The impact of values on customer loyalty after experiencing compensation process a study of car insurance industry in vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Nguyen Quang Huy

THE IMPACT OF VALUES ON CUSTOMER LOYALTY
AFTER EXPERIENCING COMPENSATION PROCESS –A
STUDY OF CAR INSURANCE INDUSTRY IN VIETNAM

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Nguyen QuangHuy

THE IMPACT OF VALUES ON CUSTOMER LOYALTY
AFTER EXPERIENCING COMPENSATION PROCESS –A
STUDY OF CAR INSURANCE INDUSTRY IN VIETNAM

ID: 22110026
MASTER OF BUSINESS (Honours)
SUPERVISOR: DR. PHAM NGOC THUY

Ho Chi Minh City – Year 2014

ACKNOWLEGDEMENT
I would like to express my sincere thankfulness to my research advisor, Dr.
Pham Ngoc Thuy, who made me believe in myself and gave me the possibility
to complete this thesis. Her guidance helped me in all the time of research and
writing this thesis. I am sure that this thesis would not have been possible
without her support.
I also would like to thank all ISB professors, lecturersand tutors for their
enthusiasm in providing invaluable knowledge, interesting lectures and
additional support.
I would like to express my gratitude to all ISB staffs that supported necessary
materials and helped summit my papers.
Especially, I would like to give my special thanks my wife for supporting me
during my studying at ISB.
The last, I would like to say thanks to all of my colleagues and dear friends for
supporting me during my studying.
Nguyen QuangHuy
Ho Chi Minh City, February 22, 2014

i


ABSTRACT
Customer attitude after buying and customer loyalty are very important
concepts that companies must understand if they want to remain competitive
and grow. In today’s competitive environment high quality customer serviceis
the key for a sustainable competitive advantage. Customer satisfaction forms
the foundation of any successful business as it leads to repeat purchase, brand
loyalty, and positive word of mouth.
This study is to identify the determinant factorsof customer loyalty after

experiencing compensation process of car insurance. Though there are many
factors affecting customer’s renewal of automobile insurance, this study goes
to explore deepconsideration four factors such as functional value, economic
value, emotional value and social value employing quantitative and qualitative
methods. Data was collected from 03 non-insurance companies in Ho Chi Minh
City using a questionnaire, then analyzed with SPSS software in aspects
ofCronbach Alpha coefficients,explore factor analysis (EFA) and regression
analysis. Testresults have showed that functional value and emotional values
have the strongestimpact on customer’s insurance purchasing continuance.
The study cannot avoid some limitations, such as scope of research is narrow
only in Hochiminh city; sample is not large enough. The study only considered
in the perspective of value. In fact there are many other factors that affect
customer loyalty.
Key Words: functional value; economic value; emotional value; social value;
andcustomer loyalty.

ii


TABLE OF CONTENTS
Acknowlegdement ....................................................................................................... i
Abstract....................................................................................................................... ii
Table of contents ....................................................................................................... iii
List of Figure ............................................................................................................. vi
List of Table ............................................................................................................. vii
CHAPTER 1: INTRODUCTION ........................................................................... 1
1.1 RESEARCH BACKGROUND.............................................................................. 1
1.2 PROBLEM STATEMENT AND RATIONALE ........................................... 1
1.3 RESEARCH QUESTIONS AND OBJECTIVES.......................................... 2
1.4 RESEARCH SCOPE .............................................................................................. 3

1.5 SIGNIFICANCE OF STUDY ........................................................................ 3
1.6 THESIS STRUCTURE .................................................................................. 4
CHAPTER 2: LITERATURE REVIEW ..................................................................... 5
SECTION A: OVERVIEW OF COMPENSATION PROCESS OF CAR
INSURANCE ....................................................................................................................... 5
2.1 TWO

