ASSESSMENT OF SERVICE QUALITY AND

CUSTOMERS’ SATISFACTION IN CLS LOGISTICS

PLC.

St. Mary University

School of Graduate Studies

A Thesis Submitted to St Mary University School of Graduate Studies in

Partial Fulfillment of the Requirements for the Degree of Master of Arts in
Marketing Management

Prepared By: Wongel Yohannes

ID-SGS-0419/2011A
Thesis advisor: Zemenu Aynadis (Ass. Prof.)

August 2020
Addis Ababa
 DECLARATION

I, Wongel Yohannes, hereby declare that this thesis titled, „Assessment of Service Quality and
Customers‟ Satisfaction in CLS Logistics Plc is my original work. I have carried out the present
study independently with the guidance and support of my research advisor, Mohammed
Mohammed (assistant professor). Any other research or academic sources used here in this study
have been duly acknowledged. Moreover, this study has not been submitted for the award of any
Degree or Diploma Program in this or any other institution.

Wongel Yohannes August 2020

Student Signature Date

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 ST. MARY'S UNIVERSITY COLLEGE

SCHOOL OF GRADUATE STUDIES

ASSESSMENT OF SERVICE QUALITY AND CUSTOMERS’ SATISFACTION IN CLS
LOGISTICS PLC.

Approved by Board Examiners

------------------ ------------------ ------------------

Advisor Signature Date

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Internal Examiner Signature Date

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External Examiner Signature Date

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ACKNOWLEDGEMENTS

First glory to God who gave a strength and courage in every step of my life. I would like to
express my deepest gratitude to my advisor, Zemenu Aynadis (Ass. Prof.) for his valuable
guidance and support in the preparation of this study.
Furthermore, I would like to acknowledge with much appreciation to my friends and colleagues
for their full engagement in the distribution and collection of questionnaires and of course to all
survey respondents for their willingness and participation in the survey, but mostly my family
whose support kept me going.

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 Table of Content
ACKNOWLEDGEMENTS ............................................................................................................ 0
ABSTRACT .................................................................................................................................... 8
CHAPTER ONE ............................................................................................................................. 9
INTRODUCTION .......................................................................................................................... 9
1.1 Background of the Study .................................................................................................. 9
1.2 Statement of the problem ............................................................................................... 11
1.3 Research Questions ........................................................................................................ 12
1.4 Research Objective ......................................................................................................... 13
1.4.1 General objective .................................................................................................... 13
1.4.2 Specific objectives .................................................................................................. 13
1.5 Significance of the study ................................................................................................ 13
1.6 Scope and Limitation of the Study ................................................................................. 13
1.6.1 Scope of the Study .................................................................................................. 13
1.6.2 Limitation of the Study ........................................................................................... 14
1.7 Organization of the study ............................................................................................... 15
CHAPTER TWO .......................................................................................................................... 16
REVIEW OF RELATED LITERATURE .................................................................................... 16
2.1. Theoretical Literature ................................................................................................. 16
2.2. Empirical Literature .................................................................................................... 32
2.3. Research framework ................................................................................................... 33
CHAPTER THREE ...................................................................................................................... 39
RESEARCH METHODOLOGY.................................................................................................. 39
3.1. Research Approach ........................................................................................................ 39
3.2. Research Design ............................................................................................................. 40
3.3. Target Population, Sampling Size and Sampling Techniques ....................................... 40
3.4. Data Type, source and Data Collection Instrument ....................................................... 41
3.5. Data Analyzing Technique ............................................................................................. 41
CHAPTER FOUR ......................................................................................................................... 42
DATA ANALYSIS AND PRESENTATION .............................................................................. 42
CHAPTER FIVE .......................................................................................................................... 49
CONCLUSION AND RECOMMENDATION ............................................................................ 49
Reference ...................................................................................................................................... 52

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Appendix: Questionnaire .............................................................................................................. 56

List of Tables

Table 1. LSQ Dimension ……………………………………………………………...…19

Table 2. Demographics of respondents…………………………………………………..42
Table 3. Respondents‟ level of familiarity………………………………………………..43
Table 4: Customer Satisfaction level with CLS Logistic………………………………....48

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 List of Figures

Figure 1: Conceptual framework of the study…………………………………………....37

Figure 2: Tangibility Analysis……………………………………………………………43
Figure 3: Reliability Analysis…………………………………………………………….44
Figure 4: Responsiveness Analysis…………………………………………………….…45
Figure 5: Assurance Analysis………………………………………………………….….47
Figure 6: Empathy Analysis……………………………………………………………….47

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 Acronyms

ISO: International Organization for Standardization

SERVQUAL: Service Quality
SPSS: Statistical Product and Service Solutions

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ABSTRACT

The importance of service quality for any business performance has been recognized in the
literature through the direct impact on customer satisfaction. The paper studied the effect of
service quality on customer satisfaction in CLS logistics PLC. SERVPERF model by Cronin and
Taylor‟s (1992) is used to identify the effect and the relationship. Quantitative means of data
collection method is employed to collect the data through questionnaire. This study used
descriptive and causal research design and both primary and secondary data. The sample consists
of 384 respondents selected based on convenience sampling procedure. The collected data was
analyzed with the help of SPSS version 20. The finding of this study indicates that customers
were most satisfied with the assurance dimensions of service quality and dissatisfied with
network quality dimension. The findings of the study also indicated that there are positive and
significant relationships between five service quality dimensions and customer‟s satisfaction.
And also except responsiveness all service quality dimensions have positive and significant
effect on customer satisfaction. The study recommends that the Company should improve the
service quality dimensions especially network quality, responsiveness, empathy and security in
order to satisfy customers.

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Logistics service quality is considered as a source of competitive advantage of firms,

contributing to customer satisfaction and further loyalty (Huiskonen and Pirttilä, 1998;
Gotzamani et al., 2010; König and Spinler, 2016). Therefore, it is crucial to assess and improve
the level of logistics service quality of firms in comparison to their customers „requirements and
satisfaction level (Yang, 2003; Stefansson, 2006).
Nowadays, in the face of ever-growing competition, a primary objective of each company is to
meet and even exceed requirements of their customers, what allow to build a strong relationship
between company and their customers acc. to Alhuwitat, M.A. Abujarad, Salem, F.SH. (2017)
and provides ensure customer loyalty − a main goal of customer relationship management acc. to
Asgarpourza et al. (2013).

Quality is one of the most important factors for companies in their relationship between suppliers
and customers. It is always relative to a set of inherent characteristics and a set of requirements
being defined by given supply chain elements and participants.

There are several definitions of quality. According to American Society for Quality, quality is
defined as a subjective term for which each person or sector has its own definition. In technical
usage, quality can have two meanings: 1. the characteristics of a product or service that bear on
its ability to satisfy stated or implied needs; 2. a product or service free of deficiencies.
According to Joseph Juran, quality means “fitness for use;” according to Philip Crosby, it means
“conformance to requirements.”1 ISO 8402-19862 standard defines quality as "the totality of
features and characteristics of a product or service that bears its ability to satisfy stated or
implied needs”.

