Luận văn thạc sĩ UEH effects of negative and positive switching barriers to customer satisfaction

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HOCHIMINH CITY

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PHAM THANH LONG

EFFECTS OF NEGATIVE AND POSITIVE SWITCHING

BARRIERS TO CUSTOMER SATISFACTION AND

CUSTOMER RETENTION

A STUDY OF MOBILE SERVICE USERS IN VIETNAM

MASTER OF BUSINESS ADMINISTRATION THESIS

Ho Chi Minh City – 2011

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MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HOCHIMINH CITY

-----oOo-----

PHAM THANH LONG

EFFECTS OF NEGATIVE AND POSITIVE SWITCHING

BARRIERS TO CUSTOMER SATISFACTION AND

CUSTOMER RETENTION

A STUDY OF MOBILE SERVICE USERS IN VIETNAM

Major: Business Administration

Major Code: 60.34.05

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisor: DR. TRAN HA MINH QUAN

Ho Chi Minh City – 2011

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i

ACKNOWLEDGEMENT

This thesis is the result after several months of work in which I have been

accompanied and supported by many people. It is fantastic that I now have the

opportunity to express my gratitude and sincere thanks all of them.

The first person I would like to thank is my direct supervisor Dr Tran Ha Minh

Quan. During these years I have known him to be a sympathetic and principle￾centered person. I owe him a lot of gratitude for having shown me this way of

research.

I would like to express my sincere gratitude to all of my teachers at Faculty of

Business Administration and Post-graduate Faculty, University of Economics Ho

Chi Minh City for their teaching and guidance during my MBA course.

I would like to specially express my thanks to all of my classmates, my friends from

for their support and encouragement.

I am deeply and forever indebted to my parents and my wife, Hong Thao, for their

continuous love, support and encouragement dedicating to me. For their never￾ending support and the sense of security they have given when I wanted it most. I

dedicate this thesis to them.

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ABSTRACT

Customer retention is a concept getting more and more attention in business nowadays

as loyal customers are considered as vital components to organizational success.

Companies today strive to identify and manage effective methods to retain their

customers as many as possible. Even though some research papers have been published

globally on service sectors, including mobile telecommunication services, very limited

studies have been conducted on this subject inside Vietnam.

Many studies show that customer satisfaction is related to customer retention. However,

customer satisfaction is not enough to provide explanation to customer retention

because in a lot of cases, customers are not freely to choose or switch between suppliers.

There are different types of constraints identified as switching barriers have effect to

customer satisfaction and customer retention. Some previous studies investigated the

impact of switching barriers as a uni-dimensional concept and it has mediating effect to

the linkage between customer satisfaction and customer retention. Just a very few

studies went further to divide switching barriers into ‘positive elements’ and ‘negative

elements’ and tested both in the same model separately. In this study, our first objective

is to prove the role of switching barriers that influence customer retention in mobile

telecommunication service and classify them into positive and negative category.

Secondly, we will use a path analysis of the empirical data in Vietnam to examine the

impact of these 2 different categories into customer satisfaction and customer retention.

Keywords: Customer retention, purchase retention, customer satisfaction, switching

barrier, customer loyalty, mobile service

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CONTENTS

Acknowledgement ……………………………………………………………... i

Abstract ………………………………………………………………………… ii

Contents ………………………………………………………………………... iii

Lists of Tables ………………………………………………………………….. v

Lists of Figures ………………………………………………………………… vi

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

1.1 Background …………………………………………………………….. 1

1.2 Problem definition and research questions ……………………………... 2

1.3 Research purpose ……………………………………………………….. 3

1.4 Research limitation ……………………………………………………... 3

1.5 Organization of the thesis ………………………………………………. 4

CHAPTER 2: LITERATURE REVIEW ……………………………………. 5

2.1 Customer satisfaction …………………………………………………... 5

2.1.1 Defining customers and customer purchasing process …………… 5

2.1.2 Concept of customer satisfaction …………………………………. 6

2.1.3 Determinants of Customer satisfaction …………………………… 9

2.1.4 Customer satisfaction measurement model ………………………. 11

2.2 Customer retention ……………………………………………………... 14

2.3 Switching barriers ………………………………………………………. 18

2.4 Positive and negative switching barriers ……………………………….. 23

2.5 Proposed research model and hypotheses ……………………………… 25

CHAPTER 3: RESEARCH METHODOLOGY …………………………… 27

3.1 Research purpose ……………………………………………………….. 27

3.2 Research Approach ……………………………………………………... 28

3.3 Sampling ………………………………………………………………... 28

3.3.1 Sampling technique ……………………………………………….. 28

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3.3.2 Sampling size ……………………………………………………... 29

