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FINAL DISSERTATION
RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND
PRODUCT QUALITY IN FAST FOOD INDUSTRY: A CASE
STUDY OF KFC IN VIETNAM
Lecturer : DR. BUI PHI HUNG
Student : NGUYEN HUU NGAN
ID : 000899818
Class : BM 111
HCM, 2015

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ACKNOWLEDGMENT
Pursuing good degree is important to me in career development. Thanks for
enthusiastic supports that I could accomplish the course in general and this study in
particular.
Firstly, the study is executed based on wide range of knowledge which is
acquired from the course. Therefore, I would like to send my special thanks to all
lecturers of the Greenwich _ FPT University who have guided and shared me
precious knowledge and experiences.
Secondly, I would like to express my warm gratitude to my Supervisor – Dr.
Bui Phi Hung. I could not perform the finish of this study without his constructive
guidance and explanation.
Thirdly, the study is relied hardly on KFC brand name that the support from
KFC management team and employees in each store being surveyed is strongly
appreciated. In addition, the study is subjected to customers-based ideas that
research value could not be achieved without their participation. Therefore, I would
like to send my warm thanks to all participants in the survey and KFC team.
Lastly, I would like to show my love to my family who has supported and
created the most favorable conditions for me to fulfill the completion of this course.

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EXECUTIVE SUMMARY
Fast food industry is developing strongly in Vietnam with the landing of
international brand names such as McDonald’s, Subway, Starbucks, Burger King, KFC,
Popeye, Pizza Hut, Carl’s Jr, and so on. On the other hand, Vietnamese living standard has
been increasing and people are more knowledgeable and open to the global with the
willingness to absorb new trends and Western style. When formula to operate a fast food
service is easily to be copied, fast food providers are competing in Product quality
including physical aspect of the stores, reliability in providing right foods, right time, at
right price; personal interaction with friendly employees and good procedures/ policies of
operation management and handling problems. Accordingly, the study aims to answer
questions of ‘What are influencers of customer satisfaction in fast food industry in
Vietnam?’ and ‘What is the role of Product quality as an element of influencer set and its
relationship to customer satisfaction in fast food industry in Vietnam?’.
To provide empirical findings answering those questions, the study, firstly, reviews
related discussions and theory of product quality and customer satisfaction and their
relations; and secondly conducts questionnaire-based survey with respondents who are
KFC customers in HoChiMinh City, to gain opinions of fast food customers. Empirical
results are found according to positivism philosophy, deduction approach and quantitative
understanding. The final conclusion confirms the role of product quality’s factors including
physical, reliability, personal interaction, problem solving and policy aspects on the final
outcome of product quality linking to positive level of customer satisfaction.

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TABLE OF CONTENT
ACKNOWLEDGMENT
EXECUTIVE SUMMARY
TABLE OF CONTENT
LIST OF FIGURES
LIST OF TABLES
Chapter 1: INTRODUCTION............................................................................................1
1.1. Research background....................................................................................................................................1
Table 1.1. Types of fast foods....................................................................................1
1.2. Justification ofthe study..............................................................................................................................2
1.3. Research question...........................................................................................................................................3
1.4. Researchobjectives........................................................................................................................................3
1.5. Scope ofthe study..........................................................................................................................................4
1.6. The structureofthe study............................................................................................................................4
1.7. Conclusion.........................................................................................................................................................5
Chapter 2: LITERATURE REVIEW................................................................................6
2.1. Introduction.......................................................................................................................................................6
2.2. Overviewofproduct quality......................................................................................................................6
2.3. Overviewofcustomersatisfaction.........................................................................................................7
2.3.1. Customers’satisfaction............................................................................................................................7
Table 2.1. Definition of customers’ satisfaction ............................................................9
2.3.2. Roleof Customers’satisfaction(CS)................................................................................................9

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2.4. Factorsof product qualityimpactingoncustomersatisfaction...............................................13
2.4.1. The relationship between physical aspectandcustomersatisfaction...............................13
2.4.2. The relationship betweenreliablityaspectand customer satisfaction..............................13
2.4.3. The relationship between personalinteraction aspect andcustomersatisfaction........14
2.4.4. The relationship between problem-solving aspect andcustomersatisfaction..............15
2.4.5.The relationship between problem-solving aspect andcustomersatisfaction...............16
2.5. How to measurecustomers’satisfaction............................................................................................17
2.6. Literature reviewgap.................................................................................................18
2.7. Conceptualresearchmodel......................................................................................................................19
2.8. Conclusion.......................................................................................................................................................19
Chapter 3: RESEARCH METHODOLOGY.................................................................21
3.1. Research philosophy...................................................................................................................................21
3.2. Research design.............................................................................................................................................23
3.2.1. Research approach....................................................................................................................................23
3.2.2. Research method.......................................................................................................................................24
3.3. Datacollection................................................................................................................................................25
3.3.1. Datasources................................................................................................................................................25
3.3.2. Sampling techniqueandcharacteristics..........................................................................................26
3.3.3. Questionnaire..............................................................................................................................................28
3.3.4. Pilot test ofthe survey.............................................................................................................................28
Table 3.1. Themes and questions allocation ..........................................................29
3.5. Ethicalissues...................................................................................................................................................30

