Professional Documents
Culture Documents
Topic of a research
and
easily
observed
in
services
industry
especially
in
mobile
providers offers more services on expanded networks and cost falls. As the results, the
nature of competition in this industry is more fierce than ever due to the small switching
cost and large bargaining power of customers. This study will explore that the quality of
service is the most important factor determine the customer retention, customer
expansion based on customer satisfaction of Vietnamobile.
2. Background for the problem
Vietnams telecommunications industry has experienced rapid growth in recent years, and
this is particularly true of the mobile-phone and Internet sectors. E-commerce is
becoming increasingly popular among Vietnamese companies as a way to reduce
transactions costs and seek new customers. Growth in average personal disposable
income, the rapid expansion of the private sector and the countrys young population
have underpinned a sharp increase in demand for telecoms and technology services in
urban areas. This trend is expected to continue, particularly as providers offer more
services on expanded networks and costs fall. Vietnams membership of the World Trade
Organization, which it joined in 2007, will open up the industry to greater private
competition from both foreign and domestic firms in 2013-17. This will serve to make
telecoms and technology services cheaper and more accessible. The government plans to
facilitate the upgrading of the countrys information and communications technology
(ICT) infrastructure and is intent on opening up the industry to greater competition.
Telecommunications is the most potential industry in Vietnam with the fast growth in
telecom subscribers. Assistant Secretarial Trade Mission to Vietnam (2008) revealed that
some small state owned enterprises have been privatized successfully and will keep doing
so especially in major sectors of economy such as telecommunications, oil and gas, etc.
Besides, evolving and improving regulatory and commercial law regimes are beginning
to address business corruption, weak intellectual property rights enforcement and a lack
of transparency and consistency is the big opportunities for multinational companies.
Le, M. (2008) reported that in 2008, the number of telecom subscribers is around 70
million including fixed and mobile phone, nearly 82% population. Additionally, Data
monitor (2010) reported that two-thirds of Vietnamese are under the age of 26; 85
percent are under the age of 40 in 2009 and current projections say 45 percent of
Vietnamese will live in urban centers by 2020 which will increase the demand for
telecommunications(p.8). Furthermore, telecom subscribers just concentrate in big city
that is 36% by provincial distribution. So the rest of it, about 64% of provincial
distribution is the present target market for communication services providers.
The Vietnamese telecommunication market is considered to be fiercely competitive, with
a high number of subscribers and several new networks operators entering the market.
There were an estimated 186 mobile subscriptions per 100 people in 2012, and the ratio is
expected to rise to 206 per 100 in 2017. According to a telecoms and technology research
company, Pyramid Research, the strong competition in the industry that necessitates
offering incentives and lowering tariffs means that Vietnamese own an average of two
SIM cards each.
The actual mobile penetration rate is estimated to be around 70-75%, giving operators
plenty of scope to attract more customers in the forecast period. However, competition in
the sector is fierce, with price-based competition rampant. As in several other emerging
markets, around 95% of subscriptions are prepaid, and customer loyalty is therefore
weak.
Demand for telecoms services in rural areas will depend largely on service provision. The
majority of Vietnamese living in such areas do not have the same sort of access to goods
and services that their compatriots have in the major cities. However, as the provision of
services improves, demand in rural areas is set to rise rapidly.
The government has a strong interest in the telecoms sector. A state-owned firm, Vietnam
National Post and Telecommunications (VNPT), holds the largest market share in both
fixed-line and mobile networks.
VNPT is the parent company of two mobile-phone operators, Vinaphone and MobiFone.
The military operates Vietnams second-largest telecoms firm in terms of market share,
Viettel. There are also a number of small service providers, including the state-owned
EVN Telecom, S-Fone (a joint venture between SK Telecom of South Korea and
Vietnams state-owned Saigon Post and Telecommunications Services), Vietnammobile
(a joint venture between Hong Kong-based Hutchison and a local firm, Hanoi Telecom)
and Beeline (a joint venture between Russias VimpelCom and a domestic firm, Gtel).
In June 2012, VNPT announced its intention to merge Vinaphone and MobiFone, in
response to the introduction of anti-monopoly regulations that prevent investors with a
20% share in one telecoms firm from owning a stake larger than this in a second operator.
However, the Ministry of Information and Communication (MIC) rejected the proposal in
April 2013, owing to concerns about competition, as the merged company would have
controlled almost 50% of the market. According to the MIC, VNPT is obliged to come up
with alternative plans to restructure its mobile businesses in order to comply with antimonopoly regulations.
Progress towards the adoption of fourth-generation (4G) technology is dependent on the
success of third-generation (3G) connections. According to the MIC, the number of 3Gnetwork users totaled 16m by end-2012, up from 12.8m a year earlier. Nonetheless, only
10% of the capacity of the 3G networks was being utilized and in May 2013 the
government confirmed its decision to postpone 4G licensing until at least 2015 to allow
providers to recoup more of their significant investments in 3G networks.
Increasing demand for telecoms services, and particularly for mobile-phone services, has
led to concerns about network capacity. Moreover, mobile-phone service providers have
been cutting tariffs and subscription fees in response to rising competition, and they may
therefore struggle to raise sufficient funds to develop their networks.
