customer sat & customer loy

Master of international Business Administration

Group 28

Research Paper

Identifying the Linkage between Customer Satisfaction and Customer Loyalty:

The Case Study of the Egyptian Rotating Equipment Service Providers

Supervisor: Dr. Nada BassetSubmitted by: Ahmed El-SockaryAcademic Year: 2010

Table of Contents

I. List of Figures..............................................................................................................7

II. List of Tables................................................................................................................8

II. List of Acronyms...........................................................................................................9

Chapter 1: Introduction...................................................................................................10

1.1. Overview..........................................................................................................10

1.2. Problem Statement...........................................................................................11

1.3. Research Objective..........................................................................................11

1.4. Conceptual Framework....................................................................................11

1.4.1. Dependent Variable......................................................................................12

1.4.1. Independent Variables..................................................................................12

1.4.1. The Research Model Diagram......................................................................12

1.5. Thesis Structure...............................................................................................13

Chapter 2: Lirature Review.............................................................................................14

2.1. Definitions.......................................................................................................14

2.1.1. Customer Loyalty..........................................................................................14

2.1.2. Customer Satisfaction...................................................................................18

2.2. The Relationship Between Customer Loyalty And Customer Satisfaction......21

2.3. The Importance of Customer Loyalty and Customer Satisfaction...................23

2.4. Factors That Affect Customer Satisfaction, And Customer Loyalty in the

Service Business............................................................................................................27

2.4.1. Price..............................................................................................................27

2.4.2. Service Quality..............................................................................................29

2.4.2.1. Definition...................................................................................................29

2.4.2.1. Customer Satisfaction and Service Quality...............................................31

2.4.3. Networking of the Service Providers’ Representatives.................................32

2.5. Conclusion......................................................................................................32

Chapter 3: Research Methodology and Design..............................................................33

3.1. Overview..........................................................................................................33

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3.2. Problem Statement Elaboration........................................................................33


3.4. Conceptual Framework....................................................................................34

3.4.1. Dependent Variable......................................................................................35

3.4.2. Independent Variables..................................................................................35

3.4.3. The Research Model Diagram......................................................................35

3.5. Research Questions.........................................................................................36

3.6. Research Hypotheses......................................................................................36

3.7. Research Methodology.....................................................................................37

3.7.1. Research Method..........................................................................................37

3.7.2. Research Instruments...................................................................................37

3.8. Population........................................................................................................37

3.9. Sampling Method..............................................................................................38

3.10. Data Collection Plan.........................................................................................38

3.11. Data Analysis....................................................................................................38

3.12. Findings Report................................................................................................39

3.13. Research Limitation..........................................................................................39

3.14. Ethical Considerations......................................................................................39

3.15. Conclusion........................................................................................................40

Chapter 4: Data Analysis and Findings...........................................................................41

4.1. Introduction.......................................................................................................41

4.2. Descriptive results and analysis of findings......................................................41

4.2.1. Reliability Test.............................................................................................412

4.3. Sample Descriptive Analysis............................................................................42

4.3.1. Service Providers Types...............................................................................42

4.3.2. Position Type................................................................................................43

4.3.3. Independent Variables Results.....................................................................44

4.3.3.1. Price..........................................................................................................44

4.3.3.1.1. Price Answers Distribution.....................................................................44

4.3.3.1.2. Price Distribution over Position Types...................................................45

4.3.3.1.3. Price Distribution over Service Provider Types......................................46

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4.3.3.1.4. Price Answers Distribution analysis.......................................................46

4.3.3.2. Quality.......................................................................................................59

4.3.3.2.1. Quality Answers Distribution..................................................................47

4.3.3.2.2. Quality Distribution over Position Types................................................49

4.3.3.2.3. Quality Distribution over Service Provider Types...................................49

4.3.3.2.4. Quality Answers Distribution analysis....................................................52

4.3.3.3. Networking................................................................................................50

4.3.3.3.1. Networking Answers Distribution...........................................................51

4.3.3.3.2. Networking Distribution over Position Types.........................................51

4.3.3.3.3. Networking Distribution over Service Provider Types............................52

4.3.3.3.4. Networking Answers Distribution analysis.............................................52

4.4. Inferential Data Analysis...................................................................................53

4.4.1. Correlation between Independent Variables and Customer Satisfaction......53

4.4.2. Correlation between Independent Variables and Customer Loyalty.............54

4.4.3. Correlation between Customer Satisfaction and Customer Loyalty..............55

4.4.4. Ranking Question analysis...........................................................................56

4.4.4.1. Ranking Question Results Analysis...........................................................59




4.5. Hypotheses Testing..........................................................................................60

4.5.1. HP1...............................................................................................................60

4.5.2. HP2...............................................................................................................60

4.5.3. HP3...............................................................................................................60

Chapter 5: Data Findings................................................................................................61

5.1. Overview..........................................................................................................61

5.2. Problem Statement...........................................................................................61


Bibliography....................................................................................................................63

Appendix A: Questionnaire.............................................................................................68

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Acknowledgement

This thesis study would never have been completed without the important contribution of

many persons. They all deserve individually my thanks and recognition for the valuable

contributions they made.

First of all I would like to thank all my ESLSCA professors for their guidance, support,

knowledge and experience that helped me a lot in my studies.

I also render gratitude to my ESLSCA colleagues, especially intake 28-A friends, for

making my study a memorable one. As well as their understanding and support

throughout my studies.

I am forever indebted to my wife and children for their unconditional love, support and

encouragement. They were truly my inspiration and were ultimately responsible for my

success in life.

Finally, I would like to deeply thank my supervisor, Dr. Nada Basset for making this a

meaningful learning process. Her guidance and encouragement throughout the process

of formulating my ideas was invaluable. Her ability to view things pragmatically was

critical and priceless to the success of this study and needs to be commended.

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Abstract

Loyal customers are always considered as an asset for any business. Satisfaction is the

main driver to maintain this customer loyalty.

Actually both customer loyalty and customer satisfaction have already attracted a lot of

attention among academic and practitioner researchers, the researcher has focused on

the service of the rotating equipment in Egypt using the individual customer as the unit

of analysis.

The aim of this research is to examine the main effect of price, service quality and

networking of the service providers’ representatives on customer satisfaction and hence

on customer loyalty.

Data were collected through a survey from different Egyptian customers dealing with

rotating equipment. A sample of 80 questionnaires was collected from the above

population. SPSS software version 17 was used to analyze the data of the questionnaire

and produce statistical facts about it.

Data analysis revealed that price, service quality and networking of the service

providers’ representatives were important factors affecting customer satisfaction and

hence affecting customer loyalty.

It is envisaged that this study will set a foundation for future research work concerning

this aspect of service business activity in Egypt.

Keywords: Customer loyalty, customer satisfaction, price, service quality and

networking of the service providers’ representatives.

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I. List of Figures

(Figure 4.1) Service providers type frequency

(Figure 4.2) Position type frequency

(Figure 4.3) Price answers distribution

(Figure 4.4) Price distribution Vs position types

(Figure 4.5) Price distribution Vs service provider types

(Figure 4.6) Quality answers distribution

(Figure 4.7) Quality distribution Vs position types

(Figure 4.8) Quality distribution Vs service provider types

(Figure 4.9) Networking answers distribution

(Figure 4.10) Networking distribution Vs position types

(Figure 4.11) Networking distribution Vs service provider types

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II. List of Tables

(Table 4.1) Reliability test

(Table 4.2) Service providers type frequency

(Table 4.3) Position type frequency

(Table 4. 4) Price answers distribution

(Table 4. 5) Quality answers distribution

(Table 4.6) Networking answers distribution

(Table 4.7) Correlation between all variables & customer satisfaction

(Table 4.8) Correlation between all variables & customer loyalty

(Table 4.9) Correlation between customer satisfaction & customer loyalty

(Table 4.10) Q15 Results



(Table 4.13) Ranking Questions Analysis

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II. List of Acronyms

(OEM) Original Equipment Manufacturer

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Chapter 1: Introduction

1.1. Overview

In the energy field, rotating equipment (mainly: Steam Turbines, Gas Turbines,

Generators and Compressors) are the major units of running such a business.

