Determinants of enterprise satisfaction The case of Long Hau industrial park

TRƯỜNG ĐẠI HỌC MỞ TP.HCM UNIVERSITÉ LIBRE DE BRUXELLES
HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL
MBAVB4




DINH XUAN PHUC





DETERMINANTS OF ENTERPRISE SATISFACTION:
THE CASE OF LONG HAU INDUSTRIAL PARK





MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)





Tutor’s Name: Dr. NGUYEN VAN PHUC

Ho Chi Minh City, 2011
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ACKNOWLEDGEMENTS OF COMMITMENT


I hereby commit that I have prepared and conducted this research, “Determinants of
Enterprise Satisfaction: The Case of Long Hau Industrial Park”, is my original work as
the final project of MBA VB program and it has not been submitted anywhere for any
degree or qualification.

To the best of my knowledge, any help received in preparing this research and all used
sources have been acknowledged.


Ho Chi Minh City, February 15
th
, 2012



DINH XUAN PHUC

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ACKNOWLEDGEMENTS

First of all, I would like to express my deepest gratitude and great appreciation
to Dr. Nguyen Van Phuc, my advisor, for his guidance, valuable advices and great
support in developing my final project.
And, it’s very important for me to thank the professors, tutors, and my classmate
for supporting me with many valuable references during my time studying at MBA
program and difficult period of doing this research.
Next, thanks to my manager and colleagues at Long Hau Corporation for their
continuous support in general and particularly last half year.
I would like to express my sincere thankfulness to Dr. Hoang Trong for
inspiring me, giving me thoughtful guidance and sharing his valuable knowledge about
SPSS program for the completion of my research.
Last, but not least, I would like to thanks all my family members who have
encouraged and sympathized with me during the study period as well as completing
this research.
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COMPANY’S COMMENTS



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ADVISOR’S COMMENTS

The topic of the thesis is interesting. The thesis tries to find out what
determines enterprise satisfaction in an industrial park. Given that there are
many industrial parks competing with each others to attract investment
projects, the implications from the study help industrial parks attract be more
successful.

Within limited time and resources, the student has tried to address these
questions with a good body of theory and quantitative analysis with survey
data. The structure of the thesis is logically constructed. After introduction,
Chapter 2 reviews various theories relating to industrial parks, service quality
and customer satisfaction. The research model and hypotheses are proposed at
the end of the chapter. Chapter 3 shows research design and sampling.
Chapter 4 conducts quantitative analysis using survey data. The results show
that four out five independent variables have significant effects on the
dependent variable. The goodness of fit of the regression is quite high.
Chapter 5 draws main conclusions and gives recommendations.

In general, the thesis is well written although there are some limitations
as the student admitted at the end of the thesis.

Based on the above performance, I recommend the thesis for
acceptance of public defense.



Signature

Dr. Nguyen Van Phuc

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS OF COMMITMENT i

ACKNOWLEDGEMENTS ii

COMPANY’S COMMENTS iii

ADVISOR’S COMMENTS iv

TABLE OF CONTENTS v

ABBREVIATIONS and NOTIONS viii

LIST OF FIGURES ix

LIST OF TABLES ix

ABSTRACT x

CHAPTER 1 - INTRODUCTION 1

1.1 Vietnam Industrial Pak Introduction 1

1.2 Introduction of Long Hau Industrial Park 1

1.3 Problem statement 2

1.4 Research question 3

1.5 Research objectives 3

1.6 Scope of research 3

1.7 Research methods 3

1.8 Structure of the research report 4

CHAPTER 2 – LITERATURE REVIEW 5

2.1 Introduction 5

2.2 Industrial Park Activities 5

2.2.1 Industrial park 5

2.2.2 Establish an IP 6

2.2.3 Call for investment 7

2.2.4 The Role of IP in Vietnam 7

2.3 Place Marketing 8

2.3.1 Place marketing elements 9

2.3.2 Planning group 9

2.3.3 Target markets 9

2.3.4 Marketing factors 12

2.4 Service quality 13

2.4.1 Service definition 13

2.4.2 Service characteristics 13

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2.4.3 Service quality, perception and expectation definitions 14

