MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY …………………… Hunh Th Ngc Mai An evidence of Pan Pacific Corporation MASTER’S THESIS Major: Business Administration Major Code: 60.34.05 Supervisor Dr. Trn Hà Minh Quân Ho Chi Minh City 2010 ACKNOWLEDGEMENT I would like to record my most sincere appreciation and heartfelt thanks to individuals, of whom without, might not lead to the possibility of this research to be realized. First and foremost, I wish to express my deep sincere gratitude to my supervisor Dr.Tran Ha Minh Quan for his guidance, encouragement and excellent advices throughout this study. I would like to extend my sincere thanks to assistant Prof. Nguyen Dinh Tho, Dr.Nguyen Thi Mai Trang and Dr.Dinh Cong Khai for their valuable comments and constructive suggestions. I would also like to avail this opportunity to express my appreciation to Professor Nguyen Dong Phong and UEH Board of Directors for creating MBA program in English. I am also thankful to all my classmates in MBA class-Bath 16, especially Ms.Nguyen Nhu Chang, Mr.Nguyen Thanh Trung, Mr.Lam Hong Phong, for their collaboration and valuable assistance throughout my study. Gratitude also goes to Board of Management of Pan Pacific Corporation, colleagues for giving me supports. Many thanks for Pan Pacific’s Clients who save value time to respond my survey questionnaire, without them my thesis could not have been done. Last but not least, the express my profound gratitude to my beloved mother, my lover and my closest friends for being patience and never failed giving me continuous supports, spiritually and encouragement along the study. i ABSTRACT In the present cleaning service industry, service quality is a vital competitive policy to keep customers support and long-term cooperation. Cleaning service providers are trying to win customer satisfaction and loyalty by proving enhanced quality service. The aim of this study is to examine the relationship between service quality, customer satisfaction and customer loyalty in cleaning service industry. In this study, attention is paid to the measurement model of service quality in cleaning service industry based on the well-known SERVQUAL model, but with modification on the basis of focus group discussions and expert opinions to reflect the specific industry attributes and the special culture of Vietnam. 158 samples were collected from Pan Pacific Corporation’s various clients in the South of Vietnam. Cronbach Alpha was carried out to test the reliability of each statement and the summated scales were formulated by means of Exploratory Factor Analysis (EFA). Then, Multiple Linear Regressions test was used to test the effect of Service Quality on Customer Satisfaction and Customer Loyalty, the effect of customer satisfaction on loyalty. Overall findings from this study suggest there were significant relationship between Service Quality, Customer Satisfaction and Customer Loyalty. The study found that there were six dimensions of cleaning service quality including affectivity, cleaner competence, supervisor competence, tangibles, service safety, empathy and all dimensions are positively related to Customer Satisfaction. The regression test also found that there was a positive direction and significant relationship between customer satisfaction on customer loyalty. The results indicated that the overall service quality has significantly positive effect on overall customer loyalty. Among these six dimensions except Empathy, all of them have a significantly positive effect on overall customer loyalty. Keywords: cleaning service industry, service quality, customer satisfaction, customer loyalty. ii TABLE OF CONTENT ACKNOWLEDGEMENT i ABSTRACT ii TABLE OF CONTENT iii Chapter 1: INTRODUCTION 1 1.1 Introduction about cleaning service industry 1 1.2 Research background: 2 1.3 Research problem 4 1.4 Research Questions 5 1.5 Objectives of the study 5 1.6 Scope of the Study 5 1.7 Research method 6 1.8 Structure of the study 6 Chapter 2: LITERATURE REVIEW 8 2.1 Service quality 8 2.2.1 Definition of service quality 8 2.2.1.1 Definition of “Quality” 8 2.2.1.2 Definition of “Service” 9 2.2.1.3 Definition of “service quality” 11 2.2.2 Measurement of service quality 11 2.2.3 Cleaning service quality 16 2.2.3.1 Definition of “Cleaning” 16 2.2.3.2 Definition of cleaning service quality: 16 2.2.3.3 Determinants of cleaning service quality: 17 2.2.3.4 Cleaning quality awareness 20 2.2 Customer satisfaction 23 2.3 Customer loyalty 24 iii 2.4 Relationship between service quality, customer satisfaction and loyalty 25 2.5.1 Relationship between Service quality and customer satisfaction 25 2.5.2 Relationship between Customer Satisfaction and Loyalty 26 2.5.3 Relationship between service quality and customer loyalty 27 Chapter 3: RESEARCH METHODOLOGY 29 3.1 Research design 29 3.2 Item generation 31 3.3.1 Items to measure Service Quality 32 3.3.2 Items to measure customer satisfaction 33 3.3.3 Items to measure customer loyalty 35 3.3 Preliminary study 35 3.4 Theoretical Model 37 3.5 Main survey 37 3.5.1 Sampling 37 3.5.2 Sample size 38 3.5.3 Survey method and data collection 39 3.6 Data Analysis techniques 39 Chapter 4: DATA ANALYSIS AND RESEARCH FINDINGS 41 4.1 Descriptive statistics of sample 41 4.2 Descriptive Analysis 44 4.3 Scales assessment 44 4.4.1 Reliability Analysis Results 44 4.4.2 Exploratory factor