and HCM City The quantitative questionnaire was employed to study the phenomenon and examine the hypotheses stated in the next chapter

1.5 Significance of the research

This research aims to examine the relationship between price, CBBE, and customer satisfaction in the coffee chain sector in Vietnam The data collection tool

is questionnaire surveys with a sample of 400 respondents in two coffee chains in Hanoi and HCM City This quantitative approach enables this research to analyze the data across the sample and test the theories

The chain coffee shops sector is imperative and contributes to the growth of the coffee industry or service industry simultaneously This study then provides new data that can support brands to understand customer preferences It also recommends implications on branding which benefit coffee chains as well as other markets in Vietnam

From the literature reviews, the researcher found little or no academic paper directly studies the effect of price, congruence, quality on customer satisfaction, and brand loyalty in the case of Vietnamese coffee chains Because of this scarcity in research about the customer of coffee shops in Vietnam, scholars should also consider this research useful and information regarding the measurement of variables The results of this paper reveal knowledge about Vietnamese customer behavior in this market, and they are also useful to future research orientation in a related market

1.6 Thesis structure

This paper consists of five chapters starting with the chapter of the research background to overview and centralize the scope of the research In chapter 2, the literature reviews are given to describe the theoretical relevance of previous researches and to develop the model as well as hypotheses for further examination In chapter 3, we show the methodology, data collection, and data analyzing technique The fourth chapter shows the findings of the research, which represent descriptive analyse and analytical results In the final chapter, we discuss the results, make conclusions about the research, answer the research objectives correspondingly, recommendations to subjects, and future researches

CHAPTER 2: LITERATURE REVIEW 2.1 Brand equity

Brandi equity,i fromi thei 1980s,i hasi becomei onei ofi thei essentiali conceptsi ofi

marketingi andi branding,i hasi beeni describedi andi researchedi ini variousi ways.i

Previousi studiesi discussedi thei ideai ofi brandi equityi ini threei primaryi prospects,i

includingiaicustomer-basediperspectivei(Aaker,i1991),ifinancialiperspectivei(Simoni

andi Sullivan,i 1993)i andi thei combinedi viewi ofi thesei twoi (Anderson,i 2007).i

AccordingitoiAakeri(1991),ibrandiequityirefersitoitheiarrayiofidifferentiliabilitiesiandi

brandi assets,i associatedi withi thei brandi fori instancei includingi symbol,i name,i andi

others,iaddingiandisubtractingifromitheivalueiprovidedi byiservicesiandiproductsitoi

theifirmiasiwelliasitoifirm’siconsumersiandicustomers

Correspondingly,i Kelleri (1993)i definedi CBBEi asi thei differentiali effecti ofi

brandiknowledgeiuponiconsumeriresponseitoitheimarketingiofitheibrand.iTherefore,i

thisi perspectivei relatesi toi threei criticali concepts,i includingi brandi knowledge,i

differentiali impact,i andi consumeri responsei toi marketing.i Brandi knowledgei

designatesi thei combinationi ofi brandi imagei andi brandi awarenessi andi itsi ideasi ini

consonanceiwithitheirelationshipsiandicharacteristicsiofibrandiassociationidepictedi

earlier

Likewise,icomparingicustomeriresponseitoitheimarketingiofiaibrandiwithithei

reactionitoisimilarimarketingifromiaifictitiouslyinamediorianiunnamediversioniofithei

producti oriserviceidecidesitheidifferentiali effectiofibrandiequity.i Thei definitioniofi

customeriresponseitoimarketingiisifollowingicustomeriperceptions,ipreferences,iandi

behavioriarisingifromimarketing-mixiactivities;iforiexample,iitiinvolvesireactionsitoi

couponi promotions,i perceptioni ofi copyi pointsi fromi ani ad,i ori evaluationsi ofi ai

proposedibrandiextensioniandiothers

Onitheiotherihand,ibrandiequityiisitheienhancementi iniperceivediutilityiandi

desirabilityi thati ai brandi namei confersi ini productsi ori servicesi (Lassar,i Mittal,i andi