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3.6. Validityandreliability................................................................................................................................30
3.7. Chaptersummary.........................................................................................................................................30
Chapter 4: FINDINGS AND MEANINGS....................................................................31
4.1. Introduction.....................................................................................................................................................31
4.2. Sample profile................................................................................................................................................31
Table 4.1. Sample profile (N = 165).......................................................................32
4.3. Internal consistenciesofPROQUAvariables.................................................................................33
4.3.1. Criteriaof reliabilitytestand Factor analysis...............................................................................33
4.3.2. Internal consistenciesofPROQUA variables.............................................................................33
Table 4.2. Internal consistency of PROQUA variables ........................................34
4.4. Assessmentof current product qualityat KFC VN......................................................................36
Table 4.3. Performance of Product quality variables at KFC VN.......................37
4.5. Keyinfluencersof Product qualityat KFC VN .........................................................38
Table 4.4. Multiple regression of PROQUA model..............................................39
4.6. Summary ofkeyfindings..........................................................................................................................40
4.7. Chaptersummary.........................................................................................................................................41
Chapter 5: CONCLUSION ..............................................................................................42
5.1. Chapterintroduction....................................................................................................................................42
5.2. Summary ofstudying process................................................................................................................42
5.3. Answering Research questions..............................................................................................................43
5.4. Researchrecommendations.....................................................................................................................44
5.5. Limitations andimplications for furtherstudies.............................................................................46

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5.6. Chapter Conclusion.....................................................................................................................................47
REFERENCE.....................................................................................................................48
Appendix
Appendix 1 : Questionnaire
Appendix 2: Sample Profile
Appendix 3: Internal Consistencies of PROQUA variables
Appendix 4: Multiple Regression of PROQUA Model at KFC VN

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LIST OF FIGURES
Figure 2.1. Roles of customers’ satisfaction..........................................................10
Figure 2.2. Measuring model of customers’ satisfaction......................................18
Figure 2.3. Conceptual research model ..................................................................19

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LIST OF TABLES
Table 1.1. Types of fast foods............................................................................................1
Table 2.1. Definition of customers’ satisfaction..............................................................9
Table 3.1. Themes and questions allocation...................................................................29
Table 4.1. Sample profile (N = 165)...............................................................................32
Table 4.2. Internal consistency of PROQUA variables.................................................34
Table 4.3. Performance of Product quality variables at KFC VN ...............................37
Table 4.4. Multiple regression of PROQUA model......................................................39

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ABBREVIATION
CS Customer satisfaction
FF Fast food
KFC Kentucky Fried Chicken – a famous fast food brand
PHY Physical aspect
PIN Personal interaction aspect
POL Policy aspect
PQ Product quality
PROQUA Product quality model
PSO Problem solving aspect
REL Reliability aspect
RSQS Retail Service Quality Scale
SERVQUAL Service quality model
U.S. United States
VN Vietnam

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Chapter 1: INTRODUCTION
1.1. Researchbackground
Fast food (FF) becomes the choice of consumption due to its convenience as easily to
be found, sold, and prepared as a quick meal (De Vogli, Kouvonen and Gimeno, 2014;
Jekanoswki, Binkley and Eales, 2001). Basically, fast food is often served in ready-to-eat
form. The term of ‘junk food’ could be used interchangeably to ‘fast food’; yet not
referring to nutrient content in food. Within the ready-to-eat category, fast food has four
typical types of fast food, junk food, instant foods, and street foods (Kaushik, Narang and
Parakh, 2011).
Table 1.1. Types of fast foods
Type Definition Example
Junk food Energy dense foods with high sugar/ fat/ salt content
and low nutrient value in terms of protein, fiver,
vitamin and mineral content
Chips, ice-cream,
soft drinks, burgers,
pizzas, etc.
Fast food Foods sold in a restaurant or store which are rapidly
prepared and quickly served in a packaged form for
take away
Burgers, pizzas,
fries, hamburger,
patties, nuggets, …
Instant food Foods that undergo special processing that are ready
to be served once dissolved or dispersed in a liquid
with low cooking time
Noodles, corn
flakes, soup powder
Street food Ready to eat foods and beverages prepared and sold
by hawkers or vendors in streets/ other public places
Various
Source: Kaushik, Narang and Parakh (2011)

