SUMMATION THESIS BY NGO ANH CUONG
PREFACE
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.
In Vietnam, the mobile communication market has been transforming from a
monopolistic market to competitive market with participation more and more service
providers. Therefore, customers have many opportunities to choose services less
bound to the service provider. The change of service providers by customers becomes
phenomenal and increasing. Subscribers starts to layoff workers because they are
getting less and less number of customers to serve which showed that customers have
been not loyal to their providers.
To develop positively and sustainably for Vietnam’s mobile market, service
providers need to find ways to maintain valuable and loyal customer.
Chapter 1
INTRODUCTION
1.1 Background of the study

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. Research result will provide information for management to formulate
effective strategy for the use of telecommunications 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
To increase the competitiveness of the service providers as well as to increase
the market demand, the dissertation would like to seek answers to the following:
- Identify factors and quantify by scales to analyze factors affecting to
customer loyalty on mobile communication market in Hanoi.
- Research and analyze the factors affecting customer loyalty by statistical

Objectvie of the dissertation will be:
The dissertation will identify factors affecting customer loyalt.
The dissertation conduct to analyze relationship between demographic factors
with customer loyalty aims to provide practical information for administrators, new
service providers who want to join or maintain their position in the mobile
communication service market.
The disertation result can help service suppilers to indentify key factors related
to customer satisfaction and customer loyalty while helping service providers develop
and implement marketing stratergies to improve customer loyalty and limited
switching wave between service providers. The disdertation will also provide
2


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. Factors affecting customer loyalty is mentioned in
this study as follows:demographics; quality services, switching barriers, etc.
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), mobile communication services provider, mrepaid subscriber,
postpaid subscriber, call quality, value – added service, monvenience in procedures,
price structure, customer services support, loss cost, adapting cost, move – in cost, ,
attractiveness of other providers, customer relationship.
Chapter 2
REVIEW OF RELATED LITERATURES AND STUDIES
2.1. Mobile telecommunication services

* Viettel telecom company (Viettel)
Viettel Telecom Company (Viettel Telecom) is affiliated companies of the
Viettel telecom military corporation. 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, 0169) and over 47,4 million subscribers.
* Viet Nam Mobile Telecom Services Company (VMS - Mobifone)
Vietnam Mobile Telecom Services Company - VMS, a state-owend company
under Vietnam Posts and Telecommunications Corporation. Currently Mobifone
provides services with 8 prefix numbers (090, 093, 0122, 0124, 0126, 0128, 0121,
0120) for about 21 million of real subscribers.
* Other suppliers
Other suppliers include SPT ( prefix number is 095); Gtel (prefix numbers are
099 and 0199) and Vietnamobile (prefix numbers are 092 and 0188). Three suppliers
have a very low market share so they are very difficult to compete the largest
suppliers.
2. 3. Customer loyalty
There are many concepts of customer loyalty.
Jim Novo (2011) described customer loyalty as a tendency of a customer to
choose a particular brand of business or product to fulfill their needs. And Reihchhed
and Detricf (2003) said that Customer loyalty is astrategy that creates mutual rewards
to benefit firms and customers.With loyalty customers, companies can maximize their
profit because loyal customers are willing to purchase more frequently, spend money
4


on trying new products or services, recommend products and services to others, and
give companies sincere suggestions.
2.4. Affecting factors to loyal customer

Loyalty

Figure 1: Proposed integrated model of service Loyalty
* Switching barrier model of customer loyalty

5


Customer loyalty

Customer Satisfation

Switching barrier
- Switching cost
- Customer relationship
- Attractive provider others

Figure 2: Switching barrier model of customer loyalty
2.6. Several topics related to mobilecommunication services
2.6.1. Some topics researched in Viet Nam
Ky Duc Pham and Hung Nguyen Bui (2007) have has built theoretical models,
test hypotheses and provide a new scale for mobile communication service market in
Viet Nam. According to authors, the service quality was the most important factor
affecting customer loyalty.
And when researching about assessment of customer satisfaction towad the
mobile telecom services in Hue, Thai Ha Thanh and Ton Duc Sau (2011) showed that
service quality was the most important factor effecting customer satisfaction.
Duong Tri Thao and Nguyen Hai Bien (2011) have studied based on
theoretical models of consumer loyalty and satisfaction, this study aims to consider
relationship between service quality and consumer satisfaction of mobile phone