Sharma,i1995).iBesides,iChristodoulidesi(2010)i representsi brandiequityiasi ai setiofi

attitudes,iperceptions,ibehaviors,iandiknowledgeionitheipartioficonsumers,iresultingi

ini thei enhancedi utilityi ofi productsi andi services,i whichi facilitatesi thei brandsi toi

generateimoreisignificantirevenuesiandimarginsithanithat,iwithoutitheibrand

Aakeri (1991)i offeredi thei measurementi ofi brandi equityi conformingi toi

differenti elements,iaspects,i andidimensions.i Theiauthorirelatesi theibrandi equityi toi

multiplei issues,i includingi brandi association,i brandi awareness,i perceivedi quality,i

brandi loyalty,i andi otheri proprietaryi assetsi ofibrands.i Fromi thisi part,i CBBEi isi thei

typeiofibrandiequityithatitheiauthoriwantsitoifocusioniandiresearchiinithisistudy.i

AsiexplainedibyiWashburniandiPlanki(2002),ifouriconcepts,iincludingibrandi

awareness,iperceivediquality,ibrandiassociation,iandibrandiloyalty,iareifundamentali

dimensionsitoimeasureiCBBE.iTheiauthorsialsoinotedithatitheiperspectiveiofiotheri

proprietaryi assetsi ofi brandsi isi irrelevanti ini consumer-basedi brandi equityi

measurement.iBesides,iYooiandiDonthui(2001)ireportedithaticonsumer-basedibrandi

equityi ati thei individuali leveli ofi customeri breaksi intoi behaviorali andi cognitivei

perspectives;itherefore,iconductingiconsumerisurveysiisiaivalidimeasurement.i i i i i i

Additionally,i consumer-basedi brandi equityi isi thei synthesisi ofi physicali

quality,i staffi behavior,i brandi identification,i lifestyle-congruence,i andi ideali congruencei (Nami eti al.,i 2011).i Consequently,i thisi paperi exploresi thei impactsi ofi

self-thosei characteristicsi ofi consumer-basedi brandi equityi oni brandi loyalty,i ini

considerationioficustomerisatisfactioniasiaimedium.iKoiandiChiui(2006)iviewedithei

coffeeishopiindustryiasi ai partiofitheiservicei industry,inotablyitheifoodi andiservicei

industry,iconsequently,ireflectingiandireutilizingitheiitemsifromitheimeasurementiofi

CBBEi ini thei studyi ofi Nami eti al.i (2011)i isi viable.i Furthermore,i O’Louhglini andi

Szmigini (2006)i portrayedi thati developingi andi designingi thei relationshipi ofi brandi

associationi andi fivei dimensionsi ofi consumer-basedi brandi equityi helpedi toi meeti

functionalineedsiasiwelliasitheisymbolicineedsioficustomers.i

Besides,iforitheiresemblancei initheiresearchimatteriasianiareaiofitheiservicei

industry,i thisi studyi appliesi consumer-basedi brandi equityi byi incorporatingi fouri

dimensionsiillustratedibyiNamietial.i(2011).iTheiauthorsiformulatediaimodeliwithiai

measurementi ofi fouri dimensionsi ofi consumer-basedi brandi equityi withi aimingi toi

researchitheicaseiofihotelsiandirestaurantiindustryiinitheiUK.iThus,iforisimilarityitoi

theicaseiofihotelsiandirestaurantsiindustry,ithisipaperiemploysitheiphysicalifoodiandi

serviceiqualityi dimensionsiasi welliasi theisymbolicidimensions,i includingicongruence,iandiidealiself-congruence,itoimeasureiconsumer-basedibrandiequityiini

lifestyle-theicoffeeishopsiindustry

2.2 Customer satisfaction

Manyi typesi ofi research,i especiallyi ini thei marketingi field,i recognizedi

customerisatisfactioniasiaicriticalifactoriforitheilong-termisuccessiofiaibrandi(Pappui

andi Quester,i 2006).i Accordingly,i ai largei numberi ofi scholarsi employedi customeri

satisfactioni asi ai dominanti factori toi explorei thei post-purchasei behaviori ofi thei

customer,i fori example,i attitudinali loyaltyi andi behaviorali loyalty.i Nematii eti al.i