WAY

INSURANCE

-

CAR

PHYSICAL

DAMAGE

INSURANCE ............................................................................................... 5
2.2 COMPENSATION PROCESS OF CAR INSURANCE ............................. 6
2.2.1 Car accident compensation claims process ..............................................….6
2.2.2 Responsibilities of the Automobile owner, driver in compensation
process ....................................................................................................................... 6
2.3 ACCIDENT SURVEY ................................................................................. 7
SECTION B: THEORIES AND RESEARCH MODLE
2.4 KEY CONCEPTS......................................................................................... 8
2.4.1 Functional value ................................................................................... 8
2.4.2 Economic value .................................................................................... 8
2.4.3 Emotional value.................................................................................... 9

2.4.4 Social value .......................................................................................... 9
iii


2.4.5 Customer loyalty ................................................................................. 9
2.5 RESEARCH MODEL AND HYPOTHESES RELATIONSHIP ................. 9
2.5.1 Functional Value and Customer Loyalty relationship ........................... 9
2.5.2 Economic Value and Customer Loyalty relationship .......................... 10
2.5.3 Emotional Value and Customer Loyalty relationship .......................... 10
2.5.4 Social Value and Customer Loyalty relationship ............................ 10
2.5.5 Moderating variables ............................................................................ 11
CHAPTER 3: RESEARCH METHODOLOGY ................................................. 13
3.1 QUALITATIVE RESEARCH ........................................................... 13
3.2 QUANTITATIVE RESEARCH ......................................................... 14
3.2.1 Measurement scales ........................................................... …14
3.2.2 Adjusting measurement scales.............................................................19
3.3 QUESTIONNAIRE DESIGN ........................................................... 19
3.4 METHOD OF DATA ANALYSIS .................................................... 19
3.5 HYPOTHESIS TESTING ................................................................ 20
3.5.1 Descriptive statistics .............................................................. 20
3.5.2 Reliability test of measurement scale ................................................ 20
3.5.3 Validity test of the measurement scale by the exploratory factor
analysis (EFA)...................................................................... 21
3.5.4 Multiple linear regression ........................................................ 22
3.6 SUMMARY ............................................................................. 24
CHAPTER 4: DATA ANALYSIS .............................................................. 25
4.1 DESCRIPTIVE DATA ANALYSIS ............................................................. 25
4.2 SURVEY PROCESS ..................................................................................... 25
4.3 MEASUREMENT SCALE ASSESSMENT .................................................. 26
4.3.1 Cronbach’s Alpha Reliability Analysis ......................................... 26

4.3.2 Exploratory Factor Analysis ....................................................... 28
4.3.3 Discussion on the customer loyalty.................................................... 31
4.3.4 Testing the research model and hypotheses.................................... 32
iv


4.3.5 Testing the research model ........................................................ 33
4.3.6 Hypothesis testing ................................................................... 34
4.4 DISCUSION ................................................................................................. 35
4.5 SUMMARY ................................................................................................. 36
CHAPTER 5: CONCLUSIONS ............................................................................. 37
5.1 OVERVIEW ................................................................................................ 37
5.2 KEY FINDINGS AND IMPLICATIONS .................................................. 37
5.2.1 KEY FINDINGS .................................................................................. 37
5.2.2 MANAGERIAL IMPLICATIONS ...................................................... 37
5.3 LIMITATIONS ........................................................................................... 38
REFERENCES ......................................................................................................... 39
APPENDICES .......................................................................................................... 42
APPENDIX I: Questionnaire ................................................................................... 42
APPENDIX II: Results of reliability analysis (cronbach’s alpha) .......................... 47
APPENDIX III: Results of factor analysis........................................................ 50
APPENDIX IV: Results of multiple linear regression analysis for whole sample ........52
APPENDIX V: Results of multiple linear regression analysis for own .................... 54
APPENDIX VI: Frequencies ........................................................................ 57
APPENDIX VII: Descriptive analysis ............................................................. 58

v


LIST OF FIGURE

Figure 2.1: Compensation process of car insurance .......................................................... 6
Figure 2.2: The research model ........................................................................................ 11
Figure 3.1: Research design and how data collection method fit in ......................... 13
Figure4.1: The modified research model .................................................................. 31