The service business for such units is including but not limited to: supplying spar parts,

field service activities, repairs, upgrades and technical support.

The service can be provided by either the OEMs (Original Equipment Manufacturers) or

by non-OEMs. The non-OEMs can be either an ISP (Independent Service Provider) or

one of the other OEMs who produces similar units. The non-OEM service providers

usually use Reverse Engineering to complete their service jobs. “https://intranet-

energy.eps.siemens.com/irj/portal/ei/public/en/processestools/supportbusiness/

HRLD20040601155253/STPH20090922053143”

This business in Egypt it is divided into three main sectors, Utility (Electrical Power

Production), Oil and Gas (production, processing and petrochemicals) and Industry

(such as fertilizers, paper mills, chemicals and spinning and weaving).

The major OEMs are: GE (General Electric), Siemens, Alstom, Sulzer, Hitachi and

Ansaldo while the major ISP’s are: Wood Group and GTS (Gas Turbine Services).

Most of the OEMs are interested in non-OEM service activities as it gives better market

situation and decreases the competitors’ profit. For example Siemens has a business

unit called “TurboCare” which is responsible for non-OEM service activities.

“https://workspace.siemens.com.eg/wppages/CompanyProfileandPresentations.aspx”

This study claims the multiple factors affecting customer satisfaction and investigating

the relationship between customer satisfaction and customer loyalty by studying the

effect of these factors on customer loyalty.

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https://workspace.siemens.com.eg/wppages/CompanyProfileandPresentations.aspx

https://intranet-energy.eps.siemens.com/irj/portal/ei/public/en/processestools/supportbusiness/HRLD20040601155253/STPH20090922053143



1.2. Problem Statement

What are the effects of the main factors affecting customer satisfaction towards service

provider(s) on customer loyalty?

1.3. Research Objective

To study the effect of the factors affecting customer satisfaction on customer loyalty and

eventually its likely impact on service providers’ performance. As maintaining customer

loyalty in marketing development strategies cannot be ignored. Especially, in a business

market which has numerous competitors, keeping good relationships with business

customers could be vital for organizational success.

This will help the service providers to find the best practice to benefit of such relationship

and its driven factors, either to protect their business or to attack competitors.

Protecting their business means that the will use “Defensive Strategy” to sustain their

current customers and they have to decide what the best strategy to do so is.

Attacking competitors means that they will use “Aggressive (Offensive) Strategy” and

they have to decide what the best strategy to do so is.

1.4. Conceptual Framework

The proposed framework of this research was to study the effect of customer

satisfaction on customer loyalty under these variables that affects customer satisfaction:

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1.4.1. Dependent Variable

Y1: Customer Loyalty

1.4.2. Independent Variables

X1: Customer Satisfaction (Intervening Variable)

X2: Price

X3: Service Quality

X4: Networking of the Service Providers’ Representatives

1.4.3. The Research Model Diagram

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Customer Satisfaction Customer Loyalty

1- Price

2- Service Quality

3- Networking of the Service

Providers’ Representatives

1.5. Thesis Structure

This section demonstrates the full research study methodology and report structure as a

preface. This study is composed of five chapters. Chapter one provides an overview,

problem definition, and research objective for the subject under study, an introduction of

the problem and identifies the theoretical frame work. Chapter two describes some

relevant international data collected by other researchers through the literature review

that are relevant to the research subject. Chapter Three provides a deeper insight of all

aspects mentioned in chapter one outlining in more depth the problem the researcher is

facing and hypothesis to be tested. It also explains the research methodology used

during the study and demonstrates and justifies the approach taken and introduces the

tools and instruments of this research. The research takes the form of a quantitative

research, and the findings are collected through questionnaire. Chapter four will cover

data analysis, collection and findings. Chapter five will provide the conclusion,

recommendations and further research work.

A final section of this report which is references and appendices consists of extra

information that is related to the main content of this research.

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Chapter 2: Literature Review

In the following literature review, the researcher begins with an outline of the

conceptualization of customer satisfaction and customer loyalty and provides an

overview of their relationship.

2.1. Definitions

2.1.1. Customer Loyalty

(Dekimpe, Steenkamp, Mellens, & Vanden, 1997; Dick & Basu, 1994) stated that

although loyalty has been defined in various ways, there are two main

approaches: behavioral and attitudinal approaches. In earlier days, most

researchers had focused on the behavioral concept. While (Newman and

Werbel, 1973) defined loyal customers as "those who re-bought a brand,

considered only that brand, and did no brand-related information seeking."

Similarly, (Tellis, 1988) measured loyalty as "repeat purchase frequency" or

"relative volume of same brand purchasing."

Furthermore, for (Jacoby and Chestnut, 1978), customer loyalty is a prejudiced

psychological manner exhibited recurrently as a commitment response whilst

(Healy, 2007) points out that it is an important attitude that favors good marketing

relationships and a person’s repeat patronage.

(Kandampully and Suhartanto, 2000; Bowen and Chen, 2001) stated that in

general, the term “loyal customer” refers to customers who continue to purchase

and maintain a positive attitude towards the same product or service provider

and also continuously recommend products and services to others.

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(Oliver, 1997) stated that recently, loyalty has been defined from the attitudinal

perspective as well. Attitudinal loyalty includes cognitive, affective, and cognitive

aspects defined customer loyalty as a profound devotion to regularly repurchase

of a favored product or service.

He also stated that the customer would maintain this behavior despite strong

marketing efforts from alternative companies. The competitors are then efficiently

defeated. This explanation underscores the view that customer loyalty is a

behavior response to the environment.

(Pritchard et al, 1999) argue that understanding how or why a sense of loyalty

develops in customers remains one of the most crucial management issues.

(Dick and Basu, 1994) add that customer loyalty should be integrated into the

broader marketing theory. To assist in this transition, they posited a framework

that conceptualized loyalty in terms of attitudes and behaviors, and suggested

that while loyalty was influenced by a customer’s repeat purchase behaviors and

intentions, it was determined by a “favorable attitude that is high compared to

potential alternatives” (p.100). Further, they contended that true or premium

loyalty only occurs when the customer has both attitudinal loyalty and behavioral

loyalty.

(Amine, 1998; Sharp et al, 1999; Wong et al, 2001) stated that this view of

customer loyalty being divided into two distinct and complementary approaches

is consistent amongst most academics, and forms the basis of customer loyalty

definition adopted for this study. Additionally, (Sharp et al, 1999), with (Foster

and Cadogan, 2000) found that the use of separate conceptualizations of

attitudinal and behavioral loyalty allows for an examination of the relationship

between the two constructs that finding partial support for attitudinal loyalty acting

as an antecedent to behavioral loyalty.

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(Oliver, 1997), and Oliver (1999) also posited four phases for a customer to

become loyal. First, loyalty in the cognitive phase is based on either prior

knowledge or experience-based information about a brand. Second, loyalty in the

affective phase is a liking or attitude toward a brand. Based on cumulatively

satisfying usage occasions, it implies feelings toward a brand. Nevertheless, this

form of loyalty remains subject to switching. Third, cognitive loyalty is defined as

a customer's behavioral intention to keep on purchasing a product in the future,

and therefore it is harder to dislodge than affective loyalty.

Action loyalty is the final stage among loyalty phases, in which motivated

intention is transformed into readiness to act. Action loyalty is related to the

behavioral approach. Oliver's view sheds light on the development of loyalty from

attitude to behavior.

The definition of (Oliver, 1999) captures the essence of these words. It captures

the essence of loyalty which is repurchase a product of service and includes

another essential aspect of loyalty, which is a long term focus. The word

commitment suggests determination and is reminiscent of some form of a

relationship. The definition of (Oliver, 1999) seems to be the most powerful one

of all above mentioned definitions. Therefore, this definition of customer loyalty

will be used in this thesis.

