Essay: Phu Nhuan Jewelry Joint Stock Company

Phu Nhuan Jewelry Joint Stock Company (PNJ) is a firm operating in fields of verifying diamond and gemstone service; manufacturing, trading gold as well as silver and gemstone jewelry, gold bullion; house renting according to real estate trading law.
 
1. 3. 1 Foundation and development history

In the 28th of April 1988, Phu Nhuan Jewelry Trading Store founded with only 14 million VND investment– equivalent to only 9.0 ounces of gold and 20 employees.

In 1990, this founding store became Phu Nhuan Jewelry, Fine Arts and Currency Exchange Company, being under direct control of Financial Administration of Ho Chi Minh City Committee. At this time, Phuong Hoang Gold Bar was also launched.

In 1992, it was renamed to Phu Nhuan Jewelry Joint Stock Company. This period of time witnesses a great change with bold investment and Italian technology production line. Soon after, PNJ also co-founded Dong A Bank and created a joint venture with Phu Nhuan House Trading and Development Company.

In 1995, PNJ expanded its activities to motorbike trading as a Head of Honda. Also in the same year, PNJ set up the first gas logistics in Ho Chi Minh City, VINAGAS.

Since 1998 till 2003, branches in other cities like Ha Noi, Da Nang and Can Tho were setting up while number of stores in Ho Chi Minh City kept increasing. Not only expending nationwide, PNJ also reached foreign markets, starting with Singapore, Malaysia and the US.

In 2003, PNJ co-found Dong a Real Estate Join Stock Company and be shareholder of SG Fisheries Joint Stock Company.

In 2004, PNJ changed the model to become a Joint Stock Company on the underside of their full name Phu Nhuan Jewelry Joint Stock Company.

In 2005, PNJ re-launched the brand PNJSilver and the premium trademark CAO as Fine Jewelry.

In 2007, PNJ was ranked by United Nations Development Programed as Top 200 Largest Enterprises in Vietnam.

In 2009, PNJ share went public at HOSE and helped increased the charter capital of the company to 400 billion VND.

In 2010, PNJ was recognized as the national brand and awarded a gold prize of National Quality by the Government.

In 2012, PNJ started using new jewelry factory with up to 120 billion VND investment. This factory became one of the biggest factories in Asia, considering the capacity of up to 4 million items per year.

In 2013, PNJ launched the biggest jewelry center in Vietnam selling not only jewelry but also diamond and watch at Phu Nhuan district in Ho Chi Minh City.

PNJ Gold jewelry brand was official launched in Vietnam market in 1989 for and was the first brand jewelry invested human resources and technical equipment in modern machinery, contributing to the development and improving the professionalization of the traditional jewelry industry. Over 22 years of continuous efforts and innovation, PNJ now can be proud to be a leading jewelry business in Vietnam.

B. PNJ high-quality silver jewelry brand

PNJ high-quality silver jewelry brand was launch on August 2005 for young, stylish customers. In seven years contributing to the vibrant fashion market, PNJ Silver brings modern and novel product lines, contributing to the aesthetic orientation for target customer groups by newest fashion trends in regional and international scale.

C. PNJ Phoenix Gold Bullion – Dong A Bank

Launched in April 2008, PNJ Phoenix gold bullion – Dong A Bank was published by two prestigious enterprises in gold and financial trading in Vietnam which are Phu Nhuan Jewelry Joint Stock Company – PNJ and Dong A Commercial Joint Stock Bank – DAB. The introduction of gold PNJ Phoenix gold bullion – DAB again confirms the strength and growth of PNJ brand. It also contributes to more convenient trading tools and payment for consumers.

D. Jemma – high quality jewelry and accessory brand

Jemma is a high quality jewelry and accessory brand of Fashion CAO Ltd Company (which belongs to PNJ). With orientation to be a premium fashion company with high-level brand names in internal and external market, CAO Fashion launches Jemma brand as another choice for young women, especially officer ones so that they would have more choices to renew and affirm themselves.

E. CAO – Fine jewellery

Being proud to be the most premium jewelry brand name of PNJ, CAO – Fine Jewelry was launched to market in 2005 with the mission to be creative in design and manufacturing technology to make the most unique and most skillful production. CAO Fine Jewllery can be assumed to be one of very few domestic jewelry brand names that has enough rank to compete directly with premium international jewelry brand names in Vietnam.

