Customer satisfaction, return intention and word of mouth at the coffee bean tea leaf in the vietnamese market

CUSTOMER SATISFACTION, RETURN INTENTION AND WORD-OFMOUTH AT THE COFFEE BEAN & TEA LEAF IN THE VIETNAMESE
MARKET

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International Business

By

Ms: Nguyen Thi Da Thao

ID: MBA05039

International University - Vietnam National University HCMC

August 2014


CUSTOMER SATISFACTION, RETURN INTENTION AND WORD-OFMOUTH AT THE COFFEE BEAN AND TEA LEAF IN THE VIETNAMESE
MARKET

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION
In International Business
by
Ms.: Nguyen Thi Da Thao
ID: MBA05039
International University - Vietnam National University HCMC

August 2014

Under the guidance and approval of the committee, and approved by all its members,
this thesis has been accepted in partial fulfillment of the requirements for the degree.
Approved by:

Approved by:

----------------------------------------------

----------------------------------------

Advisor
---------------------------------------------Committee member
---------------------------------------------Committee member

Chairperson
---------------------------------------Committee member
---------------------------------------Committee member


INTERNATIONAL UNIVERSITY

SOCIALIST REPUBLIC OF VIETNAM

SCHOOL OF BUSINESS

Independence - Freedom - Happiness

ASSURANCE QUALIFIED THESIS

Student’s Name:

Nguyễn Thị Dạ Thảo

Student ID:

MBA05039

Title of Thesis:

Customer Satisfaction, Return Intention and Word-of-Mouth

at The Coffee Bean & Tea Leaf in the Vietnamese market

Advisor: Dr. Trương Quang Được

I assure that the content of this thesis has been qualified all requirements for a research
paper and able to participate in the final thesis defense.

Approved by


Acknowledgement
The Master Thesis would not be finished without the support and assistance of
many people. I would like to take this chance to thank all of you that have helped and
encouraged during the period of writing this paper. Firstly, I would like to express my
gratitude to my advisor, Dr. Truong Quang Duoc who provided me valuable advice,
supported and guided me from the beginning. I also would like to thank Mr. Khanh who

instructed me to deal with data analysis and offered helpful recommendations to my thesis.
My thanks also go to all of my friends, younger sisters and colleagues, who helped
me to distribute questionnaires, collect them, encourage and facilitate conditions for me to
finish this research.
Last but not least, I would like to express my special appreciation to all my family
members such as dad, mom and younger sister, who always love, sympathize, support and
encourage me.


Plagiarism Statements
I would like to declare that, apart from the acknowledged references, this thesis
either does not use language, ideas, or other original material from anyone; or has not been
previously submitted to any other educational and research programs or institutions. I fully
understand that any writings in this thesis contradicted to the above statement will
automatically lead to the rejection from the MBA program at the International University –
Vietnam National University Hochiminh City.


Copyright Statement
This copy of the thesis has been supplied on condition that anyone who consults it
is understood to recognize that its copyright rests with its author and that no quotation
from the thesis and no information derived from it may be published without the author‘s
prior consent.
© Nguyen Thi Da Thao/ MBA05039/2012—2014


CONTENTS
CHAPTER ONE: INTRODUCTION ........................................................................................ 1
1.

Background: ............................................................................................................... 1

2.

General information of The Coffee Bean & Tea Leaf: .............................................. 2

3.

Rationale for study: .................................................................................................... 3

4.

Research Problem / Questions: .................................................................................. 4

5.

Research Objectives : ................................................................................................. 5

6.

Significance of the research: ...................................................................................... 5

7.

Scope and limitation: ................................................................................................. 5

8.

Research Methodology: ............................................................................................. 6

9.

Structure of the Thesis: .............................................................................................. 6

CHAPTER TWO: LITERATURE REVIEW ............................................................................ 8
1.

Customer Satisfaction: ............................................................................................... 8

2.

Service Quality: ......................................................................................................... 9

3.

The relationship between customer satisfaction and service quality: ........................ 9

4.

Measurement of Service Quality in the restaurant industry: ................................... 10

5.

The relationship between Food Quality ( Beverage Quality) and Customer

Satisfaction:..................................................................................................................... 12
6.

The relationship between Price _Value and Customer Satisfaction: ....................... 13

7.

Return Intention and Word-of-mouth: ..................................................................... 14

8.

The relationship between customer satisfaction and behavior intentions (return

intention and word-of-mouth): ........................................................................................ 15
9.