This research focuses on Vietnamese mobile telecommunication services which are
fiercely competitive attract new large entrants entering this market. Increasing the
subscribers is the source of revenue for each providers and lead to the increase in quality
and decrease in cost. The literature on Vietnam mobile telecommunication services is put
forth to discuss and give the general idea to check out service quality improvement
especially the quality of Vietnamobile: one of new providers in Vietnam.
The objectives of this research is to discuss the high quality of services is the crucial key
to retain and expand the customer base and from then recommend innovative action to
achieve more improvement. The rest of paper is organized as follows: first, discussion of
the relevant literature is presented, followed by a discussion on the methodology used.
The findings are presented and then discussed, followed by the conclusions that look at
academic and managerial implications, limitation and areas for future research.
3. Literature review
In the review provided below, we document most recent research evidence on customer
satisfaction, service quality and their impact on customers retention and expansion.
Moreover, we also provide some knowledge base about switching cost, bargaining power
of users, value perceived customers, within mobile telecommunication industry.
3.1 Perception-Customer satisfaction
3.1.1 Perception
Perception is an opinion of something viewed and assessed by a person. It might vary
from person to person, as everyone has different beliefs towards certain services and
products (Bitner et al., 1997) that play a role in determining customer satisfaction
(Lovelock, 1996). By adjusting customer expectation and perception, customer
satisfaction and customer loyalty can be influenced. In fact, satisfaction refers to the
customers positive perception of the value received (Hallowell, 1996) and is measured
based on expectation and perception (Zeithamal and Bitner, 2000). Customer perception
of service quality are generally subjective, nonetheless it does provide valuable
information and another useful tool for market monitoring and development (Toh, 2002).
All mobile telecommunication service providers in Vietnam are searching for ways to
differentiate themselves from their competitors and gain benefits over competition. There
have been various promotional efforts over the years. Unfortunately, due to the
aggressive price wars in the market, carriers do not have much room to differentiate on
price. A high level of service becomes the selling point to attract customers attention and
is the most important and significant driver in customer satisfaction (McDougall and
Levesque, 2000). However, there are limitations in applying high level of service in
telecommunication industry in Vietnam now. Difficulties exist due to the inheritance of
systems that do not support more efficient and automated use of the network (Kim, 2000
and Kim et al., 2004).
3.1.2 Customer satisfaction
Customer satisfaction can be defined as customer reaction to the state of fulfillment of
their expectation and needs, customer judgment towards service and products quality
(Hallowell, 1996; Oliver, 1997 and Zeithamal and Bitner, 2000). Satisfaction is important
as the principle purpose of a business is to create satisfied customers (Drucker, 1954).
Satisfied customers lead to higher future profitability (Anderson et al., 1994). Satisfied
customers are more willing to pay price premiums, provide recommendations and
maintain loyalty towards the company (Reichheld, 1996). Higher customer satisfaction
leads towards higher levels of customer retention and loyalty (Fornell, 1992) and lowers
costs related to defective goods and services (Anderson et al., 1997).
Customer perception, customer satisfaction and customer loyalty are closely linked with
one another. Basically, the study of customer loyalty can be categorized into three broad
categories: the behavioral approach, the attitudinal approach and the integrated approach
(Oh, 1995). The behavioral approach examines the customers continuity of past
purchases and then measures customer loyalty by rates of purchase, frequency of
purchase and possibility of purchase. The attitude approach infers customer loyalty from
psychological involvement, favoritism and a sense of goodwill towards a particular
product or service. The integrated approach takes account of both behavioral and
attitudinal variables, in order to create its own concept of customer loyalty. The concept
of customer loyalty is understood as a combination of customers favorable attitude and
the behavior of repurchase (Kim et al., 2004).
Customer satisfaction has been extensively studied in the field of marketing over the last
two decades (Oliver 1980, 1981, 1999; Fomell et al. 1996; Anderson and Fomell 1994; Yi
1989; Johnson et al. 2001; Anderson et al. 2004). It has become an important construct
for marketing scholars (McQuitty et al. 2000; Morgan et al. 1996) and an important goal
to achieve for marketing practitioners (Erevelles and Leavitt 1992). It is by far the most
commonly used customer-oriented metric by managers (Gupta and Zeithaml 2006)
because it is generic and can be mastered universally for all products and services
including nonprofit and public services (Zeithaml et al. 2006; Johnson and Fomell 1991).
After an extensive and critical review of the customer satisfaction literature, Yi (1989)
conceptualized customer satisfaction as an attitude like judgment following a purchase
act or based on a series of consumer-product interactions. The definition highlights that
customer satisfaction is essentially the customer's judgment about the extent to which a
product or service meets or falls short of expectations. The literature has also emphasized
the disconfirmation of expectations paradigm to a great extent (Oliver 1996; Yi 1989).