Figure 4: The model of impacting satisfaction and switching barrier to customer
loyalty the mobile communication service in Korea
Customer
loyalty

Satisfaction

Add –
value
service

Call
quality

Switching
barrier

Customer
support

Loss cost

Move in
cost

Customer
relationshi
p

Switching cost


- Adapting costs
- Move-in cost

Switching
barrier

Attractiveness of
other providers
Customer
relationship

7


Figure 5: The proposed model for mobile communication service in Hanoi
Source: the experimental model of customer loyalty in the communication
market in Ho Chi Minh city by Pham Duc ky and Bui Nguyen Hung, (2007)
Chapter 3
METHODOLOGY
3.1 Research design
The variables to determine customer loyalty were selected based from the
conceptual framework at figure 5. It includes:
The quality services included: calling quality with 5 variables; price structure
with 5 variables; value - add services with 5 variables; convenience in procedures
with 4 variables and customer support services with 5 variables.
And the switching barrier included: loss cost with 2 variables; adapting cost
with 2 variables; move – in cost with 2 variables; attractive offers of providers and
customer relationship with 4 variables.
In addition, the questionnaire also used 3 other factors: customer satisfaction

age group and occupation) factors, types of services (post-paid and pre- paid).

8


3.4 Research instrument
To measure the factors that affect customer loyalty in mobile communication
services, the questionnaire using the Likert scale with five levels: 5: strongly agree; 4:
agree; 3: normal; 2: disagree and 1: strongly disagree.
The questionnaire was designed in two parts:
- Part one: The customer’s demographic profile which included the
information used to classify customer groups who are using mobile communication
service such as: name, gender, education level, occupation, and income.
- Part two: This part deals on the questions that measured the customer’s
loyalty using the selected variables or indicators.
3.5 Data gathering procedure
- Secondary data: the author collected data from the managing state agencies
related to mobile communication: Ministry of Information and Communications,
General Statistics Office, Hanoi Department of Information and Communication and
Hanoi Post Office.
- Primary data: were taken from the survey results of 400 respondents who
have been using the mobile communication service of providers.
3. 6 Data processing method
After information is collected, obtained were cleaned and processed using
SPSS 16.0.
3. 7 Statistical treatment
In this research, dissertation used some statistical method to analyze factors
affecting customer loyalty in the mobile communication service. Descriptive
statistics, Chi-square test were used to analyze relationship between demographic
factors with the customer loyalty.


Others

Gender

Services type

Total

18-24

25-34

35-44

45-54

Over 55

Postpaid

Prepaid

Male

43

4

16


72

5

27

23

14

3

29

43

Female

53

3

21

17

10

2


24

13

2

22

51

Male

17

1

6

5

4

1

4

13

Female


270

Total

4.2 Scale values test
The scale is a preliminary assessment through Cronbach Alpha coefficients.
Cronbach alpha coefficient is used to remove the waste variables. Variables were
excluded when the corrected Item –Total Correlation of Variables is less than 0.3 and
the standard value to assess the better scale when it has reliability alpha to be 0.6 or
higher (Nunnally & Burnstein 1994).
4.2.1 Services quality
Cronback’s alpha of “calling quality” is 0.775.
Cronbach alpha of the “Pricing structure” is 0.85.
The composition of “value added services” with Cronbach alpha is 0.794.
The composition of “Convenience in procedures’ with Cronbach alpha is
0.806.
The composition of “customer service supports” with Cronbach alpha is
0.738.
4.2.2 Switching Barriers
The Cronbach’s alpha of the component “loss cost” is 0.765
The Adapting cost component with Cronbach's alpha 0.684.
The Move – in cost with Cronbach’s alpha is 0.644
The Cronbach’s alpha of “attractiveness of other providers” is 0.915.
The Cronbach’s alpha of the “customer relationship” is 0.852.

