truck driver determinants of service quality as perceived by
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TRUCK DRIVER DETERMINANTS OF SERVICE QUALITY AS PERCEIVED BYCOMMERCIAL CARGO RECIPIENTS
ByJeffrey W. Kennedy
A DISSERTATION
Submitted toH. Wayne Huizenga School of Business and Entrepreneurship
Nova Southeastern University
in partial fulfillment of the requirementsfor the degree of
DOCTOR OF BUSINESS ADMINISTRATION
2010
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UMI Number: 3404483
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CERTIFICATION STATEMENT
I hereby certify that this paper constitutes my own product, that where the language of others
is set forth, quotation marks so indicate, and that appropriate credit is given where I have used the
language, ideas, expressions or writings of another.
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ABSTRACT
TRUCK DRIVER DETERMINANTS OF SERVICE QUALITY AS PERCEIVED BYCOMMERCIAL CARGO RECIPIENTS
By
Jeffrey W. Kennedy
Trucking firms play a fundamental role in connecting supply chain elements inmany U.S. market channels, and firms of all kinds depend on trucks to pick up anddeliver goods. Even though many products move almost entirely by way of ship, train, orairplane, almost everything is carried by a truck at some point during the delivery process(Statistics, U.S. Department of Labor, 2009). Because of this, it is critical that managers
in trucking firms continually strive to meet and exceed customer and shipper customerservice requirements and expectations (Meixell & Norbis, 2008).While a review of the literature shows that many researchers addressed numerous
aspects of transportation performance quality, few of these investigations addressedtherole and impact that truck drivers have on service-quality perceptions (Vansickle, 2002).The purpose of this research wasto examine whether cargo handling by truck drivers had aneffect on a companys service quality perceptionsas perceived by the recipients ofcommercial cargo. TheSERVQUAL instrument was usedto measure the gap between truckdrivers determinants of service quality as perceived by the recipient of the goods fromthese truck drivers.
The findings from the study suggestthat it becomes necessary formanagers to trainthese truck driversin more than merely following a route or delivering goods. They needreal marketing and customer service skills, and this need should be factored into theirtraining program.
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ACKNOWLEDGEMENTS
I would like to express my sincerest thanks to faculty administrative staff, familyfriends and colleagues who provided support, guidance and encouragement during thepursuit of my doctoral studies. In particular, I want to express my sincerest appreciationto Dr. Candace McKinniss, my dissertation Chair. Her continued support, guidance andencouragement allowed me to make steady progress. She was more than a Chair as shemet with me continuously, even when it was terribly inconvenient.
To my committee members, Dr. Jane Gibson and Dr. Dick Murphy, I give manythanks for your support and encouragement. I especially want to thank Dr. David Smith,the Dean of the Rinker School of Business at Palm Beach Atlantic University, for histhoroughness in reviewing the various revisions of my dissertation, resulting in majorimprovements in the quality of the final product. And lastly, I thank Dr. Terrell Manyak,Professor of Public Administration at Nova Southeastern University for his endless hoursediting the final document.
Above all, I thank Jesus Christ, my Lord and Savior for the successfulcompletion of this journey, which was only possible through his grace and mercy.
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TABLE OF CONTENTS
Page
CHAPTER I ................................................................................................................... 9
INTRODUCTION ......................................................................................................... 9Background of the problem ....................................................................................... 9
Logistics service and competition ........................................................................... 11
Logistics and competitive advantage ...................................................................... 13
Instrument used to test the hypotheses .................................................................... 18CHAPTER II ............................................................................................................... 19
LITERATURE REVIEW .............................................................................................. 19
Introduction ............................................................................................................. 19The Exchange Process ............................................................................................ 19
Customers perception of service exchange ............................................................ 23
Disconfirmation paradigm ...................................................................................... 24Intangibility of services ........................................................................................... 29
Heterogeneity of services ........................................................................................ 30
Perishability ............................................................................................................ 31Traditional marketing mix ....................................................................................... 31
Expanded mix for services....................................................................................... 32
Service quality models ............................................................................................. 33
Dimensions of service quality ................................................................................. 35Difficulties unique to services ................................................................................. 39
Logistics quality service .......................................................................................... 40
Background discussion on the trucking industry .................................................... 41Description of less than truckload operations ........................................................ 43
Quality improvement research in logistics.............................................................. 46
Customer expectations and value-added services ................................................... 52Performance gaps in the logistics and trucking industry ........................................ 55
Logistics service quality .......................................................................................... 55
Transportation performance quality ....................................................................... 62
Employee selection and training ............................................................................. 65Truck drivers and service quality perceptions ........................................................ 67
The instrument SERVQUAL ................................................................................. 68
Critique of SERVQUAL ........................................................................................... 70
CHAPTER III .............................................................................................................. 75METHODOLOGY ....................................................................................................... 75
SERVQUAL questionnaire ...................................................................................... 76Hypotheses .............................................................................................................. 77
Sample Selection ..................................................................................................... 78
Data Collection ....................................................................................................... 80Prescreening............................................................................................................ 81
Adaptation of the SERVQUAL instrument to the trucking industry ........................ 82
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Instrument construction........................................................................................... 84
Measurement ........................................................................................................... 86
Stepwise regression ................................................................................................. 87CHAPTER IV .............................................................................................................. 89
ANALYSIS AND PRESENTATION OF FINDINGS ................................................... 89Introduction ............................................................................................................. 89Survey respondents .................................................................................................. 89
Reliability and validity ............................................................................................ 94
Instrument reliability ............................................................................................... 95Data analysis ........................................................................................................... 97Tangibles expectations ............................................................................................ 98
Summary expectation scores ................................................................................. 103
Tangibles perceptions ........................................................................................... 104Mean gap total ...................................................................................................... 109
Hypotheses testing ................................................................................................. 116
Conclusion ............................................................................................................. 118CHAPTER V.............................................................................................................. 120
SUMMARY AND CONCLUSIONS ........................................................................... 120
Introduction ........................................................................................................... 120Summary of the study ............................................................................................ 120
Practitioner implications....................................................................................... 123
Limitations of the study ......................................................................................... 126
Further considerations and future research ......................................................... 127Conclusion ............................................................................................................. 129
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List of Figures
Figure 1 SERVQUAL Model ............................................................................................ 77Figure 2 SERVQUAL Questionnaire ............................................................................. 133
List of Tables
Table 1 Modifications of the SERVQUAL instrument ..................................................... 82Table 2 Respondent profile/response data ....................................................................... 92
Table 3 Business ownership category .............................................................................. 93
Table 4 Business industry category ................................................................................. 94Table 5 Expectation analysis ........................................................................................... 96
Table 6 Perceptions analysis ........................................................................................... 97
Table 7 Mean tangibles expectations frequencies scores ................................................ 98Table 8 Mean reliable expectations ................................................................................. 99
Table 9 Mean responsiveness expectations ................................................................... 100
Table 10 Mean assurance expectations ......................................................................... 101
Table 11 Mean empathy expectations ............................................................................ 102Table 12 Mean tangibles perceptions ............................................................................ 105
Table 13 Mean reliability perceptions ........................................................................... 106
Table 14 Mean responsiveness perceptions ................................................................... 107
Table 15 Mean assurance perceptions .......................................................................... 108Table 16 Mean empathy perceptions ............................................................................. 109
Table 17 Mean gap total -3.50 to +1.00 ........................................................................ 110Table 18 Mean gap score tangibles ............................................................................... 111
Table 19 Mean gap score reliability .............................................................................. 112
Table 20 Mean gap score responsiveness ...................................................................... 113
Table 21 Mean gap score assurance ............................................................................. 113Table 22 Mean gap score empathy ................................................................................ 114
Table 23 mean gap scores.............................................................................................. 115
Table 24 Coefficientsfor tangibles ................................................................................ 116
Table 25 Coefficientsfor reliability ............................................................................... 117
Table 26 Coefficients
for responsiveness ....................................................................... 117Table 27 Coefficientsfor assurance ............................................................................... 118
Table 28 Coefficientsfor empathy ................................................................................. 118
Table 29 Summary of hypotheses testing ....................................................................... 122
Table 30 Final sample size explanation......................................................................... 126
Table 31 Reliability alphas ............................................................................................ 130Table 32 Individual respondent mean score .................................................................. 131
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CHAPTER I
Introduction
Background of the Problem
Marketing emerged as a separate discipline when it became concerned with the
process of moving goods from producer to consumer. This goods-centered
manufacturing-based model of economic exchange developed during the Industrial
Revolution, and since then marketing has broadened its perspective to include the
exchange of more than manufactured goods (Vargo & Lusch, 2004). The sub-discipline
of services marketing and its importance to scholars and practitioners emerged to address
this broadened perspective in the 1970s and 1980s. Individual industries mirrored the
growing recognition that America had become a service economy. Driven by supply and
demand, an integrative field focused on the marketing of intangible products (Berry &
Parasuraman, 1993).