The inclusion of concepts such as service quality and relationship marketing has significantly
changed both the academic study and business practice of logistics. Logistics has traditionally
been considered necessary for connecting production and consumption. From this perspective, a
company‟s logistics function was seen only as a generator of costs with no capacity for

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differentiation (Ballou, 2004). This began to change in the mid-1990s as logistics research based
on marketing principles began to analyze the capacity of logistics to deliver quality and thus
generate greater customer satisfaction and loyalty (Mentzer et al., 2004; Richey et al., 2007). The
logistics industry today is a classic example of service-based industry development (Chapmanet
al., 2003) and more in-depth studies of logistics are needed from the perspective of supply
channel relationships (Lambert, D.M., Knemeyer, A.M. and Gardner, J.T. (2004),).
The origination of service marketing has contributed to the core importance of customer
satisfaction through the delivery of service quality. According Parasuraman, identified 97
attributes which were found to have an impact on service quality. These 97 attributes were the
criteria that are important in assessing customer‟s expectations and perceptions on delivered
service. (Kumar et al., 2009,). These attributes were categorized into ten dimensions
(Parasuraman et al., 1985) and later subjected the proposed 97 item instruments for assessing
service quality through two stages in order to purify the instruments and select those with
significant influences (Parasuraman et al., 1988,).
The first purification stage came up with ten dimensions for assessing service quality which
were; tangibles, reliability, responsiveness, communication, credibility, security, competence,
courtesy, understanding, knowing, customers, and access. They went into the second purification
stage and in this stage they concentrated on condensing scale dimensionality and reliability.
A SERVQUAL dimension is a good scale to measure the service quality performance in various
specific industries. In this regard, researcher uses this model because it takes deep attention on
customer‟s expectation and perception of service provided at an organization (Shahin, 2005, p.3).
Parasuraman‟s SERVQUAL model is widely used to measure perceived service quality in
various industry such as retailing, restaurants, banking, telecommunication, services, airline,
catering, hotels, hospitals, automotive, education and so on (Ladhari, 2009). Businesses become
more of customer oriented to be able to survive in the market or to have a competitive advantage
over others. Customer orientation focuses on retaining market share through high customer
satisfaction (Kaur and Sharma, 2009).
As different literatures indicated, logistics service quality highly contributes to the delivery of
efficient online service which fulfills customers‟ requirements and needs. Thus, this study focus
on gathering empirical evidences to determine the customer satisfaction level of CLS Logistic
PLC users with the logistics service quality provided.

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 1.2 Statement of the problem

Delivering goods to customers is a critical activity in any business. And the way of performing
this core activity matters for the customer. In now a days, people are seeking for more
convenience and comfort in their shopping experience, and market strategies are continuously
changing to cop up with this customer needs. (Huang, Kuo and Xu, 2009)

In our dynamic world, way of business making process is being changed from time to time and
the introduction of new technologies takes the largest contribution for this evolvement. Now,
businesses are more of customer oriented and try to fulfill their customer demand before their
competitors do, otherwise, they will be out of market as customers have options to get what they
want. (Hana Alemu, 2016)

“Challenge is not in creation of the high quality services and making customers be satisfied,
because many competitors are able to do that, but in making loyal and profitable customers.
Loyalty means that customer, during a longer period of time, buys and uses specific service
structure and has positive attitudes towards company and its offers. Companies are in constant
dilemma about what shall be done in order to gain true and loyal customers. Everybody agrees
that service quality and satisfaction are main prerequisites for customer loyalty. If customer is
satisfied, it‟s logical that he should buy - use the same service of a company again. However, that
doesn‟t happen always, since satisfaction is not the only prerequisite for loyalty. A customer can
be satisfied until a competitive service appears the quality and price of which are more attractive.
A customer too can have positive attitudes toward a company and not to be satisfied with a
service and vice versa. That means that satisfied customer still can change a company. It is
necessary to bear in mind that modern customers are rarely characterized with lifetime loyalty, or
any other kind of loyalty for that matter, to one offer or one company.” (Milan Andrejić, 2016)

Namely, in marketing literature customer loyalty is considered to be one of the main

repercussions of service quality and customer satisfaction. The greatest number of studies in the
past dealt with quality – satisfaction relation and today, scientific focus is redirected from
satisfaction over loyalty to company‟s profit. Profit degree increase is the main aim of all the
activities from the service quality and customer satisfaction management domain. Available
scientific researches strongly support thesis on positive impact of service quality and customer

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satisfaction on customer‟s intended behavior (for example Parasuraman et. al. 1994). In order to
more precisely examine the impact of service quality on customer quality and provider‟s
business success, one should, in the chain of satisfaction and profit, examine relations between:
quality and satisfaction and loyalty of service. Croinin i Taylor (1992) identified positive
correlation between service quality and future purchase intension. Parasuraman et al. (1994) in
many studies found positive side of relation between customer‟s perception of service quality
and competence to recommend Service Company to acquaintances. Similar to Boulding el al.
(1993) they confirmed positive correlation between service quality, future purchase intention and
recommendation giving.
The gap is how comprehension of logistics service quality impact loyalty and satisfaction
between logistics provider and customer. Conclusion can be made that the more positive the
logistics service perception is, the greater the satisfaction. However, in reality, the relations are
more complex because, besides the quality, a series of other dimensions have an impact on
satisfaction and loyalty. In the next part of the paper the conceptual model is presented that
explains in detail relations between logistics service quality, customer satisfaction and loyalty.
The study will mainly focus on determining the customer satisfaction level of CLS Logistics
PLC customers by using standard measurement of logistics service quality and it also identifies
the logistics service quality dimensions that affect the customer satisfaction most. And this
research will bridge the literature gap in this area by providing empirical evidence on implication
of logistics service quality dimensions on customer satisfaction level.
1.3 Research Questions

The following research questions are developed to be answered as a result of the study

1. What is the level of reliability of service of CLC logistics P.L.C?

2. What is the level of tangibility of service of CLC logistics P.L.C?
3. What is the level of empathy of service of CLC logistics P.L.C?
4. What is the level of responsiveness of service of CLC logistics P.L.C?
5. What is the level of assurance of service of CLC logistics P.L.C?
6. What is the level of customers' satisfaction of CLC logistics P.L.C?

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 1.4 Research Objective

1.4.1 General objective

The general objective of the study is to assess the satisfaction level of CLS Logistics with its
logistics service qualities provided.
1.4.2 Specific objectives
In addition of attending the general objective, the study has the following specific objectives:

 To assess the level of reliability of service quality of CLS logistics P.L.C.

 To assess the level of tangibility of service quality of CLS logistics P.L.C.
 To assess the level of empathy of service quality of CLS logistics P.L.C.
 To assess the level of responsiveness of service quality of CLS logistics P.L.C.
 To assess the level of assurance of service quality of CLS logistics P.L.C.
 To assess the level of customers' satisfaction of CLS logistics P.L.C.
1.5 Significance of the study

The study of customer satisfaction is critical for any organization to provide superior service for
their customers, especially for Logistics services providers. This study has both practical and
theoretical significance. The findings of this research help CLS Logistics to understand its
customers‟ attitude towards the logistics service provided.

The other major significance is this study contribute its part in the literature of customer
satisfaction survey with the logistics service quality that pave a way for further improvement and
in-depth investigation on the impact of logistics service for customer satisfaction.
It is also important for me to conduct the study for fulfilling the requirement of Marketing and
Management thesis.

1.6 Scope and Limitation of the Study

1.6.1 Scope of the Study

1.6.1.1. Geographical Scope:

The study investigate only a selected area of Addis Ababa, the researcher may not represent
effect of service quality on customer satisfaction in Logistics services located in other areas of

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the country or outside of Addis Ababa, because of the shortage of money, time and on
conducting the research.

1.6.1.2 Conceptual Scope

The study focus on the assessment of service quality on customer satisfaction using CLS
Logistics Service Company as a Case Study. It assess and evaluates the effectiveness of service
quality on customer satisfaction.

1.6.1.3 Methodological Scope

Non-probabilistic sampling technique with a combination of purposive and convenient sampling

methods employed to get response from the study participants. Because possible respondents were
reached at the convenience of the researcher and collaborators in data collection in different areas.
Then possible respondents were asked to answer how long it has been since their last purchase from
CLS Logistics PLC and respondents who had made a purchase recently, a maximum of six months
back, are requested to fill the questionnaire. Primary data obtained through self-administered
questionnaires to selected customers. Self-administered questionnaires are a useful way of
collecting data. Sreejesh, Mohapatra and Anusree (2014) describe the advantages of self-
administered questionnaires as being less expensive to administer, helps to eliminate the
possibility of interviewer bias and derives more honest feedback than methods that involves
interview. And the secondary data gathered through critical evaluation of reference of books,
published and, unpublished materials and other relevant written materials.

