ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE SUPERMARKETS

Transcription

1 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Lam Hoang Vu ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE SUPERMARKETS MASTER OF BUSINESS (Honours) Ho Chi Minh City Year 2012

2 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Lam Hoang Vu ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE SUPERMARKETS ID: MASTER OF BUSINESS (Honours) SUPERVISOR: DR. NGUYEN THI MAI TRANG Ho Chi Minh City Year 2012

3 Running head: ANTECEDENTS OF SHOPPER LOYALTY i ANTECEDENTS OF SHOPPER LOYALTY IN THE VIETNAMESE SUPERMARKETS LAM HOANG VU UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business

4 ANTECEDENTS OF SHOPPER LOYALTY ii ACKNOWLEDGEMENTS I would like to express my sincere thankfulness to my research advisor, Dr. Nguyen Thi Mai Trang, who made me believe in myself and gave me the possibility to complete this thesis. Her guidance helped me in all the time of research and writing this thesis. I am sure that this thesis would not have been possible without her support. I also thank Prof. Nguyen Dinh Tho. I am extremely grateful and indebted to him for his expert, valuable guidance, insightful comments, and encouragement extended to me. I would like to express my gratitude to all ISB staffs that supported necessary materials and helped summit my papers. Especially, I would like to give my special thanks my family for supporting me spiritually throughout my life. Lam Hoang Vu Ho Chi Minh City, December 29, 2012

5 ANTECEDENTS OF SHOPPER LOYALTY iii ABSTRACT With a population of 91 million consumers and economic growth rate averaged 6.37 percent from 2000 until 2012, Vietnam has been an attractive foreign investment destination. Moreover, consumer preference has been changing along with higher income, becoming sophisticated and improving living standard in recent years. In addition, Nguyen, Nguyen, and Barrett (2007, p. 228) claim that little has been paid to transitional markets like Vietnam, where supermarkets are still a new retailing system, appealing primarily to upper class consumers in urban areas of the country. Therefore, supermarket retailers have to take advantage of new innovations to create their competitive advantages. When a customer goes shop at certain supermarket, what make him/her keeping buying? And what are factors affecting his/her loyalty? The retailers had to find out the answer to identify appropriate strategies for achieving their own goals. Based on that, the study was carried out to reveal the impact of service quality, product quality and assortment, layout, perceived price fairness, and convenient location on shopper loyalty. The study was conducted by the survey questionnaire. A sample of 420 consumers are living and working in Ho Chi Minh City. The result revealed that service quality, product quality, perceived price fairness, and convenient location have positive relationships with shopper loyalty.

6 ANTECEDENTS OF SHOPPER LOYALTY iv TABLE OF CONTENTS ACKNOWLEDGEMENTS...II ABSTRACT... III CHAPTER 1: INTRODUCTION BACKGROUND RESEARCH PROBLEMS RESEARCH QUESTIONS AND OBJECTIVES RESEARCH DELIMITATION THESIS STRUCTURE... 3 CHAPTER 2: LITERATURE REVIEW SHOPPER LOYALTY THE ANTECEDENTS OF SHOPPER LOYALY Service quality Product quality and assortment Layout Perceived price fairness Convenient location RESEARCH MODEL AND HYPOTHESES... 8 CHAPTER 3: METHODOLOGY RESEARCH PROCESS MEASUREMENT SCALES Shopper loyalty Service quality Product quality and assortment Layout... 12

7 ANTECEDENTS OF SHOPPER LOYALTY v Perceived price fairness Convenient location QUALITATIVE RESEARCH Sampling Data collection In-depth interviews result SAMPLING METHOD Sampling Data collection DATA ANALYSIS METHODS Cronbach s alpha Exploratory Factor Analysis (EFA) Multiple Regression Analysis CHAPTER 4: DATA ANALYSIS AND RESULTS DESCRIPTIVE ANALYSIS MEASURE ASSESSMENT Cronbach s alpha Exploratory factor analysis HYPOTHESES TESTING TESTING THE EFFECTS OF DEMOGRAPHIC VARIABLES DISCUSSION OF FINDINGS CHAPTER 5: CONCLUSION AND IMPLICATION CONCLUSION MANAGERIAL IMPLICATIONS LIMITATION OF STUDY AND FUTURE RESEARCH REFERENCES... 33

8 ANTECEDENTS OF SHOPPER LOYALTY vi APPENDICES Appendix A: Questionnaire Appendix B: Codified Variables Appendix C: First Time Running Eigenvalues Appendix D: First Time Running Factor Loadings Appendix E: Second Time Running Eigenvalues Appendix F: Second Time Running Factor Loadings Appendix G: Third Time Running Eigenvalues Appendix H: Charts of Testing Hypotheses Appendix I: Result of Affecting of Demographic Variables LIST OF FIGURES Figure 2.1: A Conceptual Model... 8 Figure 3.1: Research Process Figure H.1: Histogram of Shopper Loyalty Figure H.2: Normal P-P Plot of Shopper Loyalty Figure H.3: Scatterplot of Shopper Loyalty... 50