F. Yabling

Officially launched in March 2nd 2011, Yabling is the newest brand of PNJ which is suitable for customers from 13 – 25 years old. In addition, Yabling also has jewelry production for customers form 25 – 30 years old. The brand has kinds of jewelry and accessory including: necklace, bracelet, ring, ear-rings… by metal, alloy (brass), plastic combined with other materials such as wood, leather, stone, lace… Especially there are some designs for man also.

G. Verifying service of PNJ

The service offers verifying service in gemstone and diamond basing on verifying standards of GIA – Gem Institution of America with skilled, professional and experienced staffs and modern verifying technology. With mutual orientation of PNJ, diamond verifying service always tries to be the most prestigious verifying company in the country.

The most common interpretations obtained from many authors reflect the belief that satisfaction is a feeling resulting from a process of evaluating what has been received against what was expected, including the purchase decision itself and the needs and wants associated with the purchase (Armstrong & Kotler, 1996). According to Bitner & Zeithaml (2003), satisfaction is the customers’ evaluation of a product or service whether that product or service has met their needs and expectations. Boselie, Hesselink, and Wiele (2002) stated that satisfaction is a positive, affective condition resulting from the assessment of all aspects of a party’s working relationship with another.

Nowadays, customer satisfaction can somehow be assumed as a key performance indicator to assess a business operation, and in a competitive market where every enterprises compete seriously with one others to attract new customers and keep the current existing ones and promote the current customers to become loyal ones, customer satisfaction become a critical factors in business strategy.

Omstrom & Iacobucci (1995) stated that customer satisfaction is commonly related to two most importat elements including the customer’s judgment of the product quality and his evaluation of the interaction experience he or she has made with the product provider (Crosby et al. 1990).

The customer’s evaluation of the interaction experience he or she made with the product provider mentioned above could be understood as service quality of the provider company. Cronin and Taylor (1992) declared that service quality is an antecedent of customer satisfaction. Moreover, enhancing service quality could advance the increase probability of customer satisfaction and lead to better customer retention with positive word of mouth of quality service (Berry and Parasuraman 1991). Therefore, the relationship of service quality to customer satisfaction plays such an important role in the success of any types of businesses.

The research findings reported by Caruana (2002) and Tsiotsou (2006) verify the preceding role of Perceived Product Quality and suggest a direct effect of Perceived Product Quality on consumer satisfaction. Thus, it is expected that the higher the perceived quality of a product, the higher the consumer satisfaction and the relationship between product quality and customer satisfaction also plays a fundamental part in the success of a company.

2. 2 Service and service quality

2. 2. 1 Service

Kotler and Keller (2007) suggested the difinition of service as “any activities or benefits that one party can offer to another which is essentially intangible and does not result in the ownership of anything.”

On the same line of thinking, Edvardsson (1998) suggested service to be viewed from the customer perspective because it is what determines the quality of the service offerd. In reality, service becomes very imperative in today life, because it is the key to attract new customers and retaining the existing ones. Excellent service will persuade customers to stay with their using brand or the service provider, while bad one will lead customers to switch the brand or the service provider to search for another which make them more satisfied.

2. 2. 2 Service quality

2. 2. 2. 1 Definition

The concept about service was build up academically throughout years of 60s till now, and its significance was concerned more and more. As the result of this, another concept “service quality” was studied from the very beginning of 60s. However, in the very first stage, it is kind of difficult for many researchers on exploring and defining the true meaning of service quality. The reason is that standards of services quality are totally different from the standards of goods quality. When purchasing any type of services (health care, banking, hospitality or else…), customers basically cannot judge the quality of a particular type of service as they easily can do with a particular type of physical goods (cars, toys, food…), just because with a physical and realistic good we can analyze its quality throughout its appearances or features such as colors, packages, shape and so on. In consideration of pure services (e.g., health care, financial, education, hospitality which are all intangible products), service quality is the diminant factor for customer to evaluate. In case customer service or services that offered with physical product (e.g. IT services, auto services), service quality is still an critic element in determining customer satisfaction (Kotler et al., 2005).

Parasuraman, Zeithaml and Berry (1988) defined the overall evaluation of a specific service firm by comparing that firm performance with general expectation of customer to see how the firms should perform as service quality. Czepiel (1990) also have somehow similar idea by defining service quality as the perception of customers on how well the service meets or above their expectations. Customer perceives services by quality and their experience satisfaction in general (Zeithaml, 2000).