analysis (EFA) 46 4.4.2.1 Measurement scales of cleaning service quality 46 4.4.2.2 Measurement scales of customer loyalty 51 4.4.3 Adjustment of theoretical model 54 4.4 Testing the research model and the hypotheses 55 iv 4.4.1 Testing correlations between all constructs 55 4.4.2 Testing hypotheses 56 4.4.2.1 The relationship between Cleaning Service Quality and Customer Satisfaction 56 4.4.2.2 The relationship between Customer Satisfaction and Loyalty…………58 4.4.2.3 The relationship between cleaning service quality dimensions and customer loyalty 60 4.5 DISCUSSION AND FINDINGS 63 Chapter 5: CONCLUSIONS AND IMPLICATIONS 65 5.1 Conclusions of the study 65 5.2 Implications of the study 66 5.2.1 Theoretical implications 66 5.2.2 Practical implications 66 5.3 Limitations and recommendations for further research 68 APPENDIX 1- CUSTOMER SATISFACTION FEEDBACK 69 Vietnamese 73 English 73 SOME ACTIVITIES OF CLEANING SERVICES FOR REFERENCE 76 v LIST OF TABLES Table 3.1- Measurement scales of cleaning service quality 34 Table 3.2- Measurement scales of customer loyalty 35 Table 4.1- Sample characteristics 41 Table 4.2- Descriptive Statistics 44 Table 4.3 – Reliability of the measurement instrument 46 Table 4.4 – Rotated component matrix of cleaning service quality scale 50 Table 4.5 – Total Variance Explained of customer loyal 51 Table 4.6 – EFA result for individual measurement scales 52 Table 4. 7-Final construct measurement scales 52 Table 4.8- Summary of hypotheses 55 Table 4.9– Correlation matrix 56 Table 4.9a- Model Summary (cleaning service and customer satisfaction) 57 Table 4.9b – Coefficients 58 Table 4.10a-Model Summary ( customer satisfaction and customer loyalty) 58 Table 4.10b – Coefficients 60 Table 4.11a - Model Summary ( service quality and customer loyalty) 61 Table 4. 11b – Coefficients 61 vi LIST OF FIGURES Figure 2.1- SERVQUAL gap analysis 13 Figure 3.1-Research process 31 Figure 3.2 - Theoretical Model 38 Figure 4.1a - Position of respondents 42 Figure 4.1b-Gender of respondents 43 Figure 4.1c - Service range of respondents 43 Figure 4.2 - Adjusted theoretical model 54 Figure 4.3- Hypothesis H1 testing result 58 Figure 4.4-Hypothesis H2 testing result 60 Figure 4.5 -Hypothesis H3 testing result 62 vii Chapter 1: INTRODUCTION This chapter begins with general introduction about cleaning service and the current study is provided with research background, research problem, research objectives and research questions are mentioned as the rationale for this study. Also, scope of the current study are discussed and an introduction of the methodology to be used in this chapter. At the end of the chapter, the structure of this study is provided. 1.1 Introduction about cleaning service industry Nowadays, cleaning service is very popular in human life. Cleaning service providers is responsible for providing all necessary management, manpower, machinery, equipment, tools, chemicals (exclusive such items, which the Landlord shall provide), which were pre-approved by the Landlord to efficiently carry out the cleaning tasks of the project in accordant with the international standard and Landlord requirements. They also provides uniformed, properly trained and appropriately skilled cleaners. All cleaners have a yearly health check. Cleaners shall at all time while on duty be dressed in full uniform, well groomed, clean- shaven, polite and helpful. Service providers maintains the minimum number of contracted cleaners and provides additional cleaners as it determines necessary for full cleaning coverage during sickness, holidays, etc. Using cleaning service bring to us much advantage : high quality service, reasonable fee, the professional and well trained working force from the leading company in cleaning and property care, the modern specific cleaning equipments without any investment, maintaining the value of the property, creation a clean and beautiful working environment for both officers and visitors, avoidance from directly management to the cleaning workers and risks from its potential problems, whole hearted concentration on own business. 1 Among of many cleaning service providers in Vietnam, Pan Pacific is one leading company in this industry, with operating in over 20 cities and provinces nationwide, supplying cleaning service for more than 300 customers of many business types. Pan Pacific also is among of Vietnam largest cleaning providers with over 5000 skilled employees. With more than 17 years experience in cleaning service industry, Pan Pacific has developed various customer system including Commercial Buildings (office buildings, service apartments), Supermarkets and Shopping Centers, Hospitals & Medical Centers, Factories in IPs, EPZs, International Schools. Especially, Pan Pacific also have many experiences in supplying regular cleaning service for typical projects with highest level national security such as; International Airports, Television Station. 