Dissertation using internet to build customer relationship

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Dissertation

The impact of using Internet in building customer relationship

and possibly applying into Vietnamese tourism industry

Table of Contents

Table of Contents ................................................................................................................................. 1

Acknowledgement ............................................................................. Error! Bookmark not defined.

Abstract 4

Chapter 1. Introduction .................................................................................................................. 7

1.1 Research objectives ...................................................................................................... 7

1.2 The background of Vietnamese tourism industry and the Internet .............................. 9

1.3 Research Question ..................................................................................................... 10

1.4 Research Methodology .............................................................................................. 11

1.5 Research Structure ..................................................................................................... 11

Chapter 2. Literature Review....................................................................................................... 12

2.1 General view of relationship marketing ..................................................................... 12

2.1.1 Definition of relationship marketing ............................................................................ 12

2.1.2 Antecedents and Consequences of relationship marketing .......................................... 12

2.1.3 Barriers to relationship marketing .............................................................................. 12

2.1.4 The correlation of trust, commitment and satisfaction in the buyer-seller

relationship .................................................................................................................. 12

2.2 The Internet and customer relations building ............................................................ 12

2.2.1 Characteristics of internet and antecedents to customer relations ............................. 12

2.2.2 Factors affecting the establishment of customer relations over the Internet ............... 12

2.3 Introduction about the Vietnamese tourism industry ................................................. 12

2.4 The application of the Internet Marketing in Vietnam .............................................. 12

Chapter 3. Research Methodology .............................................................................................. 13

3.1 Hypotheses development ........................................................................................... 14

3.2 Research Design......................................................................................................... 14

3.2.1 Research Objectives ..................................................................................................... 14

3.2.2 Research Philosophy .................................................................................................... 14

3.2.3 Research Approach ...................................................................................................... 14

3.2.4 Research Strategy ........................................................................................................ 14

3.3 Data Collection .......................................................................................................... 14

3.3.1 Sampling ...................................................................................................................... 14

3.3.2 Data Collection ............................................................................................................ 14

3.3.3 Measurement of Variables and Measures.................................................................... 14

3.4 Data Analysis ............................................................................................................. 14

3.4.1 Analysing quantitative data ......................................................................................... 14

3.4.2 Analysing qualitative data ........................................................................................... 14

3.5 Ethical Issue ............................................................................................................... 14

3.6 Summary .................................................................................................................... 14

Chapter 4. Results and Discussion .............................................................................................. 15

4.1 Data description ......................................................................................................... 16

4.2 The Correlation Matrix .............................................................................................. 16

4.3 Multiple Regression Analysis .................................................................................... 16

4.3.1 Regression to test the effects of the Internet on commitment, trust and

satisfaction ................................................................................................................... 16

4.3.2 Regression to to test the consequences of the Internet-based relationship

marketing ..................................................................................................................... 16

4.3.3 Regression to test the barriers of the Internet-based relationship marketing. ............ 16

4.4 The Econometrics Tests of the Model ....................................................................... 16

4.5 Discussion of the Findings ......................................................................................... 16

4.5.1 Interaction of satisfaction, commitment and trust ....................................................... 16

4.5.2 The Impact of Internet characteristics on Commitment, Satisfaction, and Trust ........ 16

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4.5.3 The Consequences of Internet use in Relationship Marketing..................................... 16

4.5.4 The Barriers of Internet-based Relationship Marketing .............................................. 16

Chapter 5. Conclusion and Future Research Recommendations ................................................. 17

5.1 Findings of the Research ............................................................................................ 17

5.2 Managerial Implications ............................................................................................ 17

5.3 Research Limitations ................................................................................................. 17

5.4 Future Research Recommendations ........................................................................... 17

5.5 Conclusion ................................................................................................................. 17

Reference: Error! Bookmark not defined.

Appendix 1 Error! Bookmark not defined.