Conceptual Framework: ........................................................................................... 16

10.

Research Hypothesis: ........................................................................................... 17

CHAPTER THREE: METHODOLOGY ................................................................................ 18
1.

Research Process:..................................................................................................... 18

2.

Research Design: ..................................................................................................... 18

3.

Data Collection Method: .......................................................................................... 19

4.

3.1

Sample Selection: ............................................................................................. 19

3.2

Questionnaire Design: ...................................................................................... 20

3.3

Pilot Test:.......................................................................................................... 22

3.4

Distributing Questionnaire: .............................................................................. 22

Data Analysis: .......................................................................................................... 23

CHAPTER FOUR: ANALYSIS & RESULTS ....................................................................... 26


1.

Response Rate: ......................................................................................................... 26

2.

Sample Characteristic: ............................................................................................. 26

3.

Descriptive Statistics:............................................................................................... 34

4.

Reliability Analysis:................................................................................................. 39
4.1

Reliability ......................................................................................................... 39

4.2

Tangibles .......................................................................................................... 41

4.3

Assurance.......................................................................................................... 42

4.4

Responsiveness ................................................................................................. 43

4.5 Empathy ................................................................................................................ 44
4.6 Beverage Quality .................................................................................................. 44
4.7 Price and Value .................................................................................................... 45
4.8 Satisfaction ........................................................................................................... 46
5.

Exploratory Factor Analysis: ................................................................................... 47
5.1 Independent Variables: ......................................................................................... 47
5.2

Dependent Variable: ......................................................................................... 57

5.3

Confirmation of Conceptual Framework:......................................................... 59

6.

Pearson product-moment correlation coefficient: .................................................... 59

7.

Regression Analysis: ................................................................................................ 61

8.

Reliability Analysis:................................................................................................. 64
8.1

Return Intention ................................................................................................ 64

8.2

Word-of-mouth ................................................................................................. 65

9.

Exploratory Factor Analysis: ................................................................................... 65
9.1

Return Intention ................................................................................................ 65

9.2 Word-of-mouth .................................................................................................... 67
10.

Pearson product-moment correlation coefficient: ................................................ 68

10.1

Correlation between customer satisfaction and Return Intention ................. 68

10.2 Correlation between customer satisfaction and Word-of-mouth ........................ 69
11.

Simple Linear Regression Analysis: .................................................................... 70

11.1

Return Intention: ........................................................................................... 70

11.2 Word-of-mouth: .................................................................................................. 72
12.

Important Difference among Gender, Age Group in Overall Satisfaction: ......... 73

12.1 Important Difference among Gender .................................................................. 73

12.2 Important difference among Age Groups ........................................................... 74
CHAPTER FIVE: CONCLUSIONS & RECOMMENDATIONS.......................................... 77


1.

Conclusions:............................................................................................................. 77

2.

Recommendations: ................................................................................................... 78
2.1 Improving Price and Value is the first importance ............................................... 78
2.2 Improving Assurance of Service Quality is the second importance ..................... 79
2.3 Improving Responsiveness of Service Quality is the third importance ................ 80
2.4 Improving Beverage Quality is the fourth importance ......................................... 80
2.5 Improving Tangible is the fifth importance .......................................................... 81
2.6 Improving Empathy is the sixth importance ......................................................... 81
2.7 Improving Reliability is the seventh importance .................................................. 81

3.

Limitations and Future Research: ............................................................................ 82

REFERENCES ........................................................................................................................ 83
APPENDIX A – QUESTIONNAIRE (ENGLISH VERSION)............................................... 94
APPENDIX B – QUESTIONNAIRE (PHIÊN BẢN TIẾNG VIỆT) ...................................... 99


LIST OF FIGURE
Figure 1: Structure of the thesis ..................................................................................... 7

Figure 2: The Conceptual Framework ......................................................................... 17
Figure 3: Research Process .......................................................................................... 18
Figure 4: Gender Differences....................................................................................... 27
Figure 5: Nationality .................................................................................................... 28
Figure 6: Age ............................................................................................................... 29
Figure 7: Average Income per month .......................................................................... 30
Figure 8: Frequency Level ........................................................................................... 31
Figure 9: With Whom .................................................................................................. 32
Figure 10: Favorite Location ....................................................................................... 34


