The Antecedents Of Customer Satisfaction In Courier Service Marketing Essay

Published Date: 23 Mar 2015

The main objective of our research is to find out the factors which cause customer satisfaction among clients of courier service companies in Pakistan. To prove the factors which we see as important are being supported by data collection through questioners distributed to 170 customers of courier services (TCS, Leopard and OCS). Results indicate that Perception of service quality and Prices were the most prominent factors causing customer satisfaction or dissatisfaction.

1.0 Introduction

Customer satisfaction has gained tremendous attention of marketers in recent years because of ever increasing competitive markets and switching of customers from one company consumer to another for better offers. It has long been recognized that Customer satisfaction plays a crucial role for success and survival in ever increasing competitive market. (Fen & Lian, 2001) The satisfied customers have the power to enhance and increase the cross selling of suppliers or service providers. (Herrmann, Huber & Braunstein 1999) This shows that satisfaction of customers have a direct effect on the sales and demand of service providers.

Researchers have proved that customer satisfaction has increased due to better customer impression and reliability over the services being provided resulting in better financial performance. (Nelson, Johnson & Gustafsson, 2001). So the more customers relies and perceives your services as better the better will be the earnings of firm. Customer satisfaction also plays a significant role in establishing, developing & maintaining profitable customer relationship. (Homburg & Rudolph, 1999) Sound customer relationship is mandatory for smooth running of an organization, as customer can prove to be an organization's advertisement through his/her word of mouth. It is proved that to maximize profits companies strive for zero defection through customer satisfaction as retaining customer is more profitable than attracting new ones.( Kim & Lee, 2009) As companies can avoid huge advertisement expenses by retaining customers and shifting the levels of customer i.e. silver to gold and gold to platinum customers. A satisfied customer with a company's product or service is often seen as an indicator of company's success and competitive advantage. (Henning-Thurau & Klee, 1997) As customer satisfaction is a sign of company's better performance and good customer relationship, maintaining market competitiveness as well. Measuring customer satisfaction is also a practice which proves helpful for companies in assessing their offers effectiveness. Rating customer satisfaction has an advantage that they allow us to measure customer's perception, which infect ultimately drive customers to make purchase decision.(Simon & Gomez, 2005) So customer satisfaction also enables us to predict customer's purchase decisions in future. A sense of achievement and accomplishment is also provided to employees by measuring customer satisfaction. (Mihelis, Gigoroudis & Siskos, 1999) A satisfied customer is also a source of motivation for employees to perform better, survive competition and introduce innovative ideas in market.

As postal system in Pakistan is not very efficient and modern so most of the individuals belonging from corporate sector are more and more relying on courier services, therefore it was necessary to find out the factors causing customer satisfaction. Our research will prove helpful for the people belonging to courier service sector as with the help of our findings they will be able to shape their services and their customer's behaviors towards improving their business. Besides courier service sector, our research's beneficiary can also be the individuals belonging from other consumer service sector, as the essence of customer satisfaction is nearly the same in most of service sectors.