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Fast food sector is quite competitive due to its easy-to-be-replicated recipes (Gupta
and Govindarajan, 2004). Fast food consumption is the trend of young people who are
looking for good foods with delicious tastes but could be taken away and fast eaten. Since
the rocket in demands and ease in joining market, numbers of fast food restaurants have
ballooned recently. Fast food restaurant is featured ‘quick serve’ style when customers pay
for their foods at the counter when ordering and clear their tables by themselves (Fast Food
FACTS, 2013). Typical, fast food restaurant aims to “maximize the speed, efficiency and
conformity” with “standardized and limited menu” to “minimize the waiting time” for
customers (Kaushik, Narang and Parakh, 2011). Famous fast food restaurants or stores are
McDonald’s, Subway, Starbucks, Burger King, KFC, Popeye, Pizza Hut, Carl’s Jr., and so
on. Calculating in U.S. market, total sales revenue of fast food is on average US$ 1,335 per
household annually (2012).
1.2. Justification of the study
The emergence of fast food consumption has become popular in Vietnam in the
recent decades. In 2000s, KFC and Lotteria were the two major fast food chains in
Vietnam. At the current time, Vietnamese have more abundant choices with global brand
names such as McDonald’s, Burger King, Starbuck, Subway, Carl’s Jr. that their choices
and requirements of products and services provided are more complicated. Basically, the
main consumer of fast food products in Vietnam is mostly young generation who are easily
open to a Western style of eating and children who enjoy chicken and burgers as snacks
with funs. Fast food industry in Vietnam is growing dramatically with 477 stores (2012) to
estimated numbers of outlets by more than 1,000 in 2017. The industry also recorded the
good Compound Annual Growth Rate of 17.1% (2008 – 2012) (Agriculture & Agri-Food,
Canada, 2012). Fast food operators offer a pleasant store environment, better service

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qualities of half self-services due to cultural features of Vietnamese, and higher standard of
food safety.
Customer is the key of any businesses that without their enthusiastic supports
businesses could not be survived. Satisfaction is the common term when considering
tactics to retain customers. When fast food sector is more competitive in Vietnam and
Vietnamese living standard is increasing that they tend to approach famous brand names in
order to not only enjoy the foods but also confirm their identities.
Therefore, the study is to examine which factors have strong relationships with
customer satisfaction in fast foods industry directing to their expectations. The key purpose
is to scrutinize the role of product quality toward satisfied feeling of customers and its
correlations with other determinants in deciding satisfaction levels in fast food store.
1.3. Researchquestion
Aiming to identify relationship of product quality to customer satisfaction and
correlations/ contribution of product quality as an element of determinants of customer
satisfaction in fast food industry in Vietnam, the study is to answer the following
questions:
1. What are influencers of customer satisfaction in fast food industry in Vietnam?
2. What is the role of Product quality as an element of influencer set and its
relationship to customer satisfaction in fast food industry in Vietnam?
1.4. Researchobjectives
Following the research aim and question, research objectives are developed as
following:
1. To deepen the knowledge of service quality

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2. To examine relationships between retail customer satisfaction and its antecedents
in KFC Vietnam
3. To identify the most important factor affecting customer satisfaction of KFC
Vietnam
4. To evaluate the level of customer satisfaction of KFC Vietnam
1.5. Scope of the study
Due to the constraints of time and resources, the study is executed in Hochiminh City
with the exemplified case study of KFC fast food chain. To get customers’ opinions, the
survey is conducted at 10 KFC stores in urban areas and shopping malls of Hochiminh
City. Regarding to time scope, the study is conducted in July and August of 2015.
1.6. The structure of the study
The dissertation is designed with five chapters. Chapter 1 – Introduction provides the
background of the study with the identification of research questions and objectives.
Chapter 2 – Literature Review is to review related theories and studies with generalized
knowledge of product quality (PQ) and customer satisfaction (CS).The chapter provides
the theoretical viewpoints of factors of PQ and their relationships toward CS for the
formulation of the conceptual framework. Chapter 3 – Research methodology directs the
dissertation to the proper selection of research philosophy, method, approach and data
collection. Chapter 4 – Findings and meanings, based on the conceptual framework and
data collected, provides the empirical findings and analyzed discussions to verify the
research hypotheses. Finally, the chapter 5 summaries the research process with
appropriate conclusions and recommendations for serving better Vietnamese customers in
KFC chain in particular, and fast food industry in general.