Based on the review of loyalty concepts, Oliver's definition, which includes

attitudinal and behavioral aspects of loyalty, was adopted. Customer loyalty is "a

deeply held commitment to re-buy or re-patronize a preferred product or service

consistently in the future, despite situational influences and marketing efforts

having the potential to cause switching behavior" (Oliver, 1997, p. 392).

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(Yanamandream & White, 2006) ask their respondents to define customer loyalty

in a business context. Respondents mention several dimensions of loyalty, like

repurchasing over an extended period of time, the development of confidence or

trust, preferential treatment, value, commitment and relationship-specific

investments. Long term is the key. Some respondents mentioned that being

recognized, and receiving useful current market information, and being made to

feel as part of an industry network or family can influence their customer loyalty.

(Dick & Basu, 1994; Cooil, Keiningham, Akosy & Hsu, 2007; Han, Kwortnik &

Wang, 2008) stated that it is agreed on that loyalty consists of an attitudinal and

a behavioral component. In the article by (Raimondo, Miceli & Costabile, 2008), it

was mentioned that the attitudinal dimension of loyalty consists of a favorable

attitude toward a firm or a brand (relative to other firms offering the same product

or service), where the behavioral dimension consists of repeated buying

behavior. (Rundle-Thiele & Bennett, 2001) distinguished behavioral and

attitudinal loyalty in a way that behavioral loyalty deals with (brand) loyalty in

terms of the actual purchases observed over a time period and attitudinal loyalty

deals with stated preferences, commitment or purchase intentions.

(Chaudhuri & Holbrook, 2001) described it the following way: “Behavioral, or

purchase, loyalty consists of repeated purchases of the brand, whereas

attitudinal brand loyalty includes a degree of dispositional commitment in terms of

some unique value associated with the brand (p. 82)”.

(Geyskens, Steenkamp & Kumar, 1996) mentioned that attitudinal loyalty

produces positive outcomes for organizations, because it gives rise to stronger

and more stable relationships, reduces opportunism, and generates positive

word of mouth.

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(Bennett & Rundle-Thiele, 2002) stated that in marketing literature, attitudinal

loyalty is often described as preference for the brand.

“Therefore, brand preference may in fact be regarded as a higher order construct

in the sense that “preference” would likely be an outcome based upon customers’

expectations or experience (i.e. satisfaction)” (Keiningham, Cooil, Aksoy,

Andreassen & Weiner, 2007, p. 364).

(Rundle-Thiele & Mackay, 2001) stated that brand preference can be described

as the degree to which customers prefer specific brands relative to competing

alternatives.

The researcher is following (Roehm, Bolman Pullins & Roehm Jr, 2002, Yi &

Jeon, 2003, Bell & Lal, 2002 en Mägi , 2003), loyalty programs are able to

stimulate both attitudinal loyalty and behavioral loyalty.

Accordingly, the focus here will be on attitudinal loyalty, since indirect customers

are taken into account. It is hard or even impossible to measure behavioral

loyalty in this setting, since most of the times there are no data of the customers’

past or current purchase behaviors.

2.1.2. Customer Satisfaction

(Sindhav et al., 2006) stated that satisfaction is essentially an overall assessment

of the customer’s experience with a product or service. Moreover, (Oliver, 1999)

said it is “sense that consumption provides outcomes against a standard of

pleasure versus displeasure”. Therefore, according to (Bloemer and Lemmink,

1992) satisfaction is related to a psychological attitude felt during the customer's

consumption.

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(Kotler, 1977; Keith, 1960) both stated that if the customer’s needs are satisfied,

he would have the intention to repurchase again in the future.

As per (Aspinall, Nancarrow, & Stone, 2001; Reinartz & Kumar, 2002), customer

satisfaction refers to a customer’s evaluation of a specific transaction. A

customer is satisfied when a purchase performs better than expected and is

dissatisfied when expectations exceed performance.

(Johnson and Fornell,, 1991) defined customer satisfaction as a customer’s

overall evaluation of the performance of an offering to date.

(Oliver, 1999) said that it also contains a significant affective component, which is

created through repeated product or service usage.

In a service context, (Boulding et al., 1993) stated that the overall satisfaction is

similar to overall evaluations of service quality. Compared with more episode-

based or transaction-specific measures of performance, overall evaluations are

more likely to influence the customer behaviors that help a firm, such as positive

word of mouth and repurchase.

(Gustafsson, Johnson, & Roos, 2005) defined customer satisfaction as a

customer’s overall evaluation of performance for a current offering.

(Czepiel, Rosenberg and Akerele, 1974) stated that customer satisfaction as an

overall evaluation representing a sum of subjective reactions from a customer

regarding products with varied attributes.

(Cooil et al, 2007) defined that customer satisfaction and retention are generally

considered among the most important long term objectives of firms.

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(Keith, 1960; Leavitt, 1960) said that the marketing concept suggests that a

satisfied buyer will likely return to purchase again, or at least, consider

purchasing again. According to (Reichheld and Sasser, 1990) repeat customers

cost less to serve than new buyers, benefiting a firm’s cost structure.

Additionally, (Ching et al 2004, Verhoef 2003) stated that maximizing customer

retention rates and minimizing customer defections are primary strategic

objectives for most firms, as evidenced by companies' emphasis on customer

relationship management. Thus, previously satisfied buyers may help firms both

reduce marketing costs and develop more stable levels of sales when a large

number of satisfied buyers are retained to purchase again in the future.

(Oliver, 1980) said that there are several definitions of customer satisfaction in

the marketing literature. It is generally accepted that satisfaction is a

psychological state that a consumer experiences after consumption.

(Muller, 1991) argues that customer satisfaction will become a key factor for

business success in the future. (Singh, 1991) also noted that customer

satisfaction is a dimension of multiple items evaluated as a satisfaction

measurement, which can vary from business to business.

However, (Verhoef, 2003) argues that longitudinal data that combine survey

measures with subsequent behaviour should be used to establish a causal

relationship between perceptions and behaviour.

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For example, (Bolton, 1998) finds a positive effect of overall customer

satisfaction on the duration of the relationship, and (Bolton and Lemon, 1999)

show a positive effect of overall satisfaction on customer usage of services.

(Mittal and Kamakura, 2001) show a strong, albeit nonlinear, effect of customer

satisfaction on repurchase behaviour, such that the functional form relating

satisfaction to repurchase is marginally increasing. (Ostrom and Iacobucci, 1995)

also hold that customer satisfaction is a multiple-item measurement that

evaluates such items as product price, service efficiency, service personnel

attitude, overall business performance, and ideal business service.

(Kotler, 1996) proposed from his integration of various theories that satisfaction is

a difference function between perception and expectation. Accordingly, customer

satisfaction is an expression of pleasure or disappointment resulting from a

comparison between perception and expectation of product function/effect.

Customer satisfaction is a subjectively positive or negative feeling arising from a

comparison between pre-consumption expectation and post-consumption

perception.

2.2. The Relationship Between Customer Loyalty And

Customer Satisfaction

(Fornell, 1992) stated that the satisfaction of business customers leads to

customer loyalty. Additionally, (Oliva et al., 1992) state that in the relationship

between customer loyalty and customer satisfaction that customer loyalty will

increase significantly when satisfaction accomplishes a certain level and at the

same time customer loyalty will drop dramatically if the satisfaction level drops to

a certain point. (Tepeci, 1999) stated that highly satisfied customers tend to be

more loyal customer than the customers who were merely satisfied.

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(Fornell, 1992; Fornell et al., 1996) stated that this overall satisfaction has a

strong positive effect on customer loyalty intentions across a wide range of

product and service categories, including telecommunications services.

While both (Bolton and Lemon, 1999; Fornell et al., 1996) said as an overall

evaluation that is built up over time, satisfaction typically mediates the effects of

product quality, service quality, and price or payment equity on loyalty.

According to (Oliver, 1999), it should be noted that repurchase is affected by

cumulative satisfaction rather than individual episodic satisfaction or satisfaction

to affect loyalty, frequent or cumulative satisfaction is required so that individual

satisfaction episodes become aggregated or blended."