This explains that the consumer compares the product/service with a pre-consumption
expectation. Tse and Wilton (1988) defined customer satisfaction as "the consumer's
response to the evaluation of the perceived discrepancy between prior expectations (or
some form of performance) and the actual performance of the product as perceived after
its consumption." This definition conforms with definition of Oliver (1997).
Historically, satisfaction has been used to explain loyalty as behavioral intentions (e.g.,
the likelihood of repurchasing and recommending). However, Verhoef (2003) argues that
longitudinal data that combine survey measures with subsequent behavior should be used
to establish a causal relationship between perceptions and behavior. For example, Bolton
(1998) finds a positive effect of overall customer satisfaction on the duration of the
relationship for cellular phone customers, and Bolton and Lemon (1999) show a positive
effect of overall satisfaction on customer usage of telecommunications subscription
services. In a large-scale study of automotive customers, Mittal and Kamakura (2001)
show a strong, albeit nonlinear, effect of customer satisfaction on repurchase behavior,
such that the functional form relating satisfaction to repurchase is marginally increasing.
They also find large differences in the satisfactionretention relationship across customer
characteristics. On the basis of these studies, we expect customer satisfaction to have a
significant influence on customer retention that varies across customers.
3.2 Service quality
Service quality
practitioners. In the services marketing literature service quality is defined as the overall
assessment of a service by the customers. Parasuraman et al. (1988; p.l6) defined
perceived service quality as "global judgment, or attitude, relating to the superiority of
the service." Parasuraman et al. (1985) conceptualized service quality as perceptions
resulting from the comparison of customer expectations and actual service performance.
They further pointed out that service quality perceptions are not solely the outcomes of
service but it also involves the evaluation of the service delivery process by the
customers. Lehtinen and Lehtinen (1982) conceptualized service quality as a three
dimensional construct viz. "physical", "interactive" and "corporate." Physical quality is
the quality dimension which originates from the physical elements of service like
physical product and physical support. Interactive quality indicates the interaction
between the customer and the service organization. And corporate quality is symbolic in
nature and indicates the perception of customers about the image of the organization.
Garvin (1988) provided a comprehensive definition of service quality comprising of the
attributes viz. performance, features, conformance, reliability, durability, aesthetics,
serviceability and customers' perceived quality. Asubonteng et al. (1996; p.64) defined
service quality as "the difference between the customers' expectations for service
performance prior to the service encounter and their perceptions of the service received.
Yoo and Park (2007) state that the firm's ability to create and sustain competitive
advantage depends upon the high level of service quality provided by the service
provider. They defined perceived service quality as the extent to which a firm serves the
needs of its customers successfully Again, Dabholkar et al. (2000) considered service
quality as a set of different sub-dimensions like reliability and responsiveness which form
the antecedents to customer satisfaction.
3.3 SERVQUAL Model
Servqual (Parasuraman et al. 1988) emerged as an instrument to measure service quality
consisting of the five dimensions of service quality viz. reliability, tangibility,
responsiveness, assurance and empathy. But it had its own share of criticisms because it
was based on the difference between the expectations and performance. Its reliability and
validity has been questioned by many researchers (Carman 1990; Cronin and Taylor
1992; Strandvik and Lijander 1994; Babakaus and Boiler 1992). Thus, service quality is
conceptualized both as a one-dimensional and a multidimensional construct in the
literature. Furthermore, there is strong evidence in the literature for service quality being
an antecedent of customer satisfaction.
In another study Wang et al. (2004) investigated the impact of quality-related factors on
customer value and customer satisfaction using structural equation modeling (SEM) in
China. They used the SERVQUAL (Parasuraman et al. 1988) factors (reliable, tangible,
responsive, assurance and empathy) to measure service quality, but added "network
quality" as another antecedent of customers' perceived service quality. Results indicated
that all the service quality factors had significant and positive impact on customer
satisfaction. Also customer perceived value had a moderating effect on the service quality
and customer satisfaction link. Similarly, Lai et al. (2007) tested the SERVQUAL model
in China's mobile communication industry using exploratory and confirmatory factor
analysis. They found that the SERVQUAL instrument is a valid means for measuring
service quality. They also identified "service convenience" as an important additional
dimension of service quality in China's mobile services sector.
perceived value are the key constructs affecting the customers satisfaction with mobile
services. Satisfaction in turn leads to customer loyalty.
Customer perception, customer satisfaction and customer loyalty are closely linked with
one another. Basically, the study of customer loyalty can be categorized into three broad
categories: the behavioral approach, the attitudinal approach and the integrated approach.
The behavioral approach examines the customers continuity of past purchases and then
measures customer loyalty by rates of purchase, frequency of purchase and possibility of
purchase. The attitude approach infers customer loyalty from psychological involvement,
favoritism and a sense of goodwill towards a particular product or service. The integrated
approach takes account of both behavioral and attitudinal variables, in order to create its
own concept of customer loyalty. The concept of customer loyalty is understood as a
combination of customers favorable attitude and the behavior of repurchase (Kim et al.,
2004).The relationship marketing literature recognizes another potential driver of
customer loyalty: relationship commitment (Bendapudi and Berry 1997; Morgan and
Hunt 1994). Drawing on the organizational behavior literature (Meyer and Allen 1997),
marketing scholars have variously defined commitment as a desire to maintain a
relationship (Moorman, Deshpand, and Zaltman 1993; Morgan and Hunt 1994), a
pledge of continuity between parties (Dwyer, Schurr, and Oh 1987), the sacrifice or
potential for sacrifice if a relationship ends (Anderson and Weitz 1992), and the absence
of competitive offerings (Gundlach, Achrol, and Mentzer 1995). These various sources
create a stickiness keeps customers loyal to a brand or company even when satisfaction
may be low.