10


4.3 Preliminary analysis of the component variables

between the value - added service quality and customer satisfaction is directly
proportional. The significance level is less 0.05 (Sig = 0.000) to reflect meaningful
relationships. Thus, this hypothesis is accepted.
11


H1.4: More convenience in procedures will increase customer satisfaction levels on
service quality
Statistical result showed that the correlation coefficient is 0.696. So, the relationship
between the convenience in procedures and customer satisfaction is directly
proportional. The significance level is less 0.05 (Sig = 0.000) to reflect meaningful
relationships. Thus, this hypothesis is accepted.
H1.5: Customer support service is related to customer satisfaction on service quality
Statistical result showed that the correlation coefficient is 0.290. So, the ralasionship
between the customer services and customer satisfaction is directly proportional. The
significance level is less 0.05 (Sig = 0.000) to reflect meaningful relationships. Thus,
this hypothesis is accepted.
H2: Customer satisfaction has a positive effect on loyalty
Statistical result showed that the correlation coefficient of “customer
satisfaction” and “customer loyalty” is 0.877. So, the relasionship between customer
satisfaction and the customer loyalty are directly proportional. The significance level
is less 0.05 (Sig = 0.000) to reflect meaningful relationships. Thus, this hypothesis is
accepted.
H3: Switching barriers has a positive effect on loyalty
H3.1: Loss cost affects the decision of the customer to change provider
The correlation coefficient of “loss cost” and “switching barriers” is 0.609. So, the
relationship between the loss costs and switching barrier are directly proportional. The
significance level is less 0.05 (Sig = 0.000) to reflect meaningful relationships. Thus,
this hypothesis is accepted.
H3.2: Adapting cost is a switching barrier to the customer

= 0.000) to reflect meaningful relationships. Thus, the hypothesis “switching barriers
has a positive effect on loyalty” is accepted.
4.5 Factors affecting customer loyalty
4.5.1 Analyzing relationship between demographics factors with service
providers.
* Gender
The result of Chi-square test indicated that, there is not relationship between
the gender of subscribers in choosing service providers due to the significance of the
test is greater than 0.05 (Sig = 0.999 ).
* Education level
Result of Chi-square test showed that there was relationship between the
education of subscriber in choosing service providers due to the value of the Chisquare test was less than 0.05 (Sig = 0.000).
* Occupation
The statistical result showed that there is not relationship between occupation
of subscribers with selection of service providers due to value of Chi-square is 0.546.
* Per average income
The analytical results show that there is relationship between income of
subscribers with service providers due to the significance of the Chi-square test is less
than 0.05 (Sig = 0.000).
13


4.5.2 Relationship beween factors affecting loyalty versus demographic
factors
* Gender
Analytical result showed that gender of subscribers have relationship with
“value – add service” and “adapting costs” due to values of Chi-square test are less
than 0.05 . The remaining factors affecting loyalty have no relationship with the
subscriber's gender due to values of Chi-square test are higher than 0.05. (Appendix
3.1)

