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CHAPTER 1 - INTRODUCTION

1.0 Introduction

This research is a study and analysis of United Parcel Service (UPS), analyzing its customer

satisfaction and loyalty over the last few years and to forecast its future prospects as to

whether UPS can sustain and improve the level of services. The research also focuses on the

end customer needs and accordingly, changes to be considered in the global market by UPS,

if any. In this ever changing business environment of logistics and freight and air cargo

transportation, it is essential to keep one step ahead of the competitors, in terms of

technology, strategy and service dimensions (Sherden, 1998). A detailed analysis on the

current operations and services for improved customer satisfaction will also be explored.

The primary research thrust will be conducted in the domains of knowledge applicable to the

company in focus have spurred the execution of this study aimed at assessing the firm‘s

services taking a cue from its past strides. Core study objective include assessing the

hallmarks of the company‘s remarkable growth and success by conducting a review of thecompany‘s track record in various dimensions of its services and management strata. The

objectives also entail determining the company‘s probable growth and improvement in

logistics services into the future.

1.1 Background of the Study

A multitude of companies today has already identified the need to create a loyal customer

base and acknowledges that maintaining existing customers and extending business with

them is significantly less expensive than acquiring new customers. Empirical proof of the

proliferation of such customer loyalty efforts in the business world is e.g. provided in the

form of loyalty programs, which many companies have installed during the past years. By

engaging in efforts aimed at creating customer loyalty, which in turn fosters financial success

in monetary terms firms react to increasing competitive challenges.



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Within research, the investigation of customer loyalty gained importance when the classic

marketing paradigm with its instrumental and transactional orientation proved unsuitable in

the context of longer-term business relationships. Instead, the relationship marketing

approach, which is specifically concerned with the study of relational ex-changes, gained

importance within research, serving as a conceptual foundation for the majority of customer

loyalty researchers.

The question of how loyalty develops has been subject to an abundance of research, leading

to an expansive body of literature on loyalty determinants. The extant literature exploring

different factors and their constituent effects on loyalty, however, reveals a strong focus on

consumer goods and industrial equipment settings, while industrial services have received

relatively little attention so far. In addition, the majority of articles incorporates merely a few

potential determinants and thus fails to draw a comprehensive picture of the mechanisms of

customer loyalty formation.

1.1.2 Company Profile

United Parcel Service (UPS) is the world's largest package delivery company, transporting

some 15 million packages and documents per business day throughout the US and to more

than 200 countries and territories. Its delivery operations use a fleet of about 100,000 motorvehicles and about 500 aircraft. In addition to package delivery, the company offers services

such as logistics and freight forwarding through UPS Supply Chain Solutions, and less-than-

truckload (LTL) freight transportation through UPS Ground Freight. (LTL carriers combine

freight from multiple shippers into a single truckload) (www.ups.com)

Over the years, UPS has been growing at a sustained rate, and their developments and

improvements throughout are the most trusted in the industry. By the 1980‘s they had

completely captured the US markets and were entering the international shipping market.

They got established in many countries and territories of America, Europe, Middle East,

Africa and the Pacific Rim. By 1985 they had started an international air service to six

European countries, and by 1989 they had started domestic air network in Germany. Now

UPS has spread its wings over almost 185 countries worldwide. (www.highbeam.com)

1.1.3 Customer Service Management

http://www.ups.com/

http://www.ups.com/

http://www.ups.com/

http://www.highbeam.com/




http://www.ups.com/



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Just like other businesses, logistics service providers (LSPs) are faced with increasing

competitive pressure that urges them to concentrate not only on operational business

processes, but also on an efficient and effective customer management. In the US alone,

LSPs‘ revenues grew from US-$ 31 billion in 1995 to US-$ 85 billion in 2004 and logistics

outsourcing expenditures as a fraction of total logistics expenditures are at over 40% and

expected to rise even further. One way to meet this challenge of rapid growth and expansion,

according to Langley et al. is to focus on establishing, maintaining, and developing

relationships with customers.

An often proposed driver of logistics outsourcing is the need to develop and maintain

competitive advantage, which customers of LSPs intend to achieve through concentrating on

core competencies and re-engineering. Another important driver is the ongoing globalization,

which several authors regard as the most important challenge that companies are facing. In

this context, LSPs can play an important role as facilitators of global trade. Along with

globalization, however, companies that outsource logistics activities increasingly try to

consolidate the number of LSPs they use globally. Therefore, LSPs do not only have to

devise sustain-able growth strategies, but also have to develop intercultural management

competencies, a challenge hardly ad-dressed in LSP management literature.

While intercultural management deals with the influence of culture on management styles in

different countries, it is also arguable whether a one best way management paradigm is

applicable even within national confines. LSPs‘ customers are extremely diverse and

similarly, relationships between LSPs and their customers can be expected to exhibit

momentous differences. As such, it is a crucial management issue for LSPs to de-sign their

customer loyalty efforts in a manner that accounts for both cultural context and different

relationship characteristics.

1.2 Research Objectives

As outlined in the preceding section, LSPs are confronted with diverse management

challenges that result from continuous growth, globalization, and customer diversity. The aim

of the present study therefore is to identify determinants of customer loyalty in relationships

between LSPs and their customers by explicitly considering different characteristics and

cultural contexts of such relationships. In this sense, the present research is positioned at the

interface of marketing and logistics and is intended to contribute not only to logisticsresearch, but also to research in marketing, customer loyalty, and cultural studies.



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In order to address the concept of customer loyalty, it is important to understand the

mechanisms underlying loyalty in the logistics outsourcing context. For this reason, the

starting point of the present research will be the study of Wallenburg, who studied customer

loyalty within relationships between LSPs and their customers. On this basis, factors that can

be surmised to determine customer loyalty in such relationships will be proposed and

interdependencies between these factors will be identified. The resulting comprehensive

explanatory model of customer loyalty will not only provide insights into the constitution of

customer loyalty, but will also serve as the basis for subsequent analyses.

As stated previously, a globalizing marketplace and the need of LSPs to render logistics

services on an international scale requires intercultural management competencies. Before

being able to apply such management techniques, though, a thorough understanding of

cultural differences between different countries is necessary. The present study will therefore

provide a starting point for such analyses by investigating cultural differences between two

important markets for logistics outsourcing, the USA and Germany. Particular differences

between Germany and the USA will be identified and applied to the previously devised

customer loyalty model. As a result, differences between the two countries with respect to the

formation of customer loyalty can be inferred.

Finally, this study will investigate in how far different relationship conditions influence the

development of customer loyalty. For this purpose, important relationship characteristics will

be identified and their moderating influences on the customer loyalty model will be

examined. This will provide information on the robustness of the customer loyalty model

versus relational contingencies and will suggest if it is necessary to differentiate customer

loyalty efforts accordingly.

1.2.1 UPS Prospects

UPS has a great track record of success having reached its centenary in 2007. The

company‘s capacity and prowess to weather various previous financial turmoil including the

great depression, shows that historically its business operations are secure and thus likely to

be able to adapt and survive the recession. The environment provides an impetus for

continual development and strategy of self reflection and change within the company whilst

maintaining its level of services over the longer term. (www.ersa.com)

http://www.ersa.com/






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1.3 Customer Satisfaction and Loyalty Concepts

The term logistics is often misinterpreted to mean transportation. In fact, the scope of

logistics goes well beyond transportation. Logistics forms the system that ensures the

delivery of the product in the entire supply pipeline. This includes transportation, packaging,

storage and handling methods, and information flow. The impact of logistics in the ability of

a company to satisfy its customers cannot be overstated. All other efforts at modernization

within a company would not bear fruit until the logistics system is carefully designed to

facilitate the smooth and efficient flow of goods in the system.

Reviewing research, it becomes obvious that the notion of customer loyalty is blurred. At its

core, customer loyalty deals with relationships between suppliers and their customers and can

be distinguished from other loyalty aspects, such as brand loyalty, which refer to a more

abstract attachment, such as that towards a brand. Within German customer loyalty literature,

the notion of customer loyalty is even more faceted, encompasses both ‗customer loyalty‘ and

‗customer retention‘ distinguishes an active, supplier-focused component and a passive,

customer focused component of customer loyalty.

In the supplier-focused perspective, customer loyalty is seen as a bundle of measures that aim

at improving relationships with customers. The supplier is in the centre of attention and the

customer is only regarded as the factor at which success of customer loyalty becomes

manifest. Here it becomes clear that this approach contains a conceptual deficit. It is the

customer who eventually decides on whether customer loyalty management is successful or

not, because all activities undertaken by a supplier can only be geared at influencing

customers to be loyal. A customer-focused perspective therefore has to be added to evaluate

the success of customer loyalty management.

Within the customer-focused perspective, customer loyalty is conceptualized taking into

account customers‘ complex characteristics. These can either be approached as customers‘

directly observable actions and/or take into account their attitudes and intentions. Since

customers‘ actions are directly influenced by their attitudes and intentions, it is obvious that

these have to be scrutinized to understand and manage loyalty. A third perspective is asynthesis of the former two approaches. The relationship-focused perspective directly



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examines the relationship between suppliers and customers. Accordingly, the objects of study

in this perspective usually are buying behaviour in retail contexts and long-term relationships

marked by frequent interaction between suppliers and buyers in industrial contexts.