(2011)i describedi customeri satisfactioni asi thei leveliai producti ori servicei servesi thei

customeriandisatisfiesihisioriheriexpectations.i

Customerisatisfactionihasibothicognitiveiandiaffectiveiaspects.iTheicognitivei

aspectsirelateditoithoughtsiandijudgmentsiaboutitheiproductioriserviceianditheibrandi

whilei thei affectivei perspectivesi encompassi ai subjectivei feelingi thati thei overalli

experiencei ini dealingi withi thei firmi isi positivei (Tui eti al.,i 2012).i Baigi andi Khani

(2010)i believedi thati retainingi customersi isi certainlyi worthwhilei financiallyi ini

correlationi toi thei costi ofi gainingi newi customers,i whichi isi fari morei expensive.i

Consequently,i customeri satisfactioni isi ai vitali factori wheni doingi businessi ini suchi

profoundlyi competingi markets,i mainlyi thei hoteli andi restauranti industryi ori coffeei

shopsiindustry

Among two forms of customer satisfaction, including cumulative satisfaction and transaction-specific satisfaction, researchers concentrate more to study related to cumulative types, which refer to the extent of post-purchase satisfaction of the customer Tu et al (2012) evaluated the overall satisfaction of the latest consumptions

of products and services along with the rendezvous with the brand or their employees

2.3 Brand loyalty

Previousistudiesihaveidefinediandidevelopeditheiconceptiofibrandiloyaltyiasi

ani importanti factori ini brandingi andi marketing.i Brandi loyaltyi isi thei repeatedi

purchasingi productsi andi services,i asi welli asi supporti theibrandsi resultingi fromithei

positivei attitudei towardsi thei brandi fromi customersi (Hoyeri andi McInnis,i 2008).i

Accordingi toi Jacobyi andi Chestnuti (1978),i brandi loyaltyi refersi toi thei perspectivei

whichi isi biasedibehavioraliresponseiconveyingi overiaiperiodimadeibyidecisionsiofi

consumersiconcerningitheipurchaseiofiaiparticularibrandiorimultipleibrands,iconsideri

asiaiprocessiofipsychologicalithinkingioficustomers.iTheiauthorsialsoihighlightedithei

importanceiofibrandiloyaltyiwithitheiroleiofisimplifyingitheipurchasingidecision,ifori

keepibuyingiasiaisignaliofiloyalty.iTherefore,ithroughibrandiloyaltyiconcentration,iai

firmioriaibrandicanibuildiupitheiriregularicustomerioricustomeribase,iwhichiisimoralei

foriexpandingibusinessiscaleiandigrowth.i i i i

Becauseibrandiloyaltyiisiaipsychologicaliconceptidefinedibyimanyischolars,iiti

isi difficulti toi measurei iti objectively.i Onei method,i includingi pricei sensitivityi andi

purchasingi behaviors,i isi widespreadi andi mentionedi ini variousi studies.i Moreover,i

brandi loyaltyi isi informativelyi measuredi byi inspectingi customersi toi assessi theiri

commitmenti toi thei brandi basedi oni criticali itemsi suchi asi thei attitudei towardi thei

productianditheiriconsistentiopinionsiovertimei(Mohammad,i2012).iPreviousistudiesi

suggesti twoiperspectivesi toiviewibrandi loyalty.i Attitudinaliloyaltyiattributesitoi thei

positiveifeelingioriopinionionitheibrandiitselfioritheiproductsiprovidedibyitheibrandi

(GremleriandiBrown,i1996).iThereiareimultipleiwaysitoimeasureiattitudinaliloyalty,i

foriexample:i“intentioniofiwordiofimouth”i(Bouldingietial.,i1993)iori“willingnessitoi

payi ai premiumi price”i (Narayandas,i 1996).i Oni thei otheri hand,i behaviorali loyaltyi

regardsiasitheipurchasingibehavioriorirepeateditheifrequencyiofipurchaseiproductsiofi

thei samei brandi overi timei (Chaudhurii &i Holbrook,i 2001).i Bandyopadhyayi andi