vi


LIST OF TABLE
Table 3.1: Measurement scales for current research ........................................................ 15
Table 3.2: The interpretation for Cronbach’s Alpha ........................................................ 21
Table 3.3: The interpretation of KMO .............................................................................. 22
Table 3.4: The required factor loading based on the sample size ............................ 22
Table 4.1: Reliability analysis results. ........................................................... 26
Table 4.2: EFA analysis results for the independent variables ............................... 28
Table 4.3: Total Variance Explained ........................................................................ 30
Table 4.4: Recode variable for the multiple linear regression ................................. 32
Table 4.5: Results of multiple linear regression analysis ......................................... 33
Table 4.6 Level of values between owner and driver groups................................... 33

vii


CHAPTER 1: INTRODUCTION
This chapter introduces the background, the rationales and the objectives of the
research. Besides, the chapter also includes the scope of study, the implications
and the structure of the research.
1.1 RESEARCH BACKGROUND
Market Non-life insurance is growing, in Vietnam, the non-life insurance has

begun to take shape in 1965. From 1965 to 1994 was a period of non-life
insurance activities exclusive entirely with a State insurance business only.
Therefore, its impact on the economyis limited.The turning point has important
implications for the development of Vietnam's insurance sector is marked by
100/ND-CP decree, issued December 18, 1993 of the insurance business. Vietnam
now has 29 non-life insurance company both domestic and foreign licensing
activities.
Carinsurance is also growing strongly and the business is looking to bring big
revenue source for the non-life insurance companies, with revenue leader in all
other insurance product, Minh Huyen (2013) stated that sales in 2012 reached 22.7
trillion.
To be able to compete and grow in the market full rigors of the non-life insurance
company to pay special attention to important factor and decide factorthat is
compensation service. The relevance of perceived functional, economic,
emotional, and social value associated with the usage of car insurance is vital
information for non-life insurance companies because perceived value has high
explanatory power for the loyalty of insured.
1.2 PROBLEM STATEMENT AND RATIONALE
In Vietnam, many people still have several questions before buyinginsurance for
their car. The questions like: When I getan accident does the insurance company
attend to support me? How long can I get back money from an insurance claim?
Doesinsurance company comply with the commitment as they promised? ....
Many questions and debate is still ongoing customers and the press raised, for
example,Binh, N. D. (2013) wrote that a car owner in Quang Tri has asked
1


XuanThanh insurance companies compensation 29 million dong, after seven
months he only received 20 million dong. An insurance company refused to
compensate customer for the reason of the insurance contract stipulates'deadline

requirements compensation is 180 days' and he submitted after this time, (Tung
Anh, 2013). Buy car insurance easy pay hard (2012) comment that when there is a
problem, the customer is very difficult to receive compensation from insurance.
Every year, Vietnam has thousands of traffic accidents,Mai Xuan (2013) showed
that, in 2012 there were 36.376 cases and 29.318 cases in 2013. In order to reduce
risks, the car owner has to buy insurance for their cars. However, when customer
had an accident, they need to claim from insurance company, most of them are not
satisfied because of staff attitudes; procedures for compensation; amount of money
compensated, compensation processes ...etc.
KhanhHoa (2013), write that A customer in Danang has voiced "elements" BIDV
Insurance (BIC) set false information to evade liability for compensation. And we
can see more, Thy Tho (2010) discuss that customer have submitted 16 written
requests to Dragon Insurance Company (Bao Long) compensation of $ 1.8 million
over six months but has only received 10 billion advance.
So the aim of study is to look for the factors that have influenced the decision
psychology and buying behavior of customers for cars insurance products. From
that we can do better and can grow and survive in a competitive environment like
the present, especially when the foreign insurance company are about to be
licensed to operate in Vietnam.
1.3RESEARCH QUESTIONS AND OBJECTIVES.
This study is to identify, measure factors affecting loyalty intention and determine
the relationship among them in car insurance of non-life insurance company. The
proposed research questions are as follows:
-

Are there identifiable factors affecting compensation process of car
insurance?

-

What is the relationship between these factors and customer loyalty?
Which will influence customer loyaltythe most?
2


The study aims to:
-

Identify the value factors affecting customer loyalty after experiencing
compensation process.