significance level of Chi-square tests are less 0.05. Remaining factors affecting
loyalty are not relationship with subscriber’s education due to significane level of
Chi-square tests are higher than 0.05 (appendix 3.5).
4.5.3 Analyzing the Factors that Affect Customer Loyalty
The model of analysis affecting customer loyalty in mobile communication
services in HaNoi is reflected as follows:
CL = -0.404 + 0.173 * (CQ) + 0.163 *(PS) + 0.097 *(VAS) +0.162*CP+ 0.178 *(LC)
- 0.140 * (AOP) + 0.260 *(CR)
According to this model, there are 7 factors affecting customer loyalty. The impactive
level of factors are explaind as follows:
The regression coefficient of “customer relationship” is 0.260 (ß10 =0.260) so this
factor is strongest influence to customer loyalty. The “loss cost” is the second factor
affecting customer loyalty (ß6=0.178). The “calling quality” is thirth factor affecting
customer loyalty. The regression coefficient of “pricing structure” is 0.163 so This is
the fourth factor affecting customer loyalty. The fifth factor is “Convenience in
procedure”(ß4= 0.162). The “attractiveness of other providers” is the sixth factor
affecting customer loyalty (ß9 = -0.140). However, the negative regression coefficient
reflects inversely proportional relationship between “attractiveness of other providers”
with customer loyalty. The regression coefficient of “value – add services” is 0.097 so
this factor is the weakest influence to customer loyalty.
Chapter 5
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of results
The Cronback’alpha of results showed that some component variables (The
scope of coverage; The supplier has service packages with different charges to
suitable customer demands; Quick solving problem services; The staff are always
friendly with the custome) were not dissatisfaction with conditional test due to the
Cronback’alpha coefficient was less than 0.6 and the “Corrected Item-Total
Correlation” was less than 0.3. The component variables of the remaining factors
were accepted in this research due to the the Cronback’alpha coefficient was more

“service quality” had four component factors: calling quality, Pricing structure, value
– add services and Convenience in procedures. The “switching barrier” had three
component factors: loss cost, attractiveness of other suppliers and customer
relationship. According to Nguyen Duc Ky and Bui Nguyen Hung, the “calling
quality” was the strongest influential customer loyalty. However, this factor was only
thirth factor affecting customer loyalty after the “customer relationship” and the “loss
cost” in this research. The “customer loyalty” was the strongest influential custome
loyalty and the “value – add services” was the lowest influential customer loyalty.
5.3 Recommendations
5.3.1 Demographic factors
16


With small service providers, these providers should improve service quality
especially expanding coverage to enhance call quality to attract these customer groups.
With big service providers, their service quality are better but rates of service are often

higher than small service providers. So, in the future these providers should be
lowered rates to attract new subscribers (especially subscribers with low income, low
education level and unstable occupation)
In addition, service providers should have policies reasonable customer
segments to increase the new subcribers and maintain old subcribers aim to achieve
the highest business performance.
5.3.2 Service quality
Because of this, the quality service provider is constantly improving over time.
This is reflected in evaluating customer of the component factors of service quality
are greater than 3. However, the average point of the component elements are lower
than 4. This shows that the customer is not satisfied with the service quality of
provider. Therefore, service providers need to improve the quality of our services to
meet the diversified demand of customers.

packages for each customer groups: staff of organizations, worker in industrial parks,
students, etc.
5.3.2.3 Convenience in procedures
To enhance the loyalty of our customers, suppliers should improve enhance
the convenience in the process provides: extended form of payment (internet, ATM,
banking payment…); notification and sending bill on time; SIM Card replacement…
Contracting procedures need to simplify to attract more customers using postpaid
subscribers.
5.3.2.4 Value – add services
The needs of customers using the internet is increasing. The mobile phone
manufacturers have used high technology to enhance the features for mobile phones:
access to high speed internet, text editor, camera and video with high picture quality
next usual features of a mobile phone: listen, call and send messages, etc. So,
providers should often update the new added-value services to maintain subscribers
old and attract new subscribers.
Currently, there are many type of value – add services that have been provided
on the mobile communication service market by service providers. However, these
types of value – add services have similarities: speed of internet access, charges,
content of access, etc. So, service providers should make a difference and focus on
value-added services which they have an advantage.he
5.3.3 Switching barrier
The results of the factor analysis about customer loyalty showed that the
element switching costs have three factors directly impact loyal customer as customer
relationship, the attractiveness of other suppliers and loss cost.

18


5.3.3.1 Customer relationship
In the regression model, the factor was the most strong impact in customer

should use information technology to customers may be easy information for related
persons when these customers change phone number due to some reasons: lost old
phone number, to be broken SIM, change new phone number, etc.

19


Published project
Ngo Anh Cuong (2013), Factors affecting customer loyalty in mobile
communication service in Hanoi, Journal of Sience and Technology, ISSN 19593585, Hanoi University of Indusstry, No 16/06-2013, pages 83-87.

20