(Johnson, Anderson, and Fornell, 1995) also argued that cumulative customer

satisfaction is a fundamental indicator of a firm's current and long-run

performance. (Myron, 2005) asserted that customer satisfaction is a predictor of

loyalty. In their study of customer satisfaction, (Anderson and Sullivan 1993)

found that, with antecedent and consequence variables; customer satisfaction

has a positive effect on customer-repeat purchase behaviour, an expression of

customer loyalty. (Anderson and Sullivan, 1993) also showed that customer

loyalty is the chief consequence of customer satisfaction.

(Bitner, 1990) considered that customer satisfaction as an antecedent variable

that positively impacts customer loyalty. (Müller, 1991) argued that customer

satisfaction becomes a key factor for business success. (Kotler, 2002) considers

that customers constantly think about what kind of product or service can

maximize value, and thus establish an expectation of value as a shopping

reference. (Lam, Shankar, Erramilli, and Murthy, 2004) hold that customer

satisfaction has a strong impact on customer loyalty.

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(Reichheld and Sasser, 1990) hold that a satisfied customer will have greater

customer loyalty, which suggests a much greater chance for repeat purchases in

the future.

(Barnes, 1994) summarized that many companies should be trying to keep their

current customers because satisfied customers stay loyal to the products or

services of a company and it is better to invest more money and put more efforts

into this than any other marketing campaign.

(Szymanski and Henard, 2001; Bearden and Teel, 1983) sum up as quite a few

researchers suggested a strong relationship between customer satisfaction and

customer loyalty that leads to an increase of both sales and profitability.

The researcher supports that last ideas according to his personal observations

during the actual business practicing. Customer satisfaction is the main driver

towards customer loyalty. In the other words, keeping the loyal customer satisfied

will help a lot in keeping his loyalty, while dissatisfying loyal customers will lead to

break his loyalty.

2.3. The Importance of Customer Loyalty and Customer

Satisfaction

As for the relationship between customer loyalty and profitability, (Smith and

Wright, 2004) believe that customer loyalty is strongly correlated to both sales

growth rates and ROA (return on assets). However, in another study by (Reinartz

& Kumar, 2002), adverse conclusions are proposed. These authors claim, firstly,

that a high level of loyalty does not necessarily lead to increases in profitability. In

fact a negative relationship may exist between the two factors.

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In their view, the outcome depends on whether customers are treated as

“barnacles” (high loyalty but low profitability) or “butterflies” (low loyalty but high

profitability). (Srivastava et al. 1998) point out that the vulnerability of cash flows

may reduce with the increase of customer satisfaction, loyalty, and retention of

customers, while sustained, long-term customer loyalty can boost the stability of

a business and reduce the cost of capital. In addition, customer loyalty can

enhance the residual value of the business. In general, the author used

conceptual logic to argue from the empirical findings for a stronger link of

customer satisfaction to stock returns and shareholder value.

(Reichheld, 1996) said in general, the longer a customer stays with a company,

the more that customer is worth. Long term customers buy more, take less of a

company's time, are less sensitive to price, and bring in new customers. Best of

all, they have no acquisition or start-up cost. Good long-standing customers are

worth so much that in some industries, reducing customer defections by as little

as five points from, say, 15% to 10% per year-can double profits. CEOs buy the

idea that customer loyalty matters; they would prefer to have loyal customers.

But without doing the arithmetic that shows just how much a loyal customer is

worth over the whole course of the customer life cycle, and without calculating

the net present value of the company's present customer base, most CEOs

gauge company performance on the basis of cash flow and profit. They rarely

study the one statistic that reflects how much real value the company is creating,

the one statistic with predictive power: customer retention.

(Reichheld, 1996) said that what keeps customers loyal is the value they receive.

One of the reasons so many businesses fail is that too much of their

measurement, analysis, and learning revolves around profit and too little around

value creation. Their CEOs become aware of problems only when profits start to

fall, and in struggling to fix short-term profits, they concentrate on a symptom and

miss the underlying breakdown in the value-creation system.

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They see customer issues as subsidiary to profits and delegate them to the

marketing department. In the most egregious cases, years of continuing

defection can mean that former customers-people convinced by personal

experience that the company offers inferior value-will eventually outnumber the

company's loyal advocates and dominate the collective voice of the marketplace.

When that moment arrives, no amount of advertising, public relations, or

ingenious marketing will prop up pricing, new-customer acquisitions, or the

company's reputation.

(Reichheld, 1996) also stated although some executives do realize that profits

are really a downstream benefit of delivering superior value to customers-and

that customer loyalty is therefore the best indicator of strategic success or failure

they lack the tools they need to focus their organizational learning on this most

basic building block of profitable growth. They make the most of standard market

research, including customer-satisfaction surveys, but such tools are simply not

up to the task. (See the insert "The Satisfaction Trap.") And yet the message that

relative value is declining-and all the information a company needs to make

sense of that bad news and design possible remedies-is available from the day

trouble starts. Defecting customers have most of that information. They are

always the first to know when a company's value proposition is foundering in the

face of competition.

To summarize the benefits, (Reichheld and Teal, 1996) propose that retaining

customer loyalty can contribute to the ‘life cycle of profits’ to the company

including: revenue growth over time, cost saving over time, referral income, and

price premiums. Thus, (Kohli and Jaworski, 1990) stated, maintaining customer

loyalty in marketing development strategies cannot be ignored. Especially, in a

business market which has numerous competitors, keeping good relationships

with business customers could be vital for organizational success.

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As for the relationship between customer Satisfaction and profitability in the form

of share holder value, (Gruca and Rego, 2005) found that customer satisfaction

creates shareholder value by increasing cash flow growth and reducing its

variability. For instance, these authors claim that a one point advance in

customer satisfaction on a scale of 0-100 was associated with a 7% increase in

cash flow. (Berger et al., 2002; Fornell, Mithas, Morgeson, & Krishnan, 2006;

Reichheld, 1996) pointed out that the improvement in key marketing measures

including customer satisfaction and loyalty or share of customers have also been

examined in terms of their contribution in enhancing customer base value as an

investment in technology to enhance manufacturing capability.

(Anderson et al., 1994; Ittner & Larcker, 1998b; Scharitzer & Kollarits, 2000)

considered that there is no absolute positive relationship between customer

satisfaction and profitability. In their view, those firms are probably investing their

limited resources in the wrong (unprofitable) customers.

The researcher does not agree with this point as this might be true for some

cases but cannot be generalized as most of the writers agree with the positive

relationship between customer satisfaction and profitability.

In other words, from the above findings, the researcher has concluded that the

maintaining customer satisfaction as it is the main driver for customer loyalty will

lead to better organizational performance.

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2.4. Factors That Affect Customer Satisfaction, And

Customer Loyalty in the Service Business

(Ostrom and Iacobucci, 1995) stated that customer satisfaction is a multiple-item

measurement that evaluates such items as price of provided service, service

quality, service personnel attitude (networking of the company’s representative),

overall business performance, and ideal business service.

2.4.1. Price

As (Huber et al., 2001) stated, pricing is a sign of product or service value and

also one of the important dimensions of the marketing mix. The price competition

rule in the business market is an important criterion when business customers

are selecting products or services. In a real purchase situation, especially in

business markets, the buyers will not decide to purchase a product or service on

the basis of only one criterion (e.g. product quality) but normally consider several

performance levels (price, delivery and other support services) and obviously,

price is a critical factor that concerns buyers very often the most.

Where (Kotler, 2003) said: a price negotiation is regularly designed for different

customers depending on the relationship between buyers and sellers but mainly

based on the product or service features. However, the price that suppliers offer

must be reasonable and attractive in order to get business customers’

acceptance. Therefore, price acceptance from business customers (including

retailers and wholesalers) is crucial for a manufacturing firm or supplier.

Marshall (1980, p. 260) defines price acceptance as “…the excess of the price

which a man would be willing to pay rather than go without having a thing over

what he actually does pay is the economic measure of his satisfaction surplus”.

