UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business

NGO TRONG TRUNG AN INVESTIGATION OF CUSTOMER VALUE AND
PATRONAGE IN RETAILING VENDING MACHINE
SECTOR IN VIETNAM MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014

members of my advisor committee, Dr. Tho Nguyen, Dr. Nguyen, Dr. Quan, Dr. Phong, and
Dr. Thao for helping me to understand the process and theoretical foundations of the
research.
Many others also deserve my gratitude. Among them, Mr. Doanh, Mr. Tuan, Ms.
Kim Yen, Master Mai Thien Tam, Ms. Nguyet Anh, Mr. Huy, Master Nguyen Thi Nguyet
and Master Nguyen Huy Khai, helped me to obtain final questionnaire being suitable in the
context of Vietnam. My colleagues, friends and all of respondents supported to conduct the
questionnaire at the best reliability.
Finally, I would like to express my gratitude to my family for their love and support,
and they are always there when I need them. Without their emotional and financial support,
this study would not be completed.
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ABSTRACT
Although Vending machine was predicted would become one of the most important

ABSTRACT ii
TABLE OF CONTENTS iii
LIST OF TABLES v
LIST OF FIGURES vi
CHAPTER 1: INTRODUCTION 1
1.1 Research background 1
1.2 Research Problem 2
1.3 Research Objective 3
1.4 Significance of the Study 3
1.5 Research methodology and scope 3
1.6 The structure of the study 4
CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES 6
2.1 Vending machine 6
2.2 Customer value 7
2.3 Customization and Functionality 8
2.4 Perceived risk 9
2.5 Customer value and retail patronage 10
2.6 Research model 11
CHAPTER 3: METHODOLOGY 13
3.1 Research process 13
3.1.1 Qualitative research 13
3.1.2 Quantitative research 13
3.2 Research design 17
3.3 Measurements of constructs 18
3.4 Data analysis method 21
3.4.1 Descriptive Statistics 21
3.4.1.1 Test of Skewness 22
3.4.1.2 Test of Kurtosis 22
3.4.2 Confirmatory factors Analysis (CFA) 22
3.4.2.1 Reliability testing 22

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LIST OF TABLES
Table 3.1: The result of collected data 15
Table 3.2: Measurement scales 19
Table 4.1: Sample Characteristic 26
Table 4.2: The result of Skewness and Kurtosis testing 27
Table 4.3: Correlations of components 32
Table 4.4: The result of correlation test 32
Table 4.5: Summary of measurement validation 34
Table 4.6: Correlation of Constructs 36
Table 4.7: Chi-square difference test 37
Table 4.8: Hypotheses Unstandardized Structural Paths 40
Table 4.9: Summary of hypotheses testing result 40
Table 4.10: The result of bootstrap analysis 41 1

CHAPTER 1: INTRODUCTION
1.1 Research background
More than three decades ago, Quelch and Takeuchi (1981) predicted that vending
machine would become one of the most important non-store marketing channels. Reality,
their prediction has surely materialized. Most of countries all over the world used vending
machine as retail business. There are more than seven millions vending machines in
operation in U.S (Leaner 2002), Japan has become a vending-machine-country and Vietnam
also has the first vending machines in 2000s.
Vending machine offers consumer a variety of products including food, snack,
beverages, newspaper, cosmetic, CDs, cigarettes and so on. Lee (2013) argued that as more
people has joined workforce during the past several decades and their busy social life
increasingly places more value on time and convenience, vending machine had become an
indispensable part of many people daily’s lives.
In Vietnam, vending machine was deployed in early 2000s when the Vietnam’s
Government issued the coins and experts believe that they will be potential market in the
future (Kieu Giang, 2004). However, vending machine sector developed slowly during past
time. There were many investors failed in applying Vending machine for retail business.
The first main reason can explain for this is technology. Most of vending machine at that
time integrated used-coin technology, but Vietnam people do not have habit keeping the
coin available or do not like to use coin in transaction. This leads used-coin vending
machine to be inconvenient for customer to reach and purchase by vending machine;
secondly, retailers using vending machines cannot find the suitable locations to install
vending machine, especially two biggest cities in Vietnam: Ho Chi Minh City and Hanoi
City for sidewalk and public areas are quite narrow. As a result, vending machine cannot

