UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business - Nguyen Duy Tan The influence of Employee Service on Positive Word of Mouth and Repurchase Intention in Vietnamese supermarket sector MASTER OF BUSINESS (Honours) Ho Chi Minh City – 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Duy Tan The influence of Employee Service on Positive Word of Mouth and Repurchase Intention in Vietnamese supermarket sector ID: 20110053 MASTER OF BUSINESS (Honours) SUPERVISOR: NGUYEN HUU LAM Ho Chi Minh City - 2014 ACKNOWLEDGEMENT At the first time of writing an academic paper, my thesis could not be finished without guides and helps From the bottom of my heart, I really want to write my sincere words as follows Firstly, I would like to thank Dr Nguyen Dinh Tho and Dr Nguyen Huu Lam I wouldn’t know how to start, how to conduct and how to write my thesis without guiding of them Dr Tho showed me the way and Dr Lam helped me to walk on that way I would also thank Dr Nguyen Thi Mai Trang, who always answered my emails, explained all of my confusions I would like to express my deep gratitude to Mr Douglas Foster for supporting online journal articles I wouldn’t have enough academic materials to write chapter two without his help He was not only a great teacher but also a good friend to me I am truly grateful to him for being my lecturer Also, I want to express my thanks to my classmates, Nguyen Thi Tuyet Oanh and Thai Van Trung Hieu They did supported me whenever I needed them Honestly, if they hadn’t been my friends, I couldn’t have finished my thesis in this year Finally, I would like to thank all of participants in this research, especially in-service training students of ISB Thanks a lot for their precious time to join the surveys of this research i ABSTRACT Supermarket sector have been one of the most attractive field of Vietnamese economy in the last ten years The success of a supermarket mainly depends on customer repurchase intention and positive word of mouth that the supermarket gains from current customers Employee service and customer satisfaction are critical factors which impact on repurchase intention and word of mouth Nevertheless, little research has investigated the relationship of those concepts This research examines those relationships Using a data set from a sample of 175 consumers, we found that employee service influences on customer satisfaction and customer satisfaction impacts on both repurchase intention and positive word of mouth These findings suggest that in order to accomplish the success of a supermarket, we must improve employee service Once we increase employee service, customer satisfaction is increased It influences repurchase intention and positive word of mouth In short, employee service is a very important factor that supermarket managers need to improve Keywords: Customer repurchase intention, positive word of mouth, employee service and customer satisfaction, supermarket ii TABLE OF CONTENTS CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Research problem 1.3 Research questions 1.4 Research scope 1.5 Research methodology 1.6 Research contribution 1.7 Thesis structure CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES 2.1 Introduction 2.2 Employee Service 2.3 Positive Word of Mouth 10 2.4 Repurchase intention 11 2.5 Customer satisfaction 12 2.6 Hypotheses 13 2.7 Summary 16 CHAPTER 3: METHODOLOGY 17 3.1 Introduction 17 3.2 Research process of this study 17 3.3 Measurement scales 20 3.4 Qualitative Research 21 3.4.1 The purpose of this qualitative research 21 3.4.2 Sample of this qualitative research 22 3.4.3 The conduct of this qualitative research 22 3.4.4 The outcome of this qualitative research 23 3.5 Sample and data collection of pilot survey and main survey 24 3.5.1 Sample 24 iii 3.5.2 Data collection 25 3.6 The results of Pilot Survey 25 3.6.1 Reliabilty Analysis - Cronbach’s alpha Testing 25 3.6.1.a Employee Service testing 27 3.6.1.b Customer Satisfaction testing 28 3.6.1.c Positive Word of Mouth testing 28 3.6.1.d Repurchase Intention testing 28 3.6.2 Exploratory Factor Analysis (EFA) 29 3.7 Summary 31 CHAPTER 4: DATA ANALYSIS AND RESULTS 33 4.1 Introduction 33 4.2 Sample Characteristics 33 4.3 Confirmatory