LIST OF TABLE
Table 1: Frequency Analysis by SPSS – Gender Differences ........................................... 27
Table 2: Frequency Analysis by SPSS – Nationality.......................................................... 28
Table 3: Frequency Analysis by SPSS – Age .................................................................... 29
Table 4: Frequency Analysis by SPSS – Average Income per month ............................... 30
Table 5: Frequency Analysis by SPSS – Frequency Level................................................ 31
Table 6: Frequency Analysis by SPSS – With Whom ....................................................... 32
Table 7: Frequency Analysis by SPSS – Favorite Location .............................................. 33
Table 8: Meaning of Mean toward Interval Scale .............................................................. 35
Table 9: Descriptive Statistics of Dimension ― Reliability 1-5‖ ........................................ 35
Table 10: Descriptive Statistics of Dimension ―Tangibles 1-10‖ ....................................... 36
Table 11 : Descriptive Statistics of Dimension ―Assurance 1-6‖ ...................................... 37
Table 12: Descriptive Statistics of Dimension ―Responsiveness 1-6‖ ............................... 37
Table 13: Descriptive Statistics of Dimension ―Empathy 1-5‖ .......................................... 37
Table 14: Descriptive Statistics of Dimension ―Beverage Quality 1-4‖............................. 38
Table 15: Descriptive Statistics of Dimension ―Pride and Value 1-4‖ ............................... 38
Table 16: Descriptive Statistics of Dimension ―Return Intention 1-3‖ .............................. 39
Table 17: Descriptive Statistics of Dimension ―Word of Mouth 1-3‖................................ 39
Table 18: Reliability Analysis applied to Reliability .......................................................... 40

Table 19: Reliability Analysis applied to new Reliability .................................................. 41
Table 20: Reliability Analysis applied to Tangibles ........................................................... 42
Table 21: Reliability Analysis applied to Assurance .......................................................... 43
Table 22: Reliability Analysis applied to Responsiveness ................................................. 43
Table 23: Reliability Analysis applied to Empathy ............................................................ 44
Table 24: Reliability Analysis applied to Beverage Quality .............................................. 45


Table 25: Reliability Analysis applied to Price and Value ................................................. 46
Table 26: Reliability Analysis applied to Satisfaction ........................................................ 47
Table 27: KMO and Bartlett's Test – 37 variables .............................................................. 47
Table 28: Result of Principal Component Analysis – Independent Factors – 37 variables 49
Table 29: Result of Rotation Method as Varimax with Kaiser Normalization – 37 variables
............................................................................................................................................. 50
Table 30: KMO and Bartlett's Test – 36 variables .............................................................. 51
Table 31: Result of Principal Component Analysis – Independent Factors – 36 variables 52
Table 32: Result of Rotation Method as Varimax with Kaiser Normalization – 36 variables
............................................................................................................................................. 54
Table 33: KMO and Bartlett's Test – 35 variables .............................................................. 54
Table 34: Result of Principal Component Analysis – Independent Factors – 35 variables 55
Table 35: Result of Rotation Method as Varimax with Kaiser Normalization – 35 variables
............................................................................................................................................. 57
Table 36: KMO and Bartlett‘s Test .................................................................................... 58
Table 37: Result of Principal Component Analysis – Dependent Factor ........................... 59
Table 38: Result of Pearson Correlation Coefficient .......................................................... 60
Table 39: Variables Entered/Removedb .............................................................................. 61
Table 40: Model Summary of Multiple Linear Regression ................................................ 62
Table 41: Coefficients ......................................................................................................... 62
Table 42 : ANOVA ............................................................................................................. 62
Table 43: Reliability Test applied to Return Intention ....................................................... 64

Table 44: Reliability Test applied to Word-of-mouth ........................................................ 65
Table 45: KMO and Bartlett's Test ..................................................................................... 66
Table 46: Result of Principal Component Analysis – Return Intention ............................. 67
Table 47: KMO and Bartlett's Test ..................................................................................... 67


Table 48: Result of Principal Component Analysis – Word-of-mouth .............................. 68
Table 49: Result of Pearson Correlation Coefficient between Customer Satisfaction and
Return Intention .................................................................................................................. 69
Table 50: Result of Pearson Correlation Coefficient between Customer Satisfaction and
Word-of-mouth ................................................................................................................... 70
Table 51: Model Summary of Simple Linear Regression .................................................. 70
Table 52: ANOVAb............................................................................................................. 71
Table 53: Coefficientsa........................................................................................................ 71
Table 54: ANOVA .............................................................................................................. 72
Table 55: Coefficientsa........................................................................................................ 73
Table 56: Test of Homogeneity of Variances - Gender ...................................................... 74
Table 57: One-way ANOVA Test - Gender ....................................................................... 74
Table 58: Test of Homogeneity of Variances – Age Groups.............................................. 74
Table 59: One – way ANOVA Test – Age Groups ............................................................ 75
Table 60: Multiple Comparisons – Age Groups ................................................................. 75