-

Explorethedifferencebetween groups in term of carowner and driver.

The research objects are people who have bought and experienced the
compensation process of any insurance company in Vietnam.
1.4RESEARCH SCOPE
The research will conduct to study the impact of values on customer loyalty
intention on car insurance. Therefore, the research object must be interest people
who have bought and experienced the compensation process of any insurance
company in Hochiminh city, and in car insurance product of non-life insurance
company.
The insurance companies related in the research are PJICO, BAOMINH and
LIBERTY.
1.5SIGNIFICANCE OF STUDY
In non-life insurance industry, the empirical studies of the relationship between
customer loyalty and car compensation process are limited. Compensation service
quality is one of the highest important factors in analyzing the performance of non
-life insurance, since their survival depends on their service quality levels they

provide for their customers (Poretla and Thanassoulis, 2005). Having a good way
in supplying good compensation process is a key to achieve customer loyalty
which is the primary goal of business organizations, due to the advantages of
customer retention (Ehigie, 2006). The present research intends to test whether the
carcustomers are happy with the compensation process provided to them, which
will eventually lead customer loyalty or not.One of the vital tasks for the insurance
company is to do good service compensation. What hasthe non-life insurance
company done? What are the factors that affect customer loyalty, the study will
help the life insurance company knows which factors will influence most that they
need to invest and focus on it.

3


1.6 THESIS STRUCTURE
This study is divided into five main chapters:
-

Chapter 1: Introduces the background, rationale, the scope of research and
the significant.

-

Chapter 2: The literature review – the overview of the framework,
conceptual, theories historical research about the topic of the thesis. By the
in-deep theories review, the study proposes the research model and the
hypotheses.

-

Chapter 3: The research methodology – this chapter presents the research
object and how to collect data. The research is designed from the
questionnaire and measurement scale to the sampling design and the plan
for analysis.

-

Chapter 4: The data analysis and discussion – the chapter gathers the
collected data to analyze and test the hypotheses and discuss on the
findings.

-

Chapter 5: The conclusion, implication and recommendation for the future
research.

4


CHAPTER 2: LITERATURE REVIEW
This chapter introduces the definitions, concepts and theories of car compensation
process. Moreover, this chapter also studies related to the conceptual in order to
design the research model and the hypothesis for the research.
SECTION A: OVERVIEW OF COMPENSATION PROCESS OF CAR
INSURANCE
2.1 Two way insurance - car physical damage insurance
In car insurance we have two products: the first is car civil liability insurance and
the second is car physical damage insurance (one way or two way insurances). In
this study I refer to car physical damage insurance.
Before the introduction of the compensation process, we first need to know the

coverage of car physical damage insurance.
Insurance company compensates the car physical damages caused by: Pjico (2009)
-

Unexpected accident, beyond reasonable control of the Automobile owner
and driver in the following cases: Collision, upturning, fall, fire, explosion,
other objects impacting the automobile.

-

Force majeure caused by the nature: Storm, flood, lightning, earthquake,
hail, landslide and Tsunami.

-

Loss of the whole automobile in the following cases: burglary, robbery.

The necessary and reasonable expenses arising out of the accident within the scope
of insurance to:
-

Prevent, limit additional loss, protect and take the damaged automobile to
the nearest service agent but not exceeding 10% of the sum insured at most.

-

Inspect loss if included in the insurance liability.

-

In all events, total practical sum insured must not exceed the one specified
on the Insurance policy.

5


2.2Compensation process of car insurance

ACCIDENT

CUSTOMER
INSURANCE COMPANY

REQUEST

STAFF EXPERTISE

WORK AND GUIDE CUSTOMERS
COMPENSATE TO CUSTOMER
Finger 2.1: Compensation process of car insurance
Pjico (2013)
2.2.1 Car accident compensation claims process
The first step after the crash customer needs to identify any casualties and make an
emergency call (hot number) to the relevant parties and insurance company.
Then, after receiving your phone call, insurance company immediately ask staff
expertise contact to customer to guide them to solve problem.
The insurance company will pay the insurance compensation within 15 days from
the receipt of full and valid request document for compensation and must not
prolong for over 30 days in case that it is necessary to verify the documents.
2.2.2 Responsibilities of the Automobile owner, driver in compensation process.

