Antecedents of brand loyality in Vietnam banking sector.The case of Vietnam credit card users

TRNG I HC M TP. HCM UNIVERSITÉ LIBRE DE BRUXELLES
HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL
MBAVB2


NGUYEN TIEN CHUNG


ANTECEDENTS OF BRAND LOYALTY
IN VIETNAM BANKING SECTOR:
THE CASE OF VIETNAM CREDIT CARD USERS


MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)


Tutor’s Name: PhD. Le Nguyen Hau


Ho Chi Minh City
(2012)


DECLARATION

I, Nguyen Tien Chung, hereby declare that this master thesis is my own original work and
efforts. Other sources of information used have been acknowledged. The conclusion and
managerial implication with recommendation are personal standpoints.

Signature:



NGUYEN TIEN CHUNG
Date: November 15
th
, 2012
ACKNOWLEDGEMENTS
This master thesis was written in part fulfillment of the Master of Business
Administration course at Solvay Brussels School of Economics and Management - Ho Chi
Minh City Open University Campus.
First of all, I would like to express my deep thanks to the tutor - PhD. Le Nguyen
Hau for his profound guidance, helpful advice throughout my thesis, especially his
devotion and patience to each of students he has worked with, including an-always-
hurrying person like me.
I would extend my gratitude to my family and relatives, specifically my wife and two
little naughty sons, who will always try to keep me tranquillized to fulfill my lofty mission.
My unforgettable thanks also go to Nguyen Ngoc Son and Mindmap team, classmates of
MBAVB2 for continuous encouragement during the process of my study.
Finally, but not least, I would like to thank Solvay Business School Alumni in
Vietnam to support me in completing questionnaires and HSBC Vietnam GPU team for
taking my tasks during the time I took leave for the writing.
As a supplementation, I would want to show my sincere thanks in advance to the
Board of Professors, who will give me a chance to defend my thesis after a long time
pending.
1
SUPERVISOR’S COMMENTS ON THE FINAL PROJECT

Student name: NGUYEN TIEN CHUNG Program: MBAVB2
Title:
ANTECEDENTS OF BRAND LOYALTY IN VIETNAM BANKING SECTOR:
CASE OF VIETNAM CREDIT CARD USER

Comments:
Credit card in Vietnam has been developing rapidly in terms of the number of card and
transaction value since the first ever credit card of Vietnam was issued by Vietcombank in
1996. However, the market currently has a sluggish growth due to various reasons, such as
high interest rate of late payment and/or perceived risk of fraud. Moreover, Vietnamese
customers are still not used to using cards for their shopping, and prefer to use cash
instead. Many shopping centers are yet to install POS machines to accept credit card
payments. One of the emerging questions is how to retain existing customers and to attract
new ones.
This study aims to quantitatively investigate the antecedents of brand loyalty for credit
card users in Vietnam banking sector. In addressing this research objective, the author has
spent time to review the relevant literature, based on which a model was proposed. The
model introduces six antecedents of customer loyalty. Empirical tests were conducted with
a sample data of 250 credit cards users in Vietnam. Results indicate that Customer
Satisfaction, Brand Trust and Switching barrier are antecedents of loyalty. Customer
Satisfaction is then driven by Perceived Functional Value, Perceived Emotional Value.
Perceived Social value was proposed as a driver for customer satisfaction but it is not
supported in this study.

The student has demonstrated his ability to conduct an applied research which meets the
scientific requirements of a master thesis. This work achieves the quality standard of the
program. I strongly recommend it to be presented to the examination board.

Supervisor: Assoc. Prof. Le Nguyen Hau

Date: November 15th, 2012


i

TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION 1
1.1 Background 1
1.2 Problem Statement 3
1.3 Research Objectives 4
1.4 Scope of the Study 5
1.5 Research Methodology 5
CHAPTER 2: LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Brand Loyalty and its benefit 6
2.2.1 Brand loyalty 6
2.2.2 Brand loyalty benefit 7
2.3 Customer Segmentation on Loyalty 8
2.4 Factors affecting Brand Loyalty 9
2.5 Loyalty in Banking Sector 10
2.6 Research Model 11
2.6.1 Customer Satisfaction 12
2.6.1.1 Perceived Value 13
2.6.1.2 Perceived Risk and relationship with Satisfaction 15
2.6.1.3 Brand Trust 18
2.6.1.4 Switching Barrier 19
2.6.1.5 Demographic Factors 21
CHAPTER 3: DATA AND METHOD 23
3.1 Introduction 23
3.2 Methodology and Research Process 23