Abstract

Purpose – This research is carried out to find out main factors contributing on the
customer satisfaction of The Coffee Bean & Tea Leaf in the Vietnamese market
and discover the relationship of it towards return intention and word-of-mouth
endorsement. These factors are measured by DINESERV model which is
developed from SERVQUAL instrument to gauge service quality in the restaurant

industry Moreover, the conceptual framework also combines with two addition
elements which are studied from other papers.
Design/methodology/approach – Adopting a case study approach, data were
collected through secondary and primary data. A questionnaire was distributed to
420 participants (including 42 foreigners and 378 Vietnamese at fourteen branches
of Coffee Bean in Ho Chi Minh City.
Findings – There are seven key elements resulting in customer satisfaction at The
Coffee Bean & Tea Leaf in the Vietnamese market, concluding Reliability,
Tangibles, Assurance, Responsiveness and Empathy ( Service Quality ) , Beverage
Quality and Price and Value.

In addition, the customer satisfaction also has a

positive correlation influencing their return intention and word-of-mouth
endorsement.
Practical implications – Managers of The Coffee Bean & Tea Leaf in Vietnam can
understand customer‘s expectation to meet and satisfy them in good ways which
determine their return intentions and positive word-of-mouth towards this brand.
Thanks to it, Coffee Bean can increase the revenue and develop their reputation in
the Vietnamese market.
Originality/value – The influence of customer satisfaction towards return intention
and word-of-mouth should be considered importantly. From this, managers of
Coffee Bean try to satisfy customers and meet their expectation.
Keywords – customer satisfaction, return intention, word-of-mouth, The Coffee
Bean & Tea Leaf, DINESERV model, service quality
Paper type - Research paper



Customer Satisfaction, Return Intention, Word-of-mouth 1

CHAPTER ONE: INTRODUCTION
This is the first part of the research. Background of the studied field and general
information of the company are presented. Some components such as research question and
objectives, significance of the research, scope and limitation, methodology and structure are
then continued.
1. Background:
Coffee is a product that was first introduced in Vietnam from the 19th century and
since then coffee has become habitual and familiar with the Vietnamese. The bitter and
strong taste inside the tongue, the flavor of almond and the pervasive smell of land besides a
cup of coffee make people ecstatic. Just like that coffee has gone into the heart of the
Vietnamese gently and fervidly.
The coffee culture in Vietnam is different from this in many Western countries. Like
the French, the Vietnamese enjoy a cup of coffee leisurely and lightly. If coffee is
considered as an instant drink made by a machine - a method bringing enthusiasm to work
by American, it is a cultural style in Vietnam: sip and thought. They make a cup of coffee
by a filter, wait for falling drop by drop and just drink small sips whereas smoking, reading
newspapers, listening to the music, chatting friends , talking to working partners and
sometimes think about life and people… The French drink coffee before going to work
every morning while the Vietnamese take at least thirty minutes for every time of drinking
and can drink anytime in day. Indeed, coffee takes an important role in the life and culture
of the Vietnamese.
After joining into WTO in 2007, Vietnam has welcomed a variety of international
brands coming to develop. Food and beverage industry is no exception. Big brands have
brought colorful outlook for the retail dimension in Vietnam with initial expansion of large
shopping malls and cinemas. Since then, Vietnamese culture has been influenced by these