2.4.4 Service Quality Model 15

2.4.5 Dimensions and determinants of service quality 17

2.5. Place attributes 19

2.6 Enterprise satisfaction 20

2.6.1 Customer satisfaction 20

2.6.2 Enterprise satisfaction 21

2.7 Research model proposal and Hypotheses 21

2.8 Summary 23

CHAPTER 3 - RESEARCH DESIGN 24

3.1 Designing the research 24

3.1.1 Qualitative research 25

3.1.2 Quantitative data analysis processing 26

3.2 Official research 26

3.2.1 Proposal research model 26

3.2.2 Instruments 26

3.2.3 Participation 27

3.2.4 Translation and pre-test reliability of questionnaire 27

3.2.5 Method of analysis 27

3.2.6 Dimensions measuring industrial park services 29

3.2.7 Dimensions measuring enterprise satisfaction 31

3.3 Summary 32

CHAPTER 4 – DATA ANALYSIS 33

4.1 Sample characteristics 33

4.1.1 Sample 33

4.1.2 Type and Volume of enterprise 33

4.1.3 Nationality & Industrial field 34

4.1.4 Enterprise experience 34

4.2 Assessment of measurement scale 35

4.2.1 Reliability evaluation for Infrastructure and Assurance scales 35

4.2.2 Reliability evaluation for Policy scale 36

4.2.3 Reliability evaluation for Environment and Culture scales 36

4.2.4 Reliability evaluation for Satisfaction scale 37

4.3 Explore factor analysis for all scales 37

4.4 Testing model and hypothesis 39

4.4.1 Revising research model and hypothesis 39

4.4.2 Regression and correlative 40

4.5 Impact of enterprise characteristics on satisfaction 43

4.6 Findings and Discussion 44

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4.7 Summary 45

CHAPTER 5 – CONCLUSION AND RECOMMENDATION 47

5.1 Conclusion 47

5.2 Recommendation for IP to improve enterprise satisfaction 48

5.2.1 Improve infrastructure 48

5.2.2 Policy 49

5.3 Limitation of the study and future suggestion 49

REFERENCES 51

APPENDICES 54

Appendix A: The SERVQUAL instrument 54

Appendix B: Determinants of place attributes 55

Appendix C: Discussion outline 56

Appendix D: Questionnaire in English and Vietnamese 57

Appendix E: DESCRIPTIVE STATISTICS RESULT 61

Appendix F: CRONBACH’S ALPHA ANALYSIS RESULT 62

Appendix G: EFA RESULT 66

Appendix H: REGRESSION RESULT 68

Appendix I: ONE-WAY ANOVA TEST RESULTS 70

Appendix J: RESPONDENTS LIST 72


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ABBREVIATIONS and NOTIONS

- CKEZ : Central Key Economic Zone (includes 5 provinces/cities: Thua
Thien Hue, Da Nang, Quang Nam, Quang Ngai and Binh Dinh)
- EFA : Explore factor analysis
- HCM : Ho Chi Minh
- Investors : Clients who lease land or ready built factory from an industrial park
- IP developer : the company who invests in IP infrastructure and manages IP
operation, such as Long Hau Corp.
- IP : Industrial park
- IZ : Industrial zone

- LAEZA : Long An Economic Zone Authority
- LHC : Long Hau Corporation
- LHIP : Long Hau Industrial Park
- NDT : Nguyễn Đình Thọ
- NKER : Northern Key Economic Region (covers 7 provinces and
municipalities: Hanoi, Hai Phong, Vinh Phuc, Bac Ninh, Hung Yen,
Quang Ninh and Hai Duong)
- NTMT : Nguyễn Thị Mai Trang
- PZB : Parasuraman, Zeithaml, Berry
- RBF : Ready built factory
- SKEZ : Southern Key Economic Zone (includes 8 provinces/cities: Ho Chi
Minh City, Binh Duong, Dong Nai, Ba Ria-Vung Tau, Binh Phuoc,
Tay Ninh, Long An and Tien Giang provinces)
- SME : Small & medium enterprise
- SPSS : Statistic Package for Social Science
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LIST OF FIGURES
Figure 1.2 Long Hau IP location 2