2. 2. 2. 2 Service quality dimensions

Parasuraman et al. (1985) suggested ten factors to evaluating the service quality including tangible, responsiveness, reliability, credibility, courtesy, security, accessibility, communication as well as the understanding to the customer.

Then these ten factors are reduced and cut down to five factors as follows:

Tangibles – Representing the service physically – are defined as what is not abstract to express the service. They can be facilities, equipment, interiors of store or company, the location or the appearance of staffs, the layout of the shop,…

Reliability – Delivering on promises – is defined by the way business performe their service accurately and dependably. It is assessed if company can make their promises to customer about time, delivery, service provision, problems or pricing…

Responsiveness – Being willing to help – is the ability of business to give prompt service. The most important of this dimensions is the time customer have to pay to wait for answer of questions, problems, information or assistance,…

Assurance – Inspiring trust and confidence – is defined by the ability of the company as well as their staff to make customer feel trusted and confidence. It can be the knowledge and courtesy and skills of employee, and the ability of the firm.

Empathy – Treating customers as individuals – is defined as the ability of company to take care and treat customers individually so that they feel their importance to the company. Customers are very diversed and so do their needs and request. If a company can offer personally attention to each customers requirement, it would be a very good advantages.

However, many criticism have been levelled against SERVQUAL model. One of the major shortcomings of the model is that the five service quality dimensions are not universal and cannot be applied in all service industry, ( Ladhari 2009, Saurina Cannals 1997, Buttle 1996 and Robbinson 1999). They contended that it depends on the context in which the dimensions are applied since the definitions and the number differ. Many researches using SERVQUAL quality did not use all 5 dimensions of the model because of the features of different industry. For example, the result of the study of Babakus and Boller (1992) on an electric and gas utility company using SERVQUAL model only use one dimensions of five. This has also been confirmed by the research of Mels et al (1997) where only 2 dimensions were found. In the same vein, Cronin and Taylor cited in Jun and Cai (2001:278) conducted an investigation into the banking, pest control and dry cleaning and fast food industries and found that there was no evidence of the five dimensions.

Hence, we can conlude that SERVQUAL model is an open model and it is applied flexibly in different industries. And it is the same with jewelry industry where not all the dimensions play an important role in determining customer satisfaction in jewelry industry. As mentioned above, PNJ company is a product-oriented business which mainly focuses on gaining profit through selling jewelry products. Thus, reliability and responsiveness are not as important in this industry.

Reliabiliy is defined as dependably and accurately service performance. And responsiveness is defined as willingness to help and to provide prompt service. Jewelry of PNJ is not products with low price, hence, customers tend to spend much time to considering before making decision. Furthermore, with a variety of products types and designs with high product quality, it is not that necessary to provide accurate or prompt service. Both of the elements are somehow important but may have contextually modified meanings. Therefore, only elements related to the researched industry were used including: Tangibles, Assurance and Empathy.

2. 3 Product quality

2. 3. 1 Definition

Winder (1996) and Chanvan (2003) defined product quality to be the colletivity of product’s features and the characteristics that has the competency to satisfying the given needs. If customers’s expectation is fulfiled by the product, the customer will be satisfied and think that the product is of good or even high quality. If it is reversed, the customer will consider that the product is of low quality.

According to Zeithaml (1991), quality is broadly as supremacy or fineness of a product. Perceived Product Quality can be seen as the tool for customer to judge the overall excellence or superiority. Besides that, Lutz (1986) differentiates between the “affective” and “cognitive” aspect of quality. Affective quality consider the value judgment, this is similar to Zeithaml’s perceived quality. Cognitive quality is defined by the dominance of the search attributions, determined by the assesibility before purchase over the experience attributition, the assessibility during consumption of a product.

2. 3. 2 Product quality criteria

According to Garvin (1991), product quality performance has 8 criteria as follows:

• Performance

Performance refers to the elementary operating criteria of a product. It is evaluated if the product can perform its basic fucntion.

• Features

Features are subsidiary characteristics that support the basic functioning of a product. Sometimes, it is very difficult to read between the line separating primary product characteristics (performance) from secondary characteristics (features)

• Reliability

Reliability is a third dimension of quality. It is determined by the chance of a product failing a certain period of time.

• Conformance

It is the scale to which final design and operating features fit with the standards that have been reestablished.