3.3 Qualitative 23
3.3.1 Preliminary scales 24
3.3.2 Scale adjustment 31
3.4 Quantitative research 35
3.4.1 Questionnaire in quantitative research 35
3.4.2 Sampling design 35
3.4.3 Data collection 35
3.4.4 Data analysis 36
ii

3.4.4.1 Reliability of scales assessment. 36
3.4.4.2 Exploratory factor analysis 37
3.4.4.3 Regression analysis 37
CHAPTER 4: DATA ANALYSIS AND RESULT EXPLANATION 39
4.1 Introduction 39
4.2 Sample description 39
4.3 Reliability of the scale assessment 39
4.4 Exploratory Factor Analysis 44
4.4.1 EFA analysis for Functional value (FV), Emotional value (EV),
Perceived risk (PR): 44
4.4.2 EFA analysis for Brand Trust (BT), Switching barrier (SB): 45
4.4.3 EFA analysis for Satisfaction (SA): 46
4.4.4 EFA analysis for Loyalty (LO): 47
4.5 Testing the research model and hypotheses 48
4.5.1 Correlations analysis 48
4.5.2 Regression analysis 49
4.5.3 Hypothesis conclusion 53
4.6 Summary 56
CHAPTER 5: CONCLUSION 57
5.1 Overview 57

5.2 Summary of findings 57
5.3 Managerial Implication and Recommendation 58
5.4 Limitations 59
REFERENCES 60
APPENDIX A 67
APPENDIX C 86

iii

LIST OF TABLES
Table 1: Most common factors identified affecting loyalty 9
Table 2: The most factors affecting bank loyalty and its frequency appeared in
recent researches 10
Table 3: Description and definition of perceived risks dimension. 17
Table 4: Switching barrier dimension description 20
Table 5: Preliminary concept and its references 25
Table 6: Preliminary concept scales details 27
Table 7: Final scales and variables 33
Table 8: Information of data collection process 35
Table 4-1: Return ratio 39
Table 4-2: Cronbach’s Alpha of “Perceived Functional value” 40
Table 4-3 Cronbach’s Alpha value of “Perceived value – Emotional” 40
Table 4-4: Cronbach’s Alpha value of “Perceived Social value” 41
Table 4-5: Cronbach’s Alpha value of “Perceived Risk” 41
Table 4-6: Cronbach’s Alpha of “Customer Satisfaction” 41
Table 4-7: Cronbach’s Alpha value of “Brand Trust” scale 42
Table 4-8: Cronbach’s Alpha value of “Switching Barrier” Scale 42
Table 4-9: Cronbach’s Alpha value of “Customer Loyalty” scale Item-Total
Statistics 43
Table 4-10: Cronbach’s Alpha value of the scales 43

Table 4-11: Summary analysis of FV, EV, PR independent variables KMO and
Bartlett's Test 44
Table 4-12: Summary analysis of the BT, SB’s independent variables KMO and
Bartlett's Test 45
Table 4-13: Summary analysis of the SA’s independent variables KMO and
Bartlett's Test 46
Table 4-14: Summary analysis of LO’s independent variables KMO and Bartlett's
Test 47
Table 4-15: Regression analysis value 50
Table 4-16: Regression value 51
Table 4-17: Hypothesis testing results 53
Table A.1: Factors Identified Affecting Loyalty 67
iv

Table A.2: Most common Factors identified affecting Bank Loyalty 70
Table A.3: Conceptual and Operational Definitions in Consumer Satisfaction
Literature 73
Table A.4: Satisfaction constructs 80
Table A.5: Definitions of Perceived Value 81
Table A.6: Perceived Value Dimensions 83



LIST OF FIGURES

Figure 1: Research model and hypotheses 22
Figure 2: Research process 24
Figure 3: Regression analysis result 53
1