1.2 Research background: Going with developing real estate market and foreign investment, demand of facility management in office buildings, shopping centers, international schools, foreign factories are appeared. These management services include security, property maintenance, pest controls, landscape and cleaning service. In which cleaning service industry is very important to enhance quality and brand of the building. Instead of organizing and managing a cleaning division, owners can contract with professional cleaning company which can provide package service including manpower, equipments, tools, chemicals. A cleaning company will provide uniformed, properly trained and appropriately skilled cleaners, all cleaners have a yearly health check, cleaners shall at all time while on duty be dressed in full uniform, well groomed, clean-shaven, polite and helpful. Cleaning company will provide additional cleaners as it determines necessary for full cleaning coverage during sickness, holidays, etc. Cleaning company also is responsible compensating damage of property which cause of their employees. 2 [...]... meeting the customer requirements” ( Oakland 1993,5) 16 In the cleaning industry, cleaning service quality is the ability to meet the customer expectations and needs If the customers’ s experiences of the cleaning service correspond with his assumptions, then he consider the overall quality good (huilaja 1998, 22) Cleaning quality can also be defined and described as the extent to which the cleaning. .. customer loyalty is total satisfaction Hence, hypothesis 2 is proposed : Hypothesis 2: Customer satisfaction is positively related to customer loyalty in cleaning service industry 2.4.3 Relationship between service quality and customer loyalty In various studies, the relationship between service quality and customer loyalty had been examined (Boulding, Kalra, Staelin, & Zeithaml, 1993; Cronin & Taylor,... to customer loyalty? 4 1.4 Research Questions Base on the above stated research problem the following research questions have been developed: Q.1 What are the service quality dimensions in cleaning service industry Q.2 How do the dimensions of service quality effect on customer satisfaction, customer loyalty in cleaning service industry Q.3 Is there any significant relationship between customer satisfaction. .. satisfaction and customer loyalty in cleaning service? 1.5 Objectives of the study The objectives of this study are to: Explore the relationship between the components of service quality with customer satisfaction and customer loyalty Explore the relationship between customer satisfaction and customer loyalty 1.6 Scope of the Study In general Pan Pacific Corporation provides three types of core services to their... image and performance Cleaning quality The cleaning quality is the major concern that all customers requesting cleaning services with fulfilled It is important that the cleaning quality meets the requirement and expectation of the resident and customers at an affordable price and that the process should always remain clearly defined so as to provide satisfaction to both parties Cleaning has a purpose and. .. their customers such as cleaning service, pest control service and laundry service, with activities spreading from the North, the Middle to the South of Vietnam In which, most of current customers concentrate on cleaning service For the purpose of this study, the study will focus particularly in the areas of cleaning service offered by Pan Pacific which is leading company in cleaning service industry In. .. Especially in cleaning service industry, competition is rife Customer will not hesitate to terminate cleaning contract in the event that their needs and expectations are not met In cleaning service, emphasis on the quality is a vital aspect in that it determines the level or degree of customer satisfaction A cleaning service provider can reduce the detrimental impact of effective factors by first ensuring... company’s service performance exceeds customer expectations 2.4 Relationship between service quality, customer satisfaction and customer loyalty 2.4.1 Relationship between Service quality and customer satisfaction Over the past few years there has been a heightened emphasis on service quality and customer satisfaction in business and academia alike Sureshchandar et al, (2003) identified that strong relationships... that customer s needs by arranging that the service be delivered and performed to meet the customer s expectation Customer need to build trust for the service providers Cleaning companies in turn should respond the same way by guaranteeing and maintaining a stable relationship with the customer The relationship should work both ways Customer need and expectation Cleaning company at the first introduction... between customer and staffs of cleaning service provider (cleaners, supervisors), hence “assurance” and “empathy” are also main factors 22 cleaning service quality Overall, the results from these studies also concluded that number of service quality dimensions is varies in different industries, therefore need to have continuing study in specific services and markets as cleaning service in Vietnam In . examine the relationship between service quality, customer satisfaction and customer loyalty in cleaning service industry. In this study, attention is paid to the measurement model of service quality. dimensions in cleaning service industry. Q.2 How do the dimensions of service quality effect on customer satisfaction, customer loyalty in cleaning service industry. Q.3 Is there any significant relationship. include security, property maintenance, pest controls, landscape and cleaning service. In which cleaning service industry is very important to enhance quality and brand of the building. Instead