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(Monroe, 1990) stated that price acceptance refers to the maximum price that

business buyers are prepared to pay for the products or services.

More to the point of price acceptance, there is another factor for suppliers to

consider regarding the price. The perceived price fairness or unfairness is also

an important psychological factor which has an influence on customers’ reaction

to price.

(Matzler et al. 2006) defined price fairness as a perception of the customer

whether the difference between another comparative party and the socially

accepted price is reasonable and acceptable. Moreover, customers will perceive

a price as fair if there is no discrimination on price and no abuse of market power

in price setting.

Where (Herrmann et al., 2000) defined price fairness can be differentiated into

two aspects which are: (1) Price-quality ratio as perceived by the customer and

considered to be a dimension of price satisfaction. (2) The correlation of a

product’s real price and the price of a comparative other party or socially

accepted price.

According to equity theory (Adams, 1963) customers’ establish their judgment by

comparing the price they paid (investment) to the quality of product and service

they received (benefits).

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2.4.2. Service Quality

2.4.2.1. Definition

(Alexandris et al., 2001; Chiou & Droge, 2006; Hightower et al., 2002) has noted,

past work has shown that offering high-quality service is crucial for the

development of loyal patrons. The service quality–agency loyalty association

reflects a process through which the provision of quality services yields stronger

customer satisfaction that strengthens agency commitment and the likelihood of

repeat purchase.

(Dick & Basu, 1994) stated that conceptualizations of loyalty typically consider

the construct in terms of two components—attitudinal and behavioural loyalty.

Attitudinal loyalty, also referred to as psychological commitment, examines the

thoughts and feelings consumers express toward specific service providers.

Alternately, (Iwasaki & Havitz, 1998) stated that behavioural loyalty is most often

comprised of indicators that examine actual purchase or use frequency, duration,

and consistency.

(Burns & Graefe, 2006; Tian-Cole, Crompton, & Wilson, 2002; McCleary,

Weaver, & Hsu, 2006) stated, while the relationship between service quality and

customer loyalty has been observed repeatedly in the services marketing

literature. In this context, satisfaction is seen as a mediator of the service quality–

loyalty relationship. Most investigations have limited their analyses to the effect of

service quality on satisfaction alone.

Similarly, (Ko and Pastore, 2007) observed a positive association among

indicators of service quality and overall satisfaction.

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2.4.2.2. Customer Satisfaction and Service Quality

(Gronroos 1984) said satisfaction from service quality is usually evaluated in

terms of technical quality and functional quality. While (Donabedian 1980, 1982)

said usually, customers do not have much information about the technical

aspects of a service; therefore, functional quality becomes the major factor from

which to form perceptions of service quality. (Czepiel 1990) stated that service

quality may be defined as customer perception of how well a service meets or

exceeds their expectations. (Sachdev and Verma 2004) defined that service

quality can be measured in terms of customer perception, customer expectation,

customer satisfaction, and customer attitude. (Ekinci, 2003) indicates that the

evaluation of service quality leads to customer satisfaction. (Rust and Oliver,

1994) define satisfaction as the “customer fulfillment response,” which is an

evaluation as well as an emotion-based response to a service.

(Eboli and Mazzulla, 2007) measured customer satisfaction in the context of bus

service on various factors including availability of shelter and benches at bus

stops, cleanliness, overcrowding, information system, safety, personnel security,

helpfulness of personnel, and physical condition of bus stops. TCRP Report 100

identifies the following elements at bus stations for efficient service: shelters,

waiting rooms and seating, doorways, stairways, escalators, signage and

information displays, public address systems, and passenger amenities

(including shelters, benches, vending machines, trash receptacles, lighting,

phone booths, art, and landscaping).

In a study on Internet banking by (Geetika et al. 2008), consumers gave the

highest weight to the quality of service while selecting a particular bank. In

another study of customer satisfaction with banking services by (Jham and Khan

2008) factors of customer satisfaction were traditional (basic) facilities,

convenience, behavior of employees, and the environment of bank.

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(J. D. Power and Associates, 2008a) measured overall customer satisfaction of

electric utilities through six factors: power quality and reliability, customer service,

company image, billing and payment, price, and communications. (J. D. Power

and Associates, 2008b) also measured customer satisfaction with high-speed

and dialup Internet service providers based on five factors: performance and

reliability cost of service, customer service, billing, and offerings and promotions.

In another study by (J. D. Power and Associates, 2008c), they that found

communication (information systems) is to be a determinant of customer

satisfaction for customers of utility companies.

(Ribiere et al., 1999) identified customer satisfaction with hospital information

systems in terms of timeliness, accuracy, and completeness. Yet another study

on satisfaction with hospital services by (Andaleeb, 1998) included

communication with patients, competence of staff, staff demeanor, quality of the

facilities, and perceived costs.

(J. D. Power and Associates Reports 2007) stated that customer satisfaction with

full-service moving companies was measured across seven factors:

transportation of belongings, loading service, unloading service, optional

coverage, estimate process, packing service, and insurance/damage claims. This

implies that the quality of basic facilities and other supporting facilities were used

as criteria for satisfaction.

A study on customer satisfaction by (Sonne, 1999) from consultant services

identified various factors including perceived competence of the consultant and

the attitude of consultants toward the customer during the service production

process.

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2.4.3. Networking of the Service Providers’ Representatives

(Alexandris et al. 2004) tested a model that had Customer Loyalty indirectly

predicting networking (psychological commitment and positive word-of-mouth

communications and personal relations with the agencies representatives) with

satisfaction the mediator. Significant indirect positive effects on networking

between customers and agencies representatives were observed for all

dimensions of service, including interaction quality, outcome quality, and physical

environment quality witch in turn affects their satisfaction.

(Czepiel, 1990; Czepiel, Solomon, & Surprenant, 1985) stated that interaction

quality refers to the nature of the interactions between the customer and the

company’s representative.

2.5. Conclusion

After reading the above literature review, it can be concluded that customer

loyalty leads to improve the organizational performance through improving the

profitability. Customer satisfaction is a key driver for customer loyalty and it has a

positive effect on it. Increasing customer satisfaction will lead to keep customer

loyalty while decreasing customer satisfaction will lead to lose the owned

customer loyalty. The main factors affecting customer satisfaction are price,

service quality and networking of service provider’s representatives. These

factors in turn affects customer loyalty through their effect on customer

satisfaction and this what this research will try to illustrate.

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Chapter 3: Research Methodology and Design

3.1. Overview

This chapter explains in detail, how the researcher plans to perform the research.

The problem statement will be elaborated on further, the research methodology

will be explained and the instruments utilized will be discussed. The researcher

will also explain the population intended for this research, the size of the

subjective sample chosen and the criterion based upon this choice.

Data collection methods will be discussed, as well as its respective analysis;

finally this chapter will be concluded by the limitations of the research and the

ethical considerations imposed.

3.2. Problem Statement Elaboration

Do the factors that affect customer satisfaction towards service provider(s) affect

also customer loyalty?

By studying the effect of each of these three main factors price, service quality

and networking of service provider’s representatives on customer satisfaction

and the direct impact of them on customer loyalty and how it will affect his choice

when a service is needed? Which service provider will the customer will choose,

the OEM or another company? This will be the main goal of this study.

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3.3. Research Objective

To study the effect of the factors affecting customer satisfaction on customer

loyalty and eventually its likely impact on service providers’ performance. As

maintaining customer loyalty in marketing development strategies cannot be

ignored. Especially, in a business market which has numerous competitors,

keeping good relationships with business customers could be vital for

organizational success.

This will help the service providers to find the best practice to benefit of such

relationship and its driven factors, either to protect their business or to attack

competitors.

Protecting their business means that the will use “Defensive Strategy” to sustain

their current customers and they have to decide what the best strategy to do so

is.

Attacking competitors means that they will use “Aggressive (Offensive) Strategy”

and they have to decide what the best strategy to do so is.

