FACTORS AFFECTING LOYALTY OF INTERNET CUSTOMERS EVIDENCE FROM VIETNAM

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business







Nguyen Thi Kim Quyen



FACTORS AFFECTING LOYALTY OF INTERNET
CUSTOMERS: EVIDENCE FROM VIETNAM



MASTER OF BUSINESS (Honours)






Ho Chi Minh City – Year 2012


UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business







Nguyen Thi Kim Quyen


FACTORS AFFECTING LOYALTY OF INTERNET
CUSTOMERS: EVIDENCE FROM VIETNAM

ID: 60340102


MASTER OF BUSINESS (Honours)
SUPERVISOR: DR. DINH THAI HOANG




Ho Chi Minh City – Year 2012
Loyalty of Internet customers in Vietnam


ACKNOWLEDGEMENTS
I would not have been able to complete my thesis without the advice, assistance,
understanding and encouragement of a number of people. I would like to gratefully

and sincerely acknowledge their assistance and support. First of all, the most
important person I would like to thank is my supervisor, Dr. Dinh Thai Hoang.
Thanks to his valuable advice and generous guidance throughout the process of
completing this thesis. Secondly, I would like to express my gratefulness to Dr.
Nguyen Dinh Tho for his kindness in supporting me to deal with analyzing data and
other issues of the thesis.
Furthermore, I would like to thank all of the staff at International School of
Business – University of Economics Ho Chi Minh City who are always enthusiastic
and give me a lot of administrative support, assistance and understanding.
Finally, I would like to give my gratefulness to all classmates who have been
sharing with me all their knowledge and experience as well as happiness and
difficulties during MBA course. I would not complete my thesis without their
encouragement and support.
In brief, it has been a long journey and I have grown in so many ways. I would like
to say “thank you” again for the involvement of everyone who has helped me to
complete this thesis.
Loyalty of Internet customers in Vietnam


ABSTRACT
For Internet service providers (ISP), it is essential for them to understand the
critical factors that influence customer loyalty. These issues are critical to the long-
term business success of any service provider. Based on the literature reviewed in
the thesis, this study empirically investigates the impact of factors on customer
loyalty.
A quantitative method via questionnaire survey was used to obtain the views of
approximately 300 Internet users in Ho Chi Minh city regarding their opinions and
perceptions about their current ISP and their intention to stay with them. Multiple
linear regression analysis was used to investigate the relationship between customer
loyalty and influencing factors mentioned above.

According to the findings of this research, in order to retain internet service
customers, providers need to take into consideration with factors such as network
quality, price perception, perceived value and trust. The results of this research are
important for ISP to enhance and improve their competitiveness, in other words, to
become successful and have more loyal customers, which will ultimately result in
more profitability.
Keywords: customer retention, customer loyalty.

Loyalty of Internet customers in Vietnam - 1 -



TABLE OF CONTENTS
ACKNOWLEDGEMENTS 3
ABSTRACT 4
CHAPTER 1: INTRODUCTION 5
CHAPTER 1: INTRODUCTION 5
1.1 Introduction 5
1.2 Research background 5
1.3 The research objectives 7
1.4 The research questions 7
1.5 The research model 7
1.6 The research methodology 7
1.7 The research structure 8
1.8 Conclusion 8
CHAPTER 2: LITERATURE REVIEW 10
2.1 Introduction 10
2.2 Customer loyalty with internet service provider 10
2.2.1 Network quality and customer loyalty 11
2.2.2 Price perception and customer loyalty 11

2.2.3 Perceived value and customer loyalty 12
2.2.4 Trust and customer loyalty 13
2.3 Controlling factors 13
2.4 The research model 13
2.5 Conclusion 15
CHAPTER 3: RESEARCH METHODOLOGY 16
3.1 Introduction 16
3.2 The research approach 16
3.3 Measurement 16
3.4 Sample and Data collection 19
Loyalty of Internet customers in Vietnam - 2 -