customer value is a strategic weapon in attracting and retaining customers and has become
one of the most significant factors in the success in service providers (Gale 1994;
Parasuraman 1997). Therefore, many previous studies examine relationship between
Customer value and consumer’s purchasing intention or satisfaction, but little of studies
research about influence of Customer value on Patronage behavior.
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Thus, in order to fulfill this gap, an investigation of Customer Value and Patronage
behavior in retailing vending machine sector is examined, and in an effort to indentify the
key factors impacting on customer value in vending machine sector in Vietnam, this study
considers the concepts of Functionality, Customization, and Perceived Risk as antecedents
of Customer value.
1.3 Research Objective
To examine customer value in vending machine situation, it is necessary to focus on
identifying key factors affected customer value in using vending machine. These factors are
perceived risk, functionality and customization. Each of these can either positively or
negatively influence customer value in vending machine sector. Knowledge about the effect
of customer value on consumers’ vending machine patronage behavior provides helpful
implications to marketers in executing marketing and business strategy and customer
relationship management. Therefore, the overall purpose of this current study is to examine
how customer value affects consumers’ retailing vending machine patronage in Vietnam.
Particularly, this study investigates:
1. The impact of Customization of vending machine on Customer Value
2. The impact of Functionality of vending machine on Customer Value
3. The impact of Perceived Risk of using vending machine on Customer Value
4. The impact of Customer value on retailing vending machine patronage
1.4 Significance of the Study
The study will provide helpful implications for marketers in executing marketing and
business strategy in Vending machine sector in particular and in retail business in general.
1.5 Research methodology and scope

This chapter mentions about the research design, measurement of constructs,
illustrate the process of conducting the research, and then, data analysis method is also
presented to lay the foundation of chapter 4.
Chapter 4: Data Analysis and Result
This chapter includes Sample characteristic, descriptive statistic, CFA, SEM and
discussion of result.
Chapter 5: Conclusion
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This chapter includes conclusion, Implications and limitation.
use, the ability to avoid interference from service people, time saving, convenience, and
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financial saving as the factors impacting the adoption of SST, and ease of use was the most
important factor; service quality of SSTs included seven dimensions: Functionality,
Convenience, Enjoyment, Privacy, Assurance, Design, and Customization, in where,
Functionality represents responsiveness, reliability and ease of use of SSTs, and
Customization referred to extent of an SST can be altered to meet individual customer
preferences and transaction histories (Lin and Hsieh, 2011). On the other hand, Ho and Ko
(2008) proved that SST characteristics have positive effect on Customer Value. Therefore,
based on the literature regarding to Vending machine, the current study examines perceived
risk, functionality and customization to determine customer value of vending machine
sector.
2.2 Customer value
The concept of value has been applied in various fields of study, such as economics,
social science, accounting, finance, strategy, product management, information system, and
marketing (Huber et al., 2001; Ulaga and Chacour, 2001). Customers acknowledged service
value through desired purpose or goal achieved (Overby, 2005). Thus, in-depth
understanding of customer value construct was highly important.
The concept of customer value was often perceived as an ambiguous and
multifaceted word (Parasuraman, 1997). Many authors had acknowledged the difficulties
involved in defining customer value (e.g. Piercy and Morgan, 1997; Woodruff, 1997).
Therefore, many definition of customer value were proposed by many authors. For instance,
Holbrook (1994) defined customer value as “an interactive relativistic preference
experience” (p.5), and Woodruff (1997) expanded the concept of customer value as “a
customer’s perceived preference for and evaluation of those product attributes, attribute
performance, and consequences arising from use that facilitate (or block) achieving the
customer’s goal and purposes in use situation”(p.142). Customer value was also defined by
Chen and Dubinsky (2003) as “a consumer’s perception of the net benefits gained in
exchange for the cost incurred in obtaining the desired benefits” (p.326). However, there

understanding clearly specific customer’s demand was the key supported marketers to
design product or service meeting well for their own customer’s demand.
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In marketing context, the functionality was defined as “what product does for the
buyers and users; utility it offers the user; what he or she can do with it” (Yellow pencil,
2006). Functionality referred to the ability of product or service to facilitate performance
and the accomplishment of service customer goal. It also was considered to be particular
importance because physical settings of vending machine were purposeful environment that
exists to fulfill specific needs of customers.
On the other hand, functionality and customization are two of dimensions of service
quality construct (Lin & Hsieh, 2011). Service, by providing additional value for customers,
leads to increased customer satisfaction, though the relationship between service and
satisfaction can be non-linear (Anderson and Mittal, 2000). In addition, service quality is
thought to lead to increases in firm profitability and market value through the service–profit
chain (Heskett et al. 1994). That’s the main reason why service quality has long been
recognized as a key factor for creating customer value. Based on literatures above, the
following hypotheses were proposed:
H1. Customization of vending machine is positively related to customer value
H2. Functionality of vending machine is positively related to customer value
2.4 Perceived risk
Risk was defined as term of uncertainly and consequences associated with
consumer’s action (Bauer, 1960). Base on this, many studies had adopted this definition to
define the construct of perceived risk, such as Cunningham (1967) argued that “perceived
risk as a consumer’s perception of the uncertainty and adverse consequences associated with
buying a product or service” (p. 91) or Dowling and Staelin (1994) understood that
“perceived risk is determined by the distinction between inherent risk and handle risk”
(p.121). In general, perceived risk referred that consumer purchase behavior may cause
some unexpected results and these results may cause unpleasant experience (Bauer, 1960).
Imaging that, customers always had their purchase goal each time when they wanted to buy

