FACTORS AFFECTING CUSTOMER LOYALTY IN MOBILE
COMMUNICATION SERVICES IN HANOI, VIETNAM

A RESEARCH DISSERTATION PRESENTED

TO THE FACULTY OF GRADUATE SCHOOL
SOUTHERN LUZON STATE UNIVERSITY LUCBAN, QUEZON, PHILIPPINES
THAI NGUYEN UNIVERSITY S.R. VIETNAM IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE
DOCTOR IN BUSINESS ADMINISTRATION


1.3 Hypotheses 4
1.4. Significance of the study 5
1.5. Scope and limitation 6
1.6 Definition of terms 7
Chapter 2 REVIEW OF RELATED LITERATURES AND STUDIES 10
2.1. Mobile telecommunication services 10
2.2. Hanoi mobile communication services 11
2. 3. Customer loyalty 16
2.4. Affecting factors to loyal customer 18
2.5. Customer loyalty models 29
2.6. Several topics related to mobilecommunication services 31
2.6.1. Some topics researched in Viet Nam 31
2.6.2 Some topics researched Overseas 32
2.7. Conceptual framework 36
Chapter 3 METHODOLOGY……………………………………… …………….39
3.1 Research design 38
3.2 Determination of sample size 40
3.3 Sampling design and techniques 41
3.4 Research instrument 42
3.5 Data gathering procedure 43
3. 6 Data processing method 43 iii

Chapter 4: PRESENTATION ANALYSIS AND FINDINGS INTERPRETATION
OF DATA 46
4.1 Respondents profile 46
4.2 Scale values test 48
4.2.1 Services quality 48

Appendix 3: Relationship beween factors affecting loyalty versus demographic
factors ………………………………………………………………………………104
Apendix 4: Results of Regression and correlation 160
v

ABSTRACT

Customer turns to be an important concern for management due to the
increasing competition particularly in mobile telecommunication services. Customer
loyalty plays a very crucial role for achieving the competitive advantage for
enterprises. According to service providers, service quality - calling quality, pricing
structure, value – added service, customer support services, etc, and switching barriers
-loss cost, adapting cost, attractiveness of other service providers, etc, are
motivational factors to maintain customer loyalty as well as an essential element for
business and increasing market share. Currently, Hanoi is one of the cities in Vietnam
that has a great number of mobile subscribers and suppliers. According to the
Ministry of Information and Communication, in 2012, there were 9.1 million mobile
subscribers in Hanoi. In which, ,market share of the service provider as follows:
Vinaphone was 31.25%, Viettel was 43.03%, Mobifone was 18.5%, Vietnammobile
was 2.57% , Gtel was 4.63% and SPT was 0.02%.
The main tool is a questionnaire to gather information on customer loyalty for
mobile service providers in Hanoi. Because the author can not have list customers of
service providers. Therefore, the sampling method will be conducted random sample
but based on several factors: the market share of vendors, demographic (gender, age
group and occupation) factors, types of services (post paid and pre- paid). Customer
were selected to intervied for this research to be 400. In addition to information about
the customer, the questionnaire was designed to include 42 attributes of mobile

LIST OF TABLES
Table 3.1
Factors affect customer loyalty in mobile communication services
38
Table 3.2
Subscribers using mobile communication services of Vinaphone
are classified by age in Hanoi, 2012………………………………
42
Table 4.1
The distributive sample by the gender and age……………………
46
Table 4.2
The distributive sample by the gender and the market share ……
46
Table 4.3
The distributive sample by services type and the market share of
service providers
47
Table 4.4
The summary of the distributive sample by gender, age and type of
service providers…………………………………………………
47
Table 4.5
Cronbach alpha of component services quality…………………….
48
Table 4.6
Cronbach‟s alpha of the component switching barriers …………
51
Table 4.7
How to calculate the average value of the variable………………

viii

average income of subscrbers………………………………………
Table 4.16
Relationship between Value - add service with gender of
subscribers…………………………………………………………
66
Table 4.17
Relationship between “ Adapting cost” with gender of subscribers
67
Table 4.18
Relationship between calling quality of service providers with
per average income of subscribers…………………………………
69
Table 4.19
Relationship between the adapting cost with subscriber‟s ages ……
70
Table 4.20
Relationship between assessment about “the supplier has service
packages with different charge to suitable customer demands” with
education level of subscribers………………………………………
72
Table 4.21
Model Summary………………………………………………
74
ix