Martelli(2007)iconsidereditheicauseiandieffectirelationshipibetweeniattitudinaliandi

behavioraliloyalty;iforiinstance,iifi ai customeriholdsi ai pleasanti experienceiwithithei

brand,iconsequently,iheiorisheifavorsibecomingiairepeatediconsumer

Choi et al (2011) developed a set of brand loyalty items that were useful for further researches This measurement of brand loyalty helped in mitigating the risk

of other factors affecting behavioral brand loyalty, such as convenience or habit Besides, Nam et al (2011) also described a set of items to assess brand loyalty This research then employs items from previous papers to study the correlation between brand loyalty and other variables

2.4 Price

A price refers to the amount of payment or compensation given by one party

to another in exchange for one unit of goods or services (Schindler, 2012) Price is also an element of marketing mix together with product, place, and promotion Besides, from the business viewpoint, marketing mix is a critical tool for firm and organization to achieve marketing target as well as increase the sale and financial

performance (Bay, Petrizzi and Gill, 2008) In the service industry, the price has the intangible nature of service, then in case other information is missing, price becomes

a pivotal quality degree (Olander, 1970; Zeithaml, 1981) Moreover, it is imperative that the firm also confronts with setting price competitively, for example, a customer considers price as a basis to choose the brand in situation among several competing service organizations (Yelkur, 2000)

According to Olson (1977), the objective or actual price has been defined distinctively from perceived price, and whether the price is low or expensive is understood by the actual price by the customer Moreover, Yoo et al (2000) represented that price is subjectively perceived by the consumer; it is possible to measure it by collecting the opinion of the consumer Using items of Smith and Park (1992), the authors also developed eight items related to price measurement; for instance, “the price of this brand is high.” This paper, therefore, will adapt and employ this method of price assessment as a part of the scale for measuring the research variable

2.5 Relationship between brand equity, price, customer satisfaction and brand loyalty

2.5.1 Brand equity and customer satisfaction

Serviceiqualityiisiaifundamentalipartiofimarketingiandihelpsiinisustainingiandi

succeediinibusinessi(Fitzsimmonsietial.,i2001).iPreviousistudiesialreadyiresearchedi

serviceiquality,iandithisipaperiutilizesitwoiperspectivesiofiserviceiqualityicomprisingi

staffibehavioriandiphysicaliqualityitoiinvestigateiinitheifieldioficoffeeishopsiindustry.i

Thei staffi behaviori reflectsi thei competence,i friendliness,i andi helpfulnessi ofi staffi

membersiini theiserviceiindustry,iwhileitheiphysicaliqualityidimensionirefersitoithei

physicalifacilitiesiofitheibrandi(BloemeriandiKaspe,i1995)

Thei physicali facilitiesi accommodatei firmsi toi givei thei customeri ai pleasanti

experience,iwhichimayi incurinoti onlyirepeatedipurchasingibehavioributialsoi of-mouthi effect.i Consequently,i ai goodi andi pleasanti experiencei alsoi provokesi

word-customersi ini termsi ofi stronglyi affectingi theiri leveli ofi satisfactioni andi loyaltyi

(BloemeriandiKaspe,i1995;iRyuiandiJang,i2008)

Onitheiotherihand,itheistaffibehaviorihasianiimpactionicustomerisatisfactioni

becauseiduringiserviceiprovidingiprocessicustomerihasiaiparticulariexperience,iiticani

rolei ini creatingi customeri satisfactioni asi theyi havei ultimatei responsibilityi ini

contactingiandiprovidingiserviceitoicustomers,imeetingitheiriexpectationsi(Zeithamli

etial.,i1986).iPastiresearchesihavei describedithati low-skilledistaffimightiinduceithei

negativeiemotionaliexperienceiofitheicustomeribecauseithoseistaffimightibeireluctanti

toicopeiwithithatiemotioniofitheicustomeriproperlyiwhileitheyiareitheirepresentativei

ofi theifirmi(Bloemeri&i Kaspei 1995;iLemminkiandi Mattsson,i2002).iAdditionally,i