CHAPTER 1: INTRODUCTION
1.1 Background
Credit card in Vietnam has been developing rapidly in terms of the number of
card and transaction value since the first ever credit card of Vietnam was issued by
Vietcombank in 1996. By the end of 2011, there are 1,025,566 international credit
cards issued by the members of Vietnam bank card association and 300,000 ones
issued by the non-member of the association (Oberthur Technology Company
report, 2012).
The market is far away from its potentiality in terms of number of card and its
transaction value. (Kimihisa Imada, 2011; Nguyen Thu Ha, 2012). Vietnamese
adopt quickly usage of credit cards, which pointed to almost 9.5 million people who
could become customers of card issuers. (Visa Inc, 2008). It is supported by both
the macro-economic and banking perspective, the domestic card market is
considered very strong given the rising incomes among the country's 82-million
people, rapid economic growth and improving legal system. (Nguyen Thu Ha,
2012).
All major credit card service providers have a presence in Vietnam, including
MasterCard, American Express, Visa, JCB and Diners Club.
( />fees.html, April 24, 2011).
There are two types of credit cards in term of technique. One is magnet stripe
and the other is chip type. The second one is the latest technology and it is better
than the first one in security. Many merchants in US and Europe reject payment if it
is magnet credit card because they are afraid of fraud. (Oberthur Technology
Company, 2012)
Vietnam credit cards are accepted across the territory for making direct or
online payment. There are now has about 10,000 places that accept card payments,
2

concentrated in big cities like Hanoi and Ho Chi Minh City and other major tourism
sites. This number is targeted by the Government to be 250,000 by 2015. (The State

Bank of Vietnam, 2011).
However, the market currently has a sluggish growth due to high interest rate
of late payment, 1.5%-1.9% for one month. Customers perceive it risky to use the
card because of fraud. It is not safe to presume. Moreover, Vietnamese customers
are still not used to using cards for their shopping, and prefer to use cash instead.
Many shopping centers are yet to install POS machines to accept credit card
payments (Business time, 2011).
Parties involved in a transactions process are card holder, card issuing agency, the
merchant, the acquiring bank, an association of card issuing. Besides, the
transaction network is also involved. It means that the card holder’ information is
exposed to many parties. It creates security risk. Customer perceived more risk if
the payment is online.
Many benefits for credit card holders. Beside the function of cash replacement
for purchase, it could facilitate car holder a big amount to spend when car holder do
not have real amount without time constraint due to overdraft limit granted to card
holder. It is interest free spending which holder could not find if do credit purchase
in merchant. A squeaky clean credit card history can get high credit score from
credit agency. In turn, it is a criterion for loan disbursement or interest rate offered
by the bank to the card holder. Credit card statement contains data of spending, so it
could help card holder budget. Credit card holders are preferential treatment at
shopping malls, restaurants, hotels…(The economic times, 17 January 2011).
Vietnam is the most risky for credit card. The credit card fraud rises to highest
within region. It was nearly five times the world rate, and 17 times compared with
the regions. (Le Thanh Ha, 2011). The frauds in the international card payment
increase rapidly in 2011. The total value of fraud transactions reached one million
3

dollars in the first quarter of the year and 1.5 million dollars in the second quarter,
which is 3-5 times higher than the same period of the last year and the last quarters
of 2010. The ratio of fraud cases on transaction value has also increased by 2-3

times (Saigon Times, 2011). The proportion of card criminals tends to increase.
Criminals illegally use credit card for online shopping, especially for electronics,
and air tickets. Crime may create shopping webpage to lure customer to provide
their credit card information. The crime becomes more complicated. (Le Minh
Loan, 2011).
Card holder has to pay three typical fees. Member fee is to maintain the card
and paid to the issuing bank. Transaction fee which is charged at the time card
holder do payment for their purchase by credit card. Currency transfer fee is
charged when the currency paid to merchant is different with currency of its
account. The fees are different by bank to bank. In Vietnam, the first and the third
fees are widely found across country. The second one is found limited. (HSBC
Vietnam, 2012)
To explore the market, many banks have launched out campaigns to attract
new customer and encourage spending through their credit card. It could be from
free of issuance fee or free of membership for the first year (Vietcombank,
techcombank…) or gift reward (HSBC, Techcombank…) or refund a part of spend
value within a specific period from purchase time (Vietcombank) or lucky draw.
Banks compete together to expand their number of card holder. They also target to
person who are holding credit card of other banks.
1.2 Problem Statement
Vietnamese is known as low loyalty customer to brand. Surveys by Taylor
Nelson Sofres Vietnam in 1999 and 2004 reveal that, in 1999, 54 percent of
consumers paid more to “enjoy the finer things of life”. However, this rate reached
80 percent in 2004. The surveys also indicate that, in 1999, 79 percent of
4