Customer Satisfaction, Return Intention & Word-of-mouth

international trends and more and more new standards and lifestyles have developed.
Instead of gathering and dining at home after work, current young people prefer to be out of
home and experience new and strange things. This leads to a considerable growth in
demand for innovative and complicated products, particularly in food and beverages. With
the generosity to spend on food & beverage, shopping and entertainment, the young are
contributing to rise to a contemporary café culture. It is not only a cup of coffee in
traditional environment as of the old, but it needs more and more.
In recent year, Vietnam is seen as a potential market with the population of more
than 90 million people, long coffee cultural tradition and more than half of population is the
young with stably increased salary, a lot of global coffee brands rush to Vietnam to make
business. After the success of coffee chain Highlands with European style, many brands
such as Angel-In-Us (Korea), Gloria Jean‘s Coffee (Australia), The Coffee Bean & Tea
Leaf (America) and now Starbuck (America)… gradually expand their shops in two big
cities of Vietnam. In order to develop successfully in this market, such brands have applied
the concept ―Glocalization‖ to their products to be appropriate Vietnamese culture as well as
suitable methods to attract young people.
The young people want to show their rank when enjoying a cup of coffee with a
piece of cake at beautiful views, unique design and in friendly, comfortable and warm
environment. Each The Coffee Bean & Tea Leaf is a consequence of this application. It is a
―third place‖ (Ray Oldenburg ,1999) where people can spend time with friends, partners,
relatives, family or even by themselves enjoying true coffee with a new flavor, in modern
environment and gaining pleasant memories.
2. General information of The Coffee Bean & Tea Leaf:
The Coffee Bean & Tea Leaf is American brand established by Mr. Herber B.
Hyman in 1963 at California. Since then, the brand is proud of providing more than 22
kinds of excellent coffee and 20 kinds of high-class tea all over the world. The Coffee Bean

2

Customer Satisfaction, Return Intention & Word-of-mouth

3

& Tea Leaf had officially joined into Vietnamese market from 2008 with the entry mode as
franchising by Viet Café Trading Co. Up to now, there are fourteen branches in Ho Chi
Minh City and two branches in Hanoi. With ―self-served ―style, this brand had brought a
new wave with unique taste of American coffee that is made by machine and a variety of
other drinks. Beautiful locations, special design, interactive ambience, friendly and efficient
waiters are the same formulae that decide the style of The Coffee Bean and Tea Leaf.
3. Rationale for study:
In current competitive market of Vietnamese coffee industry, customers can have
choices among various service providers. They can select on the basis of trust, products,
service or efficiency (Sachdev et al, 2004). More and more money to be paid, more and
more quality customers need to consider. Keiser (1988) said that long-term financial
capability and sustainable business success depend on the ability of providing high quality.
In the restaurant industry generally and coffee shops particularly, customers usually see
service quality, food quality, physical environment and price and value as key factors of
restaurant experience in evaluating restaurant quality. It was discovered by Dabholkar,
Shepherd and Thorpe (2000) that perceived service quality has been recognized as the most
important determinant among potential candidates affecting customer satisfaction.
According to Spreng and Mackoy (1996), service quality also results in customer
satisfaction. Service quality and customer satisfaction have long been accepted as taking an
important role on business success and survival in the currently increasing competitive
conditions.
Moreover, customer satisfaction is usually considered as a predictor of customer‗s
behavior intentions such as purchase and loyalty intentions, willingness to deliver positive
word of mouth, referral and complaint intentions by many authors (Olsen, 2002; Kang,
Nobuyuki and Herbert, 2004; Söderlund and Öhman, 2005). It is not sure that a satisfied
customer can revisit a restaurant but it is guaranteed that a dissatisfied customer will never

Customer Satisfaction, Return Intention & Word-of-mouth

4

return. In this industry, positive word-of-mouth also plays a more convincing role as an
annoyed customer will destroy and dissuade other potential customers against a particular
provider. Therefore, it is quite essential for coffee shops to provide customers with the
highest satisfaction so it can lead to a growth of repeat customers, brand loyalty and
attracting new customers by developing firm‘s reputation. More particularly, the cost of
retaining existing customers by improving products and services of the brand is totally
lower than the cost of winning new customers (Krishnan et al, 1999).
Currently, The Coffee Bean & Tea Leaf is the only international brand that
possesses the most branches in comparison with contemporary ones such as Angel-in-us or
Gloria Jean‘s Coffee (coming to Vietnam from 2008). However, with the entrance of
Starbuck and Dukin Donut last year and McCafe this year, the coffee market in Vietnam is
more and more ebullient and severe. In order to survive in this environment as well as
expand the market share in the industry, it is essential for The Coffee Bean & Tea Leaf to
develop appropriate strategies effectively. Meeting customer‘s expectations effectively as
well as increasing customer satisfaction are key elements in the business success. From the
above reasons, the research is focused on assessing customer satisfaction, return intentions
and word-of-mouth endorsement at The Coffee Bean and Tea Leaf so that this brand can
provide suitable and strategic improvements.
4. Research Problem / Questions:
The research problem in this study is to find out how The Coffee Bean and Tea Leaf
can satisfy customers and how this satisfaction influences on return intentions and word-ofmouth endorsement. Based on research problem, some questions are developed as the
followings:
1. Which are determinants influencing customer satisfaction at The Coffee Bean and
Tea Leaf?

