Literature review on service quality and customer satisfaction

Table of Contents
ABSTRACT..........................................................................................................................................1
ACKNOWLEDGEMENT.......................................................................................................................2
CHAPTER 1: INTRODUCTION.............................................................................................................3
1.1 The rationale of the research: ..............................................................................................3
1.2 Research objectives:...............................................................................................................4
1.3 The scope of the study:..........................................................................................................5
1.4 The methodology of the study:..............................................................................................5
1.5 Ethics in research:...................................................................................................................6
1.6 The structure of the thesis:....................................................................................................6
CHAPTER 2: LITERATURE REVIEW ON SERVICE QUALITY AND CUSTOMER SATISFACTION................7
2.1 Customer satisfaction: .....................................................................................................7
2.1.1 Definitions:.......................................................................................................................7
2.2 Concepts of service quality: .............................................................................................9
2.2.1 Definitions:.......................................................................................................................9
2.2.2 Theoretical models.........................................................................................................12
2.3 Prior studies on the relationship among service quality, customer satisfaction and
customer loyalty:........................................................................................................................23
2.4 Conclusion:......................................................................................................................28
CHAPTER 3: RESEACH METHODOLOGY...........................................................................................28
3.1 Research approach:..............................................................................................................28
3.2 Research method..................................................................................................................29
3.2.1 Quantitative research method......................................................................................29
3.2.2 Qualitative research method.........................................................................................29
3.3 Research design....................................................................................................................30
3.3.1 The procedure of the research:......................................................................................30
3.3.2 Preparing the questionnaire:.........................................................................................31
3.3.3 Official research model..................................................................................................31
3.3.4 Data collection...............................................................................................................32
CHAPTER 4: DATA ANALYSIS AND RESEARCH FINDINGS.................................................................33
4.1 Data analysis:........................................................................................................................33
4.1.1 Scale Test on each variable.....................................................................................33
4.1.2 Exploratory Factor Analysis...........................................................................................38
4.2 Research findings..................................................................................................................40
4.2.1 Confirmatory factor Analysis:........................................................................................40
4.2.2 Structural Equation Modelling (SEM)............................................................................41

4.2.3 Findings of the research: Regression Weights..............................................................43
CHAPTER 5: DISCUSSIONS AND RECOMMENDATIONS....................................................................46
5.1 Discussions:...........................................................................................................................46
5.2 Recommendations:...............................................................................................................47
APPENDIX........................................................................................................................................50
REFERENCES....................................................................................................................................56

ABSTRACT
The study is executed with the aim of finding out factors affecting
customer satisfaction with the E – commerce website Fado.vn in
Vietnam. The data is collected from 248 people. After the data
collection step, a process of four steps: Scale test, Exploratory
Factor Analysis (EFA), Confirmatory Factor Analysis (CFA) and
Structural Equation Modelling (SEM) is undertaken. The study’s
final result showed that all five independent variables including
Tangibility, Assurance, Empathy, Responsiveness and Reliability
have a positive correlation with Customer satisfaction.
1

ACKNOWLEDGEMENT
This research may probably marks an end to my four – year course
at Foreign Trade University. If things go right, I can receive a
Business Administration bachelor’s degree after submitting this
thesis.
I want to send my most sincere thank and highest gratitude to Dr.
Cao Dinh Kien - Vice Dean of Faculty of Business Administration,
Foreign Trade University, for providing me with plenty of
invaluable instructions to help me complete this graduation thesis
successfully. Other honorable mentions are made to Mrs. Nguyen
Thuy Anh in particular, and all the other lecturers of the Faculty of
Business Administration, Foreign Trade University in general for
supporting me a lot to finish this thesis.
Sincerely,
Le Nhat Duy
May, 2019
2

CHAPTER 1: INTRODUCTION
1.1 The rationale of the research:
The 21st century is definitely the century of Internet. In 2017, for
the very first time, more than half of the world’s population
(51.7%) have used the internet on their devices and by the end of
March 2019, it is estimated that more than 4.3 billion people all
around the world have had access to the internet. Internet’s
growth is inevitable due to plenty of different great benefits for
mankind, one of which is E-commerce.
E-commerce is the activity of buying or selling of products on
online services or over the Internet. Electronic commerce draws on
technologies such as mobile commerce, electronic funds
transfer, supply chain management, Internet marketing, online
transaction processing, electronic data
interchange (EDI), inventory management systems, and
automated data collection systems.
Modern electronic commerce typically uses the World Wide
Web for at least one part of the transaction's life cycle although it
may also use other technologies such as e-mail. Typical e-
commerce transactions include the purchase of online books (such
as Amazon) and music purchases (music download in the form
of digital distribution such as iTunes Store), and to a less extent,
customized/personalized online liquor
store inventory services. There are three areas of e-commerce:
online retailing, electric markets, and online auctions. E-commerce
is supported by electronic business.
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E-commerce businesses may also employ some or all of the
followings:
 Online shopping for retail sales direct to consumers via Web
sites and mobile apps, and conversational commerce via live
chat, chatbots, and voice assistants.
 Providing or participating in online marketplaces, which
process third-party business-to-consumer or consumer-to-
consumer sales
 Business-to-business buying and selling;
 Gathering and using demographic data through web contacts
and social media
 Business-to-business (B2B) electronic data interchange
 Marketing to prospective and established customers by e-
mail or fax (for example, with newsletters)
 Engaging in pretail for launching new products and services
 Online financial exchanges for currency exchanges or trading
purposes.
E-Commerce websites are websites through which consumers can
watch, gather information and make purchasing decisions. Ever
since the introduction of e-commerce in the 1990s thanks to the
World Wide Web (WWW), online trading has taken the world
by storm. During their business implementation, E-commerce
website owners realize that they have to cope
with many more issues than they originally thought they
would, which results in some awkward efforts to solve such
problems. Among the aforementioned issues, perhaps the most
serious one is the challenge of ensuring customer’s satisfaction
and developing customers’ trust of e-commerce services. In fact,
plenty of previous researches have showed that many e-retailers
4