1.4 Rationale of the Study

United Parcel Service (UPS) is the world's largest package delivery company with operations

extending to over 200 countries. There is a tremendous potential for market growth, if the

resources, operations and services are managed appropriately. The growth rate of UPS is

noticeable, and one of the major aspects contributing towards its growth is its efficient

customer service management. The resource has furnished the scope of its study withvaluable perspectives on customer services management in relation to various organizational

management components for national and multinational companies. Since it is this service

segment that has a direct effect on the company‘s profits and cost str ucture, the study related

to customer service management at UPS holds significant impact.

1.5 Statement of the Problem

Logistics services are one of the most important segments for most of the businesses around

the world. High competition is observed among the various companies providing effective

logistics services (Adler, 2001). It is essential to keep one step ahead of the competitors, in

terms of technology, strategy, product and service specifications (Rackham, 1998). There has

been technological and strategic changes in UPS over the years, and these changes have a

significant effect on the growth and improvement of UPS. There will be a number of

strategic key point indicators that are directly responsible in terms of the company‘s growth

strategies. It is also important to understand as to how organizations develop and implement

various principles and procedures to assess their services. These principles and procedures

are directly proportional to the various changes that take place within the sphere of their

operations. Very few previous researches have shed light on these factors, and hence an in

depth understanding will be gained through this study. The aim of this research is to identify

factors that are directly related to the customer service management of UPS.





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CHAPTER 2 – LITERATURE REVIEW

2.0 Introduction

The author realizes that research exercise is not being conducted in vacuum. The research

exercise fits into a broad body of knowledge which has had numerous contributions from

various scholars, researchers, professionals and students who have carried similar or related

research exercises. Additionally, the scope and objectives of this research endeavour occurs

within related and implied theoretical, ideological and philosophical frameworks; which

largely influence the various disciplines of business.

As such the author is spurred to consider the multiple contributions relevant and

related to this research endeavour. The author will present a literature review in order

to broaden the confines of the knowledge needed and acquired for this dissertation.

2.1 Customer Satisfaction

The term logistics is often misinterpreted to mean transportation. In fact, the scope of

logistics goes well beyond transportation (Evans et al, 2009). Logistics forms the system that

ensures the delivery of the product in the entire supply pipeline. This includes transportation,

packaging, storage and handling methods, and information flow (Whittington, 2000). The

impact of logistics in the ability of a company to satisfy its customers cannot be overstated.

All other efforts at modernization within a company would not bear fruit until the logistics

system is carefully designed to facilitate the smooth and efficient flow of goods in the system

(Dyche, 2002).

There have been some companies that have done work in this area, but a large number of

companies are only now beginning to realize the benefits of designing and managing the

entire supply chain. With India joining the global marketplace, the role of logistics assumes

greater importance (Stock & Lambert, 2001).

According to Schiffman & Kanuk (2004), the industrial policies in UK have prompted

manufacturers to build plants in remote, backward areas due to inexpensive land and tax

benefits. This poses some serious logistical problems. Apart from a road and transportation

network, the existing communications system in UK leaves a lot to be desired by any

international standard (Christopher, 2002). It is in this context that logistics has to be

considered in UK.





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activities directed toward establishing, developing, and maintaining successful relational

exchanges.‖ Therefore, the relationship marketing approach provides a suitable environment

in which customer loyalty research can be nested (Johnson & Schools, 2002).

While the development of relationship marketing began in the early 1970s, it was not until

the late 1980s that works from the ‗Nordic School of Services‘, initiated a paradigm shift that

geared marketing towards the creation, conservation, and extension of buyer-seller

relationships (Cousins, 2005). Although relationship marketing today is widely accepted

among marketing researchers, its promoters do not postulate the replacement of the

transactional approach, but rather juxtapose the two approaches (Christopher, 2002). For

example, delineates a strategy continuum, in which different goods require different degrees

of transaction- and relationship-based marketing strategies (Stock & Lambert, 2001). As a

result of the focus on relationships in marketing research, customer loyalty gained importance

within research.

Before determining which stream the present study can be associated with, however, it is

important to create a clear understanding of different customer loyalty concepts prevalent in

research. This will be accomplished in the following section.

2.3 Customer Loyalty Concepts

Reviewing research, it becomes obvious that the notion of customer loyalty is blurred. At its

core, customer loyalty deals with relationships between suppliers and their customers and can

be distinguished from other loyalty aspects, such as brand loyalty, which refer to a more

abstract attachment, such as that towards a brand (Johnston & Clark, 2005). Within German

customer loyalty literature, the notion of customer loyalty is even more faceted, encompasses

both ‗customer loyalty‘ and ‗customer retention‘ distinguishes an active, supplier -focused

component and a passive, customer focused component of customer loyalty (Johnson &

Schools, 2002).

In the supplier-focused perspective, customer loyalty is seen as a bundle of measures that aim

at improving relationships with customers (Whittington, 2000). The supplier is in the centre

of attention and the customer is only regarded as the factor at which success of customer

loyalty becomes manifest (Harrison & Remko, 2008). Here it becomes clear that thisapproach contains a conceptual deficit. It is the customer who eventually decides on whether



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customer loyalty management is successful or not, because all activities undertaken by a

supplier can only be geared at influencing customers to be loyal (Dyche, 2002). A customer-

focused perspective therefore has to be added to evaluate the success of customer loyalty

management (Evans et al, 2009).

Within the customer-focused perspective, customer loyalty is conceptualized taking into

account customers‘ complex characteristics. These can either be approached as customers‘

directly observable actions and/or take into account their attitudes and intentions (Arnold et

al, 2002). Since customers‘ actions are directly influenced by their attitudes and intentions, it

is obvious that these have to be scrutinized to understand and manage loyalty (Schiffman &

Kanuk, 2004). A third perspective is a synthesis of the former two approaches. The

relationship-focused perspective directly examines the relationship between suppliers and

customers. Accordingly, the objects of study in this perspective usually are buying behaviour

in retail contexts and long-term relationships marked by frequent interaction between

suppliers and buyers in industrial contexts.

It is clear that the supplier-focused perspective with its instrumental approach is significantly

different from the other two approaches. Distinguishing the customer- and the relationship-

focused perspective, however, is difficult, because both focus on the customer (Johnston &

Clark, 2005).

2.4 Behaviourist customer loyalty concepts

Behaviourist concepts of customer loyalty have been at the core of early marketing research

and focus on customers‘ observable behaviour, as e.g. in purchasing behaviour. Accordingly,

customer loyalty is established, when customers demonstrate consistency in their choice of

supplier or brand (Berry, 2005). ―Hard-core‖ loyalty, when one product alternative is

exclusively repurchased and of ―reinforcing‖ loyalty, when customers switch among brands

but repeat-purchase one or more alternatives to a significant extent (Cousins, 2005).

Similarly, customer loyalty as ―the proportion of times a purchaser chooses the same product

or service in a specific category compared to the total number of purchases made by the

purchaser in that category.‖ (Johnston & Clark, 2005) Pegging customer loyalty to

purchasing behaviour, however, is very critical; there can be a multitude of factors affecting

purchasing behaviour, such as product availability or special deals, which are not grasped by



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looking at purchases alone. A main deficit of the behaviouristic approach thus is that it does

not look at the drivers‘ behind purchasing behaviour (Christopher, 2002).

Another disadvantage of behaviouristic customer loyalty concepts is their ex-post approach

(Cousins, 2005). When loyalty is only expressed through purchases, information on

customers‘ actual loyalty status in between purchases is not available. Consequently,

decreasing loyalty is only recognized after it manifests itself through changed purchasing

behaviour (Harrison & Remko, 2008). Only in relationships with frequent interaction can a

supplier integrate further aspects, such as complaints, into customer loyalty management. The

reason, why behaviouristic concepts may still be valuable, is because the measurement of

customer loyalty in this approach does not necessitate involvement by the customer (Payne et

al, 1995). The assessment of attitudes and intentions would always imply customers‘

cooperation through participation in surveys. By simply recording purchases, e.g. through

delivery records in the industrial context or customer cards in a consumer context; the

assessment of customer loyalty poses little difficulty (Johnson & Schools, 2002). Particularly

in areas, where most purchases can be easily ascribed to individual customers, as is the case

with mail-ordering or book-stores on the internet, the behaviouristic approach is useful for

identifying different customer groups and their characteristics (Berry, 2005). Such firms,

however, can only assess purchases of their own products, while purchases of competingproducts go unnoticed. Firms can therefore neither draw conclusions about relative changes

of purchasing behaviours, nor evaluate their comparative market position (Arnold et al,

2002).

2.5 Neo-behaviourist customer loyalty concepts

―These narrow technical definitions do not adequately capture the richness and depth of the

loyalty construct implicit in a relational framework.‖ (Schiffman & Kanuk, 2004)

Consequently, neo-behaviouristic customer loyalty concepts start at the shortcomings of the

behaviouristic approach by examining the causes of loyalty (Arnold et al, 2002). As early as

1969, Day concluded that ―loyalty should be evaluated with both attitudinal and behavioural

criteria‖ otherwise accidental repeat-purchases, merely resulting from situational exigencies,

would be regarded as indicators of loyalty (Christopher, 2002). There is no agreement,

however, on the question, whether attitudes are part of customer loyalty or merely an

antecedent of it. Some authors propose that only positive attitude can lead to ‗true‘ customer

loyalty. If attitude then is a necessary prerequisite of customer loyalty, some drivers of



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loyalty cannot be explained (Harrison & Remko, 2008). Transaction cost theory, for instance,

provides the concept of asset specificity (Stock & Lambert, 2001). Relationship-specific

investments create economic switching barriers and therefore increase customer loyalty.

