The factors affecting customers loyalty to supermarkets in ho chi minh city

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The factors affecting customers loyalty to supermarkets in ho chi minh city

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[Type text] BUSINESS RESEARCH PROJECT THE FACTORS AFFECTING CUSTOMERS’ LOYALTY TO SUPERMARKETS IN HO CHI MINH CITY Student: PHAM THANH TUAN ID No: CGSVN00015023 Class : MBAOUM0313 -K80A Advisor: A.PROF NGUYEN PHAN June 2014 Business Research Methods – BMBR5103 Page [Type text] Advisor’s assessment Advisor’s signature Business Research Methods – BMBR5103 Page [Type text] TABLE OF CONTENT CHAPTER 1:INTRODUCTION…………………………… 1.1 Reasons for research…………………………………………………………….5 1.2 Research questions………………………………………………………………6 1.3 Research goals………………………………………………………………… 1.4 Subject and scale of research……………………………………………………6 1.5 Research methodology………………………………………………………… 1.6 Contributions of this research………………………………………………… 1.7 Thesis structure………………………………………………………………….7 CHAPTER 2: THE RETAIL MARKET …………… …………………… … 2.1 Revenue from retail and consumer services throughout the years…… …… 2.2 The market for main types of retail goods…………………… ………… … 2.3 Overview of the competition situation among supermarkets in Vietnam… 12 CHAPTER 3: THEORETICAL BASES…………………… ………… …….14 3.1 Supermarket Theories………………………………………………… …… 14 3.2 Service theories………………………………………………… ……………15 3.3 Loyalty theories…………………………………………………………… 18 3.4 Overview of previous researches…………………………………………… 21 3.5 Proposed research model…………………………………………………… 23 CHAPTER 4: STUDY DESIGN…………………………… …… … ………28 4.1 Research Process……………………………………………………… …… 28 4.2 Qualitative Research…………………………………………… ……………28 4.3 Qualitative Research ………………………………………………………… 29 Business Research Methods – BMBR5103 Page [Type text] 4.4 Scale…………… …………………………………………………………….31 CHAPTER 5: RESEARCH FINDINGS…………… ……………………… 36 5.1 Descriptive Statistics……………………………………………… ……… 36 5.2 Testing the model ………………………………………………… ……… 44 5.3 Regression Analysis………………… ……………………………………….59 5.4 Seeking violation………………………………… ……………………… …66 5.5 Testing the difference between groups……………………………………… 66 5.6 Regression analysis based on frequent supermarkets …………………… 72 CHAPTER 6: CONCLUSION AND SUGGESTIONS FOR MANAGERS… 78 6.1 Conclusion…………………………… ………………………………………78 6.2 Implication for manager…………….… …………………………………… 79 6.3 Limitations of the subject and directions for further research………… ……82 REFERENCE MATERIAL …………… ………………………………… … 83 APPENDIX –INTERVIEW OUTLINE………………………………… …… 87 APPENDIX – SURVEY QUESTIONAIRE……… ……………………… …92 APPENDIX – PREMILINARY RESEARCH…………………………… ……93 APPENDIX – EFA ANALYSIS…………………………………………….….102 APPENDIX – REGRESSION ANALYSIS……………………………… … 107 APPENDIX – VIOLATION SEARCH……………………………….… … 109 APPENDIX – DIFFERENCE INSPECTION……………………… …….….110 Business Research Methods – BMBR5103 Page [Type text] CHAPTER 1: INTRODUCTION 1.1 Reasons for research In the emerging trend to integrate with the world’s economy, business fields in Vietnam in general and the retail industry in particular are not only facing fierce competition from fellow domestic firms but are also under pressures from foreign companies On January 1st, 2009, compelled to its commitments to joining the World Trade Organization – WTO, Vietnam officially opened the door to its retail market for foreign investors, making the competition in the retail market become fiercer than ever Along with the existing domestic supermarket chains, the market for retailing supermarkets in Vietnam in general and in Ho Chi Minh City in particular is becoming more vibrant, and the level of competition is becoming fiercer by the day To survive and to thrive, domestic firms have to continuously increase their standards of quality, diversify their goods, upgrade and modernize their infrastructures, and widen their food and goods distribution network in order to compete with supermarket chains run by foreign corporations Increasing the number of loyal customers’ visit to its supermarket chain is an urgent matter for a firm because according to Kotler (2011), the cost to attract a new customer is usually nine to ten folds that to maintain an existing customer It is worth noting that, as the competition on the market becomes more and more complex, to survive and prosper, supermarket administrators have