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.
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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
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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.
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.
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 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 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.
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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 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
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