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The impact of service space on customer loyalty trends at restaurants in Ho Chi Minh City - 2



1.1 . Introduction​​

CHAPTER 1 : OVERVIEW​​


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Vietnam is a developing country, consumer demand is increasingly upgraded, culinary culture has changed with certain standards in the majority of people. Cuisine or simply eating and drinking is a daily thing, very close and also very ordinary. But in each era, different stages of development, eating and drinking are concerned with different levels. As life develops, people's needs are getting higher and higher, cuisine also becomes more perfect thanks to that. Changes in the economic, cultural and social environment have changed the needs of customers, thus requiring the elevation of cuisine to the level of art. For example, diners spend money in restaurants not only to enjoy food and drinks with more creativity from the chef, but they also need a space to relax with family, relatives, friends; a space to discuss work with partners; and sometimes to express themselves. For that reason, rewards are only given to those businesses that meet the diverse and specific needs of their customers.

There are many opinions that the present time is the golden time for the restaurant business, especially in large cities with high living standards and high population density such as Ho Chi Minh City (HCMC), containing a huge number of potential customers. However, according to statistics from the Department of Planning and Investment of the city, there are currently over 1,000 large enterprises operating in the hotel and restaurant sector in Ho Chi Minh City. This has created fierce competition in the culinary business. With a large number of restaurants, it will lead to a high level of industry competition. In addition, the barriers to entry for this type of business are almost very small, creating great pressure forcing organizations/individuals participating in this type of business to survive in the long term and achieve profit goals, requiring investment in both finance and knowledge to attract more and more customers, including both old and new customers.

The impact of service space on customer loyalty trends at restaurants in Ho Chi Minh City - 2


Thus, as with other types of business, loyal customers are still the key factor and also the lever for the success of restaurants because clearly, nothing and no one but customers provide revenue for restaurants to exist and develop sustainably. Restaurants must focus on investing and researching to understand customer needs and create customer loyalty because customer loyalty is the top priority in the current fiercely competitive context of the restaurant industry. No business owner does not realize that the cost of finding a new customer is many times more expensive than the cost of retaining an existing customer. First, the cost of advertising, promotion, sales and discovering the needs of new customers is very high, and second, new customers need a "transition" period before they can become profitable customers for the business (Athanassopoulos et al., 2000).

Customer loyalty is a fairly familiar concept in the field of marketing, in the simplest understanding it refers to the tendency of consumers to repeat their purchasing behavior, and in this case, it is the tendency of each person to repeat their behavior at a certain restaurant. Why, even though other restaurants open, people still tend to be loyal to a certain restaurant and sometimes even choose a certain seat at a familiar restaurant. In reality, each restaurant has its own style and serves a specific audience. Restaurant owners also invest a lot of money and effort in activities to attract customers, but few people know systematically what the core factors are in stimulating and what is the catalyst that creates the trend of increasing loyalty to the restaurant.

Previous studies have shown that customer satisfaction is an important factor explaining customer loyalty (Jones and Suh, 2000). The simple reason is that only when customers are satisfied with products and services will they tend to use the service more and more often. The use of services is not only limited to that personal factor but also introduced by word of mouth to acquaintances (Zeithaml et al., 1996). However, only


Satisfaction alone is not enough to build a foundation of customer loyalty.

Previous research in the retail sector has clearly demonstrated that the environment of a shopping place can change customers' emotions (Babin et al., 2005). These emotions can be positive, pushing customers closer to becoming loyal customers, or negative, discouraging customers from using the current service provider and switching to another service provider. These studies have focused on developing and testing theories that explain how the environment effectively creates systematic changes in key marketing outcomes such as sales, value, and satisfaction (Turley and Chebat, 2002). Similarly, the servicescape model in Bitner's (1992) study asserts the prominent role of environmental influences in shaping service outcomes. Furthermore, a number of studies have suggested that positive and negative emotions, evoked by environmental characteristics, are fundamental concepts in explaining customer-environment interactions (Turley and Chebat, 2002).

Thus, the notion that servicescape aspects can have a strong influence on customer loyalty is a well-established one in many contexts (Harris and Ezeh, 2008). Indeed, there is general agreement that servicescapes create emotions in customers, causing them to either continue to associate with a particular provider or to cease to be a loyal customer. Despite the obvious importance of servicescapes, there is a surprising lack of empirical research that explores the role of servicescapes in consumption contexts (Tombs and McColl-Kennedy, 2003) and their influence on customer purchase decisions (Cronin, 2003). In general, the impact of servicescapes has been treated too simply as a tangible organizational resource. Thus, Hoffman and Turley (2002) question the lack of empirical research development in this area, asserting that “too little research to date


empirical research was conducted to investigate the influence of servicescapes as they relate to customers' service experiences”.

Therefore, to systematically understand the core factors that strongly influence the trend of customer loyalty to restaurants, this study focuses on determining the impact level of restaurant service space factors on customer loyalty trends based on the theory of customer loyalty and service space factors applied to the restaurant business type in Ho Chi Minh City.

1.2 . Research objectives​

This study aims to increase the theoretical understanding of the impact of servicescape elements on determining customer loyalty and to reveal the practical benefits of approaches developed from the findings of this study through servicescape elements that can be obtained by the organization of service in restaurants in Ho Chi Minh City in particular and the country in general.

