TRNG I HC M TP. HCM UNIVERSITÉ LIBRE DE BRUXELLES
HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL
MBAVB2 NGUYEN TIEN CHUNG ANTECEDENTS OF BRAND LOYALTY
IN VIETNAM BANKING SECTOR:
THE CASE OF VIETNAM CREDIT CARD USERS MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME) Tutor’s Name: PhD. Le Nguyen Hau Ho Chi Minh City
(2012) DECLARATION

I, Nguyen Tien Chung, hereby declare that this master thesis is my own original work and
efforts. Other sources of information used have been acknowledged. The conclusion and
managerial implication with recommendation are personal standpoints.



Student name: NGUYEN TIEN CHUNG Program: MBAVB2
Title:
ANTECEDENTS OF BRAND LOYALTY IN VIETNAM BANKING SECTOR:
CASE OF VIETNAM CREDIT CARD USER

Comments:
Credit card in Vietnam has been developing rapidly in terms of the number of card and
transaction value since the first ever credit card of Vietnam was issued by Vietcombank in
1996. However, the market currently has a sluggish growth due to various reasons, such as
high interest rate of late payment and/or perceived risk of fraud. Moreover, Vietnamese
customers are still not used to using cards for their shopping, and prefer to use cash
instead. Many shopping centers are yet to install POS machines to accept credit card
payments. One of the emerging questions is how to retain existing customers and to attract
new ones.
This study aims to quantitatively investigate the antecedents of brand loyalty for credit
card users in Vietnam banking sector. In addressing this research objective, the author has
spent time to review the relevant literature, based on which a model was proposed. The
model introduces six antecedents of customer loyalty. Empirical tests were conducted with
a sample data of 250 credit cards users in Vietnam. Results indicate that Customer
Satisfaction, Brand Trust and Switching barrier are antecedents of loyalty. Customer
Satisfaction is then driven by Perceived Functional Value, Perceived Emotional Value.
Perceived Social value was proposed as a driver for customer satisfaction but it is not
supported in this study.

The student has demonstrated his ability to conduct an applied research which meets the
scientific requirements of a master thesis. This work achieves the quality standard of the
program. I strongly recommend it to be presented to the examination board.

Supervisor: Assoc. Prof. Le Nguyen Hau

3.3 Qualitative 23
3.3.1 Preliminary scales 24
3.3.2 Scale adjustment 31
3.4 Quantitative research 35
3.4.1 Questionnaire in quantitative research 35
3.4.2 Sampling design 35
3.4.3 Data collection 35
3.4.4 Data analysis 36
ii

3.4.4.1 Reliability of scales assessment. 36
3.4.4.2 Exploratory factor analysis 37
3.4.4.3 Regression analysis 37
CHAPTER 4: DATA ANALYSIS AND RESULT EXPLANATION 39
4.1 Introduction 39
4.2 Sample description 39
4.3 Reliability of the scale assessment 39
4.4 Exploratory Factor Analysis 44
4.4.1 EFA analysis for Functional value (FV), Emotional value (EV),
Perceived risk (PR): 44
4.4.2 EFA analysis for Brand Trust (BT), Switching barrier (SB): 45
4.4.3 EFA analysis for Satisfaction (SA): 46
4.4.4 EFA analysis for Loyalty (LO): 47
4.5 Testing the research model and hypotheses 48
4.5.1 Correlations analysis 48
4.5.2 Regression analysis 49
4.5.3 Hypothesis conclusion 53
4.6 Summary 56
CHAPTER 5: CONCLUSION 57
5.1 Overview 57

Table 4-11: Summary analysis of FV, EV, PR independent variables KMO and
Bartlett's Test 44
Table 4-12: Summary analysis of the BT, SB’s independent variables KMO and
Bartlett's Test 45
Table 4-13: Summary analysis of the SA’s independent variables KMO and
Bartlett's Test 46
Table 4-14: Summary analysis of LO’s independent variables KMO and Bartlett's
Test 47
Table 4-15: Regression analysis value 50
Table 4-16: Regression value 51
Table 4-17: Hypothesis testing results 53
Table A.1: Factors Identified Affecting Loyalty 67
iv

Table A.2: Most common Factors identified affecting Bank Loyalty 70
Table A.3: Conceptual and Operational Definitions in Consumer Satisfaction
Literature 73
Table A.4: Satisfaction constructs 80
Table A.5: Definitions of Perceived Value 81
Table A.6: Perceived Value Dimensions 83
LIST OF FIGURES