The sub-discipline of services marketing did not exist (Berry & Parasuraman,
1993, p. 14) prior to the 1970s (Judd, 1964). Marketing practices until then illustrate how
the emergence of mass production, the need for intermediaries, and the separation of the
producer from the consumer in the industrial era led to a transactional focus on
marketing. The goods-centered manufacturing-based model focused on separating the
producer from the consumer (Lusch, Vargo, & Malter, 2006).
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In todays service economy, the emerging dominant logic focuses on the
interaction of the producer and the consumer and other supply and value network partners
as they co-create value through collaborative processes (Sweeney, 2007). This new logic
is referred to as service-dominant logic with research suggesting we do not just buy
goods and services, but relationships, experiences with brands, dreams, and many other
interacting phenomena. Also recognized by Gummesson (2008) is the co-creation of
value between customers and suppliers, and within this paradigm there is a genuine
customer orientation. Further evidence of the value of providing value to customers
through exceptional service to customers is documented by Rust, Moorman, and Dickson,
(2002), who concluded that firms focusing primarily on customer service will do better
than firms focusing primarily on cost reduction.
The attitude and actions of contact employees can affect customer perceptions of
service quality (Elmadag, Ellinger, & Franke, 2008). Other studies have emphasized the
influence a service employee has on customer perceptions of service quality. Results
indicate that employees positive and negative behaviors are highly correlated to
customer overall satisfaction (Kattara, Weheba, & El-said, 2008). Moreover, research
indicates that many service firms fail in delivering service quality to their customers
because their employees deliver inferior value to the end user (Scheepers, 2006). The
attitude and actions of contact employees can affect customer perceptions of the service.
Because of the importance of the service encounter, service firms must find ways to
manage their customer-contact employees effectively to help ensure that their attitude is
conducive to the delivery of quality service (Elmadag, Ellinger, & Franke, 2008).
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Other studies indicate that consumers desire relatedness, assurance, empathy, and
reliability. They often view service employees as the means by which an organization
conveys these components of service quality (Brady & Cronin, 2001). According to
Parasuraman, Zeithaml, and Berry (1988), capable employees who are committed to
providing service quality increase customer satisfaction. The authors also note that firms
lose customers because of poor or indifferent service.
Firms remain challenged to deliver high quality service to their customers, largely
because the thought process that consumers utilize to purchase and evaluate services is
complex. Nonetheless, service quality remains a key area of interest to practitioners, and
researchers recognize the impact it has on business performance, customer satisfaction,
purchase intentions, and financial outcomes (Seth, Deshmukh, & Vrat, 2005; Greising,
1994; Bienstock, Mentzer, Bird, & Murphy, 1997). Although many studies have
examined general quality management practices, industry-specific studies on quality
management practices and factors that influence their success in the shipping industry are
rather few (Cheng & Choy, 2007).
Logistics Service and Competition
Logistics impact our lives and the economy in a very significant way. For
example, in 2007 there were 9.6 million people working in transportation-related jobs
across all sectors of the U. S. economy, excluding the self-employed. Table 1.1 shows the
breakdown of employees in transportation and materials handling-related jobs by
industry. Nearly 67% of those working in transportation and materials handling-related
jobs are employed in the transportation and warehousing sector, manufacturing sector, or
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the wholesale and retail industries. Data supplied by the US Department of Labor show
that in 2007, approximately one of every nine people working in the U.S. was employed
in a transportation and material moving-related job. The number of people employed in
trucking-related jobs (excluding the self-employed) grew from 7.8 million in 1994 to 8.6
million in 2003, an increase of 9.1%. From 2003 to 2007 the number increased to 9.6
million an increase of 10.4% (U.S. Department of Labor, 2009). An interesting and
significant factor concerning this research is that truck drivers and driver sales workers
hold 45% of all the jobs in the industry.
Corporations and researchers also have become increasingly aware of the strategic
role logistics that services play in a firms overall success (Bienstock, Mentzer, Bird, &
Murphy, 1997; Mentzer, Bienstock, & Kahn, 1995; Mathews, 2006). Anecdotal evidence
from firms such as Dell Computer Corporation, Nabisco, and Federal Express suggest
that logistics excellence has a significant impact on revenue and profitability (Mentzer,
Flint, & Holt, 2001; Flint, Larsson, Gammelgaard, & Mentzer, 2005). We feel 3PLs
have improved in performance and in service offerings, noted Victor Guzman, Director
of Supply Chain and Logistics with Honeywell International Inc. They serve a specific
purpose and outsourcing allows us to avoid significant capital investment in non-core
activities (Richardson, 2005, p.17).
Despite its growing importance in corporate strategy and the global economy, the
logistics discipline does not have as rich a heritage in theory development and empirical
research as older more established disciplines such as anthropology, philosophy,
psychology, and sociology (Stock, 1997). In fact, much of logistics literature and research
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has been considered managerial in nature and lacking a rigorous orientation toward
theory development, testing, and application (Mentzer, Bienstock, & Kahn, 1995).
Competition among transportation companies has dramatically increased in recent
years (Kirkeby, 2008). The reasons contributing to additional competition include
deregulation of the industry, growing demands among shippers for better levels of
service, and the relatively recent trend in the creation of third party logistics carriers. As
common carriers increasingly compete in each others territories, more trucking firms are
offering higher quality service offerings to customers (Kirkeby, 2008, p. 4). A carrier
or common carrier is defined as: A for-hire carrier that holds itself out to serve the
general public at reasonable rates and without discrimination. To operate, the carrier must
secure a certificate of public convenience and necessity (Ability Tri-Modal, 2010, p.1).
In this study, carriers or common carriers will be limited to commercial trucking
companies which transport goods between vendors and shippers. A commercial trucking
company is defined as: A for-hire carrier that holds itself out to serve the general public
at reasonable rates and without discrimination (Ability Tri-Modal, 2010, p.1). In this
study, shippers prepare goods for shipment and carriers deliver the cargo via commercial
trucks to the end user.