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1.7. Conclusion
The chapter provides the background of fast food industry with its increasing in
numbers of stores and customers’ preferences of using fast food as an official meals for
convenience. However, due to its common formula, it is easy for new entrants to the
markets leading to the tougher competition. Vietnamese is gradually familiar with this
Western style of foods by which numbers of fast food outlets in Vietnam is growing
dramatically. The study is to answer the main question of ‘What is the role of Product
quality as an element of influencer set and its relationship to customer satisfaction in fast
food industry in Vietnam?’. The Chapter also clarifies research objectives, scope and
outline structure for the general view of readers. The next chapter – Literature Review will
outline related theories and concepts as the theoretical fundamental source of the study.

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Chapter 2: LITERATURE REVIEW
2.1. Introduction
The correlation of product quality and customer satisfaction is the key which is
deeply explored in this chapter. Regarding to the thesis’ topic, the author would like to find
out which factors that have potential impact on customer satisfaction. This chapter not only
presents theories related to the research objectives but also focuses on customer
satisfaction and antecedents of quality in services with consideration on the relationship in
theoretical framework.
2.2. Overview of product quality
Because the study takes into account the product quality aspect, the first section of
this chapter is set to explore the understanding of product quality. Boom and Bitner (1981)
assert that product quality reflects one of the most important parts in marketing mix theory.
Product is defined as things that are provided to the customers by companies and it helps to
satisfy the customers’ needs. According to Holbrook (1980), product has four
characteristics, namely communication aesthetic, symbolic, economic information, and
attention drawing and the best way to improve product quality is through optimizing these
characteristics or aspects. Communication aesthetic is defined as how a product can be
pleasure to the customers at the first time when the customers look into them. This means
that the customers look into the product and they feel happy about its appearance without
taking any consideration or looking into the products’ functions (Bamossy et al., 1983).
The second aspect of product refers to symbolic and it is defined as how the companies can
design their products in different ways compared to others’ products (Levy, 1959).

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Generally, symbolic is expressed through tangible or intangible expressions. Hirschman
and Holbrook (1982) assert that the symbolic level of the product is depended on the
messages that the companies want to transmit to their customers. In the world today, many
customers want to choose products with good symbolic meanings (Koller and Keller,
2009). The third aspect of product refers to economic information and it is known as all
information related to products’ functions such as size, weight, etc. Economic information
is determined as ergonomic value of the product as it pertains all the information that the
customers should know about this product such as its usability, size, and how to use this
products at best (Lobach, 1976). The final aspect of the product is attention drawing is the
information that are highlighted for the customers before the make purchase for this
products. Holbrook (1980) indicates attention drawing as any information that the
companies want to highlight to the customers and it directly impacts on the customers’
attention as well as their purchasing decisions accordingly.
2.3. Overview of customer satisfaction
2.3.1. Customers’ satisfaction
Customer satisfaction is an important aspect to the companies today and it can
become strategic weapon to the companies to further improve its competitive edge
compared to other players in the market. Due to this important context, there are a lot of
definitions that are provided by different researchers. Take the study of Jamal and Naser
(2003) as an example. It is a matter of fact that customers’ satisfaction with the services of
the firms potentially leads to more and more business opportunities brought to the
manufacturer. Hence, many researchers have conducted their own studies with the aim to
understand more about elements contributing to customer satisfaction. According to Oliver
(1997), customer satisfaction can be defined in many forms. One of the earlier definition

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states that customer satisfaction is the collective outcome that are appeared when the
customers choose to buy and to use product or service (Yi, 1990). On the other hand, it
measures how well both positive and negative expectations and behavior of a customer
towards specific characteristics or attributes of the product or service (Gunderson et al.,
1996). Moreover, recent researchers points to another definition for customer satisfaction
as the gap between customer expectation and actual feeling after using product or service
(Kotler, 2001; Olsen, 2002).
In the context of recent globalization and recession, CS is considered as the main factor
that may bring the competitive edge to the firms as well as potential sources for increasing the
profits. According to Jamal and Naser (2003), customer satisfaction is considered as an
abstract concept as well one of the top ranking criteria when a business wants to ensure its
products and services to meet the customers’ demands and the firm can take the gauge of
customer satisfaction surveys to obtain sustainable growth in the long run.
Owing to its significance,the number of definitions has been provided by both of the
researchers and manufacturers. Oliver (1997) denotes customer satisfaction is feeling of
the customers and it is changed overtime. Recently, another researcher considers customer
satisfaction as the customers’ experiences and they have after using products or services
(Olsen, 2002). The definition of customer satisfaction, then, is bloomed with many
concepts to be delivered. Fehr and Russell (1984) consider customer satisfaction is familiar
concept in sense but it is very hard to provide common concept or this term cannot be
consolidated into one single definition accordingly. Taylor and Baler (1994) also highlight
the formation of customer satisfaction as part of customer purchasing process. Table 2.1.
below is prepared in order to illustrate about customer satisfaction concept.