When accident occurs, the Automobile owner, driver has responsibility for:

6


-

Actively rescuing, limiting the bodily injury or damages to property,
protecting the accident scene, at the same time must notify immediately to
the nearest Police station, insurance company to coordinate in solving the
accident consequences, Pjico (2009).

-

Notifying in written to the Insurance company within 05 days from the
occurrence of accident (except for the case the legitimate reasons are
given). In case the automobile is lost, robbed, the Automobile owner (or
driver) must notify immediately to the Police station or the local authority
where the event happened and within 24 hours must notify in written to
insurance company.Pjico (2009)

-

Not allowed to move out of the accident scene. It is not allowed to remove
or repair the property without the consent of insurance company has not
surveyed the actual damages or insurance company surveyed but it has not
agreed the reasonable repair option), except for the case that it is necessary
to ensure the safety, prevent the bodily injury or damages to property or
must implement at the request of the authorized bobby.Pjico (2009)

-

Transfer the right of requesting for compensation related to the third party
liability.Pjico (2009)

-

In case of happening loss due to partially or wholly fault of the Third Party,
the Automobile owner must reserve the right of complaint and transfer the
right of claiming for compensation to insurance company within the
amount compensated by insurance company enclosed with all related
necessary documents.Pjico (2009)

-

The Automobile owner, driver must be honest in collecting and providing
accident information,

documents in the

Request document for

compensation and create favorable conditions for insurance company
during the truthfulness verification of such documents.Pjico (2009)
2.3 Accident survey
-

When the insurance event happens, all damages to property (such as
automobile, goods, other properties….) are surveyed directly by insurance
company or its authorized person in the presence of Automobile owner,

driver or legal representative of the Automobile owner in order to
7


determine the causes and damage level. The damage survey fees shall be
born by insurance company.Pjico (2009)
-

In case insurance company and Automobile owner cannot agree the causes
and damage level, the independent surveyor shall be appointed to carry out
the survey. In case both parties cannot agree the appointment of
independent surveyor, either party requires the Court in the place
happening damages or the residence place of the Automobile owner to
appoint the independent surveyor. The conclusion of independent surveyor
is binding on both parties.Pjico (2009)

-

For the accidents which insurance company has no condition for survey or
has no accident report from the Police, the Automobile owner, driver must
provide all detailed information of the causes, developments of the
accident, damage level and documents, damage photos (if any) to make the
grounds for determining compensation.Pjico (2009)

SECTION B: THEORIES AND RESEARCH MODEL
2.4 Key concepts
2.4.1 Functional value
Functional value is the utility derived from the perceived quality and expected
performance of product(Sweeney, J.C. and Soutar, G.N., 2001). In this
present we refer to functional value of a compensation process, that is the helpful,

considerate of the staff, the respond of insurance company when customers need
help from them.
2.4.2 Economic value
Economic value is the utility derived from the product due to the reduction of its
perceived short term and long term costs(Sweeney, J.C. and Soutar, G.N.,
2001). How we know economic value compensation that are fast payment,

satisfactory of customers about amount of payment, time saving and compact
procedure.

8


2.4.3 Emotional value
That is the utility derived from the feelings or affective states that a product
generates(Sweeney, J.C. and Soutar, G.N., 2001). Does compensation
process give customer peace of mind and confidence, is it sense of security,
enhanced wellbeing. These feelings create emotional value in compensation
process.
2.4.4Social value
The utility derived from the product’s ability to enhance social selfconcept(Sweeney, J.C. and Soutar, G.N., 2001). When I buy car insurance
friends and colleagues envy me, it improves the way risk transfer for society.
When I have car insurance it helps me to feel distinct from the other people
because I can be confidence to drive.
2.4.5Customer loyalty
Customer loyalty is the result of an organization’s creating a benefit for
customers so that they will maintain andincreasingly repeat business with the
organization (Anderson, & Jacobsen, 2000).
What makes people buy car insurance for their car, which is experiencing
compensation process of insurance company? When I have chosen to buy car

insurance of this company, I must also to encourage friends and relatives to
buy, too.
2.5 Research model and hypotheses relationship
2.5.1 Functional value and customer loyalty relationship.
The present study refers to when customers buy insurance products, the insured
generally most interested in whenever the accident occurred, the staff are very
helpful and considerate, and always respond promptly and on time? Clearly,
these factors greatly influence the loyalty and continued selecting next year's
insurance, which is the basis of forming hypotheses.
H1: perceived functional value is assumed to positively influence Customer
Loyalty.
9