struggle to keep customers loyal to their services, which results
from the fact that they have not thoroughly understood their
customers’ insight, including what they want, what they need and
what they are willing to pay.
Being aware of this challenge that many e-retailers, along with the
fact that I intend to open my own online business in the future, I
have decided to conduct the following study, whose name
is “Factors affecting customers satisfaction of E-commerce
websites”. This study will aim at collecting, analyzing, discussing
data and providing possible recommendations based on the
research’s result.
1.2 Research objectives:
This research is conducted with the aim of obtaining the following
objectives:
First, it systemizes the theoretical basis about customers’
satisfaction.
Secondly, it examines the factors effecting customers’ satisfaction
of e-commerce websites.
Thirdly, it provides some recommendations for individual or
institutional e-retailers to increase customers’ satisfaction, thus
helping to improve their overall business performance.
1.3 The scope of the study:
The study investigates factors’ effecting customer satisfaction with
E – commerce website: Fado.vn. The survey is conducted in Hanoi
from 15th May to 22nd May, 2019.
1.4 The methodology of the study:
Using deductive research approach, the research receives
scholars’ theoretical framework as a foundation and based on
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which, conceptual framework is formulated. All hypotheses that
forms conceptual framework are then tested to confirm causal
relationship between variables.
Causal relationship research is to be based on primary data to
analyze determinants contributing to or influenced customer’
satisfaction. The research utilized quantitative data analysis, in
which Cronbach’s Alpha will be deployed to analyze the reliability
of unidimensional scale, EFA to explore factors, CFA to confirm
factors and structural equation modelling (SEM) to clarify
relationship between latent variables and observed variables.
The software programs employed are IBM SPSS and IBM AMOS.
IBM SPSS provides Scale Test to understand internal consistency,
and Exploratory Factor Analysis to reduce dimensions and
comprehend patterns of factors. Likewise, IBM AMOS offers
Confirmatory Factor Analysis to test the Goodness of Fit of
measurement models and Structural Equation Modelling to
evaluate the fit of structural models, thereby providing conclusive
findings from regression weights.
1.5 Ethics in research:
This research completely uses transparent, unmodified and
unbiased raw data. Surveys are constructed confidentially with all
participants’ data being highly secured and not being leaked under
any circumstances without their permissions. In addition, the
survey’s data is also used ONLY in order to complete this study,
not for any other purposes.
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1.6 The structure of the thesis:
Chapter 1: Introduction, which introduces the rationale of the
research, the thesis’s objectives, research’s scope, a brief
overview of research methodology, and ethics in research.
Chapter 2: Literature review, which presents the concepts of
service quality, the definition of customer satisfaction, as well as
the relationship among the concepts of service quality, customer
satisfaction and customer loyalty.
Chapter 3: Research methodology, which shows the research
approach, research method and research design.
Chapter 4: Data analysis and research findings. Which interpret
different steps of the data analysis process, as well as the findings
of that process
Chapter 5: Recommendations, which summarizes all of my
recommendations to enhance customer satisfaction based on the
researching results.
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CHAPTER 2: LITERATURE REVIEW ON SERVICE
QUALITY AND CUSTOMER SATISFACTION
2.1 Customer satisfaction:
2.1.1 Definitions:
2.1.1.1 Customer satisfaction:
According to Oliver, (1980), customer satisfaction results from
experiencing a
service quality encounter and comparing that encounter with what
was expected.
Satisfaction can be conceived as an attitude, from an operational
definition point
of view, because it can be assessed as the combined level of
satisfaction with
various attributes of a product or a service (Churchill and
Surprenant, 1982).
According to Yi (1990), customer satisfaction can be viewed as an
attitude as
there is sufficient evidence supporting it. Meanwhile, according to
LaTour and
Peat (1979), satisfaction is a post-decision experience construct,
whereas
attitude is a pre-decision construct (Caruana, Money and Berthon,
2000).
Customer satisfaction can be defined as a response of consumer’s
fulfilment;
i.e., it is a judgment whether “a product or service feature, or
product or service
itself, provides a pleasurable level of consumption-related
fulfilment” (Oliver,
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1997; Zeithaml and Bitner, 2000). As customer satisfaction reflects
the degree of
a customer’s positive feeling about a service provider, it is
important for service
providers to understand customers’ perception of their services
because a high
level of customer satisfaction do have a positive effect on
customer loyalty
(Deng, Lu, Wei and Zhang, 2009).
According to Tung (2004), the SERVQUAL model provides a
theoretical basis for exploring the relationship between service
quality and customer satisfaction and expectations play a
significant role in customer satisfaction. Jones et al. (2003)
emphasized that, “when expectations are met or exceeded,
customers report 20 higher levels of satisfaction.” There are
numerous previous studies that had investigated the concept of
satisfaction on service setting (e.g. De Ruyter et. al., 1997; Fornell,
1992). Customer satisfaction can be assessed based on the
customer’s satisfaction attitude on various attributes of the
product or service
(Churchill & Surprenant, 1982). Customer satisfaction depends on
a variety of
factors, including perceived service quality, customers’ mood,
emotions, social
interactions, and other experience-specific subjective factors (Rust
and Oliver,
1994).
2.1.1.2 Customer loyalty:
Customer loyalty can be defined as the entirety of feelings or
attitudes that would
influence a customer to consider re-purchase. It is suggested in
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marketing
literature that customer loyalty can be defined in two distinct ways
(Jacoby and
Kyner, 1973). The first one defines loyalty as an attitude. Different
feelings
create an individual’s overall attachment to a product, service, or
organization
and these feelings define the individual’s (purely cognitive) degree
of loyalty
(Fournier, 1994). The second definition of loyalty is in terms of
behavioral.
Illustrations of loyalty behavior include keeping on obtaining
services from the
same supplier to increase the scale or scope of the relationships,
and the
act of recommendation (Yi, 1990). Customer loyalty is the
consequence of
customer satisfaction and satisfied customers may use mobile
phone services
more, and they may be more likely to continue their patronage
and endorse the
service to their friends and relatives (Zeithaml et al., 1996). Fornell
(1992) also
supported that higher customer loyalty depends mainly on higher
customer
satisfaction.
Customer loyalty has a powerful impact on firms’ performance and
is considered
an important source of competitive advantage by many companies
(Heskett,
Sasser, and Schlesinger, 1997; Rust, Zeithaml, and Lemon, 2001;
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Woodruff,
1997). The outcomes of superior customer loyalty in service firms
are increased
revenue, reduced customer acquisition costs, and lower costs of
serving repeat
purchasers; thus, lead to greater profitability (Reichheld 1993;
Reichheld and Sasser, 1990). Indeed, customer loyalty constitutes
an underlying objective for
strategic market planning (Kotler, 1997).
2.2 Concepts of service quality:
2.2.1 Definitions:
Service quality is probably one of the most discussed subjects in
the area of research and business. It is also an indispensable part
of our research due to its very close relationship with customer
satisfaction, which will be discussed and interpreted further later.
The service quality has been an emerging issue for many firms to
focus and major area of attention to gain a distinct advantage in
the market. Only few companies realize the importance of service
quality in the business and many are not. Recent research reveals
that about 20 – 25 % of customers deflect after experiencing just
one bad service quality. Quality service is the need of the hour and
there is no alternative or short – cut for it. Service quality concepts
have been developing since late 1970s, as a result of several
studies and practical approaches proposed many practitioners,
managers, and researchers owing to its significant impact on
business performance, customer satisfaction, loyalty, and most
importantly the profitability of the firms (Leonard and Sasser,
1982; Parasuraman et al., 1984; Cronin and Taylor, 1992; Teas,
1993; Griffin, 1995; Zeithaml and Bitner, 1996; Gitomer, 1998;
11

Lasser et el., 2000). An endless number of studies and other
activities about service quality and its core have led to the
establishment and evolution of a strong base for researches,
scholars and business leaders to make use of it even further.
Service quality (SQ), in its contemporary conceptualization, is a
comparison of perceived expectations (E) of a service with
perceived performance (P), giving rise to the equation SQ=P-
E. This conceptualization of service quality has its origins in the
expectancy-disconfirmation paradigm. Zeithaaml et al. (1988)
claims that Service quality can be defined as an overall judgment
of a customer towards difference between expectations of service
and perceived service.
From the viewpoint of business administration, service quality is
an achievement in customer service. It reflects at each service
encounter. Customers form service expectations from past
experiences, word of mouth and marketing communications.
According to Parasuraman, Berry and Zeithaml (1985, 1988) ,In
general, customers compare perceived service with expected
service, and which if the former falls short of the latter the
customers are disappointed.
The measurement of subjective aspects of customer service
depends on the conformity of the expected benefit with the
perceived result. This in turns depends upon the customer's
expectation in terms of service, they might receive and the service
provider's ability and talent to present this expected service.
Successful companies add benefits to their offering that not only
satisfy the customers but also surprise and delight them.
Delighting customers is a matter of exceeding their expectations.
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Historically, scholars have treated service quality as very difficult
to define and measure, due to the inherent intangible nature of
services, which are often experienced subjectively.
One of the earliest attempts to grapple with the service quality
concept came from the so-called Nordic School. In this approach,
service quality was seen as having two basic dimensions:
Technical quality: What the customer receives as a result of
interactions with the service firm (e.g. a meal in a restaurant, a
bed in a hotel)
Functional quality: How the customer receives the service; the
expressive nature of the service delivery (e.g. courtesy,
attentiveness, promptness)
The technical quality is relatively objective and therefore easy to
measure. However, difficulties arise when trying to evaluate
functional quality.[10]
A key terminology in Service quality is the dimensions of it. All in
all, there are five separated dimensions of service quality:
Tangibility, responsiveness, assurance, empathy, and
responsiveness. In order to come up with this system of 5
dimensions, numerous researchers have studied services of many
different categories: Long – distance telephone service, securities
brokerage, credit card companies, retail banking, and appliance
repair. Here we go further into details of each of the 5 dimensions
mentioned above:
Tangibility:
Since services are tangible, customers derive their perception of
service quality by comparing the tangible associated with these
services provided. It is the appearance of the physical facilities,
13