Figure 1: Research model and hypotheses 22
Figure 2: Research process 24
Figure 3: Regression analysis result 53
1


Bank of Vietnam, 2011).
However, the market currently has a sluggish growth due to high interest rate
of late payment, 1.5%-1.9% for one month. Customers perceive it risky to use the
card because of fraud. It is not safe to presume. Moreover, Vietnamese customers
are still not used to using cards for their shopping, and prefer to use cash instead.
Many shopping centers are yet to install POS machines to accept credit card
payments (Business time, 2011).
Parties involved in a transactions process are card holder, card issuing agency, the
merchant, the acquiring bank, an association of card issuing. Besides, the
transaction network is also involved. It means that the card holder’ information is
exposed to many parties. It creates security risk. Customer perceived more risk if
the payment is online.
Many benefits for credit card holders. Beside the function of cash replacement
for purchase, it could facilitate car holder a big amount to spend when car holder do
not have real amount without time constraint due to overdraft limit granted to card
holder. It is interest free spending which holder could not find if do credit purchase
in merchant. A squeaky clean credit card history can get high credit score from
credit agency. In turn, it is a criterion for loan disbursement or interest rate offered
by the bank to the card holder. Credit card statement contains data of spending, so it
could help card holder budget. Credit card holders are preferential treatment at
shopping malls, restaurants, hotels…(The economic times, 17 January 2011).
Vietnam is the most risky for credit card. The credit card fraud rises to highest
within region. It was nearly five times the world rate, and 17 times compared with
the regions. (Le Thanh Ha, 2011). The frauds in the international card payment
increase rapidly in 2011. The total value of fraud transactions reached one million
3

dollars in the first quarter of the year and 1.5 million dollars in the second quarter,
which is 3-5 times higher than the same period of the last year and the last quarters
of 2010. The ratio of fraud cases on transaction value has also increased by 2-3

others, even the others product features and price are better. It also shows that the
cost to win a new customer is always higher than the current one. The development
and maintenance of customer brand loyalty is placed at heart of marketing plans,
especially in highly competitive market with increasing unpredictability and
reducing product differentiation.
It has been suggested by many authors that loyal customers are a competitive
asset and that a way of increasing customer retention is through secure and
collaborative relationship between buyers and sellers (Chaudhuri, 1999; Chaudhuri
and Holbrook, 2001; Fournier, 1998; Oliver, 1999). Customer loyalty has been
universally recognized as a valuable asset in competitive markets (Srivastva,
Shervani& Fahey, 2000).
For long term success, all firms should gain customer loyalty by understanding
factors affecting customer loyalty.
After a period of focusing on increase in number of new customers, some
banks such as Vietcombank, HSBC have paid attention on building loyalty. Their
loyal programs have been appreciated by their card holders. All the other banks
understand that loyalty is important but it is a dilemma.
Credit card research in Vietnam is limited especially for loyalty. How to build
credit customer loyalty is a big question to managers.
Given the above concern, there is a need to examine the antecedents of brand
loyalty for credit card users.
1.3 Research Objectives
5

The question of what are the loyalty drivers of the market is always a big
question for those bank managers to have a correct direction in promoting their
customer loyalty programs. This research attempts to examine antecedents of brand
loyalty for credit card users in Vietnam banking sector. This study’s aim to answer
for below questions:
 Question 1: What are factors affecting loyalty of credit card user?

Customer loyalty has been widely researched and as a result the concept of
loyalty has received many definition and interpretation in the literature. Jacoby and
Chestnut ( 1978) defined loyalty to brand as a biased behavioral response, expressed
over time by some decision-making unit in relation to one or more of the
alternatives within a larger set of brands. Oliver (1997) defined that loyalty as a
deeply held commitment to re-buy or re-patronise a preferred product or service
consistently in the future, which causes repetitive same-brand or same-brand set
purchasing, despite any situational influences and marketing efforts that might
cause switching behavior. Cunningham (2000) proposed loyalty as a percentage of
overall purchases of a specific brand in comparison with other competitor brands.
Mowen and Minor (2001) referred to loyalty as the extent in which a customer held
positive attitudes towards the brand, commitment and intention to repurchase this
brand in the future. Tawfeq (2007) suggested that loyalty was determined because
7