to find ways to establish and increase their customers' loyalty Building customer loyalty plays an important role in building a firm's competitive strategies, which is even more crucial as top-tier retailers worldwide such as Tesco, Walmart, Carrefour, etc have been making preparations to set foot on the market According to Nguyen Thi Mai Trang (2006), customers’ loyalty to a supermarket is the most important factor deciding that supermarket’s success and existence Without customer loyalty, the competitive strength of a firm will be negligible With the purpose of helping supermarket Business Research Methods – BMBR5103 Page [Type text] administrators understand more clearly the importance of customer loyalty in mind, the authors chose the topic “The factors affecting customers’ loyalty to supermarkets in Ho Chi Minh City” to be the research subject for their research 1.2 Research questions This thesis focuses on researching to answer these questions: (1) Which factors will affect the loyalty of customers to supermarkets in Ho Chi Minh City? (2) To what extent these factors affect the loyalty of customers to supermarkets in Ho Chi Minh City? (3) Are there any differences among the loyalty of different types of customers to supermarkets in Ho Chi Minh City? 1.3 Research goals To answer the questions stated above, the specific goals of this thesis are to: (1) Point out the factors affecting customer loyalty towards supermarkets in Ho Chi Minh City? (2) Measure the extent to which the factors affect the loyalty of customers towards supermarkets in Ho Chi Minh City? (3) Explore the differences among survey subjects in their loyalty towards supermarkets in Ho Chi Minh City? 1.4 Subject and scale of research This research is conducted using the method of directly surveying the opinions of regular supermarket shoppers in Ho Chi Minh City Samples are chosen using the convenience sampling method The data used for research are mainly primary data, collected from handling questionnaires directly to customers Business Research Methods – BMBR5103 Page [Type text] 1.5 Research methodology This thesis researches the factors affecting the loyalty of customers when visiting supermarkets in Ho Chi Minh City in two steps: Step one: Conducting qualitative research through one-on-one discussions with regular supermarket customers, based on the interview draft in June 2013 Customers will adjust the use of words in the questions to clarify them as well as adding statements to clarify the research concept From the result of this qualitative research, combined with the theoretical base, the official measuring scale for this research is built Step two: Conducting quantitative research through handling close-ended questionnaires directly to 700 customers regularly visiting supermarkets such as Coopmart, Big C, Maximart…in Ho Chi Minh City; collecting 506 legitimate finished questionnaires in July 2013 1.6 Contributions of this research The research “The factors affecting customers’ loyalty to supermarkets in Ho Chi Minh City” helps supermarket administrators gain necessary information and acknowledge the importance of factors affecting the loyalty of customers From there, the administrators can come forth with solutions to maintain customers’ loyalty 1.7 Thesis structure Chapter 1: Research overview This chapter states the reason for choosing this topic, the research questions, research goals, subject and scale of research, research methodology, and the contributions of this research and the structure of the thesis Chapter 2: The retail market and the competition situation among supermarkets in Vietnam Business Research Methods – BMBR5103 Page [Type text] The second chapter introduces the revenue from retail and consumer services throughout the years, the market for main retail goods, and the overview of the competition situation among supermarkets in Vietnam Chapter 3: Theoretical bases The content of this chapter presents the definition of supermarket, supermarket classifications, theories on service, theories on loyalty and the summaries of previous researches Finally, the author argues the research hypotheses to propose the initial research model Chapter 4: Research design This chapter presents the research subjects, the survey subjects, the sampling methods, the analytical methods and the designing of the measuring scale