3.5 Data analysis 20
3.6 Conclusion 22
CHAPTER 4: DATA ANALYSIS AND RESULT 23
4.1 Introduction 23
4.2 Preliminarily data analysis 23
4.2.1 Cleaning and screening data 23
4.2.2 Profile of respondents 23
4.3 Evaluating the measuring scales 25
4.4 Multiple Linear Regression analysis 32
4.4.1 Introduction 32
4.4.2 Computing variables 32
4.4.3 Assumption for Multiple Regression 32
4.4.4 Testing hypotheses 35
4.4.5 Controlling variables 37
4.5 Conclusion 39
CHAPTER 5: CONCLUSION AND IMPLICATIONS 40

1.1 Introduction 40
1.2 Conclusion 40
1.3 Implications of the study 41
1.4 Limitations and suggestions for further research 42
REFERENCES 43
APPENDIX A: QUESTIONAIRE 47
APPENDIX B: DATA ANALYSIS 53

Loyalty of Internet customers in Vietnam - 3 -



LIST OF FIGURES
Figure 1: The theoretical model 14
Figure 2: The Histogram 33
Figure 3: The Nomal P-P Plot of Regression Standardized Residual 34
Figure 4: Scatterplot 34

Loyalty of Internet customers in Vietnam - 4 -



LIST OF TABLES
Table 1: Research questions and hypotheses 15
Table 2: Measuring scale for variables 19
Table 3: The profile of respondents 25
Table 4: The reliability statistics 27
Table 5: KMO and Barlett’s test 29
Table 6a: The pattern matrix of EFA result 30
Table 7b: The pattern matrix of EFA result 31

Table 8: The Cronbach’s alpha result - retest 31
Table 9: Collinearity statistics 35
Table 10: Hypotheses testing 36
Table 11: Regression with controlling variable of gender 37
Table 12: Regression result with controlling variable of income level 38
Table 13: Regression result with controlling variable of using experience 38
Loyalty of Internet customers in Vietnam - 5 -



CHAPTER 1: INTRODUCTION
1.1 Introduction
This research examines the driving forces of internet users’ loyalty and their
intention to stay with their current provider among existing Internet Service
Providers (ISP) in the context of Vietnam telecommunication sector. This chapter
will provide general information of research problem as well as research
background, identify research objectives and research questions. This chapter also
briefly outlines research structure.
1.2 Research background
High-speed internet services are becoming more and more popular and the rapid
development of information technologies affects every aspect of our lives. The
importance of information and communication technology is undeniable as it has
been applied in various fields for the purpose of service enhancement. Although
basic Internet services had existed in Vietnam since the early nineties, until 1997,
the first commercial Internet Service Provider (ISP) opened for business – Vietnam
Data Communication Company (VDC) which belongs to Vietnam Posts &
Telecommunication Groups (VNPT). Since then, Vietnam has been connected by
two gateways: one in Hanoi connecting with Hong Kong and Australia, and the
other in Ho Chi Minh City, which connects with the United States by Sprint.
Internet usage remains low in comparison with that of other Asian nations, yet

connectivity has increased rapidly over the past few years, thanks to an initiative by
the Ministry of Post and Telecommunications. According to the internet statistic
report of VNIC (Vietnam Internet Center), up to June 2012, the number of internet
users in Vietnam is more than 31 million which is equivalent to the scale of 35.4
percent users per capita. Over more than fifteen years of formation and
development, together with the development of internet services, the number of
ISPs has also remarkably increased, which leads to severe competition among ISPs,
especially in a developing country like Vietnam. Until now, there are more than ten
ISPs operating in Vietnam including VDC/VNPT, Viettel, FPT, Netnam, SPT,
Loyalty of Internet customers in Vietnam - 6 -



Hanoi Telecom, VTC, G-Tel, Vishiped and CMC TI in which three of the leading
companies: VDC/VNPT, Viettel, FPT have obtained more than 85 percent of total
Internet service market share in Vietnam. As a result, ISPs must try their best to
develop their marketing strategy and improve their business performance to
increase their level of competitiveness. From the above statistics, we can understand
that the competition of Internet services in Vietnam is a severe war among three big
ISPs: VDC/VNPT, Viettel and FPT. Beside the diversification of services,
enhancing the customer satisfaction and customer loyalty is considered to be the
most effective way to compete in the market, especially in telecommunication
industry which is on the verge of saturation point in some years’ time. Customer
loyalty are believed to be the most effective weapons for providers to complete with
other rivals because these factors are the primary variables that impact customers’
intention to stay with their current providers (Khatibi, Ismail & Thyagarajan, 2002).
The providers which satisfy customers can expect higher market shares and greater
profitability and, in turn, encourage their customers to become loyal (Khatibi,
Ismail & Thyagarajan, 2002). Aaker (1991) has discussed the role of loyalty in the
brand equity process and has specifically noted that brand loyalty leads to certain