Vietnamese consumers agreed that they often switched brands. However, this rate
became 47 percent in 2004 The Wall Street (Nguyen Dinh Tho, 2009).
Many researches show that when customers lay their loyalty to a brand, they
continue to buy it in future, recommend it to friend, and choose the brand over

others, even the others product features and price are better. It also shows that the
cost to win a new customer is always higher than the current one. The development
and maintenance of customer brand loyalty is placed at heart of marketing plans,
especially in highly competitive market with increasing unpredictability and
reducing product differentiation.
It has been suggested by many authors that loyal customers are a competitive
asset and that a way of increasing customer retention is through secure and
collaborative relationship between buyers and sellers (Chaudhuri, 1999; Chaudhuri
and Holbrook, 2001; Fournier, 1998; Oliver, 1999). Customer loyalty has been
universally recognized as a valuable asset in competitive markets (Srivastva,
Shervani& Fahey, 2000).
For long term success, all firms should gain customer loyalty by understanding
factors affecting customer loyalty.
After a period of focusing on increase in number of new customers, some
banks such as Vietcombank, HSBC have paid attention on building loyalty. Their
loyal programs have been appreciated by their card holders. All the other banks
understand that loyalty is important but it is a dilemma.
Credit card research in Vietnam is limited especially for loyalty. How to build
credit customer loyalty is a big question to managers.
Given the above concern, there is a need to examine the antecedents of brand
loyalty for credit card users.
1.3 Research Objectives
5

The question of what are the loyalty drivers of the market is always a big
question for those bank managers to have a correct direction in promoting their
customer loyalty programs. This research attempts to examine antecedents of brand
loyalty for credit card users in Vietnam banking sector. This study’s aim to answer
for below questions:
 Question 1: What are factors affecting loyalty of credit card user?

 Question 2: How are factors affecting loyalty importance?
 Question 3: How to increase credit card holder loyalty in perspective
of perceived value and switching barriers?
1.4 Scope of the Study
By reviewing recent researches to point out findings of antecedent of loyalty
and banking loyalty and discussion with experts to find the suitable factor for
Vietnam market. Due to resources constraints, the author narrow down to the most
influence factor to the proposed research model.
1.5 Research Methodology
This research just focuses on card users who are living in Vietnam.
Preliminary study is qualitative through group discussion in order to explore,
adjust and supplement scale for factors affecting brand loyalty. Official study is
quantitative with sample size of: Number of variable x 5.
6

CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
Chapter 1 pointed out the current Vietnam credit card situation and card holder
loyalty problem. Chapter 2 will review previous researches and discussion of
theories relating brand, customer loyalty to a brand and customer loyalty in banking
sector. It also provides loyalty constructs researches and discussion. This chapter is
structured into 6 sections. Section 2.1 provides a general introduction to the chapter,
including the objectives and structure of the chapter. Section 2.2 focuses on
concepts of brand loyalty and brand loyalty benefit to an organization. Section 2.3
introduces customer segmentation on loyalty. Section 2.4 provides previous
researches and discussion on factors affecting loyalty. Section 2.5 focuses on factors
affecting loyalty in banking sector. Section 2.6 proposes research model after
reviewing literature and adjustment for Vietnam context and this study.
2.2 Brand Loyalty and its benefit
2.2.1 Brand loyalty

Customer loyalty has been widely researched and as a result the concept of
loyalty has received many definition and interpretation in the literature. Jacoby and
Chestnut ( 1978) defined loyalty to brand as a biased behavioral response, expressed
over time by some decision-making unit in relation to one or more of the
alternatives within a larger set of brands. Oliver (1997) defined that loyalty as a
deeply held commitment to re-buy or re-patronise a preferred product or service
consistently in the future, which causes repetitive same-brand or same-brand set
purchasing, despite any situational influences and marketing efforts that might
cause switching behavior. Cunningham (2000) proposed loyalty as a percentage of
overall purchases of a specific brand in comparison with other competitor brands.
Mowen and Minor (2001) referred to loyalty as the extent in which a customer held
positive attitudes towards the brand, commitment and intention to repurchase this
brand in the future. Tawfeq (2007) suggested that loyalty was determined because
7