Figure 2.3.1 Levels of Place Marketing 10

Figure 2.4.4 Service Quality Model 16

Figure 2.7 Research model proposal 22

Figure 3.1 Research design 24

Figure 4.4.2 Revised model 43

LIST OF TABLES
Table 2.4.5 Determinants of service quality in SERVQUAL 18

Table 2.6.1 Determinants of customer satisfaction 21

Table 2.6.2 Determinants of enterprise satisfaction 21

Table 2.7 Industrial park service quality dimension 22

Table 3.2.6a Measurement scales of infrastructure and assurance 30

Table 3.2.6b Measurement scales of policies 30

Table 3.2.6c Measurement scales of Environment 31

Table 3.2.7 Measurement scales of enterprise satisfaction 32

Table 4.3a KMO and Bartlett’s Test 38

Table 4.3b Total Variance Explained 38

Table 4.3c Rotated Component Matrix 39

Table 4.4.1 Revised research model 40

Table 4.4.2 Multiple regression result 40

Table 4.5 Summary ANOVA results of respondent 43

Table 4.6 Levels of importance factors on Enterprise satisfaction 44

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ABSTRACT

This research addresses factors that impact enterprise satisfaction of investors in
manufacturing factories in industrial park (IP). In Vietnam, after 20 years of
development, especially fast recently years, there were 287 IPs nationwide. Thus, the
market becomes more and more competitive, most of IPs face difficulty in terms of
calling for investment. This research aims to choose an appropriate model to evaluate
enterprise satisfaction of investors in current IP. Then, based on this result, IP
developer can make decision when develop the new one.
The research is constructed on service quality theory, adapted with place
attributes (place marketing acknowledges) and a practical operation in provincial scale.
A questionnaire was distributed via personal email to company’s representative. After
reliability tests, EFA and regression are used to analyze important factors.
As for enterprises who are investing in LHIP, the volume, nationality and
experience are not different. Top 3 important factors impacting on their satisfaction are:
(1) Infrastructure (water system, telecommunication, labor), (2) Policy (government
support, quick legal procedure, Import/export support, Customs office, bank,
dormitory), and (3) Environment (water & waste water treatment prices, living cost)
Research helps point out factors having important impact on enterprise
satisfaction in Vietnam IPs. However, the scope of this research is at one IP only. It
leads to the judge within small area. Therefore, it is necessary to conduct more
researches for group of IP in different regions in order to have an overview of factors
impact on IP enterprise satisfaction.

Key words -
Industrial park, industrial zone, industrial real estate, enterprise satisfaction




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CHAPTER 1 - INTRODUCTION
1.1 Vietnam Industrial Pak Introduction
Vietnam is a developing country. In the context of industrial development in
recent years, industrial parks have sprang up in every province, particularly in the
provinces of the key economic regions. The fastest growing is Southern Key Economic
Zone (SKEZ) with the well-known provinces as Dong Nai, Ba Ria-Vung Tau, Ho Chi
Minh City, Binh Duong and Long An. From the first IP called SONADEZI was
developed in 1960s (sonadezi.com) up to now there are 287 IPs in Vietnam, SKEZ
alone has 158 IPs, equal to 55% of the country (viipip.com) with total natural land area
of 72,000 ha; fulfillment ratio reached 60% on average (Bá Tú, 2011)
1
.
1.2 Introduction of Long Hau Industrial Park
LHIP now includes 249 ha total located in Can Giuoc District, Long An province,
next to Nha Be district – HCMC. It started up in 2006, the first phase of 141 ha was
exploited successful, nearly all the land was leased within 3 years; the second phase of
108 ha was launched in 2009 and now more than a half of land is being leased.
Besides minimum requirement of clear land, road, water supply system, sewage
treatment system, power supply system, telecommunication infrastructure, at LHIP the
investors also enjoy services of banks, internal transportation vehicles, dormitory,
medical station, super market and security forces.
Long Hau IP has called for investment since 2007, up to now there are 105

investors who are leasing land to build their own factories or rent ready built factories
from Long Hau Corp. Among which, 62 investors are domestic (59%) and most of
foreign investors come from Japan (30 companies, 28.6%). Total registered investment
capital is 143.8 billion USD.