Abstract

Relationship marketing has emerged as the dominant marketing approach in the business

market. Along with the development of information technology, the Internet is utilized as one

of the most effective channels to facilitate relationship marketing. There have been mixed

results, even contrasting findings related to the utilization of the Internet in building customer

relations. Thus, it is essential to conduct research on this topic in order to provide

implications for managerial practices.

The research aims at investigating the association between Internet use and relationship

marketing in the Vietnamese tourism industry. Among various relational mediators, the

research only focuses on commitment, trust, and satisfaction. Empirical tests are conducted to

examine the impacts of five Internet characteristics on such three factors. There are also

considerations with regard to the consequences of Internet-based relationship marketing.

Especially, the research explores whether four barriers, characterized by the Vietnamese

context, adversely affect Internet use.

In order to resolve such questions, the study applies the multi-strategy design that

combines both quantitative and qualitative methods. In particular, questionnaire-based

surveys and semi-structure interviews are employed. Two methods are conducted separately,

and then the results in both are compared in the analysis.

In terms of data analysis, correlation coefficient and ordinary least square regression are

adopted to test the effects of the Internet on building customer relations. Furthermore, this

study carries out the tests for autocorrelation, multicollinearity, normal distribution and

homogeneity of residuals. These help to check the assumptions of regressions as well as to

evaluate the generalization degree of models tested within the entire population.

By collecting data from 72 travel agencies in Quang Binh province, and using regression

analysis, as well as testing hypotheses, the empirical test has generated some essential

findings. At first, there are strong correlations between trust, satisfaction, and commitment. In

which, increasing satisfaction concurrently fosters customer trust and commitment in the

buyer-seller relationship. Second, the research concludes that among five fundamental

characteristics of the Internet, accessible information, interactivity, and efficient

communication, considerably influence commitment, trust and satisfaction. Particularly, the

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efficiency of communication, characterized by multimedia applications, expresses the

greatest impact. Third, major consequences of Internet-based relationship marketing in

Vietnam are identified. They include customer retention, positive word-of-mouth

recommendations, and improved organizational performances. Finally, it is inspected that the

lack of security and privacy, organizational incapability, unstable legal systems to protect a

commercial use of the Internet, and pessimistic customer perceptions towards Internet

application negatively influence commitment to the relationship.

Despite several limitations of data collected, and research methods applied, the empirical

results may be helpful for Vietnamese travel agencies to weaken the barriers, and

simultaneously leverage benefits related to applying the Internet in customer relations.

Furthermore, based on favourable results of testing methods, the study could be generalized

to certain extents in another industry, another geographic region, and another nation.

List of tables and figures Table 2.1: Antecedents of relationship marketing 10

Table 2.2: Consequences of relationship marketing 12

Table 2.3: Tourism indicators from 2006 to 2010 22

Table 3.1: The measurements of variables 36

Table 4.1: Descriptive statistics of the data collected 43

Table 4.2: Correlations of variables 45

Table 4.3: Coefficient of the regression (9) a 47








Table 4.11: Test for autocorrelation 55

Table 4.12: Test for homogeneity of variance 56

Table 4.13: Results of the hypotheses testing 64

Figure 2.1: The number of international tourists from 1995 to 2010 22

Figure 2.2: The number of lodgings and total rooms from 2006 to 2010 23

Figure 2.3: The proposed model 27

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Chapter 1. Introduction

At the beginning, the first chapter will explain the purposes and reasons why the

researcher select the issue of benefits and barriers associated with Internet-based relationship

marketing in Vietnam which is interesting topic to make research. Following section is an

introduction of general situation of the Vietnam tourism industry and Internet application.

Next, authors will discussed and present the research questions and research methods applied.

Final chapter will describe the dissertation structure.

1.1 Research objectives

The objective of this study is an investigation how the Internet on relationship marketing

practices influences its obstacles in the Vietnamese tourism industry. There are four vital

reasons to motivate research in this area.

Firstly, relationship marketing is one of the most fascinating topic areas in the literature.