Logistics and competitive advantage
Firms no longer view logistics as simply an area for cost improvements, but they
perceive logistics as a key source of competitive advantage within a firm's total
marketing efforts (Ha, Li, & Ng, 2003). Logistics service competence can be leveraged to
create customer and market share by improving service performance, (Ha et al., 2003),
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increasing market share, (Daugherty, Stank, & Ellinger, 1998), enabling mass
customization (Bradley, Gooley, & Cooke, 1998), creating effective customer-based
systems (Closs, Swank, & Nair, 2005), effecting customer satisfaction, (Dresner &
Kefung, 1995), providing a competitive advantage, (Rodrigues, Bowersox, & Calantone,
2005), and segmenting customers (Gilmour, Duffy, & Johnson, 1994).
Tom Mentzer, Executive Director of the University of Tennessees Integrated
Value Chain Forums, has seen an evolution in the transportation industry. Transportation
companies are moving away from being just trucking firms moving products from point
to point. They are growing into complete supply service chain organizations. Supply
chain services have continued into the areas of distribution and warehousing. In the past,
cargo had been simply shipped to a warehouse, stored for a period of time, and shipped
out; now there is a demand for more complex, value-added services. In other words,
customers are demanding more from their primary service providers (Cheng & Choy,
2007).
While a review of the literature shows that many researchers examined numerous
aspects of transportation performance quality, few of these investigations addressed the
role and impact that truck drivers have on service-quality perceptions (Vansickle, 2002).
This is the reason, that this study was conducted. The purpose of this study is to examine
whether cargo handling by truck drivers has a far-reaching effect on customer perceptions
of a companys service quality.
A growing body of literature supports the notion that suppliers gain far more
lifetime value from the retention of customers than from the acquisition of new ones. A
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primary goal of logistics managers, therefore, has been to enhance operational
responsiveness to customers. In many cases truck drivers serve as front-line staff for the
organization and are frequently the customers only contact in the service encounter.
These drivers can impact customer perceptions of the service experience (Richey,
Genchev, & Daugherty, 2005; Kimberley & Hartel, 2008).
Additionally, firms in a competitive industry are always under pressure to develop
comparative advantages in resources that will give them an edge in some market segment
or segments (Hunt, 2000). Providing the right level of service delivery to the right
customer in the right market segment may serve as a comparative advantage for firms
delivering cargo door to door.
It is documented that mishandling cattle and livestock in transit has forced the
National Pork Board in Des Moines, Iowa to launch a quality assurance program. This
action was taken because truckers were not handling animals to the satisfaction of the
cattle industry. According to David Meisinger, the Pork Boards Trucker Quality
Assurance Coordinator, mishandling of live cargo by truck drivers costs the industry
approximately $59 million in lost revenue per year (Vansickle, 2002). This example
should lead other industries involved in shipping merchandise to consider the impact of
truck driver contact and interaction with vendors in their respective industries.
This researcher will examine the influence of truck driver determinants on service
quality perceptions as experienced from the receivers of trucking services. Firms
receiving goods via truck are concerned with driver reliability, personal communication
skills, driver appearance and responsiveness. This contact impacts a companys
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performance and delivery of service quality. Therefore, this study will examine the
implication of truck driver contact on service-quality as it is perceived by the receiver of
the shipped cargo.
The significance of this study and the role that truck drivers play in delivering
service quality to end users is determined in part by the convergence of many economic
factors. These factors include a firms ongoing effort to remain competitive by delivering
high quality service to its customers in a competitive global environment. Moreover,
excellent quality service can provide firms with a competitive advantage (Porter, 1985).
Another significant reason for this study grows out of the fact that trucking
operated in a regulated industry until 1980. Government regulation impacts competition
in general and the operating performance of trucking firms. To ensure their survival,
firms are now forced to add a range of customer-oriented services to complement
trucking delivery services. This change is evidenced by the phenomenal growth of third
party logistics providers. These providers offer value added services to firms engaged in
delivering cargo throughout the supply chain.
Also, there is growing evidence of the impact that front line service employees
have on overall customer satisfaction and relationship quality. Organizations must
develop information systems that enable front-line employees to build relationships
effectively and to coordinate delivery of benefits to individual customers (Mandrodt &
Davis, 1992, p. 3).
Finally, service firms must adapt to the current services dominant logic to
compete. Although little empirical research exists, practitioners and researchers agree that
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drivers play a significant role in the transportation industry. Supply chain partners all
converge and operational outcomes, relational outcomes, and overall business
performance are affected by efficient pick-up and delivery of customer cargo (Zacharia,
Nix, & Lusch, 2009). This researcher posits that many variables impact the commercial
truck drivers efficiency and effectiveness in delivering superior service quality to the end
user. In short, the data support a need for firms to continue finding ways of providing
better customer service.
Domestic firms must become accustomed to the increased competition from
global companies as well as increased competition from local firms. In addition, industry
deregulation predestined firms to adjust their service offerings to upgrade their service
delivery in an ever increasing business environment in a non regulated environment.
Furthermore, customers increasingly require firms to add value to their service offering.
In addition, little empirical research exists in this area of logistics (Ashenbaum, Maltz, &
Rabinovich, 2005). Finally, current research is being done in the area of front line service
employees and their impact on service quality. Research shows that customers make
evaluative judgments of the service quality delivered by these front line employees.
Consequently, the behaviors and attitudes of front-line employees that provide services
are crucial for the positive evaluation of services by customers (Bienstock, DeMoranville,
& Smith, 2003). In the end, firms must provide better ways of delivering excellent
service. Their very survival depends on it.
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Instrument Used to Test the Hypotheses
Hypothesis testing was done using the SERVQUAL instrument developed by
Parasuraman, Zeithaml, and Berry (1985). The Extended Service-quality Model, also
developed by Parasuraman, Zeithaml, and Berry (1988), specifies a set of factors that are
theorized to contribute to a series of four organizational gaps that may contribute to the
size of the service-quality gap perceived by customers.
The dominant conceptualization of service quality in the service management
literature is that service-quality can be measured by assessing the gap between the
customer's expectations for service (what a customer feels a service firm should offer)
versus the customer's perception of the service performance that was delivered by a firm.
This gap between expectations and perceptions is often referred to as the disconfirmation
construct of service-quality and is frequently measured by the 22-item SERVQUAL
instrument (1988).
The SERVQUAL instrument provides management and key players with
feedback about the organizations ability to provide quality service. The results of a
service-quality audit assist management in identifying service strengths and weaknesses
(e.g., gaps). The benefit to the organization is that specialized departments, such as
marketing and human resources, are able to support the business plan's focus on
customers by continuously listening to the customer-using a service-quality information
system-and making needed changes to the five key dimensions that influence customers'
perceptions of service-quality.
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CHAPTER II
Literature Review
Introduction
This literature review describes prior research from the marketing exchange
process, service quality and logistics literature and seeks to extend these concepts to the
field of commercial trucking and the truck drivers role in delivering quality service to
the customer. Because of its strong impact on business performance, customer
satisfaction, and profitability, the topic of service quality has been an important research
subject in the marketing literature for some time beginning with the conceptual of
Parasuraman et al. (1985) (Chang & Chen, 1998; Cronin & Taylor, 1992; Gummesson,
1998; Silvestro & Cross, 2000; Guru, 2003).