However, the mere repeat purchase of goods or services for reasons of economic constraints

would not qualify as loyalty, as positive attitudes are not involved (Fitzsimmons, 2006). In

order to avoid the outlined problem, it is useful to abstain from defining positive attitude to

be a necessary antecedent of loyalty. Instead, researchers usually consider intentions and

observable behaviour to be the constituting elements of customer loyalty (Harrison & Remko,

2008).

2.6 Logistics

After having presented the necessary fundamentals of customer loyalty in the preceding

section, this section will elaborate on the reference point of the research project, i.e. logistics.

For that, the first section will present different views on logistics and lay the notional basis

for the understanding of logistics embraced in this study. As relationships between logistics

service providers and their customers are to be analyzed, the logistics outsourcing

phenomenon will be detailed, before taxonomy of logistics service providers is provided.

2.7 Nature of Logistics

Logistics is an established discipline both in theory and in practice, yet there is no agreement

on a universal definition of logistics (Parasuram & Grewal, 2000). One widely accepted view

stems from the Council of Supply Chain Management Professionals (CSCMP). In their latest

definition (CSCMP 2005), logistics management is seen as ―that part of Supply Chain

Management that plans, implements, and controls the efficient, effective forward and reverses

flow and storage of goods, services and related information between the point of origin and

the point of consumption in order to meet customers' requirements.‖ This view is clearly

marked by the economic objectives of effectiveness and efficiency and regards logistics as

part of supply chain management (Cousins, 2005).

Other definitions, e.g. which of Weber and Kummer, are broader and refer to logistics as a

flow-oriented design of all value-creation processes. At the base of their understanding is the



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empirically backed assumption that there are different stages of maturity in logistics (Berry,

2005). While there are several researchers that also argue for stage models of logistics

development, there is no unity as to how many stages such a model has. The model that will

be briefly examined in this section stems from Weber, who identifies four maturity stages.

These stages are determined by the level of logistics knowledge present in a firm and require

path-dependent development from the lowest to the highest level of logistics knowledge:

In the first maturity stage, logistics is a specialized service function that provides

transportation, handling, and storage services that are necessary for an efficient flow of

materials and goods (Dyche, 2002). Weber states that this stage of logistics maturity was first

observable in the 1950s, when markets changed from suppliers‘ to buyers‘ markets , requiring

improved materials flows to succeed in the changed market environment. This is in line with

Bowersox and Daugherty, who confirm that advanced logistical organizations barely existed

at that time. Effects of this paradigm-change were two-fold. On the one hand, logistics

optimization was achieved through process improvements and advances in forecasting and

planning techniques (Arnold et al, 2002). On the other hand, organizational changes took

place, as many companies institutionalized their logistics functions in dedicated departments

and therefore created a specialized service function that was separated from other functions

such as procurement or manufacturing (Johnson & Schools, 2002).

The second stage of logistics maturity was initiated by contextual changes in the economic

environment. In addition, advances in technology facilitated communication and networks

between different departments in companies‘ state (Johnston & Clark, 2005). As a result,

firms realized that efficiency could be increased by improving the coordination of materials

flows from inbound streams in procurement through the value creation process in

manufacturing to outbound streams in distribution (Harrison & Remko, 2008). Through this

focus on the integration of different functions, cost and performance benefits were achieved

(Christopher, 2002). Weber provides coordination of lot-sizes and just-in-time supply and

production as examples of these benefits.

The following third stage of logistics maturity was necessitated by further changes of the

market environment. Simon points out that the intensity of competition increased, an effect

attributable to over-capacities, and a world-wide convergence of product quality, shortened

product-life-cycles, and a strengthened focus on customer demands. The required

simultaneous focus on differentiation and cost leadership was not feasible under the prevalent



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functional structures and rigid organizational systems (Fitzsimmons, 2006). Instead, a

process-oriented intra-company value chain that reduces complexity was needed to succeed

in the changing market environment (Schiffman & Kanuk, 2004). Hence, logistics evolved

from a mere functional concept to a management concept or, as from operational to strategic

orientation.

The fourth and, for the time being, last maturity stage of logistics development is again

driven by market pressures (Payne et al, 1995). When companies realized that optimization

potentials within the organization had been largely exploited, the focus of attention was

furthered to include upstream and downstream partners in the supply chain (Cousins, 2005).

In this sense, the view of logistics as a management concept from the third maturity stage is

ex-tended over company boundaries and can be labelled supply chain management (SCM)

(Parasuram & Grewal, 2000).

This underlines the outstanding importance of logistics for companies, which can realize

significant economic benefits by allocating management capacities to the improvement of

logistics and the creation of flow-oriented organizations (Johnston & Clark, 2005). A way, in

which many companies presently try to accomplish this, is by outsourcing parts or all of their

logistics activities to third parties (Evans et al, 2009).

2.8 Logistics Service Providers (LSP)

If a company employs an outside provider to perform some or all of its logistics activities,

this outside provider is termed a logistics service provider (Stock & Lambert, 2001). These

LSPs were originally only offering a very narrow spectrum of services, mainly consisting of

transportation or warehousing services (Berry, 2005). In order to react to changing demands

from their customers, as pointed out in the preceding sections, LSPs have started to offer

integrated service portfolios that include a multitude of different services (Christopher, 2002).

According to, five types of LSPs can currently be distinguished: carriers, couriers & express

& parcel/postal (CEP), freight forwarders, third-party LSPs (3PLs), and fourth-party LSPs

(4PLs), which will be briefly described below (Harrison & Remko, 2008).

Carriers are firms that own assets for transportation purposes. These as-sets are usually

confined to road, sea, air, or rail transportation. In some cases, however, carriers own severalof the aforementioned transportation assets (Harrison & Remko, 2008). Management of



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capacity and load-factor optimization are at the core of the carrier business. CEP providers

are also transportation providers (Arnold et al, 2002). As opposed to carriers, CEP providers

send parcels or mail though their networks, employing different transportation vehicles and

incorporating handling at hubs (Fitzsimmons, 2006). In this way, they can virtually supply

door-to-door services anywhere in the world, without having to rely on any third parties

(Dyche, 2002). Core competencies of CEP providers are the operation and management of

highly complex distribution networks (Cousins, 2005).

Freight forwarders are intermediaries between suppliers and buyers of transportation services

(Johnston & Clark, 2005). In most cases, brokers carry out additional ser-vices, such as

transportation planning and management, including the associated provision of information

systems (Parasuram & Grewal, 2000). In some cases, brokers also dispose of their own

transportation assets. Bundling and coordination of demand for transportation services are the

core competencies of brokers (Christopher, 2002).

In contrast to the aforementioned LSPs, 3PLs or contract LSPs offer their customers logistics

solutions that often include management capacities. These solutions most commonly include

several services, such as warehousing and pick/pack operations that are carried out on alonger-term contractual basis (Whittington, 2000). Sometimes, customers‘ value chains, such

as fleet management, order handling, complaints management, call centres, or assembly

services (Berry, 2005). A recent addition to the list of types of LSPs comes in the form of

4PLs. While there is no universal agreement on the definition of the 4PL, the cur-rent state of

the debate establishes 4PLs as suppliers of complete logistics systems, without carrying out

the services themselves (Fitzsimmons, 2006). Instead, 4PLs sub-contract all operations from

other LSPs and confine themselves to the management of logistics systems. Thus, they do not

dispose of any logistical assets and are a neutral intermediary between businesses and asset-

based LSPs (Johnson & Schools, 2002).

As 3PLs form the point of reference for logistics outsourcing as dealt with in this study, the

existing notional ambiguities in research have to be examined. Author to identify different

types of 3PLs, to him, there are four distinct classes of 3PLs:

(1) Asset-based 3PLs use their own assets (e.g. trucks and warehouses) to offer dedicated

logistics services;



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(2) Management-based 3PLs supply logistics management through information systems or

consulting;

(3) Integrated 3PLs use their own assets to provide logistics services, but also subcontract

from other vendors if necessary; and

(4) Administration-based 3PLs mainly offer administrative management (e.g. Freight

Payment) (Christopher, 2002)

2.9 THEORETICAL FRAMEWORK

2.9.1 Social Exchange Theory

Social exchange theory deals with ―the relational interdependence, or relational contract, that

develops over time through the interactions of the ex-change partners.‖ While this concept

has only entered marketing theory in the 1980s, the discussion goes as far back as to the

Greek philosopher Aristotle, who distinguished social exchange from economic exchange in

his Nicomachean Ethics. Later, sociologists such as Blau and Emerson, as well as social

psychologists such as Thibaut and Kelley worked on the concept of social exchange.

On the basis of a thorough investigation of social exchange literature, Lambe, Wittmann, and

Spekman summarize the following four foundational premises of social exchange theory,

which will be detailed below:

• Exchange interactions result in economic and/or social outcomes,

• These outcomes are compared over time to other exchange alternatives to determine

dependence on the exchange relationship

• Positive outcomes over times increase firms‘ trust of their trading partner(s) and their

commitment to the exchange relationship, and

• Positive exchange interactions over time produce relational exchange norms that govern the

exchange relationship.