1.6.2 Limitation of the Study

With all its significance mentioned, this study have some drawbacks or limitations which have
negative impact. The major limitation of this research was the fact that it is hard to collect data
because of COVID-19, unable to easily access to recorded document and material that are
significant for the study, But, to cope up this limitation, the researcher accompanied every
questionnaire with an official letter to clarify on the objectives of the research as well giving an
assurance of it being for academic purposes only.

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 1.7 Organization of the study

The introduction part of the study discussed in chapter one. Back ground information, problem
statement, research questions, objective of the study, significance and delimitation of the study
discussed in this chapter.
In the next chapter, chapter two, existing literatures related to logistics service quality and
customer satisfaction assessed. CLS Logistics brief background information presented and
theoretical frame work on the relationship between customer satisfaction and logistics service
quality developed.
The third chapter discussed about the methodology of the research. The research design and
research methods explained in this chapter starting from how the data collection instrument is
prepared to how the collected data is analyzed.
The following chapter, chapter four, discuss the empirical findings and analysis of the study with
interpretations. And the last chapter, chapter five, present conclusion based on the analysis result
and recommendations provided by the researcher.

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CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1. Theoretical Literature

2.1.1 Service quality

Different scholars describe service quality in different ways, justifying with different point of
views. Wisniewski (2001) stated that service quality is a concept that has aroused considerable
interest and debate in the research literature because of the difficulties in both defining it and
measuring it with no overall consensus emerging on either.

GhoDisagreeian, Speller and Jones (1994) describes that though there are many definitions of
“quality”, because quality have different meaning for different people, it is possible to classify
the definitions of “quality” into five broad categories. The five generic categories are:

Quality as Transcendent: - here “quality” is defined as innate excellence, meaning

“Quality” is the relationship between individual salience and the perceived quality

Quality as Product led: - here “quality” is defined as the units of goodness packed into a product
or service.

Quality as Process or supply led: - in this approach, “quality” is defined as

“Conformance to requirements”.

Quality as Customer led: - here the focus is external, “Quality” is defined as

“Satisfying customer‟s requirements” or “fitness for purpose”

Quality as Value led: - here “Quality” is defined either as the “cost to the producer and price to
the customer” or as “meeting the customer‟s requirements in terms of quality, price, and
availability.

Most of the service quality definitions fall within the “customer-led” category (GhoDisagreeian
et al., 1994). And they have defined quality as it is a measure of the extent to which the service
delivered meets the customer‟s expectations.

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Parasuraman, Zeithaml and Berry (1985) defined service quality as „a function of the differences
between expectation and performance along the quality dimensions‟. And Cronin and Taylor
(1994) viewed service quality as a form of attitude representing a long run overall evaluation.

GhoDisagreeian et al. (1994) have explain that perception of quality is influenced not only by the
“service outcome” but also by the “service process”. They have presented perceived service
quality is the summation of prior customer expectation, actual process quality and actual
outcome quality.

2.1.1.1 Service quality models

Measuring service quality is difficult because of the unique characteristics of intangibility,

heterogeneity, inseparability and perishability (Buttle, 1996) (GhoDisagreeian et al., (1994).
Over the years, different service quality determinates and model have been identified and
explained, some of them are explained below:

2.1.1.1.1 Technical and functional quality model

According to Grönroos (1984), Service quality has three components, namely: technical quality;
functional quality; and image:

The technical quality: - is the actual outcome of the service encounter. It is the quality of what
consumer actually receives as a result of his/her interaction with the service firm and is important
to him/her and to his/her evaluation of the quality of service. It answers the questions of what the
customer gets.

The functional quality: - is concerned with the interaction between the provider and recipient of a
service and is often perceived in a subjective manner. It answers the question of how the
customer gets the technical outcome.

The corporate image: - is concerned with consumers‟ perceptions of the service organization.
The image depends on: technical and functional quality; price; external communications;
physical location; appearance of the site; and the competence and behavior of service firms‟
employees

2.1.1.1.2 GAP model

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Service quality is a function of the differences between expectation and performance along the
quality dimensions (Parasuraman et al. 1985). They mentioned the presence of five gaps that
have an influence over the perception of quality:

Gap 1. Consumer expectations vs management perceptions.

Gap 2. Management perceptions vs service quality specifications.

Gap 3. Service quality specifications vs service encounter process.

Gap 4. Service encounter process vs outsider communication.

Gap 5. Expected service vs perceived service

GhoDisagreeian et al. (1994) describes this model as a diagnostic tool. They said, if it is used
properly, it will enable the management to identify systematically service quality shortfalls since
it facilitates the identification of gaps between a numbers of variables affecting the quality of the
offering.

2.1.1.1.3 SERVQUAL Model

SERVQUAL Model was first introduced by Parasuraman et al. in 1985. The model has been
further developed through a series of publications. This service quality model is founded on the
view that the customer‟s assessment of service quality is paramount. This assessment is
conceptualized as a gap between what the customer expects from service providers, and their
evaluations of the actual performance the service provider.

Ten components of perceived service quality were identified in the first formulation of
SERVQUAL model by Parasuraman et al. (1985):

Reliability: involves consistency of performance and dependability.

Responsiveness: concerns the willingness or readiness of employees to provide service.

Competence: means possession of the required skills and knowledge to perform the service.

Access: involves approachability and ease of contact.

Courtesy: involves politeness, respect, consideration, and friendliness of contact personnel.

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Communication: means keeping customer informed in language they can understand, and
listening to them.

Credibility: involves trustworthiness, believability, honesty.

Security: is freedom from danger, risk, or doubt.

Understanding/Knowing the customer: involves making the effort to understand the customer‟s
needs.

Tangibles: includes the physical evidence of the service.

In their 1988 work, they have minimized these components into five dimensions:

Tangibility, reliability, responsiveness, assurance, and empathy.

Tangibility dimension refers to the appearance of physical facilities, equipment, personnel and
communication materials

Reliability dimension refers to the ability to perform the promised service dependably and
accurately

Responsiveness dimension refers to the willingness to help customers and to provide prompt
service

Assurance dimension refers to the knowledge and courtesy of employees and their ability to
convey trust and confidence

Empathy dimension refers to the provision of caring, individualized attention to customers

2.1.1.1.4 SERVPERF model

Cronin and Taylor (1992) have developed and tested a performance-based alternative for
SERVQUAL measure, called SERVPERF. To investigate and validate their claim, they have
gather response on the service quality offered by two firms in four industries (banking, pest
control, dry cleaning and fast food). Accordingly, they have found that SERVPERF is a better
predictor of perceived service quality than SERVQUAL. Their findings support that performance
measurement of service quality is better predictor and therefore, no need to assess the
expectation measurements as it was suggested on SERVQUAL model.

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Finally, Cronin and Taylor (1992) concluded that performance-based scale developed
(SERVPERF) is efficient compared to the SERVQUAL scale; since it reduces the number of
items by 50% and the empirical finding also supports the theoretical superiority of the
SERVPERF scale.

2.1.2 Logistics service quality

Logistics has traditionally been considered as a necessity for connecting production and
consumption (Saura, Frances, Contri, & Blasco, 2008). From this perspective, a company‟s
logistics function was seen only as a generator of costs with no capacity for differentiation
(Ballou, 2004; cited in Saura et al. (2008)). This began to change in the mid-1990s as logistics
research based on marketing principles began to analyze the capacity of logistics to deliver
quality and thus generate greater customer satisfaction and loyalty (Mentzer et al., 2001;
Mentzer et al., 2004).

Logistics service quality has been studied from two different perspectives which is objective
quality and subjective quality (Chin et al., 2013; Saura et al., 2008).

Objective perspective of quality relates quality with adapting the service to service provider
defined specifications. This industrial view of service sees quality as an accurate evaluation of all
the stages and operations necessary to deliver the service, considering the service as a physical
object which can be observed and with attributes that can be evaluated.