1
Beside industrial parks, in Vietnam there are 1,872 industrial clusters, in which 918 clusters (area
40,500 ha) are operating with fulfillment ratio 26%. (Ba Tu, 2011).
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Coming projects under
LHC management are:
- LH3: Long Hau 3 IP,
1165 ha in same Can Giuoc
District, Long An province.
- LH4: Long Hau 4 IP,
120 ha in Ben Luc District, Long An province.
1.3 Problem statement

When investing a big amount of capital in building up an IP, owners want to lease
the land a fast as possible. However, the situation is practically not the same for all IPs.
This research will analyze the situation of Long Hau Corporation (LHC) who operate
LHIP in Long An and is shareholder at Bourbon An Hoa IP in Tay Ninh. LHIP land
was leased very fast in 2007-2008 while BAIP one was very slow after that in 2009-
2011.
Board of Directors wants to have an overview of:
- What items should be done step by step when setting up an IP?
- What is the expectation of investors when choosing an IP to locate their factory?
Figure 1.2 Long Hau IP
location

- 3 km to Saigon Premier
Container Terminal (SPCT) and
Saigon–Hiep Phuoc Seaport
- 12 km to Phu My Hung New
City
- 19 km to Ho Chi Minh city
- 25 km to Tan Son Nhat
International Airport
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- Whether investors who have already been at LHIP are satisfied with current
services?
That leads to the research “
Determinants of Enterprise Satisfaction: the Case of
Long Hau Industrial Park”. The report will firstly concentrate on reviewing the
quality of customer service to understand customer’s positive or negative assessment
about the value of using services in LHIP. Secondly, the research will give
recommendation on improving the services in order to satisfy existing investors and to

attract new ones.
1.4 Research question
Above problem can be solved by many decisions. Each decision needs to be
based on information. In which, it is important and requirement to answer the question
that what are key determinants of enterprise satisfaction in LHIP.
1.5 Research objectives
The research is to find out the factors which impact enterprise satisfaction in
LHIP and then find the answers for below objectives:
- To measure enterprise satisfaction in Long Hau IP. This is a part to analyze
company’s business environment.
- To recommend LHC for improving customer care activities at current project.
- To define which services should LHC focus with priority when building projects
in the future.
1.6 Scope of research

Research place is Long Hau Industrial Park and research subjects are enterprises
who invested in LHIP. They come from both domestic and other countries, such as
Japan, Korea, Malaysia, China, Germany, and Australia.
1.7 Research methods
Research process is done through two main steps, the (1) exploration study by
qualitative methods and (2) formal study by quantitative methods. Qualitative research
is done through discussion with LHIP developer and some companies are investing in
LHIP. The aim is to explore the attitudes and opinions of the IP developer, the
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investors about the enterprise satisfaction attributes. Also set the scale of place
attributes used for quantitative research.
Quantitative research is done by the questionnaire that designed based on results
of previous steps. The goal is to measure the place attributes as well as their impact on
the satisfaction of investors.