equipment, personnel and communication materials. In this
survey, on the questionnaire designed, the customers respond to
the questions about the physical layout and the facilities that FFR
offers to its customers.
Reliability:
It is the ability to perform the promised service dependably and
accurately. Reliability means that the company delivers on its
promises-promises about delivery, service provision, problem
resolutions and pricing. Customers want to do business with
companies that keep their promises, particularly their promises
about the service outcomes and core service attributes. All
companies need to be aware of customer expectation of reliability.
Firms that do not provide the core service that customers think
they are buying fail their customers in the most direct way.
Assurance:
It means to inspire trust and confidence. Assurance is defined as
employees’ knowledge of courtesy and the ability of the firm and
its employees to inspire trust and confidence. This dimension is
likely to be particularly important for the services that the
customers perceives as involving high rising and/or about which
they feel uncertain about the ability to evaluate. Trust and
confidence may be embodied in the person who links the customer
to the company, for example, the marketing department. Thus,
employees are aware of the importance to create trust and
confidence from the customers to gain competitive advantage and
for customers’ loyalty.
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Responsiveness:
It is the willingness to help customers and provide prompt service.
This dimension emphasizes attentiveness and promptness in
dealing with customer’s requests, questions, complaints and
problems. Responsiveness is communicated to customers by
length of time they must wait for assistance, answers to questions
or attention to problems. Responsiveness also captures the notion
of flexibility and ability to customize the service to customer
needs.
Empathy:
It means to provide caring individualized attention the firm provide
its customers. In some countries, it is essential to provide
individual attention to show to the customer that the company
does best to satisfy his needs. Empathy is an additional plus that
the trust and confidence of the customers and at the same time
increase the loyalty. In this competitive world, the customer’s
requirements are rising day after day and it is the companies’
duties to their maximum to meet the demands of customers, else
customers who do not receive individual attention will search
elsewhere.
2.2.2 Theoretical models
2.2.2.1 Servqual model:
Using qualitative and quantitative researches, Parasuraman et al.
(1985, 1988, 1994) had come up with the original 22 – item
SERVQUAL instrument, which still remains one of the most popular
research instruments used to capture consumer expectations and
perceptions of a service along the 5 dimensions that are believed
to represent service quality. The contention by the
developers of SERVQUAL that the instrument can be applied to
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determine the
service quality offering of any service firm has led to its extensive
adoption
(Dabholkar et al., 1996). The instrument has been widely applied
in a variety of contexts and cultural settings and found to be
relatively robust. It has become the dominant measurement scale
in the area of service quality. Despite the long-standing interest in
SERVQUAL and its myriad of context-specific applications, it has
attracted some criticism from researchers. The SERVQUAL model
focuses on the score difference between customer expectations of
service and their perceptions after using the service. At first,
Parasuraman et al. (1985) thought that there would be up to 10
determinants of service quality. Nevertheless, after many scale
purifications, the final model only consists of 5 dimensions of
service quality: tangibility, reliability, responsiveness, assurance,
and empathy
SERVQUAL’s questionnaire consists of matched pairs of items; 22
expectation items and 22 perceptions items, organized into five
dimensions which are believed to align with the consumer's
mental map of service quality dimensions. Both the expectations
component and the perceptions component of the questionnaire
consist a total of 22 items, comprising 4 items to capture
tangibles, 5 items to capture reliability, 4 items for
responsiveness, 4 items for assurance and 5 items to capture
empathy. This questionnaire is designed to be used in face – to –
face interviews and requires the sample size to be at least
moderate to large for statistical values to be reliable. The
questionnaire is comparatively long, which, along with sample size
requirements, result in a considerable cost in administration, data
collection and data analysis.
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Summary of SERVQUAL items
Dimension No. of Items in
Questionnaire Definition
Reliability 5
The ability to perform the
promised service dependably
and accurately
Assurance 4
The knowledge and courtesy of
employees and their ability to
convey trust and confidence
Tangibles 4
The appearance of physical
facilities, equipment, personnel
and communication materials
Empathy 5
The provision of caring,
individualized attention to
customer
Responsive
ness 4
The willingness to help
customers and to provide
prompt service
This model is the result of a five – year research. It was tested, pre
– tested and refined before being finalized and publicly introduced.
17

Its creators claim that it is a very reliable and valid instrument,
which has been partially proven through the fact that it is
popularly applied in service quality research for various industry
categories and several geographic regions. Customized versions of
this instruments have been found with different name, preferably
based on the service category and industry of its researches like
HEALTHQUAL (hospital context), ARTSQUAL (art museum), …
Examples of matched pairs of items in the SERVQUAL
questionnaire
Dimension Sample expectations
item
Sample perceptions
item
Reliability
When excellent car
companies promise to do
something by a certain
time, they do so
XYZ company provides
its services at the
promised time
Assurance
The behavior of
employees in excellent
banks will instill
confidence in customers
The behavior of
employees in the XYZ
bank instils confidence
in you.
Tangibles
Excellent mobile phone
companies will have
modern looking
equipment
XYZ company has
modern looking
equipment
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Empathy
Ideal banks will have
operating hours
convenient to customers
XYZ bank has
convenient operating
hours
Responsive
ness
Friendly employees will
never be too busy to help
a customer
XYZ employees are
never too busy to help
you
The model of service quality is built based on the expectancy-
confirmation paradigm, which says that service quality (SQ) is
measured based on the gap between customers’ expectation (E)
and the perceptions of customers about how well their given
services are (P). We conceptualize service quality based on that
paradigm as the following formula:
SQ = P-E
In which:
SQ is service quality
P is the individual's perceptions of given service delivery
E is the individual's expectations of a given service delivery
If customers’ expectation of a given service delivery surpasses
their perceptions of those delivery, service quality is considered
low. If perceptions exceed expectation, service quality is
considered high. Via this model of service, we can identify 5 gaps
that cause customers to experience poor service quality ( the
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knowledge gap, the standards gap, the delivery gap, the
communications gap, and the gap between a customer's
perception of the experience and the customer's expectation of
the service). Among 5 gaps above, the last one is the only one to
be capable of being directly measured. Gaps 1-4 can’t be
measured, but they do have diagnostic value.
Summary of Gaps with Diagnostic Indications
Gap Brief description Probable
Causes
Gap 1
The
Knowledge
Gap
Difference
between the
target market's
expected service
and
management's
perceptions of the
target market's
expected service
 Insufficient
marketing
research
 Inadequate
upward
communications
 Too many
layers of
management
Gap 2
The
standards
Gap
Difference
between
management's
perceptions of
customer
expectations and
the translation
into service
 Lack of
management
commitment to
service quality
 Employee
perceptions of
infeasibility
 Inadequate
20

procedures and
specifications
goal setting
 Inadequate
task
standardization
Gap 3
The Delivery
Gap
Difference
between service
quality
specifications and
the service
actually delivered
 Technical
breakdowns or
malfunctions
 Role conflict/
ambiguity
 Lack of
perceived
control
 Poor employee-
job fit
 Poor
technology- fit
 Poor
supervision or
training
Gap 4
The
Communicati
ons Gap
Difference
between service
delivery intentions
and what is
communicated to
the customer
 Lack of
horizontal
communications
 Poor
communication
with advertising
agency
 Inadequate
communications
between sales
21