of customer purchasing habits. Martin (2007) stated that loyalty was a state of mind,
a set of attitudes and desires of the client, but they derive from his psyche.
Loyalty is a multi-dimension concept. It consists of behavioral and attitudinal
(Day, 1969; De Ruyter et al., 1998). Behavioral loyalty is repeated transactions (or
percentage of total transactions in the category, or total expenditures in the
category) and can sometimes be measured quite simply with observational
techniques. Attitudinal loyalty is often defined as both positive affect toward the
relationship’s continuance, and the desire to continue to remain in the relationship,
and is sometimes defined equivalently with relationship commitment (e.g. Morgan
and Hunt, 1994). Uncles et al. (2003) suggested that loyalty is a three popular
conceptualizations of loyalty exist: as an attitude that leads to a relationship with the
brand; as expressed in terms of revealed behavior; and as buying moderated by
individual characteristics, circumstances, and/or the purchase situation. Zeithaml,
Berry and Parasuraman (1996) determined that loyalty had four dimensions: the
intention to repurchase, positive references, complaint behavior, or sensitivity or

tolerance to price against other alternatives.
2.2.2 Brand loyalty benefit
Researchers have agreed that customer loyalty bring benefits to the firm in
both dimensions, economic and non-economic. Loyal customers bring more sales
and lower cost to the seller. Statistics indicate that the cost of attracting a new
customer, is between 5 to 11 times greater than the cost to keep an old customer.
For increasing 2 percent of customer, costs must be10 percent or more. (Vahidreza
Mirabi1 et al, 2012). To keep customer loyalty is easier and profitable than to attract
new customer (Aaker, 1996; Burgeson, 1998). Kumar and Shah (2004) claims that
customer loyalty brings most known benefits: (1) less price sensitive, (2) spend
more time with the company, (3) give positive comments on the brand or company
to other.
8

In summary, when customers have made a decision about a brand and its
associations, they are often loyal to that brand, continue to buy it in the future,
recommend it to friends, and choose the product over others, even those with better
features or lower prices (Assael, 1991).
2.3 Customer Segmentation on Loyalty
There are different ways in differentiating loyal customer. Asker (1996) states
that, there are five levels of customer attitude: (1) The customer will change brands,
especially for price reasons. No brand loyalty; (2) Customer is satisfied. No reason
to change brands; (3) Customer is satisfied and would incur cost by changing brand;
(4) Customer values the brand and sees it as a friend; (5) Customer is devoted to the
brand.
Dick and Basu (1994), suggest customer loyalty is the result of the interaction
between a customer’ relative attitude and repeat purchase behavior to a brand,
classifies customer loyalty into four segmentations: loyalty, latent loyalty, spurious
loyalty and no loyalty. Loyalty is associated with people who have high relative
attitude and behavior. They are called true loyalty person. It is highest level of

loyalty. They repeat purchase to a brand with highly commitment. Latent loyalty is
associated people who have high relative attitude, but low behavior. Spurious
loyalty is associated with people who have low relative attitude and with high
behavior. No loyalty is associated with people who have low relative attitude and
low behavior. It is classified as no loyalty.
As Evans (1996), customers are classified into four categories: hard core
loyalty, branch switcher, new users, and non-users. A hard core loyal customer is
the one repeatedly purchase a particular brand regardless premium price of that
brand has charged.
Jenifer Rowley (2005) suggests a four C’s loyalty model: Captive,
Convenience seeker, contented and commitment. Captive customers are to continue
to patronize a brand because they have no real or other alternative for choice. They
perceive a high switching cost. They also stick to a brand that is associated with
9

products or services where buying decisions are not frequent. Convenience seeker
customers are driven by convenience factors and these factors dominate the choice.
They are not really have and attitude to a brand because it is not relevant. They may
have routine re purchase but low involvement. Contented customers have a positive
attitude to the brand, but are inertial in their behavior. They do not involve with the
brand purchasing additional product or service associated with the brand. For these
customers, each purchase is evaluated on its merits, and brands are not significant in
their purchase decisions. Committed customers are positive in both attitude and
behavior. They are the highest loyal one to a brand. They will do continuing
purchases and also exchange positive and delighted word of mouth to other one.
Committed customers are resistant to competitors’ attempts to attract them. They
may also add value to the brand. They make a positive contribution to ambience of
the service experience for other customers.
2.4 Factors affecting Brand Loyalty
At the earliest time, loyalty is uni-dimension construct. It is attitudinal (Guest,