Hanietial.i(2015)ibelievedithatitheibehavioriofiemployeesihasiaisignificantieffectioni

overallicustomerisatisfaction.iBesides,iBhattacharyai andiSeni(2003)iresearchedithei

expliciti servicei attributei andi reportedi thati thei politenessi andi attentivenessi ofi staffi

alsoihaveianiimpactionicustomerisatisfaction

Also,i therei arei numerousi scholarsi identifiedi andi employedi thei relationshipi

amongicustomerisatisfaction,iphysicaliqualityiandistaffibehavioriinidifferentisectorsi

ofitheiserviceiindustryiforitheiristudies,inamelyiParasuramanietial.i(1988);iBergamii

&iBagoiii(2000);iBradyi&iCronini(2001);iRyui&iJangi(2008)

The lifestyle of people refers to how they purchase products or choose a brand, for example, luxury goods or services Brands and brand settings are expressions of lifestyles (Solomon, 2002) Peter and Olson (2008) defined lifestyles as the specific manner that people conduct their lives Also, Solomon et al (2006) described lifestyle

as a way to differentiate people belong to a group or not According to Casswell and Maxwell (2005), interpretation desired experiences and lifestyles when the customer uses a product or service facilities to build a brand Similarly, the authors believed that the suitability of the brand and personal lifestyle of consumers stimulates the right attitude of the customer with the brand Lifestyle-congruence describes the degree to which brand consumption supports consumers’ unique pattern of living as expressed by their activities, interests, and opinions (Nam et al., 2011)

Sarkiietial.i(2012)iportrayedipurchasingibehavioriasirelatesitoiemotionimorei

thani rationale.i Thisi researchi alsoi mentionedi thati encouragingi customersi toi buyi

productsioriservicesiofiaibrandiisiinfluencedibyimanyiexternalifactorsisuchiasiculturei

andilifestyle

Solomoni(2002)ialsoiidentifieditheimechanismiforitheimarketingiofilifestyle,i

whichiaimsitoigainicustomerisatisfactioniisiharmonizingitheispecificilifestyleiofithei

customeri toi brandi strategy.iResearchesi abouti thei effectiofi lifestylei onithei leveli ofi

satisfactionioficustomeritowardsiaibrandiconfirmithatithereiisiaipositiveirelationshipi

betweenicustomerisatisfactioniandilifestylei(Kyungnam,i2011;iAwaniandiRehman,i

2014).i Ai furtheri studyi conductedi byi Nami eti al.i (2011)i alsoi confirmedi thati thei

congruencei betweeni thei lifestylei ofi consumeri andi ai brandi stronglyi reinforcei

customerisatisfaction

The construct of congruence relates the personality of brands to the concept of consumers (Nienstedt et al., 2012) AccordingitoiBaumeisteri(1999),iself-concepti refersi toi thei sumi ofi thoughtsi andi feelingsi ofi ai personi abouti himselfi ori

self-herself,iincludingitheicomprehensioniofithatipersoniaboutiwhoiandiwhatitheiselfiis.i

CarliRogersi(1959)ialsoiidentifiedithreeiperspectivesiofiself-concept,iincludingiimage,iself-esteem,iandiidealiself.iInitheseithreeiconcepts,ithisipaperiemploysitheiusei

self-ofiideal-self,iwhichimeansiwhatiindividualsiwishitheyiwereibecoming

Sirgyi eti al.i (2000)i developedi self-congruencei theoryi andi definedi congruenceiasitheiextentitoiwhichiactualiandiidealiself-congruenceimatchesiwithithei

self-brandi image;i thisi leveli theni partiallyi influencei customeri behavior.i Ambleri eti al.i

(2002)ialsoishareitheisameiopinionioniself-congruence;itheiindividualiownsioribuysi

brandsitoienhanceitheiriself-esteem

Hei andi Mukherjeei (2007)i consideredi self-congruityi asi ai cruciali factori ini

researchingi variousi aspectsi ofi customeri behavior,i andi iti isi ofi greati importancei ini

beingi antecedenti toiimpacti customeri satisfaction.i i Previousi studiesibyiAndreasseni