and operations
 Differences in
policies and
procedures
across branches
or divisions of
an entity
 Propensity to
overpromise
Despite being popularly recognized and frequently used in plenty
of different industries and cross – cultural contexts, this approach
still has a LOT of criticisms. Francis Buttle published one of the
most remarkable set of criticisms of this model and the associated
SERVQUAL instrument in 1996, some of which include:
Face validity: The model of service quality has its roots in the
expectancy-disconfirmation paradigm that informs customer
satisfaction. Plenty of researchers have argued that the research
instrument actually captures satisfaction rather than service
quality. Other researchers have questioned the validity of
conceptualizing service quality as a gap.
Construct validity: The model's developers tested and retested the
SERVQUAL scale for reliability and validity. Nevertheless, at the
same time, the model's developers recommended that applied use
of the instrument should modify or adapt them for specific
contexts. Any effort to adapt or modify the scale will have
implications for the validity of items with implications for the
validity of the dimensions of reliability, assurance, tangibles,
empathy and responsiveness.
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Ambiguity of expectations construct: SERVQUAL is created to be
administered after respondents have experienced a service. Thus,
they are asked to recall their pre-experience expectations.
However, recall is not always precise, raising concerns about
whether the research design accurately captures true pre-
consumption expectations. Furthermore, studies show that
expectations change over time. Consumers are continually
modifying their expectations as they gain experience with a
product category or brand. In light of these insights, concerns
have been raised about whether the act of experiencing the
service might color respondents' expectations.
Operational definition of the expectations construct: The way that
expectations has been operationalized also represents a concern
for theorists investigating the validity of the gaps model. The
literature identifies different types of expectations. Of these, there
is an argument that only predict expectations are true
expectations. Yet, the SERVQUAL instrument appears to elicit ideal
expectations. Note the wording in the questionnaire in the
preceding figure which grounds respondents in their expectations
of what excellent companies will do. Subtle use of words can elicit
different categories of expectations. Capturing true expectations is
important because it has implications for service quality scores.
When researchers elicit ideal expectations, overall service quality
scores are likely to be lower, making it much more difficult for
marketers to deliver on those expectations.
Questionnaire length: The matched pairs design of the
questionnaire (total of 22 expectation items plus 22 perception
23

items= 44 total items) makes for a very long questionnaire. If
researchers add demographic and other behavioral items such as
earlier experience with product or category and the standard
battery of demographics including: age, gender, occupation,
educational attainment etc. then the average questionnaire will
have around 60 items. In practical terms, this means that the
questionnaire would take more than one hour per respondent to
administer in a face-to-face interview. Long – lasting
questionnaires are known to induce respondent fatigue which may
have potential impacts on data reliability. In addition, lengthy
questionnaires add to the time and cost involved in data collection
and data analysis. Coding, collation and interpretation of data are
all very time consuming and in case questionnaires are too long
administered across large samples, the findings cannot be used to
address urgent quality-related problems. In some cases, it may be
necessary to carry out 'quick and dirty' research while waiting for
the findings of studies with superior research design.
Administration of the questionnaire: Some analysts have pointed
out that the SERVPERF instrument, developed by Cronin and
Taylor, and which reduced the number of questionnaire items by
half (22 perceptions items only), achieves results that correlate
well with SERVQUAL, with no reduction in diagnostic power,
improved data accuracy through reductions in respondent
boredom and suffering and savings in the form of reduced
administration costs.
Dimensional instability: A number of studies have reported that
the five dimensions of service quality implicit in the model
(reliability, assurance, tangibles, empathy and responsiveness) do
24

not hold up when the research is replicated in different countries,
different industries, in different market segments or even at
different time periods. Some studies report that the SERVQUAL
items do not always load onto the same factors. In some empirical
research, the items load onto fewer dimensions, while other
studies report that the items load onto more than five dimensions
of quality. In statistical terms, the robustness of the factor loadings
is known as a model's dimensional stability. Across a wide variety
of empirical studies, the factors implicit in the SERVQUAL
instrument have been shown to be unstable. Problems associated
with the stability of the factor loadings may be attributed, at least
in part, to the requirement that each new SERVQUAL investigation
needed to make context-sensitive modifications to the instrument
in order to accommodate the unique aspects of the focal service
setting or problem. However, it has also been hypothesized that
the dimensions of service quality represented by the SERVQUAL
research instrument fail to capture the true dimensionality of the
service quality construct and that there may not be a universal set
of service quality dimensions that are relevant across all service
industries.
In spite of these criticisms, the SERVQUAL instrument, or any one
of its variants (i.e. modified forms), dominates current research
into service quality. In a review of more than 40 articles that made
use of SERVQUAL, a team of researchers found that “few
researchers concern themselves with the validation of the
measuring tool”. SERVQUAL is not only the subject of academic
papers, but it is also widely used by industry practitioners.
25

2.2.2.2 Servperf model:
Servperf was created on the basis of SERVQUAL model. According
to SERVPERF’s creators, Parasuraman’s study of the relationship
between experienced and expected quality is not the right way to
assess service’s quality.
Parasuraman, Zeithaml and Berry in 1988 proposed SERVQUAL
model which described five gaps between those two visions of
quality. By eliminating those gaps, the organization improves
service quality. However, this approach obviously is inconsistent
with some study results that customers’ expectation should be
based on experiences. In addition, what’s more, higher level of
perceived service quality only results from a cause of increased
consumer satisfaction, which means that SQ and P are not totally
independent.
Being a modified version of SERVQUAL, SERVPERF shares the
exact same categories to assess service quality (RATER model –
Tangibles, Reliability, Responsiveness, Assurance, Empathy). Each
category has statements that are assessed on 7-step Likert scale.
The SERVQUAL has 44 statements whereas SERVPERF has 22
statements as mentioned below:
1. Has up-to-date equipment
2. Physical facilities are visually appealing
3. Employees are well dressed and appear neat.
4. l dressed and appear neat
5. The appearance of physical facilities is in keeping with the
type of service provided
6. When company promises to do something by certain time, it
does so
7. When you have problems, company is sympathetic and
reassuring
26

8. Is dependable
9. Provides its services at the time it promises to do so
10. Keeps its records accurately
11. Does not tell its customers exactly when the services will be
performed
12. You do not receive prompt service from company employees
13. Employees are not always willing to help customers
14. Employees are too busy to respond to customer requests
promptly
15. You can trust employees
16. You can feel safe in your transactions with company
employees
17. Employees are polite
18. Employees get adequate support to do their jobs well
19. Company does not give you individual attention
20. Employees do not give you personal attention
21. Employees do not know what your needs are
22. Company does not have your best interests at heart
23. Company does not have operating hours convenient to all
their customers
2.2.2.3 Gronroos model:
According to Gronroos (1984), usually, a service firm cannot hide
behind brand names or distributors. In most cases, the consumers
will be able to see the firm and its resources during buyer – seller
interaction. As a result, corporate image, or sometimes local
image of an office or another organizational unit, is of utmost
importance to most service firms. The expectations of the
consumers are highly influenced by their view of the company, i.e,
by the image.
27

The corporate image is the final result of how the consumers
perceive the firm. The most important part of a firm, which its
customers see and perceive, is its services. Therefore, the
corporate image can be expected to be built up mainly by the
technical quality and the functional quality of its services. Of
course, there are other factors, which also may influence the
image, but they are normally less important. One may choose
between two types of such factors: external factors (tradition,
ideology and word – of – mouth), and on the other hand, traditional
marketing activities, such as advertising, pricing public relations.
When a service firm wants to inform a new target market about its
image, traditional marketing activities like image advertising can
be the most effective means of doing so. Moreover, if customers in
an existing market, for some reason or another, have an image of
the firm which does not correspond with reality, traditional
28

marketing activities can again be expected to be an effective way
of communicating the real image to the market.
2.3 Prior studies on the relationship among service
quality, customer satisfaction and customer loyalty:
There are some empirical studies, which have shown that service
quality is related to customer satisfaction (Cronin and Taylor,
1992; Levesque and McDougall, 1996; Taylor and Baker, 1994;
Zeithaml et al., 1996; McDougall and Levesque, 2000). Some other
studies suggested that service quality positively affects customer
satisfaction (Kim et al., 2004; Kuo et al, 2009; Tung, 2004; Turel
and Serenko, 2007).
Figure 2.1: Model for Service Quality and Perceived
Value on Satisfaction,
Intention and Usage of Short Message Service (SMS)
(Tung, 2004)
In addition, Brady and Robertson (2001) had confirmed the
antecedent role of service quality with respect to customer
29