• Durability

Durability is a measure of how long the product can live and perform well their functions. But nowadays, durability is more difficult to test because everything can be repaired. Durability now determined by the amount of usage before the product breaks down and requires replacement.

• Serviceability

It can be understood as the speed, and the competence of repair.

• Aesthetic

Aesthetic dimensions of quality are the appearances of the product, how they look, feel, taste, sound or smell. It is the most subjective dimension, and clearly matters of personal judgement and reflection of personal preferences.

• Perceived Quality

Perceptions of quality can be as subjective as assessments of aesthetics. Because consumers do not always possess complete information about a product’s attributes, they must frequently rely on indirect measures when comparing brands. In these circumstances, products will be evaluated less on their objectìve characteristics than on their images, advertising, or brand names.

2. 4 Price

2. 4. 1 Definition

According to Kotler and Armstrong (2010) price is the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service while Stanton, Michael and Bruce (1994) defined price as the amount of money or goods needed to acquire some combination of another goods and its companying services.

According to Mason (1940), the prices of all goods and services and all agents of production can be regarded as an “elaborate indicator” of the alternatives open to individual consumers and producers. “To the consumer the structure of prices indicates the terms on which he can acquire the goods for which he spends his money income.”

2. 4. 2 Relationship between price and quality

Economists have long been aware of the essential relationship between quality and price. A review of early writings reveals such explicit statements as the following by VV. C. Mitchell (1912), I. M. Clark (1923), and C. D. Edwards (1940). According to Arthur (1971), today, more than ever, “expensive” is the word that can connote to the word “quality” in customer’s perception. They are almost synonymous to each other. The idea that price is the indicator of a product is fairly reasonal. It shows a trust in supply and demand ans also it assumes that market price exists because they are fair and reasonable.

In the literature of Oxenfeldt (1950), the degree of correlation between product price and quality in U.S. product markets has been explored extensively. The results of these studies have also been quite consistent. In general, price and quality relates mutually. Comsumer tends to see the price to measure the product quality. Many prior research (e.g., Monroe 1973 and Olson 1977 have pointed out that when consumer are uncertain about the product quality, they often assume that the higher the price is, the better the quality is.

2. 5 Conceptual frame work

Figure 1: Conceptual framework

2. 6 Operationalization

Table 1: Operationalization

CONCEPT DEFINITIONS DIMENSIONS HYPOTHESIS

Customer Satisfaction The customers’ evaluation of a product or service in terms of whether that product or service has met their needs and expectations _ Satisfaction on product and sale services

_ Satisfaction on staffs

_ Satisfaction on serving process

_ Satisfaction on facilities,equipment

_ Satisfaction on equal treatment among customers, good product and service support, reasonable price, friendly atmosphere and social responsibility

_Overall satisfaction

H1: Customer satisfaction is positively associated with Perceived Product Quality and Perceived Service Quality.

H6: Customer Satisfaction is hypothesized to be positively associated with factors of Assurance, Price, Empathy and Tangibles

H7: Customer Satisfaction is well explained by those factors (including Perceived Service Quality as well as Perceived Product Quality)

H8: Customer Satisfation is directly and indirectly affected by those factors (including Perceived Service Quality and also Perceived Product Quality)

Multiple regression technique can be used to explore the relationship between one dependent variable and two or more independent variables. In this research, the multiple regression technique was used to figure out how well the independent variables were able to predict service quality and product quality. Besides that, it can also exactly show which factors most influenced these two factors.

Simple linear regression technique can also be used to explore the relationship between two dependent variables.

Path analysis, an extension of the regression model, was also applied to test the hypotheses that the four independent variables and product and surveice quality have direct and indirect effects to customer satisfaction. The effects are reflected in the so-called path coefficient standardized regression coefficient (beta: β). the interpretations of the path coefficients in this study are shown in Table 9 below.

Note: Extraction Method: Principal Component Analysis

To see how many factors to extract, the Kaiser’s criteria is used to consider. According to the criteria, only component that have eigenvalue of 1 or more are considered appropriate for retaining. This can be measured by the Total Variance Explained in table above. In the table, the first 4 components recorded eigenvalues above 1. These 4 components explain 69.212 percent of the total variance in which component 1 explains 46.268 percent, component 2 explains 9.294 percent, component 3 explains 7.599 percent, component 4 explains 6.051 percent of the total variance.