(1994),iBakeri(1987),iandiGrewali&iMangleburgi(2000)ialsoisupportedithatithereiisi

aipositiveicorrelationibetweenicustomerisatisfactioniandiidealiself–congruenceiinithei

servicei industry.i Ini thei studyi abouti thei effecti ofi brandi self-congruencei oni thei

behavioriofitheicustomer,ibrandiself-congruenceihasimoreiimpactionisatisfactionithani

attitudeiandipreference.i

Thisi studyi theni combinesi thei physicali quality,i staffi behavior,i lifestylei

congruence,i andi ideal-selfi congruencei dimensionsi ofi CBBEi intoi qualityi andi

congruenceidimensionsitoiexploreitheiriimpactsionicustomerisatisfaction

2.5.2 Price and customer satisfaction

According to Peng and Wang (2006), the customer has to pay the price as the financial cost they purchase products or services, then the customers consider price

as a crucial thing to decide between buying a product or service There is a close relationship between the fairness of price and customer satisfaction (Al-Msallam, 2015) The authors found that price fairness is one of the critical determinants for customer satisfaction because the customers often switch to any other brand which offers a reasonable price This idea means that as long as a brand offers a fair price, the customer will stick to them for a longer-term

Most of the customers view price with the service quality; when there is a match, the result is customer satisfaction and vice versa (Oliver, 1997) This idea means the customers have a tendency to pay for the product or service if they feel the deal given by the service provider is reasonable There are two perspectives in calculating the price perception (Cheng et al., 2008) The first one is the reasonableness of price, which refers the customer’s perception of the differentiation between one brand and the others The other aspect is how the customers consider the relative position of a brand; then, they perceive the fairness of price concerning the value of money Ordinarily, the products or services with low quality are often cost lower than those with high quality (Chitty et al., 2007)

Many studies proclaimed that there is a positive correlation between price perception and customer satisfaction (Oliver, 1997; Cheng et al., 2008) The leading cause of customers changes service providers stays in price problems; for example, the lack of fairness or reliability in pricing policies of the firms (Peng and Wang, 2006) Consequently, a brand, in order to gain customer satisfaction, should consider the fairness of pricing under maintaining and improving the service quality

2.5.3 Customer satisfaction and brand loyalty

Accordingi toi Oliveri (1999),i ati thei affectivei stagei ofi customeri satisfaction,i

consumersi wouldi nurturei ai positivei attitudei towardsi thei service-provideri ori thei

brandi patronageiresultingifromi satisfactoryirepetitivei purchasingi actioni overi time.i

Thisibrandiexperienceithenimakesicustomerisatisfactioniaicriticalifactoriiniembracingi

brandi loyalty.i Numerousi studiesi havei focusedi oni thei explorationi ofi thisi satisfactionirelationshipi(e.g.,iSzymanskiiandiHenard,i2001;iChoiietial.,i2011;iSongi

loyalty-eti al.,i 2012)i andi thati customeri satisfactioni isi thei predecessori ofi brandi loyaltyi

(Kapferer,i2008;iMartisiuteietial.,i2010;iNamietial.,i2011).i i

Besides,i Bennetti andi Rundle-Thielei (2004)i believedi thati ifi customersi arei

satisfiediwithitheiproductiandiserviceiofiaibrand,itheyihaveihighitendenciesitoikeepi

usingitheibrand,iencourageiothersitoiuseithisibrand,ianditheyiareilessilikelyitoiswitchi

toi otheri brands.i Moreover,i thei relationshipi betweeni satisfactioni andi loyaltyi isi

significantiinibothithei short-runiandilong-run;itheyiareilikeitwoiuniqueiconceptsiori

stepsi relatingi toi thei attitudei ofi customersi towardsi brandi ori brandi seti (Mittali andi

Kamakura,i2001).iIniotheriwords,ibrandiloyaltyiisitheifinalistageithatiresultedifromi

theiresponsesiofi theicustomeritoitheiofferingsiofithei brand,iwhichifollowifromithei

initialisatisfactionistage

Brakusi eti al.i (2009)i conductedi ai studyi ini thei USi marketi toi investigatei thei

relationshipi betweeni brandi loyaltyi andi customeri satisfactioni andi foundi outi thati

satisfactioniwithibrandiexperienceiisianiinfluentialimediatoriaffectingibrandiloyalty.i

Researchesi ini manyi sectorsi andi thei empiricali studiesi demonstratedi ai positivei

correlationi betweeni loyaltyi andi satisfaction:i Backi andi Parksi (2003)i ini theiservicei

industry;iRustiandiZahoriki(1993)iiniretailibanksiandihoteliindustry;iMcDougalliandi