Producing quality products and services to customers remain vital for business
success. In fact, quality may be the most significant element in satisfying business
customers. High performance can only be sustained if strategies are directed at
satisfying the needs of all stakeholders. Achieving high customer satisfaction leads to
fewer customer defections and higher profits and growth (Erickson, 1992, p. 56).
The Exchange Process
Marketing scholars from various theoretical perspectives have acknowledged that
the fundamental purpose of marketing is to facilitate exchanges between buyers and
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sellers. Hunt (1983, p. 9) notes the primary focus of marketing is the exchange
relationship. Other authors including Bagozzi, (1978); Ferber, (1970; Frazier, (1983);
Kotler, (1972; Luck, (1969) and others agree the notion of exchange between two parties
is central to the understanding of the domain of marketing (Blois, 2004). At the heart of
every marketing act- big or small- is the exchange relationship. An exchange occurs
when a person gives something and gets something else in return (Solomon, Marshal, &
Stuart, 2009, p. 9). Whereas exchange is the core concept of marketing, a transaction, in
turn, is marketings unit of measurement. A transaction consists of a trade of values
between two parties: One party gives X to another party and gets Y in return. For
instance, in exchange for giving Apple Computer $500, a customer receives an iPod.
McInnes (1964) and Alderson (1965) are largely credited with launching this
exchange perspective in marketing. McInness (1964) remarked that marketing is any
motion or activity that actualizes the potential relation of producer and consumer. A
concept of marketing in its wildest sense, therefore, is any activity which actualizes the
potential market relationship between the makers and users of economic goods and
services ( p. 57). Alderson and Miles (1965) proposed Laws of Exchange to explain
why two parties decide to enter into a transaction.
The Law of Exchange was stated as: Given that x is an element of assortment
A1 and y is an element of the assortment A2, x is exchangeable for y if an only if these
three conditions hold:
(a)X is different than y.(b)The potency of the assortment A1 is increased by dropping x and adding y.
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(c)The potency of the assortment A2 is increased by adding x and dropping y.(Alderson & Miles, 1965, p. 121).
What is important to note here in the authors concept of exchange is the pivotal
role played by the perceptions and preferences of the exchange actors in determining the
optimality of the exchange transaction. Alderson and Miles (1965, p.122) continued their
discussion on exchange relationships:
Viewing exchange from the standpoint of one of the decisionmakers, we can say that exchange is optimal if he prefers it to any
available alternative. Similarly, for the decision maker on the otherside of the transaction, it will be optimal for him if he prefers it toany available alternative. It is assumed that if a concrete situationoffers an exchange opportunity, the number of alternativesrealistically available to either side is not infinite in number butlimited to only a few. Faced with a decision, an individual must beguided by his present knowledge of alternatives and the orderingaccording to his preferences within that set.
Philip Kotler (1972) followed up on Alderson and Miles (1965) work by
presenting the generic concept of marketing. He clarified his perception of the basic
focus of marketing by stating, The core concept of marketing is the transaction. A
transaction is the exchange of values between two parties. The things-of-value need not
be limited to goods, services, and money; they can include other resources such as time,
energy, and feelings ( p. 48).
Kotler (1972) continued in his writings to reinforce his view that transaction or
exchange is the core concept of marketing. He talked about how marketers look to
facilitate and shape exchange relationships:
Marketing is a particular way of looking at the problem ofachieving a value response from a target market. It essentially holdsthat exchange values must be identified and the marketing program
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must be based on these exchange values. The marketer attempts tofind ways to increase the persons perceived rate of exchangebetween what he would receive and what he would give up in freely
adopting that behavior. The marketer is a specialist at understandinghuman wants and values and knows what it takes for someone to act.( p. 53)
Other authors during the 1970s also contributed to this idea of the exchange being
the focal point of marketing. Richard Bagozzi (1974) defined the exchange system as a
set of social actors, their relationships to each other, and the endogenous and exogenous
variables affecting the behavior of the social actors in those relationships (p. 78).
Bagozzi also identified the cause and effect relationship of exchange and stated that the
traditional notion of exchange says little about the theoretical cause and effect
relationship determining the exchange. To say that X will be exchanged for Y when both
actors perceive their assortment to be improved is not sufficient for a theory (Nooteboom,
1992).
Marketers want to know why and when an individual will take a particular action
(Bagozzi, 1974,). Bagozzi later proposed that a general theory of marketing exchange
could be established on the exchange concept: Although marketing seems to defy
simple definition and circumscription, it is essential that marketers locate the distinctive
focus (or foci) of the discipline. Failure to do so impedes both growth of the discipline
and the character of its performance. Exchange is a central concept in marketing, and it
may well serve as the foundation for that elusive general theory of marketing ( p. 39).
Bagozzi (1978) later advanced the exchange concept by stating that the exchange
process should be viewed as a social activity rather than as insulated individuals making
solitary decisions:
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No longer are buyers and sellers treated solely as isolated actorsemitting or responding to stimuli. Rather, marketing behavior is nowregarded as an inherently social activity where the outcomes of exchange
depend on bargaining, negotiations, power, conflict, and the shared meaningexisting between buyer and seller. (Bagozzi, 1978, p. 536)
Bagozzi (1979) also presented a category for evaluating exchanges:
If the concept of exchanges is to be used in an explanatory-as opposed to apurely descriptive-sense, then it will have to be conceptualized as a phenomenoncapable of variation in one or more ways. This author believes that exchangesmight be fruitfully conceived as a threefold categorization of outcomes,experiences, and actions, each varying in degree and occurring to the actors as
individuals, jointly or shared, or both. Outcomes in an exchange refer to physical,social or symbolic objects accruing to the actors as a consequence of theirrelationshipExperiences are psychological states and consist of affective,cognitive, or moral dimensions. They typically are conveyed symbolicallythrough the objects exchanged, the functions performed by the exchange, or themeaning attributed to the exchange The final variable with which to representan exchange are the actions performed by the actors as a product of theirinterchange. Actions might represent individual choices and responses or joiningcommitments (pp. 435-436).
Customers Perceptions of Service Exchange
Customers usually face a broad array of goods and services that might satisfy a
given need. Gronroos (1984) argued that in order for a firm to compete successfully it
must have a general understanding of the customers perceptions and then determine how
the service can be influenced. Consumers make choices based on their perceptions of the
value and satisfaction that various products and services deliver (Legcecic, 2008;
Mollenkopf, Rabinovich, Laseter, & Boyer, 2007). Customers form expectations about
the value of various marketing offers and buy accordingly. These expectations are
standards or reference points that customers bring into the service experience, whereas
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customer perceptions are subjective assessments of actual service experiences.
(Zeithaml, Bitner, & Gremler, 2006, pp. 33-34).
The difference between customer expectations and customer perception is often
referred to as the customer gap. This gap refers to the difference between customer
expectations and customer perceptions of the service provided (Zeithaml, Bitner, &
Gremler, 2006). Stated another way, the quality of service a customer receives relies
primarily on expected quality of service and perceived quality of service (Zhen, Yizheg,
& Da-Hai, 2008). This conceptualization of quality of service received has its roots in
expectancy disconfirmation theory. Many early marketing researchers adopted this theory
as the foundation for measuring service quality (Gronroos, 1984; Parasuraman, Zeithaml,
& Berry 1985, 1988). According to Gronroos (1984), the quality of service that a
customer receives is essentially dependent on two variables: expected service and
perceived service. This phenomenon has been studied by several authors and is generally
regarded as the disconfirmation paradigm. (Bearden & Teel, 1983; Oliver, 1981; Oliver
& Bearden, 1985; Oliver & Burke, 1999; Swan & Trawick, 1981; Ueltschy, Larache,
Eggert, & Bindl, 2007; Webb, 2000).