to form the survey questionnaire Chapter 5: Research results analysis Chapter five uses the descriptive statistics method, the Cronbach Alpha internal consistency analysis method, the explanatory factor analysis method, and the regression analysis method, to detect violations and verify the differences Chapter 6: Conclusions and notes to administrators: From the conclusions drawn from the research results, this thesis puts forth recommendations for supermarket administrators/managers in order to increase customer loyalty Business Research Methods – BMBR5103 Page [Type text] CHAPTER 2: THE RETAIL MARKET AND THE COMPETITION SITUATION AMONG SUPERMARKETS IN VIETNAM Chapter two introduces the revenue from retail and consumer services throughout the years, the market for main retail goods, and the overview of the competition situation among supermarkets in Vietnam 2.1 Revenue from retail and consumer services throughout the years The revenue gained from retail and consumer services maintained a high degree of growth in the period 2005-2011, increasing at an average of up to 27%/year The total amount of goods sold in retail and revenue from consumer services in 2011 in Vietnam were estimated to be 2,004.4 trillion dong (approximately 96 billion USD), having increased by 24.2% compared to the previous year; if excluding the price factor, the increase was 4.7% If calculated based on the proportion of contributing components, the majority of the retail revenue came from the individual and private sectors, which accounted for 85% of the total retail revenue This showed the activeness of these business groups The revenue from the government sector in 2010 was 219 trillion dong, making up 11% of the total revenue from retailing and service providing The proportion of revenue from the FDI companies sector is quite low at 3% of the 2010 total retail revenue As of the speed of growth in the period 2005-2011, the average retail revenue growth rate for the individual and private sectors were 23% and 38%/year, respectively, while that of the FDI companies sector was 21%/year, lower than the average rate at 27%/year (www.gso.gov.vn) 2.2 The market for main types of retail goods 2.2.1 Food and beverages Food is the most important segment of the retail market In 2011, the proportion of spending for food in the total retail expense in Vietnam was up to 62.5%, higher than that of China (60.7%), Thailand (58.1%) and Indonesia (59.8%) In Vietnam, 80% of the retail outlets are food outlets (www.vneconomy.vn) Moreover, food Business Research Methods – BMBR5103 Page [Type text] outlets are usually stationed in numbers in traditional markets and in unlicensed stalls In the trend of urbanization and modernization of the economy, supermarkets and food stores appear more often than before In general, the cuisine needs of Vietnamese people are becoming more diverse and increase alongside the population growth scale However, under the effects of inflation, the proportion of spending for food in the total income of people is increasing Consumer food revenue in Vietnam in 2011 reached 357 trillion dong (approximately 18.69 billion USD), 1.9 times higher than that in 2006 The consumer revenue from food in 2012 was estimated to be 397 trillion dong (equivalent to 19.3 billion USD), which was a percentile increase compared to the figure in 2011 (www.gso.gov.vn) Compared to the scale of the population, the average amount of spending for food per capita in Vietnam in 2011 reached million dong/person (equivalent to 212.7 USD/person), which was a 1.8 times increase compared to that in 2006 Therefore, the yearly average food consumption growth rate in Vietnam was about 12% Compared to other Asian countries, this average spending on food per capita was relatively low This was a significant growth potential for the food industry (www.saigontimes.com.vn) As of breweries, the need for breweries in Vietnam is very significant Aside from the reason that Vietnam is in a tropical location with a hot and humid climate, there are two other important reasons: that the majority of the population are in their young and working years, and the living culture of Vietnamese people The total revenue from alcoholic drinks in 2011 reached 1.7 billion USD, an 18.46% improvement compared to the previous year The total volume of alcoholic drinks consumed in 2011 