satisfaction in their research. Since customer satisfaction has been
considered to be based on the customer’s experience on a
particular service encounter, (Cronin & Taylor, 1992) it is in line
with the fact that service quality is a determinant of customer
satisfaction, because service quality comes from outcome of the
services from service providers in organizations. Another author
stated in his theory that “definitions of consumer satisfaction
relate to a specific transaction (the difference between predicted
service and perceived service) in contrast with ‘attitudes’, which
are more enduring and less situational-oriented,” (Lewis, 1993, p.
4-12) This is in line with the idea of Zeithaml et al (2006, p. 106-
107). Regarding the relationship between customer satisfaction
and service quality, Oliver (1993) first suggested that service
quality would be antecedent to customer satisfaction regardless of
whether these constructs were cumulative or transaction-specific.
Some researchers have found empirical supports for the view of
the point mentioned above (Anderson Sullivan, 1993; Fornell et al
1996; Spreng & Macky 1996); where customer satisfaction came
as a result of service quality. In relating customer satisfaction and
service quality, researchers have been more precise about the
meaning and measurements of satisfaction and service quality.
Satisfaction and service quality have certain things in common,
but satisfaction generally is a broader concept, whereas service
quality focuses specifically on dimensions of service. (Wilson et al.,
2008, p. 78). Although it is stated that other factors such as price
and product quality can affect customer satisfaction, perceived
service quality is a component of customer satisfaction (Zeithaml
et al. 2006, p. 106-107). This theory complies with the idea of
Wilson et al. (2008) and has been confirmed by the definition of
customer satisfaction presented by other researchers.
30

It has been proven from past researches on service quality and
customer satisfaction that Customer satisfaction and service
quality are related from their definitions to their relationships with
other aspects in business. Some authors have agreed to the fact
that service quality determines customer satisfaction.
Parasuraman et al., (1985) in their study, proposed that when
perceived service quality is high, then it will lead to increase in
customer satisfaction. Some other authors did comprehend with
the idea brought up by Parasuraman (1995) and they
acknowledged that “Customer satisfaction is based upon the level
of service quality that is provided by the service providers”
(Saravana & Rao, 2007, p. 436, Lee et al., 2000, p. 226). Looking
into (figure 1), relating it to these authors’ views, it is evident that
definition of customer satisfaction involves predicted and
perceived service; since service quality acted as one of the factors
that influence satisfaction. More evidence of this relationship has
been proven by past researches. As a result of the definition of
customer satisfaction presented by Lewis, (1993, p. 4- 12),
Sivadas & Baker-Prewitt (2000, p. 73-82) used a national random
telephone survey of 542 shoppers to examine the relationship
between service quality, customer satisfaction, and store loyalty
within the retail department store context. One of the results was
that service quality influences relative attitude and satisfaction
with department stores. They found out that there is a relationship
between customer satisfaction and service quality. In line with the
findings of Sivadas & Baker-Prewitt (2000, p. 73-82), Su et al.,
(2002, p. 372) in their study of customer satisfaction and service
quality, found out that; these two variables are related, confirming
the definitions of both variables which have always been linked.
They also dictated that service quality is more abstract because it
may be affected by perceptions of value or by the experiences of
31

others that may not be so good, than customer satisfaction which
reflects the customer’s feelings about many encounters and
experiences with service firm. (Su et al., 2002, p. 372).
In addition to the relationship above, it is very important to
understand the relationship that exists between the concepts of
customer satisfaction and customer loyalty. These two concepts
have an important part to play in the success of any business. The
concept of customer satisfaction is a vital aspect that must be
taken into consideration when a company is trying to increase
customer loyalty and better performance of the business.
According to Dick and Basu (1994), the role of customer
satisfaction in loyalty largely indicates that satisfaction is a key
determinant of loyalty. Therefore, there is a link between customer
satisfaction and customer loyalty. Both concepts must be
incorporated together to achieve the desired goals of the company
which are market share and profitability. Satisfaction is a good
indicator of commitment and repeated buying behavior (Woodcock
et al. 2003, 11-20). Customer satisfaction represents the feelings
of a customer when a product or service meets the customer’s
expectation. When the attributes of product or service out plays
the expectations of a 14 customer, the customer is left really
satisfied but if not, then the customer is left dissatisfied.
Dissatisfied customers may discourage others from trying the
products or services of that company. Negative word-of-mouth by
a dissatisfied customer of a products or services of a company has
the most damaging effect to the image of that company. Chen and
Wang (2009) indicated that, satisfied customers are more likely to
repurchase, lower their price sensitivity, engage in positive
wordof-mouth, recommendation and become loyal customers .
Customer satisfaction gives an understanding on how much the
32

product or service meets the expectations of the customer while
loyalty is influenced by product or service quality and other
factors.
Figure 2.1: Relationship between customer satisfaction
and customer loyalty
The figure above is a representation of the relationship that exist
between customer satisfaction and loyalty. Heskett et al.,
(2011,71) puts customers into three zones; zone of defection, zone
of indifference and zone of affection. This figure shows the level of
customer loyalty based on their satisfaction from a product or
service. Heskett et al. (2011) term the extremely dissatisfied
customers as 15 “terrorist”. It is without doubt that a dissatisfied
customer will never say anything positive about the product or
service of that company. It is more likely that these customers can
discourage others from trying the products or services of the said
company. The very satisfied customers are termed “apostle”. They
33

are the ones that were or are impress with the service quality of
the company and will be more willing to come back thereby
making them loyal. These are the kind of customers that will put in
a god word for the company to others in their community thereby
encouraging many to try out the services or products of the
company. Loyal customers are more satisfaction driven, thus
companies must make sure their customers are highly satisfied
(Heskett et al. 2011,75)
2.4 Conclusion:
This literature review has identified factors affecting service
quality, customer loyalty and customer satisfaction, as well as
analyzing the relationship among constructs that were clarified
from earlier studies.
34

CHAPTER 3: RESEACH METHODOLOGY
3.1 Research approach:
There are 2 primary possible research approach choices:
deductive and inductive. Deductive approach, known as top –
down approach, is the process of using available theoretical
knowledge or premises to create hypothesis, which is later tested
using observations and data collection methods. Meanwhile,
inductive approach is the bottom – up approach that is based on
observations, researchers create pattern and then tentative
hypothesizes before concluding with a theory.
Each aforementioned approach has its own pros and cons, which
substantially effects my research approach choice. Deductive
reasoning is based on some inevitable fact or reliable researches,
which means that its conclusion is also guaranteed to be correct.
Meanwhile, with inductive reasoning, the information base is just a
theory but not a fact, though it is a strongly supported theory. This
leads to some risk of the final conclusion being wrong. As a result,
deductive reasoning is generally considered less risky.
Deductive also often requires a more diverse and abundant source
of database to be executed since it relies a lot on prior researches
35

to find a theory to be based on. Meanwhile, inductive approach
requires more time to be completed.
The topic I discuss in this thesis has already had a considerable
number of theoretical frameworks to be based on earlier. In
addition, for the sake of saving time and remaining safe, I have
decided that the deductive approach is more the optimal choice
and therefore chosen to be applied analyzing the concept of
customer satisfaction and its variables.
3.2 Research method
3.2.1 Quantitative research method
According to Given, Lisa M. (2008), quantitative research is the
systematic empirical investigation of observable phenomena via
statistical, mathematical, or computational techniques. Its goal is
to develop & employ mathematical models, theories, and
hypotheses pertaining to phenomena. A very popular
misunderstanding of quantitative research is that its data can only
be numbers; However, quantitative research can still use non –
numerical data that is converted into numerical values via
summated scale with Likert being a popular instrument (Dinh, Vo
& Tran, 2018).
Quantitative methods can be used to verify which of such
hypotheses are true. A comprehensive analysis of 1274 articles
published in the top two American sociology journals between
1935 and 2005 found that roughly two thirds of these articles used
quantitative method.
3.2.2 Qualitative research method
According to Babbie, Earl (2014), qualitative research method was
a scientific method of observation to gather non – numerical
data. This type of research "refers to the meanings, concepts
definitions, characteristics, metaphors, symbols, and description of
36

things" and not to their "counts or measures." This research
answers why and how a certain phenomenon may occur rather
than how often Berg, Bruce Lawrence; Lune, Howard
(2012). Qualitative methods are best for researching many of
the why and how questions (Given, L. M., ed, 2008).
We can say that the core difference between quantitative and
qualitative research methods is the form of data. Whereas
Quantitative research mainly uses measureable and numerical
data, qualitative tends to uncover mysteries using thoughts and
opinions. This core difference leads to some other substantial
differences between the two research methods as well:
quantitative data methods are much more well – structured than
qualitative data methods do; Quantitative method can be done
much quicker & cheaper, whereas qualitative method is good for
exploratory purposes due to the information potential that is
impossible with only quantitative data.
Owing to the time limitation, tight budget for conducting research
and demand for a well – structured research, I have decided to
choose quantitative method as the primary method for my
research.
3.3 Research design
3.3.1 The procedure of the research:
The following research is conducted based on primary data to
analyze items contributing to or affected by customer satisfaction.
Such factors include Tangibility, Reliability, Responsiveness,
Assurance, Empathy, Customer loyalty. The following research
procedure consists of six steps, starting with questionnaire
design:
37