The various definitions suggest two major dimensions of relationship commitment:
affective commitment and calculative, or continuance, commitment (Fullerton 2003;
Hansen, Sandvik, and Selnes 2003; Johnson et al. 2001). Calculative commitment is the
colder, or more rational, economic-based dependence on product benefits due to a lack of
choice or switching costs (Anderson and Weitz 1992; Dwyer, Schurr, and Oh 1987; Heide
and John 1992). Affective commitment is a hotter, or more emotional, factor that
develops through the degree of reciprocity or personal involvement that a customer has
with a company, which results in a higher level of trust and commitment (Garbarino and
Johnson 1999; Morgan and Hunt 1994).
3.5 SEM Model
Kim et al. (2004) investigated the effect of different service features and switching
barriers on customer satisfaction and customer loyalty in the Korean mobile
telecommunication services sector. They used SEM to test their proposed structural
model. The results indicated that customer satisfaction is significantly and positively
affected by call quality, value added services and customer support. They also found that
customer satisfaction and switching barrier had a significant and positive impact on
customer loyalty. Aydin and Ozer (2005) used the SEM technique to study the impact of
service quality, perceived value, customer expectations and complaint handling on
customer satisfaction in the Turkish mobile telephone market. The results showed that
service quality, customer expectations and complaint handling had positive and
significant effect on customer satisfaction. Service quality had the strongest effect than
other constructs in their model. All these studies have looked at different facets of service
quality or service features affecting customer satisfaction. In this study we consider the
service-related factors of Vietnamobile in Vietnam.
One of the most important factors in customer retention is the switching cost. The cost
that the customer has to pay when they wish to eliminate the current service provider and
use the new one. If the switching cost is high, the customer is reluctant to change the
service provider and vice-versa.
3.6 Switching cost
The concept of switching costs has been dealt with in detail by Klemperer
(1987) and Jones et al. (2002), among others. It is empirically analyzed byKim et al.
(2003), Shy (2002), and Chen and Hitt (2001). The latter is somewhat similar to our study
in that a discrete choice model was used to estimate switching costs. Employing revealed
preference data, Chen and Hitt (2001) developed an approach for measuring the
magnitude of switching costs for the online brokerage industry.
switching costs were analyzed in various ways: Klemperer (1987) focused on the stages
of switching behavior, Jones et al. (2002) analyzed the stages in more detail,
and Klemperer (1995)looked at the sources of switching costs. Among this group,
switching costs are broadly defined as the perceived economic and psychological costs
associated with changing from one alternative to another. As such, switching costs can be
thought of as barriers that hold customers within a particular service relationship (Jones
et al., 2002).
According to Jones et al. (2002), switching costs can be grouped into three categories:
Continuity, learning and sunk costs. Each subcategory of switching costs has its
counterpart in the mobile communications market. First, there are two kinds of continuity
costs, namely lost performance and uncertainty costs. Lost performance costs occur when
consumers lose (or perceive losing) benefits and privileges by switching to an alternative
provider. After switching, consumers may lose accrued mileage and their call charge
discount. Uncertainty costs are associated with consumer anxiety over the performance of
the new product and/or service provider.
Second, pre-switching search and evaluation costs, post-switching behavioral and
cognitive costs, as well as setup costs are categorized as learning costs. Prior to
switching, consumers spend time and effort to obtain information and evaluate various
alternatives. It is here that pre-switching search and evaluation costs occur. Postswitching behavioral and cognitive costs are incurred when consumers perceive the time
and effort spent in learning about a new service routine. Setup costs relate to the time,
effort, and expenses associated with switching providers. In the mobile communications
market, this type of cost is strongly related to inconvenience: changing the previous
phone number and informing potential callers of the number change and, if they have not
been informed, the costs to callers in finding out the new number.
Finally, sunk costs represent consumer perception of the nonrecoverable time, money,
and effort invested in establishing and maintaining a relationship. The cost of purchasing
a new mobile terminal can be thought of as a sunk cost.
Consumers decide whether to switch service providers based on their net utility change.
If the switching costs are greater than the increase in utility, consumers prefer not to
switch. In fact, high switching costs can be used as an efficient lock-in tool by existing
service providers to maintain a quasi-monopolistic environment. Conversely, if switching
costs are low, competition in price and quality of service among service providers can be
stimulated by the offer of free switching, making it beneficial to consumers.
3.7 ANOVA Method
Zeithaml et al. (1996) To summarize the literature on the behavioral consequences of
service quality at the individual customer level.
To offer a conceptual model of the impact of SQ on particular behaviors that signal
whether customers remain or defect from the company.