9 ANTECEDENTS OF SHOPPER LOYALTY vii LIST OF TABLES Table 3.1: Scales of Shopper Loyalty Table 3.2: Scales of Service Quality Table 3.3: Scales of Product Quality and Assortment Table 3.4: Scales of Layout Table 3.5: Scales of Perceived Price Fairness Table 3.6: Scales of Convenient Location Table 3.7: Cronbach s Alpha Reliability Coefficient Table 4.1: Sample Description Table 4.2: Reliability Analysis Table 4.3: Factor Loadings Table 4.4: Results of Pearson Correlation Table 4.5: Results of Standard Multiple Regression Table 4.6: Creating and Recoding Variables Table 4.7: Results of Hypotheses Testing Table I1: Model Summary of Testing Male Table I2: Model Summary of Testing Younger Table I3: Model Summary of Testing Student Table I4: Model Summary of Testing Low Income... 52

10 ANTECEDENTS OF SHOPPER LOYALTY 1 CHAPTER 1 INTRODUCTION This chapter introduces the background of the Vietnamese supermarket industry as well as the status of shopper loyalty. The research questions and objective are proposed to explore the factors determining customer loyalty. Based on these, research delimitation is proposed and thesis structure is presented Background According to Vietnam Retail Analysis ( ) (2010), the researchers claimed that fast pace growth in Vietnam s retail market has made the country an attractive destination for multinational retailers. Vietnam holds the 4 th position among 30 countries attracting foreign investors. As per the WTO agreement, the government has removed limitation on capital invested by the foreign investors.. The value of retail sales in Vietnam has rapidly risen over the past few years. The retail sales are expected to surge at a CAGR of around 20% during C. V (2012) states that although the nation has faced a difficult year, the retail market in 2011 still grew and made up percent of Vietnam s GDP with an increase of 29.3 percent over the previous year. Currently, there are approximately 900 supermarkets, shopping malls, and convenience stores, along with a system of 9,000 traditional markets in Vietnam. Moreover, the spending and consumption habit of Vietnamese people has change a lot in the last few years. As stated in Vietnam Retail Market Forecast to 2014 (2012), the modern retail channels are expected to play a crucial role in future growth. Moreover, it is estimated that the retail sale will continue to grow at a CAGR of around 26% during In addition, the report also mentioned that Vietnam is one of the world s five most lucrative retail markets. Therefore, Vietnam s retail market will attract a number of foreign investors as well as international brands. These researches have pointed out that Vietnam has been considered to be one of the most potential markets in Asia. In addition, foreign firms (like Big C, Metro) have been

11 ANTECEDENTS OF SHOPPER LOYALTY 2 entered the Vietnam retails. That means the domestics retailers have to face the toughest challenges when the foreign firms entering Vietnam retail market. The issues are how the domestic retailers survive and develop in the local retail market. 1.2 Research Problems Yang, Do, Wang, Chang, and Hung (2011, p. 209) claim that 2009 was considered as a crucial landmark for the Vietnamese retail industry with 100% foreign owned retailers allowed under Vietnam s commitment to WTO. It leads to a new development period and rapid growth in Vietnamese retail market. Domestic retailers have to compete with foreign multinational retailers on market share. In there, foreign firms take advantages of capital and experience to reign over a share of supermarket chains. For example, Metro has a plan to invest $100 million - $ 120 million for each outlet; Big C use $17 million to open supermarket in central Hue. And domestic firms have competitive advantages in proximity locations and understanding local customers. As a result, domestic firms have to enter an extreme race to compete against foreign ones. In order to increase competitive advantages, they choose to expand stores to improve their distributions. For example, Saigon Co.op confidently increases the outlets to reach 120 by 2012; Citimart also hopes to expand 10 more outlets in Therefore, the appropriate strategies are the most important issue which both parties must consider in order to prevail. According to Nielsen Shopper Trends (2011), Vietnam has been faced with inflationary pressures. It has led to some changes in shoppers behaviors that have become more price-sensitive ( That means they has focused more on value and their demands have been affected by a general increase in price. Otherwise, Vietnamese shoppers still keep shopping at the certain store based on what they are looking for. Consequently, it is necessary to explore the factors which determine consumer loyalty to attract and retain customers. It also helps the firms make decisions in order to select the most appropriate strategies for their goals.

12 ANTECEDENTS OF SHOPPER LOYALTY Research Questions and Objectives This research is to identify, measure factors affecting shopper loyalty and determine the relationship among them. The proposed research questions are as follows: - Are there identifiable factors affecting shopper loyalty? - What is the relationship between these factors and shopper loyalty? Which will influence shopper loyalty the most? The research objectives are: - To identify factors affecting shopper loyalty in the Vietnamese supermarket. - To determine the impact of each factor on shopper loyalty 1.4 Research Delimitation This study focuses on individual shoppers in Ho Chi Minh City, who have more shopping options than other. Children below 16 years old are not chosen to be respondents. Moreover, the study focuses on attitudinal loyalty. Therefore, this sample cannot represent for Vietnam nationwide. In addition, there are five factors including service quality, product quality and assortment, layout, perceived price fairness, and convenient location which are considered as the antecedents of shopper loyalty. 1.5 Thesis Structure This thesis is organized as follows: - Chapter 1 presents the research background, research problems, research questions and objectives, research delimitation, and thesis structure. - Chapter 2 introduces research model and its hypotheses as well as its literature review - Chapter 3 illustrates the methodology conducted in this paper - Chapter 4 presents research results is based on data collected - Chapter 5 summarizes the research results, provide the findings and recommendations