Disconfirmation Paradigm
The disconfirmation paradigm asserts that customers compare perceived product
performance to perceived expectations. The disconfirmation paradigm is the widely
accepted view of the process by which customers develop feelings of satisfaction or
dissatisfaction (Cadotte, Woodruff, & Jenkins, 1987; Sheetal & Verma, 2004).
Expectations are the reference points that customers have before experiencing the service
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whereas perceptions reflect their subjective experience assessments of the service that
they have actually received (Aga & Safakli, 2007; Gronroos, 1984). The expected service
consists of what a customer believes should or will happen. For example, a customer
expects a much higher level of service when traveling first class as opposed to traveling
coach. Because customer satisfaction is critical to firm competitiveness, organizations
will strive to close or narrow this gap, i.e., between what is expected and what is received
to satisfy their customers, and to build long-term relationships with them (Ching-Chow,
2003).
Churchill and Surprenant (1982) state, Disconfirmation arises from discrepancies
between prior expectations and actual performance. It is presumably the magnitude of the
disconfirmation effect that generates satisfaction and dissatisfaction (p. 492). The
disconfirmation-expectation model assumes that a customers degree of satisfaction is an
outcome of a four-step process (Anderson, Rungfusanatham, Schroeder, & Devaraj,
1995). In a perfect world, expectations and perceptions would be identical: Customers
would receive what they thought they would and should receive. In practice, these
concepts are often, even usually, separated by some distance. Broadly speaking, it is the
goal of services marketing to bridge this distance or close the gap between customer
expectations and customer perceptions of service quality (Muslim & Zaidi, 2008).
Addressing and closing the gap between customer service expectation and
perceptions is challenging because services are performances, and most of the time it is
people who render these performances (Berry, Zeithaml, & Parasuraman, 1990). For this
reason, managers of many service firms recognize the importance of service employees
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to communicate with and satisfy their customers (Bebko & Sciulli, 2009). Parasuraman,
Zeithaml and Berry (1985) found from their interviews that a set of key discrepancies or
gaps exists regarding executive perception of service quality and the tasks associated with
service delivery to customers. These gaps can be major hurdles in attempting to deliver a
service which the customer would perceive as being of high quality (Berry, Zeithaml, &
Parasuraman, 1990).
The gaps model (Parasuraman, Zeithaml, & Berry, 1985) further suggests that
four other gaps called the provider gaps need to be closed. These gaps occur within the
organization providing the service (hence the term the provider gaps) and include the
following:
Gap 1: Not knowing what customers expect.
Gap 2: Not selecting the right service design and standards.
Gap 3: Not delivering to service design and standards.
Gap 4: Not matching performance to promises.
Provider gap 1 is the difference between customer expectations of service and the
companys understanding of those expectations. A primary cause in many firms for not
meeting customers expectations is that the firm lacks an accurate understanding of
exactly what those expectations are (Chowdhury, 2009). There are many reasons that
managers may not be aware of what customers expect: they may not interact directly with
customers, they may be unwilling to ask about expectations, or they may be unprepared
to address them (Warden, Tsung-Chi, Chi-Tsun, & Chi-Hsun, 2003). Further, because
there are few clearly defined and tangible cues for services, this gap may be considerably
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larger than it is in firms that produce tangible goods (Gronroos, 1982; Hamer, 2006;
Webster, 1992).
A number of factors have been shown to be responsible for provider gap 1. First,
because marketing research is a key vehicle for understanding consumer expectations and
perceptions of services, the size of gap 1 depends greatly on the amount of marketing
research conducted (Zeithaml, Berry, & Parsuraman, 1988). A second factor is lack of
upward communication. Frontline employees often know a great deal about customers
(Schneider & Bowen, 1985), but management may not be in contact with frontline
employees and may not understand what they know. A third factor is a lack of a company
strategy for retaining customers and strenghtening relationships with them (Gwinner,
Gremler, & Bitner, 1998). A fourth factor is inadequate attention to service recovery,
understanding why people complain and what they expect when they complain, and how
to develop effective strategies for dealing with inevitable service failures (Walker,
Johnson, & Leonard, 2006).
A recurring theme in service companies is the difficulty experienced in translating
customer expectations into service quality specifications that employees can understand
and execute (Niranjan & Metri, 2008). Provider gap 2 is the difference between company
understanding of customer expectations and the development of customer-driven service
designs and standards. Customer-driven standards differ from the conventional
performance standards in that they are based on pivotal customer requirements that are
visible to and measured by customers (Zeithaml & Bitner, 2003).
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Provider gap 3 is the discrepency between the development of customer-driven
service standards and actual service performance by company employees (Narasimhan,
2004). Even when guidelines exist for performing services well and treating customers
correctly, high-quality service performance is not a certainty. Standards must be backed
by appropriate resources (people, sytems, and technology) and must be enforced to be
effective, i.e., employees must be measured and compensated on the basis of performance
along those standards (Zeithaml, Berry, & Parsuraman, 1988). When the level of service
delivery falls short of the standards, it falls short of what customers expect as well.
Narrowing gap 3-by ensuring that all resources needed to achieve the standards are in
place-reduces the customer gap.
Provider gap 4 illustrates the difference between service delivery and the service
providers external communications (Lafferty & Colgate, 2001). Promises made by a
service company through its media advertising, sales force, and other communications
may potentially raise customer expectations and the standards against which customers
assess service quality (Duffy & Ketchand, 1998). The discrepency between actual and
promised service, therefore, has an adverse effect on the customer gap. Broken promises
can occur for many reasons: overpromising in advertising or personal selling, inadequate
coordination between operations and marketing, and differences in policies and
procedures across service outlets (Ahmet, Subhash, Mehves, & Selim, 2005). Because
service advertising promises what people do, and because what people do cannot be
controlled like machines that produce physical goods can be controlled, this type of
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communcation involves functions other than the marketing department. This kind of
interaction between contact people and customers must be examined (Potocan, 2008).
Intangibility of Services
Few transactions can be identified as purely product (no service involved) or
purely service (no physical product involved). To a certain extent, most transactions
provide a combination of product with accompanying service or service with some
product (Evans & Lindsay, 2002). Unlike quality of goods, that can be measured
objectively by such indicators as durability and number of defects, service quality is an
abstract and elusive construct because of the unique features of services: intangibility,
heterogeneity, and inseparability of production and consumption (Blankson & Kalafatis,
1999). In the absence of an objective measure, an appropriate approach is for assessing
quality of the firm's service is to measure its consumers' perceptions of quality (Berry &
Parasuraman, 1993). Thus far, no quantitative measure is available for determining
perceptions.
Services are performances that cannot be seen, felt, tasted or touched in the same
manner as tangible goods (Gill & Flaschner, 2006). For instance, healthcare services are
actions (such as surgery, diagnosis, examination, and treatment) performed by providers
and directed toward patients and their families. These services cannot actually be seen or
touched by the patient although the patient may be able to see and touch certain tangible
components of the service (like the equipment or hospital room) (France & Grover,
1992). This intangibility presents challenges to the marketer. Services cannot be
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inventoried, patented, displayed, or easily communicated to the customer so quality may
be difficult for consumers to assess (Ojasalo, 2008).