2.5.2 Economic value and customer loyalty relationship.
In terms of economic compensation insurance can greatly influence the
customers, there are many factors affect this problem, the compensation
quickly and satisfactorily, the simplest procedure is the factors directly impact
the economic value and the decision to continue to work with the insurance
company.
Therefore, the influence of economic value on Customer Loyalty may vary
between the time of compensation and amount of compensation. Hence,
economic value is the rationale behind the next proposed hypothesis:
H2: Economic value is assumed to positively influence on Customer Loyalty.
2.5.3 Emotional value and customer loyalty relationship.
An unusual incident occurred on the road always creates confusion, mental
restlessness. The accident is always faced with the loss of financial and
emotional impact is very strong. Insurance is financially secure and create
confidence for our customers, and this only really play when compensation
insurance gives customers the confidence andpeace of mind and safety when

engaged traffic.Therefore, Emotional value is the rationale behind the proposed
hypothesis:
H3: Emotional value is assumed to positively influence on Customer Loyalty.
2.5.4 Social value and customer loyalty relationship.
Social value: what we consider to be important in social interactions between
people. it was, ‘a process whereby organization meet their needs for goods,
services, works and utilities in a way that achieves value for money on a whole
life basis in terms of generating benefits to society and the economy, whilst
minimizing damage to the environment.(Inspiring and Creating Social Value in
Croydon).
Insurance provides an efficient mechanism of risk transfer by pooling
idiosyncratic risks. In technical terms, such risk pooling, based on the law of
large numbers, provides value in that the premium paid by individual
policyholders is smaller than the cost of an expected maximum loss occurrence.
10


By charging a premium that reflects the underlying risks, insurance provides an
important signal to policyholders and the economy at large, thereby offering
incentives for risk mitigation. Insurers also give risk management advice and
services to individuals and companies. Therefore, Social Value is the rationale
behind the following proposed hypothesis:
H4: Social value is assumed to positively influence on Customer Loyalty.
2.5.5Moderating variables.
Study also Explore the difference between customer groups in term of car
owner and driver. The owners are people also drive by themselves every day,
in this group we can see most of regulations and procedure they can understand
and do it very easy, but with group of drivers who only drive for the owner,
with low education, so it is difficult for them do complete procedure and
understand regulations of insurance company.

H5: There is difference impact level of values and customer loyalty between
owner and driver groups.
The conceptual framework guiding the present study is depicted in Figure 2.2
Based on the literature review, hypothesized relations among the latent
variables have been derived.
Functional
value
Economic
value
Emotional
value

H1

H2

Customer
Loyalty

H3

H4
H5

Social value

Moderator
- Owners and drivers

Finger 2.2: The research model

11


H1: Functional value is assumed to positively influence Customer Loyalty.
H2: Economic value is assumed to positively influence on Customer Loyalty.
H3: Emotional value is assumed to positively influence on Customer Loyalty.
H4: Social value is assumed to positively influence on Customer Loyalty.
H5: There is difference impact level of values and customer loyalty between
owner and driver groups.

12


CHAPTER 3: RESEARCH METHODOLOGY
Chapter 2 presented the research model and the research hypotheses. This
chapter presents the research process, the research object and the way that data
is collected. The research is designed from the questionnaire to the sampling
design and the plan for the data analysis.
The research methodology included the phase of qualitative study and
quantitative study. The qualitative study was conducted by in-depth interview
of focus group. In the phase of quantitative study, the construction of
measurement scales and the design of questionnaire based on selected and
adjusted measurement scales were conducted.