13 ANTECEDENTS OF SHOPPER LOYALTY 4 CHAPTER 2 LITERATURE REVIEW This chapter is an overview of shopper loyalty and its antecedents which have been conducted by previous researchers. Based on these studies, a conceptual model is proposed. 2.1 Shopper Loyalty Oliver (1996, cited in Donio', Massari, and Passiante, 2006, p. 446) defines customer loyalty as a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior. In addition, Goodwright (n.d.) defines that customer loyalty is when an organization receives the ultimate reward for the way it interacts with its customers; and competitive advantage can be achieved through customer loyalty. Donio' et al. (2006, p. 446) propose three conceptualizations of customer loyalty: as primarily an attitude that sometimes leads to a relationship with the brand, as mainly expressed in term of revealed behavior ; and buying moderated by the individual s attitudes In short, customer loyalty is one of the most important issues of the firms. The customer will chose one product/service instead of one of other competitors. In other way, when the firm delivers superior value and wins customer loyalty, it ensures that the firms can be continued profitable. That means market share, profitability will be going up and the cost of attracting new customer will go down (Fraenkel, 2009)

14 ANTECEDENTS OF SHOPPER LOYALTY 5 Costabile (2001, cited in Donio', 2004, p. 447) describes the dynamic model of customer loyalty in which customer loyalty is considered as an outcome of attitudinal dimensions including customer satisfaction, trust and commitment. In there, satisfaction with purchases, and consequential habit formation, explains most of a person s ongoing propensity to buy one or a product from a specific firm. Gounaris and Stathakopoulos (2004, cited in Nguyen, Nguyen, and Barrett, 2007, p. 229) claim that there are three main different perspectives of loyalty such as attitudinal, behavioral and reasoned action. Moreover, the attitudinal approach posits that loyalty is based on psychological commitment, purchase intention, and word-of-mouth recommendations. In this research, shopper loyalty refers to strong feelings about loyalty and commitment relative to their supermarkets, to continue purchasing goods in the same supermarket and recommend it to others (Baker et al., 2002; Sirohi et al., 1998; Zeithaml et al., 1996, cited in Nguyen et al., 2007, p. 229) 2.2 The Antecedents of Shopper Loyalty Service quality. Service quality is defined as an overall assessment of service by the customers (Lewis and Booms, 1983, cited in Ganguli and Roy, 2010, p. 405). In the retail industry, service quality is measured by interacting between customers and firm employees. That means quality evaluations are not made solely on the outcome of a service; they also involve evaluations of the process of service delivery (Parasuraman, Zeithaml, and Berry, 1988, p.42). Kandampully (1998, p. 443) states that service quality is a critical and indispensable factor in persuading customers to use a particular service provider instead of another. In addition, customers in service industries will switch into other firms if they have the feeling of disconnection from the current service provider for many reasons including inconvenience, core service failures, failed service encounters, and response to failed service encounters (Keaveney, 1995, cited in Pollack, 2009, p. 45). Therefore, in order to gain customer loyalty, many organizations find it

15 ANTECEDENTS OF SHOPPER LOYALTY 6 essential to maintain service quality on a regular basis (Kandampully, 1998, p. 443). Pollack (2009, p. 45) reveals that service quality is a significant predictor of word-of-mouth and intention to re-purchase. Consequently, it is expected that the higher service quality will be more loyal to supermarket. H1: There is a positive relationship between service quality and shopper loyalty Product quality and assortment. Garvin (1987, cited in Yuen and Chan, 2010, p. 225) proposes eight dimensions of product quality such as performance, features, conformance, reliability, durability, serviceability, aesthetics, and customer-perceived quality. The recognition of product can be considered as an initial stage for developing customer satisfaction and creating customer loyalty (Eduardo, Arturo, and Jorge, 2008). Kotler and Keller (2006, cited in Yuen and Chan, 2010, p. 227) claim that the better the possibility of delivering quality products, the higher the level of maintaining customer satisfaction which encourages customers to make their next purchases. Mantrala et al. (2009, p. 71) state that by striking appropriate balance among variety, depth, and service levels, the retailers expect to satisfy the customer needs by delivering the right merchandise in the right store at the right time. When the retailer doesn t meet the expected assortment, customers will switch to another one which leads to the loss of both current and future sales. In addition, the more congenial the merchandise on the shelf is organized to the customers preference (Alba and Hutchinson, 1987, cited in Mantrala et al., 2009, p. 74), the easier the information about the items is processed (Fiske and Taylor, 1991, cited in Mantrala et al., 2009, p. 74). H2: There is a positive relationship between product quality and assortment and shopper loyalty.