3.4 Data collection procedure ………………………………………………. 29

3.5 Measurement …………………………………………………………… 30

3.6 Pilot testing ……………………………………………………………... 31

3.7 Data analysis method …………………………………………………… 33

CHAPTER 4: DATA ANALYSIS AND FINDINGS ……………………….. 36

4.1 The questionnaire ………………………………………………………. 36

4.2 Descriptive result ……………………………………………………….. 36

4.3 Accessing reliability and validity of collected data …………………….. 39

4.4 Accessing model fit …………………………………………………….. 42

4.5 Testing hypotheses and answering research questions …………………. 44

CHAPTER 5: RESEARCH IMPLICATIONS ……………………………... 47

5.1 Conclusion ……………………………………………………………... 47

5.2 Implications for management …………………………………………... 47

5.3 Implications for theory and future research ……………………………. 48

REFERENCE

APPENDIX 1: QUESTIONNAIRE (ENGLISH AND VIETNAMESE)

APPENDIX 2: STATISTICAL RESULT, PILOT STAGE

APPENDIX 3: STATISTICAL RESULT, MAIN RESEARCH

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v

LISTS OF TABLES

Table 3.1 Cronbach’s alpha result – Pilot stage ………………………………… 32

Table 4.1 Age statistics of respondents …………………………………………. 36

Table 4.2 Education Background statistics of respondents ……………………... 37

Table 4.3 Occupation statistics of respondents …………………………………. 37

Table 4.4 Monthly income statistics of respondents ……………………………. 38

Table 4.5 Living city/town Statistics of respondents …………………………… 38

Table 4.6 Mobile network statistics of respondents …………………………….. 39

Table 4.7 Cronbach’s alpha value – Main research stage ………………………. 39

Table 4.8 Table KMO and Bartlett's Test ………………………………………. 40

Table 4.9 Total Variance Explained by EFA …………………………………… 41

Table 4.10 Rotated Component Matrixa by EFA ………………………………... 42

Table 4.11 CMIN value calculated by AMOS …………………………………… 43

Table 4.12 RMSEA value calculated by AMOS …………………………………. 44

Table 4.13 Standardized Regression Weights of path model calculated by AMOS 45

Table 4.14 Non-standardized Regression Weights of path model ……………….. 46

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LISTS OF FIGURES

Figure 1.1 Research organization ………………………………………………... 4

Figure 2.1 Components of ACSI Model …………………………………………. 12

Figure 2.2 Components of ECSI Model …………………………………………. 13

Figure 2.3 Affecting role of switching barriers, both mediating and direct to

customer retention ……………………………………………………. 19

Figure 2.4 Mediating role of switching cost to both customer value – customer

loyalty and perceived satisfaction – customer loyalty linkage ……….. 20

Figure 2.5 Research model used in this thesis to investigate relationship among

switching barriers, customer satisfaction and customer retention …… 25

Figure 4.1 Path diagram with regression weights calculated by AMOS ………… 43

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1

CHAPTER 1

INTRODUCTION

1.1 Background

The increasing economic importance of telecommunication service sector has

inspired many researchers to devote more of their research attention to this area.

Since 1990s, the telecommunications industry and services have become a dynamic

key factor for the economic development of many countries. This is the result of

enormous development in technology as well as of the increased number of network

operators and intense competition among them.

It has been figured out by previous researchers that as markets become more

competitive, firms are more likely to try maintaining their market share by focusing

on retaining current customers. It’s also obvious that when competition and the costs

of acquiring new customers increase, companies will be more concentrated their

strategic efforts on customer retention, therefore to maintain customer long-term

relationships becomes as a critical mission for business. Especially in the field of

telecommunications services, it has been pointed out that once customers have been

acquired and connected to the telecommunications network of a particular operator,

their long-term links with the focal operator are of greater importance to the success

of the company.

By having this in mind, customer retention is critical in the mobile service since

operators lose about 30 percent or more of their subscribers every year and have

large customer acquisition expenditures. It is very important to stress that mobile

operators need to develop well-designed programs to increase customer retention

(Lee, 2001).

As a result, many studies were conducted in this critical issue. They developed and

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