This Dissertation , entitled “FACTORS AFFECTING CUSTOMER
LOYALTY IN MOBILE COMMUNICATION SERVICES IN HANOI,
VIETNAM”, prepared and submitted by Ngo Anh Cuong in partial fulfillment of the
requirements for the degree of Doctor in Business Administration, has been examined
and recommended for acceptance and approval for FINAL EXAMINATION. NELLY MENDOZA, PhD
Adviser
Approved by the Committee on Oral Examination with a grade of PASSED on
2013
Dr……………………… ………………… Member
Dr……………………… ………………… Member
Dr……………………… ………………… Member
Dr……………………… ………………… Chairman
Accepted in partial fulfillment of the requirements for the degree of Doctor in
Business Administration.
THAI NGUYEN UNIVERSITY SOUTHERN LUZON STATE UNIVERSITY
Dean Dean 1

Chapter 1
INTRODUCTION
Customers are invaluable assets of the business. Customer loyalty is significant
to the future development of a general company or the particular mobile service
providers. It contributes to maintain stable profits when the subscriber reaches the
saturation point, mature market and fierce competition.

1.1 Background of the study
According to the suppliers of telecommunications services, service quality,
with wide network coverage, network capacity and customer care are the key driving
force to maintain customer loyalty. However, survey results of the Strategy Analytics
with 215 suppliers who have been representing 75% of mobile subscriber worldwide
poses a challenge in developing strategies to retain customers. Whereby in 2011, there
are 44% of global mobile subscribers to change service providers, the highest ever,
with an average churn time is 27/1. Compared with a decade ago, the time for loyal
subscribers with the service provider has halved (www.vnpt.com.vn/new)
So, research on factors affecting customer loyalty in mobile
telecommunication services in Viet Nam is significant to discover new scale and a
new theoretical model for managers. In practice, they "retain" customers, as
customers become more loyal then it brings the urgency especially to the three big
service providers: Vinaphone, Mobiphone, and Viettel and three small and new
suppliers: Gtel, Hanoi telecom and SPT as the mobile communication market in Viet
Nam is on its saturation phase. Likewise, research result will provide information for
management to formulate effective strategy for the use of telecommunications 3

resources and helping suppliers of mobile telecommunication services plan and
implement more effective follow-up market activities and customer care services.
1.2 Statement of the problem
Nowadays, with so many interested investors joining the market, the
competition in mobile communication is becoming stiff. The monopoly situation of
the cellular phone market is gradually lost and was replaced by a structure where there
is strong competition resulting to a battle of strategies to attract and retain customers
by improving quality basic services, value – added services, advertising, promotion,
pricing strategy and customer care. Each mobile communication company tries to

- Based on findings, the dissertation proposes some solutions to improve
customer loyalty for the mobile communication services of the supplies.
1.3 Hypotheses
Mobile communication service quality is a latent variable. It cannot be
measured directly but it can be determined by the following components: call quality;
value – add service; price structure; convenience and customer service support. Thus,
measuring customer satisfaction model is a combination of component scales in
mobile communication service quality.
H1: Service quality has a positive effect on customer satisfaction
H1.1: Increasing the call quality will increase the satisfaction level on service
quality;
H1.2: More reasonable price structure will increase the satisfaction level on
service quality;
H1.3: Increasing the value - added service quality will increase the satisfaction
level on service quality; 5

H1.4: More convenience in procedures will increase customer satisfaction
levels on service quality;
H1.5: Customer service is related to customer satisfaction on service quality.
The concept of switching barrier is expressed by latent variables and to be
measured by three component factors: switchin cost (loss cost, adapting cost, move –
in cost), attractiveness of other providers and customer relationship.
H2: Customer satisfaction has a positive effect on loyalty
H3: Switching barriers has a positive effect on loyalty
H3.1: Loss cost affects the decision of the customer to change provider;
H3.2: Adapting cost is a switching barrier to the customer;
H3.3: Higher move – in cost is a switching barrier to the customer;

switching wave between service providers. The disdertation will also provide
important information for mobile service providers so they can formulate specific
strategies and plans for executing more effective marketing strategies and customer
care.
1.5. Scope and limitation
The scope of the study is the customers who have been using mobile in Hanoi.
It includes prepaid and postpaid. So, researches of the dissertation do not reflect for
other provinces in the country. That is one of the limitations of the dissertation.
There is a big competition between providers in the mobile communication
services market, so the findings apply only at the time of the study. It does not
effectiveness of the factors affecting the customers loyalty in the mobile information
services in the long term. 7