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Table 2.1. Definition of customers’ satisfaction
No. Definition Author
1 Satisfaction is the level of a person’s feeling experienced from product
performance. The judgments are based on the perceived results of the
products with his or her expectations.
Kotler
(2001)
2 It is a state of mind obtained by evaluation and expectations on the
company over the lifelong period of the product or service.
Cacioppo
(2000)
3 It also ranks consumers’satisfaction thanks to their response in the
estimated difference between previous expectations and actually
represents of the product as a good signal for the supplier.
Tse and
Wilton
(1998)
4 Contentment is measured after a product or service is consumed by
assessing guest’s evaluation of a performance on particular
characteristics.
Gunderson,
et al. (1996)
5 Customers’ state of being satisfied is a collective result of perception,
evaluation and psychological reactions to the consumption experience
with a product/service.
Yi (1990)
2.3.2. Role of Customers’ satisfaction (CS)
Many studies aim to illuminate the benefits of satisfaction. Kotler (2004) well-known
as a founder of modern marketing theories investigates the roles of benefits from
satisfaction customers may guide to spread positive word-of-mouth which decreases the
promotion’s costs for the new customers’ attracting. Moreover, this study also advances
the author’s understanding of customer contentment that can lead to their loyalty and
profitability. (Hallowell, 1996). Indeed, CS is identified as a key source of benefits such as

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customer retention, public acceptance of organization, trust of services which can generate
huge profitability. Once gained high profitability, it is really easy for ECS companies to
conduct successful value-added in ESC such as supporting breadth of service, extension of
service facilities, quality of human resources, investment in assets and in information
system, and integration of services etc. And in fact, these above value-added are
indispensable in ECS, Sheth (2001) has offered insights into CS that is likely to provide
you with essentitially competitive advantages directly leading to possitive added quantity
of products and obviouslly increase in profitability and market expansion. For easy
recognition, Sheth (2001) has illustrated them in Figure 2.1.
First, many empirical and theoretical models have admitted satisfaction as a factor of
customer retention (or repeat buying). According to Bolton (1998), the role of customer
satisfaction is shown through the fact that higher customer satisfaction mean higher
customer retention rate. The study of Dawkins and Reichheld (1990) strongly indicate that
when the customer satisfaction is increased 1 percent, the customer retention rate will be
increased by 25 percent or up to 95 percent. Moreover, Gupta et al. (2004) identify that
when the firm can find the way to improve customer satisfaction, the firm will be benefited
by lower operating cost spending for marketing programs such as discount rate or intensive
advertisements. In addition, when the firm gains higher customer retention, it will help
them to construct the business in more relevant ways or improves the business process in
order to obtain higher customer satisfaction and retention (Buttle, 2004; Dawkins and
Reichheld, 1990). Mittal et al. (2001) also provides support for the key argument that
customer satisfaction should be put into concentration of any firms and it should be
understood clearly and pursued well.
Figure 2.1. Roles of customers’ satisfaction

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Source: Sheth (2001)
Second, with high satisfaction, customer is willing to spend their money (higher
prices) for consumption without giving careful consideration to repurchasing products or
services which will cut cost of doing business. The firms may put products or services in
higher prices leading to higher profits. The connection between consumer satisfaction and
higher price permissiveness has long been mentioned in many articles (He et al, 2008).
Economists profound the view that price increase tolerance may be the economic act of
measuring of satisfaction surplus (Marshall, 1920). Anderson (1996) show that consumer
satisfaction is so higher it guides to the price is highter too , increasing tolerance and
profitability also increased. Of which, harvested finance may support firms in necessary
situations even in economic crisis, and encourage customer to buy others products or
services (Sheth, 2001).
Another point worth mentioning here is that highly contented consumers are more
forgiving (loyalty in crisis), therefore, the firm can occasionally slip up and not and lose
valuable opportunities to win customers’ trust. Having highly satisfied customers then, is
like having an insurance policy against something going wrong in the service
encounter.(The Institute for Working Futures, 2012). Indeed, in the stage of crisis, loyal

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