This study is designed to contribute to theory by testing a multidimensional framework for modeling servicescapes that includes both physical and social dimensions, as well as to contribute to practice by providing empirical insights into contemporary servicescapes. The study also operationalizes a servicescape scale, providing a methodological contribution as well as implications for practice in the restaurant industry.

The research objectives of this report focus on:


Analysis of the relationship between the components of restaurant service space

influence customer loyalty trends.


1.3 . Research scope and methods​

The scope of this report focuses on restaurants operating in Ho Chi Minh City.

This research was conducted through two steps: preliminary qualitative research and formal quantitative research. The preliminary qualitative research aimed to adjust the measurement scale of the service space concept and was conducted through the group discussion method. The quantitative research was conducted by the convenience sampling method and direct interviews with customers who answered all the screening questions.

Based on the survey results, the study used Cronbach alpha reliability testing method and EFA exploratory factor analysis through SPSS 16.0 software to test the scale and multiple regression method to test the research model and research hypotheses in the model.

1.4 . Practical significance of the topic​​​​

Firstly , determine the impact relationship of service space components on customer loyalty to restaurants ;

Second , through the results obtained from actual data collection, the study also provides conclusions and specific recommendations for individuals/organizations that have been, are and will be doing business in this field ;

Third , the study adds a measurement scale system to the service space concept, which can be applied to other studies .

1.5 . Structure of research report​​​

The research report is divided into 5 chapters, specifically as follows:


- Chapter 1. Overview​​

This chapter provides an overview of the topic, states the research objectives, scope, research methods, outlines the practical significance of the topic and introduces the structure of the report.

- Chapter 2. Theoretical basis and research model​​​​


This chapter theoretically explores the contents of customer loyalty trends, defines service space, presents basic explanations of service space; presents and proposes a research model for the report.

- Chapter 3 : Research methods​​

The content of this chapter is to present the research design, measurement scales of research concepts and methods of adjusting the scales with the ultimate goal of specifying the research method to adjust the scales, testing the research model along with the research hypotheses established in chapter 2.

- Chapter 4. Research results​​​​​


This chapter presents the data analysis method and presents the research results.

- Chapter 5. Meaning and conclusion​​​​


The main content of this chapter is to summarize the main results found through the research process, to point out the significance, contributions in terms of theory and management practice as well as the limitations of the research to guide future research.


CHAPTER 2 : THEORETICAL BASIS AND RESEARCH MODEL​​​

2.1 . Customer loyalty trends


2.1.1 . Concept


Customer loyalty is a crucial goal in today's fierce competition in the restaurant industry. Loyalty is a concept that has been around for a long time and in terms of linguistics, loyalty is considered to be steadfast, faithful, a duty and always performed unconditionally.

It is said that the cost of acquiring a new customer is three to five times the cost of retaining an existing customer (Jang and Mattila, 2005). As the market has become more competitive, many companies have realized the importance of retaining their current customers and some have begun to take steps to improve customer loyalty. In fact, the benefits arising from customer loyalty are well recognized by businesses. Long-term customers often extend their relationships within the product range and thus the profits from this group are long-term and cumulative. Another widely perceived benefit is that loyal customers are more likely to engage in word-of-mouth advocacy and will also create channels of information, connecting an informal network of friends, relatives and other potential customers to the business (Athanassopoulos et al., 2000).

The definition of loyalty has been developed in many academic literatures, however, the common point for customer loyalty is that it is characterized by a customer's preference to purchase or use a service consistently when the need arises. The key issues of this characteristic are preference and consistency (McMullan and Gilmore, 2008). The most widely accepted definition of loyalty is that of Jacoby and Kyner (1973), who argue that loyalty is a propensity (i.e., non-random), behavioral response (i.e., purchase), expressed over time, by decision-making, for


with one or more alternative brands among a set of such brands, and is a function of psychological processes (i.e., decision making, evaluation) (McMullan and Gilmore, 2008).

In marketing, customer loyalty can be approached in two different ways: the behavioral approach and the attitudinal approach. In the behavioral approach, customer loyalty refers to a customer’s actual repeat purchase behavior. In contrast, in the attitudinal approach, customer loyalty refers to a customer’s intention to repeat purchase behavior.

With the above approaches, it can be affirmed that attitudes and behaviors exist in many situations and attitudes allow to predict the possibility of repeating the customer's purchasing behavior in the future and when the above purchasing behavior actually occurs, it shows the customer's loyalty. Or in other words, the term customer loyalty tendency focuses on the attitude aspect to prepare for going to behavior.

In fact, loyal customers are those customers who tend to repeat their purchase behavior over a long period of time, this tendency indicates that loyal customers always have a specific intention towards their favorite brand, not a random nature. And here, the non-random and intentional nature is the core of the problem of customer loyalty.

2.1.2. Models of loyalty


At a very general level, loyalty can be said to be what customers can show towards brands, services, stores, product categories and activities. Here we use the term customer-based loyalty in contrast to the concept of brand-based loyalty; this emphasizes that loyalty is a human trait, rather than something tied to a brand. Unfortunately, there is no universally accepted definition of loyalty. Instead, according to Uncles et al. (2003), there are three models used to generalize loyalty:

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