Figure 3.1: Research procedure
Source: Author’s summary
This research uses quantitative data analysis provided by IBM
SPSS and IBM AMOS, in which Scale Test (Cronbach’s Alpha) is
used to analyst the unidimensional scale’s reliability. EFA
(Explanatory factor analysis) is used to explore factors. CFA is
used to confirm factors whereas SEM (structural equation
modelling) is used to express the relationship between latent
variables & observed variables. CFA and SEM will be further
analyzed in Chapter 4.
3.3.2 Preparing the questionnaire:
Questionnaires are constructed based on the discussion of
dimensions in previous researches. My questionnaire, which is
showed in the appendix, is using the interval scale of Likert from 1
to 5.
The Likert scale is a usual method used in social science research,
and is of great value in the aspect of measuring attitudes (Dinh,
Vo & Tran, 2018). It does offer features beneficial to the research
as a traditional Likert scale, namely declarative statement (instead
of questions), ordered continuum of response categories (from two
38
Hypothesis
preparation
Questionnaire
developed Official Model Data Collection
SEM CFA EFA Scale Test

polarized level of agreement), a balanced number of positive and
negative responses, and numerical value associated to each
category (facilitating quantitative data analysis purpose),
according to Losby and Wetmore (2012).
3.3.3 Official research model
Figure 3.2: Official research model
3.3.4 Data collection
The use of convenience sampling (non-probability sampling) is
used since sample is collected by conveniently passing surveys
to online shoppers curently living in Hanoi. Moreover, as the size of
the population is scarcely known, the non-probability sampling has
to be used.
All the data serving this research is collected through an online
questionnaire survey created using Google form. The
questionnaire is later distributed online via a social network
platform and offline throught direct interviews. Finally, after 1
39
RESPONSIVE-
NESS
TANGIBILITY
RELIABILITY
ASSURANCE
EMPATHY
CUSTOMER
SATISFACTION
CUSTOMER
LOYALTY

week, both the online and offline survey results are collected and
analyzed.
Hardly is there any research that emphasizes on how the size of a
sampling is calculated using non-probability sampling.
Nevertheless, Kettinger and Lee (1995) told the difference
between two circumstances when performing Chi – square/df test
on structural equation model, which is that if x2/df<5 (sampling
size >200), or x2/df<3 (sampling size <200), the model is
accepted. The collected sample here has N=248, which meets the
requirement of N>200.
40

CHAPTER 4: DATA ANALYSIS AND RESEARCH
FINDINGS
4.1 Data analysis:
4.1.1 Scale Test on each variable
4.1.1.1 Scale test on Tangibility:
Table 4.1: Reliability statistics from Tangibility’s item
Reliability
Statistics
Cronbac
h's
Alpha
N of
Ite
ms
.909 4
Source: IBM SPSS output
Table 4.2: Tangibility’s Item – Total statistics
Item-Total Statistics
Scale
Mean
if
Item
Delet
ed
Scale
Varian
ce if
Item
Delete
d
Correct
ed Item-
Total
Correlat
ion
Cronba
ch's
Alpha if
Item
Deleted
TAN
1 10.61 5.613 .834 .868
TAN
2 10.56 5.943 .786 .886
TAN
3 10.38 6.122 .834 .871
TAN
4 10.73 5.932 .735 .905
41

Source: IBM SPSS output
Cronbach’s Alpha scale reliability statistics is 0.909 (greater than
0.8) and Corrected Item-Total Correlation of each item is greater
than 0.3 at the same time, suggesting these items be accepted
(Nunally, 1978; Peterson, 1994). The statistics of 0.909 is in the
interval of (0.8; 0.95), indicating great internal consistency (Dinh &
To, 2017). The items of TAN1, TAN2, TAN3, TAN4 and TAN5 will be
taken to EFA phase.
4.1.1.2 Scale Test on Reliability
Table 4.3: Reliability statistics from Reliability’s items
Reliability
Statistics
Cronbac
h's
Alpha
N of
Ite
ms
.885 5
Source: IBM SPSS output
Table 4.4: Reliability’s Item – Total statistics
Item-Total Statistics
Scale
Mean
if
Item
Delet
ed
Scale
Varian
ce if
Item
Delete
d
Correct
ed Item-
Total
Correlat
ion
Cronba
ch's
Alpha if
Item
Deleted
42

RELI
1 11.29 11.58
0 .707 .865
RELI
2 10.67 11.71
0 .694 .867
RELI
3 11.40 11.46
6 .701 .866
RELI
4 11.17 10.95
2 .759 .852
RELI
5 11.15 10.96
2 .757 .853
Source: IBM SPSS output
Cronbach’s Alpha scale reliability statistics is 0.885 (greater than
0.8) and Corrected Item-Total Correlation of each item is greater
than 0.3 at the same time, suggesting these items be accepted
(Nunally, 1978; Peterson, 1994). The statistics of 0.885 is in the
interval of (0.8; 0.95), indicating great internal consistency (Dinh &
To, 2017). The items of RELI1, RELI2, RELI3, RELI4, RELI5 will be
taken to EFA phase.
4.1.1.3 Scale Test on Responsiveness
Table 4.5: Reliability statistics from Responsiveness’s
items
Reliability
Statistics
Cronbac
h's
Alpha
N of
Ite
ms
.908 4
43

Source: IBM SPSS output
Table 4.6: Responsiveness’s Item-Total Statistics
Item-Total Statistics
Scale
Mean
if
Item
Delet
ed
Scale
Varian
ce if
Item
Delete
d
Correct
ed Item-
Total
Correlat
ion
Cronba
ch's
Alpha if
Item
Deleted
RESP
1 6.73 5.584 .791 .882
RESP
2 6.68 5.170 .792 .881
RESP
3 6.69 5.469 .784 .884
RESP
4 6.62 5.141 .806 .876
Source: IBM SPSS output
Cronbach’s Alpha scale reliability statistics is 0.908 (greater than
0.8) and Corrected Item-Total Correlation of each item is greater
than 0.3 at the same time, suggesting these items be accepted
(Nunally, 1978; Peterson, 1994). The statistics of 0.908 is in the
interval of (0.8; 0.95), indicating great internal consistency (Dinh &
To, 2017). The items of RESP1, RESP2, RESP4, and RESP4 will be
taken to EFA phase.
4.1.1.4 Scale Test on Assurance
Table 4.7: Reliability statistics from Assurance’s items
44

Reliability
Statistics
Cronbac
h's
Alpha
N of
Ite
ms
.903 4
Source: IBM SPSS output
Table 4.8: Assurance’s Item-Total Statistics
Item-Total Statistics
Scale
Mean
if
Item
Delet
ed
Scale
Varian
ce if
Item
Delete
d
Correct
ed Item-
Total
Correlat
ion
Cronba
ch's
Alpha if
Item
Deleted
ASSU
1
11.2
5 4.523 .800 .869
ASSU
2
11.2
6 4.474 .805 .867
ASSU
3
11.3
7 4.687 .693 .908
ASSU
4
11.3
5 4.330 .839 .855
Source: IBM SPSS output
Cronbach’s Alpha scale reliability statistics is 0.903 (greater than
0.8) and Corrected Item-Total Correlation of each item is greater
than 0.3 at the same time, suggesting these items be accepted
45