The buyer and seller relationships have become progressively predominant in firms

strategies. Thus, this marketing approach yield mixed results. Most research has admitted

that, relationship marketing yields benefits in terms of customer retention, superior

organizational performances and positive word-of-mouth advertisements (1, 2). Nevertheless,

several businesses have not achieved beneficial consequences of relationship marketing

practices (3). 4, 5 also assumes that the positive effects of relationship marketing are

unsustainable.

In addition, there are several researchers, who have acknowledged the mediating factors of

relationship marketing, such as 6, 7, 8. However, there appear various results owing to

different industries examined and research methods used. For instance, 9 assume that there is

a positive linkage between commitment, trust and satisfaction in a buyer-seller relationship.

Meanwhile, 10 propose that trust, commitment and interdependence mediate the relational

exchange.

In recent years, Internet has emerged as a lever for the development of relationship

marketing. A variety of studies is undertaken to test the implementation of Internet-based

relationship marketing, of which the results are diverse (11, 12). In another way, Internet is

supposed to provide benefits to attract customers and enhance buyer loyalty (13). On the

other hand, 14 claims that the Internet is worse with regard to trust-building process. Further,

the majority of web sites are characterized merely for commercial purposes without focusing

on increasing trust as pat of a buyer-seller relationship approach. As a result, many

companies failed to adopt the effectiveness of Internet use (15). The impacts of the Internet in

relationship marketing, hence, attract more attentions from researchers.

Additionally, the application of relationship marketing is not similar in all countries

throughout the world. While higher levels of relationship marketing have been implemented

widely in developed nations, the approach is still in its inception in developing nations (16).

For an example, Companies developed ones follow one-to-one relationship marketing is

facilitated by information technology, such as the Internet (17). Meanwhile, companies in the

developing world retain customers by offering financial incentives, namely price discounts

and cross selling. These various findings encourage research concerning Internet-based

relationship marketing in Vietnam, a developing country with emerging relationship

marketing practices.

Secondly, most of the prior research and empirical tests related to the Internet use in

relationship marketing have collected data from developed countries, such as the United

Kingdom, United States, Australia, and other European countries (18, 19, 20). Although

researchers have conducted studies in Asian societies, they often concentrate on several

strong economies, including China, Japan, Taiwan, and Thailand (21, 22, 23). There is still a

shortage of findings in the Vietnamese context. This is another reason to carry out research

concerning Internet-based relationship marketing in Vietnam.

Thirdly, although the Internet facilitates improved relationship marketing in terms of

online transaction, efficient communication, and electronic data exchange, many companies

could not take advantages of this new approach owing to difficulties when adopting it (17,

19). Little research has identified the issues of barriers related to the Internet and customer

relations, especially in Vietnam. Further, previous papers have merely focused on the

obstacles of service providers without placing concerns towards customers (15, 16). This can

lead to a partial perspective of Internet-based relational exchanges. Therefore, in addition to

positive outcomes, it is essential to study the barriers from both sellers and buyers views.

This dissertation, thus, covers the obstacles of adopting the Internet in establishing customer

relations.

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Finally, the research makes contributions to the development of relationship marketing in

the Vietnamese tourism industry. The Internet characteristics offer advantages to create

customer satisfaction, trust, and in effect, resulting in commitment to the buyer-seller

relationship (24). However, Vietnam with distinct characteristics may not achieve success as

indicated in prior research. In addition, the country, characterized by Asian culture, probably

encounters significant problems that differ from Western societies. Hence, the study provides

a better understanding of benefits as well as potential barriers associated with applying the

Internet in relational exchanges in the Vietnamese condition. Based on these findings, travel

agencies could devise proper strategies to affect online trust, satisfaction, and relationship

commitment, which in turn, capitalize on Web-based relationship marketing. Simultaneously,

solutions are offered to weaken the obstacles with which the company may confront.

Moreover, the Vietnamese government may create changes in legal procedures and

regulations to support the utilization of Internet-based relationship marketing.

1.2 The background of Vietnamese tourism industry and the Internet

The utilization of the Internet in tourism industry has been expanded widely in Asian

countries, and Vietnam also employs this tool in marketing practices. Recently, the number

of Internet users has increased dramatically to keep pace with the development worldwide

(18). However, the application of the internet in Vietnamese travel agencies is implemented

in the environment that differs from other developed nations.