Levesquei(1994)iinimultipleisectors

Namietial.i(2011)ipresentediaimodeliiniwhichicustomerisatisfactioniplayedithei

rolei ofi mediatori ofi brandi loyaltyi andi consumer-basedi brandi equity.i Thei authorsi

conductediempiricaliresearchiinitheihoteliandirestaurantiindustryiinitheiUK,iandithei

resulti isi unsurprised,i therei isi ai positivei effecti ofi brandi equityi oni brandi loyaltyi

throughi customeri satisfaction.i Lateri ini 2012,i Tui eti al.i alsoi investigatedi thisi

correlationi ofi loyaltyi andi satisfactioni ini Starbucksicoffeei shopsiiniTaiwan,iwhichi

supportedisimilariresults.iThisicaseimeans,iasiaipartiofitheiserviceiindustryiorifoodi

andibeverageisector,icoffeeishopsiareiaipotentialicontextitoiconductiaistudyitoiexplorei

thisirelationshipiofibrandiloyaltyiandicustomerisatisfaction

Suh and Yi (2006) highly valued the strong effect of customer service on brand loyalty with the direct connection rather than typical advertisements or brand image This view implies that focusing on customer satisfaction helps in strengthen brand loyalty, especially for the product and service of the brand The coffee shops offer products in a service-based manner; therefore, the essence of customer satisfaction must be higher in both tangible and intangible aspects (Morrison and Crane, 2007)

On the other hand, studies by Zeithaml et al (1996); Bloemer et al (1999); Cronin et al., (2001); Johnson et al (2001) also supported that satisfied customers exposed additional loyal behavior In the situation in which the service has a vital role along with brand experience, enhancing brand loyalty needs more than just having tasty product offerings

2.6 Research model

The above literature reviews are about CBBE, brand loyalty, price and customer satisfaction, and their relationships From these conceptual constructs, this paper foresees the influences of price and brand-equity on customer satisfaction and customer satisfaction on brand loyalty Although different from the conceptual model from Nam et al (2011), we do not test the role of the brand identification dimension

in the model because the coffee chains market in Vietnam is still developing with little awareness from the customer about brand identification However, it is of the great potential that there is a positive effect of the price on customer satisfaction, which is a new dimension to the conceptual model Moreover, from the phenomenon about location, the hypotheses are developed and tested as two separate empirical cases in Hanoi and HCM City Therefore, the author developed the research model with four hypotheses as follows:

Brand Loyalty Quality

Congruence

Customer Satisfaction

 Hypothesis 1: Pricei hasi ai positivei effecti oni customeri satisfactioni ini chaini

coffeeishopsiiniVietnam.i i i

 Hypothesisi2:iQualityihasiaipositiveieffectionicustomerisatisfactioniinichaini

coffeeishopsiiniVietnam

 Hypothesisi 3:i Congruencei hasi ai positivei effecti oni customeri satisfactioni ini

chainicoffeeishopsiiniVietnam.i

 Hypothesisi4:iCustomerisatisfactionihasiaipositiveieffectionibrandiloyaltyiini

chainicoffeeishopsiiniVietnam

CHAPTER 3: METHODOLOGY 3.1 Research design

Thisi studyi aimsi toi identifyi andi investigatei thei relationshipi betweeni price,i

congruence,i quality,i customeri satisfaction,i andi brandi loyaltyi ini thei coffeei shopsi

industryiiniVietnam.iTheiresearcheriadoptsideductiveireasoningiwithiaitheoryiabouti

thei concernedi topici insteadi concentratesi oni formulatingi testablei hypothesesi byi

collectingi observationsi andi gatheringi datai thati concernsi thei confirmationi ofi thei

originalitheory

Besides,i thisi paperi usesi ai quantitativei researchi strategyi generatingi thei

numericalirepresentationiofiaiparticulariphenomenonithroughicollectedidata.iItitheni

employsi thei survey-stylei questionnaire,i whichi isi populari andi effectivei asi thei

previousi researchesi ini thei field.i Underi timei andi resourcei limitations,i thei authori