Factor analysis method used to reduce variables, and regression was used to
determine the satisfaction of the place attributes in the enterprise satisfaction. SPSS
software is used to analyze data collected by quantitative research.
1.8 Structure of the research report
Chapter 1 – Introduction: this chapter gives an overview of the research,
information of Long Hau Industrial Park, the objectives, the way to conduct the
research, the scope and methodology of the study.
Chapter 2 - Literature review: This chapter gives the concepts of industrial park
activities, including the role of IP in Vietnam Economy; the definition of industrial real
estate products and services; the concepts of customer satisfaction; and the model
would be used to study.
Chapter 3 - Research design: Based on the context of LHIP, this chapter gives the
research methodology, including preliminary result, variable choosing, and research
sample.
Chapter 4 - Data analysis: This chapter gives the results of Descriptive statistics
of service quality measurement, Reliability analysis, and Regression analysis; the
findings impact customer satisfactions at LHIP.
Chapter 5 - Conclusion and Recommendation: This chapter contains summary
findings and gives some recommendations for LHC to improve current services and
make infrastructure investment priorities for coming projects.
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CHAPTER 2 – LITERATURE REVIEW
2.1 Introduction
Chapter 1 introduced project overview and research methods. Chapter 2 presents
basic theory of industrial park marketing as basis of the research. This chapter includes
4 main parts, (1) Industrial park activities, (2) Place marketing theory, (3) Service
quality, (4) IP service quality, and (5) Enterprise satisfaction.
2.2 Industrial Park Activities
To study the enterprise satisfaction of investors who invest in industrial parks,

this study first presents the concept of IP, describe the formation and operation of an
industrial park.
2.2.1 Industrial park
An industrial park is an area zoned and planned for the purpose of industrial
development. Industrial parks are usually located outside the main residential area of a
city and normally provided with good transportation access, including road and rail. IPs
are usually located close to transport facilities, especially where more than one
transport modes coincide: highways, railroads, airports, and ports.
In America as per
Grunkemeyer (1996) mentioned criteria provide general
guidelines to assist community officials and leaders in evaluating the ability of their
community to meet some basic foundations required for the creation of an industrial
site includes zoning, highway access, topography & soil conditions, ownership,
utilities, incentives and additional studies.
In Vietnam the IP concept is closer to the definition of industrial real estate
products and services. In Vietnam, concept of the real estate industry is not ambiguous
but is understood as the construction projects of industrial parks (IPs), buildings for
rent, warehouses, offices for lease, urban areas and projects investment ground for
industrial production.
Industrial Park area is specialized in producing industrial goods and perform
services for industrial production, has defined geographical boundaries, established
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under the conditions, order and procedures prescribed in Vietnam Government Decree
29 (Article 2).
Beside the industrial zone projects, infrastructure companies should also ensure
provision of support needs, such as wharves, warehouses, transportation, storage,
bonded warehouse, fiber optic transmission of broadband internet, commercial centers,
hotels, etc. (T. Son, 2010).
2.2.2 Establish an IP

Unless a community has created an acceptable industrial site, they have little
chance of attracting the construction of a new manufacturing firm. The first dilemma
facing community decision makers are what acceptable industrial site is in the eyes of
the executives of a manufacturing firm. This dilemma is especially difficult to resolve
as no universal site description exists that will guarantee to meet the priorities of all
industrial firms.
Each industry has particular needs that cause a specific site to be more
appropriate for their uses than another. However, community officials and leaders can
discover some basic standards that will enhance the probability that a industrial site is
ready for the construction of a manufacturing facility (Grunkemeyer, 1996).
To establish an IP in Vietnam, conditions and procedures are mentioned in
Decree 29/2008:
a) In accordance with the master plan on development of industrial parks have
been approved;
b) Total industrial land area of industrial parks have been established on the
territories of provinces have given the project investment registration and grant
investment certificates to lease land at least 60%.
Therefore, they hold many meeting to discuss and consider advantages and
disadvantages when put an industrial park project at a place. Usually, planners make a
full dossier, submit to Provincial People’s Committee (PPC). Based on this
information, the Committee will get opinions from Department of Planning and
Investment, Department of Natural Resources, Provincial Military Command, etc. to
consider.
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In case the project of industrial park is already in the master plan on development
of industrial parks or in the general planning of economic development zones
approved, Chairman of PPC decided to establish, expand industrial parks. If not, PPC
must submit to the Prime Minister for consideration and decision.
2.2.3 Call for investment