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In contrast to pure economic theories, social exchange theory thus incorporates both

economic and social outcomes, highlighting the fact that social as well as economic

considerations are made when evaluating the value of relationships (Harrison & Remko,

2008). This value results from an assessment of both utilities and costs of a relationship, and

parties will choose to uphold a relationship as long as the cost-utility-ratio is satisfactory

(Christopher, 2002). The exact composition of utilities and costs varies from individual to

individual, and more emphasis may be put on either social or economic aspects (Arnold et al,

2002).

When appraising the value of a relationship, parties will not only consider current and past

costs and utilities, but also potential future benefits, and may forego present benefits for

benefits in the future (Harrison & Remko, 2008). Therefore, an important factor in social

exchange theory is trust, which results from multiple and beneficial interactions over time.

Only if the trading partner is trusted, will one be willing to reciprocate the abdication of

current benefits for future benefits (Whittington, 2000). Another important aspect of social

exchange theory is commitment, which is fostered by trust. This causal relationship between

trust and commitment is based on the principle of generalized reciprocity, because

commitment entails vulnerability and parties will seek only trustworthy partners (Johnson &

Schools, 2002).

Social exchange theory‘s foundational premises indicate that relation-ships are not only

governed by contracts, but also by norms, which develop as a consequence of repeated

interaction and ―increase the efficiency of relationships because by agreeing to the manner in

which interactions take place, the degree of uncertainty may be reduced.‖ As with trust,

norms are adhered to because rewards are expected (Parasuram & Grewal, 2000).

While social exchange theory can be very useful conceptually, it is mainly criticized for its

lack of empirical foundation. Factors such as commitment and trust should be able to

substitute (at least in part) contractual governance structures, but this cannot be confirmed

empirically. Presumably, this is attributable to social exchange theory‘s neglect of

opportunism (Berry, 2005).



19

2.9.2 Equity Theory

Equity theory represents an extension of social exchange theory by adding the aspect of

fairness. While the concept dates back to Homans, equity theory was primarily coined by

Adams. At that time referred to as ―theory of inequity‖, it was introduced to explain wage

inequities (Johnson & Schools, 2002). The basic assumption underlying equity theory is that

each party in a relationship compares its input-output-ratio to that of the other party (Evans et

al, 2009). Analogous to social exchange theory as well as economic considerations are

incorporated in the evaluation of fairness.

In case the ratio is balanced, the perception of being fairly treated is conveyed. Otherwise,

one feels unfairly treated, arousing distress for both the over-benefited and the under-

benefited parties, which may lead to emotional and behavioural consequences (Parasuram &

Grewal, 2000). In order to re-create fairness, parties can change their inputs, adjust their

expectations, influence the other party, or terminate the relationship (Harrison & Remko,

2008).

As in social exchange theory, the input-output-ratios of the involved parties do not have to be

in balance at any given time. Instead, parties must trust that outcomes be split equitably in the

long-run (Schiffman & Kanuk, 2004).



20

Figure: 1 Adam’s Equity Theory based on Maslow’s Hierarchy of Needs

(Source: Alan Chapman, 2001)

2.9.3 Commitment Trust Theory

Morgan and Hunt in 1994 first introduced commitment trust theory in their article on

successful relationship marketing. According to them, commitment and trust function as key

mediating variables between five antecedents (relationship termination costs, relationship

benefits, shared values, and opportunistic behaviour) and five outcomes (acquiescence,propensity to leave, cooperation, functional conflict, and decision-making uncertainty). By

highlighting commitment and trust, Morgan and Hunt‘s theory is based on the fundamental

ideas of social exchange theory. At the same time, one of the major deficits of social

exchange theory is addressed by allowing for opportunistic behaviour.

Considerations by Morgan and Hunt were spurred by a shift in marketing research and

practice away from a mere transactional focus towards the relationship marketing approach,

according to which all marketing activities are supposed to establish, develop, and maintain

successful relational exchanges. While Morgan and Hunt ac-knowledge that many contextual

factors determine the success or failure of relationship marketing efforts, commitment and

trust are seen as key, be-cause they can establish relational governance norms. As such,

commitment and trust can encourage cooperative behaviour aimed at preserving relationship

investments, mitigate the risk of choosing attractive short-term alternatives despite of

expected long-term benefits with existing exchange partners, and can make high-risk actions

appear more attractive, because exchange partners are not feared to act opportunistically.

―Therefore, when both commitment and trust – not just one or the other – are present, they

produce outcomes that promote efficiency, productivity, and effectiveness.‖ (Stock &

Lambert, 2001)



21

Figure: 2 Commitment Trust Theory

Customer-related determinants are mainly influenced by customers‘ characteristics. In this

respect, affect and involvement, and consequently also the importance of the good or service

to the customer, are important (Whittington, 2000). In addition to the above delineated areas,

the effects of the market environment and competition are researched, as is the link between

satisfaction and loyalty, which plays an important role in the research of customer loyalty and

is often placed in one of the three dimensions. However, as most other determinants influence

satisfaction, it cannot be clearly separated and should therefore be listed as a distinct category

(Dyche, 2002).



22

CHAPTER 3 – RESEARCH METHODOLOGY

3.0 Introduction

The research method used for this research study will be described and the method employedfor this study will also be explained in this chapter. Research philosophy, research strategy

and data collection methods, research approach and the approach used for analysis will be

explained further in this chapter. Moreover, collection of the data, analysis sampling

techniques employed are described. Finally, validity and reliability of the study will be

presented.

3.1 Research Philosophies

Unique approach has been adopted for this research. Many authors such as Sparks (1992) and

Finn et al (2000) and Veal (2006) suggests the phenomenological or explanatory approach

analyses data from the individuals involved point of view. Within the interviews that were

conducted, questions were framed in order to gather data from the participant perspective.

Questionable Herzberg et al used a similar method. Were individuals are asked questions in

which they had to reply from their own experience. (Rellinson et al, 2002) (See chapter two).

More on interviews will be discussed within the following section.

The phenomenological approach entails the belief that an individual‘s behaviour is pertinent

to how that individual seeks to interpret their own existence (Finn et al, 2000).

Therefore individual experiences are unusual (Finn et al, 2000). This approach also aims to

make trends and discuss how they linked with each other (Veal, 2006). Within the data

analysis this approach will be noticeable. Human behaviour is examine from subjective

point of view in this approach main point to recognize the questionable phenomenon from

the point of view of individual (Finn et al, 2000). Qualitative method of research is also

related to this approach (Finn et al, 2000).

3.2 Research Approach

Henderson (1990) indicated by Finn et al (2000) notes that qualitative data is related with

meanings of words and developing theory. And the quantitative is related with numbers and

theory confirmation. The pattern of qualitative research, the method which incorporates



23

looking for patterns and themes within research data, is convenient in establishing theories.

(Creswell, 2003)

For responding the interview question qualitative data was gathered within this research

because the approach was to record patterns and themes there has been an argument that this

research used a mix method of research, as (Creswell 2003) he has suggested that in mix

method of research open and closed questions are involved. It has also been seen that

maximum questions are open questions, which are linked to qualitative approach according to

(Creswell 2003).

As per suggested by Silverman (2000) he has contradicted that quantitative method of

research is a short term solution, because it has been said that it has very minimum

interaction with individuals involved in study.

According to Silverman (2000) he has suggested that qualitative method of research is better

than quantitative as it focuses on analysing words rather than numbers.

And it has also been disliked by because of explanation of data by authors may not be fully

true (Silverman, 2000). Some may ignore data if it is not fully understandable this may

happen because the researcher might have collected the similar themes in the feedback

(Silverman, 2000). Careful consideration has been made when scrutinizing the primary data f

or the research, regular themes were scrutinized, however the less predicted responses that

come up once or twice has been still consider when analysing the data.(see chapter four).

It will be converse in the next section, this research was organised and it was lacking a

structured interviews which are connected to qualitative research (Finn et al, 2000). Therefore

this research takes into considerations aspects of ethnographic findings (Finn et al, 2000) ,

However according to Swetnam,(2000)ethnographic method of finding has been disliked. It

has been contradicted that ethnographic research can‘t be broadly estimated and it do not

involve scientific data Sweatnam,(2000). Due to the above criticism it has been advised that

using undersized samples provides improper data and researcher may influence candidates

and may give bias result .Sweatnam,(2000)

Contrary to argument ethnographic research is more relevant to reality as it tries to analyse

why a particular individual act in a certain (Sweatnam, 2000). This would be extremely

important in order to know what motivates UPS employees and how their encouragement iseffected within the work environment.



24

Finn et al (2000) adv ice researchers to keep an open mind in regards to the approaches. This

theory is acceptable reason is combination of methods used within its research.

For Example to two types of method were used one is qualitative method of research and the

other phenomenological approach were used.

3.3 Data Collection Methods

Veal (2006) emphasizes the benefits of using existing literature in research projects. The

Literature furnishes understanding and knowledge for the research (Veal, 2006). According

to this theory it is significance to use existing literature for the success of the research project.

In order to critically examine theories and planning‘s use UPS can use, to encourage and

satisfy their employees, existing literatures were examined critically of employee motivation

to confirm and build theory. For critically assessing secondary data on the advantage for the

workers or motivating staff analysing existing literature was partly used.(Refer Chapter

Two). As previously converse, the other method was used to collecting the primary data was

face to face discussion technique. (Finn et al, 2000). Finn et al (2000) states one is structured,

semi-structured and the last is unstructured interviews.