factor analysis (CFA) 36 4.3.1 CFA of Employee Service (items: es1, es2, es3, es4, es5, es6) 36 4.3.2 CFA of Customer Satisfaction (items: cs2, cs3, cs4, cs5) 37 4.3.3 CFA of Positive Word of Mouth (items: wm2, wm3, wm4, wm5, wm6) 38 4.3.4 CFA of Repurchase Intention (items: ri1, ri2, ri3, ri4, ri5) 39 4.4 Saturated Model 40 CHAPTER 5: CONCLUSION, IMPLICATION AND LIMITATION 46 5.1 Conclusion 46 5.2 Implication 48 5.3 Limitation and future research 49 REFERENCES 51 Appendix 1: Qualitative result – Table 3.1 55 Appendix 2: Pilot survey results – EFA first time running 57 Appendix 3: Pilot survey results – EFA fifth time running (last time) 59 Appendix 4: The results of covariance and correlation 60 Appendix 5a: Questionnaire in Vietnamese 61 iv Appendix 5b: Questionnaire in English 65 LIST OF TABLES Table 3-2: Reliability result of pilot survey 26 Table 3-4 Pattern Matrixa 30 Table 4-1: Descriptive Statistics 33 Table 4-4: Regression Weights: (Group number - Default model) 42 Table 4-5: Standardized Regression Weights: (Group number - Default model) 43 LIST OF FIGURES Figure 1: Conceptual Model 15 Figure 2: Research Process 19 Figure 3: Result of Employee Service CFA 37 Figure 4: Result of Customer Satisfaction CFA 38 Figure 5: Result of Positive Word of Mouth CFA 38 Figure 6: Result of Repurchase Intention CFA 39 Figure 7: Result of Saturated Model 41 Figure 8: Structural Results (Standardized estimates) 44 v CHAPTER 1: INTRODUCTION 1.1 Research background In recent years, the Vietnamese retail market has developed significantly in comparison with previous decades According to IIB’s analysis on November 2012, sales in the retail industry had been increasing on an average of 27% per year from 2005 to 2011 International retailers, such as Big C, Metro, Lotte Mart, have come to Vietnam Coop Mart, a domestic retailer, has also expanded very quickly Also, retailing continues to transform Vietnamese economics with domestic consumption as a primary focus Additionally, retailing has enabled the opening of doors to international investors because of the young population and the continuously urbanizing process This trend should favour continued growth in retailing over the long term (A.T Kearney, cited by Nguyen, 2010) Despite the fact that Vietnam has fallen from first place in 2008 to 6th place in 2009, 14th in 2010, 23rd in 2011, and 32nd in 2012 according to the annual reports of Global Retail Development Index, with improved growth forecasts in both GDP and disposable income, Vietnam still remains an attractive market for global retailers Furthermore, according to Vietnam’s WTO commitments, effective January 11, 2015, Vietnam has to allow the establishment of 100% foreign-invested retail organizations Casino, owner of the Big C supermarket chain, has developed its number of supermarkets in Vietnam to 24 Casino plans to open five supermarkets and shopping centres annually over the next three years Meanwhile, Germany’s Metro Cash & Carry Vietnam now operates 19 stores nationwide, a number expected to rise to 30-35 over the next three to five years In short, the Ministry of Industry and Trade estimates that by 2020, Vietnam would host some 1,200 to 1,300 supermarkets, and more than 300 shopping centres (Nguyen, 2013) Apparently, the Vietnamese retail market is very competitive and is set to explode to develop in the next years 1.2 Research problem Theoretically, retailers have many choices to implement strategies attracting consumers to come to their supermarkets and spend their money on their goods and services; for instance, they are strategies of promotion, service and price However, the answer for efficiency of those strategies is not really clear in Vietnamese context The truth is not everyone spends money when they come to these shopping places Consumers who buy at a store one time doesn’t mean that they will surely buy something in the future Some of them will buy, some will just look at products and not buy, some will never come back, etc Some will talk to others about the supermarket in a favourable way while others will talk negatively about their shopping experience There are plenty of things that could affect the success of a supermarket Retailers