The four new variables were created after a variamax rotation. These factors account for 69.212 percent of the total variance. Factor 1 is Assurance; factor 2 is Price; factor 3 is Empanthy and factor 4 is Tangibles

Table below showed Factor Loadings of each item in independent variables and Reliability of those variables

Table 12: Factor Loadings and Reliability of Independent Variables

Service Quality An assessment of how well a delivered service conforms to the client’s expectations

_Good and consistent after-sale services and other services (Parasuraman (1985))

_ Give quickly and enthusiastic services

_ Staffs have good sales skill, knowledge and professional styles

_ Good location

_ Polite, friendly, caring and respectful staffs

_ Staffs have good communication skills

_ Honest and trustful staffs

Product Quality Perceived quality becomes the consumer’s judgement for the product overall perfection. _ Products are beaufiful and aesthetical (Garvin (1991))

_ Products make comfort and pleasantness

_ Products have long durability

_ Products give convenience

_ Products are warranted and assured of quality

_ Products have high safety

_ Products have sophisticated, luxury and unique design

Tangibles the physical facilities, equipment, faculty and communication materials. Tangiblility provides physical performances or images that customers, especially the new ones, will use in order to considerate the quality. _ Modern equipment (Parasuraman (1985))

_ Appealing facilities

_ Neat-appearing staffs

_ Interior matches with products and services delivered

_ Easy-locating layout

_ Easy-visiting layout

_ Clean, attractive, accessible rooms

Empathy the caring, individualized attention that the firm provides its customers _ Give personal attention (Parasuraman(1985))

_ Have customers’ best interest at heart

_ Understand specific needs of customers

Assurance determined by how knowledgable and courtesy the employees are and the ability of the firm to gain customer trust and confidence. _ Staffs are trusted by customers (Parasuraman(1985))

_ Safe transaction

_ Courteous staffs

_ Well-equipped staffs

Price the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service _ Better price than others

_ Reasonable price

_ Price matches with product value

_ Price deserves money paid

_ Overall satisfaction on price

3. 7 Factor analysis

In order to improve and obtain the highest reliability and validity for all measures of this study, factor analysis was applied for both dependent variables and independent variables. The following procedure which includes how to check for the assumptions of factor analysis, how to determine number of factors, how to interpret the factor loadings, and how to generate factor scores was used in this study.

3. 7. 1 Factor Analysis of Independent Variables

In this part, factor analysis was processing 4 independent variables which include 19 items of Tangibles, Assurance, Empathy and Price.

Method involves inspecting the correlation matrix for coefficients of .40 and above, and calculating the Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) and Barlett’s Test of Sphericity.

Table 10: KMO and Bartlett’s Test of Independent variables

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .822

Bartlett’s Test of Sphericity Approx. Chi Square

df

Sig. 2941.724

171

.000

Refering to KMO and Bartlett’s Test the Kaiser-Meyer-Olkin Measure of Sampling Adequacy is .905 (According to Pallant (2005), to be significant, value has to be .6 or above) and Bartlett’s Test of Sphericity value is significant at .000 level. Therefore, this factor analysis is considered appropriate.

Table 11: Total Variances Explained Independent Variables

Component Initial Eigenvalues Rotation Sums of Squared Loadings

Total % of variance Cumulative % Total % of variance Cumulative %

1

2

3

4

5

6

7 8.791

1.766

1.444

1.150

.978

.729

…….. 46.268

9.294

7.599

6.051

5.145

3.838

…….. 46.268

55.562

63.162

69.212

74.357

78.195

………. 3.926

3.422

3.125

2.678 20.663

18.008

16.446

14.095 20.663

38.671

55.117

69.212

Note: Extraction Method: Principal Component Analysis

To see how many factors to extract, the Kaiser’s criteria is used to consider. According to the criteria, only component that have eigenvalue of 1 or more are considered appropriate for retaining. This can be measured by the Total Variance Explained in table above. In the table, the first 4 components recorded eigenvalues above 1. These 4 components explain 69.212 percent of the total variance in which component 1 explains 46.268 percent, component 2 explains 9.294 percent, component 3 explains 7.599 percent, component 4 explains 6.051 percent of the total variance.