1944, 1955) or behavioral (Cunningha, 1956). Later researches have combined
these two dimensions into one model (Baldinger and Rubinson 1996; Dick and
Basu 1994). There are many follow up researches to claim that loyalty is more
complex and it is multi-dimension (Chaudhuri and Hoibrook, 2011; ACSI; Oliver,
1999…). Jacoby and Chestnut (1978) propose a composite concept of loyalty. It
includes favorable attitudes, intentions and repeat-purchases.
To find factors affecting loyalty attracted many authors in decades. Different
models have been tested for different industries. Table A.1 in Appendix A
summarizes recent researches on loyalty and factors affecting. There were 34
common factors identified from these researches listed in Table 1 below
Table 1: Most common factors identified affecting loyalty
No
Factors
No
Factors
1
Customer satisfaction
17
Brand affect
2
Image
18
Emotional value
10

3
Switching barrier
19
Brand relevance
4

Habit
20
Celebrity influence
5
Brand trust
21
Brand Performance
6
Awareness
22
Functional value
7
Relationship proneness
23
Culture
8
Religion
24
Attitude
9
Involvement
25
Price worthiness
10
Experience
26
Cognitive conviction
11
Perceived value
27

Equity
12
Reputation
28
Market share
13
Commitment
30
Perceived quality
14
Social value
31
Customer complaint handling
15
Repeat purchase
32
Communication
16
Brand credibility
33
Perceived relative Pprice
17
Brand affect
34
Market factors
(Source: Author extracts from previous researches and refers to Kamla-Raj, 2012)
2.5 Loyalty in Banking Sector
Banking sector is one of high class services. Therefore, loyalty of this sector
has attracted many authors to have deeply studies. Bloemer et al. (1998) defined
bank loyalty as the biased behavioral response, expressed over a period of time by

some decision-making unit with respect to one bank out of a set of banks, which
was a psychological function. Recent researches on loyalty in banking sector were
listed in Table A.2 stated in Appendix A section, at the end of this writing.
In summary, previous studies suggested that bank loyalty is affected by factors
described in Table 2. Frequency of each factor was listed in Table 2 as well.
Table 2: The most factors affecting bank loyalty and its frequency appeared in
recent researches
No.
Factor
Frequency
No.
Factor
Frequency
1
Satisfaction
14
9
Service features
1
11

2
Switching barrier
6
10
Situational factors
1
3
Service quality
9

11
Choosing
1
4
Image
3
12
Habit
1
5
Communication
1
13
Customer attitudes
1
6
Trust
3
14
Customer’s
environment
1
7
Environment
quality
1
15
Competing offers
1
8

Customer complaint
handling
1



(Source: Extracted from Table A.2 stated in Appendix A)
In summary, customer satisfaction, switching barrier, trust, service quality,
image are repeatedly found in researches.
2.6 Research Model
It is explored that bank loyalty is a multi-dimension concept and its
determinants are commonly stated in Table 2. To propose model for this research,
the author has conducted a group discussion with eight participants including three
senior personal bankers and five credit card holder to explore the suitable
determinants of credit card loyalty in Vietnam context. The channel picked up the
most repeated factors previous section to discuss. They are customer satisfaction,
switching barrier, trust, service quality, and image. Based on this qualitative
exploratory study, suggested determinants are customer satisfaction, trust, customer
complaint handling, perceived risk, and switching barriers. However, customer
complaint could only be measured if the respondents have experience with
complaint. It is the fact that there is less than 5% of total customer who have this
experience (as the channel’ confirmation). Due to this constraint of availability of
correspondence, this study just studies the relation between Customer satisfaction,
trust and switching barrier to loyalty. These factors may have correlation each other
12

but it is omitted in this study because of time constraint. This study just only studies
the direct impact of these factors to loyalty.
2.6.1 Customer Satisfaction
Customer satisfaction has attracted many authors to study. The concept was