16 ANTECEDENTS OF SHOPPER LOYALTY Layout. According to Aghazadeh (2005), there are three principles of layout including circulation, coordination, and convenience. Among these, circulation includes many factors such as location, size, shape, and character of merchandise which control the traffic flow throughout the store. Coordination is the ability to control customer movement or predetermined impression on the customer by combining goods and space; and to create the desired atmosphere. Finally, convenience is arranging items to cater to various customer needs by emphasizing on the management s policy, the character of the merchandise, and the character of the customers. Huddleston, Whipple, and VanAuken (2004, p. 225) point out that a store with a consistent layout in different geographical areas and stores with wide aisles and less congestion are more likely to satisfy customers. In addition, Wilson (2007, p. 126) reveals that store layout has a great impact on customers when a store remodeled or a new store is built. Thus, we propose that there is a positive relationship between layout and shopper loyalty. H3: There is a positive relationship between layout and shopper loyalty Perceived price fairness. Pan and Zinkhan (2006, p. 230) state that shopping channels are significantly different in terms of the general price levels for products sold. Low prices, in the form of either price promotions or general price levels, can create store traffic and increase category sales. However, there are consumers who are willing to pay more for quality called price-seeking (Tellis and Gaeth, 1990, cited in Pan and Zinkhan, 2006, p. 230) Zeithaml (1998, cited in Bei and Chiao, 2001, p. 129) states that the perceived price is based on the consumer s viewpoint which is more meaningful than monetary price. If consumers realize that the price of a service or product is fair, they will be encouraged to continue to re-purchase (Lee, 1998, cited in Bei and Chiao, 2001, p. 130). Bei and Chiao (2001) point out that perceived price

17 ANTECEDENTS OF SHOPPER LOYALTY 8 fairness has impact on customer loyalty. In addition, Brumley (2002) claim that perceived price fairness has positive impact on shopper loyalty. H4: There is a positive relationship between perceived price fairness and shopper loyalty Convenient location. Rowley (2005, p. 578) states that it is difficult to create the differentiation strategies for supermarkets through price, quality and product range without concerning convenient location. In addition, Huff (1964, cited in Piron, 2001, p. 49) consider location as one of the most popular factors influencing store choice. Michels and Bowen (2005, p. 7) claim that store location and ease of access have significant impacts on the re-patronage intention. Koo (2003, p. 61) proposes that among three factors: location, merchandising, and after sales service which affect store loyalty, location is the most influential. Thus, it could be expected that convenient location have a positive influence on customer loyalty. H5: There is a positive relationship between convenient location and shopper loyalty. 2.3 Research Model and Hypotheses Based on the above studies, a conceptual model is proposed. Details about a conceptual model and it hypotheses as follows: SERVICE QUALITY H1 (+) H4 (+) PERCEIVED PRICE FAIRNESS SHOPPER LOYALTY PRODUCT QUALITY AND ASSORTMENT H2 (+) H3 (+) H5 (+) CONVENIENT LOCATION LAYOUT Figure 2.1: A Conceptual Model

18 ANTECEDENTS OF SHOPPER LOYALTY 9 H1: There is a positive relationship between service quality and shopper loyalty. H2: There is a positive relationship between product quality and assortment and shopper loyalty. H3: There is a positive relationship between layout and shopper loyalty. H4: There is a positive relationship between perceived price fairness and shopper loyalty. H5: There is a positive relationship between convenient location and shopper loyalty.

19 ANTECEDENTS OF SHOPPER LOYALTY 10 CHAPTER 3 METHODOLOGY This chapter includes five parts: the first part is research process in which is the way to conduct research will be presented; the second part is measurement scales; the third part is the results of in-depth qualitative research interviews; the forth part is sampling methods; and the last part introduces the methods to analyze data. 3.1 Research Process This study is conducted as given in the chart below (Figure 3.1) Problem definition Literature review Research model Measurement scales Qualitative research Official scales Quantitative research Assessment of measurement (Cronbach alpha, EFA) Testing of hypotheses (Standard multiple regression) Figure 3.1: Research Process

20 ANTECEDENTS OF SHOPPER LOYALTY 11 The starting point of the process is the identification of research objectives based on the definition of problems in retail markets. So, the end point is the results of hypotheses testing by using standard multiple regression. 3.2 Measurement Scales This part includes measurement scales of shopper loyalty and its antecedents adapted from Allaway et al. (2011) and Nguyen et al. (2007) Shopper loyalty. Scale items of shopper loyalty are adapted from Allaway et al. (2011, p. 192) and Nguyen et al. (2007, p. 239) Table 3.1 Scales of Shopper Loyalty No. Item 1 I care about the long-term success of this store 2 I have faith in this store 3 This store gives me a feeling of confidence 4 I trust this store 5 I would expend effort on behalf of this store to help it succeed 6 I say positive things about this store to others 7 I am emotionally attached to the store 8 I feel loyal to this store 9 I have a sense of belonging to this store 10 I am going to do my shopping in this store in next few weeks 11 I will recommend this store to someone who seeks advice 12 I am very committed to this store 13 Shopping in this store is my first choice 14 I encourage my relatives and friends to go to this store Service quality. Service quality was measured base on Allaway et al. (2011, p. 193), it shows in Table 3.2.

21 ANTECEDENTS OF SHOPPER LOYALTY 12 Table 3.2 Scales of Service Quality No. Item 1 This store has helpful employees 2 This store has friendly employees 3 The employees at this store(s) are polite to me 4 This store has an adequate number of employees available to assist me 5 This store is service oriented 6 In general, I am satisfied with the service offered at this store 7 My shopping experiences at this store have always been pleasant Product quality and assortment. Nine scale items of Allaway et al. (2011, p. 193) are used to measure product quality and assortment (see Table 3.3). Table 3.3 Scales of Product Quality and Assortment No. Item 1 The products at this store are of high quality 2 The products at this store are very satisfactory compared to other stores 3 I shop this store because its products are superior to its competitors 4 This store has products that are not available at other stores 5 This store has good quality merchandise 6 This store has the right merchandise selection 7 This store is well stocked across its different departments 8 This store offers the assortments of product I am looking for 9 This store has an extensive assortment of products Layout. Scale items of layout are adapted from Allaway et al. (2011, p. 194). A good layout allows the customers easy to navigate and they don t feel pressure to choose an item (see Table 3.4).