Proposed a conceptual model linking the behavioral and financial consequences of
service quality.
Service quality
Superior
Inferior
Behavioral intentions
Favorable
Unfavorable
Behavior
Remain
Defect
Financial consequences
Ongoing revenue
Increased spending
Price premium
Referred customers
Decreased spending
Lost customers
Costs to attract new customers
From this ANOVA method we can create the underlying factors used for the survey. The
table 1 below will list the factors we need to examine:
TABLE 1: Factors for survey
Overall you are satisfied with the service provider
The services of my mobile phone service provider are close to my expectation
My present mobile phone service provider is comparable with my ideal mobile phone service
provider.
If I were to choose a mobile phone service provider today, I would choose my present service
provider again.
I recommend the mobile phone service provider to friends and relatives
The cellular company provides service reliably, consistently and dependably
The cellular company is trustworthy and its employees are believable and honest
The company fulfils its promises
Employees are efficient and competent
Employees are easily approachable
Employees are courteous, polite and respectful
Employees listen to customers and are willing to help
Employees are pleasant, friendly and earring
The company makes efforts to understand the specific needs of customers
The company provides individual and personal attention to the customers
The company performs any service right first time
The company provides accurate and timely information
The services provided the company is prompt [low waiting time and quick response]
The operating hours are convenient for the customers
The services provided by the company are competitive
The pricing of the services are reasonable and competitive
There is enough variety of pricing plans available
The cellular company has reputation and good image
The company is innovative and forward looking
The advertisements and promotional campaigns of the company are effective
4. Research objectives
5. Research questions
Vietnam welcomes the advent of Information Ages. In this era, information can flow
easily and freely regardless of distance and territorial boundaries. This will improve the
most cost-effective and liberal way of sending information, ideas, people, goods, and
service across borders. Besides that, opening market means the high level of competition
within industry when there are many partners entering the current market: VNPT, Viettel,
Vietnamobile, Beeline, even EVNIn this situation, some questions can be asked to
either marketing experts, users to figure out what a mobile communication services
provider should be done in term of service quality, strategic planning for its future
success? And in the scope of this project, how a provider can retain and expand its
customer base is really a not easy answered-question.
Based on these objectives listed, the questions for this research should be formulated
below:
6.
Research design
The survey instrument-the cross sectional survey- was developed based on a thorough
literature review. The variables will be shown up in the research design. The
questionnaire was further refined based on a pretest among the MBA students of HUFLIT
in Ho Chi Minh city.
The secondary research method is also used to answer the questions that could not
answered by primary research.
The target population of the study was Vietnamobiles customers.
So, the method for doing this research is the combination of literature review and using
survey. The aim of these methods is comparing between theory and reality, seeing how
service quality impact on customer satisfaction and lead to the reuse intention.
The literature review will help to find out the relationship between service quality and
customer satisfaction. Furthermore, based on the literature review, the most commonly
used terms in service quality and customer satisfaction from case-studies, articles , or
theories from famous authors, and then probably recommend the suitable way to improve
their own service quality.
Research framework
Table 2:
Constructs
Customer satisfaction
Customer retention
again.
I recommend the mobile phone service provider to
Service quality
3
4
5
6
7
8
9
help
Employees are pleasant, friendly and earring
The company makes efforts to understand the
10
11
12
13
information
The services provided the company is prompt [low
14
15
customers
The services provided by the company are
16
competitive
The pricing of the services are reasonable and
competitive
17
18
19
20
image
The company is innovative and forward looking
The advertisements and promotional campaigns of
the company are effective
Vietnamobile
A mobile communication provider in Vietnam
(a joint venture between Hong Kong-based Hutchison and a local firm, Hanoi Telecom)
Service quality
Customer satisfaction
Relational Quality
Competitiveness
Reliability
Reputation
Support Features
Transmission Quality
Customer retention
Relational Quality
Competitiveness
Reliability
Reputation
Support Features
Transmission Quality
Customer expansion
(Recommendation of existing customer
to others)
6.2 Hypothesis
In this section, the relationship above-mentioned variables are clarified by hypothesis.
Hypothesis: there is a relationship among customer satisfaction, service quality, and
customers retention and expansion.
We will have three sub-hypothesis for the three pairs of customer satisfaction-service
quality; service quality- customer retention; service quality-customer expansion.
Hypothesis 1: There is a significant relationship between customer satisfaction and
service quality.
Hypothesis 2: There is a significant relationship between service quality and customer
retention.
Hypothesis 3: There is a significant relationship between service quality and customer
expansion.
6.3 Methodologies
In this section, we will answer four questions mentioned in the research questions
section. Each questions will be answered with different methods: literature review or
survey conducting.
How is the service quality in mobile communication services?
Method: We will use literature review to answer this question. Firstly, Parasuraman et al.