(Nunally, 1978; Peterson, 1994). The statistics of 0.903 is in the
interval of (0.8; 0.95), indicating good internal consistency (Dinh &
To, 2017). The items of ASSU1, ASSU2, ASSU3, and ASSU4 will be
taken to EFA phase.
4.1.1.5 Scale Test on Empathy
Table 4.9: Reliability statistics from Empathy’s items
Reliability
Statistics
Cronbac
h's
Alpha
N of
Ite
ms
.923 5
Source: IBM SPSS output
Table 4.10: Empathy’s Item-Total Statistics
Item-Total Statistics
Scale
Mean
if
Item
Delet
ed
Scale
Varian
ce if
Item
Delete
d
Correct
ed Item-
Total
Correlat
ion
Cronba
ch's
Alpha if
Item
Deleted
EMPA
1 15.85 7.221 .794 .906
EMPA
2 15.89 7.144 .818 .902
EMPA
3 15.90 7.200 .768 .912
46

EMPA
4 15.83 7.220 .794 .906
EMPA
5 15.87 7.138 .823 .901
Source: IBM SPSS output
Cronbach’s Alpha scale reliability statistics is 0.923 (greater than
0.8) and Corrected Item-Total Correlation of each item is greater
than 0.3 at the same time, suggesting these items be accepted
(Nunally, 1978; Peterson, 1994). The statistics of 0.923 is in the
interval of (0.8; 0.95), indicating good internal consistency (Dinh &
To, 2017). The items of EMPA1, EMPA2, EMPA3, EMPA4 and EMPA5
will be taken to EFA phase.
4.1.2 Exploratory Factor Analysis
4.1.2.1 KMO & Barlett’s Test:
Table 4.11: KMO and Bartlett’s Test
KMO and Bartlett's
Test
Kaiser-Meyer-
Olkin Measure
of Sampling
Adequacy.
.905
Bartlett
's Test
of
Spheric
ity
Appro
x.
Chi-
Squar
e
7211.
285
df 465
Sig. 0.000
47

Source: IBM SPSS output
KMO measure of sampling adequacy is 0.905, conforming to the
prerequisite to do EFA stated by Hair et al. (2006) that when 0.5 <
KMO < 1, a sample is adequate to proceed with Factor Analysis.
Hair et al. (2006) further required that the Significance of Bartlett’s
Test of sphericity is equal or less than 0.05 so as to accept
alternative hypothesis H1: There may be statistically significant
interrelationship between variables. The significance of KMO of
0.000 satisfied that condition.
4.1.2.2 Communalities:
The communalities table is mentioned in the Appendix part. As
Dinh and To (2017) stated, to further research with EFA, Extraction
of Communalities must be greater than 0.2. The first-run
Communalities extractions, using Principal Axis Factoring, in the
table meet this requirement, the lowest value of extraction being
0.414, belonging to item CUSAT5.
4.1.2.3 Explained total variance:
The explained total variance table is mentioned later in the
appendix part. There are seven factors extracted, having Total or
Eigenvalue greater than 1 with cumulative percentage of variance
of 66.790 %, greater than 50%, satisfying the requirements stated
by Gerbing and Anderson (1988). These 7 factors extracted
explain 66.790% of the variability in variables.
4.1.2.4 Factor loading:
Table 4.12: Factor loading based on the size of a sample.
Sample
size
Factor
loading
N>350 >0.3
48

100<N<
350 >0.55
N<100 >0.75
Source: Gerbing and Anderson (1998)
Gerbing and Anderson (1988) stated that when items are formed,
they must have relevant factor loading as shown above. The
sample size of the research is 248, and therefore requires factor
loading of 0.55.
4.1.2.5 Pattern Matrix:
The pattern matrix table is mentioned in the appendix. Using
factor loading of 0.55 as explained above, Pattern Matrix has
extracted 7 dimensions uncorrelated with and independent of one
another. They will undergo further tests in confirmatory factor
analysis and whether they influence customer satisfaction will be
scrutinized in structural equation model.
49

4.2 Research findings
4.2.1 Confirmatory factor Analysis:
Figure 4.1: Measurement model in Confirmatory Factor
Analysis
In Confirmatory Factor Analysis, all items are chosen as all their
loading factors are greater than 0.55
4.2.1.2 Evaluation of Model Fit (Appendix)
50

4.2.2 Structural Equation Modelling (SEM)
Figure 4.2: Structural model
Sources: IBM AMOS output
51

Table 4.13: Evaluation of model Fit
Fit index Source
d by
Recommen
ded cut-off
Structu
ral
Model
Indices
Parsimonio
us Fit
Minimum
discrepancy
divided by
degrees of
freedom (Chi-
square/df)
Bentler
&
Bonnett
(1980);
Schuma
ker &
Lomax
(2004)
Chi-square/
df ≤ 3:
great
1.617
Chi-square/
df ≤ 5:
acceptable
Incremental
Fit Indices
Normed Fit
Index (NFI)
Pituch &
Stevens
(2016)
NFI ≥ 0.9 0.909
Incremental
Fit Indices
(IFI)
Pituch &
Stevens
(2016)
IFI ≥ 0.9 0.963
Non-normed
Fit Indexes
(NNFI)/
Tucker-Lewis
Index (TLI)
Garver
&
Mentzer NNFI/TLI ≥
0.9 0.959(1999);
Hair et
al.
(2006)
Comparative Bentler CFI ≥ 0.9 0.963
52

Fit Indexes
(CFI)
& Bonett
(1980);
Hooper
et al.
(2008);
Hu &
Bentler
(1995)
Absolute Fit
Indices
Goodness-of-
Fit Index
(GFI)
Pituch &
Stevens
(2016)
GFI ≥ 0.9 0.894
Standardized
Root Mean-
Square
Residual
(SRMR)
Pituch &
Stevens
(2016);
Singh
(2017)
SRMR= 0:
perfect fit
SRMR<0.05:
good fit 0.0395
SRMR<
0.08:
acceptable
Root Mean-
Square Error
of
Approximatio
n (RMSEA)
Hair et
al.
(2006);
Schuma
ker &
Lomax
(2004)
RMSEA<
0.05: close
fit
0.042
RMSEA<
0.08:
adequate fit
4.2.3 Findings of the research: Regression Weights
Table 4.18: Unstandardized regression coefficient
53

Estim
a-te
S.
E.
C.
R. P
Hypo
t-
hesis
CUSSAT
IS
<-
-- EMPATHY 0.188 0.07
3
2.56
3 0.01 H1
CUSSAT
IS
<-
-- RELIABILITY 0.152 0.04
9
3.09
1 0.002 H2
CUSSAT
IS
<-
-- TANGIBILITY 0.373 0.05
8
6.46
2 *** H3
CUSSAT
IS
<-
--
RESPONSIVEN
ESS 0.166 0.05
2
3.18
1 0.001 H4
CUSSAT
IS
<-
-- ASSURANCE 0.145 0.06
9
2.09
8 0.036 H5
CUSLOY <-
-- CUSSATIS 0.299 0.04
4
6.75
2 *** H6
Source: IBM AMOS’ output and compilatpion
Table 4.19: Ranks in the level of influence
Estima
te
Percenta
ge
Rankin
g
CUSSATIS <
- EMPATHY 0.188 18.4% 2
CUSSATIS <
- RELIABILITY 0.152 14.8% 4
CUSSATIS <
- TANGIBILITY 0.373 36.4% 1
CUSSATIS <
- RESPONSIVENESS 0.166 16.2% 3
CUSSATIS <
- ASSURANCE 0.145 14.2% 5
TOTAL 1.024 100.0%
54