22 ANTECEDENTS OF SHOPPER LOYALTY 13 Table 3.4 Scales of Product Quality and Assortment No. Item 1 Finding the product I need is easy 2 The width of aisles at this store allows for easy cart navigation 3 It is easy to locate the different departments within this store 4 This store has a leasing layout Perceived price fairness. The items of prices were suggested by Allaway et al. (2011, p. 194) (see Table 3.5) Table 3.5 Scales of Perceived Price Fairness No. Item 1 I am satisfied with the general price level of merchandise at this store 2 This store provides a good value for the money 3 I am satisfied with the price/quality ratio offered at this store Convenient location Allaway et al. (2011, p. 194) introduced that the item of This store is located where it can be easily reached and I am satisfied with the location of this store are used to measure convenient location of the store (see Table 3.6). Table 3.6 Scales of Convenient Location No. Item 1 This store is located where it can be easily reached 2 I am satisfied with the location of this store 3.3 Qualitative Research The purpose of qualitative research is to explore factors affecting shopper loyalty and their items. Scales of shopper loyalty and the antecedents are adapted from Allaway et

23 ANTECEDENTS OF SHOPPER LOYALTY 14 al. (2011) and Nguyen et al. (2007). According to Vishnevsky and Beanlands (2004, p. 235), the term qualitative research encompasses a number of research methods within the naturalistic paradigm that take different approaches to the research design. There are three commons of qualitative designs such as ethnography, phenomenology and grounded theory. In there, Polit, Beck, and Hungler (2001, cited in Vishnevsky and Beanlands, 2004, p. 236) supposed that the main resource of data collection of phenomenology is in depth-discussions with both the researcher and informant participating fully. Therefore, phenomenology would be suitable for this research. Method of sampling, data collection and the results of in-depth interviews will be presented in the next section Sampling. Six participants are customer representatives. Participants were drawn from different social class and had much shopping experiences. Each participant will be investigated separately. All participants are living in Ho Chi Minh City Data collection. In-depth interview has three steps. Firstly, the participants are asked a couple of questions which supermarket do you like best? and which factors of that supermarket do you like?. Secondly, they received a questionnaire and examined all factors in more detail. Finally, the researcher recorded the results of in-depth interview Results. Details are as follows: In measurement scales of shopper loyalty: The item of I trust this store and the item of I have faith with this store had similar meanings. So, the item of I have faith with this store was eliminated.

24 ANTECEDENTS OF SHOPPER LOYALTY 15 The item of I feel loyal to this store and the item of I am emotionally attached to the store had similar meaning. Therefore, the item of I am emotionally attached to the store was discounted. The item of I am very committed to this store and the item of I have a sense of belonging to this store had similar meaning. So, the item of I have a sense of belonging to this store was eliminated. The meaning of the item of I encourage my relative and friends to go to this store included the item of I say positive things about this store to others and the item of I will recommend this store to someone who seeks advice. The item of This store gives me a feeling of confidence and the item of I would expend effort on behalf of this store to help it succeed were not necessary In measurement scales of service quality, the item of This store is service oriented was replaced by item This store always improves service quality because it is quite difficult for the responses to understand. In measurement scales of product quality and assortment, the item of The products at this store are of high quality and the item of This store has good quality merchandise had similar meaning. Therefore, the item of This store has good quality merchandise was eliminated. All items were measured by a seven-point Likert scale, anchored by 1: strongly disagree and 7: strongly agree. 3.4 Sampling Method After conducting qualitative research, the survey via questionnaire is completed. This study includes 31 variables, in which 24 variables are independent and 07 dependent variables. According to Hair, Black, Babin, and Anderson (2010), a general rule, the sample size should be 100 or greater and the minimum sample should have a desired ratio of 5 observations per variable.

25 ANTECEDENTS OF SHOPPER LOYALTY 16 n > 100 samples and n=5k (where k = the number of variables). Therefore, the minimum sample size is n = 5*31 = 155. For standard multiple regression analysis, Tabachnick and Fidell (1991) proposed that the desired level is: n > m (where m = number of independent variables) Hence, the required sample is: n > *5 = 90. Thus, the minimum sample size is Sampling. A sample of 402 respondents was drawn from different social classes living, studying or working in Ho Chi Minh City. The sampling was conducted based on convenience sampling. The respondents should have shopping experience Data collection. The data collection was conducted by the survey questionnaire. Out of 455 respondents 420 returned questionnaire, of which 402 were usable, for a response rate 92.3 percent. The accepted questionnaire must not having more than one missing value and not selecting all 1 or all 7 for more than two factors. The data collection was carried out from 10 th Sep to 24 th Oct, Data Analysis Methods All accepted questionnaire were reviewed for completion, coded and input the raw data in IBM SPSS Statistic version 20. The reliability and validity of measurement scales were evaluated by using Cronbach s alpha and exploratory factor analysis. Then, multiple regression analysis is used to provide for interpreting the results of its application from a managerial and statistical viewpoint (Hair et al., 2010). The list of codified variables is shown in Appendix B Cronbach s alpha. According to Connely (2011, p. 45), Cronbach s alpha is used as only one criterion for judging instruments or scales. It only indicates if the items hang together; it does not determine if they are measuring the attribute they are