The four new variables were created after a variamax rotation. These factors account for 69.212 percent of the total variance. Factor 1 is Assurance; factor 2 is Price; factor 3 is Empanthy and factor 4 is Tangibles

Table below showed Factor Loadings of each item in independent variables and Reliability of those variables

Table 12: Factor Loadings and Reliability of Independent Variables

Factors Factors loading Cronbach’s Alpha

(N=205)

FACTOR 1: ASSURANCE

Staffs are trusted by customers

Well-equipped staffs

Safe transaction

Courteous staffs

Modern equipment

Appealing facilities

FACTOR 2: PRICE

Price matches with product value

Reasonable price

Price deserves money paid

Better price than others

Overall satisfaction on price

FACTOR 3: EMPATHY

Have customers’ best interest at heart

Understand specific needs of customers

Clean, attractive, accessible rooms

Give personal attention

FACTOR 4: TANGIBLES

Neat-appearing staffs

Easy-locating layout

Easy-visiting layout

Interior matches with products and services delivered

.822

.820

.729

.702

.614

.606

.804

.795

.715

.704

.624

.776

.703

.686

.625

.736

.723

.718

.696 .871

.717

.833

.763

3. 7. 2 Factor Analysis for Dependent Variables

In this part, factor analysis was applied for the group of 3 dependent variables including 23 items of Perceived service quality, Perceived product quality and Customer satisfaction

Table 13: KMO and Bartlett’s Test of Dependent Variables.

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .824

Bartlett’s Test of Sphericity Approx. Chi-Square

df

Sig. 2947.545

210

.000

According to KMO and Bartlett’s Test the Kaiser-Meyer-Olkin Measure of Sampling Adequacy is .824 (According to Pallant (2005), to be significant, value has to be .6 or above) and Bartlett’s Test of Sphericity value is significant at .000 level. Therefore, this factor analysis is considered appropriate.

Table 14: Total Variances Explained Dependent Variables

Component Initial Eigenvalues Rotation Sums of Squared Loading

Total % of Variance Cumulative % Total % of Variance Cumulative %

1

2

3

4

5 8.940

2.223

1.694

1.168

…… 42.571

10.584

8.068

5.561

…… 42.571

53.155

61.223

66.784

…… 5.405

3.961

3.492 25.736

18.861

16.626 25.736

44.597

61.223

Note: Extraction Method: Principal Component Analysis

To see how many factors to extract, the Kaiser’s criteria is used to consider. According to the criteria, only component that have eigenvalue of 1 or more are considered appropriate for retaining. This can be identified by the Total Variance Explained in table … In the table, the first 3 components recorded eigenvalues above 1. These 3 components explain 61.223 percent of the total variance in which component 1 explains 42.571 percent, component 2 explains 10.584 percent and component 3 explains 8.068 percent of the total variance.

The three new variables were created after a variamax rotation. These factors account for 61.223 percent of the total variance. Factor 1 is Perceived product quality; factor 2 is Perceived service quality and factor 3 Customer satisfaction

Table below showed Factor Loadings of each item in dependent variables and Reliability of those variables

Table 15: Factor Loadings and Reliability of Dependent Variables

4. 1. 2 Univarate Descriptive Statistics of Independent Variables

In order to check whether all scores were normally distributed, the descriptive procedure was conducted with all variables – the dependent and dependent variables involved in this study. In table …, there was no missing value; all variables loaded with sample size of 205 cases. The minimun and maximum value of each variable are also included.

Table 16: Univarate Descriptive Statistics of Independent Variables

N Minimum Maximum Mean Std. deviation

Tan

Ass

Emp

P 205

205

205

205 10.00

11.00

8.00

8.00 20.00

30.00

20.00

25.00 15.3415

22.0927

14.3024

17.2878 2.58018

4.21670

2.88441

3.57416

4. 1. 3 Univarate Descriptive Statistics of Dependent Variables

Table 17 presents the univariate descriptive statistics of the 3 dependent variables with a sample size of 205 cases, minimum, maximum, mean, and standard deviation values of each variable

Table 17: Univarate Descriptive Statistics of Dependent Variables

N Minimum Maximum Mean Std. deviation

SQ

PQ

CS 205

205

205 8.00

11.00

10.00 20.00

30.00

20.00 15.0488

22.4195

14.6780 2.64900

4.15268

2.57129

4. 2 Multiple regression analysis

Multiple regressions are a group of techniques that can be used to explore the relationship between a number of independent variables and one dependent variable. This technique can help researchers with information about the model as a whole (all subscales) and the relative contribution of each of the variables that make up the model (individual subscales).