different from author to author with different approaches. Oliver (1997) proposed
that Customer satisfaction was a response of filling to the need/desires of the
consumer. It was the judgment that the characteristics of a product or service, or
both for themselves, will provide (or are providing) a pleasant level of filling to the
consumer’s needs. Yi (1990) defined that customer satisfaction was the consumer’s
response to the evaluation of the perceived discrepancy between expectations and
perceived performance of the product, expectations, perceived performance, and
discrepancy or disconfirmation are the natural antecedents of consumer satisfaction.
There were two points of view about the formation time of customer
satisfaction. Some authors proposed that it was formed during the consumption.
(Oliver, 1992; Halstead, Hartman, and Schmidt, 1994; Westbrook, 1987; Bearden
and Teel, 1983…). The others stated it was the result of post-purchase evaluation
(Moven, 1995; Hunt, 1977; La Barbera and Mazursky, 1983…). Joan L. Giese and
Joseph A. Cote (2002) summarized satisfaction concept and its formation time in
previous researches in Table A.3 in Appendix A, at end of this writing.
There are many countries have their own Customer Satisfaction Index such as
the Swedish customer satisfaction barometer (SCSB) (Fornell, 1992), the ACSI
(Fornell et al., 1996), and the Norwegian Customer Satisfaction Barometer
(Andreassen and Lindestad, 1998). Austria, Germany, Korea, New Zealand,
Taiwan, and the European Union have also started such indexes (Fornell et al.,
1996; Johnson et al., 2001). These indexes are important tool to measure country
economic performance. It provides useful information to buyers, investors,
regulatory governments (Fornell, 1996). Yong-Jae Park at el (2008) summarized
customer satisfaction construct dimensions of countries Customer Satisfaction
13

Index (CSI) in Table A.4 in Appendix A. From this table, below factors are used in
these countries CSI index
1
Perceived quality

5
Perceived hardware/software quality,
2
Perceived value
6
Customer dialogue
3
Expectation
7
Price tolerance
4
Complaint handling
8
Image
In the previous discussion, customer satisfaction direct affected customer
loyalty. Heskett (1993) revealed that an existence direct connection between
satisfaction and loyalty. Satisfied customer become loyalty and dissatisfied
customer move to another. When the satisfaction is low, customer have the option
to quit and joint competitor or express the complaints.
The American Customer Satisfaction Framework (Fornell et al., 1996) which
has been adopted to create customer satisfaction indices for many countries (Aydin
and Ozer, 2005) shows that customer loyalty is leaded by customer satisfaction and
customer complaints. The European customer satisfaction index model states that
customer satisfaction is an antecedent of customer loyalty. Researchers (Bolton,
1998; Rust and Williams, 1994; File et at.,1994) stated that customer satisfaction
bring greater purchase intention and positive word of mouth.
It appears that unnecessary to study relationship between customer satisfaction
and loyalty as many studies confirmed that there is signification positive between
these two variables (Colgate and steward, 1998; Hocutt, 1998, Patterson and
Spreng, 1997).

Among above factors, perceived value has been received attention from
authors. It is strongly positively impact on customer satisfaction. Many authors
have raised a concern that perceived value concept is the substitute of the concept of
satisfaction (Andreas Eggert and Wolfgang Ulaga, 2002).
2.6.1.1 Perceived Value
Perceived value is discussed as an important construct of customer
satisfaction. Its definition is different from author to author. Zeithaml (1988)
14

proposes that value is the consumer’s overall assessment of the utility of a product
based on perceptions of what is received and what is given. Day (1990) states that
perceived customer value is the surplus between customer’s perceived benefits and
customer’s perceived costs. Perceived customer value equals customer's perceived
benefits minus customer's perceived costs. Perceived value is tradeoff between
perceived benefit and perceived cost. This concept has been widely accepted by
authors (Zeithaml, 1988; Day, 1990; Monroe, 1990; Urbany and Bearden, 1989;
Dodds et al, 1991; Anderson et al., 1993; Gale, 1994; Cronin et al, 1997; Woodruff,
1997; Patterson and Spreng, 1997). The benefit component would include the
perceived quality of the service and a series of psychological benefits (Zeithaml,
1988). The perceived cost component, what the consumer must contribute, would
be include the monetary and non-monetary cost, i.e. money, time, effort and other
resources. (Dodds et. al., 1991).
Jyoti and Harsh (2011) summarized perceived value concept proposed in
recent researches listed in Table A.5 in Appendix A section.
Perceived value is a multidimensional construct (Woodruff, 1997; De Ruyter
et al., 1997 and 1998; Sweeney and Soutar, 2001; Sa´nchez et al., 2006). Sweeney
and Soutar (2001) propose that perceived value constructs are functional, emotional
and social dimensions. Functional is defined by the rational and economic
valuations of individuals. The quality of the product and the quality of service form
part of this dimension. Emotional dimension is relating to feelings or internal