26 ANTECEDENTS OF SHOPPER LOYALTY 17 supposed to measure. Therefore, scales also should be judged on their content and construct validity. George and Malley (2003, cited in Matkar, 2012, p. 94) provide the following techniques: Table 3.7 Cronbach s Alpha Reliability Coefficient (adapted from George and Malley, 2003, cited in Matkar, 2012, p. 94) Cronbach s alpha Internal consistency α 0.9 Excellent 0.8 α < 0.9 Good 0.7 α < 0.8 Acceptable 0.6 α < 0.7 Questionable 0.5 α < 0.6 Poor α < 0.5 Unacceptable Exploratory factor analysis (EFA). Norris and Lecavalier (2010, p. 9) supposed that EFA is based upon a testable model and can be evaluated in terms of its fit to the hypothesized population model; fit indices can be generated to help with model interpretation. Moreover, EFA s purpose is to identify latent constructs underlying a set of manifest variables. Hair et al. (1998, cited in Lee and Hooley, 2005, p. 376) claimed that with samples of 350 or more, a factor loading of the attribute higher than 0.3 is significant. In addition, with samples of 200, a factor loading of 0.4 or greater will take to indicate. Therefore, the researchers must carefully consider the sample size for choosing significant factor loadings. Factors with a total eigenvalue of 1 or greater will take into account; hence, any factors with an eigenvalue of less than 1 are discounted (Kim and Mueller, 1978, cited in Lee and Hooley, 2005, p. 376). Based on these studies, any factors with eigenvalue greater than 1 will be retained. In addition, any factor loadings of 0.3 or higher on a factor are counted.

27 ANTECEDENTS OF SHOPPER LOYALTY Multiple regression analysis. Hair et al. (2010, p. 156) claimed that there is the difference between the actual and predicted values of dependent variable. That means the random error will occur when predicting sample data. It is called the residual (ε or e) Based on these studies, the multiple regression formula will be Y = a + β 1 X 1 + β 2 X β n X n + ε Where in: Y: is the dependent variable a: is constant β: is called beta weight, standardized regression coefficient, or beta coefficient X: is the predictor entered into the equation in a single step ε: is the residual Moreover, Meyers, Gamst, and Guarino (2006, p. 161) introduced the value of R 2 indicating how much variance of the dependent variable is accounted for by the full regression model. Therefore, the higher the value of R 2, the greater the explanatory power of the regression equation (Hair et al., 2010)

28 ANTECEDENTS OF SHOPPER LOYALTY 19 CHAPTER 4 DATA ANALYSIS AND RESULTS This chapter presents the descriptive of collected data. The reliability and validity of data will be assessed by using Cronbach s alpha and EFA. After that, the hypotheses and the effect of demographic variables on shopper loyalty will be tested by the collected data. Consequently, this chapter includes four parts: descriptive analysis, measurement assessment, hypotheses testing, and testing the effect of demographic variables 4.1 Descriptive Analysis A sample of 402 shoppers includes 162 men (40.3 per cent) and 240 women (59.7 per cent), aged from under 18 to over 50 years old with majority being in the age group of 19 to 29 years old. In terms of income, the majority of shoppers had a monthly income of VND 5,000,000 or less with 63.7 percent. All respondents go shopping at their favorite supermarket at least once a month. Table 4.1 shows the demographic characteristics of the sample with regards to gender, age, careers, income, buying frequency per month, and favorite supermarkets. Table 4.1 Sample Description Description Frequency Percentage Cumulative (%) percent (%) Gender Male Female Age 18 or less Over Career Student Housewife Free lancer Officer Income per month 5 or less (VND million)

29 ANTECEDENTS OF SHOPPER LOYALTY Over Buying frequency Once per month Twice Three times Four times More than four times Favorite Big C supermarket Maximark Metro Lottemart Co.opmart Citimart Measurement Assessment Cronbach s alpha. Table 4.2 shows the result of Cronbach s alpha of each scale. In each construct, the alpha values of the overall constructs were higher than the alpha if item deleted. All the values of Cronbach s alpha are in the range 0.8 through 0.9; the highest was.875 (service quality) and the lowest was.820 (layout). That means the data is good for conducting exploratory factor analysis. Table 4.2 Reliability Analysis Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item- Total Correlation Cronbach's Alpha if Item Deleted var var var var var var var Service quality Cronbach's Alpha.875 var var var var var

30 ANTECEDENTS OF SHOPPER LOYALTY 21 var var var Product quality and assortment Cronbach's Alpha.836 var var var var Layout Cronbach's Alpha.820 var var var Perceived price fairness Cronbach's Alpha.869 var var Convenient location Cronbach's Alpha.858 var var var var var var var Shopper loyalty Cronbach's Alpha Exploratory factor analysis. All the variables were run through the Principal component analysis, using the varimax rotation method. After three times of running factor analysis, the results shown that all remained variables have higher factor loadings than 0.3 and a significant loading on an acceptable factor. Details are as follows: First time running factor analysis, there are seven factors with the eigenvalue that are higher than 1 (see Appendix C). The variables var16, var17, var21, var25, var26, var27, and var62 have a cross-loading. The variable var61 loads on both factor 2 (0.568) and factor 7 (0.284). Therefore, they are deleted from the analysis (see Appendix D) and the loadings recalculated.