Heterogeneity of Services
The employees delivering the service frequently are the service in the customers
eyes, and people may differ in their performance from day to day or even hour to hour
(Lovelock & Gummesson, 2004). Heterogeneity also results because no two customers
are precisely alike; each will have unique demands or experience the service in a unique
way. For instance, a truck driver may provide a different service experience to two
different customers on the same day depending on their individual needs and
personalities and on whether the driver is delivering the products first thing in the
morning when he or she is fresh or later in the evening when the same driver is tired
(Lovelock & Gummesson, 2004).
Additionally, services are produced and consumed simultaneously. For example,
restaurant services cannot be provided until they have been sold, and the dining
experience is essentially produced and consumed at the same time. This means that the
customer is present while the service is being provided and utilized and the customer may
even take part in the production process (Iglesias & Guillen, 2004). This interaction
between customer and service provider implies that each affects the service experience of
the other. Another outcome of simultaneous production and consumption is that service
producers find themselves playing a role as part of the product itself as an essential
ingredient in the service experience for the consumer (Yoo & Park, 2007).
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Because services often are produced and consumed at the same time, mass
production is difficult. The quality of service and customer satisfaction will be highly
dependent on what happens in real time (Sampson & Froehle, 2006). Therefore, it is
difficult to gain economies of scale through centralization. Also because of simultaneous
production and consumption, the customer is involved in and observes the production
process and thus may affect (positively or negatively) the outcomes of the service
transactions (Mels, Boshoff, & Deon, 1997).
Perishability
Perishability refers to the fact that services cannot be saved, stored, resold, or
returned. A seat on an airplane or in a restaurant, an hour of a lawyers time, or a
telephone line capacity not used cannot be reclaimed and used or resold at a later time
(Rhoades & Waguespack, 2008). Perishability is in contrast to goods that can be stored in
inventory resold another day, or even returned if a customer is not happy. The fact that
services cannot be returned or resold also implies a need for strong recovery strategies
when things go wrong. For example, although a bad haircut cannot be returned, the
hairdresser can and should have strategies for recovering the customers goodwill if and
when such a problem occurs (Parasuraman, 1998).
Traditional Marketing Mix
One of the most basic concepts in marketing is marketing mix which is defined as
the elements an organization controls that can be used to satisfy, or communicate with
customers. The traditional marketing mix is composed of the four Ps: product, price,
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place (distribution), and promotion (Borden, 1964). However, the strategies for the four
Ps require some modification when applied to services. Traditionally, promotion is
thought of as involving decisions related to sales, advertising, sales promotion, and
publicity. In services these factors are also important, but because services are produced
and consumed simultaneously, service delivery people (such as clerks, ticket takers,
nurses, and truck drivers) are involved in real-time promotion of the service even if their
jobs are defined in terms of the operational function they perform (Rhoades &
Waguespack, 2008).
Expanded Mix for Services
Because services are usually produced and consumed simultaneously, customers
are often present in the firms facility, interact directly with the firms personnel, and are
actually part of the production process. In fact, some clients expect involvement.
Suppliers demand the complete involvement of front-line personnel when they have a
non-routine problem requiring specialized knowledge or skills (Manrodt & Davis, 1992,
p. 3). Also because services are intangible, customers will often be looking for any
tangible cue to help them understand the nature of the service experience. For example, in
the hotel industry the design and dcor of the hotel as well as the appearance and attitudes
of its employees will influence customer perceptions and experiences (Lewis & McCann,
2004).
Acknowledgment of the importance of these variables has led services marketers
to adopt the concept of an expanded marketing mix for services (Boons & Bitner, 1981).
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1. People all human actors who play a part in service delivery and thus influencethe buyers perceptions, namely the firms personnel, the customer, and other
customers in the service environment. All human actors participating in the
delivery of a service provide clues to the customer regarding the nature of the
delivery itself. How these people are dressed, their personal appearance, and their
attitudes and behaviors all influence the customers perception of the service.
(Zeithaml & Parasuraman, 2004)
2. Physical evidence the environment in which the service is delivered and wherethe firm and customers interact and any tangible component that facilitates
performance or communication of the service. In telecommunications services,
the physical facility may be irrelevant, but other tangibles such as billing
statements or the appearance of the truck may be important indicators of quality.
3. Process the actual procedures, mechanisms, and flow of activities by which theservice is delivered the service delivery, and operating systems. The actual
delivery steps that the customer experiences, or the operational flow of the
service, also gives customers evidence on which to judge the service (Zeithaml,
Bitner, & Gremler, 2006).
Service Quality Models
Researchers have proposed and evaluated both alternative service quality models
and the instruments for measuring service quality for the past two decades (Asubonteng,
McCleary, & Swan, 1996; Seth, Deshmukh, & Vrat, 2005). Service quality models help
management recognize quality concerns and aid in planning quality improvement
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programs that help to improve efficiency, profitability and, in particular, firm
performance. The most important aim of these models is to allow management to be
aware of and improve the quality of the business and its service offering (Seth,
Deshmukh, & Vrat, 2005). Among these models, SERVQUAL (Parasuraman, 1985;
1988) is the most prominent and the most widely used (Parikh, 2005).
Quality may be the most critical component in satisfying an organization's
customers (Barrier, 1991). The elevation of quality as a component of customer
satisfaction started with Juran (1974) and Crosby (1979); Deming; 1982; and
Feigenbaum (1992) and continued with the development of programs such as Total
Quality, Continuous Quality Improvement, and Total Quality Management (Tobin,
1990). Total Quality Management positioned quality as the "meeting or exceeding of a
customers expectations (Heller, 1991, p. 32). Further, Garvin (1984) and Parasuraman,
Zeithaml, and Berry (1988) put forth the proposition that while quality was
multidimensional in nature, it could be enhanced or lost with the variant of one construct.
This continued focus on quality contributed to a general improvement in products and
services. Quality programs helped define which dimensions contributed to a customer's
initial perception of quality (Garvin, 1987; Parasuraman, Zeithaml, & Berry, 1988).
Generally, a user of services has a set of attributes or characteristics in mind when
judging service quality. Quality has traditionally been viewed as conformance to
requirements (Crosby, 1979), fitness for use (Juran, 1974), and innate excellence
(Parasuraman, Zeithaml, & Berry, 1988). In 1984, Garvin suggested that product quality
is not a single recognizable characteristic; rather, it is a multifaceted characteristic that
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appears in many forms. He observed eight dimensions of product quality: performance,
features, reliability, conformance, durability, serviceability, aesthetics and perceived
quality. He also maintained that different users would require different mixes
(combinations of varied amounts) of the quality dimensions. In other words, quality is in
the eye of the beholder (Garvin, 1984).
Using extensive in-depth interviews with 12 consumer focus groups,
Parasuraman, Zeithaml, and Berry (1985) found that customers assess service quality
using the following ten dimensions.
1. Reliability- dependable and accurate performance of promised service2. Responsiveness-willingness/readiness to provide prompt service3. Competence-knowledge and skill to perform the service4. Access-approachability and ease of contact of service personnel5. Courtesy-politeness, consideration, and friendliness of service personnel6. Communication-keeping customers informed and listening to customers7. Credibility-trustworthiness, believability, and honesty8. Security-freedom from danger, risk, or doubt9. Understanding/knowing customer-knowing customers needs10.Tangibles-physical evidence of service
Dimensions of Service Quality
Service quality was initially designed based on the traditional product
manufacturing model of quality of materials utilized in the manufacture of goods, the
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workmanship resulting in a quality product, and the sales personnel (Parasuraman,
Zeithaml, & Berry, 1985). Gronroos (1984) proposed three essential points of service
quality: technical quality (what), functional (how), and overall perceptions of service.