Purpose of the
study
Exploration
Description
Hypothesis
testing

Extent of
researcher
interference
Minimal: Studying
events as they
normally occur
Manipulationand/o
r control
and/orsimulation

Type of
investigation
Causal
Relationship
Correlations
Group
differences

Study setting
Contrived
Noncontrived

Measurement
and measures
Operational
definition
Item (measure)

1. Feel of data

2. Goodness
of data

Problem
statement

3. Hypothesis
testing

Unit of analysis
(Population to
be studied)
Individuals

Sampling design
Probability
Sample size

Time horizon
One shot
(Crosssectional)
Longitudinal

Data collection
method
Interviewing
Questionnaire

Finger 3.1: Research design and how data collection method fit in(Sekaran,
U and Bougie, R., 2011)

3.1 QUALITATIVE RESEARCH
The purpose of qualitative research step is to make clear the concepts and
interpret the items from measurement scale based on the standpoint of
customer. Hence, the necessary modification can be carried out in order to
increase the power of scale. In addition, this step also provides the
13


opportunities to gain new idea, new items to enhance the research model and
measurement scale.
The technique employed was the focus-group interview – the most well-known
group interview technique - because it can provide historical information and
the interaction will enrich the information for research (Donald & Pamela,
2006). It was valuable in the scenario of this research as helping researcher
obtain general background about the topic, interpret existing researched
findings and provide new idea for modifying and supplementing new
components.
The participants of focus group were the people who has experiences of
compensation and who really interested in this problem, and people who
worked in compensation of insurance company, who understand what the
owner or driver need when they have accident.
The general rule is keep conducting focus group interviews until no new
insights are gained (Donald & Pamela, 2006). The script for interview was
prepared in advance. The researcher led the discussion in focus group
interview. The interviewees presented their private opinions according to the
questions in script prepared by researcher before and criticized the previous
ideas until no insights were gained.
The findings of focus group interview got agreements of interviewers on some
contents, some other contents need modified, complemented to be more
appropriate.

3.2 QUANTITATIVE RESEARCH
3.2.1 Measurement scales
Measurement scale for values was adapted from Koller, Floh, and Zauner
(Psychology and marketing Doi: 10.1002/mar) and modified through
qualitative research with 37 items (2006) and modified through qualitative
research with 23 items.

14


CONCEPT

ORIGINAL SCALES

EXPLANATION

Has done compensation as

concepts are adjusted

Definition: The utility

promised in the insurance

to suit the research

derived from the perceived

contract.

context

Compensation process closely

concepts are adjusted

Function value

quality and expected

Has consistent quality

CURRENT SCALES (CONTEXT)

Is well made

performance of the

to suit the research

product (Sweeney, J.C.

context

and Soutar, G.N.)

Has

an

acceptable Has an acceptable standard of

standard of quality

quality.

Has poor workmanship

Professional compensation

concepts are adjusted

process.

to suit the research
context

Would not last a long time

quick claim settlement as

concepts are adjusted

commitment

to suit the research
context

Would
consistently

perform Solving the compensation in a
manner consistent

concepts are adjusted
to suit the research
context

Staff is professional, accurate

new concepts under

counseling and always come

study

timely when customer have an

15


accident.
The process of compensation

new concepts under

of company X is simple and

study

convenient
Economic value

Is reasonably priced

Is reasonably price

Definition: The utility

Offers value for money

Offers value for money

derived from the product

Is a good product for the

meaningful concept

due to the reduction of its

price

nearly overlap with

perceived short term and

other concepts in the

longer term costs

context of research

(Sweeney, J.C. and Soutar, Would be economical

Would be economical

G.N.)

Compared to the others

Compared to the others

concepts are adjusted

cars, my car is economical

insurance, my insurance is

to suit the research

economical

context

Is fairly priced

meaningful concept
nearly overlap with
other concepts in the

context of research

Emotional value

Is one that I would enjoy

Is one that I would enjoy

Definition: The utility

Would make me want to

Would make me want to use it

derived from the feelings

use it

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