2. How much is each determinant contributing in this satisfaction?


5

Customer Satisfaction, Return Intention & Word-of-mouth
3. How much does customer satisfaction contribute in the development of customer‘s
return intentions and word-of-mouth endorsement?
5. Research Objectives :
The study has three main objectives. Firstly, the author wants to test the influence of
perceived service quality on customer satisfaction in the context of coffee shop. Second aim
is to define key dimensions and items that customers perceives as ―meeting their
expectation‖ Finally, the research reveals the impact of customer satisfaction on return
intention as well as word-of-mouth endorsement so that some helpful methods will be
carried out for improvement.
6. Significance of the research:
It is necessary for the managers of The Coffee Bean & Tea Leaf to understand
clearly about customer‘s expectations and perceptions towards this brand. Thanks to it, they
will have detailed and suitable strategies to invest their resources effectively as well as make
changes to decisive quality dimensions that influences strongly to customer satisfaction.
This plays an important role in increasing sale revenue of the company and expanding
market share in the industry due to maintaining of old customers (repurchasing) and wining
new ones (word-of-mouth endorsement). Moreover, other coffee shops can see and learn
from the case of The Coffee Bean & Tea Leaf and apply these valuable lessons for their
shops. (Both international brands and Vietnamese brands).
7. Scope and limitation:
The research is focused on customers of The Coffee Bean & Tea Leaf including the
Vietnamese and Foreigners with the age from 18 to 45 in Ho Chi Minh City. These
customers have had experience with products and service of this shop and return one more
to enjoy it. This paper is limited to evaluate satisfaction and behavior intentions of

customers in Hanoi as well as other customer groups that are not belonging to the
interviewed age.


Customer Satisfaction, Return Intention & Word-of-mouth

8. Research Methodology:
This paper is collected from both primary and secondary data. With the second kind,
surveys are carried out at fourteen branches of The Coffee Bean & Tea Leaf in Ho Chi Minh
City. It is distributed to a sample of 420 customers who has enjoyed any product of The
Coffee Bean & Tea Leaf. After collecting data, some methods such as Cronbach‘s Alpha,
Exploratory Factor Analysis and Regression Analysis are used to analyze and find out
appropriate strategies for improvements.
9. Structure of the Thesis:
There are five parts in the research. Part one provides introduction of field studied
and the topic chosen, research question and objectives, significant of the study, scope and
limitation also are presented. Part two includes review of literature review of many authors
and identifies the conceptual framework of the thesis. Methods and techniques used to
choose sample, collect data, design a questionnaire, measuring scale are showed in Part
three – Methodology. Part four explains result of analysis and the final part gives
recommendation and conclusion of the paper.

CHAPTER ONE: INTRODUCTION

CHAPTER TWO: LITERATURE REVIEW

CHAPTER THREE: METHODOLOGY

CHAPTER FOUR: ANALYSIS & RESULTS

6


Customer Satisfaction, Return Intention & Word-of-mouth

CHAPTER FIVE: CONCLUSIONS &
RECOMMENDATIONS

Figure 1: Structure of the thesis

7


Customer Satisfaction, Return Intention & Word-of-mouth

CHAPTER TWO: LITERATURE REVIEW
This chapter provides a review of literature that introduces theories and dimensions
relating to the field of this paper such as service quality, customer satisfaction,
Measurement of Service Quality in the restaurant industry, Food Quality, Price and Value,
Return Intention and Word-of-mouth. From these, the conceptual framework and hypothesis
will be built.
1. Customer Satisfaction:
There are many reasons explaining the attention of measuring customer satisfaction
as the ability of establishing customer loyalty, growing positive word of mouth, leading to
repeat purchases and broadening the market share and profitability of the firms (Cronin and
Taylor, 1992; Halstead and Page, 1992; Fornell, 1992; and Oh and Parks, 1997).Therefore,
the nature of customer satisfaction has been conceptualized by several authors. Yuksel and
Yuksel (2002) stated that both researchers and managers pay a lot of attention to the topic of
customer satisfaction. According to Olive (1997), the feelings of satisfaction occur when
customers compare their actual performance with expectation of any product or service.