Table 18: Correlation Coefficients between Independent Variables

1 2 3 4

1

2

3

4 Ass

P

Emp

Tan 1.000

.558**

.629**

.609**

1.000

.654**

.537**

1.000

.494**

1.000

Mean

Std.deviation 22.0927

4.21670 17.2878

3.57416 14.3024

2.88441 15.3415

2.58018

Note: ** Significant level p < .001

Table 18 shows correlation coefficients between four independent variables those are Assurance, Price, Empathy and Tangibles, and the significant level of those.

4. 3. 1 Factors affect Perceived service quality

Table 19: Descriptive Statistics and Variables’ Correlations of the SQ Model

SQ 1 2 3 4

1 Ass .478** 1.000

2 P .621** .558** 1.000

3 Emp .610** .629** .654** 1.000

4 Tan .439** .609** .537** .494** 1.000

Mean 15.0488 22.0927 17.2878 14.3024 15.3415

Std. deviation 2.64900 4.21670 3.57416 2.88441 2.58018

Note: ** Significant level p < .001

Table 19 indicates a significant relationship among the dependent variables, SQ, and the independent variables: Ass, P, Emp and Tan. Based on this, two variables of P and Emp were strongly correlated with SQ (r=.621, p<.001) and (r=.610, p<.001), respectively. This means that the better the price and the empathy were gotten, the higher service quality can be achieved. In addition, there were a substantially positive correlations between Ass and SQ (r=.478, p<0.001) and between Tan and SQ (r=.439, p<0.001). This means that better assurance and better tangibles could lead to a higher service quality.

In conclusion, the SQ was strongly correlated with P (r=.621, p<.001) and Emp (r=.610, p<.001), and was substantially positively correlated with Ass (r=.478, p<0.001) and Tan (r=.439, p<0.001).

The model valids at p<.0005 with F (4, 204) = 43.175 with the index for R squared value of .463, which explains more than 46 percent of SQ. This indicates that, every independent variable contributes explaining 46.3 percent of the variance of the SQ, as showed in note of Table 20

Table 20: Coefficients between IVs and SQ

Variables Standardized Coefficients (Beta) Sig. Correlations (Part)

Ass

P

Emp

Tan .037

.353

.323

.068 .626

.000

.000

.320 .478

.621

.610

.439

Note: Dependent Variable: SQ: Perceived service quality

– Predictors: Ass, P, Emp, Tan

– ANOVA: F(4, 204) = 43.175, Sig.=000, p < .0005

– Model summary: R2 = .463

For greater clarity, a regression equation for the model of EMPJOSA was written using the standardized coefficients (Beta) in Table 20:

SQ = .037(Ass) + .353(P) + .323(Emp) + .068(Tan)

Where:

• SQ: Perceived service quality

• Ass: Assurance

• P: Price

• Emp: Empathy

• Tan: Tangibles

4. 3. 2 Factors affect perceived product quality

Table 21: Descriptive Statistics and Variables’ Correlations of the PQ Model

Note: ** Significant level p < .001

Table 21 indicates a significant relationship among the dependent variables, PQ, and the independent variables: Ass, P, Emp and Tan. Regarding to this, there were substantially positive correlations between PQ and Ass (r=,647, p<.001), between PQ and P (r=.662, p<.001) between PQ and Tan (r=.611, p<.001) and between PQ and Emp (r=.534, p<.001). This means that the better assurance, price, empathy and tangibles were gotten, the higher level of product quality perceived.

In conclusion, there are substantially positive correlations between PQ and 4IVs: Ass (r=,647, p<.001), P (r=.662, p<.001), Emp (r=.534, p<.001) and Tan (r=.611, p<.001).

The model valids at p<.0005 with F (4, 204) = 69.131 with the index for R squared value of .580, which explains 58 percent of PQ. This indicates that, every independent variable contributes explaining 58 percent of the variance of the PQ, as showed in note of Table 22.

Table 22: Coefficients between IVs and PQ

Variables Standardized Coefficients (Beta) Sig. Correlations (Part)

Note: Dependent Variable: PQ: Perceived product quality

For greater clarity, a regression equation for the model of PQ was written using the standardized coefficients (Beta) in Table 22:

4. 3. 3 Factors affect Customer satisfaction

Table 23: Descriptive Statistics and Variables’ Correlations of the CS Model

Note: ** Significant level p < .001

Table 23 indicates a significant relationship among the dependent variables, CS, and the independent variables: Ass, P, Emp and Tan. According to this, there was a substantially positive correlation between CS and Emp (r=.502, p<.001). This means that the better the empathy was gotten, the higher level of satisfaction that customers feel. Besides that, the variables of Ass, P and Tan were moderately correlated with CS (r=.462, p<.001), ( r=.378, p<.001) and (r=.494, p<.001), respectively. This means that better assurance, price and tangibles could lead to higher customer satisfaction.