(1988; p.l6) defined perceived service quality as "global judgment, or attitude, relating to
the superiority of the service." Parasuraman et al. (1985) conceptualized service quality
as perceptions resulting from the comparison of customer expectations and actual service
performance. They further pointed out that service quality perceptions are not solely the
outcomes of service but it also involves the evaluation of the service delivery process by
the customers. Secondly, Lehtinen and Lehtinen (1982) conceptualized service quality as
a three dimensional construct viz. "physical", "interactive" and "corporate." Physical
quality is the quality dimension which originates from the physical elements of service
like physical product and physical support. Interactive quality indicates the interaction
between the customer and the service organization. And corporate quality is symbolic in
nature and indicates the perception of customers about the image of the organization.
Thirdly, Garvin (1988) provided a comprehensive definition of service quality
comprising of the attributes viz. performance, features, conformance, reliability,
durability, aesthetics, serviceability and customers' perceived quality. Asubonteng et al.
(1996; p.64) defined service quality as "the difference between the customers'
expectations for service performance prior to the service encounter and their perceptions
of the service received. Yoo and Park (2007) state that the firm's ability to create and
sustain competitive advantage depends upon the high level of service quality provided by
the service provider. They defined perceived service quality as the extent to which a firm
serves the needs of its customers successfully. Finally, Dabholkar et al. (2000) considered
service quality as a set of different sub-dimensions like reliability and responsiveness
which form the antecedents to customer satisfaction.
What is the customer satisfaction in mobile communication services provider?
Method: once again, we will use literature review to answer this question. Firstly,
customer satisfaction can be defined as customer reaction to the state of fulfillment of
their expectation and needs, customer judgment towards service and products quality
(Hallowell, 1996; Oliver, 1997 and Zeithamal and Bitner, 2000). Satisfaction is important
as the principle purpose of a business is to create satisfied customers (Drucker, 1954).
Satisfied customers lead to higher future profitability (Anderson et al., 1994). Satisfied
customers are more willing to pay price premiums, provide recommendations and
maintain loyalty towards the company (Reichheld, 1996). Higher customer satisfaction
leads towards higher levels of customer retention and loyalty (Fornell, 1992) and lowers
costs related to defective goods and services (Anderson et al., 1997). Secondly, Bolton
(1998) finds a positive effect of overall customer satisfaction on the duration of the
relationship for cellular phone customers, and Bolton and Lemon (1999) show a positive
effect of overall satisfaction on customer usage of telecommunications subscription
services. In a large-scale study of automotive customers, Mittal and Kamakura (2001)
show a strong, albeit nonlinear, effect of customer satisfaction on repurchase behavior,
such that the functional form relating satisfaction to repurchase is marginally increasing.
They also find large differences in the satisfactionretention relationship across customer
characteristics. On the basis of these studies, we expect customer satisfaction to have a
significant influence on customer retention that varies across customers.
In June 2012, VNPT announced its intention to merge Vinaphone and MobiFone, in
response to the introduction of anti-monopoly regulations that prevent investors with a
20% share in one telecoms firm from owning a stake larger than this in a second operator.
However, the Ministry of Information and Communication (MIC) rejected the proposal in
April 2013, owing to concerns about competition, as the merged company would have
controlled almost 50% of the market. According to the MIC, VNPT is obliged to come up
with alternative plans to restructure its mobile businesses in order to comply with antimonopoly regulations.
Increasing demand for telecoms services, and particularly for mobile-phone services, has
led to concerns about network capacity. Moreover, mobile-phone service providers have
been cutting tariffs and subscription fees in response to rising competition, and they may
therefore struggle to raise sufficient funds to develop their networks.
Progress towards the adoption of fourth-generation (4G) technology is dependent on the
success of third-generation (3G) connections. According to the MIC, the number of 3Gnetwork users totaled 16m by end-2012, up from 12.8m a year earlier. Nonetheless, only
10% of the capacity of the 3G networks was being utilized and in May 2013 the
government confirmed its decision to postpone 4G licensing until at least 2015 to allow
providers to recoup more of their significant investments in 3G networks.
What are the factors determine customer retention and expansion?
Method: Conducting the survey to find downs which services related factors determine
customer retentions and expansion by giving out the survey to the customers of
Vietnamobile to get their ideas and opinions. The information is analyzed to see how
important the factors affect the loyalty and referral of existing customers. And from the
result, this mobile service provider will know how to keep existing customers and expand
its customer base.
7. Data collection
Data was collected using self-administered questionnaires from the mobile phone users of
Vietnammobile in Ho Chi Minh city. A convenience sampling method was used to select
the respondents for the study. In all 350 questionnaires were distributed, yielding 255
completed questionnaires. Of the 255 completed questionnaires, 238 were usable,
resulting in a68 percent response rate, which is quite reasonable for a survey of this type
(Malhotra 2007). Respondents were asked to state their level of agreement with a series
of statements using a 5-point Likert scale ranging from strongly disagree" to "strongly
agree." The detailed sample characteristics are shown in Table 3:
TABLE 3:
Demographic Profiles of Respondents and Their Usage Patterns
Gender
Female (27 percent)
Age
Between 24-30 years (48.60 percent)
Data was analyzed in two stages. In the first stage the 25-variables related to service
quality were factor analyzed using principal component analysis with varimax orthogonal
rotation. An orthogonal rotation was used for its simplicity (Nunnally and Bernstein
1994). We then used service quality factor scores as independent variables in three
multiple regression analyses with customer satisfaction, customer retention and
recommendation of service to others as dependent variables, respectively. The descriptive
statistics of twenty five service quality variables and customer satisfaction; customer
retention and recommendation to others are shown in Table 4.