stores. The patronage factors consist of: Convenience _ Location, hour working, shopping
ease; Assortment of merchandise _ Variety or limited; Quality and fashion level of goods _
High quality and fashion; Prices _ Lower price; Service _ Credit Card, delivery, return-
goods, and knowledgeable sales staff; Excitement _ promotional effort, use of celebrities
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and fashion show” (p.77). Secondly, Morgenstein and Strongin (1992) stated that patronage
motives as “the reasons why customer choose one place to shop rather than other and
include special brand, attractive facilities, personal service, conveniences, goods value,
attentive salespeople, and a good store image” (p. 124). Finally, Pan and Zinkhan (2006)
categorized a large number of determinants of retail patronage that were frequently
examined in prior studies into three factors: product-relevant factors, market-relevant
factors, and personal factors. Product-relevant factors is related to function of product and
attributes (product quality, assortment, and price); market-relevant factors pertained to
service offered by store with respect to convenience, service quality, store image and
atmosphere, and salespeople; and personal factors refer to consumer characteristic (e.g . age,
gender, income, and so on).
According to Lee et al (2009), three groups of determinants including product
quality, service quality, and assortment had the strongest influence to consumers’ decision
to patronize a particular store. This finding presented clearly the importance of service
quality as a key to achieve retail patronage. Furthermore, Yieh & Wei (2012) also stated that
customer value was a crucial instrument for analyzing service quality. Therefore, the
following hypothesis is suggested:
H4. Customer value is positively related to retailing vending machine patronage.
2.6 Research model
Based on the literature review and the hypotheses developed, the following research
model was proposed

3.1 Research process
The study consisted two phase: a pilot study and a main survey. The pilot study was
conducted by qualitative method and the main survey by quantitative method.
3.1.1 Qualitative research
After author proposed the research model based on literatures review above, the
measurement scales of each construct also was build by re-used or adapting with previous
research. Thus, a preliminary questionnaire of study was developed to investigate
respondents in Ho Chi Minh City. After the preliminary questionnaire had been translated
into Vietnamese, the researcher interviewed deeply with 8 people who used the vending
machine prior to answer the questionnaire to obtain correct items in the context of
Vietnamese consumers, check the meaning of words in original measurement scales and
modify them to be more suitable and easier to understand. This step is very important due to
there are many differences between meaning in English and Vietnamese, as well as English
level of translator, made misunderstanding or not convey enough the meaning of the
original scales. After finish this step, most of measurement scales would be refined to be
easy to understand and to be meaningful in context of the study.
3.1.2 Quantitative research
After qualitative research, a refined questionnaire was completed to be more
appropriate with Vietnam market, especially Ho Chi Minh City market. Consumers in Ho
Chi Minh City would be chosen to interview for main survey in this study for using
convenient sample. The process of quantitative research was conducted by the following
steps:
Step 1: Composing the questionnaire for the research
Questionnaire was designed in English, and then the author translated into
Vietnamese for delivering to respondents. (See Appendix A and B)
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Step 2: Defining sample size of the research
According to Hair et al. (2010) the sample size should be 100 or greater and
minimum sample equal five observations for each item. The proposed research model has

touch, classmates at Master of Business Administration program at ISB School and some
friends on Facebook and Yahoo Messenger. Finally, 176 answers in hard copy and 158
feedbacks via online channel were delivered author. Totally, the author received 334
answers from respondents.
Step 4: Checking the answers, coding and input data
After checking the answer, the error answers which were missed answers or answer
with only one value such as “1”, “2”,“3”, “4” and “5”, or were checked as zigzag line, were
removed out of final data to analyze. Besides, author also eliminated the answers which
respondents chose answer was “no” when they were asked: “Have you ever used Vending
machine?” As a result, 87 responses of total of 334 ones were eliminated; total included 247
answers in final. The final sample is suitable to the requirement of minimum sample size:
240 observations. The following table summarized collected data from the survey.
Table 3.1: The result of collected data

Number of
questionnaire
were delivered
Number of
questionnaire
were returned
Percentage
Total of sample
used for the main
survey
Hard copy
250
176
52.7%
132
Online channel


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Figure 2: Research process

3.2 Research design
This study aimed to investigate how customer value influences on customer’s
retailing patronage behavior and the antecedents (customization, functionality and perceived
risk) of customer value in vending machine sector in Vietnam. Therefore, a research model
was proposed as Figure 1. This research used primary data that collected from participants
who were required to have used Vending machine services prior to completing the survey.