Similarly, Kotler (2000) defined satisfaction as the feeling of a person of pleasure or
disappointment when comparing perceived performance in relationship with his or her
expectation. Satisfaction can be associated with feelings of acceptance, happiness, relief,
excitement, and delight (Hoyer and MacInnis, 2001).Or Khalifa and Liu (2003) presented
that customer‘s positive assessment after post-purchasing results in customer satisfaction.
Based on this review, customer satisfaction is described as the result of cognitive or
affective assessment process (Giese & Cote, 2000) where some standards will be used to
compare with actual performance. If customers perceive lower than their expectations, they
will be dissatisfied. On the other hand, if customer‘s perceptions meet expectations, they
will be satisfied. Otherwise, if customers perceive more than their expectations, they will be
delighted.

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Customer Satisfaction, Return Intention & Word-of-mouth

2. Service Quality:
Since there are too restaurant choices available, customers do not hesitate to leave
bad restaurants and select better ones if they cannot provide good service quality. That is
why the significance of service quality is more and more increased in recent years. The
concept also has been debated from both academicians and practitioners (Negi, 2009) and in
the services marketing filed .Traditionally, Lewis and Booms (1983) defined that service
quality assesses how well service level that the provider can meet customer‘s expectations
on an appropriate basis. It can be understood as the comparison between what customers
want to be offered and actual service they receive (Parasuraman, Zeithaml and Berry, 1985,
1988). Or Eshghi, Roy and Ganguli (2008) said that service quality is a general evaluation
of customers toward a service. Sharing the same opinion, Parasuraman et al. (1985, 1988),
Johnston (1995), Zeithaml and Bitner (1996), Ueltschy, Laroche, Tamilia and Yannopoulos
(2004) and Fogli (2006) descried service quality is the whole impression of customers

relating to inferiority / superiority of services delivered from the supplier.
Compared with product quality, there are a lot of difficulties to measure service
quality physically because of four special characteristics of service such as intangibility,
inseparability, heterogeneity and perishability (Bitner, Fisk and Brown, 1993). So, service
quality is considered as a significant advantage to differentiate itself from its competitors
(Ladhari, 2008). Similarly, it was also agreed by Yeo (2008) that a lot of firms are fostered
to supply higher and higher service quality to customers in this severely competitive
industry.
3. The relationship between customer satisfaction and service quality:
During the past few years, there has been an increased insistence on service quality
and customer satisfaction in business and academia. There is a strong correlation existing
between service quality and customer satisfaction although these two concepts are totally
different (Sureshchandarl, Rajendran and Anantharaman, 2003). Several authors have

9


10

Customer Satisfaction, Return Intention & Word-of-mouth

demonstrated that service quality takes an optimal role in leading customer satisfaction with
a service encounter (Stevens, Knutson, & Patton, 1995; Qu, 1997; Pettijohn, Pettijohn, &
Luke, 1997). It is not an exception in the restaurant settings.
In other words, Parasuraman et al. (1985) pointed out that the level of perceived
service quality is in direct proportion to customer satisfaction. The higher service quality is,
the higher customer satisfaction is. This is in line with Saravana and Rao (2007) and Lee,
Lee and Yoo (2000) who believed that customer satisfaction is based upon the level of
service quality delivered from the provider.
It was agreed that the connection between service quality and satisfaction is totally

undoubtful (Bitner, 1990; Bolton and Drew, 1991; Parasuraman et al., 1988). There are many
studied topics of customer satisfaction based on service quality, especially in the restaurant
industry such as research of Inkumsah (2011), Khan and Shaikh (2011), Andaleeb and Conway
(2006), Yüksel and Yüksel, F. (2003). All of them show that service quality is an important
factor contributing to customer satisfaction.

4. Measurement of Service Quality in the restaurant industry:
The evaluating of service quality in the restaurant field is quite difficult because it is
not only assessing from service outcome but also from service delivery process. Therefore,
it is essential to develop a suitable measurement to recognize all characteristics of the
service quality in the field.
As discussed earlier in the literature review, there are a lot of definitions of service
quality, so there are also many measurements of service quality. One of the best-known
measures of service quality available is SERVQUAL instrument that compares the
differences between customer‘s expectations and their actual performance (Parasuraman ,
Zeithaml and Berry, 1985,1988)
The first version SERVQUAL model was introduced from 1985 by Parasuraman
and his colleagues through a series of publication where they conceptualized service quality