To accurately evaluate the factors that affect customer loyalty on mobile
communication service market, there should be follow up studies, using data collected
at different times. Progress model analysis evaluating the impact of the different
factors affecting ability to provide mobile services.
On the other hand, the study did not perform analysis model by customer
groups or demographic profile: gender, education level and age.
1.6 Definition of terms
In this research, the dissertation will present some concepts related to research
content as follows:
Mobile telecommunications services prepaid the ground (prepaid mobile
service) is a service where users pay in advance mobile telecommunications services
providers by recharging the mobile subscriber account to be assigned with a prepaid
SIM card or prepaid mobile terminals (do not use SIM cards) or other similar forms.
Mobile communication services provider is an enterprise to be licensed network

of benefits such as mileage program.
Adapting cost is perception of cost of adaptation, associated with switching
to a new carrier as inconvenience of having to learn a new service and need to search
for information on new carrier, when switching carrier
Move – in cost is perception of economic cost involved in switching to a new
carrier as cost of replacing mobile device and subscription fee for new membership.
Attractiveness of other providers are alternative vendor‟s reputation, image
and service quality, according to the customer perception as reputation, image and
overall service quality… 9

Customer relationship is customer perception of social and psychological
rapport with service providers as trust, intimacy and level of communication…
10

Chapter 2
REVIEW OF RELATED LITERATURES AND STUDIES
This chapter provides the reader with sufficient theory to assimilate the
continuing part of this study. It will begin briefly by a background of mobile telecom
market and customer loyalty, then discusses why loyal customer is important and
finally proposes a model for determining customer loyalty, which is going to be
evaluated in following chapters.
2.1. Mobile telecommunication services
Mobile telecommunication services are clearly exhibiting signs of an abrupt
industry paradigm change and symptoms of a market in transition. Bolstered by the

* Viet Nam Telecom Services Company (Vinaphone)
As a member unit of Vietnam Post and Telecommunications Corporation
(VNPT), in 1999 VinaPhone was the first network to cover service in 100% of
provinces and cities. After 7 years, in June 2006, VinaPhone was once again the first
mobile network to cover service in 100% of districts nationwide, including districts in
mountainous or remote areas. Currently VinaPhone provides services with 6 prefix
numbers (091, 094, 0123, 0125, 0127, 0129) for about over 36 million of real
subscribers.
VinaPhone's traditional slogan “never stop reaching far” has been delved into
customers' mind. VinaPhone's statement “available everywhere” shows the
commitment for developing and reaching far to help customers more successful in
anywhere they go. VinaPhone shall not only a bridge of communication but also a
bridge of emotion for millions of customers. 12

* Viettel telecom company (Viettel)
Viettel Telecom Company (Viettel Telecom) is affiliated companies of the
Viettel telecom military corporation, it was founded April 5, 2007 with merging
between the Viettel internet company, Viettel landline and Viettel mobile phone.
Viettel‟s slogan is “ Say it your way” that is mean, Viettel is not only meet the
specifics but also expressed interest and listening to customer needs. On the other
hand, for Viettel‟s staffs, the slogan also expressed interest, listening to the needs,
opinions and creative ideas of the individual and allows them to express their own
way.
Early in 2012, EVN Telecom has been merged by Viettel, so Viettel has
became a mobile communications provider with the largest market share in Vietnam.
Currently, Viettel is one of the leading mobile communications suppliers in Vietnam
with 10 subscriber numbers (098, 097, 096, 0163, 0164, 0165, 0166, 0167, 0168,

3,21%. In 2012, SPT had decreased 80% market share compared to 2011;
Vietnamobile had decreased to 20% but Gtel had increased 1,42%. In the first 6
months of 2012, Viettel‟s market share were 43,03%; Vinaphone were 31,25% and
Mobiphone were 18,5%. Thus, the market share of three largest service providers
does not change basically and only increasing less than 1%.
Ilustration 1-1: The market share of mobile subscribers in Hanoi, 2011 and 2012