The type of interview was unstructured interview which was selected to use. According to

Finn et al (2000:75), this type of interview aims,

―To understand the perspective of the interviewee and the meanings that the interviewee

attaches to situations and contexts important to him or her‖.

Research aims to gather data therefore this method of interview was used, suitable to the

employees‘ views and feelings about motivation at work, which then, can be investigated and

examined. Linked to ethnographic research it is qualitative data this type of interview aimed

to collect such data.(Finn et al, 2000).

As per Veal (2006), it is advice able that interview questions should be described in the form

of pilot interview. It may resolve the problems of wording the questions so it can be attained

before the complete interview procedure starts. In order to check the questions are right to

replenish the information required for the research and responses to the questions can be

judge and assessment can be done it is vital to pilot the interview (Cottrell, 2003). A decisionwas taken to combine a few questions together and it was found that the participant‘s natural



25

responses seemed to answer the following question, before it was actually asked this is the

result of pilot process.

In gathering primary data technique of unstructured interview is vital as it attempts to gather

information from the interviewee‘s point of view (Finn et al, 2000).

As per Finn et al (2000), an unstructured conduction of interview is also termed as a

qualitative interview. For producing data about the participant‘s opinion and perceptions

qualitative interviews are important tool (Mason, 2002).

This was applicable in understandings employees‘ benefits from been inspire and also

whether or not employees within UPS in UK, are reasonably inspired because the interview

furnished qualitative data from the individual point of view.

As per Creswell (2003) the interview technique is useful because it makes possible the

research conductor to have a complete set of questions which respondents will answer. This

advised that gives the research conductor power to supervise and control the course of the

interview (Cresswell, 2003). Interview techniques are vital it can be utilised to acquire the

information required when the participant can‘t be perceived (Creswell, 2003). This suggestsit may have been caused difficulties and inconvenience to watch employees while doing their

duties, to gather data about their motivation, in such a case unstructured interviews is logical

option.

Veal (2000) to collect a huge quantity of data from a few individuals Veal argues that

interviews are a better source of information collection .The Theory explains that the

information collected from interviews is of a big quantity so there will be enough of data to

analyse (Veal ,2006). On the other side as per Finn et al (2000), since unstructured interviews

permits the feedback givers to express their opinion in a way they like in the way they are

comfortable , the data judging becomes more complex because responses may differ

significantly.

As per Veal (2006) for the researcher it becomes very effective when there is tape recording

is done for the purpose of research. If the data is tape recorded it becomes much more easier

for the researcher because recorded data that is responses can be listen word for word on

multiple times (Veal, 2006). During the pilot interview, some candidate felt uncomfortable



26

because they have been taped recorded and likes the conductor to jot down the written nodes

. It has been advised that some individuals may disagree or may not have been able to

communicate themselves accurately when tape recording is used (Veal, 2006)

As per Cottrell (2003) face to face interviews with many candidates is much more effective

if they match as possible each time to confirm results are trustful. Therefore instead of

recording some of the interviews written notes were taken. By doing this researchers was able

to write down the information adequately and gathered important data all the respondents

were informed about what the data will be used for.

As per Rudestam et al (2001), ‗Critical event interviews‘ are also famous form of interview.

In the case of critical event interview in this interviewing process interviewer ask the the

person who has participated questions about important times within their experience

(Rudestam et al, 2001). While interviewing the respondents some questions are thrown about

their significant times within their career path (Rudestam et al, 2001). When respondents felt

that they are feeling predominantly good or mostly bad, in order to judge that weather they

are inspired by particular factors and if correlates to the theory.

It is very vital to ask questions about the participant‘s personal life experiences within

qualitative interviews, as opposite to hypothetical questions, if research aims to find therespondents original views and perceptions (Mason, 2002).

3.4 Sampling Approach

Mason (2002) says that it can be very hard to gather information from everyone that is related

to the study; therefore there is a need of picking up a sample from a population. For example,

it would be hard to attempt to interview every single staff or patron associated with the UPS

offices across the nation. According to the data there are many UPS offices within the nation.

From that population, a few UPS centres were selected at random to conduct the unstructured

interviews to gather data.

The chosen sample was a qualitative research sample according to Mason (2002) qualitative

research are not very lengthy they are concise, because lengthy samples can be very costly

and consumes too much time , qualitative research may save some time. This suggests that if

selected samples are too big will add additional cost to the researcher. Finn et al (2000) figure



27

out that applying a sampling technique in comparison to the whole population will be

inexpensive. Therefore the above sample was suitable to use in this research because of time

and cost issue.

However, many authors such as Finn et al (2000), Swetnam (2000) and Veal (2006) advised

that bigger samples raise the chances of the study been most convincing. Veal (2006) also

notes that if sample size is to short in comparison to the population then the study could be

referred as bias. This research attempts to undertake a larger sample size as possible however

, As per Finn et al (2000), the research conductor can only choose a sample size that can

access resources enables the researcher to do.

In this research the ‗Criterion‘ qualitative sampling type was used. As per Veal (2006), this

type of sampling technique includes selecting to gather information from people with set

criteria, which are staffs and patrons from same firm. This research selects to gather data

from sample of patrons from UPS centres, in order to explain find customer satisfaction and

loyalty levels.

According to Veal (2006) while finalising what size of sample should be considered three

factors should be kept in mind, The First one is the level of preciseness, second the amount of

data of proposed analysis and the amount of monetary requirement researcher has to accountfor Veal (2006). According to Finn et al (2000), the level of preciseness dependent on how

much inaccurateness can be put up with. Therefore theories recommend that if the sample

gathered does not show the true views and opinions of the people that were sampled, the level

of preciseness will be low (Finn et al,2000).If the sample size does not have correct level of

accuracy the may be a concern for researcher (Finn et al 2000). However, this research had

gathered various types of feedback which was scrutinized and that‘s why there is a strong

belief that this research has correct opinion and views of UPS employees. Veal (2006) also

questions that the quantity of information that the samples chosen can give in order to be

judge is a very important consideration when confirming the sample size. If sample is enough

to give enough information to compare, then this should provide good data to analyse (Veal,

2006).

When organising research where funds are concern it is vital that the researcher does not

spend too much on giving a large sample when a smaller sample could provide valuable data

(Veal, 2006). However, few researchers may be pressured into gathering data from a smallsample in if they have less money to gather from a larger sample, because of this it may make



28

the information been unrealisable Veal (2006). Within this research, there was one set of

questions in which the interviewer read out to the respondents, so there was no need to print

off large amounts of paper, so therefore it did not add much cost to the research. So

therefore, the issue of controlling a budget was only limited applicable to this research.

3.5 Data analysis

A physically operated method of qualitative data analysis was considered in this research. As

per Veal (2006) this method takes into consideration reading the remarks of the interview

feedbacks, finds for elaborating themes, organisation of data into different sections and

scrutinizing and interpreted the information. The main technique of this finding took to

scrutinized the information from the unorganized interviewed questions, was the ‗

information transformation‘ approach (Creswell,2003). As per Creswell (2003) this way of

approach involves noting regular themes or feedbacks to the interviewed question. In this

approach , if the trend of feedbacks to the questions are matching to other respondents

response, then such feedbacks can be marked important and it also stress upon the reality

that these feedbacks are vital for the research findings because they are very frequent

(Creswell,2003).Therefore in this type of research, the first step is to effectively scrutinize the

primary data gathered, was to compile the data into proper structured format it need to be

scrutinized and judged (Creswell, 2003). This includes typing up the feedbacks received from

the interview questions (Veal 2006). Once the interview is over, important written notes

which are jotted down during the session were typed up and each respondents are labelled as

participant one , two etc. Then the interviewee‘s feedbacks were placed into sections, as the

most general feedbacks themes become proof. As per Creswell (2003) it is very vital to

organize and label codes on information gathered in order to get the proper interpretation of

the information.

3.6 Validity and Reliability

As per the Finn et al (2000) all investigation studies are normally measured according to their

validity and reliability. Validity is how the research is exact and correct the research findings

are in compare to the reality to what has been observed (Silverman, 2000). For instance , as

per this theory if the finding results indicates that the employees were encouraged by self



29

performance and in reality that was the case , it means the conducted research is true and

creditable (Silverman, 2000).

On the other side, reliability is about the consistency within the investigation results obtain

from using the same type of research (Finn et al, 2000). If the technique of data gathering was

duplicated, outcome should be the similar as the initial research (Veal, 2006). Therefore a

judgement was consider to use same methods of research as other researchers have done

previously in order to raise the reliability of outcomes, for example, Herzberg‘s critical

occurrence technique was adopted within interview‘s (see chapter two). As this research

comes in the class of social sciences It would be hard to replicate the same outcome the

reason is it is a study about human beings, human beings social environment keeps changing.

3.7 Ethics

According to Mason (2002) all the ethical problems of the research projects should be taken

into account before the beginning of the project and while doing the research project it is very

important to do this. Research project endeavours to make confirm that all the ethical

problems are attained and performed carefully and at the earliest.

Banister et al (1994) cited by Finn et al (2000) and Creswell (2003) highlights the

significance of ethical problems for researchers. Finn et al (2000) disagrees that research

conductor has to be honest with all the research attendees who are engaged in the

investigation and to accept their full consent to take part. Therefore unstructured interview

were conducted by the patrons of the UPS and the questionnaire was handed over to the

patrons visiting the UPS centre.