marketing advantages such as reduced marketing costs, more new customers and
greater trade leverage. Expanding loyal customers can assist in generating a
business’s profitability because the cost of retaining existing customers is less than
that of acquiring new ones (Reichheld, Teal, 1996). Therefore, understanding how
and why a sense of loyalty develops in customers remains one of the crucial
management issues of our day. By assessing the Internet service users in Ho Chi
Minh city, this research will give useful information of a range of factors impact on
Vietnamese internet users’ perceptions of their current ISPs, from which factors
effecting customer loyalty, especially in telecommunication sector, will be derived.
In other words, this research provides ISPs the direction and valuable
understandings of what factors should be taken into account to become successful
Loyalty of Internet customers in Vietnam - 7 -



and have more loyal customers, which ultimately result in more profitability and
leads to their strong competitiveness and stable growth in the future.
1.3 The research objectives
Arising from the research problem, this research aims to explore the main attributes
in internet service provisioning - customer loyalty in the context of Vietnam
telecommunication market. More specifically, the main objective of this research is
to identify the factors influencing customer loyalty in Internet services in Vietnam.
We also examine the affecting level of each factor on Vietnamese internet users’
loyalty.
1.4 The research questions
Based on the research objectives, we accordingly give two main questions as
follow:
- What are the factors that influence customer loyalty in Internet services in
Vietnam?
- How do these factors influence on loyalty of Internet customers?

1.5 The research model
Based on the literature review, a model with four hypotheses are established in
order to explore the research problems and develop the hypotheses. Figure 1 – The
research model – in Chapter 2 shows the proposed model for this research regarding
customers’ intentions to stay with their current ISP in Vietnam. This model leads to
four hypotheses tested that show the relationship between network quality, price
perception, perceived value and trust and customer loyalty.
1.6 The research methodology
An overview of the research methods used to collect and analyze the data are briefly
discussed. In this research, a survey with questionnaire in was used to collect data.
The questionnaire was made in English and then translated into Vietnamese because
all of respondents are Vietnamese. Random sampling was chosen to reduce bias in
Loyalty of Internet customers in Vietnam - 8 -



the sample. The data collected from the survey was coded, analyzed and interpreted
by SPSS software. More details of the research methodology are provided in
Chapter 3 and the result of the research is presented in Chapter 4.
1.7 The research structure
This research begins with Chapter 1 – Introduction, which provides general
introduction and brief background of internet services in general and in the context
of Vietnam in particular to the research including research background, research
objectives, research questions, research model, research methodology and structure
of the research.
Chapter 2 – Literature review - screens the literature of customer loyalty from
previous researches. Basing on these literature reviews, a model with four
hypotheses is developed. We examine the relationship between customer loyalty
and its affecting factors including network quality, price perception, perceived value
and trust. Besides, demographic factors such as gender, income, and experience of

service using are also tested their impact on customer loyalty.
Chapter 3 – Research methodology - presents methods to conduct this research,
consisting of three sections. Firstly, measuring scale with items for each factor is
provided. Next, sample and data collection are explained in detail. The last one
describes the process and analytical techniques used for data analysis.
Chapter 4 – Data analysis - reports the results from data analysis process and
confirms the value of hypotheses mentioned in Chapter 2 and relationship among
factors.
Chapter 5 – Conclusion, implications and limitations – repeats the result derived
from this research. Moreover, this chapter also discusses limitations of the research
and suggestions for future researches.
1.8 Conclusion
This chapter presents the background to the research in order to introduce the key
research problem, research objectives, research questions, research model and
Loyalty of Internet customers in Vietnam - 9 -



research methodology. By reviewing the existing literature, this research aims to
test the relationship between customer loyalty and its affecting factors in
Vietnamese Internet service market. Four factors are assumed to have positive
effect on loyalty of Internet customers. Data are collected by questionnaire and
analyzed by SPSS software.
Loyalty of Internet customers in Vietnam - 10 -



CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
This chapter presents a review of the literature in the main areas of customer

retention which concentrates on factors influencing customer loyalty for internet
service providers, especially in the context of Vietnam telecommunication industry.
At first, from the tested relationship between customer loyalty and relating factors
including network quality, price perception, perceived value and trust, four
hypotheses derived from which (H1, H2, H3, H4) are proposed. Then, the
controlling variables such as gender, income and service using experience are also
tested their effect on customer loyalty.
2.2 Customer loyalty with internet service provider
Customer loyalty is an outcome of a customer’s purchase and use resulting from the
comparison of the reward and the costs of the purchase in relation to the anticipated
consequences (Churchill & Surprenant 1982). Jacoby (1975) advises that loyalty is
a biased behavioral purchase process caused by the customer’s emotional processes.
Loyalty can be measured by several factors including proportion of purchase,
purchase sequence, and probability of purchase (Dick & Basu 1994). The meaning
of customer loyalty can be explained as the customer’s intention to stay with the
current service provider and, at the same time, their behavior to make frequent
repeat purchases of their preferred brands. As a result, most businesses prefer to
retain their valued customers and persuade them to become more loyal because this
can result in greater income and profit. Without customer loyalty, service providers
may not be able to retain their competitive advantage. This can be explained as
loyal customers are easier to serve and make fewer demands on employees since
they already know and understand the company’s working processes (Chow &
Holden 1997). Loyal customers appear to provide more repeat patronage and are
less likely to shop around with competitors for better deals (Bowen & Chen 2001).
In order words, companies create profit from their long-term relationship. The
Loyalty of Internet customers in Vietnam - 11 -



longer loyal and profitable customers stay with a business, the more profit that the

business can gain (Reichheld & Teal 1996).
In general, a range of advantages arise when businesses have loyal customers
including increasing profitability, increasing price premiums, increasing long-term
relationship and commitment, increasing purchase intention and positive word-of-
mouth, reducing marketing and operating costs and increasing switching barriers to
prevent customers from defecting their current service provider (Reichheld & Teal
1996). Therefore, customer loyalty cannot be neglected and most companies must
try their best to satisfy their customers in order to develop long-term relationships
with them and to ensure their customers become loyal.
2.2.1 Network quality and customer loyalty
Network quality is one of the most important drivers of overall service quality
which leads to customer satisfaction in the context of telecommunication (Chun &
Hahn, 2007; Wang, Lo & Yang, 2004). Previous literature suggested that stability,
transmission speed and network coverage are the core attributes of network quality
(Woo & Fock, 1999; Mohd R.B. Yaacob, 2011). The stability and transmission
speed of internet service were important to users and they will consider changing to
other providers due to stability and speed factor (Mohd R.B. Yaacob, 2011).
Moreover, the uptime of service was tested to have impact on customer
satisfaction as well as customer loyalty (Wang, Lo & Yang, 2004). The results of
Wang, Lo & Yang’s (2004) study suggested that, in order for service providers to
be successfully competitive, they must try to improve the availability of service.
We, therefore, hypothesize that:
H1: Network quality has a positive impact on customer loyalty.
2.2.2 Price perception and customer loyalty
With regards to price perception, although Internet broadband users are willing to
pay more for better service, they will consider changing to other provider because
of the price factor (Mohd R.B. Yaacob, 2011). Therefore, we believe that customers
Loyalty of Internet customers in Vietnam - 12 -