in Vietnam was 2.1 billion liters, which composed of billion liters of beer and 16.3 million liters of table wine Therefore, beer was the dominant kind of goods in the Vietnamese breweries market Aside from alcoholic drinks, the need for non-alcoholic drinks in Vietnam is also great The revenue from nonalcoholic drinks in 2011 reached 1.7 billion liters, equivalent to 6,430 billion dong, Business Research Methods – BMBR5103 Page 10 [Type text] Supermarket X's 30 3.93 640 supermarket X is 30 4.03 718 4.03 718 4.03 718 30 4.03 718 with 30 4.20 847 3.77 971 3.83 874 exits are very safe Shopping at the right decision I am satisfied with the quality of goods 30 of supermarket X I am satisfied with quality of service of 30 supermarket X Supermarket X considers my satisfaction as their achievement goal Overall, I am very pleased supermarket X I use loyalty cards issued by supermarket X to 30 accumulate points when shopping I get discounts when using loyalty card offered by 30 supermarket X Business Research Methods – BMBR5103 Page 97 [Type text] I receive complimentary gifts when having 30 3.73 907 30 3.90 960 promotion 30 3.93 944 4.00 871 3.73 1.143 3.63 850 3.73 1.143 supermarket X's loyalty card Application process for a loyalty card of supermarket X is fast Having a loyalty card, I always get the information from the supermarket The use of the loyalty card is very 30 easy The reputation of Supermarket X is 30 very good The reputation of Supermarket X is 30 better than others Supermarket X is a well-known retailer 30 Business Research Methods – BMBR5103 Page 98 [Type text] Supermarket X is famous for offering 30 3.87 1.008 X is the best retail 30 3.83 950 30 3.60 675 goods are sold at 30 3.80 805 3.60 675 3.87 973 safe and reliable products I think supermarket brand Price of items sold at supermarket X is consistent with theirs quality Supermarket X's reasonable prices Supermarket X offers goods with competitive price 30 than other supermarkets Price of daily necessities in supermarket X is no higher from than that 30 traditional markets or grocery stores Business Research Methods – BMBR5103 Page 99 [Type text] Cost of price- stabilization commodities at 30 3.80 805 30 4.10 712 30 3.60 724 easy to locate on 30 4.10 712 4.10 712 30 4.10 712 makes it convenient 30 4.10 712 supermarket X is very reasonable Supermarket X is near my house Supermarket X is near my workplace Supermarket X is the way Supermarket X has spacious and safe 30 parking lot Door-to-door delivery service of Supermarket X is very punctual Exchange return for and services me when shopping Business Research Methods – BMBR5103 Page 100 [Type text] I always go to Supermarket X 30 4.27 740 30 3.77 774 30 4.20 805 supermarket X to 30 3.93 740 3.93 785 when wanting to go shopping Supermarket X is my first choice when it comes to shopping For me, Supermarket X has the best service attitude I will introduce my acquaintances I will continue to shop at supermarket X in 30 the coming years Business Research Methods – BMBR5103 Page 101 [Type text] APPENDIX – EFA ANALYSIS First-time EFA Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .842 Approx Chi-Square Df 561 Sig Bartlett's Test of Sphericity 13491.068 000 Total Variance Explained Compon Initial Eigenvalues Extraction ent Sums of Squared Loadings Total % Variance of Cumulative Total % % of Cumulative Variance % 10.130 29.795 29.795 10.130 29.795 29.795 3.435 10.103 39.898 3.435 10.103 39.898 2.959 8.702 48.600 2.959 8.702 48.600 2.324 6.835 55.435 2.324 6.835 55.435 1.826 5.371 60.806 1.826 5.371 60.806 1.620 4.766 65.571 1.620 4.766 65.571 991 2.914 72.736 898 2.640 75.376 811 2.385 77.761 10 735 2.162 79.923 Business Research Methods – BMBR5103 Page 102 [Type text] 11 694 2.042 81.965 12 640 1.883 83.848 13 547 1.608 85.457 14 525 1.544 87.001 15 501 1.473 88.474 16 481 1.414 89.888 17 429 1.262 91.150 18 391 1.149 92.300 19 355 1.045 93.345 20 289 851 94.196 21 277 814 95.010 22 248 729 95.739 23 223 657 96.396 24 204 601 96.996 25 191 560 97.557 26 170 501 98.058 27 145 425 98.483 28 127 375 98.857 29 110 323 99.180 30 085 249 99.429 Business Research Methods – BMBR5103 Page 103 [Type text] Second-time EFA Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy 13189.93 Approx Chi-Square Bartlett's Test Sphericity 838 of df 496 Sig .000 Total Variance Explained Compon Initial Eigenvalues