All the data collected and the respondents should be kept anonymous and secret (Finn et al,

2000). Cottrell (2003) tells the significance of informing respondents about what happens to

the information they have given for confidentially reasons. According to Creswell (2003) it

is vital to save the identity of respondents when scrutinizing the primary data. This research

project does not indicate the names of individuals. The only data required is the respondents

role title and the name of UPS centre, for analysing purpose.

While doing a research university guidelines of ethics should be kept in mind no rules should

be broken within research (Veal, 2006). If a researcher follows the guidelines he can be

benefited by ethics, by avoiding them from legal action Veal (2006). It means that theresearcher acts as per a code of ethics, it means that they are doing their research subject



30

within the constraints and within the legal frame. Creswell (2003) and Veal (2006) also argue

that outcome of the research have to be conveyed and translation should be done as truthfully

as possible.

Mason (2002) says that while conducting a qualitative interview, it‘s important that the

questions, which interviewer asks, should reflect ethical practice. Some questions such as

question on participant‘s personal and upsetting times in their life may be taken as unethical

(Mason, 2002). This care was taken into account when devising the interviewing questions

within this research. Interviewee has the right not to answer the questions which he feels

uncomfortable some of the questions such as asking the interviewee about negative

experience at job place which interviewee may feel uncomfortable to respond.

3.7 Limitations of Research

Veal (2006) recommends few respondents may give answers which pleases the interviewer.

This recommends that while answering the respondents may not reflect the real thing because

they might have given the feedbacks that may be appealing to the interview conductor may

not be unreliable. Sweatnam (2000) and Creswell (2003) say that because the researcher is

there, when questions are answered there are chances that the feedback may be bias. As per

previous conversation ethnographic research cannot be broadly judged and does not include

any scientific data (Sweatnam, 2000). It has been recommended that if there is a use of

undersized information provides unreliable data (Sweatnam, 2000) therefore such problems

given more complexity during analysing the collected primary data.

Finn et al (2000) argues that scrutinizing the data within the unorganised interview method, is

often more difficult. Within the interviews, some occasions the respondents may not be able

to reply or express his views or opinions as they wished to the interviewer. As per Creswell

(2003) some respondents often find it difficult to put into correct words what exactly they

mean.

However another limitation is many individual objects tape-recording therefore interview

were conducted, with the researcher taking written notes, to take written notes during

interview is not easy while doing so the researcher may miss important information (Veal,

2006).



31

CHAPTER 4 – DATA ANALYSIS AND FINDINGS

4.0 Introduction

This part of the research work contains the information regarding the methods used by theresearcher for gathering of data. This chapter also describes the research approach and

research strategy used by the researcher in order to collect required data which will be using

in analysis part of this research work. The researcher also mentioned the appropriate reasons

for choosing a particular research technique and also the advantages and disadvantages of the

chosen research methods are described here.

4.1 Customer Satisfaction Dimensions

This chapter critically analyses the primary data collected from the unstructured interviews

conducted with the sample of sixty customers using UPS services in the recent past, against

existing academic literature. The following sections are labelled by the emerging theme

deriving from the collected primary data. The respondents were asked to describe the

situation when they experienced the positive and negative aspects of the services of UPS.

According to (...), the quality of a service perceived by customers will differ depending on

what strategy the company chooses to deliver and promote that service. The service qualitymodel by (....) holds that the quality of a service, as it is perceived by the customer, can be

divided into technical quality and functional quality dimensions. The former denotes what the

customer receives as the output of a service production process and the latter how the

technical quality is produced and transferred to the customer during buyer-seller interactions.

The importance of functional quality in comparison to technical quality becomes a strategic

one (...). The distinction is also made in the model between perceived and expected service

quality and it is suggested that the quality is perceived subjectively. (...) further develops the

model by positioning that in the case of a company, which extends offer with services, it is

more appropriate to talk about total perceived quality. According to him, a high perceived

quality of service is obtained when the experienced quality meets customer expectations, i.e.

the expected quality service. However, if the expectations are unrealistic, the total perceived

quality of services will be low, even if high quality services were experienced (...).

Customer satisfaction surveys are a questionnaire based information collection tool to

determine the level of satisfaction with various product or service features. Developing a



32

good questionnaire is the key to collecting good quality information. Questions must be short

and concise, well formulated, easy to interpret and answer, and facilitate unbiased responses.

Survey techniques and questionnaire designs are well known to research community and

offers substantial guidance from different disciplines (...).

Participant observation is ―research that involves social interaction between the researcher

and informants in the milieu of the latter, during which data are systematically and

unobtrusively collected‖ (...). Observations provide the possibility to observe product or

service at a system level – during interaction with the user and during interaction with the

environment. A source of data in the observation is everything that goes around the setting.

This includes the physical environment and activities as well as social environment, such as

patterns of interaction, frequency of interactions, direction of communication patterns,

decision-making patterns, and verbal and non-verbal communication patterns. Observations

are unobtrusive and do not require direct interaction with participants, thus, observation can

be conducted inconspicuously.



33

4.2 Questionnaire Analysis

Customers overall experience to accessibility and responses of UPS

representative through Telephone

Figure: 3 Accessibility and responses through telephone

Table 1

Response Number of Respondents Percentage of Respondents

Excellent 14 23.34%

Very Good 15 25%

Good 24 40%

Fair 07 11.66%

Poor 00 00%

Total 60 100%

Interpretation

Percentage of Respondents

Excellent

Very good

Good

Fair

11.66 %

23.33 %

40 %

25 %



34

23.34 % of the customers responded that their overall experience to accessibility and

responses through Telephone is Excellent. Next 25 % says it is very good. Good being

awarded by 40 % of the customer. Final 11.66 % is not so satisfied so they said that the

service is fair.

Customers overall experience to accessibility and responses of UPS

representative through E-mail

Figure: 4 Accessibility and responses through E-mail

Table 2


Excellent 14 23.33%

Very Good 15 25%

Good 24 40%

Fair 7 11.66%

Poor 00 00%

Total 60 100%


Excellent

Very good

Good

Fair

11.66 %

23.33 %

40 %

25 %



35

Interpretation

23.33 % of the customers responded that their overall experience to accessibility and

responses through E-mail is Excellent. Next 25 % says it is very good. Good being awarded

by 40 % of the customer. Final 11.66 % is not so satisfied so they said that the service is fair.

Customer service representatives’ ability to solve customer issue/need

Figure: 5 Ability to solve customer issues

Table 3


Excellent 13 21.66%


Excellent

Very good

Good

Fair

Poor

7.66 %

20 %

28.33 %

21.66 %

23.33 %



36

Very Good 14 23.33%

Good 17 28.33%

Fair 12 20%

Poor 04 7.66%

Total 60 100%

Interpretation

21.66 % of the customers responded that their overall experience with the ability to help

resolve issue or need is Excellent. Next 23.33 % says it is very good. Good being awarded by28.33 % of the customer. 20 % is somewhat satisfied so they said that the service is fair. 7.66

% is not satisfied with the service.

Customers Overall experience with UPS Clearance Department

Figure: 6 Experience with Clearance Department

Percentage ofRespondents

Excellent

Very Good

Good

Fair

Poor

21.66 %

18.33 %

38.33 %

16.66 %

5 %





38

Table 5


Excellent 7 11.66%

Very Good 17 28.33%

Good 31 51.66%

Fair 3 5%

Poor 2 3.33%

Total 60 100%

Interpretation

11.66 % of the customers responded that their overall experience with UPS clearance

department is Excellent. Next 28.33 % says it is very good. Good being awarded by over

51.66% of the customer. 5 % is somewhat satisfied so they said that the service is fair. 3.33 %

is not satisfied with the service.


Excellent

Very Good

Good

Fair

Poor

28.33%

51.66 %

11.66 %3.33 %5%



39

Customer Satisfaction level with UPS Logistics

Figure: 8 Customer Satisfaction levels

Table 6


Extremely Satisfied 11 18.33%

Satisfied 16 26.66%

Neutral 17 28.33%

Dissatisfied 13 21.66%

Extremely Dissatisfied 3 5%

Total 60 100%

Interpretation

18.33 % of the customers responded they are Extremely Satisfied with the service. Next

26.66 % they are satisfied. Neutral is 28.33 % of the customer. 21.66 % is somewhat satisfied

so they said that the service is fair. 5 % is not satisfied with the service.


Extremely Satisfied

Satisfied

Neutral

DissatisfiedExtremely Dissatisfied

21.66 %

18.33 %

28.33%

26.66 %

5 %



40

Customer Responses or Reasons for satisfaction with UPS Logistics

Less transit time

Clear tracking

Advance furnishing of documents

Keeping customer fully informed

Timely clearance

Good Shipment delivery at doorstep

Interpretation

Various reasons are given by customers for satisfaction like less transit time, Clear tracking,

Advance furnishing of documents, keeping customer fully informed, Timely clearance, Good

Shipment delivery at doorstep etc.

Customer Responses or Reasons for Dissatisfaction with UPS Logistics

Original Bill of Entry getting only after 3 days after our follow up, this should come

along with delivery

Freight Bill received 30 days after delivery this should deliver within 24 hrs, so that

your payment will not be delayed

The currency sometimes wrongly mention in the B/E before filing with Customs,

check the invoice or check with the customer - this will help avoiding mistake.

