Factors of service quality affecting customer satisfaction of Highlands coffee in Ho Chi Minh City, 2022

MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OF VIET NAM

HO CHI MINH CITY UNIVERSITY OF BANKING

------

NGUYEN THI THU THAO

FACTORS OF SERVICE QUALITY

AFFECTING CUSTOMER SATISFACTION OF

HIGHLANDS COFFEE IN HO CHI MINH CITY

GRADUATE THESIS

MAJOR: BUSINESS ADMINISTRATION

CODE: 7340101

SUPERVISOR: Ph.D. NGUYEN VAN THUY

HO CHI MINH CITY, 2022

DECLARATION

I declare that the thesis “Factors of service quality affecting customer

satisfaction of Highlands Coffee in Ho Chi Minh City” is the result of my own

research process. Except for references from other research works as stated in the

thesis, the survey data and the results of this thesis are honest and have not yet

been published in any research works before.

HCMC, 18

th August 2022

Author

Nguyen Thi Thu Thao

ACKNOWLEDGE

I am willing to take this opportunity to acknowledge some individuals who

have supported me to accomplish my thesis.

First and foremost, I would like to express my deepest acknowledge to my

supervisor, Ph.D. Nguyen Van Thuy, lecturer at Ho Chi Minh City University of

Banking. During the process of completing my thesis, he always gave me his

valuable advice and recommendation. His encouragement, suggestion and advice

are always greatly valued and contributed to the success of this thesis.

Additionally, I would like to express my sincere appreciation to the professors

and lecturers at the University of Banking for their guidance during my academic

years there. The knowledge and skills I have accumulated, have helped me

complete this thesis.

Finally, I would like to express thanks to my family and friends, who always

motivate and support me. They not only support and give advice for me during

the period of completing the thesis, but they are also a source of motivation and

strength in my life.

i

ABSTRACT

The research aims to identify service quality factors that affect customer

satisfaction of Highlands Coffee’s customers in Ho Chi Minh City. Based on the

theories of customer satisfaction, service quality and previous studies, this

research is conducted using both qualitative and quantitative methods. The

qualitative method aims to complete the measurement scales. The quantitative

method with the data analysis techniques such as descriptive statistics,

Cronbach's Alpha, EFA, regression and ANOVA. According to the analysis of

data from 160 participants in Ho Chi Minh City show that customer satisfaction

when using Highlands Coffee services is impacted by three factors include:

Serving competence, Tangibles and Price policy. The Serving competence factor

significantly affects customer satisfaction with Highlands Coffee services while

the Price policy factor slightly impacts customer satisfaction with Highlands

Coffee services. The research also offers implications to enhance customer

satisfaction for the managers of Highlands Coffee in specific and for the coffee

businesses in general.

Keywords: Serving competence, Tangibles, Price policy, Customer satisfaction,

Highlands Coffee, service quality.

ii

TABLE OF CONTENTS

ABSTRACT .................................................................................................................... i

TABLE OF CONTENTS.............................................................................................. ii

LIST OF ABBREVIATIONS....................................................................................... v

LIST OF FIGURES...................................................................................................... vi

LIST OF TABLES....................................................................................................... vii

CHAPTER 1: INTRODUCTION ................................................................................ 1

1.1 Statement of the problem........................................................................................ 1

1.2 Research objectives ................................................................................................. 2

1.2.1 Research aim....................................................................................................... 2

1.2.2 Specific objectives .............................................................................................. 2

1.3 Research questions .................................................................................................. 3

1.4 Research subject and scope .................................................................................... 3

1.4.1 Research subject.................................................................................................. 3

1.4.2 Research scope .................................................................................................... 3

1.5 Research methods.................................................................................................... 4

1.6 Thesis structure ....................................................................................................... 4

1.7 Summary .................................................................................................................. 5

CHAPTER 2: LITERATURE REVIEW.................................................................... 6

2.1 Basic concepts .......................................................................................................... 6

2.1.1 Customer satisfaction.......................................................................................... 6

2.1.2 Service quality..................................................................................................... 7

2.1.3 The relationship between service quality and customer satisfaction ................ 11

2.2 Literature review ................................................................................................... 12

2.2.1 SERVQUAL Model.......................................................................................... 12

2.2.2 Empirical Research ........................................................................................... 14

2.2.3 About Highlands Coffee ................................................................................... 19

2.3 Hypotheses and conceptual model ....................................................................... 22

2.3.1 Hypotheses........................................................................................................ 22

2.3.2 Conceptual model.............................................................................................. 25

iii

2.4 Summary ................................................................................................................ 26

CHAPTER 3: METHODOLOGY ............................................................................. 27

3.1 Research process.................................................................................................... 27