need to understand their customer attitudes and behaviours in order to come up with appropriate strategies In the international academic arena, there are many research projects related to these issues It is about four concepts: repurchase intention, word of mouth, employee service and customer satisfaction Recently, in the past four years, there were a lot of complaints from consumers to employee of supermarkets in Vietnam These complaints have been printed in the newspaper Supermarket managers had to admit that their employees were wrong and would be punished However, these incidents have influenced future customer behaviour This influence needs more research in order to show its importance to those managers who are in charge of planning strategies for supermarkets This study focuses on observing the important role of employee service on related concepts mentioned above Customer repurchase intention is critical to a store’s profitability (Jones and Sasser, cited in Kuo, Hu & Yang, 2013, p.170) Therefore, the retailer can earn repurchase intention of its customers by providing the customer what they want in terms of products and services Katz and Lazarsfeld (1955) believed that word of mouth (WOM) was seven times more effective than newspaper ads while Day (1971) estimated that WOM was nine times more effective than advertising in changing consumer attitudes, and Morin (1983) showed that “other people’s recommendations” were three times more effective in terms of stimulating purchases of over 60 different products than was advertising (cited by Goyette et al., 2010) Yoo et al (as cited in Nguyen, 2011) found that personal service has a direct effect on consumer in-store emotion and indirectly creates consumer store attitude Retailers easily lose customers to their competitor because of doing poorly in this area of providing service Anselmsson (2006) supplemented that satisfaction is a crucial issue for both customer and retail management (cited in Theodoridis and Chatzipanagiotou, 2008) Due to these important roles mentioned above, it is now necessary to research on these four concepts that contribute to the overall study in the Vietnamese retail industry Pollack, B.L (2009) Linking the hierarchical service quality model to customer satisfaction and loyalty Journal of Service Marketing, 23(1), 42-50 doi:10.1108/08876040910933084 Prokopis K Theodoridis, Kalliopi C Chatzipanagiotou (2008) Store image attributes and customer satisfaction across different customer profiles within the supermarket sector in Greece European Journal of Marketing, Vol 43 No 5/6, pp 708-734 Shahrokh, Z D., Oveisi, N., Timasi, S M (2013) The Effects of Customer Loyalty on Repurchase Intention in B2C Journal of Basic and Applied Scientific Research, ISSN 2090-4304, pp 636-644 Siu, Y.M.N and Cheung, J.T.H (2001) A measure of retail service quality Marketing Intelligence & Planning, 19/2 pp 88-92 MCB University Press ISSN 0263-4503 Wang, Xuehua (2011) The effect of inconsistent word-of-mouth during the service encounter Journal of Services Marketing, Vol 25, No 4, 2011, 252-259 Yoo, D.K and Park, J.A (2007) Perceived service quality – analyzing relationships among employees, customers, and financial performance International Journal of Quality & Reliability Management, Vol 24 No 9, pp 908-26 54 Appendix 1: Qualitative result – Table 3.1 Variables/Items Source Factor Employee Service (SCE) ES1 Supermarket X’s employees are willing to serve me Adapted ES2 Supermarket X’s employees are available when I need them from ES3 Supermarket X’s employees enthusiastically answer my questions Nguyen and ES4 Supermarket X’s employees are very polite Nguyen ES5 Supermarket X’s employees are very friendly (2003) ES6 Supermarket X’s employees serve quickly Customer Satisfaction (SC) CS1 I like to purchase goods from Supermarket X Adapted CS2 I think that purchasing from Supermarket X is a good idea from Fang, CS3 I feel satisfied with Supermarket X Chiu, and 10 CS4 I would be happy shopping at Supermarket X in the future Wang 11 CS5 Supermarket X is meeting my expectation (2011) and 12 CS6 Supermarket X is better than other supermarket Pham & Le 13 CS7 Overall, I am satisfied with the experience of purchasing