Source: Author’s computation
The results of the research accept all hypotheses as the p-
values(s) of all hypotheses are equal or less than 0.05. In addition,
the p-values of Further, the p-values of H3 and H6 are less than
0.001 (significant at 99.9%), and the critical ratios of them are
greater than 2.58, indicating ideal significant factor covariance
(Kline, 1998; Maccallum et al., Garver & Mentzer, 1999; Hair et al.,
2006).
Overall, Customer satisfaction is positively correlated with all 5
variables with it being affected most by tangibility at ß=0.373. As
an exogenous variable to Customer loyalty, Customer Satisfaction
are strongly correlated with Customer Loyalty at ß=0.299 and
critical ratio equal to 6.752
As the regression output from structural model is expressed in
unstandardized coefficient terms, the result can be construed as
when Empathy increases by 1, Customer Satisfaction increases by
0.188, ceteris paribus. Similarly, if Tangibility increases by 1,
Customer Satisfaction increases by 0.373, other things equal.
Likewise, if Customer satisfaction increases by 1, Customer loyalty
increases by 0.299, other variables unchanged.
55

CHAPTER 5: DISCUSSIONS AND RECOMMENDATIONS
5.1 Discussions:
The discussions undermentioned are to explain why these
hypotheses are accepted or rejected based on Vietnamese
context. Conceptual models, based on theoretical frameworks, are
not tailored to any nations or contexts, and the rejection of
attendant hypotheses not matching empirical findings, ergo,
should not be deemed abnormal.
According to the findings of the aforementioned research, all five
dimensions: Empathy, Reliability, Tangibility, Responsiveness,
Assurance have positive correlation with Customer satisfaction to
different extend, with Tangibility having the most substantial
impact(0.373). Meanwhile, Customer satisfaction itself also has a
positive correlation with Customer loyalty. The reasons for such
correlations are mentioned below:
Tangibility: Tangibility all comes down to 2 different aspects:
employees’ dress and equipment. Employees’ dress fashion can
be said to be the very first thing that impresses customers at first
glance. As a result, customers highly associate the professional
level of an employees’ uniform with the service quality of that
company, which is directly related to customers’ satisfaction.
Meanwhile, the facilities of a company plays a critical role in
building up trust to customers, especially in the first time that
customer has access to that company’s services. As a result, there
is a very tight relationship between the company’s facility quality
and customer’s satisfaction.
Reliability: punctuality and accuracy best describe this noun. In
the modern day era, time is gold. Consequently, punctuality,or on-
56

time delivery of website’s shipment service to their customers is
very crucial in building up trust to customers. Failure to deliver
services on time makes customers find the company
untrustworthy. The accuracy of services is also fundamental, as it
helps satisfying customers by showing them exactly what they
wanted from the booking website. Those are the reasons why
reliability is positively correlated to customer’s satisfaction.
Responsiveness: can be referred to as reaction time. Customers
need respect, and there is no better way to express respect than
to respond to customers’ request immediately. Customers can feel
like their demand to use the services is given sufficient attention
from the service provider, which directly improves their
satisfaction. Therefore, responsiveness has a positive correlation
with customers’ satisfaction.
Assurance: “safety first” is always correct, even in the service
industry. Customers are always in need of the feeling of being
“safe”. They need services to be delivered in a transparent way,
with goods being safe and statistically precise to the information
introduced on the e-commerce website. As a result, assurance is
also vital in deciding customer satisfaction.
Empathy: refers to how much the firm cares for personalizing their
services for each particular customer. Nowadays, with thousands
of customer that the enterprise serves everyday, a customer is
much more satisfied if the service provider shows some indicators
of their caring for the customer personally, through such actions
like trying to meet a unique demand of that customer, or making
efforts to customize their service. As a result, Empathy is also
positive related to customer satisfaction.
57

5.2 Recommendations:
Based on the aforementioned researching results, we immediately
realize that Tangibility has the most substantial impact (36.4% -
0.373) on the change of customer satisfaction. This in turn means
that If Fado.vn wants to significantly enhance their customers’
experience, they definitely need to focus on changing tangibility
factors, including but is not limited to: Investing a lot in their
employees’ uniforms to make them both professional – looking
and consistent, upgrading shippers’ means of transportation with
uniformized skin to increases customers’ trust. Not only do they
have to enhance those aspects, but more importantly, they have
to do so in such a way that helps them outperform their direct
competitors (Amazon, sendo.vn, etc…) in terms of tangibility.
With an estimated value of 0.188 and 18.4% impact out of the
overall 100% impact that 5 dimensions have on customer
satisfaction, Empathy is the second most important dimension.
This result has showed how much customers care for such
shopping experience that is highly individualized for themselves.
Improving customer satisfaction via this dimension – as its name
refers to – requires a lot of “empathy”: Fado.vn’s employees must
receive special training to make them be sensitive enough to
detect and meet customers’ particular requirements quickly
(knowing what type of goods they are looking for based on their
description, etc…). Technically, the website can also consider
using some advanced technologies (Artifical intelligence, website
cookies, …) to track their customers’ web browsing habits to get to
know what kinds of good they are interested in , thus personalizing
the website’s content to optimize customers’ satisfaction (by
58

suggesting goods that are similar to the products searched by
customers, etc…)
Responsiveness comes close in the third place with an estimated
value of 0.166 and 16.2% impact. This aspect is mostly dependent
on employees’ performance to decide how fast they react to
customers’ needs. Customer care staffs should be requested to
always remain ready to respond immediately to customers on
demand. An important element that is often ignored is the
stability of the communication system: only by guaranteeing it can
the company assure customers’ requests are recognized on time.
Therefore, investing in building up a strong internet and
telecommunication infrastructure of the company is also critical.
Reliability is the 4th most important factors with an estimated
value of 0.152 and 14.8% impact. The company needs to optimize
all supply chain process steps to ensure goods are always
delivered on time or minimize the rate of unpunctual good
shipment. Decreasing the company’s dependence on third – party
service providers to improve their control over each step of the
process is also a highly recommended option. Furthermore,
moerdenizing technological infrastructure is also fundamental
since it decreases the risk of inaccurate service delivery as a result
of human’s fault.
Last but not least, assurance accounts for 14.2% of the 5
dimensions’ overall impact on customer satisfaction with an
estimated value of 0.145. Only if the firm is fully aware of the
necessity of building up trust can they satisfy their customers,
59

which results in earning greater revenue. Trust can be built in
plenty of different ways, mostly by maintaining employees’ good
manner and preserving the consistency of information that staffs
provide for their customers.
In addition to all aforementioned dimension – based
recommendations, I would recommend some additional methods
to significantly improve customers’ satisfaction effectively.
60

APPENDIX
Appendix A: Official research’s questionnaire
Latent
variables
Observed
variables
Designed
by Statement
Tangibility
TAN
Modern
equipment
(TAN1)
Parasuram
an
(1988)
Equipment are modern
Eye-catching
infrastructure
(TAN2)
Infrastructure are eye –
catching
Good-looking
staff uniform
(TAN3)
Staffs’ uniform is good
looking
Good – looking
flyers,
brochure
(TAN4)
The company’s brochure
and flyers are good
looking
Reliability
(RELI)
Promise
keeping
(RELI1)
Parasuram
an
(1988)
The company always keep
promises they have made
with you
Customer
attention
(RELI2)
The company shows a real
intention to help you
when you are in trouble
Service
delivery
accuracy
(RELI3)
The company delivers
their services correctly
right from the beginning
Service punctu
ality
(RELI4)
The company delivers
services on time
61

Service
delivery
carefulness
(RELI5)
The company delivers
services without making
any single mistake
Responsive
ness
(RESP)
Service time
respondence
(RESP1)
Parasuram
an
(1988)
Employees of the
company let you know
when the service is
delivered
Customer help
readiness
(RESP2)
Staffs of the company are
always ready to help you
Staff time
management
(RESP3)
Staffs of the company are
never too busy to respond
to your request
Service
execution time
(RESP4)
Staffs of the company
quickly execute services
for you
Assurance
(ASSURANC
E)
Staffs’
behavior
(ASSU1)
Parasuram
an
(1988)
Staffs’ behavior gives you
faith
Staffs’
trustworthiness
(ASSU2)
You feel safe when
dealing with the company
Staffs’
impression
(ASSU3)
Staffs of the company are
always happy to see you
Staffs’
knowledge
(ASSU4)
Staffs of the company are
knowledgeable enough to
answer your questions.
Empathy
(EMPA)
Company’s
care
Parasuram
an
The company always pays
attention to you specially
62