At first, Vietnamese customers prefer interpersonal interactions rather than Internet-based

service. This is not only because of low levels of information technology infrastructure, but

also owing to the significance of interpersonal interactions in most Asian cultures (25).

Indeed, in Vietnam, any relationships between buyer and seller involve a degree of face-to-

face communications. In the tourism industry, travel agencies often check the service before

selling it to customers. Likewise, the need to test rooms in hotels, taste foods in restaurants,

and negotiate directly with service suppliers is the distinct characteristic of Vietnamese

customers (26).

In addition, the issue of security restricts the use of the Internet by both travel agencies

and tourists. Similar to other South-East Asian countries, the Vietnamese express high

uncertainty avoidance behaviours, so they are reluctant to change or encounter risks (18).

Meanwhile, cash payment is strongly oriented in the Vietnamese culture. Moreover, the

majority of customers perceive serious risks related to financial transactions and personal

information exchanges via the Internet (26). This is mainly due to the deficiencies in legal

procedures and information infrastructures associated with online transactions.

In terms of travel agencies, they confront with the shortage of resources to develop an

effective internet marketing strategy and a professional website (12). A vast number of travel

agencies in Vietnam currently operate in small and medium basis, while implementing an

internet marketing strategy requires a large amount of investments. Therefore, these firms are

unable to afford to achieve advantages of the internet marketing practice. They suffer a lack

of knowledge to setup and handle computerized system, and an insufficiency of continuous

maintenance. Thus, almost commercial websites are used for advertising purposes in the

tourism industry.

In summarise, communication and information through Internet are insufficient to build

customer’s truth in the Vietnamese circumstance. Consequently, companies may consider

Internet as a supplementary channel rather than the replacement for conventional face-to-face

approaches to enhance the buyer-seller relationship. Additionally, by utilizing Internet, firms

can apply catalogues, advertisements strategy as well as financial incentives to appeal and

retain customers. It is great doubt that the information technology, particularly the Internet,

can successfully facilitate relationship marketing to achieve favourable outcomes in Vietnam.

1.3 Research Question

The purposes of this research are characterized by discovering answers for these four

questions:

Q1: To what extent are commitment, trust and satisfaction interrelated in a buyer-

seller relationship?

Q2: Which influences does the internet have on satisfaction, commitment or trust

in the buyer-seller relationship in Vietnam?

Q3: To what extent does the company benefit from building customer relations

over the Internet?

Q4: Which factors affect the effectiveness of the internet towards building

customer relations in Vietnam?

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Firstly, the study inspects the relationship between commitment, trust and satisfaction in

relationship marketing. In Western countries, Internet marketing has been applied

successfully, however, in some developing countries the results may vary. Thus, the second

and third question is to investigate whether Internet-based relationship marketing increases

customer satisfaction, commitment and trust in the company, and which beneficial outcomes

of this application are in Vietnam. In addition to advantages, the fourth question explains

which barriers probably impede the utilization of the Internet in building customer relations

in Vietnam. Hypotheses are developed based on these questions.

1.4 Research Methodology

All the research questions are tested in the tourism industry, particularly among travel

agencies and Companies. The data is initially collected through computer-aided

questionnaires. After that, semi-structure interviews are carried out to clarify answers from

questionnaires. The research also adopts data from previous studies in order to discuss its

findings critically.

After collecting data, both quantitative and qualitative analysis is applied to resolve the

questions. In terms of the former one, a range of basic analytical techniques, including

correlation, regression analysis with ordinary least square (OLS) and Durbin-Watson, helps

to find the results. Furthermore, Kolmogorov-Smirnov (K-S) test and Breusch-Pagan/Cook-

Weisberg test checks the reliability and validity of empirical tests in the research. On the

other hand, questions and making comparisons are two methods adopted in qualitative

analysis. The results from both methods are then linked and discussed together.