In conclusion, CS was moderately correlated with Ass (r=.462, p<.001), with P ( r=.378, p<.001) and Tan (r=.494, p<.001), and was substantially positively correlated with Emp (r=.502, p<.001).

The model valids at p<.0005 with F (4, 204) = 25.548 with the index for R squared value of .338, which explains nearly 34 percent of CS. This indicates that, every independent variable contributes explaining 33.8 percent of the variance of the CS, as showed in note of Table 24.

Table 24: Coefficients between IVs and CS

Variables Standardized Coefficients (Beta) Sig. Correlations (Part)

For greater clarity, a regression equation for the model of CS was written using the standardized coefficients (Beta) in Table 24:

CS = .108(Ass) – .051(P) + .320(Emp) + .297(Tan)

4. 3. 4 Relationship among dependant variables

Table 25: Descriptive Statistics and Variables’ Correlations of the CS Model 2

Note: ** Significant level p < .001

Table 25 shows that there were significant relationships between CS and PQ, CS and SQ . From this, there were moderate correlations between CS and PQ (r=.365, p<.001) and between CS and SQ (r=.355, p<.001). This means that the better the company’s product quality and service, the higher satisfaction that customer will perceive.

The model valids at p<.0005 with F (2, 204) = 20.008 with the index for R squared value of .165, which explains 16.5 percent of CS. This indicates that, two dependant variables: perceived product quality and perceived service quality contributed to explaining 16.5 percent of the variance of the CS, as showed in note of Table 26.

Table 26: Coefficients between CS and PQ, CS and SQ

Variables Standardized Coefficients (Beta) Sig. Correlations (Part)

PQ

SQ .241

.217 .002

.006 .365

.355

Note: Dependent Variable: CS: Customer Satisfaction

– Predictors: PQ, SQ

– ANOVA: F (2, 204) = 20.008, Sig. =000, p < .0005

– Model summary: R2 = .165

For greater clarity, a regression equation for the model of EMPJOSA was written using the standardized coefficients (Beta) in Table 22:

CS = .241(PQ) + .217(SQ)

Where:

• CS: Customer satisfaction (the dependant variable)

• PQ: Perceived product quality (the dependant variable)

• SQ: Perceived service quality (the dependant variable)

4. 3 Direct and Indirect Effects of the Customer Satisfaction

Path analysis, an extension of the regression model, was also explored to test the hypotheses that the four independent variables and service and product quality have direct and indirect effects to customer satisfaction.

The path analysis provides the estimation on the magnitude and significance level of the hypothesized while explaing the causal connections among the set of variables. This is best showned by considering a path diagram.

Based on the multiple regression results from the previous sections, Path analysis was performed with the dependent and independent variables, from that all variables making significant unique contributions to predicting the dependent variables were retained for further path analysis.

Based on significance (Sig.) indicator was shown in Table 20, Ass (Assurance) and Tan (Tangibles) ) do not affect SQ (Perceived service quality). The rest of independent variables including P (Price) and Emp (Empathy) with significance (Sig.) of .000 have effect to SQ.

Also, based on significance (Sig.) indicator showed on Table 22, only Emp (Empathy) could not achive the statistic to effect PQ (Perceived product quality. The other three independent variables including Ass (Assurance), P (Price) and Tan (Tangibles) with significance (Sig.) of .000 have effect to Perceived product quality.

Finally, based on significance (Sig.) indicator was showed on Table 24, only P (Price) failed to affect CS (Customer Satisfaction). The other three independent variables including Ass (Assurance), Emp (Empathy) and Tan (Tangibles) with significance (Sig.) of .000 have effect to Customer Satisfaction.

4. 3. 1 Direct effects of Customer Satisfaction

According to Table 24, three independent variables have directly effects on the CS. The effect of each independent variable on the CS varied; Emp produced the direct effect on the CS with β = .320, next, Tan with β = .291, and last, Ass with β = .108.

According to Table 26, two intervening dependant variables have directly effects on the CS. The effect of each intervening dependant variable on the CS varied; PQ produced the direct effect on the CS with β = .241 and SQ with β =.217.

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