at (2011) Supermarket X Positive Word of Mouth (PWOM) 14 WM1 I am proud to say to others that I am Supermarket X’s customer Adapted 55 Variables/Items Source Factor 15 WM2 I recommend Supermarket X 16 WM3 I speak of Supermarket X’s good points from Goyette et al (2010) 17 WM4 I mostly say positive things about Supermarket X to others 18 WM5 I have spoken favorably of Supermarket X to others 19 WM6 I strongly recommend people to buy goods from Supermarket X Repurchase Intention (RI) 20 21 22 RI1 RI2 RI3 If I could, I would like to continue purchasing goods from Adapted Supermarket X from Fang, I intend to continue purchasing goods from Supermarket X in the Chiu & future Wang It is likely that I will continue purchasing goods from Supermarket X (2011) and in the future Kuo, Hu & Yang 23 RI4 I anticipate repeat purchasing from Supermarket X in the near future 24 RI5 I expect to repeat purchase from Supermarket X in the near future (2013) 56 Appendix 2: Pilot survey results – EFA first time running Table 3-3 Pattern Matrixa Factor Repurchase Intention 956 Repurchase Intention 879 Repurchase Intention 678 Repurchase Intention 675 Repurchase Intention 612 326 Employee Service 859 Employee Service 770 Employee Service 721 Employee Service 707 Employee Service 653 Employee Service 564 Customer Satisfaction 833 Customer Satisfaction 734 Customer Satisfaction 697 Customer Satisfaction 670 Customer Satisfaction 484 Customer Satisfaction 408 57 Customer Satisfaction 403 Positive Word of Mouth 811 Positive Word of Mouth 728 Positive Word of Mouth 717 Positive Word of Mouth 706 Positive Word of Mouth 621 Positive Word of Mouth 332 361 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations 58 Appendix 3: Pilot survey results – EFA fifth time running (last time) Table 3-5: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling 871 Adequacy Bartlett's Test of Approx Chi-Square Sphericity df 1.447E3 190 Sig .000 Table 3-6: Total Variance Explained Rotation Sums of Extraction Sums of Squared Squared Loadings Loadingsa Initial Eigenvalues Factor Total % of Cumulative Variance % Total % of Cumulative Variance % Total 8.002 40.012 40.012 7.615 38.076 38.076 5.833 2.904 14.522 54.534 2.511 12.555 50.631 4.381 1.455 7.275 61.809 1.056 5.281 55.912 5.675 1.157 5.787 67.596 785 3.923 59.836 5.569 883 4.417 72.013 … … … … 20 131 654 100.000 59 Appendix 4: The results of covariance and correlation Table 4-2 Covariances: (Group number - Default model) Estimate S.E C.R P ES < > WM 362 100 3.603 *** ES < > RI 346 076 4.582 *** CS < > WM 579 112 5.161 *** CS < > RI 588 090 6.544 *** ES < > CS 465 090 5.159 *** WM < > RI 417 096 4.339 *** Label Table 4-3 Correlations: (Group number - Default model) Estimate ES < > WM 345 ES < > RI 517 CS < > WM 499 CS < > RI 794 ES < > CS 595 WM < > RI 418 60 Appendix 5a: Questionnaire in Vietnamese Xin chào bạn Mình Nguyễn Duy Tân, học viên MBus - ĐH Kinh Tế Mình làm luận văn, mong người dành 10 phút để làm giúp khảo sát  Siêu thị mà bạn thường mua hàng thuộc hệ thống siêu thi nào? (chỉ chọn 1) Coop Mart Big C Lotte Metro Maximark Citimart Vinatex mart  Trung bình, tháng, số lần bạn đến mua hàng siêu thị là: a.Dưới lần/ tháng b.Một lần / tháng c.Hai lần / tháng d.Ba lần / tháng e.Từ bốn lần / tháng trở lên Từ “siêu thị X” bảng câu hỏi bên ám siêu thị mà bạn trả lời Mời bạn trả lời cách khoanh tròn vào ô trả lời Chỉ chọn mức độ ý kiến với quan điểm bạn nhất: 61 Hoàn toàn không đồng ý Không đồng ý Hơi không đồng ý Không ý kiến Hơi đồng ý Đồng ý Hoàn toàn đồng ý BẢNG CÂU HỎI Về khả 1.Nhân viên siêu thị X sẵn lòng phục vụ 2.Nhân viên siêu thị X có mặt kịp thời cần phục vụ 3.Nhân viên siêu thị X giải đáp tận tình thắc mắc của nhân viên 4.Nhân viên siêu thị X lịch 5.Nhân viên siêu thị X thân thiện 6.Nhân viên siêu thị X phục vụ nhanh nhẹn Sự 1.Tôi thích mua hàng siêu thị X hài lòng 2.Tôi nghĩ mua hàng siêu thị X ý kiến tốt 3.Tôi cảm thấy thỏa mãn với siêu thị X 4.Tôi vui vẻ mua hàng siêu thị X tương lai 5.Siêu thị X đáp ứng đủ mong đợi 6.Siêu thị X tốt siêu thị khác 7.Về tổng quát, thỏa mãn với trải nghiệm mua hàng siêu 7 Ô trả lời nằm bên phải, có mức độ ý kiến: KHÁI Số lớn nghĩa bạn đồng ý, Vd: Hoàn toàn NIỆM đồng ý - Số nhỏ bạn không đồng ý, Vd: Hoàn toàn không đồng ý - thị X Ý định 1.Nếu có thể, muốn tiếp tục mua hàng siêu thị X 62 tái mua 2.Tôi có ý định tiếp tục mua hàng siêu thị X tương lai sắm 3.Tôi chắn tiếp tục mua hàng siêu thị X tương 7 7 2.Tôi giới thiệu siêu thị X với người khác 3.Tôi nói mặt tốt siêu thị X với người khác 4.Tôi thường nói điều tích cực siêu thị X với người 5.Tôi nói cách thích thú siêu thị X với người khác 6.Tôi khuyên người khác mua hàng siêu thị X lai 4.Tôi biết trước lặp lại việc mua hàng siêu thị X tương lai gần 5.Tôi mong đợi lặp lại việc mua hàng siêu thị X tương lai gần Tin đồn 1.Tôi tự hào nói với người khác khách quen tích cực siêu thị X khác Thông tin người trả lời khảo sát: a Giới tính: Nam Nữ b Tuổi tác: Từ 18 đến 22 Từ 23 đến 28 Từ 29 đến 35 Trên 35 63 c Thu nhập hàng tháng (VNĐ): Từ - triệu Từ triệu đến triệu Từ triệu đến 10 triệu Từ 10 triệu đến 20 triệu Trên 20 triệu Khảo sát đến hết Xin chân thành cảm ơn bạn dành thời gian 64 Appendix 5b: Questionnaire in English Dear Sir or Madam I am Nguyen Duy Tan, a MBus student of UEH I am doing my thesis Hopefully you spend 10 minutes to finish this survey for me  Supermarket that you most-often purchase is: (please choose one option) Coop Mart Big C Lotte Metro Maximark Citimart Vinatex mart  Averagely, in a month, how often you purchase in this supermarket? a Less than once a month b Once a month c Twice a month d Three times a month e Four times a month or more The word “Supermarket X” in the following questionnaire implies to the supermarket you have chosen above Please answer by circling one of seven numbers Choose the one that matches your opinion: 65 Totally disagree Disagree Slightly disagree Neutral Slightly agree Agree Totally agree QUESTIONNAIRE Employe Supermarket X’s employees are willing to serve me e Service Supermarket X’s employees are available when I need them Supermarket X’s employees enthusiastically answer my Supermarket X’s employees are very polite Supermarket X’s employees are very friendly Supermarket X’s employees serve quickly Customer I like to purchase goods from Supermarket X Satisfacti I think that purchasing from Supermarket X is a good idea -on I feel satisfied with Supermarket X I would be happy shopping at Supermarket X in the future Supermarket X is meeting my expectation Supermarket X is better than other supermarket Overall, I am satisfied with the experience of purchasing at 7 There are seven levels: CONCE The greater the number is, the higher your agreement is PT Ex: Totally agree - The smaller the number is, the higher your disagreement is Ex: Totally disagree - questions Supermarket X Repurcha If I could, I would like to continue purchasing goods from 66 -se Supermarket X Intention I intend to continue purchasing goods from Supermarket X in 7 7 the future It is likely that I will continue purchasing goods from Supermarket X in the future I anticipate repeat purchasing from Supermarket X in the near future I expect to repeat purchase from Supermarket X in the near future Positive I am proud to say to others that I am a Supermarket X’s Word of customer Mouth I recommend Supermarket X I speak of Supermarket X’s good points I mostly say positive things about Supermarket X to others I have spoken favorably of Supermarket X to others I strongly recommend people buy goods from Supermarket X Respondents’ information: a Sex: Male Female b Age: From 18 to 22 From 23 to 28 From 29 to 35 67 Over 35 c Monthly income (VND): From - million From more than million to million From more than million to 10 million From more than 10 million to 20 million More than 20 million This is the end of the survey Thank you for your time 68 ... Customer Satisfaction, Positive Word of Mouth and Repurchase Intention The idea of this research is to focus on the impact of Employee Service on Repurchase Intention and Word of Mouth There are research...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Duy Tan The influence of Employee Service on Positive Word of Mouth and Repurchase Intention in Vietnamese... reviewed: Employee service, positive word of mouth, repurchase intention, and customer satisfaction In this paper, customer satisfaction, positive word of mouth and repurchase intention are reviewed