2.0 Literature Review

2.01 Perception of Quality Services

As an important antecedent of customer satisfaction, both in marketing literature and as well as in service marketing literature service quality concept remains at the forefront (Rauyruen & Miller, 2005). Perceived service quality is the evaluation of past experience of consuming services like customer service, conditions of product display, range of services and products etc (Loughlin & Coenders, 2002) Customer satisfaction largely depends on perceived service quality. They are contiguous concepts, although perceived service quality is more specific concept than customer satisfaction, as perceived service quality refers to the customer's subjective response to the difference between his/her expectations before consuming the services and actual perceptions of the service delivered (Kyong & Lee, 2009; Cameran, Moizer & Pettinicchio, 2009; Fornell , Johnson, Anderson, Cha & Bryant, 1996). Perceived quality can be defined as the consumer's judgment about a products overall excellence or superiority (Anderson, Donald & Lehmann, 1994). Service quality is considered as a must condition, and the depth and climate of relationship leading to quality can be enhanced by the attainment of both service quality and customer satisfaction (Wong & Zhoy, 2010). Quality of a product or service may contribute to the fulfillment of customer's stated or implied needs which consequently increases customer satisfaction (Kroll, Wright & Heiens, 1999). Satisfaction is formed through a cognitive comparison of perceive performance with pre-purchase expectations. Perceive quality performance can be categorized according to the level of customer perception of the services which are to be delivered to him/her. As in many models this theory is described as three factor theory of customer satisfaction. Perceived performance can be greater than customer's expectations, which can result in positive confirmation (satisfaction), or if lower than expectations, resulting in negative disconfirmation (dissatisfaction) (Matzlera, Bailomb, Hinterhubera, Renzla & Pichlerb, 2003). In today's business environment satisfaction paradigm is based on customer's intention to either avail or not to avail particular services depends on their perception of quality and satisfaction related to that service (Starbacka, Strondnik & Gronroos, 1994). An evaluation process is in which consumer compare his/her expectations with the perception of the service that he or she has received is called Service quality (Myungsook & Yonghui, 2009; Raaij & Pruyin, 1998). It is important to mention our area of interest in review as well. As we are considering on improving customer satisfaction in courier service sector which is purely based on providing services. And sector which provides services it is very important for them to establish customer satisfaction as it is the basis for running their business successfully. Customer loyalty's one of most influencing factor is perceived service quality, which in result provide diagnostic ability to any framework including customer satisfaction as a dependent variable (Rauyruen & E.miller, 2007). Consistent, positive interaction with a firm's customer service support personnel are important source of customer satisfaction (Lewin, 2009). In service sector making new customers is as important as making the existing customer retain. The satisfactory service experience observed by a customer is likely to have significant impact on repeat business and customer renetration (Chi & Gursoy, 2009). Here the question also rises that what is the difference between service quality and perceived service quality, which is well explained by Yen & Su. The degree of extent and direction of discrepancy between a customer perceptions and expectations is Service quality, where as perceive service quality is the gap between a customer expectations and perception as a measurement of service quality (Yen & Su, 2004). Existing literature's findings greatly support that service quality is primary antecedent of customer satisfaction and customer satisfaction is directly and positively related to repurchase intention (Brown & Chin, 2004). Providing back-up or Good service quality even after providing services can also motivate customers for post-purchase intention (Fengkuo, Mingwu & Debg, 2009).

H1: Perception of quality services is positively related to customer satisfaction.