Extraction Sums of Squared ent Loadings Total % of Cumulative Variance Total % % of Cumulative Variance % 9.803 30.634 30.634 9.803 30.634 30.634 3.396 10.613 41.247 3.396 10.613 41.247 2.925 9.141 50.388 2.925 9.141 50.388 2.277 7.117 57.505 2.277 7.117 57.505 1.804 5.636 63.141 1.804 5.636 63.141 1.614 5.044 68.186 1.614 5.044 68.186 956 2.986 75.587 854 2.668 78.256 735 2.297 80.553 10 642 2.006 82.559 11 569 1.779 84.337 Business Research Methods – BMBR5103 Page 104 [Type text] 12 539 1.684 86.021 13 505 1.580 87.600 14 487 1.523 89.123 15 441 1.379 90.502 16 391 1.222 91.724 17 361 1.129 92.853 18 298 930 93.783 19 278 869 94.652 20 250 782 95.434 21 226 707 96.141 22 206 644 96.785 23 191 597 97.383 24 173 542 97.924 25 145 454 98.379 26 128 399 98.778 27 110 344 99.121 28 085 266 99.387 29 078 244 99.631 30 066 206 99.837 31 052 163 100.000 EFA of Dependent Variable KMO and Bartlett's Test Business Research Methods – BMBR5103 Page 105 [Type text] Kaiser-Meyer-Olkin Measure of Sampling Adequacy .780 Approx Chi-Square Bartlett's Test of Sphericity 778.263 df 10 Sig .000 Total Variance Explained Compon Initial Eigenvalues Extraction ent Sums of Squared Loadings Total % of Cumulative Total Variance % % of Cumulative Variance 2.787 55.747 55.747 848 16.970 72.716 552 11.045 83.762 452 9.036 92.797 360 7.203 100.000 Business Research Methods – BMBR5103 2.787 55.747 % 55.747 Page 106 [Type text] APPENDIX – REGRESSION ANALYSIS Variables Entered/Removeda Mod Variables el Variables Method Entered Removed Convenienc e, Service Quality, Price, Loyalty Card, Enter Customer satisfaction, Supermarke t Reputation b a Dependent Variable: Customer Loyalty b All requested variables entered Model Summaryb Mod R el R Adjusted R Std Square Square Error of the Estimate 755a 570 565 42778 a Predictors: (Constant), Convenience, Service Quality, Price, Loyalty Card, Customer satisfaction, Reputation b Dependent Variable: Customer Loyalty Business Research Methods – BMBR5103 Page 107 [Type text] ANOVAa Model Sum of df Mean Squares Regressi Sig Square 120.902 20.150 Residual 91.314 499 Total 212.216 110.11 000b 183 505 on F a Dependent Variable: Customer Loyalty b Predictors: (Constant), Convenience, Quality, Price, Loyalty Card, Customer satisfaction, Supermarket Reputation Coefficientsa Model Unstandardized Standardized t Coefficients Sig Coefficients Collineari ty Statistics B Std Beta Toleranc Error e (Constant) 142 Quality 073 029 081 2.495 013 811 Satisfaction 284 037 282 7.634 000 634 Loyalty Card 173 028 221 6.133 000 664 Reputation 268 037 282 7.268 000 574 Price 024 034 025 716 474 681 Convenience 239 111 024 146 4.556 000 837 Business Research Methods – BMBR5103 1.685 093 Page 108 [Type text] APPENDIX – VIOLATION SEARCH Business Research Methods – BMBR5103 Page 109 [Type text] APPENDIX – DIFFERENCE INSPECTION Income Test of Homogeneity of Variances Customer Loyalty Levene df1 df2 Sig 502 106 Statistic 2.049 ANOVA Customer Loyalty Sum of df Mean Squares Between Total 850 502 2.036 108 418 212.216 Groups 209.664 Within Sig Square 2.551 Groups F 505 Education Test of Homogeneity of Variances Customer Loyalty Levene df1 df2 Sig 501 003 Statistic 3.992 Business Research Methods – BMBR5103 Page 110 [Type text] ANOVA Customer Loyalty Sum of df Mean Squares Between Groups Within Groups Total F Sig 2.583 036 F Sig Square 4.289 1.072 207.927 501 415 212.216 505 Frequency of shopping in supermarket Test of Homogeneity of Variances Customer Loyalty Levene Statistic df1 df2 Sig 2.431 501 047 ANOVA Customer Loyalty Sum of df Squares Between Groups Within Groups Total Mean Square 16.832 4.208 195.384 501 390 212.216 505 Business Research Methods – BMBR5103 10.790 000 Page 111 ... out the factors affecting customer loyalty towards supermarkets in Ho Chi Minh City? (2) Measure the extent to which the factors affect the loyalty of customers towards supermarkets in Ho Chi Minh. .. will affect the loyalty of customers to supermarkets in Ho Chi Minh City? (2) To what extent these factors affect the loyalty of customers to supermarkets in Ho Chi Minh City? (3) Are there any... researches and theory models, this thesis also focuses on researching the factors affecting the loyalty of customers when shopping in supermarkets in Ho Chi Minh City, including such factors as: service

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