3.4. Conceptual Framework

The proposed framework of this research was to study the effect of customer

satisfaction on customer loyalty under these variables that affects customer

satisfaction:

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3.4.1. Dependent Variable

Y1: Customer Loyalty

3.4.2. Independent Variables

X1: Customer Satisfaction (Intervening Variable)

X2: Price

X3: Service Quality

X4: Networking of the Service Providers’ Representatives

3.4.3. The Research Model Diagram

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Customer Satisfaction Customer Loyalty

1- Price

2- Service Quality

3- Networking of the Service

Providers’ Representatives

3.5. Research Questions

The research is aiming to answer the following research questions:

Q1: Is price the main driver of customer loyalty?

Q2: Is the quality of the provided services affects customer loyalty?

Q3: Is networking of the service providers’ representatives has a positive

effect on customer loyalty?

3.6. Research Hypotheses

The research gave the following hypotheses aiming to answer the research

questions:

HP1: Price is not the main driver of customer Loyalty

HP2: Networking of the service providers’ representatives has a positive

effect on customer loyalty

HP3: Quality of the provided services has a positive effect on customer

loyalty

3.7. Research Methodology

Much of the literature reviewed on research paradigms and methodology

suggested that choosing a research philosophy is a subjective matter. (Fisher,

2003) and (Easterby-Smith et al, 2002), amongst others, agree that in practice

any research methods could actually be used. It appears there is no right or

wrong answer to which research philosophy, but some will be more suited to

answering the research question than others.

The researcher is planning to utilize a quantitative method and the data will be

collected by using a questionnaire (appendix A) to collect data. As it is a breadth

study and making statistics to analyze these data

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3.7.1.Research Method

The research method undertaken by the researcher will be of a hypothesis

testing type as the researcher is needed to test how true his pre assumed

hypothesis were. As quantitative methods might be the best when the researcher

wants to compare data in a systematic way, make generalizations to the whole

population or test theories with hypothesis. This is particularly complying with this

research objective and the theoretical framework discussed earlier and

hypothesis needed to be tested.

A survey method is used to produce statistical facts for such hypotheses tests as

surveys are the preferred method for those types of questions that involve asking

participants about their own experience.

3.7.2. Research Instruments

The researcher will utilize a questionnaire (Appendix A). This questionnaire

is a personally administrated questionnaire as defined by (Uma Sekaran, 2010).

The personally administer the questionnaires is a good way to collect data as the

survey is confined to a local area, and the researcher is willing and able to

assemble groups of the population to respond to the questionnaire at their

workplace,. The main advantage of this is that the researcher can collect all the

completed responses within a short period of time. If there is any doubts that the

respondents might have on any question could be clarified on the spot. The

researcher is also afforded the opportunity to introduce the researcher topic and

motivate the respondents to offer their frank answers.

3.8. Population

The population of this research is the decision makers in the companies that deal

with rotating equipment services both technical and financial\commercial sectors.

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3.9. Sampling Method

As the elements in the population have some known chance or probability of

being selected as a sample subjects, this is a probability sampling.

The researcher has chosen to perform the simple random sampling. This is

because any person of the chosen population has the same effect and his

participation is needed. In the unrestricted probability sampling design, more

commonly known as simple random sampling, every element in the population

has a known and equal chance of being selected as a subject. Simple random

sampling also has the least bias and offers the most generalizability.

3.10. Data Collection Plan

The researcher is planning on exploring different rotating equipment using

companies, in all fields (Electricity Production, Oil and Gas and Industry) that

present the rotating equipment service customers to perform the necessary

data collection.

The researcher will need to receive all necessary approvals prior to performing

any of the questionnaire filling. Since the research instruments used are of

an exploratory nature, the researcher is not expected to have difficulties in

receiving the necessary acceptance to proceed with the research within

the various companies. Further arrangements will have to be organized by

the researcher; such as dates and times to submit the questionnaires and the

dates and times to collect them. The data collection should begin for a period of

two weeks.

3.11. Data Analysis

Since the data has been collected through questionnaire, this information needs

to be analyzed. The analysis process will be performed by The SPSS software

Version 17.0 and the output will be in the form of pie charts, bar charts and

tables.

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3.12. Findings Report

The findings report will explain the results provided after the research has

been conducted, the findings should provide the researcher with a possible solid

theory formulation, to the extent of impact of customer satisfaction on customer

loyalty towards the OEM service provider.

3.13. Research Limitations

The main research limitations are the limited sample size as the Egyptian

companies dealing with rotating equipment are not so many. Although all

attempts were made to make this an objective study by clarifying to all

participants that this is totally anonymous questionnaire and this is for the sake of

making an illustrative academic study, biases on the part of respondents might

have resulted with some subjectivity. Also the availability and accessibility of data

from the service providers themselves is another limitation.

3.14. Ethical Considerations

The researcher will strictly adhere to all ethical considerations in conducting this

research. All participants will be aware of their taking part in the research will

be informed clearly; their prior written consent will be provided. All information

provided will be treated as strictly confidential guarding the questionnaire filler’s

privacy is one of the primary responsibilities. The researcher should not

misinterpret the nature of the study, nor should he violate the self-esteem and

self-respect of the subjects. Also the observation should be as non-intrusive as

possible. All recorded notes and findings will be disposed of after reaching the

possible theory formulation in question.

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3.15. Conclusion

The researcher provided information on the research design and methodology

expected for this specific research. The problem statement has been described

in detail, the research methodology used, as well as the data collection method

used. The sampling has been explained, as well as the data analysis and report

of the findings. Finally this chapter has been concluded with the research

limitations and the necessary ethical considerations implementation during this

research.

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Chapter 4: Data Analysis and Findings

4.1. Introduction

In this chapter the researcher will give the analysis of the collected data as the

result of the SPSS statistics software version 17 for the sample used size which

is 80 participants.

4.2. Descriptive results and analysis of findings

4.2.1. Reliability Test

Reliability test is used to check the reliability and the consistency of the data to

ensure its reliable enough for statistical analysis and efficient results.

Cronbach Alfa test is used to test reliability and the closer its value to 1, the more

reliable the data. From the below (Table 4.1), Alpha=0.738 which is a good

indicator for reliable data.

Scale: All Variables

Case Processing Summary N %

Cases Valid 80 100.0Excludeda 0 .0Total 80 100.0

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Cronbach's Alpha No of Items

.738 5

(Table 4.1) Reliability test

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4.3. Sample Descriptive Analysis

4.3.1. Service Providers Types

The sample shows that 42 of the participants are dealing with both OEM % non

OEM service providers while 38 participants are dealing only with OEM service

providers. The below table and graph show this distribution.

Frequency Percent Valid Percent Cumulative Percent

OEM & Non MEM 42 52.5 52.5 52.5

Only OEM 38 47.5 47.5 100.0

Total 80 100.0 100.0

(Table 4.2) Service providers type frequency

Service Providers Types

OEM & Non OEM

Only OEM

(Figure 4.1) Service providers type frequency

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4.3.2. Position Type

The sample shows that 48 of the participants have technical position while 32

participants have commercial\financial position. The below table and graph show

this distribution.

Frequency

PercentValid

PercentCumulative Percent

Technical 48 60.0 60.0 60.0Commercial \ Financial

32 40.0 40.0 100.0

Total 80 100.0 100.0 (Table 4.3) Position type frequency

Position Type Technical

Commercial\ Financial

(Figure 4.2) Position type frequency

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4.3.3. Independent Variables Results

The coming part will illustrate the distribution of the answers of the questionnaire

questions that related to each of the independent variable price, quality of

provided services (quality) and networking of the service providers’

representatives (networking).

4.3.3.1. Price

4.3.3.1.1. Price Answers Distributions

The below table and figure show the distribution of different price questions

answers.