After establishing an IP, IP developer proceeds to flat the land, build road system,
water supply system, waste water treatment system, telecommunication, electric and
lighting, etc., at the same time Sales & Marketing Dept. must build plan for calling
investment from domestic and foreign as well. There are many channels for calling
investment, such as:
Between central government and central government: At VSIP industrial park
projects, for instance, Urban Services VSIP Bac Ninh, on the basis of a partnership
between the Government of Vietnam and the Government of Singapore are stepping up
the construction of infrastructure in urban area of 700 ha communes Tu Son, Bac Ninh.
Singapore government has made positive moves in marketing, investment
promotion called for mobilization of large economic groups, have the financial
capability and experience of the Singapore International investment and the investment
in industrial zones (vsip.com.vn).
Twinning between city & city: To call invest abroad, Ho Chi Minh City is
twinned with many industrial city in the world, such as Yokohama, Osaka (Japan),
Guangzhou, Shanghai, Shenyang (China), San Francisco (US), Toronto (Canada),
Lyon (France), Busan (Korea), etc.
Through professional associations: Many Sales & Marketing Dept of IP take
part in professional association, such as Vietnam Textile and Apparel Association
(VITAS), Vietnam Plastics Association (VPA), Vietnam Steel Association (VSA),
Vietnam young entrepreneurs associations, Young Business Association (YBA) to call
invest from those members, as well as introduce themselves as a channel of marketing.
2.2.4 The Role of IP in Vietnam
IPs development has been taking important part in Vietnam economics. Up to
midyear 2010, in Vietnam there were 223 industrial parks, export processing zones, hi-
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tech zones in 56 cities/provinces; attracted over 7,000 projects from domestic and
foreign investment, industrial output value reached 33 billion dollars, contribute an
industrial value equal to 29.2% of the national industry value; created approximately

1.5 mil jobs (Võ Thanh Thu, 2010).
In HCMC, after 20 years (1991-2010) of developing export processing zone and
industrial zone, according to Đỗ Anh Dũng (2011), 16 EPZs & IPs has been established
(13 are operating), called 1,206 projects with total registry capital 5.4 bill USD.
Exports reached 19,982 billion dollars, accounting for 14% of export turnover of the
City, created a large source of foreign currency and contributed to increasing the city's
GDP.
In Long An, districts Duc Hoa, Ben Luc, Can Giuoc and Can Duoc from the
impoverished soil, inefficient agricultural production, and negligible industrial
production became key areas of industrial production with GDP growth 1.5 times
higher than the common rate of the province and contribute significantly to province
economic restructuring (An Thuận, 2010).
For IP activities summary, there are many aspects to be considered when
establish an IP. They are not only internal IP manage company aspects but also
external components, such as citizens, government, social infrastructure. It is
necessary to map this practice into a theory. The researcher has chosen “Place
marketing” theory to reflect IP aspects.
2.3 Place Marketing
In this research, the term “place” is used to mean Long Hau industrial park by
specific geography and relative region such as Can Giuoc district, Long An province,
Nha Be district (HCMC).
Place marketing means designing a place to satisfy the needs of its target
markets. It succeeds when citizens and businesses are pleased with their community,
and the expectations of investors are met (Kotler et al. 2002, 183, quoted by Rainisto,
2003)
According to NDT and NTMT (2009) and Rainisto (2003), as marketing aspect,
places can be branded like products and services called “place branding” to distinguish
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to product branding or service branding of business organization. With this perspective,

marketing a "place branding" is same as marketing a tangible product brand or service
brand. So, the task of marketing management is to choose the target market, brand
positioning, maintaining and developing target markets through the establishment,
development and communication of values that brand provides to the target market.
If the marketer of a product brand is the marketing department of the enterprise, a
similar way, the place brand, marketer includes many different components such as
local authorities, business community and the community.
Place marketing is a combination of local resources (investors, professionals,
workers, materials, etc.) and in order to achieve the goal of local is economic
development and improved quality of life for all members of the place (NDT and
NTMT, 2009).
2.3.1 Place marketing elements
Place marketing relates to three main groups, they are (1) Planning group
includes place marketer, (2) marketing factors, and (3) target market (place’s
customers).
2.3.2 Planning group
As mentioned above, in view of the modern marketing, marketing activities is not
belong to marketing department only but belong to all members of the organization.
Applying this perspective, the place marketers are all members at that place. Planning
group includes local authorities, business community and local citizens (
Figure 2.3.1).
These elements are involved directly or indirectly in the marketing plan for a place.
As mentioned about IP activities, building and operating an industrial park need
to plan and solve many social problems. Involving in this planning is not only IP
developer, but also authority at all level of central, provincial and district.
2.3.3 Target markets
Same as marketing for products or services brand, place marketer need to define
target markets or target customers. Place target markets can be divided into 4 main
groups. They are (1) investors and manufacturers, (2) visitors, agencies & researchers,
(3) labors, and (4) exporters (See