Subjective perspective of quality transfers evaluation of quality to the customer.

From this perspective, service quality is “a global judgment or attitude, concerning the superior
nature of the service” (Chin et al., 2013; Saura et al., 2008).

Bienstock, Mentzer and Bird (1997), contributes for the identification of objective variables for
the measurement of customers‟ perceptions in relation to their expectations as the main
components of Logistics Service Quality. More recent study of Mentzer et al., (2001), contribute
to this line by considering logistics service quality as the difference between the expected and the
perceived service.

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Logistics specific measurement models are being developed on the basis of the above models,
which is adapted to the special features/attributes of logistics service (Saura et al., 2008).
According to Chin et al. (2013), these views of logistics service provide the building blocks to
create a customer-based foundation for better definitions and measures of LSQ.

Chin et al. (2013) and Saura et al. (2008), underline two important contributions from Bienstock
et al. (1997) and Mentzer et al. (1999). Bienstock et al. (1997) developed a specific model
known as physical distribution service quality, based on result, rather than on functional or
process dimensions. And Mentzer et al. (1999) carried out a study to confirm the accuracy of the
model developed by Bienstock et al. (1997) with an integral logistics focus. This revision and
validation provided a new multidimensional model which they called Logistics Service Quality
that have both aspects of physical distribution and customer elements.

2.1.2.1 Logistics service quality model

Mentzer et al. (2001) describes that logistics service quality have two components physical
distribution service and marketing customer service. Combining these two components they
identified 9 dimensions of logistics service quality: personnel contact quality, order release
quantities, information quality, ordering procedure, order accuracy, order condition, order
quality, order discrepancy handling, and timeliness. They developed a 25 item instrument to
measure customers‟ perceptions of the nine dimensions of logistics service quality. Two or three
numbered items are used to measure each dimension.

Table 1: LSQ Dimensions

Dimensions Definition Item in scale

Tangibility Tangibles as physical facilities (equipment, personnel, and communications 3
materials). It is the physical image of the service that customers will use to
assess quality. Tangibles are associated with the physical facilities, tools, and
machines used in order to provide the service, as well as representations of the
services, such as statements, cards (debit and credit), speed, and efficiency of
transactions. Several privileges are included in tangibles such as; external
appearance, counters in the bank, overdraft facilities, opening hours, and speed
and efficiency of transactions.

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Reliability Means organizations perform a service correctly the first time. Moreover, it 3
shows that organizations strive to fulfill promises and pay attention to the
results. Reliability has been classed as the first dimension of the SERVQUAL
service quality model. Studies of Lam ranked reliability as first in the
dimensions of the service quality model.

Responsiveness Parasuraman et al.] Highlighted that the responsiveness of willing employees 2

involves telling customers exactly when things will be done, giving them
undivided attention, promoting services, and responding in accordance with
their requests. Responsiveness was ranked as the third dimension in
SERVQUAL 1994.

Assurance Assurance has been defined as employees‟ courtesy and knowledge, and their 2
capacity to transfer confidence and trust to customers. Assurance means
keeping customers informed in their native language and listening to them,
regardless of their educational level, age, and nationality. Parasuraman et al.
states that assurance indicates the attitudes of the employees and their
behavior, and the staff‟s ability to provide friendly, confidential, courteous,
and competent services

Empathy Customers need to feel that they are made priority by the organization 3
providing services. Empathy means caring, paying personal attention, and
providing services to customers. The core of empathy is conveying the feeling
that the customer is unique and special. Parasuraman et al. stated that
quantitative studies that have identified service quality model dimensions have
used security, credibility, and access to measure empathy.

2.1.3 Online logistics service quality

The generalized use of information and communication technologies (ICT) has brought far
reaching transformations to different business areas including logistics activities. The use of ICT
in logistics has been truly revolutionary, especially in terms of improving LSQ for the customer
(Saura et al., 2008.)

Internet has not only had an important impact on consumers‟ ordering processes, making it
cheaper and faster and transcending time and geographical constraints, but has also had a

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significant impact on the business model of physical retail stores. Establishment of the Internet
has created enormous potential business opportunities for e-commerce (Chen et al., 2014)

With the rapid development of e-commerce, customer demand for diversity and timeliness has
also increased, in fact, B2C e-commerce business lead higher requirement for logistics service
(Wang, 2015).

When we discuss about logistics service under B2C e-commerce, the concern is no longer only
making a movement from the supplier to the buyer, but also pursuit logistics service in a short
time, with flexible service, and high value-added services. Therefore, the quality of logistics
distribution has become more and more important to the development of B2C electronic
commerce (Wang, 2015).

2.1.4 Satisfaction

Customer satisfaction has been studied extensively in the marketing literature, both in the areas
of consumer behavior and channels research, and has considerable strategic implications and
potentially offers a broad range of benefits for selling firms (Stank, Goldsby and Vickery 1999).
It has been conceptualized, measured, and tested for over twenty years across a considerable
number of industries and situational contexts. Following is a general description of various
conceptualizations of satisfaction that have developed throughout its research history:
• Satisfaction is a function of an initial standard and some perceived discrepancy from the
initial reference point. Individuals make summary comparative judgments apart from and
as an input to their feelings of satisfaction (Oliver1980).
• Satisfaction is a consumer‟s response to the evaluation of the perceived discrepancy
between prior expectations (or some other norm of performance) and the actual
performance of the product as perceived after its consumption (Day1984). We do not
know the exact conceptualization of the comparison standard. It can be expected, ideal, or
normative performance standards, and there has also been evidence of multiple
comparisons (Tse and Wilton 1988).
• Satisfaction is the outcome of a comparison between expected and perceived
performance throughout the customer relationship. Expectations regarding future costs
and benefits are mainly influenced by prior experiences in the relationship (Wangenheim
2003).

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 • Satisfaction is the consumer‟s fulfillment response. It is a judgment that a product or
service feature, or the product or service itself, provided (or is providing) pleasurable
level of consumption-related fulfillment, including levels of under-or over-fulfillment. It
can only be judged with reference to a standard, and the standard serves as the basis for
comparison (Oliver 1997).
• Satisfaction is an attitude-like judgment following a purchase act or based on a series of
consumer-product interactions, where confirmed standards lead to moderate satisfaction,
disconfirmed (exceeded) standards lead to high satisfaction, and vice versa (Fournier and
Mick 1999; Yi 1990).
• In a channels setting, satisfaction is an affective state resulting from the appraisal of all
aspects of a firm‟s working relationship with another firm. It results from perceptions of
past performance, autonomy, and structure (Anderson and Narus1984; Schul, Lamn and
Little 1981.)
• Satisfaction is a special form of consumer attitude. It is a global, post purchase
phenomenon reflecting how much the consumer likes or dislikes the service after
experiencing it (Bearden and Teel 1983; Woodside, Frey and Daly 1989).
• Buyer satisfaction is defined as an affective state that results from appraisals concerning
all aspects of a relationship (Anderson and Narus 1984).