(Table 4. 4) Price answers distribution

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Price Frequency PercentValid

PercentCumulative

Percent1 5 6.3 6.3 6.31.33 2 2.5 2.5 8.81.5 4 5.0 5.0 13.81.67 5 6.3 6.3 20.02 39 48.8 48.8 68.82.33 6 7.5 7.5 76.32.5 3 3.8 3.8 80.02.67 6 7.5 7.5 87.53 6 7.5 7.5 95.03.33 1 1.3 1.3 96.33.5 2 2.5 2.5 98.84 1 1.3 1.3 100.0Total 80 100.0 100.0

Price Frequency

0

5

10

15

20

25

30

35

40

1 1.33 1.5 1.67 2 2.33 2.5 2.67 3 3.33 3.5 4

Price

Co

un

t

(Figure 4.3) Price answers distribution

4.3.3.1.2. Price Distribution Over Position Types

Price Vs Position Type

0

5

10

15

20

25

1

1.33 1.5

1.67 2

2.33 2.5

2.67 3

3.33 3.5 4

Price

Price

Co

un

t

Technical


(Figure 4.4) Price distribution Vs position types

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4.3.3.1.3. Price Distribution Over Service Provider Types

Price Vs Service provider Type

0

5

10

15

20

25

1 1.33 1.5 1.67 2 2.33 2.5 2.67 3 3.33 3.5 4

Price

Co

un

t

OEM & Non OEM

OEM Only

(Figure 4.5) Price distribution Vs service provider types

4.3.3.1.4. Price Answers Distribution Analysis

It is clear from the above figures that neither the position type nor the type of

service provider has an effect on their price questions answers. The distribution

is almost the same with different position types and service providers’ types and

it is homogeneous with the total distribution.

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4.3.3.2. Quality

4.3.3.2.1. Quality Answers Distribution

The below table and figure will show the distribution of different quality questions

answers.

Quality Frequency Percent Valid Percent

Cumulative Percent

1 2 2.5 2.5 2.51.33 6 7.5 7.5 10.01.4 1 1.3 1.3 11.31.6 4 5.0 5.0 16.31.67 7 8.8 8.8 25.01.8 5 6.3 6.3 31.32 26 32.5 32.5 63.82.2 8 10.0 10.0 73.82.33 1 1.3 1.3 75.02.4 7 8.8 8.8 83.82.6 4 5.0 5.0 88.82.67 3 3.8 3.8 92.53 2 2.5 2.5 953.2 1 1.25 1.25 96.253.33 2 2.5 2.5 98.83.6 1 1.3 1.3 100.0Total 80 100.0 100.0

(Table 4. 5) Quality answers distribution

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Quality Result

0

5

10

15

20

25

30

1 1.33 1.4 1.6 1.67 1.8 2 2.2 2.33 2.4 2.6 2.67 3 3.2 3.33 3.6

Quality

Co

un

t

(Figure 4.6) Quality answers distribution

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4.3.3.2.2. Quality Distribution Over Position Types

Quality Vs Position Type

02468

10121416

11.

41.

67 22.

33 2.6 3

3.33

Quality

Co

un

t

Technical


(Figure 4.7) Quality distribution Vs position types

4.3.3.2.3. Quality Distribution Over Service Provider Types

Quality Vs Service provider Type

0

2

4

6

8

10

12

11.

41.

67 22.

33 2.6 3

3.33

Quality

Co

un

t

OEM & Non OEM

OEM Only

(Figure 4.8) Quality distribution Vs service provider types

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4.3.3.2.4. Quality Answers Distribution analysis


service provider has an effect on their quality questions answers. The distribution

is almost the same with different position types and service providers’ types and

it is homogeneous with the total distribution.

4.3.3.3. Networking

4.3.3.3.1. Networking Answers Distribution

The below table and figure will show the distribution of different networking

questions answers.

Networking Frequency PercentValid

PercentCumulative

Percent1 2 2.5 2.5 2.51.5 6 7.5 7.5 10.01.75 2 2.5 2.5 12.52 25 31.3 31.3 43.82.25 6 7.5 7.5 51.32.5 15 18.8 18.8 70.02.75 8 10.0 10.0 80.03 9 11.3 11.3 91.33.25 2 2.5 2.5 93.753.5 3 3.75 3.75 97.53.75 1 1.3 1.3 98.84 1 1.3 1.3 100.0Total 80 100.0 100.0

(Table 4.6) Networking answers distribution

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Networking Result

0

5

10

15

20

25

30

1 1.5 1.75 2 2.25 2.5 2.75 3 3.25 3.5 3.75 4

Networking

Co

un

t

(Figure 4.9) Networking answers distribution

4.3.3.3.2. Networking Distribution over Position Types

Networking Vs Position Type

0

2

4

6

8

10

12

11.

51.

75 22.

25 2.5

2.75 3

3.25 3.

53.

75 4

Networking

Co

un

t

Technical


(Figure 4.10) Networking distribution Vs position types

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4.3.3.3.3. Networking Distribution over Service Provider

Types

Networking Vs Service provider Type

0

2

4

6

8

10

12

14

1 1.5 1.75 2 2.25 2.5 2.75 3 3.25 3.5 3.75 4

Networking

Co

un

t

OEM & Non OEM

OEM Only

(Figure 4.11) Networking distribution Vs service provider types

4.3.3.3.4. Networking Answers Distribution analysis


service provider has an effect on their networking questions answers. The

distribution is almost the same with different position types and service providers’

types and it is homogeneous with the total distribution.

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4.4. Inferential Data Analysis

4.4.1. Correlation between Independent Variables and

Customer Satisfaction

The below table shows the correlation between the three independent variables

price, quality & networking and customer satisfaction as an output of SPSS

software.

(Table 4.7) Correlation between all variables & Customer Satisfaction

Customer SatisfactionPrice Pearson Correlation .596**

Sig. (1-tailed) .032N 80

Quality Pearson Correlation .734**


Networking Pearson Correlation .620*


**. Correlation is significant at the 0.01 level (1-tailed).*. Correlation is significant at the 0.05 level (1-tailed).

From the table we can conclude that the three parameters are effectively related

to customer satisfaction as their three significant factors are less than 0.05.

Price is directly related to customer satisfaction as the Pearson correlation

coefficient is positive. The relationship is medium as the coefficient =0.596.

Quality is directly related to customer satisfaction as the Pearson correlation

coefficient is positive. The relationship is strong as the coefficient =0.734.

Networking is directly related to customer satisfaction as the Pearson correlation

coefficient is positive. The relationship is medium as the coefficient =0.620.

We can rank the effect of the three parameters on customer satisfaction

accordingly, quality of provider service then networking of service providers’

representatives and finally price of the provided service.

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4.4.2. Correlation between Independent Variables and

Customer Loyalty

The below table shows the correlation between the three independent variables

price, quality & networking and customer loyalty as an output of SPSS software.

(Table 4.8) Correlation between all variables & Customer Loyalty

Customer LoyaltyPrice Pearson Correlation .624*


Quality Pearson Correlation .833Sig. (1-tailed) .033N 80

Networking Pearson Correlation .711*



From the table we can conclude that the three parameters are effectively related

to customer loyalty as their three significant factors are less than 0.05.

Price is directly related to customer loyalty as the Pearson correlation coefficient

is positive. The relationship is medium as the coefficient =0.624.

Quality of the provided service is directly related to customer loyalty as the

Pearson correlation coefficient is positive. The relationship is strong as the

coefficient =0.833.

Networking of service providers’ representatives is directly related to customer

loyalty as the Pearson correlation coefficient is positive. The relationship is strong

as the coefficient =0.711.

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We can rank the effect of the three parameters on customer loyalty accordingly,

quality of provider service then networking of service providers’ representatives

and finally price of the provided service.

4.4.3. Correlation between Customer Satisfaction and

Customer Loyalty

The below table shows the correlation between customer satisfaction and

customer loyalty as an output of SPSS software.

(Table 4.9) Correlation between Customer Satisfaction & Customer Loyalty

Customer LoyaltySatisfaction Pearson Correlation .851*



From the table we can conclude that customer satisfaction is effectively related to

customer loyalty as the significant factor between them is less than 0.01.

Customer satisfaction is directly related to customer loyalty as the Pearson

correlation coefficient is positive. The relationship is strong as the coefficient

=0.851.