of Internet services are sensitive to price and the higher price level could lead to low
demand, accordingly. Ranaweera & Neely (2003) showed that price perception has
a direct linear relationship with customer loyalty in telecommunications sector. We
therefore believe that such relationship may be more explicit in the fierce price
competitive in telecommunication market like Vietnam. Hence, we formulate the
following hypothesis:
H2: Service price is positively related to customer loyalty.
2.2.3 Perceived value and customer loyalty
Perceived value can be defined as the customers’ overall assessment of the utility of
products or services based on perceptions of what is received and what is sacrificed
(Monroe 1991, Parasuraman, Zeithaml & Berry 1988). Simply stated, perceived
value is trade-off between benefits and sacrifices. The perceived sacrifice includes
all the costs the customer faces when they are in the process of purchasing such as
purchase price, acquisition costs, installation, repair and maintenance, risk of failure
or poor performance (Monroe 1991, Parasuraman, Zeithaml & Berry 1988). The
perceived benefits include physical and service attributes, technical support, and
other indicators of perceived service quality. Monroe 1991, Parasuraman, Zeithaml
& Berry (1988) point out that perceived value is subjective and individual, and
therefore varies among customers. Research evidence suggests that customers who
perceive that they receive value for money are more satisfied and tend to become
loyal customers more often than ones who do not (Zeithaml, Berry & Parasuraman
1996). Customers who remain with a service provider for a longer period of time
because they are pleased with the perceived quality and value of the services tend to
buy more additional services and spread favorable word-of-mouth messages and
have a willingness to recommend the firm to others (Boulding 1993, Zeithaml &
Berry 1988). Perceived value, from the service providers’ standpoint, should be
viewed as a major competitive weapon and can be used to create and improve their
sustainable competitive advantage (Khatibi, Ismail & Thyagarajan 2002). By adding
Loyalty of Internet customers in Vietnam - 13 -

more perceived value to the service, customer loyalty can be increased. We,
therefore, hypothesize that:
H3: Perceived value has a positive effect on customer loyalty
2.2.4 Trust and customer loyalty
Trust can be viewed as an antecedent of customer loyalty (Dick & Basu, 1994). To
create customer loyalty toward a brand, building long-term relationships with
customers in order to win their trust is considered advantageous (Morgan & Hunt,
1994). When customers have trust in the products or services of their preferred
brand, they are willing to purchase more of the brands without the need to be
heavily persuaded, and this can result in lower advertising and other related costs
(Murphy, 2001). Trust can be viewed as being complementary to satisfaction, in
ensuring long-term relationships, and strengthening customer loyalty (Hart &
Johnson, 1999). In addition, trust is a willingness to rely on other parties in whom
one has confidence, when the buyers trust the sellers, it affects their purchasing
behavior (Chow & Holden, 1997). This leads to the following hypothesis:
H4: Trust positively influences customer loyalty.
2.3 Controlling factors
Choudrie, Jyoti (2005) find there are strong influences of demographic variables
such as gender, income on customer loyalty. In this research, the relationship
between gender, income also were tested. Besides, the customer’s experience with
service should be examined its impact on customer loyalty.
2.4 The research model
The research model is the foundation that the entire research is based on and a good
model should help in identifying and labeling the underlying variables in the
circumstances that are related to the research problem (Sekaran 2000). This section
is built basing on the existing literature to propose a model linking the correlations
between customer loyalty and relating variables. To appropriately answer the

Loyalty of Internet customers in Vietnam - 14 -



research questions, we develop the model with five main variables including
network quality, price perception, perceived value and trust, which are considered
to be dependent variables affecting customer loyalty. Furthermore, controlling
variable of demographic is tested its influence on the relationship among these
variables.
The proposed model and all hypotheses tested in the context of Vietnam
telecommunication market are outlined as follow:














Figure 1: The theoretical model
The following table provides a summary of the research hypotheses and questions
to be tested in the research:
Research questions Hypotheses
1. What are the factors that influence

customer loyalty in Internet
H1: Network quality has a positive impact
on customer satisfaction.
Controlling variables
(Gender, Experience,
Income)
Network quality

Price perception
Perceived value

Trust


Customer loyalty
H1

H2

H3

H4

Loyalty of Internet customers in Vietnam - 15 -



H2: Price perception is positively related
to customer loyalty.
H3: Perceived value has a positive effect

on customer loyalty
services in Vietnam?
2. How do the factors influence
customer loyalty in Internet
services in Vietnam?
H4: Trust positively influences customer
loyalty.
Table 1 - Research questions and hypotheses
2.5 Conclusion
In summary, we develop four hypotheses in the theoretical model in the context of
Vietnam telecommunication industry. The model proposes that customer loyalty is
positively affected by network quality, price perception, perceived value and trust.
In addition, we also examine the effect of demographic factors on customer loyalty.
Loyalty of Internet customers in Vietnam - 16 -



CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction
The purpose of this chapter is to introduce the research methods and approaches
used to investigate customers’ perceptions of Internet service users in Ho Chi Minh
city. Specifically, this chapter will give you some general information about the
way we conducted the research including the research approach, measurement,
sampling, data collection, and data analysis technique.
3.2 The research approach
Quantitative approach primarily involves statistical analysis and relies on numerical
data to ensure objective and accurate results are obtained in order to draw
conclusions or to test hypotheses (Ticehurst & Veal, 2000). This research involves
quantifying the relationship between variables and will use quantitative research to
test the research assumptions and hypotheses in order to solve the research problem.