The above conceptualizations highlight the notion that satisfaction encompasses both
(dis)confirmation of expectations and an effective response. As Oliver (1980) points out, post-
usage beliefs are compared with pre-purchase expectations, yielding expectancy disconfirmation
that can be positive, neutral or negative. Although these traditional models implicitly assume that
customer satisfaction is essentially the result of cognitive processes, new conceptual
developments suggest that affective processes may also contribute to the explanation and
prediction of customer satisfaction (Oliver, 1997; Westbrook, 1987). Therefore, satisfaction
judgments logically ( should be determined at least in part by the occurrence of the consumption-related
affective responses in addition to the effects of the cognitive processes (Westbrook 1987).
Satisfaction can also be viewed as transactional or cumulative. Transactional satisfaction is the
perception of the company‟s performance on the most recent transaction, or an immediate post
purchase evaluative judgment (Oliver 1993). Several authors, however, have claimed that

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satisfaction should be viewed as a judgment based on the cumulative experience made with a
certain product or service rather than transaction-specific phenomenon (Anderson, Fornell and
Lehmann, 1994). Consistent with the notion that satisfaction is an attitude, cumulative
satisfaction is the more economic psychology-based general perception of the company‟s overall
performance (Rust, Zahorik and Keiningham 1995). This approach to satisfaction has grown and
gained acceptance over the last decade (Johnson et al. 2001). Thaibaut and Kelly (1959) suggest
that satisfaction judgments are nothing else but the cumulated prior experiences in the
relationship – a proposition that is consistent with the cumulative rather than transactional view
on customer satisfaction (Wangenheim 2003). Similarly, Westbrook (1981) proposes that
satisfaction is a cumulative, attitude-like construct. This conceptualization is appropriate because
some researchers have found that it is cumulative satisfaction that correlates with customer
retention (Fornell 1992; Reichheldand Sasser 1990).
“Cumulative” satisfaction has also been used interchangeably with “overall “satisfaction.
According to Garbarino and Johnson (1999), cumulative satisfaction is an overall evaluation on
the total purchase and consumption experience over time (Anderson, Fornell and Lehmann
1994). Additionally, Fornell (1992) suggests that the majority of the satisfaction literature
advocates that satisfaction is an overall post purchase evaluation. Anderson and Sullivan (1993)
also agree that satisfaction is a customer‟s overall or global judgment regarding the extent to
which product or service performance matches expectations. Although it has been measured in
numerous ways, the previous discussion highlights that there are three facets of overall, or
cumulative, satisfaction, including 1) general affective satisfaction, 2) confirmation of
expectations, and 3) the distance from the customer‟s hypothetical ideal product.
Based on this review, customer satisfaction is defined as the result of a cognitive and affective
evaluation, based on total purchase and consumption experience with the logistics service over
time, where some comparison standard is compared to the actually perceived performance. The
evaluation is based on post purchase confirmation or disconfirmation of the buyer‟s
preconceived expectations of product or service standards.
2.1.5 Customer satisfaction

Customer satisfaction has been a subject of great interest for organizations and numbers of
researches, because customers are key stakeholders in organizations and their satisfaction is a
priority for sustainable growth (Abel, 2013).

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Keiningham et al. (2006) describes that the ability of the service provider to meet expectations of
customers with regards to the different facets of service quality is what ultimately determines the
level of customer satisfaction/dissatisfaction. Gro¨nroos (1982) also argue that consumers
compare the service they expect with the service they receive to evaluate its quality. When the
service delivered does not meet initial expectations, the consumer is dissatisfied, whereas if the
service meets or exceeds those expectations, he or she is satisfied.

Lee et al. (2011) stated that satisfied customers are a great source to increase profitability. That is
because satisfied customers are likely to commit to the service organization and have better
social interaction with service providers, while dissatisfied customers complain more and
repurchase less. Keiningham et al. (2006) have also describe the above concept in different terms
but with the similar meaning, satisfaction with a service or service provider may be a strong
incentive for customers to maintain or increase current retention rate, dissatisfaction with a
service or service provider may be a strong incentive to exit from the interaction.

Oliver (1997) state that customer satisfaction is the consumer's fulfillment response. It is a
judgment that a product or service feature, or the product or service itself, provided (or is
providing) a pleasurable level of consumption-related fulfillment, including levels of under- or
over fulfillment. On other definition from Oliver (1997) is that customer satisfaction is as an
overall emotional response to an entire service experience for a specific service encounter after
purchasing consumption.

Saura et al. (2008) explains that satisfaction can also be interpreted from the point of view of a
specific transaction or from an accumulative view. Most approaches in the literature use the first
perspective (Giese and Cote, 2000; cited in Saura et al., 2008 ), although proposals like those by
Fornell et al. (1996) and Anderson et al. (1994) consider satisfaction as a global evaluation based
on consumption experience over time or on a set of similar experiences. More recent
contributions adopt this last approach in the wide sense supporting the idea of satisfaction as “a
global measurement of a set of satisfactions with specific prior experiences” (Yu and Dean,
2001).

Customer satisfaction is considered as a pre requisite for customer retention and loyalty.

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Delivering quality and achieving satisfaction can be the basis for developing relationship (Saura
et al., 2008). Jing (2013) stated that satisfied customers are more likely will display loyalty
behavior, i.e. repeat purchase and willingness to give positive word of mouth.

2.1.6 Relationship between Logistics Service Quality and Customer satisfaction

Customers are the lifeblood of any business. And “Service quality can win and keep customers”
and it can be measured by the extent to which the service provided satisfies the customer‟s
expectations (GhoDisagreeian et al., 1994).

Different literature reviewed that service quality impacts customer satisfaction. Keiningham et
al. (2006) describes that the ultimate determinant of customer satisfaction/dissatisfaction is the
ability of service provider to meet the customer expectation with different aspects of service
quality. Cronin & Taylor (1992) also found an empirical support for notion which states
“perceived service quality in fact leads to satisfaction”.

Providers look for better ways to understand how customers perceive the quality of service and
how the perception of service quality translate into customer satisfaction and customer loyalty
(Chin, Soh & Wong, 2013). This is because customer satisfaction is the state of mind that
customers have about a company when their expectations are met or exceeded over the lifetime
of the product or service. Satisfying customers is the way to hold on our customers and attract
the new ones.

GhoDisagreeian et al. (1994) states that “Perceived quality” is what the customer‟s feel for the
“quality” of the service. It determines the extent of the customer‟s satisfaction. The three key
possible “quality” outcomes are:

Satisfactory quality, where customer‟s expectations (CE) are exactly met.

Ideal quality, where perceived quality is higher than customer‟s expectations.

Unacceptable quality, where perceived quality is lower than customer‟s expectations.

Most research findings indicate that to increase the level of customer satisfaction organizations
should provide a high level of service quality as service quality is Neutrally considered an
antecedent of customer satisfaction (Saura et al., 2008).

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The quality of logistics service performance is an important key component that helps Create
customer satisfaction. Logistics excellence has been recognized as an area that firms can create
competitive advantage because of its visible service impact on customers (Mentzer et al., 2001).

There are many definitions and descriptions of how logistics creates customer satisfaction. The
most traditional are based on the creation of time and place utility (Perreault and Russ 1974).
Mentzer et al. (2001) describes the seven Rs which are the attributes of the company's
product/service offering that lead to utility creation through logistics service; that is, part of a
product‟s marketing offering is the company's ability to deliver the right amount of the right
product at the right place at the right time in the right condition at the right price with the right
information. This conceptualization implies that part of the value of a product is created by
logistics service.

The rapid development of e-commerce provides more convenience and comfort for the customer.
This rapid growth enhances the customer demand for diversity and timeliness, which in fact led
B2C e-commerce business to higher requirement for logistics service (Wang, 2015).

Wang (2015) describe Logistics distribution as a bridge between e-commerce enterprises and
consumers, the core competitiveness of e-commerce enterprises is not limited to price
competition, the logistics service is becoming more and more important, and the logistics
distribution has a great influence on consumer's cognition and trust.