considersi theideductivei approach,iquantitativeiresearchistrategy,i andiquestionnairei

areitheimostisuitableidesignitoiconductithisipaper

First, this study utilized secondary data coming from journal articles, textbooks, and media stories, which ensured the research motivation and literature reviews The process follows a pilot test for the validity purpose of the questionnaire

by the 47 offline surveys (27 in Hanoi; 20 in HCM City) These surveys reinforced the meaning of research items and the translation of questionnaire items into the Vietnamese language The author then conducted surveys to collect primary data in the one month between February and March 2020 in Vietnam under a common sampling technique Thisi paperi collectsi datai byi onlinei questionnairesi withi thei

purposiveisamplingi followingi chosenicriteria:i (1)iTheirespondentiareicustomersiofi

Highlandsi Coffeei ori Thei Coffeei Housei ini Hanoi,i andi HCMi City;i andi (2)i Thei

respondentihasipurchaseditheiproductioriserviceiofitheseibrandsiatileastithreeitimesi

inirecentithreeimonths

Asi ai structurali equationi modelingi (SEM)i research,i thisi studyi includesi thei

exploratoryiandiconfirmatoryifactorianalysis,iandiaccordingitoiGorsuchi(1983),ithosei

fairi samplesi requirei thei minimumi samplei ofi200i observations.i Also,i accordingi toi

Hairietial.,i(2010),itheileastiratioiofiobservationsioveriaiquestionnaireiitemiisi5:1,iandi

Klinei(2015)ibelievedithatitheiN:qiratioishouldibei20itoi1iorieachiparameteriinithei

modeli requiresi 20i participants.i Therefore,i thisi studyi withi 24i itemsi andi fouri

Thei authori generatedi 450i questionnairesi equallyi distributedi ini Hanoii andi

HCMiCity.iAftericheckiandieliminationiofifalseioriincompleteiresponses,ithereiwerei

427icompletediandivalidianswersiforitheianalyzationistepsi(218iiniHanoiiandi209iini

HCMiCity),iwhichiindicateditheivalidirateiofi94.9%

In terms of analytical technique, this study utilized IBM SPSS Statistics 20 and AMOS 21, which is an added module of SPSS to conduct multivariate analyses and test hypotheses AMOS is a popular tool in SEM, and it also helps to graph and

to modify the relationship between variables

3.2 Data collection instruments

This paper studies the relationship between five variables, including price, quality, congruence, customer satisfaction, and brand loyalty The scale using for the research has been used in previous researches to apply to the case of the coffee shops

industry in Vietnam In specific, the price variable consists of four items dropped from Yoo et al., (2000) The congruence variable comprises of six items of ideal-self

congruence and lifestyle congruence adopted from Nam et al., (2011) The product

and service quality variable was evaluated with six items from Nam et al., (2011)

Customer satisfaction and brand loyalty measured by four items respectively, were adopted from Choi et al (2011)

Apart from demographic questions, surveys of this study also employed a point Likert scale for all those variables to assess the answers of respondents ranging from strong disagreement to strong agreement The table below then summarizes the scale and construct of the questionnaire:

five-Table 3.1 Questionnaire scale and construct

Brand

Loyalty

BL1 Sharing good comments about the brand BL2 Continue purchasing and using the brand in future BL3 Prefer this brand to others

BL4 Recommend this brand to someone who ask

3.3 Data analysis

Structural equation modeling (SEM) has advantages in running multiple regression models simultaneously, while one variable might be both independent and dependent This study follows the typical steps in an (SEM) research to investigate the relationship in literature Firstly, each latent variable will go through the reliability check based on the Cronbach’s alpha indices If the observed variables meet the required threshold, the remained indicators proceed to the explanatory factor analysis (EFA) for testing if they belong to the same variables The critical result is the principal axis factoring with the convergence of criteria into iterations The CFA analysis step follows to examine the reliability of the measurement items as a whole with the goodness-of-fit and statistical indices The last step is to run the SEM analysis, where the path loading of the proposed model will be tested In this study, the objects are the coffee chain market in Hanoi and HCM City; therefore, we will run the model twice for checking the hypotheses and comparing the results of two cases