MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY X—W HOANG NGOC CAM TU THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY MASTER THESIS OF BUSINESS ADMINISTRATION HO CHI MINH CITY – 2012 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY X—W HOANG NGOC CAM TU THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY Subject: Master of Business Administration Code: 60.34.01.02 MASTER THESIS OF BUSINESS ADMINISTRATION SUPERVISOR: DR TRAN HA MINH QUAN I ACKNOWLEDGEMENT For the completion of this thesis, I would like to extend my deep gratitude to Dr Tran Ha Minh Quan, who gave me intensive support, valuable suggestion, guidance and encouragement during the time I conduct my thesis Through his guiding I found the way to conduct thesis successfully and also the way to solve research problems I also want to say thankful to my classmate at eMBA K19 for their sharing knowledge and honestly support during the time we studied and conducted thesis, their passion to finish thesis and encouragement gave me more strength to get over objection on the way to graduation Last but not least, I am grateful to my husband and my family for their warm encouragement during the time I finished the thesis Although I has tried the best to complete the thesis, but errors could not be comprehensively avoided Therefore, I am looking forward to receiving comments from respectful lecturers and friends, so that I can improve more on the quality of this thesis Hoang Ngoc Cam Tu Ho Chi Minh, 25 October 2012 II COMMITMENT I would like to commit that this thesis, “THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY”, was accomplished based on my independent and serious studies and scientific researches The data was collected in reality and it has clear origins In addition to that, the data would be trust-worthily handled and it has never been released in any menu Hoang Ngoc Cam Tu III CONTENTS ACKNOWLEDGEMENT .I COMMITMENT II CONTENTS III TABLES IV FIGURES V CHAPTER I: INTRODUCTION 1.1 1.2 1.3 1.3.1 1.3.2 Problem Statement Research Objective Contribution .2 Academic Contribution Business Contribution 1.4 Scope and Approach 1.5 Research Structure 2.1 Service Quality 2.2 Customer Loyalty 2.3 Relationship Between Service Quality and Loyalty .11 3.1Research Design 14 3.2 Questionnaire Development .16 3.2.1 Service quality scale 16 3.2.2 Customer loyalty scale .18 3.3 Questionnaire Translation .19 3.4Group Discussion .20 3.5 Target population 21 3.6 Sample size .21 3.7 Selecting the sample and collecting data .22 3.8 Method of data analysis 23 3.8.1 Data cleaning 23 3.8.2 Reliability 23 3.8.3 Confirmatory Factor Analysis (CFA) 24 3.8.3 Structural Equation Model (SEM) 26 3.8.5 Analysis of variance (one-way and two-way ANOVA) .27 IV 4.1 Characteristic of qualified respondents 29 4.2 Normality analysis 31 4.3 Reliability of the measurements .33 4.3.1 Reliable Test of Service Quality (SERVPERF) Measurement 33 4.3.2 Reliable test of customer loyalty scale 36 4.4 Confirmatory factor analysis 36 4.5 HYPOTHESIS TESTING 42 4.6 Analysis of variance 45 4.6.1 The effect of gender on loyalty 45 4.6.2 The effect of age on loyalty 47 4.6.3 The effect of income on loyalty 48 5.1 Discussion on findings 50 5.2 Practical implications .51 5.3 Contribution of the current study 52 5.4 Limitations and Future research .52 REFERENCES VIII APPENDIX XVIII TABLES Table 2-1: Five Dimensions of Service quality V Table 2-2: Loyalty Scale Table 3-1: Survey Items Used in The Study-Service Quality Scale Table 3-2: Survey Items Used in The Study-Customer Loyalty Scale Table 3-3: Assessing fit indices Table 4-1: Variables Table 4-2: Socio-demographic Characteristics of The Qualified respondents Table 4-3: Assessment of Normality Table 4-4: Reliability of Service Quality Measurement (SERVPERF scale) Table 4-5 Reliability of loyalty measurement Table 4-6: Composite reliability Table 4-7: Standardized Regression Weights – Hypothesized Model Table 4-8: Assessing Fit Indices – Modified Model Table 4-9: Regression Weights: (Group number - Default model) Table 4-10: T-test of gender toward loyalty (BI) Table 4-11: ANOVA Test Of Age Toward Loyalty Table 4-12: ANOVA Test Of Education Toward Loyalty Table 4-13: ANOVA test of income toward loyalty FIGURES Figure 2-1: The conceptual Model Figure 3-1: The research process VI Figure 3-2: The translation process Figure 4-1: CFA model Figure 4-2: SEM result (standardized estimate) CHAPTER I: INTRODUCTION 1.1 Problem Statement From 2001 to 2008, Vietnamese pharmaceutical market has increased significantly with average about 19.9% per year, especially in 2008 the growth was up to 25.5% compared to 2007 (Tan et al., 2009) In recent years, with the higher average income, Vietnamese people tend to spend more on healthcare service While average expense for medicine of Vietnamese people in 1998 was just about 5.5 USD, in 2008 the average expense for medicine was 16.5 USD and up to 19.77 USD in 2009 (Tan et al., 2009) The growth in pharmaceutical market is attributed by increasing trend in self-medication, inline with the greater awareness of health issues As end-stage in medicine distribution (along with hospitals), pharmacies has become the most important factor to ensure the good consuming medicine product to most of consumer, the best place for self-medication Especially in rural areas, where patient rather visit pharmacies than hospital for their minor health problem, pharmacies are not only places to buy drug but also places where patient can get fast and effective medicine for their simple disease At pharmacies, patient can be advised how to use medicine safety and effectively In Vietnam, when patient got health problem, most of them will go to pharmacies nearby to take some medicine; this situation make the role of pharmacies become more and more important Adapted to Ministry of Health regulation in 2007, that all pharmacies in Ho Chi Minh City should be improved to GPP (Good Pharmacy Practices) standard to increase service to consumer, pharmacies has been put in a new competition for increasing infrastructure and service quality More and more new GPP pharmacies appeared in HCM city in year 2011 with many formalism of increasing service: pharmacist or doctor available, economic price, gift for loyal customer…etc Pharmacies are doing their best to increase service quality to attract loyal customer to maximize profit Aim at understanding how to improve loyalty pharmacy customer, this research is conducted to clarify relationship between service quality and customer loyalty 1.2 Research Objective To examine if any dimension of service quality, that are tangibility, reliability, responsiveness, assurance and empathy effect on loyalty in pharmaceutical market To investigate if there is any difference on mean of loyalty of pharmaceutical consumer between demographic factors such as income, age, and gender 1.3 Contribution 1.3.1 Academic Contribution ...MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY X—W HOANG NGOC CAM TU THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON. .. that this thesis, ? ?THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY ON PHARMACY CUSTOMERS IN HO CHI MINH CITY? ??, was accomplished based on my independent and serious... found between service quality and customer loyalty Indeed, most of the studies linking service quality and behavioral intentions have been conducted in one specific service setting For instance,