This is a quantitative research because it seeks to answer set hypotheses from
reviews of previous literature rather than attempting to develop new theory.
3.3 Measurement
This section presents the items for measurement of all relating factors. Items of each
factor are developed from previous literature review mentioned in Chapter 2.
Measuring scale of network quality from Mohd R.B. Yaacob (2011) and Wang, Lo
& Yang (2004) were used:
- The upload and download speed of network is always strong.
- The uptime of network is always available without interruption.
- The connection quality is always reliable.
- I can access the network at anytime without delay.
Items for price perception from Ranaweera & Neely (2003):
- The price charged by X is reasonable.
- The service’s price of X is cheaper than others.
- Service supplied by X is equivalent to its price.
Loyalty of Internet customers in Vietnam - 17 -



- Service offered by X is better value for money than what I would pay for the
same service of others.
- I’m willing to pay more for better service quality.
Based on Wang, Lo & Yang (1988), five items for measuring the effect of
perceived value on customer loyalty are adopted:
- The customer service staff of my ISP gives me adequate support.
- Whenever I have problem with services, X takes corrective action without
delay.
- X keeps me informed of things that I need to get the best use of the service.
- I feel comfortable with the willingness of assistance and support from X.
- Overall, the chosen offerings are worth for my money, effort and time.

Items for measuring trust from Dick & Basu (1994)
- I believe that X will be ready and willing to offer me assistance and support.
- I believe that X always fulfills the promises that it makes to its customers.
- I believe that X has necessary ability and knowledge to fulfill its tasks
- I believe that X always puts interests of its customers first of all.
Items for customer loyalty from Nguyen and Leblanc (1991)
- I will recommend X as the best ISP in HCMC.
- I will continue to do business with X.
- X is my first choice in my future internet service needs.
- I will purchase other services offered by X in the future.
- I will encourage friends and relatives to do business with X.
Items for demographic of respondents:
- Gender
- Service-using experience
- Income
Measuring scales for variables are summarized as table below:


Loyalty of Internet customers in Vietnam - 18 -



No.

Variables Literature review Measuring items
1
Network
quality
Mohd R.B. Yaacob
(2011) and Wang,

Lo & Yang (2004)
1. The upload and download speed of network is
always strong.
2. The uptime of network is always available
without interruption.
3. The connection quality is always reliable.
4. I can access the network at anytime without
delay.
2
Price
perception

Ranaweera &
Neely (2003):
1. The price charged by X is reasonable.
2. The service’s price of X is cheaper than others.
3. Service supplied by X is equivalent to its price.
4. Service offered by X is better value for money
than what I would pay for the same service of
others.
5. I’m willing to pay more for better service
quality.
3
Perceived
value
Wang, Lo & Yang
(1988)
1. The customer service staff of my ISP gives me
adequate support.
2. Whenever I have problem with services, X

takes corrective action without delay.
3. X keeps me informed of things that I need to
get the best use of the service.
4. I feel comfortable with the willingness of
assistance and support from X.
5. Overall, the chosen offerings are worth for my
money, effort and time.
4
Trust
Dick & Basu
(1994)
1. I believe that X will be ready and willing to
offer me assistance and support.
Loyalty of Internet customers in Vietnam - 19 -



2. I believe that X always fulfills the promises that
it makes to its customers.
3. I believe that X has necessary ability and
knowledge to fulfill its tasks
4. I believe that X always puts interests of its
customers first of all.
5
Customer
loyalty
Nguyen and
Leblanc (1991)
1. I will recommend X as the best ISP in HCMC.
2. I will continue to do business with X.