2.02 Price

We now try to establish and explain the relationship between Price and Customer satisfaction. This is very common in daily life as well. We are more satisfied towards a service or a product which offers quality service with lower price. For which the value of quality is more that the value of attaining it. Value may be defined as the "fairness of the level of economic benefits derived from usage in relation to the level of economic costs" (Bolton and Lemon, 1999). Even if the perceived services quality of a customer is high, they still can get dissatisfied by higher price. (Balasubramanian, Konana & Menon, 2005) It is very well observed in our personal lives that we feel satisfied with some product or service, however when its price raises our perception of its expected price, we start becoming dissatisfied. Here it is also important to introduce the concept of price tolerance. It is the level of tolerance or readiness of customer to pay to attain the services. We expect customers to be tolerating companies providing services costing higher than competitors when they are highly satisfied (Anderson, 1996). This concept hold that customers when highly satisfied are even ready to step forward in paying firms premium for that better service or competitive edge they are providing. So customer satisfaction also proves to be a high revenue earner for a company. Satisfied customers are willing to pay more for a same product or service than dissatisfied customers, however price increase reduces customer surplus to a certain extent, This finding leads to downward sloping demand curve resulted due to decreases in demand because of higher price(Homburg, Hoyer & Koschate, 2005). Consumers understanding of prices, costs and profits does not exist largely across the population, so price increase due to any reason like inflation etc only contribute to consumer perception of price unfairness (Bolton, Warlop & Alba, 2003). Customers that are satisfied with service quality but not with the price, if they see a lower price after purchase they buy the service again elsewhere at lower price. (Williams & Gerstner, 2006). This affect of price is more prominent on lower or middle income groups than on high income groups. When middle income class customers are confronted with high prices, their intentions of future purchase decreases to a great extent than those of high income groups (Homburg, Koschate & Totzek, 2010). The different prices of both new and old trade in products or services must be examined in order to investigate the role of price in influencing customer satisfaction, as evaluation of both of these will then impact on the customer's satisfaction with the final deal (Hoyer, Hermann & Hubber, 2002). Price is also a very important element in determining whether the customer will return to buy from that vary company with whom he is satisfied. Specifically consumer puts his more attention in considering the relevant relationships like between price and expectations by comparing those with their previous experiences, so perception of price acts as an important cue in evaluating consumer pre-purchase decision (Tsou & Shu, 2008). It is also important to put some light on price quality relationship where with high prices customers also expect very satisfying quality of a service as well. And when quality dose not fulfills their expectation then they may become dissatisfied. Price quality relationship holds that with high quality service consumers could be lead to high prices, therefore companies should produce high quality service with ever low prices to maintain competitive (Shocker, Srivastava & Ruekert, 1994). Firms whose customers are satisfied better than their competitors actually generates superior returns at lower systematic risks (Fornell, Mithats, Morgeson & Krishnan; 2006). Its means that there is less percentage of their failure with even any new service they are launching because of the already pool of satisfied customers they have. Consumers are attracted more towards high-quality brand or service offering price discounts and they switch from lower-quality brand or service to high-quality brand or service, whereas consumers of already high-quality brand or service switch less on price discounts because of their satisfaction related to that firm (Delvechio & Heath, 2008). Research also indicates this issue with price sensitivity concept. Price sensitivity of highly satisfied customers is low, where as price sensitivity of general customers is high (Kelley, Gilbert & Mennicom, 2003). That is satisfied customer of a particular service or brand is not that sensitive to price, as they absorb high price because of their commitment or satisfaction related to that brand or service.

H2: Higher Prices are negatively related with customer satisfaction in most of cases and can make the customer dissatisfied.

3.03 Customer Satisfaction

Customer satisfaction is primarily a function of determining that how the customers have evaluated the value experienced by them and then compare it with what they expected and what they perceive they could have obtained from a competitor if they would have consumed their services (Doyle , 1995). Customer satisfaction has an impact on earning revenue and cost of doing business. It works as a twofold mechanism for revenue generation, first it increases positive word-of-mouth which generates new customers and secondly has a positive impact on customer retention which results in repetitive sales (Sharma, Niedrich & Dobbins, 1999). Customer loyalty also provides sound bases for smooth running of business and customer loyalty depends on customer satisfaction. Even, when a satisfied customer complaints of a service which is being mishandled and if firm responds well, they actually build more sound bases for customer satisfaction and hence resulting in a loyal customer. A firm is successful in turning complaining customers into satisfied and hence in loyal customers when there is a positive relationship between customer loyalty and customer complaints (Loghlin & Coenders, 2002). The most important aspect for firms now-a-days is enhancing the customer-firm relationship. This relationship is purely based on providing the customers the back up support whenever they want and satisfying them in every possible manner. Customer satisfaction is the driving force that propels organization existence, as customer focused satisfaction promotes supplier partnership, service relationship with internal customers while maintaining quality according to customer driven standards (Eugenia, 2010). Customer satisfaction provides a mean to encourage profitable transactions without the firm explicitly measuring employee effort (Hauser, Simester & Wernerfelt, 1994). Here, it is also important to mention that for establishing customer satisfaction the element of employee satisfaction is also important as employees are the ones in customer service sector who are directly interacting with the customers. Satisfied employees tend to treat their customers with a friendly and ready to assist environment promoting customer satisfaction where as dissatisfied employees do the opposite (Yee, Yeung & Cheng, 2008). High level of customer satisfaction also establishes customer citizenship behaviors like spreading good word-of-mouth, constructive involvement of customers in suggesting service improvements and other polite and courteous behaviors which all lead to environment of friendly relation between customer and firm (Yi, Natraajan & Gong, 2009).