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4.4.4. Ranking Question analysis

The questionnaire contains 3 ranking questions (Q15, Q16 & Q17) to test the

priorities of each of the three independent variables plus another variable

(nationality) and an option to be added by each participant under (others).

The first outcome of the results that there is no participant added another factor

in the (others) field. This means either they found the given variable sufficient or

they did it add it to make it easier for themselves and fill the questionnaire faster.

4.4.4.1. Q15 Results

The coming table give the results of this question:

Q15 1st Choice

Frequenc

y Percent Valid Percent Cumulative PercentValid Price 10 12.5% 12.5% 12.5%

Quality 52 65.0% 65.0% 77.5%Nationality 0 0.0% 0.0% 77.5%Networking 18 22.5% 22.5% 100.0%Total 80 100.0% 100.0%

Q15 2nd Choice

Frequenc



Q15 3rd Choice

Frequenc



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Q15 4th Choice

Frequenc






Q1 61st Choice

Frequenc



Q16 2nd Choice

Frequenc



Q16 3rd Choice

Frequenc



Q16 4th Chive

Frequenc

y Percent Valid Percent Cumulative Percent

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Valid Price 11 13.8% 13.8% 13.8%Quality 15 18.8% 18.8% 32.5%Nationality 39 48.8% 48.8% 81.3%Networking 15 18.8% 18.8% 100.0%Total 80 100.0% 100.0%


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Q17 1st Choice

Frequenc



Q17 2nd Choice

Frequenc



Q17 3rd Choice

Frequenc



Q17 4th Choice

Frequenc




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4.4.4.4. Ranking Question Results Analysis

The coming table shows the weighted results of the answers of each of the

ranking questions. The 1st position takes the power of 4, the 2nd position takes the

power of 3, the 3rd position takes the power of 2 and the 4th position takes the

power of 1.

VariableWeighted Result

Q15 Q16 Q17 TotalPrice 151 191 189 531Quality 298 240 272 810Nationality 99 129 132 360Networking 252 240 207 699(Table 4.13) Ranking Questions Analysis

The result of these ranking questions says that the quality of the provided service

is the most important variable in customer satisfaction and customer loyalty in the

service of rotating equipment in the energy field in Egypt. Networking of service

providers’ representatives comes second. Then price of provided service comes

third. Nationality of the service provider is the last and it is not one of this study’s

variables.

From the above analysis we conclude that the researcher has chosen important

variables for the Egyptian customers. The ranking of these variables from the

ranking questions is the same as the ranking from the other questions for both

customer loyalty and customer satisfaction as shown before.

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4.5. Hypotheses Testing

Based on the above result, the researcher is going to make hypothesis testing for

each of the three research hypothesis.

4.5.1. HP1

The first hypothesis says that the price is not the main driver in customer loyalty.

The research data analysis shows that quality of the provided service is the most

important driver for customer loyalty then networking of service providers’

representatives then price. Accordingly, this hypothesis is true.

4.5.2. HP2

The second hypothesis says that networking of the service providers’

representatives has a positive effect of customer loyalty. The research data

analysis shows that this hypothesis is true.

4.5.3. HP3

The third hypothesis says that the quality of the provided services has a positive

effect on the customer loyalty. The research data analysis shows that this

hypothesis is true.

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Chapter 5: Conclusions and Recommendations

5.1. Main Conclusions

From this study we conclude that the effect of the chosen factors affecting

customer satisfaction (price, quality of provided service and networking of service

providers’ representatives) are also affecting customer loyalty.

Quality of the provided service is the most effective parameter of the chosen

parameters on customer loyalty. The research findings stated that the Egyptian

energy field customers in the rotating equipment services are quality focused

customers. Networking of the service providers’ representatives comes after

quality. Price comes last of the chosen parameters that affecting customer

loyalty.

5.2. Recommendations

The researcher recommends the service providers for rotating equipment in

Egypt who are willing to maintain their customer loyalty to avoid ignoring the

chosen factors in their marketing development strategies to keep their obtained

organizational success. The researcher also recommends them keeping paying

the greatest attention to the quality of the provided services as it is the most

effective driver for customer loyalty. The networking of their representatives with

the customers is also very important and they have to make their representative

socially qualified as they are qualified technically.

Price is also an effective factor but less than the previous two. Most of the

service providers deal with such a business as if it is a priced driven business

which it not the only parameter that affecting the customers’ decision according

to the findings of this study.

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This researcher hopes that the above findings will help the service providers to

find the best practice to benefit of such relationship and its driven factors, either

to protect their business or to attack competitors.

5.3. Future Work

The researcher has found in the literature review that the part of the effect of

networking of organizations’ representatives on customer satisfaction and\or

customer loyalty is not well covered and there is a lack of researches in this

topic. The researcher recommends the future researchers who want to make

researches in this field to proceed searching in this topic.

This research might be extended to target different business with a larger

sample.

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Appendix A:

Customer Satisfaction \ Customer Loyalty

Questionnaire

Department : Technical Commercial \ Financial

For the rotating equipment services you are dealing with:

Please answer the following questions regarding the OEM service provider:

1. How Many OEM service providers you are dealing with?

One Two Three More than three

2. How do you rate the service provider representative(s) in

dealing with you?

Excellent Good Fair Bad Very bad

3. If you received any technical support, how do you rate

the technical professionals in dealing with you?


4. If you received any technical support, how do you rate

the technical competence of the engineers and their

response time?


5. How do you rate the products and services and did they meet your

needs and expectations regarding quality and performance?


6. How do you rate the delivery on time performance and the commitment

to meet your delivery expectations?


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7. How do you rate the competitiveness of the products and do they

represent best value for total cost of lifetime ownership?


8. Did the price of service provided by the supplier meet your

expectations?


9. How do you rate your satisfaction with the overhaul evaluation of the

services provided by this OEM service provider?


10. If a colleague had a similar problem to yours would you recommend

they use the same service provider?

Yes No N\A

11.Do you feel loyal to this service provider?

Yes No N\A

12.Have you had experience with any of this OEM's competitor

Yes No

13. If yes, do you recommend this competitor to any of your colleagues or

business partners?

Yes No N\A

14.How likely do you think of changing this OEM service provider:

Very Likely Likely Neutral Unlikely Very Unlikely

15. In General, please rank the importance of the following point when

choosing the service provider:

a. Price ……………….

b. Quality of Service ……………….

c. His Nationality ……………….

d. His representatives’ attitude ……………….

e. Other (Please Specify) …………….. ………………

16.When you are evaluating a Non-OEM service provider

before choosing him to do a service for the 1st time,

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please rank the following points by their importance in the

evaluation process:

a. Price ……………….

b. Quality of Service ……………….

c. His Nationality ……………….

d. His representatives’ attitude ……………….


17.Please rank the following according to importance of the

reasons that make you deciding to change the service

provider:

a. Price Increase ……………….

b. Quality of Service decreases ……………….

c. His Nationality changed (Acquired by another company) ……………….

d. His representatives’ attitude change negatively ……………….


18.Do you deal with other service providers than the OEM service

providers (i.e. Non-OEM)?

Yes No

If no, then thank you. You have finished the questionnaire.

If yes, please answer the following questions regarding the

Non-OEM service providers:

19.How Many Non-OEM service providers you are dealing with?

One Two Three More than three

20.How do you rate the attitude of his staff?


21.How knowledgeable and professional have you found the staff of this

services provider?


22. How do you rate knowledge of his staff?


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23.How do you rate quality of the provided service?


24.How do you rate price of the provided service?


25.How do you rate your satisfaction with the overhaul evaluation of the

services provided by this Non-OEM service provider?


26.Will you continue to use this services provider?

Yes No N\A

27.Would you recommend this services provider to others?

Yes No N\A

28.Do you feel loyal to this service provider?

Yes No N\A

29.How likely do you think of changing this Non-OEM service provider:


30.How likely do you think of returning back to the OEM service provider:


Thank you for your time.

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customer sat & customer loy

Documents

analysis of findings

ranking question analysis

inferential data analysis

sample descriptive analysis

networking distribution

independent variables

service providers types

position types