Factors affecting customer loyalty in mobile communication services in ha noi viet nam

The Dissertation of NGO ANH CUONG entitled FACTORS AFFECTING CUSTOMER LOYALTY IN MOBILE COMMUNICATION SERVICES IN HANOI, VIETNAM Submitted in Partial Fulfilment of the Requirements fo

_

A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines

in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam

The Dissertation of

NGO ANH CUONG

entitled

FACTORS AFFECTING CUSTOMER LOYALTY IN MOBILE

COMMUNICATION SERVICES IN HANOI, VIETNAM

Submitted in Partial Fulfilment of the Requirements for the Degree

DOCTOR OF BUSINESS ADMINISTRATION

A program offered by Southern Luzon State University,

Republic of the Philippines in collaboration with

Thai Nguyen University, Socialist Republic of Vietnam

has been approved by Oral Examination Committee

CECILIA N GASCON, PhD

Chairman

Accepted in Partial Fulfilment of the Requirements for the Degree

Doctor of Business Administration

_ WALBERTO A MACARAAN, EdD

Date Vice President for Academic Affairs

This is to certify that the research work / dissertation entitled “Factors

affecting customer loyalty in mobile communication services in Hanoi, Vietnam”, orally defended/ presented under the DBA Program jointly offered

by Southern Luzon State University of the Republic of the Philippines and Thai Nguyen University of the Socialist Republic of Vietnam, embodies the result of original and scholarly work carried out by the undersigned

This dissertation does not contain words or ideas taken from published sources or written works by other persons which have been accepted as basis for the award of any degree from other higher education institutions, except where proper referencing and acknowledgement were made

Researcher/Candidate:Ngo AnhCuong (Smile) Date Orally Defended: October 10, 2013

Iwould liketo express ourmost sincere thankstothe Management Board

ofthe SouthernLuzonState University, Thai Nguyen University; teachers of theschoolhavehelped mefacilitatethe learning processthroughout

Iwould like to expresssinceregratitude to Dr Nelly Mendoza, myenthusiasticteacher whohasdedicatedguidance, encouragement, timeandhas shared knowledgefor meduringthis research I also would like to

thank Dr Joanna Paula Ellaga who has insightful suggestion for my dissertation

IsincerelythanktheBoard of theUniversityofLaborandSocial Affair

(ULSA), colleaguesinULSA, classmates in DBA1 who enthusiastically

facilitated,helped andsharedexperienceto helpcomplete the dissertation

Finally, Iwould like to thank my best friends who have encouraged to complete mydissertation

Ngo AnhCuong

TITLE PAGE ……… i

APPROVAL SHEET ……… ii

CERTIFICATE OF ORIGINALITY ……… iii

ACKNOWLEDGEMENT ……… iv

DEDICATION ……… v

TABLE OF CONTENTS ……… vi

LIST OF TABLES ……… viii

LIST OF FIGURES ……… x

ABBREVIATIONS ……… xi

LIST OF APPENDICES ……… xii

ABSTRACT ……… xiii

CHAPTER I INTRODUCTION ……… 1

Background of the Study ……… 2

Statement of the Problem ……… 3

Objectives of the Study ……… 4

Hypotheses of the Study ……… ……… 5

Significance of the Study ……… 6

Scope and Limitations of the Study ……… 7

Definition of Terms ……… 8

II REVIEW OF LITERATURE ……… 11

Conceptual Framework ……….… 39

III METHODOLOGY Locale of the Study ……… 41

Research Design ……… 41

Determination of Sample Size ……… 43

Sampling Design and Techniques ……… 43

Research Instrument ……… 44

Statistical Treatment ……… …….…… 51

IV RESULTS AND DISCUSSIONS ……… 54

4.1 Respondent’s Profile ……… 54

4.2 Preliminary Analysis of the Component Variables … 56 4.3 Hypothesis Test ……… 60

4.4 Factors Affecting Customer Loyalty ……… 66

V SUMMARY, CONCLUSION AND RECOMMENDATION Summary……….……… 86

Conclusions ……… 89

Recommendations ……… 91

REFERENCES ……… ……… 98

APPENDICES ……… 101

CURRICULUM VITAE ……… 189

4.3 The Distributive Sample by Services Type and the Market

4.4 The Summary of the Distributive Sample by Gender, Age

4.5 How to Calculate the Average Value of the Variable 57

4.7 The Mean Value of Switching Barrier 60 4.8 Correlation Coefficients of Variables 63 4.9 Correlation Coefficients of Switching Barrier and Customer