The technical quality means the result of interaction with an actual service that is
received from the service providers. The functional quality represents the expressive
manner of service delivery that the service receiver takes from the service provider. The
overall perception of service is a customers evaluation of service between perception and
expectation of the service. Lehtinen and Lehtinen (1982) proposed three dimensions of
service quality: physical quality, corporate quality, and interactive quality. Physical
quality indicates facilities, equipment, or buildings. Corporate quality represents the
service firms image and reputation. Interactive quality means the interaction between
guests and service providers (Zeithaml & Parsuraman, 2004).
Parasuraman, Zeithaml, and Berry (1985) developed 10 dimensions of service
after conducting numerous focus group research studies with a variety of industries.
These 10 dimensions of service quality, regardless of service sector include the tangibles
(appearance of physical facilities, equipment, personnel, and communication materials),
reliability (ability to perform the promised service dependably and accurately),
responsiveness (willingness to help customers and provide prompt service), competence
(possession of the required skills and knowledge to perform the service), courtesy
(politeness, respect, consideration, and friendliness of the contact personnel), credibility
(trustworthiness, believability, and honesty), security (freedom from danger, risk, or
doubt), access (approachability and ease of contact), communication (keeping customers
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informed in language they can understand and listening to them), and understanding the
customer (making the effort to know customers and their needs) (Berry, Zeithaml, &
Parasuraman, 1990).
Services are performances, and most of the time it is people who render these
performances (Berry, Zeithaml, and Parasuraman, 1990). For this reason, many service
firm managers recognize the importance of service employees in communicating with
and satisfying their customers. Berry, Zeithaml, & Parasuraman (1990) found that
managers of service businesses pay particular attention to employee training. A set of key
discrepancies or gaps exist regarding executive perceptions of service quality and the
tasks associated with service delivery to customers. These gaps can be major hurdles in
attempting to deliver a service that consumers would perceive as being of high quality
(Panayides, 2007). These challenges help researchers better appreciate the challenges in
measuring service quality.
The principal concepts addressed in service quality delivery include satisfaction,
attitude, expectations, disconfirmation, evaluations, and performance (Gupta, McDaniel,
& Herath, 2005). For the purposes of this study, satisfaction is defined as both the
cognitive and affective response to an experience (Shipley, Johnson, & Hashemi, 2009).
Therefore, satisfaction (or dissatisfaction) is the result of a customers response to a
service encounter.
Attitude, then, is a predisposition to a service encounter (Iglesias, 2004). Attitude
is associated with the long-term relationship between service provider and receiver
(Oliver, 1981). As a result, attitude directly develops as the outcome of previous
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experience and satisfaction and becomes part of the customers frame of reference
regarding the service provider (Olson & Dover, 1979). Expectations represent, according
to Olson and Dover (1979), pre-usage beliefs held about a service. In other words,
expectations anticipate results or the service experience and so reflect experience norms
(Cadotte, Woodruff, & Jenkins, 1987).
Churchill and Surprenant (1982) addressed the concept of disconfirmation which
is defined as the differences between a customers prior expectations and perceptions of
actual performance. The result leads to overall satisfaction or dissatisfaction with a
service provider. The construct of evaluations involves a customers perception of
quality, satisfaction, and resulting attitude (Iacobucci, Grayson, & Ostrom, 1994).
Generally, using preconceived standards, customers make evaluative judgments about
services to be purchased or a service provider. For example, if their perceptions exceed
their standards, then their evaluation is favorable.
Performance is the final construct of customer satisfaction of service quality.
Oliver, Rust, and Varki (1997) defined performance as consumer judgment about the
quality of service received, generally categorized as good or bad. The concept of
performance is extremely important in the literature on customer satisfaction because a
performance level becomes the standard by which customers evaluate their experience
(Caceres & Paparoidamis, 2007).
The challenge of assessing customer satisfaction with a service involves more
than merely addressing opinion regarding service quality. In order for a customer to be
satisfied with the outcome of purchasing a service, perceived service quality involves a
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positive evaluation of the end result and experience with the delivery of that result. To
that end, employee selection and training becomes an important component of perceived
service quality (Oakland & Oakland, 1998). Unlike the quality of goods which can be
measured objectively by such indicators as durability and number of defects, measuring
services is challenging for many reasons.
Difficulties Unique to Services
1. Services cannot be stored
2. Services cannot be mass produced
3. Patents cannot be protected
4. Service quality is difficult to control
5. Service costs are difficult to calculate
6. Demand for services fluctuates and,
7. Consumers themselves are involved during the service production process
(Parasuraman, Zeithaml, & Berry, 1985).
The GAP model was developed by Parasuram, Zeithaml, and Berry (1985) to
show the most important activities of the service organization that influences perceptions
of quality. Their model is based on an interpretation of qualitative data generated through
in-depth executive interviews and consumer focus groups. The model shows the
interaction between key activities and identifies the linkages between these activities of
the service organization which are pertinent to the delivery of a satisfactory level of
service quality.
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Logistics Quality Service
Little has been written about the trucking industry despite the growing importance
of logistics in corporate strategy and the global economy (Brooks & Ritchie, 2005). The
logistics discipline does not have as rich a heritage of theory development and empirical
research as older more established disciplines such as anthropology, philosophy,
psychology, and sociology (Stock, 1997). In fact, much of the logistics literature and
research is considered largely anecdotal in nature and lacks a rigorous orientation toward
theory development, testing, and application (Mentzer, Bienstock, & Kahn, 1995).
One of the biggest challenges logistics providers face as they provide service from
the supplier to the customer is to assess the value and impact these activities have on
overall business performance. In fact, definitive empirical results that link improvements
to logistics performance to overall firm performance have been difficult to achieve.
Although progress has been made, Bowersox noted that establishing a link between
functional logistics performance and overall firm performance in the logistics industry is
the equivalent to the medical fields dilemma of finding a cure for cancer. In other words,
there is much empirical research to be done (Bowersox, Closs, & Stank, 2000). This
research hopes to add to the body of knowledge by positing that truck drivers play a
central role in a companys assessment of service quality as these drivers deliver cargo to
the end user. Research already indicates that the attitude and actions of contact employees
can affect customers perceptions of the service. Other studies have emphasized the
influence that a service employee has on customer perceptions of service quality. Other
research indicates that employees positive and negative behaviors are highly correlated
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to the customers overall satisfaction (Kattara, Weheba, & El-said, 2008). Moreover,
research indicates that many service firms fail to deliver service quality to their customers
because their employees deliver inferior value to the end user (Scheepers, 2006).
Sheffi (1990) argued, for example, that a combination of economic, regulatory,
and technological changes would cause Third Party Logistics (3PL) services in the
United States "to experience explosive growth during the 1990s (p.28). Sheffi was
correct. Follow-up work done by Ashenbaum, Maltz, and Rabinovich (2005) showed that
annual U.S. 3PL expenditures exceeded $80 billion in 2005. Third Party Logistics
services refer to a for-hire provider performing logistics activities for the buyer or seller
of raw materials, processed foods, or finished products. The third party performs services
that might be done by the buyer or seller, and is actively engaged in the movement of
goods and information relevant to the transaction, but the third party does not take title.