of customer purchasing habits. Martin (2007) stated that loyalty was a state of mind,
a set of attitudes and desires of the client, but they derive from his psyche.
Loyalty is a multi-dimension concept. It consists of behavioral and attitudinal
(Day, 1969; De Ruyter et al., 1998). Behavioral loyalty is repeated transactions (or
percentage of total transactions in the category, or total expenditures in the
category) and can sometimes be measured quite simply with observational
techniques. Attitudinal loyalty is often defined as both positive affect toward the
relationship’s continuance, and the desire to continue to remain in the relationship,
and is sometimes defined equivalently with relationship commitment (e.g. Morgan
and Hunt, 1994). Uncles et al. (2003) suggested that loyalty is a three popular
conceptualizations of loyalty exist: as an attitude that leads to a relationship with the
brand; as expressed in terms of revealed behavior; and as buying moderated by
individual characteristics, circumstances, and/or the purchase situation. Zeithaml,
Berry and Parasuraman (1996) determined that loyalty had four dimensions: the
intention to repurchase, positive references, complaint behavior, or sensitivity or

loyalty. They repeat purchase to a brand with highly commitment. Latent loyalty is
associated people who have high relative attitude, but low behavior. Spurious
loyalty is associated with people who have low relative attitude and with high
behavior. No loyalty is associated with people who have low relative attitude and
low behavior. It is classified as no loyalty.
As Evans (1996), customers are classified into four categories: hard core
loyalty, branch switcher, new users, and non-users. A hard core loyal customer is
the one repeatedly purchase a particular brand regardless premium price of that
brand has charged.
Jenifer Rowley (2005) suggests a four C’s loyalty model: Captive,
Convenience seeker, contented and commitment. Captive customers are to continue
to patronize a brand because they have no real or other alternative for choice. They
perceive a high switching cost. They also stick to a brand that is associated with
9

products or services where buying decisions are not frequent. Convenience seeker
customers are driven by convenience factors and these factors dominate the choice.
They are not really have and attitude to a brand because it is not relevant. They may
have routine re purchase but low involvement. Contented customers have a positive
attitude to the brand, but are inertial in their behavior. They do not involve with the
brand purchasing additional product or service associated with the brand. For these
customers, each purchase is evaluated on its merits, and brands are not significant in
their purchase decisions. Committed customers are positive in both attitude and
behavior. They are the highest loyal one to a brand. They will do continuing
purchases and also exchange positive and delighted word of mouth to other one.
Committed customers are resistant to competitors’ attempts to attract them. They
may also add value to the brand. They make a positive contribution to ambience of
the service experience for other customers.
2.4 Factors affecting Brand Loyalty
At the earliest time, loyalty is uni-dimension construct. It is attitudinal (Guest,

Habit
20
Celebrity influence
5
Brand trust
21
Brand Performance
6
Awareness
22
Functional value
7
Relationship proneness
23
Culture
8
Religion
24
Attitude
9
Involvement
25
Price worthiness
10
Experience
26
Cognitive conviction
11
Perceived value
27

some decision-making unit with respect to one bank out of a set of banks, which
was a psychological function. Recent researches on loyalty in banking sector were
listed in Table A.2 stated in Appendix A section, at the end of this writing.
In summary, previous studies suggested that bank loyalty is affected by factors
described in Table 2. Frequency of each factor was listed in Table 2 as well.
Table 2: The most factors affecting bank loyalty and its frequency appeared in
recent researches
No.
Factor
Frequency
No.
Factor
Frequency
1
Satisfaction
14
9
Service features
1
11

2
Switching barrier
6
10
Situational factors
1
3
Service quality
9

Customer complaint
handling
1
(Source: Extracted from Table A.2 stated in Appendix A)
In summary, customer satisfaction, switching barrier, trust, service quality,
image are repeatedly found in researches.
2.6 Research Model
It is explored that bank loyalty is a multi-dimension concept and its
determinants are commonly stated in Table 2. To propose model for this research,
the author has conducted a group discussion with eight participants including three
senior personal bankers and five credit card holder to explore the suitable
determinants of credit card loyalty in Vietnam context. The channel picked up the
most repeated factors previous section to discuss. They are customer satisfaction,
switching barrier, trust, service quality, and image. Based on this qualitative
exploratory study, suggested determinants are customer satisfaction, trust, customer
complaint handling, perceived risk, and switching barriers. However, customer
complaint could only be measured if the respondents have experience with
complaint. It is the fact that there is less than 5% of total customer who have this
experience (as the channel’ confirmation). Due to this constraint of availability of
correspondence, this study just studies the relation between Customer satisfaction,
trust and switching barrier to loyalty. These factors may have correlation each other
12

but it is omitted in this study because of time constraint. This study just only studies
the direct impact of these factors to loyalty.
2.6.1 Customer Satisfaction
Customer satisfaction has attracted many authors to study. The concept was