3. X is my first choice in my future internet
service needs.
4. I will purchase other services offered by X in
the future.
5. I will encourage friends and relatives to do
business with X.
Table 2: Measuring scale for variables
3.4 Sample and Data collection
Sampling can be described as the process of selecting a sufficient proportion of
people from the entire population (Sekaran, 2000). The process of random sampling
was used in order to reduce bias in the sample of Vietnamese Internet users.
According to DeCoster, J. (2004), minimum sample size used in statistics analysis
should be equal to or greater than five times of the number of independent variables,
but not less than 100 to generate reliable results: n ≥ 100 and n ≥ 5k (where k is the
number of items). This research has 23 items, as a result, the minimum sample size
required to run EFA in this research is: n = 5 x 23 = 115. Otherwise, Tabachnick &
Fidell (2001) stated that the minimum sample size in case of multiple regression
should be: n = 50+8m (where m is the number of independent variables). Apply this
formula for 4 independent variables of this research, we have the minimum sample
size for multiple regression: n = 50 + 8 x 4 = 82. In summary, this research needs
Loyalty of Internet customers in Vietnam - 20 -



115 samples at least to take EFA and multiple regression analysis. With quantitative
approach, in order to ensure the reliability and validity, the adequate sample size for
this research was about three hundreds of internet service users. The survey was
conducted from August to October with Internet service users in Ho Chi Minh city.
The questionnaire was sent to more than 500 potential respondents to get the target
sample size of around 300 respondents.

Data was collected by questionnaire survey which consists of three sections. The
first section was questions about customers’ experience with ISPs; the questions in
the second section focused on respondents’ opinions on service and their future
decision with the current ISP; and the last one were demographic questions.
Basically, the questionnaire contained statements that could be answered through
ranking and open-ended questions as well. Respondents were asked some
fundamental questions about their experiences with ISP and which companies were
their current ISPs. In the second section, a seven-point Likert scale ranging from
“Strongly disagree” (1) to “Strongly agree” (7) was used to measure respondents’
perceptions about their current ISP’s service quality and intention to stay with or
leave for another one. The questionnaire was made in English at first and translated
into Vietnamese because the respondents were all Vietnamese.
3.5 Data analysis
Following data collection, the next step is the process of data analysis in order to
address the research questions. The procedure of converting raw data into
information consists of several processes including editing, coding, data entry and
data analysis (Zikmund 2000). In this research, the SPSS software was chosen to
analyze the data in terms of descriptive statistics. Data processing procedures and
analytical techniques used in this research are discussed as below:
Firstly, the Cronbach alpha was used to examine the reliability of measuring scale.
Cronbach alpha is a statistical test if correlation of the items in the scale relative to
each other (Hair 2006). So, this method of analysis can remove inappropriate
variables and limit junk variables in the research process and assess the reliability of
Loyalty of Internet customers in Vietnam - 21 -



the scale through the Cronbach alpha coefficient (Hair 2006). The scales are reliable
when Cronbach’s alpha coefficient of each scale is equal to or bigger than 0.7
(Pallant 2005).

Secondly, Effecting Factor Analysis (EFA) was conducted to test the number of
factors extracted. Factor analysis is a multivariate statistical technique which
defines the underlying structure among a large number of variables (Hair 2006).
The two fundamental purposes of factor analysis are to summarise the information
contained in a large number of variables and condense the data into smaller number
of factors (Hair, 2006). In this research, there were five factors that were assumed to
have impact on customer loyalty of Internet services. Factor analysis was used to
create factors for each of the five measuring scale related. In addition, factor
analysis helped the researcher to determine which factors were highly correlated to
customer’s loyalty. The result is considered to be acceptable when following
conditions are met (Pallant, 2005):
 The sample size should be equal to or greater than five cases for each
variable.
 Factor analysis is appropriate to data if:
 The Kaiser-Meyer-Olkin value (KMO) is 0.6 or greater.
 The Bartlett’s test of sphericity is statistically significant: p < 0.05.
 The number of factors is determined when:
 The total variance explained by these components should be above
50%.
 Factor loading criteria should be 0.5 or more to ensure a practical
significance.
Thirdly, Pearson’s correlation coefficient was used to examine the relationships
between two or more research variables (Veal 2005). According to Veal (2005), the
relationship between the variables can take different forms. If the value of
correlation coefficient is 1.0, then there is a perfect positive correlation between two
variables. In contrast, if the value of correlation coefficient is -1.0, it can be