2.1.6 Loyalty

Passionately loyal customers do business with the type of company they can “trust to always act
in their best interest – without exception” (Hart and Johnson 1999). Polygamy loyalty refers to
customers who are loyal to more than one brand. According to Dowling and Uncles (1997), this
describes consumer behavior better, because most customers do not buy only one brand.
Zeithaml, Berry and Parasuraman (1996) and Dick and Basu (1994) discuss spurious loyalty,
when service customers stay with a supplier because they perceive no other alternatives or
because of low involvement or little perceived differentiation. Conversely, ultimate loyalty is the
convergence of product, social, and personal forces with logical, personal and communal
sustainers that motivates consumers to want only one particular brand and be uninfluenced by
competitors‟ marketing efforts. (Oliver 1999). To attain this loyalty state, all three of these
aspects must be obtained, and not every firm can attain this kind of loyalty.
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Dick and Basu (1994) developed a loyalty typology based on degrees of behavior and attitude;
the four types include spurious loyalty (high behavior and low attitude), true loyalty (high
behavior and high attitude), low loyalty (low behavior and low attitude), and latent loyalty (low
behavior and high attitude). Similarly, Oliva, Oliver andMacMillan (1992) also viewed loyalty in
terms of brand loyalty, brand avoidance, or brand neutrality.
2.1.6.1 Loyalty Measurements
The majority of definitions focus on dimensions of loyalty, so most of the literature describes
loyalty in terms of how it is measured, rather than a concrete statement to describe what it is and
what it means. With all of the various definitions offered, there is a lack of unity to really explain
definitively the domain of the phenomenon. As a result of these definitions, the literature also
provides various loyalty measures, according to the way it is conceptualized.
2.1.6.2 The Loyalty Relationship
A number of researchers have argued that the affective dimension of commitment best describes
the emotional component of loyalty (Mahoney, Madrigal and Howard2000). Loyalty is
conceptualized as a causal relationship between affective commitment and purchasing behavior.
Aside from the rationale given in thick and Basu (1994) model, several literature bases speak to
this relationship. Jacobyand Chestnut (1978) say that commitment provides the essential basis
for distinguishing between brand loyalty and other forms of purchasing behavior, and this causal
relationship differentiates those customers.
Iwasaki and Havitz (1998) suggested that research on loyalty should move from a focus on
conceptualizing the topic to better understanding how loyalty develops and what influences such
development. In their behavior, consumers may appear to be brand loyal because they purchase
and repurchase a particular brand. However, their underlying motives or antecedents of behavior
may be quite different (Bloemer 1988). Along thisline, it is important to be able to measure
customers‟ strength of attachment to a product or service in order to separate the highly loyal
from the spuriously loyal customer to distinguish genuine loyalty to habitual behavior (Mahoney,
Madrigal and Howard 2000).Jones and Sasser (1995) presented the topic of “false loyalty” (e.g.,
spurious loyalty),which can be misinterpreted by marketers as genuine loyalty or be mistaken for
loyalty due to customers high level of repeat patronage despite a low relative attitude toward the
marketer. This causal loyalty relationship allows for separating the differences between these
customers.

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The leisure science literature base also makes this causal connection by researching loyalty to
sports teams, sports, and recreational places and activities. Some researchers contend that loyalty
is reflected in commitment and behavioral consistency (Pritchard et al 1992; James 2001). In
empirical studies that studied customer loyalty in a leisure involvement context, Iwasaki and
Havitz (1998; 2004) found a positive relationship between commitment and behavioral
intentions. Additionally, distinguishing the differences between customers has been more
extensively studied empirically in the leisure science literature. Mahoney, Madrigal and Howard
(2000) developed a scale to use in segmenting sports customers for differentiating consumers
into discreet segments based on the strength of their overall loyalty. Baloglu (2002) also used
casino customers to do a cluster analysis for segmentation of "loyalty types”- true, spurious,
latent, and low loyalty customers. Likewise, Backman and Crompton (1991b) looked at golf and
tennis customers and measured loyalty with attachment and behavior as two individual
components and found these loyalty types. Their contribution was to demonstrate that traditional
all-or-none portrayal of loyalty as a simple dichotomy between loyal and non-loyal consumers is
too narrow.
In the organizational behavior literature, there is also a connection between an employee‟s
commitment to the organization and the intention to stay. Employees „affective commitment has
been considered an important determinant of dedication and loyalty (Rhoades, Eisenberger and
Armeli 2001). Affectively committed employees are seen as having a sense of belonging and
identification that increases their desire to remain with the organization (Meyer & Allen, 1991;
Mowday, Porter, & Steers, 1982). O'Reillyand Chatman (1986) also found that in a university
setting, affectively committed employees have stronger tenure intentions. Further, in the
financial industry, Malhotraand Mukherjee (2003) found that affectively committed employees
show greater levels of service performance.
Marketing literature has also empirically examined the relationship between commitment and
loyalty. Several empirical studies have measured conceptualizations of commitment and loyalty
together in both a business relationship context and a consumer context. In studies with business
samples, two studies found that affective commitment and trust in benevolence strongly
influence the intention to continue the relationship(Wetzels, Ruyter and van Birgelen 1998;
Ruyter, Moorman and Lemmink 2001).Hewett, Money and Sharma (2002) examined
relationship quality, which is a second order construct comprised of trust and commitment, and

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determined a link to repurchase intentions. In a consumer setting, Garbarino and Johnson (1999)
concluded that commitment plays different roles in the prediction of the future intentions for
high and low relational customers. Verhoef, Franses and Hoekstra (2002) established a link
between affective commitment and word-of-mouth. Johnson et al (2001) used the Norwegian
Customer Satisfaction Barometer (NCSB) to conclude that affective commitment has a large
positive effect on behavioral loyalty.
Hansen and Hetn (2004) summarize this relationship by explaining that if a customer's affective
commitment is high, this should bring about a wish and motivation to continue the relationship.
Since this type of commitment does not include any instrumental cost-benefit evaluations, it is
derived from the emotional pleasure associated with the relationship partner, and the feelings of
fondness developed within the relationship. As such, affective committed parties are inclined to
maintain the relationship and exhibit repeat purchasing behavior.
2.1.6.3 Satisfaction-Loyalty Relationship
The final relationship that this dissertation proposes to explore is the satisfaction loyalty
relationship. For many years, companies measured customer satisfaction, assuming that
satisfaction led to loyalty. Companies gauged performance with customer satisfaction surveys.
However, implementation of the satisfaction-loyalty link has been problematic for firms
(Anderson and Mittal 2000). Changes in overall satisfaction scores have not always led to
increased retention. Neal (1999) contends that satisfaction measurement is good for monitoring
process and product performance, but has little to do with loyalty. This stems from the idea that
loyalty captures long-term relationship elements that satisfaction measures can miss, and there
has been a gap between how most firms think about and measure satisfaction and what their most
satisfied customers actually feel (Hart and Johnson 1999).
Although much of the academic literature concurs that satisfaction is a mediating variable to
loyalty, recent mounting evidence has contradicted this long-standing principle (Seymour and
Rifkin 1998; Oliver 1999; Fredericks, Hurd and Salter 2001), and substantial research now
rejects the idea that satisfaction leads directly to loyalty (Brown2000; Neal 1999). Many popular
press articles argue that just satisfying customers is doing the very least that customers expect,
and customers can be satisfied and still defect (Fredericks, Hurd and Salter 2001; Gould 1995;
McIlroy & Barnett 2000; Reichheld 1996), and that customer satisfaction alone is not sufficient
for the fruition of a loyal relationship (Kandampully 1998). Brown (2000) suggests that

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satisfaction is not a good predictive measure of loyalty because it is not always correlated with
buying behavior. Neal (1999) also agrees that satisfaction only keeps the product or service in
the purchaser‟s consideration set, and increasing levels of satisfaction beyond an acceptable level
does not result in a proportionate increase in loyalty.
The literature pertaining to the relationship between customer satisfaction and loyalty can be
organized in three categories (Homburg and Giering 2001). The first category, mostly previous
research using fairly simple conceptualizations (Ganesh, Arnold, and Reynolds 2000), provides
empirical evidence of a positive relationship between customer satisfaction and loyalty without
further elaboration. These studies have typically been based on the explicit or implicit
assumption of a linear relationship. (Gassenheimer, Sterling andRobicheaux 1989; Fornell et al
1996; Oliver and Swan 1989; Woodside, Frey and Daly1989; Caruana 2002; Daugherty, Stank
and Ellinger 1998; Hallowell 1996; Kandampullyand Suhartanto 2000; Hennig-Thurau, Gwinner
and Gremler 2002; Stank, Goldsby, Vickery and Savitskie 2003; Selnes and Gonhaug 2000;
Biong 1993; Wangenheim 2003; Homburg and Giering 2001; Johnson et al 2001; Taylor and
Baker, 1994).