4.10 Relationship Between Gender with Service Providers 67 4.11 Relationship Between Education of Subscribers with

4.12 Relationship Between Selections of Service Provider with

4.13 Relationship Between Selection of Service Provider With

4.14 Relationship between Value - Add Service with Gender of

4.15 Relationship between “Adapting Cost” with Gender of

4.16 Relationship Between Calling Quality of Service Providers

with Per Average Income of Subscribers 76

4.17 Relationship Between the Adapting Cost with Subscriber’s

4.18 Relationship Between Assessment About “The Supplier

Has Service Packages With Different Charge to Suitable

Customer Demands” With Education Level of Subscribers 79

FIGURE PAGE

1 The Market Share of Mobile Subscribers in Hanoi, 2011

2 Proposed Integrated Model of Service Loyalty 31

3 Switching Barrier Model of Customer Loyalty 32

4 Customer Loyalty about Mobile Communication Service in

5 The Model of Impacting Satisfaction and Switching Barrier

to Customer Loyalty the Mobile Communication Service in

6 The Proposed Model for Mobile Communication Service in

VNPT Viet Nam Post and Telecommunications Corporation

VINAPHONE Viet Nam Telecom Services Company

SPT Saigon Post & Telecommunications (Sfone)

HANOI TELECOM Ha Noi telecom Corporation (Vietnammobile)

Title of Research : FACTORS AFFECTING CUSTOMER LOYALTY IN

MOBILE COMMUNICATION SERVICES IN HANOI, VIETNAM

Researcher : NGO ANH CUONG (SMILE)

Degree Conferred : DOCTOR OF BUSINESS ADMINISTRATION

Name and Address

of Institution

: Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University, Socialist Republic of Vietnam

Adviser : Dr Nelly I Mendoza

Year Written : 2013

Customer turns to be an important concern for management due to the increasing competition particularly in mobile telecommunication services Customer loyalty plays a very crucial role for achieving the competitive advantage for enterprises According to service providers, service quality - calling quality, pricing structure, value – added service, customer support services, etc, and switching barriers -loss cost, adapting cost, attractiveness

of other service providers, etc, are motivational factors to maintain customer loyalty as well as an essential element for business and increasing market share

Currently, Hanoi is one of the cities in Vietnam that has a great number

of mobile subscribers and suppliers According to theMinistry of Informationand Communication, in 2012, there were 9.1 millionmobile subscribers in Hanoi in which, market share of the service provider are as follow:Vinaphone was 31.25%, Viettel was 43.03%, Mobifone was 18.5%, Vietnammobilewas 2.57%, Gtel was 4.63% and SPT was 0.02% Thus, the

mobile subscribers to mobile communication services in Hanoi, Vietnam.

The main tool is a questionnaire used to gather information on customer loyalty for mobile service providers in Hanoi Since the researcher did not have the list of the customers of service providers, the sampling method used was random sample based on several factors: the market share

of vendors, demographic (gender, age group and occupation) factors, and types of services (postpaid and pre-paid) There were 400 customers who were selected for the interview In addition to information about the customers, the questionnaire was designed to include 42 attributes of mobile communication services that customers usually look for rated through the Likert scale having the descriptive rating from 5 for strongly agree to 1 for strongly disagree The subscribers, as the respondent were interviewed irrespective if they are prepaid and postpaid customers

The study used correlation coefficients and Chi-square test to test the hypothesis and assess the relationship between factors with customer loyalty The multiple regression model was used to evaluate the factors affecting customer loyalty in the mobile communications market in Hanoi