TABLE 4
Descriptive Statistics
Variables
1. Reliability and Consistency
Mean
3.668
Variance
0.729
2. Trust
3.378
0.768
3. Promises Fulfilled
3.357
0.838
4. Competent Employees
3.432
0.846
5. Employees Approachable
3.369
1.027
6. Employees Courteous
3.630
0.825
7. Employees Helpful
3.609
0.813
8. Employees Friendly
3.512
0.791
3.344
0.944
2.941
0.975
2.882
0.889
3.365
0.773
3.605
0.957
3.189
1.133
3.205
0.974
3.046
0.947
3.664
0.680
18. Coverage
3.702
0.725
4.130
0.949
3.000
1.333
3.202
1.233
3.668
1.083
3.479
1.103
24. Innovative
3.727
0.756
25. Promotions
3.874
0.659
8. Research Results
Factor analysis results
As can be seen from Table 4, six factors were extracted, accounting for 63 percent of the
total variance. We retained factor loadings greater than 0.40 for further analysis.
Reliability of the factors was calculated using the Cronhach's alpha. A Cronhach's alpha
value of greater than or equal to 0.7 is considered acceptable for the factor to he reliable
(Hair et al. 2006). In our case all the factors had satisfactory value of Cronhach's alpha.
Hence the factors are reliable.
Rotated Factor Matrix
Factors
Relational Quality
Items
Competent
Factor Loadings
0.535
Employees
Employees
0.723
Approachable
Employees
0.720
Courteous
ReUability
0.901
Employees Helpful
Employees Friendly
Specific Needs of
0.748
0.804
0.612
Customers
Accurate
0.468
Infonnation
Prompt Services
Sympathetic
0.514
0.646
Problem Solving
Competitiveness
Competitive
0.741
Services
Competitive Prices
Variety of Price
0.758
0.678
Plans
Value Added
0.680
Reliability
Services
Reliability and
0.653
Reputation
Consistency
Trust
Promises Fulfilled
Right First Time
0.672
0.741
0.413
Accurate Records
0.645
Geographical
0.480
0.811
0.710
Presence
Support Features
Transmission
Reputation and
0.508
Image
Promotions
Physical Facilities
Operating Hours
Promotions
Network Quality
0.550
0.793
0.410
0.550
0.817
Call Quality
0.767
Quality
0.732
0.701
Convenience
0.634
Regression analysis
As mentioned in the hypothesis, each multiple regression will analyze the relationship
between factors.
There is a significant relationship between service quality and customer expansion.
In the first regression model, we used customer satisfaction as the dependent variable and
the factor scores of the service related factors as the independent variables. We measured
customer satisfaction through a multiple item scale with Cronhach's alpha reliability
score of 0.885. Below is the regression model:
yl = a + hi *xl + h2*x2 + h3*x3 + h4*x4 + h5*x5 + h6*x6 .(1)
where, yl = customer satisfaction; xl = relational quality; x2 = competitiveness; x3 =
reliability; x4 = reputation; x5 = support features; x6 = transmission quality. Table 5
shows the result of the regression analysis. Sixty five percent of variance in the
dependent variable was explained why the six service related factors. From Table 5 it is
evident that "support features" is not significant at five percent significance level and
competitiveness and reliability had the greater impact on customer satisfaction than the
other factors.
TABLE 5
Regression 1
Independent Variables
Relational quality
Competitiveness
Standardized Beta
0.367
0.448
t-value
9.476
10.403
p-value
0.000
0.000
Reliability
0.402
5.770
0.000
Reputation
0.223
1.706
0.000
Support features
0.066
7.835
0.089
Transmission quality
0.303
2.868
Note: R-square = 0.656; F-value = 62.59; Sig. F = 0.000
0.000
TABLE 6:
Regression 2
Independent Variables
Standardized
t-value
Beta
Relational quality
0.399
8.292
Competitiveness
0.368
7.643
Reliability
0.349
7.252
Reputation
0.093
1.934
Support features
-0.011
-0.219
Transmission quality
0.152
3.163
Note; R-square = 0.467; F-value = 28.76; Sig. F = 0.000
p-value
0.000
0.000
0.000
0.054
0.827
0.002
The third regression was performed with customer retentions as the dependent variable
and the service related factors as the independent variables. The regression model is:
y3=a+b1*x1 + b2*x2 + b3*x3 + b4*x4 + b5*x5 + b6*x6 +.(3)
where, y3 = customer retention of the customers; xl = relational quality; x2 =
competitiveness; x3 = reliability; x4 = reputation; x5 = support features; x6 =
transmission quality. Table 7 shows the result of the regression analysis.