Figure 2.3.1).
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Figure 2.3.1 Levels of Place Marketing

Source: Levels of Place Marketing (Kotler et al. 2002, 46)
Target investors and manufacturers
According to NDT and NTMT (2009), group of investors is a top local’s priority
market, especially the developing countries, including Vietnam. They are investors
inside and outside the country. They arrived to find investment opportunities, business
partnership or a link to independent investors at the local level. The purpose of this
group is to get profits from their investment. So they decided to invest in places that
can help them achieve this goal.
There are many ways for calling investment to their locality, such as investment
seminars, establishment of investment promotion organizations, incentive policies, like
tax exemptions, some free services. However, each locality has different policies
depends on their objectives. If tackling unemployment is to encourage labor-intensive
industries (textiles and garments in Binh Duong, Dong Nai). If developing modern
Target markets
Marketing factors

Planning group

Exporters
Infrastructure
Citizens
Place marketing
plan: diagnosis,
vision, action
Business

community

Local
government

Investors

Visitors

Labors

Manufacturers

Researchers /
Agencies
Image &
quality of life
People

Attractions

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technology is to give favors to investors investing in software, electronics, precision
engineering in HCM City.
Visitors, agencies and researchers
Visitors can be divided into group of non business, such as pure tourist, coming
to see relatives and friends; and group of businesses who come to take part in
conferences, collect information for analysis and decision on investment place.
Agencies are the international brokers or domestic brokers, they gather

information, analyze and provide to foreign investors about business environment,
consulting how to select investment locations. Their goal is the brokerage fee.
Researchers from universities, international assessment institutions, government
agencies that need scientific information to give their citizens and enterprises.
HCMC is the venue for ongoing seminars, conferences and exhibitions with the
two major centers SECC and Hoang Van Thu.
Labor
Labor is one of place target markets component. Local may generate policies to
attract skilled people to settle down. Of course, each local encourage a different group.
Localities tend to stimulate this group but reserved with others. The group is often
called the most are skilled people in professional careers that focus on local
development. Competition in attracting skilled labors is not only in business but also
between localities. For example, in Binh Duong have remuneration policies in wages,
living allowances, housing assistance, etc.
Exporters
Developed countries often concentrate export strategy coupled with import
substitution. And export is also a useful method to promote place brand to international
markets, such as Korea with Samsung, LG (Amine and Chao 2005). Therefore, parallel
to encourage exporters coming to local, local government seeks to promote exports
through preferential policies for export, the export-support institutions such as market
searching, global market information, and incentives for local companies that have
export capacity.
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On overview, customer groups “consume” and keep consuming place brand if
this brand makes them satisfied. In other words, the brand provides them optimal value
more than competitive brands. No locality more powerful than others in every aspect.
Place marketers must choose some target markets and concentrate the resources how to
provide value to chosen target markets (NDT and NTMT 2009).
2.3.4 Marketing factors