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

Result of analyzing multiple regression model showed that there were 7 factors affecting customer loyalty The “service quality” had four components: calling quality, pricing structure, value-added services and convenience in procedures The “switching barrier” had three components: loss cost,

that affect customer loyalty, the "customer relationship" was the strongest influence Therefore, service providers should improve the "customer

relationship" to maintain existing customers and attract new customers

Chapter 1 INTRODUCTION

Customers are invaluable assets of the business Customer loyalty is significant to the future development of a general company or the particular mobile service providers It contributes to maintain stable profits when the subscriber reaches the saturation point, mature market and fierce competition According to the Nguyen Duc Ky and Bui Nguyen Hung (2007), the developmental history of the mobile communication services market in European countries, the United States and some countries in the region such

as China, Korea, Taiwan, India, etc, and even in Vietnam showed that the general market has some notable features When the market is new and its rapid growth is through technological innovation, the technological cycle is more and more shorter Initially, the mobile services was the monopolist market (monopoly technology, monopoly of scale…) and it only provided services for postpaid so customers was tied by service contract of the provider After the market was opened, technology becomes popular, investment costs decline, new providers enter the market, competitive pricing becomes a practice, value- adding to improve service quality is included as a strategy and customers have many opportunities to select providers

Thus, in recent years it was realized that researches have to be done on the different models about satisfaction and customer loyalty in the mobile communication services These researches were built on the ground of the traditional relationship between service quality and satisfaction-loyalty and analyzing factors affecting customer behavior In addition, researches in

Korea, China, Taiwan have showed that the mobile communication markets in these countries have many similarities with the market in Vietnam

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

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

Background of the Study

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

So, research on factors affecting customer loyalty in mobile telecommunication services in Viet Nam is significant to discover new scale and a new theoretical model for managers In practice, they "retain" customers, as customers become more loyal then it brings the urgency especially to the three big service providers: Vinaphone, Mobiphone, and

SPT as the mobile communication market in Viet Nam is on its saturation phase Likewise, research results will provide information for management to formulate effective strategy for the use of telecommunications resources and helping suppliers of mobile telecommunication services plan and implement more effective follow-up market activities and customer care services

Statement of the Problem

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

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

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

Therefore, there is great competition in attracting subscribers The competition between service providers in the mobile communication are mainly based on tariff reduction and continuous promote programs so that it makes waves move to provider That is the main reason why subscribers have been not loyal to the suppliers as in the monopoly market before 2003

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

a What are the significant factors that affect customer loyalty on mobile communication market in Hanoi?

b What are the relationship between the different factors that affects customer loyalty?

c What are the impacts of each factor to customer loyalty?

d What are some solutions to improve customer loyalty of mobile communication services?

Objectives of the Study

Hanoi, as the commercial center of Vietnam in the north, is currently on its developing stage and people are very much curious and eager to use modern technologies that are in the market Generally, the study would like to identify the factors that primarily affect the loyalty of the mobile subscribers to mobile communication services in the Northern part of Vietnam

Specifically, the research sought to:

1 Describe the different characteristics of the customers of the mobile subscribers in Hanoi, Vietnam;

2 Analyze the different factors affecting customer loyalty for mobile subscribers;

3 Assess the relationships of the respondents characteristics to the different factors that affect customer loyalty; and

4 Propose some solutions to improve customer loyalty for the mobile communication service providers

Hypotheses

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

H1: Customer’s characteristics affect customer loyalty

H2: Service quality has a positive effect on customer satisfaction

H2.1: Increasing the call quality will increase the satisfaction level

on service quality;

H2.2: More reasonable price structure will increase the

satisfaction level on service quality;

H2.3: Increasing the value - added service quality will increase the satisfaction level on service quality;

H2.4: More convenience in procedures will increase customer satisfaction levels on service quality;

H2.5: Customer service is related to customer satisfaction on service quality

The concept of switching barrier is expressed by latent variables and to be measured by three factors: switching cost (loss cost, adapting cost, move – in cost), attractiveness of other providers and customer relationship

H3: Customer satisfaction has a positive effect on loyalty

H4: Switching barriers has a positive effect on loyalty

H4.1: Loss cost affects the decision of the customer to change

provider;

H4.2: Adapting cost is a switching barrier to the customer;

H4.3: Higher move – in cost is a switching barrier to the customer; H4.4: Attractive offers of other providers are switching barrier to

the customers;

H4.5: Customer relationship is a switching barrier to the customer

Significance of the study

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

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

On the other hand, these do not have a research about loyal customer

dissertation will identify factors affecting customer loyalty specifically the factors of service quality factors and switching barrier will impact how the customer satisfaction and loyalty

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

Finally, the dissertation results can help service providers to identify key factors related to customer satisfaction and customer loyalty while helping service providers develop and implement marketing strategies to improve customer loyalty and limited switching wave between service providers The dissertation will also provide important information for mobile service providers so they can formulate specific strategies and plans for executing more effective marketing strategies and customer care