emotions and social dimension is relating to the social impact of the purchase.
Sweeney and Soutar (2001) later designed a scale of measurement of value named
PERVAL.
Juan Carlos Fandos Roig et. al. (2005) proposes customer perceived value in
banking services has six dimensions by adopting three dimensions of PERVAL.
The authors divided functional value of PERVAL into four small functional scales.
It is functional value of the installations of the establishment; functional value of the
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contact personnel; functional value of the service (Quality); functional value price.
The social value and emotional value are accepted.
Jyoti and Harsh (2011) summarized perceived value dimensions propose in
recent researches in Table A.6 in Appendix A section.
Components of perceived value were examined to direct affect customer
satisfaction. Lee et al. (2007) studied the multiple dimensions of perceived value
and investigated how value affects satisfaction. Their results stated that all
dimensions of perceived value have a significant effect on satisfaction. This result is
not different with findings by Wang et. al. (2004).
In this study, author adopt Juan at el model and its scale for perceived value in
banking service but group the four functional dimensions as one as the originating
model proposed by Sweeney and Soutar (2001).
Consequently, it is hypothesized that:







H1: Functional value positively influences customer satisfaction

H2: Emotional value positively influences satisfaction
H3: Social value positively influences on satisfaction
2.6.1.2 Perceived Risk and relationship with Satisfaction
Credit card is as electronic paper note. It requires a workspace from card
issuance, and acceptance for payment which includes internet for shopping online,
POS for shopping at stores. The users restricted information would be leaked to
whenever the card is used for payment at shops, cinemas, website of course it is
Perceived value
Functional value
Emotional value
Social value
Satisfaction
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outside the bank. In some instance, customers consider perceived risks before
adopting a credit card and during using the card to pay their purchases.
Credit card usage behavior is impacted by Perceived usefulness, Perceived
ease of use, Perceived risk (Nguyen Thi Tuyet Phuong, 2012).
Perceived Risk is to explain the risk perception and risk deduction methods
used by consumers (Mitra et al., 1999). It is defined as “a common thought of as felt
uncertainty regarding possible negative consequences of using a product or service”
(Featherman and Pavlou, 2003). Five different risk dimensions identified by Jacoby
and Kaplan (1972) are:(1) financial;(2) performance;(3) physical;(4)social; (5)
psychological risk. The sixth risk parameter identified by Roselius (1971) is time
risk. Time risk involved the possible loss of convenience or time associated with the
satisfactory delivery of a service. Definition of such dimension has been
summarized in Table 3.
Szymanski and Hise (2000) stated that financial risk includes both tangible
and intangible assets of consumers. That means consumers are quite apprehensive,
not only about losing certain amounts of money, but also about losing private

information required in the transaction. Privacy risk is the potential loss of control
over personal information, such as invasion of privacy. Featherman and Pavlow
(2003) also stated that privacy risk may also be identified as a common concern that
prevents the adoption of internet banking. Furthermore, some researches on credit
card fraud have been studies recently (Barker et al., 2008; Prabowo, 2011; Yu –
Feng, 2005). As discussion in Chapter 1, In Vietnam context, fraud in credit card is
the high rate in the region, privacy risk is significant. Therefore this study will adopt
the privacy is one of perceived risks.
Given in credit card context, perceived risks have significant impact to
perceived risk which impact on satisfaction are financial risks, time risk,
performance risk, privacy risk. (Nguyen Thi Tuyet Phuong, 2012).
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Many authors claimed that perceived risk negatively and significantly
influences on satisfaction (Kun Hua Tsai, 2004; Mark S. Johnson et. al., 2008;
Huei-Huang Chen et. al.,2009).
Table 3: Description and definition of perceived risks dimension.
Dimension
Definition
Financial risk
The potential monetary outlay associated with the initial
purchase price and subsequent maintenance cost of the products
(Featherman & Pavlou, 2003)
Performance
risk
“The possibility of the product malfunctioning and not
performing as it was designed and advertised and therefore
failing to deliver the desired benefits” (Featherman & Pavlou,
2003).
Physical risk

“The probability that a purchased products results in a threat to
human life” (Lee, 2009)
Social risk
“Potential loss of status in one’s in social group as a result of
adopting a product or service, looking foolish or untrendy”
(Featherman & Pavlou, 2003)
Psychological
risk
Psychological risk is the perception that a negative effect on a
consumer's peace of mind may be caused by a defective product
(Jacoby and Kaplan, 1972)
Time risk
“Consumers may lose time when making a bad purchasing
decision, wasting time researching and making the purchase,
learning how to use a product or service only to have to replace it
if it does not perform to expectation (Featherman and Pavlou,
2003)
(Source: Nguyen Thi Tuyet Phuong, 2012)