3.2 Building the scale ................................................................................................... 29

3.2.1 The scale of reliability (REL) ........................................................................... 30

3.2.2 The scale of responsiveness (RES)................................................................... 31

3.2.3 The scale of assurance (AS).............................................................................. 31

3.2.4 The scale of empathy (EM)............................................................................... 32

3.2.5 The scale of tangibles (TAN)............................................................................ 33

3.2.6 The scale of price policy (PRI) ......................................................................... 34

3.2.7 The scale of customer satisfaction (CS)............................................................ 34

3.3 Methods of data collection .................................................................................... 35

3.3.1 Sample size........................................................................................................ 35

3.3.2 Questionnaire design......................................................................................... 36

3.3.3 Survey ............................................................................................................... 36

3.4 Data analysis methods........................................................................................... 37

3.4.1 Descriptive statistics.......................................................................................... 37

3.4.2 Cronbach’s Alpha scale testing......................................................................... 38

3.4.3 Exploratory Factor Analysis (EFA) .................................................................. 39

3.4.4 Regression analysis........................................................................................... 40

3.4.5 Analysis of Variance (ANOVA test) ................................................................ 41

3.5 Summary ................................................................................................................ 42

CHAPTER 4: RESEARCH RESULTS AND FINDINGS ...................................... 43

4.1 Descriptive statistical analysis.............................................................................. 43

4.1.1 Descriptive statistics for nominal variables...................................................... 43

4.1.2 Descriptive statistics for groups of Likert quantitative variables ..................... 46

4.2 Cronbach’s Alpha analysis................................................................................... 51

4.2.1 Evaluate the reliability of the reliability scale .................................................. 51

4.2.2 Evaluate the reliability of the responsiveness scale .......................................... 52

4.2.3 Evaluate the reliability of the assurance scale .................................................. 52

4.2.4 Evaluate the reliability of the empathy scale .................................................... 53

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4.2.5 Evaluate the reliability of the tangibles scale.................................................... 54

4.2.6 Evaluate the reliability of the price policy scale ............................................... 55

4.2.7 Evaluate the reliability of the customer satisfaction scale ................................ 56

4.3 Exploratory Factor Analysis (EFA)..................................................................... 57

4.3.1 Factors analysis for independent variables ....................................................... 57

4.3.2 Factors analysis for the dependent variable ...................................................... 61

4.3.3 Conclusion about EFA...................................................................................... 63

4.4 ANOVA and regression analysis.......................................................................... 68

4.4.1 Correlation analysis........................................................................................... 68

4.4.2 Regression analysis........................................................................................... 69

4.4.3 Testing the hypothesis of the research model ................................................... 72

4.4.4 One way ANOVA analysis............................................................................... 73

4.5 Discussion ............................................................................................................... 75

4.6 Summary ................................................................................................................ 76

CHAPTER 5: CONCLUSIONS AND IMPLICATIONS........................................ 78

5.1 Conclusions............................................................................................................. 78

5.2 Managerial implications ....................................................................................... 79

5.2.1 Serving Competence (SC)................................................................................. 79

5.2.2 Tangibles (TAN)............................................................................................... 80

5.2.3 Price policy (PRI).............................................................................................. 82

5.3 Contribution of the research ................................................................................ 83

5.4 Limitations and future research........................................................................... 83

5.5 Summary ................................................................................................................ 84

REFERENCES ............................................................................................................ 85

APPENDIX................................................................................................................... 88

APPENDIX 1: QUESTIONNAIRE........................................................................... 88

APPENDIX 2: DATA ANALYSIS RESULTS ......................................................... 95

v

LIST OF ABBREVIATIONS

Serial Abbreviation Complete Words

1 WTO World Trade

Organization

2 SPSS Statistical Package for

the Social Sciences

3 HCMC Ho Chi Minh City

4 EFA Exploratory Factor

Analysis

5 KMO Kaiser-Meyer-Olkin

6 ANOVA Analysis of Variance

7 Sig. Significance level

8 VIF Variance Inflation

Factor

9 REL Reliability

10 RES Responsiveness

11 AS Assurance

12 EM Empathy

13 TAN Tangibles

14 PRI Price

15 CS Customer Satisfaction

16 SC Serving Competence

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LIST OF FIGURES

Figure 2.1 SERVQUAL Model............................................................................13

Figure 2.2 Logo of Highlands Coffee ..................................................................19

Figure 2.3 Phin Sua Da with Banh Mi - Vietnamese Bread and Iced Milk Coffee

..............................................................................................................................20

Figure 2.4 Conceptual model ...............................................................................26

Figure 3.1 Research process.................................................................................28