Results show that, the independent variables explain about 40 percent variance in the
dependent variable. "Support features" is not significant at the five percent level of
significance, whereas other five factors impact the customer retention positively and
significantly. Transmission quality had the least impact on customer retention whereas
relational quality and reliability had the highest impact on retention of customers.
TABLE 7
Regression 3
Independent Variables
Standardized t-value
p-value
Relational quality
Competitiveness
Beta
0.362
0.296
0.000
0.000
7.087
5.790
Reliability
0.356
6.954
Reputation
0.161
3.150
Support features
-0.016
-0.310
Transmission quality
0.147
2.885
Note; R-square = 0.399; F-value = 21.8; Sig. F = 0.000
0.000
0.002
0.757
0.004
market.
We
found
that
six
factors:
relational
quality,
recommendation of service to others. These findings are consistent with past research
results. For example. Woo and Fock (1999) found that the core service of mobile phone
service providers is to provide users uninterrupted service reliably. Similarly, corporate
reputation has been found to be a key driver of customer satisfaction (Andreassen and
Lindestad 1998; Gronroos 1984; Bloemer et al. 1998; and Hart and Rosenberger 2004) in
the literature. This finding implies that corporate reputation is used as a proxy for service
quality by the customer and has a positive impact on customer satisfaction. Thus, we
conclude that in the Vietnamese mobile telecommunications services sector, reputation is
intertwined with the perceived service quality and ultimately with enhanced customer
satisfaction. In other words, building and maintaining a positive corporate reputation
through innovative communications strategies and public relations campaigns can go a
long way in enhancing customer satisfaction. Vietnamobile is doing very well in Vietnam
to obtain and build up its reputation in Vietnam. Asia Pulse (2010) provided that: The
survey of telecom service quality in 2010 found that Vietnamobile and Beeline achieved
impressive scores in important indicators - especially Vietnamobile, which has rapidly
established a reputation for winning market share and holding it, with quicker responses
to customer complaints than major telecoms like MobiFone and Vinaphone and
Vietnamobile earned a usability rating of 99.866 per cent in the survey, well above the
99.5-percent benchmark, and defeated the three major operators (Vinaphone, MobiFone
and Viettel) in such key indicators as voice-call quality and dropped calls.
Relational quality also emerged as a service quality dimension which had a significant
impact on customer satisfaction, repurchase intention and customers' propensity to
recommend the services to others. Similar findings were reported by Storbacka et al.
1994 and Thurau and Klee 1997. This implies that service providers should have
competent, friendly and approachable employees who pay close attention to the specific
needs of customers and provide prompt customer service.
Another interesting finding of this study is the impact of reputation on customers'
propensity to recommend the services to others. Again, building and maintaining a
Personal (Postpaid)
Corporate(Postpaid)
Other:
What providers did you choose before using Vietnamobile?
_________________________________________________
No Factors
disagree
A.
Customer
satisfaction
satisfied with
the service
provider
The services of
my mobile
phone service
Disagree
Normal
Agree
Totally
agree
provider are
close to my
expectation
My present
mobile phone
service provider
is comparable
with my ideal
mobile phone
B
Customer
service provider.
If I were to
retention
choose a mobile
phone service
provider today, I
would choose
my present
service provider
Customer
again.
I recommend
expansion
the mobile
phone service
provider to
friends and
Service
relatives
The cellular
quality
company
provides service
reliably,
consistently and
dependably
The cellular
company is
trustworthy and
its employees
are believable
and honest
The company
fulfils its
promises
Employees are
efficient and
competent
Employees are
easily
approachable
Employees are
courteous, polite
and respectful
Employees
listen to
customers and
are willing to
help
Employees are
pleasant,
friendly and
earring
The company
makes efforts to
understand the
specific needs of
customers
The company
provides
individual and
personal
attention to the
customers
The company
performs any
service right
first time
The company
provides
accurate and
timely
information
The services
provided the
company is
prompt [low
waiting time and
quick response]
The operating
hours are
convenient for
the customers
The services
provided by the
company are
competitive
The pricing of
C. Personal Information
Male Female
Full
Name: ......................................................................................
<24 years old
Age:
Education: On University
Other
Your annual income: <3,000,000 VND
5,000,000-10,000,000 VND
3,000,000-5,000,000 VND
>10,000,000 VND
Contact
Contact
address: ........................................................................
References
1. Andreassen, T.W. and B. Lindestad (1998), "Customer Loyalty and Complex
Services," International Joumal of Service Industry Management, 9(1), pp. 7-23.
TELECOMMUNICATIONS
SERVICES. Marketing
Management
13. Jyoti, J., & Sharma, J. (2012). Impact of Market Orientation on Business
Performance: Role of Employee Satisfaction and Customer Satisfaction. Vision
(09722629), 16(4), 297-313. doi:10.1177/0972262912460188
14. Kim H (2000), The Churn Analysis and Determinants of Customer Loyalty in
Korean Mobile Phone, Korean Information Society Review, pp. 1-18.
15. Kim M K, Park M C and Jeong D H (2004), The Effects of Customer Satisfaction
and
Swithching
Barrier
on
Customer
Loyalty
in
Korean
Mobile