Each place has special method to build and locate place brand differently based
on place attributes. The attributes can be (1) place attraction; (2) place image; (3) place
infrastructure, and (4) place people (see
Figure 2.3.1).
Place attraction is synthesis of ideas, beliefs, impression, and hallmark that
customers feel about that location. Attraction can be made by a good impression,
appealing to target markets. Good impression can be expressed by constructing unique
selling proposition in order to attract target customers, i.e. Hong Kong with “City of
life” or Osaka with “Sports paradise”. Marketers can also make an attraction by local’s
unique architecture, i.e. Opera house (Sydney), Great Wall (Beijing).
Place images can be made by natural, historical, or constructed by local, such as
Taj Mahah temple in Agra, India, or Angkor Wat in Cambodia, or Petronas in Kuala
Lumpur.
Place infrastructure can be used to attract customers. Local people usually invest
and develop modern and convenient transportation like road, underground, train,
airport, seaport, river port, communication system, and software park/scientific park to
attract tourists and investors.
Place people: Marketers often use well-known people, like Gujarat state with
slogan “This is the birthplace of Mahatma Gandhi”; or use people who valuable
contributed to local, who are good and successful business.
In summary, an IP can be seen by all place marketing elements of planning
group, marketing factors and target market (place’s customers). The next question is
what IP service elements are, and how to measure them.


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2.4 Service quality
2.4.1 Service definition
Services are “Activities, benefits and satisfactions, which are offered for sale or

are provided in connection with the sale of goods” (American Marketing Association,
Committee of Definitions 1960, p. 21).
“Services include all economic activities whose output is not a physical product
or construction, is generally consumed at the time it is produced, and provides added
value in forms (such as convenience, amusement, timeliness, comfort or health) that are
essentially intangible concerns of its first purchaser” (Quinn, Baruch and Paquette,
1987).
2.4.2 Service characteristics
According to Kotler et al., 1999, p. 647, service characteristic includes
intangibility, inseparability, variability (heterogeneity) and perishability:
Intangibility means that service cannot be seen, tasted, felt, heard or sine lied
before they are bought. A buyer can examine before purchase the color, features and
performance of an audio hi-fi system. In contrast, a person getting a hair-cut cannot see
the result before purchase, just as an airline passenger has nothing but a ticket and the
promise of safe delivery to a chosen destination. Because service offerings lack
tangible characteristics that the buyer can evaluate before purchase, uncertainty is
increased. To reduce uncertainty, buyers look for “signals” of service quality. They
draw conclusions about quality from the place, people, equipment, communication,
material and price that they can see.
Inseparability means services cannot be separated from their providers, whether
the providers are people or machines. If a person provides the service, then the person
is a part of the service. A teacher cannot deliver a service if there are no students
attending class. Because the customer is also present as the service is produced,
provider-customer interaction is a special feature of services marketing. It’s important
for service staff to be trained to interact well with clients.
Variability means the quality of services depends on who provides them, as well
as when, where and how they are provided. As such, service quality is difficult to
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control. For example, some hotels have reputations for providing better service than

others. Within a given hotel, one registration-desk employee may be cheerful and
efficient, whereas another, standing just a few meters away, may be unpleasant and
slow.
Perishability means that services cannot be stored for later sale or use. In some
countries, dentists and general practitioners charge patients for missed appointments
because the service value existed only at that point and disappeared when the patient
did not show up. The perishability of services is not a problem when demand is steady.
However, public transportation companies have to own much more equipment because
of rush-hour demand than they would if demand were even throughout the day.
2.4.3 Service quality, perception and expectation definitions
Some important definitions of service quality are coming as following:
“Service quality is determined by the differences between customer’s
expectations of services provider’s performance and their evaluation of the services
they received”. (Parasuraman et al.,
1985, 1988)
“Service quality can be defined as “the difference between customers’
expectations for service performance prior to the service encounter and their
perceptions of the service received”. (Asubonteng et al., 1996, quoted by Siadat, S.H.,
2008)
“Service quality as the subjective comparison that customers make between the
quality of the service that they want to receive and what they actually get”. (Gefan,
2002, quoted by Siadat, S.H., 2008)
Among them, definition of Parasuraman et al. is usually referred which mentions
the gap between expectation and perception of customer about the service.
Next, based on Parasuraman concept, perceived service quality is therefore
viewed as the degree and direction of discrepancy between consumers’ perceptions and
expectations.
Finally, the term “expectations” as used in the service quality literature differs
from the way it is used in the consumer satisfaction literature. Specifically, the
satisfaction literature, expectations are viewed as predictions made by consumers about