Scope and Limitations of the Study

The scope of the study focused on the customers who have been using mobile in Hanoi It includes prepaid and postpaid So, researches of the dissertation do not reflect for other provinces in the country That is one of the limitations of the dissertation

Also, the dissertation only analyzed factors affecting customer loyalty through customer perception when they used mobile information services providers

Customer expectations for mobile information services providers were not mentioned in the dissertation Therefore, this was a limitation of the dissertation

To accurately evaluate the factors that affect customer loyalty on mobile communication service market, there should be follow up studies, using data collected at different times Progress model analysis evaluating the impact of the different factors affecting ability to provide mobile services

On the other hand, the study did not perform analysis model by customer groups or demographic profile: gender, education level and age

Definition of Terms

In this research, the dissertation will present some concepts related to research content as follows:

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

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

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

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

Call quality depends on customer perception: call quality is clear; without

dropping the call when the call is done; no congestion when the call is connected; not losing when sending and receiving messages; have good scope of coverage

Convenience in procedures are subscription and change procedures such

as ease of subscribing and changing service and staff friendliness

Customer relationship is customer perception of social and psychological

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

Customer services supports are variety of customer support systems,

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

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

with the churn of service from an existing carrier as difficulty of changing number and loss of benefits such as mileage program

Mobile communication services provider is an enterprise with licensed

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

Mobile telecommunications services prepaid the ground (prepaid mobile

service) is a service where users pay in advance to mobile

telecommunications services providers by recharging the mobile subscriber account to be assigned with a prepaid SIM card or prepaid mobile terminals (do not use SIM cards) or other similar forms

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

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

Postpaid subscribers are individuals, representative enterprises or

organizations who use mobile communication services of providers but paying the charge in the end of the month (No 24 the Circular of the Ministry of Information and Communication, 2012)

Prepaid subscribers refers to individuals, representative enterprises or

organizations who use prepaid mobile communication services: subscribers use prepaid mobile services and other prepaid subscribers

as prescribed by the Ministry of Information and Communication

Price structure is pricing and other prices as reasonability of price, variety of

price schedule and possibility of freely choosing price schedules

Value – added services are types of services and convenience such as

internet, waiting call, international roaming, etc

Chapter II REVIEW OF LITERATURE

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

Mobile telecommunication services

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

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

belief that the best core marketing strategy for the future is to try to retain existing customers by heightening customer loyalty and customer value

Earlier studies suggest that customer loyalty provides the foundation of

a company’s sustained competitive edge, and that developing and increasing customer loyalty is a crucial factor in companies’ growth and performance (Lee & Cunningham, 2001; Reichheld, 1996)

Hanoi mobile communication services

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

* Viet Nam Telecom Services Company (Vinaphone)

As a member unit of Vietnam Post and Telecommunications Corporation (VNPT), in 1999 VinaPhone was the first network to cover service

in 100% of provinces and cities After 7 years, in June 2006, VinaPhone was once again the first mobile network to cover service in 100% of districts nationwide, including districts in mountainous or remote areas Currently VinaPhone provides services with 6 prefix numbers (091, 094, 0123, 0125,

0127, 0129) for about over 36 million of real subscribers

VinaPhone's traditional slogan “never stop reaching far” has been

delved into customers' mind VinaPhone's statement “available everywhere” shows the commitment for developing and reaching far to help

customers more successful in anywhere they go VinaPhone shall not only a bridge of communication but also a bridge of emotion for millions of customers

* Viettel telecom company (Viettel)

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

Viettel’s slogan is “ Say it your way” that is mean, Viettel is not only

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

Early in 2012, EVN Telecom has been merged by Viettel, so Viettel has became a mobile communications provider with the largest market share in Vietnam Currently, Viettel is one of the leading mobile communications service providers in Vietnam with 10 subscriber numbers (098, 097, 096,

0163, 0164, 0165, 0166, 0167, 0168, 0169) and over 47,4 million subscribers

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

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

The contingent of 3.000 MobiFone staff in ready to effectively meet every demand of customers MobiFone is the first and exclusive mobile telephony services provider in Vietnam which is selected as of the best mobile operator in three consecutive years (from 2005-2008) in the Vietnam Mobile Awards Ceremony organized by E-chip Mobile Magazine, Especially in 2009, MobiFone was honored to receive the Excellent Op erator 2008 granted by Vietnam Ministry of Information and Communications