In some of the instances your response is not proper

Since express service is preferred only when there is some urgency, though the cargo

reaches at airport, clearance team takes minimum 7-25days takes for customs

clearance

Commitment not met in several cases

Interpretation

Various reasons are given by customers for dissatisfaction. The company need more focused

approach for satisfying the customers.



41

Recommend UPS Logistics to others

Figure: 9 UPS recommendation to others

Table 7

Response Number of Respondent Percentage of Respondents

Yes 37 61.66%

No 23 38.33%

Interpretation

61.66 % of the customer responded in favour of recommending UPS Logistics to others. On

the other hand 38.33 % of the people say No to recommend UPS Logistics to others.

Over the past years loyalty towards UPS Logistics has grown stronger

Figure: 10 Loyalty strength


Yes

No

Yes

61.66

No

38.33 %



42

Table 8

Response Number of Respondent Percentage of Respondent

Yes 41 68.33%

No 19 31.66%

Interpretation

68.33 % of the customer responded in favour that loyalty towards UPS Logistics has grown

stronger. On the other hand 31.66 % of the people say No that loyalty towards UPS Logistics

has not grown stronger.

UPS Logistics Values people & Relationships ahead of Short-term goals


Yes

No

Yes

68.33 %

No

31.66 %



43

Figure: 11 Customer values and Relationships of UPS

Table 9

Response Number of Respondent Percentage of Respondent

Yes 32 53.33%

No 28 46.66%

Interpretation

53.33 % of the customer responded in favour that UPS Logistics Values people &

Relationships ahead of Short-term goals. On the other hand 46.66 % of the people say No that

UPS Logistics do not Values people & Relationships ahead of Short-term goals.

Percentage of Respondent

Yes

No

Yes

53.33 %

No

46.66 %



44

Customers overall experience regarding the price of the services offered by UPS

Figure: 12 Price of services offered by UPS

Table 10


Very Dissatisfied 3 5%


Satisfied 35 58.33%

Very Satisfied 9 15%

Total 60 100%

Interpretation

Out of the 60 people interviewed, it is found that 5% of the people are dissatisfied with the

price point, even 58.33% are satisfied, 21.66% are very dissatisfied and similar to that only

15% people are very satisfied with price of the item. The final conclusion is major portion of

people are satisfied with the price.


Very dissatisfied

Dissatisfied

Satisfied

Very Satisfied

15 %5 %

21.66 %

58.33 %



45

Customers overall experience in transparency of billing for the services offered

by UPS

Figure: 13 Transparency of billing by UPS

Table 11


Very Dissatisfied 2 3.33 %


Satisfied 32 53.33%

Very Satisfied 7 11.66%

Total 60 100%

Interpretation

Out of the 60 people interviewed, it is found that 3.33% of the people are dissatisfied with the

approach of convenience, even 53.33% are satisfied, 31.66% people are very dissatisfied and

similar to that only 11.66% people are very satisfied with price of the services. The final


Very dissatisfied

Dissatisfied

Satisfied

Very Satisfied

11.66 %3.3%

31.66 %

53.33 %



46

conclusion is major portion of people are satisfied with the delivery services provided by the

UPS.

Customers overall experience in dealing with the convenience in approach of the

services provided by the UPS team

Figure: 14 Convenience in approach

Table 12


Very Dissatisfied 5 8.33%


Satisfied 35 58.33%


Total 60 100%

Interpretation


Very dissatisfied

Dissatisfied

Satisfied

Very Satisfied

10%8.33 %

23.33 %

58.33 %



47

Out of the 60 people interviewed, it is found that 8.33% of the people are dissatisfied with the

approach of convenience, even 58.33% are satisfied, 23.33% people are very dissatisfied and

similar to that only 10% people are very satisfied with convenience in approach. The final

conclusion is major portion of people are satisfied with the convenience approach by the

UPS.

Customers overall experience with the packaging of the items of delivery by the

UPS

Figure: 15 Packaging of delivery items

Table 13




Satisfied 32 53.33%


Total 60 100%


Very dissatisfied

Dissatisfied

Satisfied

Very Satisfied

21.66%6.6 %

18.33 %

53.33 %



48

Interpretation

Out of the 60 people interviewed, it is found 53.33% are satisfied, and similar to that only

21.66% people are very satisfied with the packaging of the items of delivery. Around 18.33%

of the respondents are dissatisfied, whereas 6.66% are very dissatisfied with the packaging.

The final conclusion is major portion of people are satisfied with the packaging of the items

of delivery by UPS.

Overall loyalty approach of the customers – Will the customers say positive

things about UPS to others?

Figure: 16 Customer attitudes

Table 14



Dissatisfied 9 15%

Satisfied 37 61.66%


Very dissatisfied

Dissatisfied

Satisfied

Very Satisfied

16.66%6.66 %

15 %

61.66 %



49


Total 60 100%

Interpretation

From the above table we can easily make out that 61.66% people are in agreement to say

positive things to other people even 16.66% people are very much agree to say positive things

of UPS to other people and just 6.66% people are disagree to say positive things about UPS

to other people. On the other hand 15 % are not very sure if they are going to say positive

things about UPS.

Customers’ decision to consider UPS as the first choice delivery company in the

future

Figure: 17 Decision as first choice delivery company

Table 15



Very Dissatisfied

Dissatisfied

Satisfied

Very Satisfied

10% 8.33 %

28.33 %

53.33 %



50



Satisfied 32 53.33%


Total 60 100%

Interpretation

From the above table we can easily make out that 53.33% people are in agreement for

consider UPS as a first choice in the future and even 10% people are very much agree and

just 8.33% of customers are in disagreement for considering UPS as a first choice in the

future . 28.33 % customers are not sure if they would consider adhering to UPS for the future.

Customers overall experience based on the security of items delivered by the

UPS

Figure: 18 Security of delivery items


Very dissatisfied

Dissatisfied

Satisfied

Very Satisfied

16.66%6.66 %

15 %

61.66 %



51

Table 16



Dissatisfied 9 15%

Satisfied 37 61.66%


Total 60 100%

Interpretation

Out of the 60 people interviewed, it is found that 6.66 % of the people are dissatisfied withthe security of items, even 61.66% are satisfied, and similar to that only 16.66% people are

very satisfied with the security facility. About 15 % of the respondents are not sure about the

security of items. The final conclusion is major portion of people are satisfied with the

security of the items of delivery by the UPS.

Findings

20 % of the customers responded that their overall experience to accessibility andresponses through Telephone is Excellent. Next 20 % says it is very good. Good being

awarded by 40 % of the customer. Final 20 % is not so satisfied so they said that the

service is fair.

19 % of the customers responded that their overall experience to ability to help

resolve issue or need is Excellent. Next 21 % says it is very good. Good being

awarded by 28 % of the customer. 24 % is somewhat satisfied so they said that the

service is fair. 9 % is not satisfied with the service.

21 % of the customers responded that their overall experience with UPS clearance

department is Excellent. Next 19 % says it is very good. Good being awarded by 18 %

of the customer. 38% is somewhat satisfied so they said that the service is fair. 5 % is

not satisfied with the service.

11 % of the customers responded that their overall experience with UPS clearance

department is Excellent. Next 31 % says it is very good. Good being awarded by 50 %

of the customer. 5 % is somewhat satisfied so they said that the service is fair. 3 % is

not satisfied with the service.



52

19 % of the customers responded they are Extremely Satisfied with the service. Next

25 % they are satisfied. Neutral is 22 % of the customer. 23 % is somewhat satisfied

so they said that the service is fair. 3 % is not satisfied with the service.

64 % of the customer responded in favour of recommending UPS Logistics to others.On the other hand 36 % of the people say No to recommend UPS Logistics to others.

69 % of the customer responded in favour that loyalty towards UPS Logistics has

grown stronger. On the other hand 31 % of the people say No that loyalty towards

UPS Logistics has not grown stronger.

51 % of the customer responded in favour that UPS‘s Values people & Relationships

ahead of Short-term goals. On the other hand 49 % of the people say No that UPS do

not Values people & Relationships ahead of Short-term goals.

The basic model for creating customer satisfaction, which was described in literature review,

is not always very useful when it comes to service customers. These customers do not often

go through the process in a linear manner and a lot of services happen after the encounter

with the service organisation takes place. In these cases, much of the evaluation process

occurs after service purchase and during or even after its consumption. It was shown, that

when evaluating service alternatives before purchase, consumers seek and rely more on

information from personal sources than from non-personal sources (advertising), which is the

case with products (...). Thus, an external stimulus is not so often the marketer, but can be a

family member, a neighbour, or a friend. The basic model is often criticised for reflecting

consumer decision and satisfaction as a very extensive processes when buying products or

services. In reality people are often faced with situations when they do not have time for

extensive information seeking (....).

There are some tools available for mapping out the service process, such as service

blueprinting or service mapping (Norling 1993). A service blueprint is ―a picture or map that

accurately portrays the service system so that the different people involved in providing it can

understand and deal with it objectively regardless of their roles or their individual points of

view‖ (Zeithaml and Bitner 1996). It depicts the process of service delivery, roles of

customers, roles of service employees, and visible elements of service. Zeithaml and Bitner

(1996) call the consumer contact with the service system a ―line of visibility or line of

interaction‖. According to them the main components of a service blueprint are: line of



53

interaction: customer actions; line of visibility: ―on-stage‖ contact and employee actions; line

of internal interaction: ―backstage‖ contact and employee actions; support processes. The

components of the service blueprint can identify and prioritise potential problematic areas in

the service delivery process from the customer point of view. In the service sector, it is

important to learn the decision- making process of consumers who evaluate products, which

they do not need to buy.