2.2. Empirical Literature

2.2.1 The Relationship between Logistics Service Quality and Customer Satisfaction and Trust

The satisfaction-retention-profit model believes that the increase in product/service quality will
lead to an increase in customer satisfaction, while an increase in customer satisfaction will make
customers more loyal and ultimately make the company more profitable. In the existing
literature, many scholars' studies have shown that there is a clear relationship between service
quality and customer perception. Zeithaml, Parasuraman and Malhotra gave a clear definition of
the concept of service quality under the network environment, analyzed and discussed the
components of service quality in the context of the network, and put forward a model of website
service quality. The conclusions of the research indicated that for the service quality in the
context of the network, it should be related to certain perceived values. Research on service
quality and perceived value can help further improve service quality. Ping HU (2014) believed
that customer satisfaction in logistics services is one of the core competencies of B2C
companies.

2.2.2 The Relationship between Customer Trust and Satisfaction

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Kim, Hye-Ran. Developing (2005) found that high trust can bring consumer satisfaction and
there is a positive correlation between the two factors. Based on their research, Lee Delene and
Bunda (2003) further studied the relationship between customer trust and customer satisfaction
when there is a difference in service quality. The study found that high quality of service leads to
higher customer perception.

2.2.3 The Relationship between Customer Trust, Satisfaction and Loyalty

Smith (2001) believed that satisfaction experience determines customer trust, customer trust
affects customer emotions, and customer sentiment is a guarantee for enterprise development and
profitability; Woodruff (2009) believed that customer sentiment is the customer's cognitive
response to the company's products, and perceived value reflects the essential relationship
between the company, customers, and service quality.

2.3. Research framework

In relation to the variables of logistics service quality, the literature reviewed showed that the
measurement scale developed by Mentzer et al. (2001) has been used repeatedly and is up-to-
date. Considering the nature of online shopping, various works regarding this topic used this
scale with minor adaptation. Based on earlier research in online logistics, perceived LSQ in
online shopping has five dimensions (Huang*, Kuo & Xu, 2009). Those are: information quality,
ordering procedures, timeliness, order condition and order discrepancy handling. In addition to
the above listed logistics service quality dimensions, two dimensions of logistics service quality
namely; personnel contact quality and order accuracy will be included in this research construct.

There are insufficient empirical evidences regarding the effect of logistics service quality on
customer satisfaction on online market especially, in Ethiopia. Thus this research will bridge the
literature gap in this area by providing empirical evidence on implication of logistics service
quality dimensions on customer satisfaction level.

The justification for the relationship structure conceptual model was developed from the
integration of logistics, organizational management, marketing, psychology, and leisure science
literature. Each of these literature domains was included in order to provide a comprehensive
review of the extant research that supports the research questions described in Chapter 1. The
primary research questions are: How does logistics service quality impact customer loyalty and
how should customer loyalty be conceptualized, defined, and measured? Secondary questions

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include: How does calculative commitment affect the loyalty relationship, what is the
relationship between satisfaction, affective commitment, and purchasing behavior, and how
should the relational component of logistics service quality be measured?
The principle concepts of logistics service quality, satisfaction, loyalty, and commitment drove
the literature review. Many disciplines are involved in relationship research; hence all of these
different disciplines were consulted to obtain as comprehensive a picture of the concepts as
possible. Logistics and marketing provide the basis for research in logistics service quality. The
marketing, psychology and leisure science literature provided the foundation for developing the
loyalty relationship, and organizational management also contributed to developing affective and
calculative commitment. The marketing literature also provided the basis for developing the
satisfaction construct.
Much of the existing research on loyalty, satisfaction, and service quality (and the relationships
between them) is ambiguous and contradictory. Therefore, comprehensive review of the previous
empirical findings served as the groundwork for providing the foundational development, and
the literature bases outside of marketing and logistics were consulted to provide support for the
conceptual model presented in Chapter1. Figure 2.1 demonstrates the model with the
corresponding hypotheses. In this chapter, first the focal constructs that comprise logistics
service quality – operational LSQ and relational LSQ - are presented. Second, satisfaction is
presented, followed by hypotheses that link the LSQ constructs to satisfaction. Next, the previous
loyalty research is introduced, followed by the explanation of the loyalty relationship –
comprised of affective commitment and purchasing behavior. Calculative commitment is then
offered as a moderating variable in the loyalty relationship. Finally, the relationship between
satisfaction and loyalty is provided. The chapter concludes with a summary of the constructs and
hypotheses in the relationship structure model, control variables that will be included, and
justification for an alternate model is presented.
When buyers can select similar products from a number of suppliers, sellers may choose to
differentiate themselves by the quality of their customer service and by the service processes
accompanying their products (Novak, Langley and Rinehart 1995).Because of this, every
industry is now potentially a “service” industry (Anderson, Foreland Lehmann 1995). As firms
progress to offering higher service levels, they must become more proactive with their customers
and anticipate customer expectations (Stank, Goldsby and Vickery 1999). As logistics

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capabilities can raise customer service levels, firms are placing more reliance on logistics service
in recent years to improve their competitive positioning (Daugherty, Stank and Ellinger 1998).
Because logistics spans the boundaries between suppliers and customers, and logisticians
understand that these activities constitute the very essence of their business, logistics service
creates value by supporting customers‟ delivery requirements in a cost effective manner, and has
become increasingly important to successful logistics operations (Stank et al. 2003).

Improving customer service is an ongoing focus of the logistics community. Lalonde and Zinszer
(1976) note that customer service has been measured by stock out levels, order cycle elements,
and system accuracy, which fall into two general categories inventory capability (completeness,
and fill rate), and 2) order cycle time (length and reliability of the order cycle). Later work also
included timeliness (Mentzer, Gomes and Krapfel 1989; Mentzer, Flint and Hult 2001);
however, all of these measures can be generated with little participation from the customer.
According to Maltz and Maltz (1998), these quantitative measures do not completely explain
customer ratings of supplier service levels. In practice, however, many firms still are not in direct
contact with customers, relying on these internally generated measures of performance to infer
customer opinions (Reichheld and Sasser 1990; Reichheld 1996).
Increasingly, suppliers are trying to understand what their customers want besides availability,
timeliness, and reliability (Maltz and Maltz 1998). One critical element that distinguishes the
most successful firms is the fact that they externally verify customer perceptions (Jones and
Sasser 1995; Reichheld 1996). In the logistics literature, Stank,Golds by and Vickery (1999)
discuss the change from the mass production mentality(“doing things right”), to firms that value
customer closeness and are able to provide higher levels of service effectiveness (the ability to
“do the right things”).
Based on the realization that customers want other service elements besides the traditional
measures, logistics research began to focus on other elements of customer service. According to
Maltz and Maltz (1998), customer service has two aspects. The first is basic customer service,
involving cycle time, on-time delivery, and inventory availability. The second aspect of customer