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

0122, 0124, 0126, 0128, 0121, 0120) for about 21 million of real subscribers

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

Mobifone’s mobile services are ready to serve anytime and anywhere customes want

* Other service providers

Other service providers include SPT (prefix number is 095); Gtel (prefix numbers are 099 and 0199) and Vietnamobile (prefix numbers are 092 and 0188) Three service providers have a very low market share so they are very difficult to complete the largest service providers

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

Figure 1 The Market Share of Mobile Subscribers in Hanoi, 2011 and 2012

Source: Department of Hanoi telecom

In 2012, service providers have been in competition to attract new subscribers and maintain the old subscribers The popular competition of service providers are on product promotion for new roaming subscribers For example, when the customer is a new roaming subscriber, they will receive 100% of value’s card in the first month and 50% in the next several months from their providers Meanwhile, old subscribers did not receive these promotion programs So, they changed providers When new subscribers were used up amount in their account they will leave the network, pause to switch to another provider With this form, the customer can own more than one subscriber’s provider

In effect, the number of subscribers increased rapidly but loyal subscribers has no significant increase The competition on charges of mobile service providers lessen the customer’s loyalty to the network or company

Subscribers are willing to give up current service providers to move to the new vendor if they have attractive promotional programs

To attract new subscribers, service providers have been applying many promotion programs with discounted rates increasing But after the end of promotion programs, the subscriber used up money in their account, they leaving the vendor, suspension or transferring other service providers has increased significantly The subscriber leaving the vendor was more than new joining subscribers Active subscriptions were increasing or decreasing irregular So, revenues did not increase with growth subscribers

This competition is opposite to the trend integration of the mobile communication industry in Vietnam In 2011, inactive subscription compared

to the total was very large rate About 25% are 'virtual' subscribers, suspension subscribers or the customer may be using two – three mobile subscribers at the same time

According to regulations of the Ministry information and communications, providers have big share market (Viettel, Mobifone and Vinaphone) their charges will be decided by government Small providers (Sfone, Gtel mobile, Vietnam mobile) are allowed to decide their charges The charge is competitive advantage of the small provider but their service quality

is not guaranteed because their investment does not keep pace with subscriber growth or restrictions on the coverage Conversely, big providers have stable service quality but their charges and rates are controlled so they should not attract customers Currently, running customers in promotion programs of the provider that is becoming very popular (especially young

customers) and represented by data activity actually subscribers increased or decreased between the promotion and no promotion period

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

In 2009, the Gtel joined Vietnam mobile communication service market with the name Beeline Total investment capital for entering this market was

450 million dollars However, Gtel has not competed with other providers (Viettel, Vinaphone and Mobifone) After nearly three years, they have left the mobile communication market because their profit was declining

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

Customer loyalty

Loyalty as a concept has its root from the consumer behavior theory and is something that consumers may exhibit to brands, services or activities

Therefore, customer loyalty has been studied both in the academic field and real business world for years Often, customer loyalty is used as oppose to brand loyalty to emphasize that loyalty is a feature of people, rather than something inherent in brands Customer loyalty has been found in the literature to be a competitive tool for many companies This is even much more pronounced in today’s highly globalized, industrialized and competitive markets As has already been discussed in the background of the study, the growth and survival of companies depend on how loyal their customers are of which telecommunication is no exception

Loyalty based on inertia, where a brand is bought out of habit merely because this takes less effort and the consumer will not hesitate to switch to another brand if there is some convenient reason to do so That is, the consumer is buying the same brand, not because of true brand loyalty, but because it is not worth the time and trouble to search for an alternative True brand loyalty, which is a form of repeat purchasing behavior reflecting a conscious decision to continue, buying the same brand, must be accompanied by an underlying positive attitude and a high degree of commitment toward the brand

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

Rust, Zeithaml, and Lemon (2004) defined customer equity as the discounted lifetime values of a firm’s customer base According to their view, customer equity is made up of three components and key drivers: Value

equity that refer to quality, price, and convenience While brand equity are customer brand awareness, customer brand attitudes, and customer perception of brand ethics Lastly, the relationship equity is loyalty programs, special recognition and treatment programs, community-building programs, and knowledge building programs