31 ANTECEDENTS OF SHOPPER LOYALTY 22 Second time running, there are only six factors remained (see Appendix E). The variable var28 is insignificant because of loading on factors lower than 0.3 (see Appendix F). Thus, this variable is eliminated for next running. In the third time running, six factors are extracted (see Appendix G). Rotation is converged in 6 iterations. The generated factors, the attributes of each factor loadings are presented in Table 4.3. After acceptable factors in which all variables have a significant loading on a factor have been obtained, the variables with higher loadings have a more significant impact on the factor name (Hair et al., 2010). Therefore, the factor called Product quality and assortment is changed into Product quality. Table 4.3 Factor Loadings Component var var var13 Service quality.773 var var var var23 Product quality.814 var var var Layout var var var Perceive price var fairness var var51 Convenient.848 var52 location.834 var var var65 Shopper loyalty.772 var var67.753

32 ANTECEDENTS OF SHOPPER LOYALTY 23 As shown in Table 4.3, there are six factors such as shopper loyalty, service quality, layout, perceived price fairness, convenient location, and product quality. These factors were summated into new variables by the total all of the rating scores for each person on all of the variables which load highly on a factor (Hair et al., 2010, p. 123). These replacement variables including one dependent variable and five independent variables were entered into the regression equation at the same time. And the results are presented in the next section. 4.3 Hypotheses Testing The relationship between the independent variables (such as service quality, perceived product, layout, perceived price fairness, and convenient location) and shopper loyalty was tested by standard multiple regression analysis. It is necessary for testing correlation between variables by using Pearson correlations (see Table 4.4). The results present that the explanatory variables are not correlated with each other Table 4.4 Results of Pearson correlation Shopper loyalty Service quality Layout Perceived price fairness Product quality Convenient location Shopper loyalty 1 Service quality.366 ** 1 Layout.356 **.453 ** 1 Perceived price fairness.446 **.321 **.412 ** 1 Product quality.425 **.384 **.385 **.293 ** 1 Convenient location.377 **.337 **.430 **.443 **.263 ** 1 **. Correlation is significant at the 0.01 level (2-tailed). After running standard multiple regression, the adjusted R Square is and p-value is very small (<.001) which indicates that the combination of these variables significantly predicts the dependent variable. There are four factors such as service quality, perceived price fairness, product quality, and convenient location that have significant impacts on shopper loyalty. That means these four factors account for 32.3 percent of the variance in shopper loyalty. Among them, perceived price fairness has the highest beta coefficient with the value of (see Table 4.5) which reflects that it

33 ANTECEDENTS OF SHOPPER LOYALTY 24 has the greatest contribution to shopper loyalty. We test histogram and normal probability plot, and they meet the requirement of the regression (see Appendix H). Table 4.5 Results of Multiple Regression Model Unstandardized Coefficients Standardized Coefficients t Sig. Collinearity Statistics B Std. Error Beta Tolerance VIF (Constant) Service quality Layout Perceived price fairness Product quality Convenient location a. Dependent Variable: Shopper loyalty 4.4 Testing The Effects of Demographic Variables The effects of demographic variables of age, gender, career, and income on shopper loyalty were tested. Each variable is recoded and presented in following table (see Table 4.6) Table 4.6 Creating and Recoding Variables No. Variable Label Group description Recoding 1 c1 Gender Male vs. Female Male (male group) 2 c2 Age Younger (29 or less) vs. Older (over 29) YOG (younger group)

34 ANTECEDENTS OF SHOPPER LOYALTY 25 3 c3 Career 4 c4 Income Student (student) vs. Non-student (officer, freelancer, housewife, and others) Low income (5 or less) vs. High income (over 5) STU (student group) LIN (low income group) Results of multi regression analysis (see Appendix I) are as follows: Gender: the results show that no difference was found in terms of shopper gender with the value of (>0.05) F change. Age: there is no different impact between two groups of age (F change value = 0.101) Career: student group and non-student group have no impact on shopper loyalty (F change value = 0.25) Income: shopper loyalty does not influence by customer incomes (F change value = 0.549) In short, there are no difference impacts of demographic variables of age, gender, career, and income on shopper loyalty. Based on these result of multiple regression analysis, shopper loyalty is influenced by factors including service quality, product quality, perceived price fairness, and convenient location. 4.5 Discussion of Findings The research is carried out with a sample of 402 shoppers who are working or living in Ho Chi Minh City. Shopper was drawn from different social classes with a response rate 92.3 percent. The usable sample (402) includes 162 men (40.3 percent) and 240 women (59.7 percent). The majority of sample is young shoppers (81.1 percent) who are under 30 years old. Most of the respondents (63.7 percent) have a low income of under VND 5,000,000 per month. And the majority of observations are student (58.5 percent). All respondents go shopping at their favorite supermarket at least once a month. Based on the results of testing effect of demographic variables, the study findings significantly depend on those factors proposed in literature review. And the results of hypotheses testing are presented in Table 4.6