1.5 Research Structure

This study is divided in five chapters. The first section introduces the research objectives,

questions, and methodologies applied to answer the questions. Next, the literature review

mentions theories and former studies as the background of this dissertation, as well as a brief

introduction of the Vietnamese context. The chapter three is research methodology that

summarizes the way to collect and interpret data. The next chapter describes and discusses

results from analysis. After that, the final chapter concludes the findings of this empirical test.

Managerial implications and limitations of the research are also presented to suggest further

studies.

Chapter 2. Literature Review

There are numerous theories and empirical tests about the correlations between three

mediating factors of relationship marketing, including commitment, trust and satisfaction,

and the impacts of the Internet on customer relations building. The results are diverse, even

appears contrast findings. This chapter discusses the findings in terms of Internet-based

relationship marketing and its application in the Vietnamese condition.

2.1 General view of relationship marketing

2.1.1 Definition of relationship marketing

2.1.2 Antecedents and Consequences of relationship marketing

2.1.3 Barriers to relationship marketing

2.1.4 The correlation of trust, commitment and satisfaction in the buyer-seller relationship

2.2 The Internet and customer relations building

2.2.1 Characteristics of internet and antecedents to customer relations

2.2.2 Factors affecting the establishment of customer relations over the Internet

2.3 Introduction about the Vietnamese tourism industry

2.4 The application of the Internet Marketing in Vietnam

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Chapter 3. Research Methodology

This chapter objects to describe the research methodology applied to collect and analyse

data. There are four main sections in this chapter. They are hypotheses development, research

design, data collection, and data analysis. The first section introduces hypotheses that are

tested according to the research question/problem and the literature review. Following, the

research design demonstrates a framework of research strategies, philosophy and methods to

be used in this dissertation. The third section is comprised of the sampling procedures, the

sources of data as well as measurements of variables. Finally, the data analysis presents

research tools and techniques used to interpret data.

3.1 Hypotheses development

3.2 Research Design

3.2.1 Research Objectives

3.2.2 Research Philosophy

3.2.3 Research Approach

3.2.4 Research Strategy

3.3 Data Collection

3.3.1 Sampling

3.3.2 Data Collection

3.3.3 Measurement of Variables and Measures

3.4 Data Analysis

3.4.1 Analysing quantitative data

3.4.2 Analysing qualitative data

3.5 Ethical Issue

3.6 Summary

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Chapter 4. Results and Discussion

This chapter examines the results that derive from data collected, and testing methods

mentioned in chapter 3. The chapter is comprised of five main parts, including the data

description, the correlation matrix, the multiple regression analysis, econometrics tests of the

models, and discussion of the findings.

4.1 Data description

4.2 The Correlation Matrix

4.3 Multiple Regression Analysis

4.3.1 Regression to test the effects of the Internet on commitment, trust and satisfaction

A. Commitment as the dependent variable

B. Trust as the dependent variable

C. Satisfaction as the dependent variable

4.3.2 Regression to to test the consequences of the Internet-based relationship marketing

4.3.3 Regression to test the barriers of the Internet-based relationship marketing.

4.4 The Econometrics Tests of the Model

4.5 Discussion of the Findings

4.5.1 Interaction of satisfaction, commitment and trust

4.5.2 The Impact of Internet characteristics on Commitment, Satisfaction, and Trust

4.5.3 The Consequences of Internet use in Relationship Marketing

4.5.4 The Barriers of Internet-based Relationship Marketing

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Chapter 5. Conclusion and Future Research

Recommendations

The first part of this chapter draws conclusions about the utilization of Internet-based

relationship marketing following the discussions in the previous chapter. Next, the second

part continues with the fundamental implications for managerial practices among service

providers. Then, suggestions for further research are mentioned in accordance with several

limitations of this study. Ultimately, the dissertation ends with a brief conclusion.

5.1 Findings of the Research

5.2 Managerial Implications

5.3 Research Limitations

5.4 Future Research Recommendations

5.5 Conclusion

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Dissertation using internet to build customer relationship