Figure 4.1 Research model after EFA..................................................................68

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LIST OF TABLES

Table 2.1 Previous studies summary....................................................................16

Table 2.2 Hypothesis Table..................................................................................24

Table 3.1 The scale of reliability..........................................................................30

Table 3.2 The scale of responsiveness.................................................................31

Table 3.3 The scale of assurance..........................................................................31

Table 3.4 The scale of empathy ...........................................................................32

Table 3.5 The scale of tangibles...........................................................................33

Table 3.6 The scale of price policy ......................................................................34

Table 3.7 The scale of customer satisfaction .......................................................34

Table 4.1 Descriptive statistics for nominal variables.........................................43

Table 4.2 Descriptive Statistics of Reliability .....................................................46

Table 4.3 Descriptive Statistics of Responsiveness.............................................47

Table 4.4 Descriptive Statistics of Assurance......................................................48

Table 4.5 Descriptive Statistics of Empathy........................................................48

Table 4.6 Descriptive Statistics of Tangibles.......................................................49

Table 4.7 Descriptive Statistics of Price policy ...................................................50

Table 4.8 Cronbach’s Alpha of the reliability scale.............................................51

Table 4.9 Cronbach’s Alpha of the responsiveness scale ....................................52

Table 4.10 Cronbach’s Alpha of the assurance scale ..........................................52

Table 4.11 Cronbach’s Alpha of the empathy scale ............................................53

Table 4.12 Cronbach’s Alpha of the tangibles scale............................................54

Table 4.13 Cronbach’s Alpha of the price policy scale .......................................55

Table 4.14 Cronbach’s Alpha of the customer satisfaction scale ........................56

Table 4.15 Synthesize Cronbach’s Alpha of each scale ......................................57

Table 4.16 KMO and Bartlett’s Test for independent variables..........................58

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Table 4.17 Eigenvalue and the total value of deviation for independent variables

..............................................................................................................................58

Table 4.18 Rotated Component Matrixa of Independent variables.....................59

Table 4.19 KMO and Bartlett’s Test for the dependent variable.........................61

Table 4.20 Eigenvalue and the total value of deviation for the dependent variable

..............................................................................................................................61

Table 4.21 The factor rotation matrix of the dependent variable ........................62

Table 4.22 The Serving Competence scale after EFA.........................................63

Table 4.23 The Price policy scale after EFA .......................................................64

Table 4.24 The Reliability scale after EFA..........................................................64

Table 4.25 The Tangibles scale after EFA...........................................................65

Table 4.26 The Empathy scale after EFA............................................................65

Table 4.27 Synthesize variables of each scale after EFA ....................................66

Table 4.28 Synthesize new hypotheses after EFA...............................................67

Table 4.29 Pearson Correlation Analysis.............................................................68

Table 4.30 Model Summary.................................................................................69

Table 4.31 ANOVAa

............................................................................................70

Table 4.32 Coefficientsa

.......................................................................................70

Table 4.33 Synthesize the hypothesis testing results...........................................72

Table 4.34 One-way ANOVA test.......................................................................74

Table 5.1 Descriptive statistics of serving competence scale ..............................79

Table 5.2 Descriptive statistics of tangibles scale................................................81

Table 5.3 Descriptive statistics of price policy scale...........................................82

1

CHAPTER 1: INTRODUCTION

1.1 Statement of the problem

In today's market context, the market economy has many fluctuations under

the pressure of globalization combined with the rapid development of technology

and the opening of new markets. Since joining the WTO until now, Vietnam's

economy has been gradually developing and integrating into the world economy,

opening up opportunities and accompanying new difficulties and challenges. The

rapid development of the global economy has increased fierce competition

between domestic and foreign enterprises. Therefore, today's businesses need to

promote their prestige and strong position in the market before their competitors

to be able to survive and develop strongly. To contribute to helping businesses

improve their position and reputation in the market, improving service quality is

a very important thing for businesses in general and coffee businesses in

particular.

For service industries, restaurants or hotels, especially in Food and Beverage

Industry, service quality is considered one of the most important factors to help

create a sustainable competitive advantage and build trust with customers.

Measuring service quality benefits for the company both qualitatively and

quantitatively. Achieving a high level of service quality will also increase

customer loyalty, helping to increase market share, and ensure competitive

advantage. Coffee is one of the most widely consumed beverages in the world.

According to a market research report, in the period 2021 - 2025, the global

coffee market will grow by an average of 7.6%. Vietnam is a sizable coffee￾consuming country, especially in big cities. According to Kantar Worldpanel in a

survey of consumer behavior in the Vietnamese market, coffee accounted for

26% of the total drinks selected for a week in Ho Chi Minh City.