35 ANTECEDENTS OF SHOPPER LOYALTY 26 Table 4.7 Hypotheses Testing No. Hypotheses Standardized Coefficients (Beta) Sig. Tested Results H1 There is a positive relationship between service quality and shopper loyalty Confirmed H2 There is a positive relationship between product quality and assortment and shopper loyalty Confirmed (*) H3 There is a positive relationship between layout and shopper loyalty Unconfirme d H4 H5 There is a positive relationship between perceived price fairness and shopper loyalty There is a positive relationship between convenient location and shopper loyalty Confirmed Confirmed With the data collected, Hypotheses (H) 1 is confirmed. The mean value of service quality of 5.00 is quite high compare to 7-point of Likert scale which means the respondents are satisfyied with services provided by retailers. It confirms that service quality has become a critical factor in enabling firms to achieve a differential advantage over their competitors (Vuorinen, Järvinen, and Lehtinen, 1998, cited in Pérez, Abad, Carrillo, and Fernánde, 2007, p.136). This result supports the findings of Yuen and Chan (2010) that service quality is significant to shopper loyalty conducted in retail industry in Hong Kong. Moreover, it is also consistent with the findings of Nguyen et al. (2007) that employee services as one of the dimensions of supermarket attributes has a direct impact on shopper loyalty. In there, the item of this store has friendly employees is the highest loading item on this factor. As shown in Table 4.7, the sig. value of product quality is very small (p=0.000). H2 is confirmed with beta coefficient of In literature review, H2 is stated that there is

36 ANTECEDENTS OF SHOPPER LOYALTY 27 a positive relationship between product quality and assortment and shopper loyalty. However, after running factor analysis, product quality and assortment was renamed product quality. The items of product assortment are eliminated. Consumers satisfy and continue shopping at the particular store because they suppose that its products are superior quality in comparison with its competitors. This finding against the result of Yuen and Chan (2010) that product quality doesn t have a positive impact on customer loyalty. H3 is unconfirmed. With sig. value of 0.443, layout has no impact on shopper loyalty. The mean value of layout is That means the design in stores creates an attractive image for consumers, but it doesn t lead to choose or switch their favorite supermarkets toward shoppers who are working and living in Ho Chi Minh. In addition, the items of layout includes Finding the product I need is easy, The width of aisles at this store allows for easy cart navigation, It is easy to locate the different departments within the store, and This store has a leasing layout. These findings against the previous findings conducted by Nguyen et al., (2007) that facilities have direct impact on shopper loyalty. Moreover, the main items which have high loading on facilities are similar to the items of layout. Consequently, Vietnamese consumer preferences and behavior has changed a lot due to inflationary pressure. H4 is accepted with beta coefficient of The sig. value of equal confirmed the possibility of H4. This appears that perceived price fairness has the greatest impact on shopper loyalty. The beta coefficient (0.255) is greater than perceived product quality (0.251), followed by convenient location (0.140) and service quality (0.123). It lends support to Bei and Chiao (2001) that perceived price fairness both has positively a direct and indirect impact on loyalty. In addition, they proposed that both quality and price fairness are important factors to create customer loyalty through satisfaction. The sig. value of represents the relationship between convenient location and shopper loyalty. That means convenient has a positive impact on shopper loyalty (beta coefficient of 0.129). H5 is accepted. In other words, when consumers are more satisfied with store location, they are more loyal. It once again confirms that there are a direct link between convenient location and shopper loyalty. This finding supports

37 ANTECEDENTS OF SHOPPER LOYALTY 28 Piron s finding (2001) that convenient location has a significant impact on shopper loyalty. Consequently, it can be the foundation of patronage and encourages loyalty of customer (Piron, 2001, p.55). In Chapter 2, this study proposes five factors including service quality, product quality and assortment, layout, perceived price fairness, and convenient location have positive impacts on shopper loyalty. Based on these findings above, there are only four factors influencing on shopper loyalty, namely service quality, product quality, perceived price fairness, and convenient location.

38 ANTECEDENTS OF SHOPPER LOYALTY 29 CHAPTER 5 CONCLUSION AND IMPLICATION This chapter reminds the reader of the thesis goal presented on introduction chapter. It shows the connection between the thesis results and the reality applications by suggesting some strategies for managerial implications. This chapter also describes a number of important limitations needed to be considered and recommends the further research. Therefore, this chapter consists of three parts: conclusion, managerial implications, and limitation of study and future research. 5.1 Conclusion The purpose of this research is to understand the attitudinal loyalty of Vietnamese shopper by examining the literature and determining antecedents of shopper loyalty. Therefore, the study was to answer the question How is the relationship between these factors and shopper loyalty? Which will influence shopper loyalty the most?. Our scale includes 31 variables presenting shopper loyalty, service quality, product quality and assortment, layout, perceived price fairness, and convenient location. The following conclusions can be drawn from the present study Firstly, the study contributes to our understanding of shopper loyalty and its antecedent by examining their variables and their relationships. Secondly, the relationship between shopper loyalty and its antecedents are tested. And it gives opportunity to managers to choose an appropriate strategy for their organizations. Thirdly, the present study relies on the sample of actual shoppers who comes from different social class. Finally, the study reveals that layout has no impact on shopper loyalty. And perceived price fairness is the most important affecting shopper loyalty. It is the first factor which managers must consider if they want to build up consumer loyalty