As business processes become more complex and are integrated into the entire supply
chain management process, 3PLs turn out to be essential. Barks (1994) followed up on
Sheffis work by illustrating that annual expenditures for 3PL services in the United
States did not exceed $10 billion until 1993 ( p. 36). Today, by contrast, annual U.S.
3PL expenditures exceed $80 billion (Ashenbaum, Maltz, & Rabinovich, 2005).
Background Discussion on the Trucking Industry
The trucking industry is categorized into private carriage and for-hire carriage forms
(Tang & Yulong, 2002). Private carriers haul for a specific firm that owns its own fleet
(e.g., Publix grocery stores have a private fleet that delivers to their stores), and for-hire
carriers haul for multiple firms under contract or upon request. The two major divisions
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within the for-hire category of for-hire as follows: general freight hauling and specialized
freight hauling. Specialized freight trucks include tankers, refrigerated trailers, steel
carriers, dump trucks and construction vehicles. General freight hauling includes any
freight that can travel in standard road trailers. Within general freight hauling, the three
main segments are: truckload (TL) firms that haul in excess of 10,000 pounds, from the
shipper directly to the consignee; package express firms that haul shipments, letters and
boxes, that weigh, less than 150 pounds; and less-than-truckload firms that haul
shipments smaller than TL but larger than package express (Kirkeby, 2008).
Trucking has grown considerably since it began as an industry in the early 1900s
(Cantelon & Durr, 1996). The industry grew during the 1920s, competition increased, and
aggressive competition and economic reliance on trucking led to regulation. Regulation
of interstate trucking began when the Interstate Commerce Commission (ICC) was
granted authority under the Motor Carrier Act of 1935. The American Trucking
Association, the industrys lobbying group, was established in the early 1930s to promote
regulation because trucking firms were engaged in severe price wars. Until the late
1970s, most transportation was regulated because regulators perceived that pure
competition would lead to decreased safety and diminish the ability to serve the public.
Since the movement of passengers and goods is deemed essential to commerce, the
economy could not risk having reduced safety and poor service. Although the economy
continues to depend on trucks to haul the majority of commercial and retail goods, the
regulatory governance view has been replaced with a view that market forces do not lead
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to reduced safety and that they actually increase the ability to serve the public (Tang &
Yulong, 2002).
During regulation the ICC restricted routes, rates, and entry into the market. Rate
bureaus were formed to set fair rates based on weight, distance, and class. For example, a
trailer was limited in the freight that it could transport based on the volume of the truck
(physical capacity) and weight of the load (regulatory restrictions). The rate bureaus, and
now the firms attempt to price the freight based on how greatly it affects either constraint
(Kirkeby, 2008).
Classes were developed to capture the general characteristics of freight. Because
entry was also restricted, a firm could not grow unless it bought operation rights from
other firms or unless it proved that existing firms did not offer the service. The costs to
the economy of trucking regulation the included firms inability to offer flexible or
customized service and poor management of truck lines. Generally the ICC approved
rates that were 7% above operating costs for the region (Jerman & Anderson, 1994).
This lead to a disinterest in cost control by managers. Labor contracts with large wage
increases were not a problem, as firms could recoup the costs. On-time service and
customer satisfaction were often not considered in the regulated industry era (Pettus,
2001).
Description of Less Than Truckload Operations
The less than truckload (LTL) segment is organized into national, interregional,
and regional types of firms. National firms concentrate on long-haul shipments of three-
to-four-day lanes (e.g., lanes in excess of 1500 miles). Interregional firms carry freight
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between regions (Belman & Monaco, 2001). For example, they pick up shipments in the
Midwest destined for the Southeast. They concentrate on one to two day lanes of 500 to
1,000 miles. Regional firms carry all freight within a region and they primarily do all
their business overnight or the next day; their lanes are less than 500 miles (Kirkeby,
2008).
Recently, some blurring of the lines has occurred between these three types of
carriers. Most LTL firms believe that long haul and short haul cannot be effectively
handled by the same firm (Belzer, 2002) however, other firms are attempting to be the
single carriers that shippers demand. For instance, in order to reduce transportation costs,
some shippers have begun to demand that for-hire carriers remove all the freight from the
dock and take care of administration and transportation, regardless of whether their
carrier services all the locations. The carriers consign the freight for areas they do not
serve. Thus, shippers have only one firm to call and carriers subcontract (Sornn-Friese,
2005).
The following describes a typical LTL day. Beginning at noon, pick- up and
delivery drivers begin loading their trailers with freight from shippers. Some of the pick-
ups are scheduled before the driver leaves in the morning, but many are called in from
shippers while the driver is on the road making deliveries. The dispatcher receives the
pick-up requests and communicates them in some manner to the driver (the method of
contact varies quite substantially. Some terminals have RF or Nextel phones, beepers,
and alpha numeric pagers. Some still have radios, some require drivers to call in after
each stop often from the shippers phone, and others use cell phones). The driver is given
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a bill of lading. For some firms, this information is immediately transmitted back to the
terminal so they can plan where to ship the freight. Other firms wait until the drivers
return to the terminal to process the information. Once the pick-ups are complete, the
driver returns to the terminal. Some terminals have specific times after which they will
not pick up freight from a shipper. Others will never miss a pick-up (Cantelon & Durr,
1996).
Not all terminals function the same way. For a large terminal, the driver parks the
tractor and trailer in the yard and a company employee backs it up to the dock for
unloading. For small terminals, drivers back the trailer into the dock themselves and may
unload the freight as well. Once the trailer is backed up to the dock, the freight is taken
from the trailer and put onto line haul trailers to be shipped to another terminal that
evening or over the course of the next few days. A dock supervisor plans how to unload
the city trailers and load the line haul trailers. However for smaller terminals, the terminal
manager does that planning. There are several philosophies on how to organize freight for
line haul distribution. For larger hauls the hub and spoke system is commonly used. The
hub and spoke system was first used in trucking by Roadway in the 1960s (Cantelon &
Durr, 1996). The hub and spoke system was first introduced in the airline industry in
1955 by Delta Airlines. Its purpose is to route all traffic through one central hub or hubs
with very few direct routes between other destinations. Airlines used the system so
airplanes would spend less time in the air, thus reducing their costs. Trucking firms have
adopted this strategy and designate certain terminals as hubs and then have smaller, more
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fuel efficient vehicles carry the freight to their final destination (Lumsden, Fabrizio, &
Ruggeri, 1999).
Freight is constantly in transit and moving over the road from terminal to
terminal. When the freight arrives, the dockworkers break down the inbound shipments
and may be expected to coordinate pool shipments or shorter routes for the morning city
operations. Some terminals run fixed routes based on geography and re-adjust if trailers
are imbalanced. Others considered that all the inbound freight and plan routes based on
freight flow. Once the trucks are loaded, the drivers move the freight out to the customers
and deliver it. When the task is finished, the day begins again with pick-ups.
Quality Improvement Research in Logistics
Quality improvement programs in manufacturing have received much attention by
researchers, and the results achieved by these companies have been dramatic and well
documented (Wisner & Lewis, 1997). Over time, efforts to improve performance and
competitiveness have led transportation companies to implement formal quality
improvement programs as well. Limited attention has been given to the quality
improvement