5
Perceived hardware/software quality,
2
Perceived value
6
Customer dialogue
3
Expectation
7
Price tolerance
4
Complaint handling
8
Image
In the previous discussion, customer satisfaction direct affected customer
loyalty. Heskett (1993) revealed that an existence direct connection between
satisfaction and loyalty. Satisfied customer become loyalty and dissatisfied
customer move to another. When the satisfaction is low, customer have the option
to quit and joint competitor or express the complaints.
The American Customer Satisfaction Framework (Fornell et al., 1996) which
has been adopted to create customer satisfaction indices for many countries (Aydin
and Ozer, 2005) shows that customer loyalty is leaded by customer satisfaction and
customer complaints. The European customer satisfaction index model states that
customer satisfaction is an antecedent of customer loyalty. Researchers (Bolton,
1998; Rust and Williams, 1994; File et at.,1994) stated that customer satisfaction
bring greater purchase intention and positive word of mouth.
It appears that unnecessary to study relationship between customer satisfaction
and loyalty as many studies confirmed that there is signification positive between
these two variables (Colgate and steward, 1998; Hocutt, 1998, Patterson and
Spreng, 1997).

emotions and social dimension is relating to the social impact of the purchase.
Sweeney and Soutar (2001) later designed a scale of measurement of value named
PERVAL.
Juan Carlos Fandos Roig et. al. (2005) proposes customer perceived value in
banking services has six dimensions by adopting three dimensions of PERVAL.
The authors divided functional value of PERVAL into four small functional scales.
It is functional value of the installations of the establishment; functional value of the
15

contact personnel; functional value of the service (Quality); functional value price.
The social value and emotional value are accepted.
Jyoti and Harsh (2011) summarized perceived value dimensions propose in
recent researches in Table A.6 in Appendix A section.
Components of perceived value were examined to direct affect customer
satisfaction. Lee et al. (2007) studied the multiple dimensions of perceived value
and investigated how value affects satisfaction. Their results stated that all
dimensions of perceived value have a significant effect on satisfaction. This result is
not different with findings by Wang et. al. (2004).
In this study, author adopt Juan at el model and its scale for perceived value in
banking service but group the four functional dimensions as one as the originating
model proposed by Sweeney and Soutar (2001).
Consequently, it is hypothesized that:

H1: Functional value positively influences customer satisfaction

information required in the transaction. Privacy risk is the potential loss of control
over personal information, such as invasion of privacy. Featherman and Pavlow
(2003) also stated that privacy risk may also be identified as a common concern that
prevents the adoption of internet banking. Furthermore, some researches on credit
card fraud have been studies recently (Barker et al., 2008; Prabowo, 2011; Yu –
Feng, 2005). As discussion in Chapter 1, In Vietnam context, fraud in credit card is
the high rate in the region, privacy risk is significant. Therefore this study will adopt
the privacy is one of perceived risks.
Given in credit card context, perceived risks have significant impact to
perceived risk which impact on satisfaction are financial risks, time risk,
performance risk, privacy risk. (Nguyen Thi Tuyet Phuong, 2012).
17

Many authors claimed that perceived risk negatively and significantly
influences on satisfaction (Kun Hua Tsai, 2004; Mark S. Johnson et. al., 2008;
Huei-Huang Chen et. al.,2009).
Table 3: Description and definition of perceived risks dimension.
Dimension
Definition
Financial risk
The potential monetary outlay associated with the initial
purchase price and subsequent maintenance cost of the products
(Featherman & Pavlou, 2003)
Performance
risk
“The possibility of the product malfunctioning and not
performing as it was designed and advertised and therefore
failing to deliver the desired benefits” (Featherman & Pavlou,
2003).
Physical risk