Overall, both the Social exchange theory and the Commitment trust theory model may be of

value for further research on customer satisfaction and perceived quality of UPS as they

combine both tangible and intangible attributes and can be developed to represent the quality

model of UPS as a first step in evaluating customer satisfaction.

The SERQUAL model of Parasuraman, was criticised for being too general and many studies

that used the model adjusted it to specific requirements of a particular service sector. The

same could be said about applicability of the SERQUAL model to UPS – service components

in various departments are different and, therefore, the basic model will need to be

customised for each case. The main focus of the SERQUAL model is on capturing the

competence of products or services. The performance of products is not addressed, only

service aspects are noted. The model presents a good classification of service attribute that

could be part of a UPS.



54

CHAPTER 5 - CONCLUSIONS AND RECOMMENDATIONS

5.0 Introduction

Finding and conclusions will be presented in this chapter on the basis of empirical data andanalysis done on this data. A general discussion will be given as findings according to the

research questions. After that the issues posed in the research model will be discussed.

Conclusion, future research and suggestions will be presented at the end of the chapter.

Reichheld (1996) proposes the idea of customer satisfaction as a trap, noting that the

relationship between customer satisfaction and customer loyalty is not simply a concrete

description of concrete correlation. Instead, customer loyalty reflects long-term consumption

behaviour (repeat purchase) instead of momentary emotional expression (Reichheld, 1996).

Many factors in the initial survey about the customer service in particular will be taken into

account, as well as in the follow up survey which pertains to brand loyalty. Many variables

must be considered in regards to influencing perceived customer service. Comparing previous

brand expectations and loyalty would be compared to current opinions. Dissecting the two

should help determine if there is a correlation between customer service and brand loyalty.

5.1 Key Findings and Scope of Research

While the customer loyalty model validated in this study possesses good power for

explaining repurchase intentions and referral behaviour, only partial explanation of the

construct of additional purchase intentions is achieved. As stated before, factors not

contained in the model such as strategic outsourcing considerations can be assumed to affect

the intention of customers to outsource additional logistics activities to the currently most

important LSP. For this reason, future studies should explore additional determinants of this

loyalty dimension.

Measurement model assessment revealed that the operationalization of fairness in this study

does not achieve sufficient discriminance from other constructs, especially from trust and

relational satisfaction. As there is a strong theoretical indication that fairness is important in

customer loyalty considerations, further studies should modify fairness‘ measurement model,

e.g. by more strongly recurring to the concept of inequity.

Within this study, four relational characteristics were examined. In addition, analyses were

conducted for a multitude of other contingency factors that are not included in the present



55

study. Overall, however, no conclusive moderations were identified. Nevertheless, it may be

assumed that customer diversity still has moderating effects on the formation of customer

loyalty. The determinants contained in this study, however, capture rather general evaluations

of relationships between logistics service providers (LSPs) and their customers, which may

be too broad to be subject to moderating effects. For this reason it would be sensible to

examine antecedents of the employed determinants, as moderating effects could surface when

this level of detail is added to the analyses.

It seems self evident that companies should try to satisfy their customers. Satisfied customers

usually return and buy more, they tell other people about their experiences, and they may

well pay a premium for the privilege of doing business with a supplier they trust. Statistics

are bandied around that suggest that the cost of keeping a customer is only one tenth of

winning a new one. Therefore, when we win a customer, we should hang on to them. Why is

it that we can think of more examples of companies failing to satisfy us rather than when we

have been satisfied? There could be a number of reasons for this. When we buy a product or

service, we expect it to be right. We don‘t jump up and down with glee saying ―isn‘t it

wonderful, it actually worked‖. That is what we paid our money for. Add to this our world of

ever exacting standards.

Delighting customers and achieving high customer satisfaction scores in this environment is

ever more difficult. And even if your customers are completely satisfied with your product or

service, significant chunks of them could leave you and start doing business with your

competition. A market trader has a continuous finger on the pulse of customer satisfaction.

Direct contact with customers indicates what he is doing right or where he is going wrong.

Such informal feedback is valuable in any company but hard to formalise and control in

anything much larger than a corner shop. For this reason surveys are necessary to measure

and track customer satisfaction. Developing a customer satisfaction programme is not just

about carrying out a survey. Surveys provide the reading that shows where attention is

required but in many respects, this is the easy part. Very often, major long lasting

improvements need a fundamental transformation in the company, probably involving

training of the staff, possibly involving cultural change. The result should be financially

beneficial with less customer churn, higher market shares, premium prices, stronger brands

and reputation, and happier staff. However, there is a price to pay for these improvements.

Costs will be incurred in the market research survey. Time will be spent working out anaction plan. Training may well be required to improve the customer service. The implications



56

of customer satisfaction surveys go far beyond the survey itself and will only be successful if

fully supported by the echelons of senior management.

Changing human behaviour and existing lifestyles contributes to the vision of sustainable

development, but it proves to be an insurmountable task over a short period of time. Instead,

changing the design of product-service system to reduce the behavioural pitfalls may

potentially be an easier way towards sustainable development. Changing system design

requires understanding how consumer acceptance of more sustainable solutions is formed,

influenced or changed, what the influencing factors are and what the leverage points for best

results with lowest costs are. Understanding consumer perceptions and behaviour in this

context is crucial. However, the consumer decision-making process is much more complex

and intricate than just a simple decision about shifting from owning a product towards paying

per its use. Throughout this study we demonstrated that services are not seen purely for their

functional features, but rather services are complex combinations of various attributes, which,

together with functionality, also bring status, serve as a key to a certain social class, reinforce

one‘s self -esteem, and much-much more. Therefore, the goal of this study was to make a step

toward better understanding the complexity of the phenomena we intend to change.

The challenge is not in the availability of analysis tools, but in analysis frameworks, which

would allow us to speak the same language with our system and understand it better. We can

probably employ just one tool to measure customer satisfaction with our system. But it is a

multifaceted system and thus a combination of tools is more promising. UPS is a system,

comprised of products, services, infrastructures, and networks. The criteria we want to

evaluate this system against should include attributes of each dimension. UPS is a multi-

disciplinary area and initiating system level change will require system level effort.

Researchers with various backgrounds need to be involved in developing ideas and methods

for measuring customer satisfaction with UPS.

5.2 Recommendations

Communicate: Whether it is an email newsletter, monthly flier, a reminder card for a tune up,

or a holiday greeting card, reach out to your steady customers.

Customer Service: Go the extra distance and meet customer needs. Train the staff to do the

same. Customers remember being treated well.



57

Employee Loyalty: Loyalty works from the top down. If you are loyal to your employees,

they will feel positively about their jobs and pass that loyalty along to your customers.

Employee Training: Train employees in the manner that you want them to interact with

customers. Empower employees to make decisions that benefit the customer.

Customer Incentives: Give customers a reason to return to your business. For instance,

because children outgrow shoes quickly, the owner of a children‘s shoe store might offer a

card that makes the tenth pair of shoes half price. Likewise, a dentist may give a free cleaning

to anyone who has seen him regularly for five years.

Product Awareness: Know what your steady patrons purchase and keep these items in stock.

Add other products and/or services that accompany or compliment the products that yourregular customers buy regularly. And make sure that your staffs understand everything they

can about your products.

Reliability: If you say a purchase will arrive on Wednesday, deliver it on Wednesday. Be

reliable. If something goes wrong, let customers know immediately and compensate them for

their inconvenience.

Be Flexible: Try to solve customer problems or complaints to the best of your ability.Excuses — such as "That's our policy" — will lose more customers then setting the store on

fire.

People over Technology: The harder it is for a customer to speak to a human being when he

or she has a problem, the less likely it is that you will see that customer again.

Know Their Names: Remember the theme song to the television show Cheers? Get to know

the names of regular customers or at least recognize their faces.



58

APPENDIX – QUESTIONNAIRE

Please tick the most appropriate response that suits you in the following questions

1. Customers overall experience to accessibility and responses of UPS

representative through Telephone

Excellent Very Good Good Fair Poor

2. Customers overall experience to accessibility and responses of UPS

representative through E-mail


3. Customer service representatives’ ability to help customer issue/need


4. Customers Overall experience with UPS Clearance Department


5. Customers Overall experience with UPS Shipment Delivery at doorstep


6. Customer Satisfaction level with UPS Logistics

Extremely Satisfied Satisfied Neutral Dissatisfied

Extremely Dissatisfied

7. Recommend UPS Logistics to others

Yes

No



59

8. Over the past years loyalty towards UPS Logistics has grown stronger

Yes

No

9. UPS Logistics Values people & Relationships ahead of Short-term goals

Yes

No

10. Customers overall experience regarding the price of the services offered by UPS

Very Dissatisfied Dissatisfied Satisfied Very Satisfied

11. Customers overall experience in transparency of billing for the services offered

By UPS


12. Customers overall experience in dealing with the convenience in approach of

The services provided by the UPS team


13. Customers overall experience with the packaging of the items of delivery

By the UPS


14. Overall loyalty approach of the customers – Will the customers say positive

things about UPS to others?




15. Customers‘ decision to consider UPS as the first choice delivery company

in the future


16. Customers overall experience based on the security of items delivered by the UPS


Documents

Final Dissertation Ups