3.0 Hypothesis:

Perception of Quality Service

Customer Satisfaction

Lower

Price

4.0 Research Methodology:

We collected our primary data using questionnaires. 170 questionnaires were distributed through hand and e-mail of which 153 were received back with feedback making response of 90%. There were in total 18 questions of which 8 were based on evaluating perception of quality, 6 regarding price and remaining 4 were on our dependent variable customer satisfaction. Five point Likert scale has been used in our questionnaire ranging from Strongly Agree to Strongly Disagree. Our target sample included mainly employed individuals mainly belonging from Convent School Wah Cantt, U.Fone call centre Islamabad, Wi-tribe office, Scheme3 Rawalpindi and Ptcl Islamabad.

4.01 Sample Demographics

Age:

Age

Frequency

Percentage

18-24

78

51%

25-30

37

24%

31-35

15

10%

Above 35

23

15%

Gender:

Gender

Frequency

Percentage

Male

93

69%

Female

60

31%

Total

100

100%

Education:

Education

Frequency

Percentage

Matriculate

6

4%

Intermediate

17

11%

Graduation

67

44%

Post Graduate

53

35%

Others

10

6%

5.0 Statistical Analysis

After collection of data through questionnaires, the information gathered was analyzed through statistical programming for social science software (SPSS) by applying correlations and regression analysis on data. Correlation analysis shows the relationship of perception of quality services and price on customer satisfaction respectively while Regression analysis is used to find out the strength of dependency.

5.01 Results:

Correlation

Perception of

Quality Service

Price

Customer Satisfaction

Customer Satisfaction

561**

365**

1

Correlation results clearly show a very strong relationship between Perception of Quality service and Customer Satisfaction (.561**, p < 0.01), Where as the relationship between price and customer satisfaction also exists but not as strongly as relationship between perception of quality service and customer satisfaction (.365**, p < 0.01)

Regression Analysis:

Independent Variables

Beta

T

Sig.

Perception of Quality Services

.495

6.781

.000

Price

.162

2.220

.028

Dependent variable: Customer satisfaction

n= 153, F=38.042

R square = .337, adjusted R square= .328

As F= 38.042, Shows great statistical significance that is mostly significant between dependent and independent variables. Value of T (6.781) of perception of quality service shows that customer satisfaction is very strongly influenced by this independent variable, while value of T (2.220) of Price shows that customer satisfaction is also significantly influenced by this variable as well. R-square value (0.337) shows that this model is very effective. Beta values tells us about the participation of independent variables in making overall effect in dependent variable that is customer satisfaction which are (.495) and (.162) respectively.

6. 0 Discussion

The main purpose of our research was to find out the relationship of our dependent variable with independent variable. As our focus was on courier service sector in Pakistan so we have collected data from employed individuals who have been using courier services from a significant time. Our findings show that R square is .34 which means that our independent variables contribute 34% in affecting customer satisfaction while 66% remained unexplored. Our research's first finding is very much consistent with our H1 established in literature review. As previous research also suggested strong relationship exist between perception of quality service and customer satisfaction, While the result regarding price and customer satisfaction were surprising and inconsistent with our H2, as It was quite prominent from the previous researches that price gets higher, affects customer satisfaction negatively and where discounts are offer on price it results in a positive affect on customer satisfaction. However, according to our findings price is positively related with customer satisfaction. Keeping in view that our focus of attention is on courier service sector and 66% factors also remained unexplored too. So this could provide a good reason for our findings inconsistency with H2.

However we support our finding because it is very much possible for a consumer of courier service to be highly satisfied with perception of service quality and significantly get satisfied with price as well, Because he is not very much bothered with price increments because he's priorities are also related to other factors which he perceive very important for a courier service to possess. Like delivery on time, customer support etc. Courier services firms who deliver parcels or other services within their specified time, their consumers actually get very satisfied. And a highly satisfied consumer is also a loyal customer as it is been proven by many researches. So a loyal customer is a one who is ready to pay premium for better service. And there are consumers who are brand conscious as well. So consequently price is also positively related with customer satisfaction. However that is a matter of another discussion that how much increment in prices satisfied customers of courier service can tolerate without starting to get dissatisfied.