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

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

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

loyalty focuses on brand recommendations, resistance to superior products, repurchase intention, and so on

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

Affecting factors to loyal customer

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

of companies business The customer loyalty can be measured by the intention of repurchase, recommending the product/services to other and patience towards price Customer loyalty also is used to measure repeated purchasing and forbearance for price Several factors have been identified to influence customer loyalty It includes main two factors (customer satisfaction and switching barrier) and other factors (customer relationship, attractiveness

of other providers)

* Customer satisfaction

Satisfaction and customer loyalty cannot substitute for each other According to Oliver (1999), the customer may be loyal without high

satisfaction level (in case of a little choice) and he is satisfied but no loyal (in case of multiple choices) And some researches have shown that there was the existence of the relationship between satisfaction and customer loyalty The high customer satisfaction will result in increased loyalty for the firm and that customers will be less prone to overtures from competition (Fornell, 1992) Jones and Sasser (1995) also said that increase customer satisfaction will create stronger effect on customer loyalty The relationship between satisfaction and customer loyalty was weak when customer satisfaction was low, to be moderate when customer satisfaction was mediate and to be strong when customer satisfaction was high So, it can be assumed that the relationship between loyalty and satisfaction are different at different levels of satisfaction The customer satisfaction is one of the significant determine of loyal customer

Satisfaction is defined by different studies in different ways According

to Spreng et al.1996, Customer satisfaction is the emotional state of products and services have been used Satisfaction can be obtained because of what was expected If the supply of a firm were according to expectations of customers, they would be satisfied The amount of high and low satisfaction depends upon the level of supply that meets the level of expectation or fall above/below to that level (Gerpott, Rams & Schindler, 2001).Customer satisfaction is the necessary foundation for the company to retain the existing customers (Guo, Xiao &Tang, 2009) The customers who are unsatisfied with the received services would not be expected to have long run relationships with the company (Lin & Wu, 2011)

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

on customer satisfaction

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

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

The service quality also is defined as the factor to attract and maintain customers in the provider business strategic Several studies showed that as customer-organization relationships deepen; consumers increase their expertise in the firm’s product line and industry and develop increased switching costs Technical service quality is hypothesized to be a more

important determinant of customer loyalty than functional service quality as expertise increases Both technical and functional service quality are hypothesized to have a reduced relationship with customer loyalty as perceived switching costs increase Three-way interactions between the main effects of service quality, customer expertise, and perceived switching costs yield additional insight into the change in relative importance of technical and functional service quality in customers’ decision to be loyal They concluded that some relationship exist between service quality and customer loyalty

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

Prices depend on factors as product quality, service quality, supplier’s reputation, brand and other services (payment discount, warranty…) Today, customers tend to pay for products and services they buy at a higher price if it's good to meet customer needs So, prices have a certain influence to total customer satisfaction To attract and retain customers, service providers must

be diverse service types and the type would correspond to a different price Therefore, service providers must build the pricing structure for their products The pricing structure is the factor to impact customer loyalty and it impacts directly the provider’s profit The service providers will have many competitive advantages if they have reasonable price’s structure strategic: the calling charges are reasonable; the value–added service of the charge is reasonable

Value-added service is one of the factors to differentiate service providers in the market Value-added services are one of the factors for

customer to select service providers and it is also the factor affecting customer loyalty With the call quality and pricing structure are the same, customers will select the providers have more value-added services than other providers

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

Convenience in procedures are a problem to note customer when they use provide services So, the vendor must have a specific business strategies

to meet the customer demands when they use vendor services: the flexibility

in changing the products and services, the system channel distributors located in convenient locations, convenient to the customer involved using new products

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

Thus, customers determine satisfaction level of any purchased service

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

In addition, there are many benefits for a company from a high customer satisfaction level It heightens customer loyalty and prevents customer churn, lowers customers’ price sensitivity, reduces the costs of failed marketing and of new customer creation, reduces operating costs due

to customer number increases, improves the effectiveness of advertising, and enhances business reputation

* Switching Barriers

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

According to Jones et al (2000), the switching barrier is any factor which makes it difficult or costly for consumers to change providers In their empirical study they examined three types of switching barriers: strong interpersonal relationships (the strength of the personal bonds that may develop between the employees of a supplier and the customer), high switching costs (the customers perception of the time, money and effort