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service is responsiveness, representing the ability to adapt to market-driven change. The
dichotomy has been conceptualized in number of ways.
 Maltz and Maltz (1998) adopted “responsiveness” to refer to customer service elements
other than availability, on-time delivery, and cycle time. They emphasize the ability to
respond to customer requests, market changes, and competitor tactics.
 La Londe, Cooper and Noordweier (1988) use “responsiveness” and emphasize error
correction, after-sale service, and effective handling of information requests.
 Davis and Mandrodt (1992) use responsiveness for any handling of individual customer
requests beyond traditional service measures.
 The MSU Research Team emphasizes flexibility, provision of emergency services, and
ability to handle change.
 Bowersox and Closs (1966) suggest that basic service includes availability, performance
and reliability, while value added services are customer-specific.
More recently, logistics research has applied marketing tools to evaluate logistics service using
customer perceptions of provider performance rather than relying on providers‟ self-reported
performance indicators (Stank, Goldsby and Vickery 1999). In marketing, the focus of service
performance has been on service quality, or the evaluation of service performance, and the
definition and measurement of service quality has occupied a prominent position in the services
marketing literature.
Applying the original Parasuraman, Berry, Zeithaml (1988) service quality scale in a logistics
context, one study attempted to apply the scale to motor carrier transportation services; however,
the predictive validity of the scale was quite low(Brensigner and Lambert 1990). Beinstock,
Mentzer and Bird (1997) argued that alternative dimensions should be explored for logistics
service because (1) the service provider and the service customer are physically separated and (2)
the services are directed at “things” instead of people, so technical or outcome dimensions are
necessary for logistics service quality measurement instruments. They developed a scale that
measured perceptions of physical distribution service quality (PDSQ) based on an earlier
conceptual model that included timeliness, availability and condition (Mentzer, Gomesand
Krapfel 1989). In an effort to measure logistics service quality specifically, Mentzer,Flint and
Hult (2001) developed a scale based upon the earlier PDSQ scale with more specific dimensions
added to it. They conceptualized LSQ as a process and the scale was based on qualitative

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research from a large logistics service provider‟s customer base. The scale was then administered
to those customers and found to be reliable and valid.
Another study also measured logistics service using fewer and more operational measures to
examine the effect of logistics service on market share (Daugherty, Stank and Ellinger1998).
The previous discussion highlights the emergence of two critical aspects of service quality -
performance relative to operational elements and performance relative to relational elements.
Successful firms perform well on both elements, i.e., they understand customers‟ needs and
expectations and have the ability to provide quality services to meet them in an efficient manner
(Schlesinger and Heskett 1991). Collier (1991) suggests that service consists of two distinct
dimensions: an internal or operations oriented dimension of service quality performance and an
external or marketing-oriented dimension. Following this logic, Stank, Goldsby and Vickery
(1999) and Stank et al. (2003) developed a scale to measure both the operational and relational
elements of logistics service performance.
Based on the existing literature, operational LSQ is defined as perceptions of logistics activities
performed by service providers that contribute to consistent quality, productivity and efficiency.
Operational elements include physical features of the service, e.g., characteristics of delivery that
define and capture form, time, and place utilities of the service. In accordance with the service
quality literature and previous empirical studies (Stank et al. 2003; Stank, Goldsby and Vickery
1999), operational LSQ consists of reliability - the ability to perform the promised service
dependably and accurately. Also consistent with the literature, relational LSQ is defined as the
perceptions of logistics activities that bring the firm closer to its customers, in order to
understand customers‟ needs and expectations and have the ability to provide quality services to
meet them in an efficient manner. It is operationalized by assurance (the knowledge and courtesy
of employees and the ability to convey trust and confidence), responsiveness (the willingness to
help customers and provide prompt service), and caring (the provision of considerate,
individualized attention to customers).
In the Stank, Goldsby and Vickery (1999) study, operational performance and relational service
performance were portrayed as co-varying constructs. They contended that although the
literature provided little guidance on the relationship between operational performance and
relational performance, it was reasonable to anticipate that performance on these items will move
together and firms that tend to be more progressive operationally also tend to be more aware of

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customer needs and wants, and vice versa. Although this covariance was supported, these authors
further investigated these two constructs and found a highly significant causal path from
relational performance to operational performance. They also examined the reverse causal
relationship, but this path was not significant. In order to further understand this causal
relationship, they conducted customer interviews, which revealed that the true benefit of
establishing customer relationships comes from the insight the supplier gains regarding custom
needs and wants. Then, upon learning of these needs and wants, the service provider can focus
on operational means of meeting the needs and wants, and doing so in the lowest cost manner. In
a later study involving 3Pl customers, Stank et al (2003) also found evidence supporting the
causal relationship between relational performance and operational performances. Therefore,
based on the previous discussion,
A SERVQUAL dimension is a good scale to measure the service quality performance in various
specific industries. In this regard, researcher uses this model because it takes deep attention on
customer‟s expectation and perception of service provided at an organization (Shahin, 2005, p.3).
Parasuraman‟s SERVQUAL model is widely used to measure perceived service quality in
various industry such as retailing, restaurants, banking, telecommunication, services, airline,
catering, hotels, hospitals, automotives, education and so on (Ladhari, 2009).

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Parasuraman et al. (1985) also found that the customer‟s perception of service quality depends
on the range of gap distance between the customer expects before receive a service in a service
center and what he or she actually perceive after see and use the service by their own. Thus,
service quality is in fact defined as the gap between customers‟ expectation of service and their
perception of the service experience. A service quality gap exists when there are shortfall occur
in which the service provider would like to close (Lewis et al., 1994). For examples, insufficient
of sales, planning procedures and marketing research, organization do not focus on the demand
quality, unsystematic service development service, lack of personnel training and so forth. This
gap model is one of the best-received discoveries, a practice of problem solving and most
heuristically valuable contributions to the service literature according to Brown and Bond
(1995).

CHAPTER THREE

RESEARCH METHODOLOGY

3.1. Research Approach

Research is a systematic investigation that is used to find the answers for questions raised
whereas methodology is a system of rules that are explicit and built upon which the research is
based and against which the claims for knowledge are usually evaluated (Nachamias et al.,
1996). Research is conducted based on theory which is extracted from deep literature study and it
helps to interpret and collect the data. The theory basically serves as a foundation to conduct the
research. The research is conducted by using different methods, techniques and guidelines.
However the most appropriate method of conducting a research is qualitative and quantitative
approach.
Qualitative Approach analyzes, interprets and collects data by studying people‟s behavior, the
way they act and response (Creswell, 1994). It is considered as an inductive approach in which
interviews and case study methods are used to collect and analyze data. As Garson ( 2002) said,
“qualitative research design strive for in-depth understanding of subjects, through such
techniques participant observation or narrative analysis, or they may strive for in-depth

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understanding of texts through such methods as exegesis or deconstruction”. The qualitative
research approach is non-statistical and it is used to understand the motivations and reasons in a
qualitative way (Creswell, 1994).
Quantitative approach involved number of respondents, listed questions are raised and response
choices are predetermined. According to Svensson (2003) the quantitative research approach is
best to investigate the perceptions and problem of the study and to discover the hidden values,
feelings attitudes and motivations. It uses deductive approach; the focus is on testing the theories
related to the topic by analyzing and collecting the data (Bryman and Bell, 2007). To achieve the
aim of this study qualitative research method was used. The qualitative research method was
used to construct the theoretical and industry perspectives. Using this approach open ended and
emerging data was collected with primary intent to develop themes from data (Creswell, 2009).
The qualitative methods used in this thesis were literature review and interviews.

Appropriate research designs and research methodology are selected in a way to address the
research question, having the insights from different literatures. This topic is divided into four
sections; Research Design, Sampling and Sampling Techniques, Data Collection and Data
Analysis.
3.2. Research Design

The study is descriptive in that it seeks to describe in detail the state of customer satisfaction and
logistics service quality in CLS Logistics, which gives an in depth understanding of the reality of
customer satisfaction with logistics service quality in CLS Logistics. On the other hand, to
identify the relationship between logistics service quality dimensions and customer satisfaction
in addition to the effect of logistics service quality dimensions on customer satisfaction, causal
research design was applied

3.3. Target Population, Sampling Size and Sampling Techniques

The total target population of the study is about 10,000 in worldwide out of this 3,200 are local
manufacturer who have visited and ordered products from CLS Logistics. Out of this sample frame,
the sample size was determined using sample size determination formula, with confidence level of
95% and margin of error 5%, which results in 384.

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Accordingly, 384 respondents are selected and requested to fill the prepared questionnaire. Non-
probabilistic sampling technique with a combination of purposive and convenient sampling methods
is employed to get response from the study participants, because possible respondents were reached
at the convenience of the researcher and collaborators in data collection in different areas. Then
possible respondents were asked to answer how long it has been since their last purchase from CLS
Logistics PLC and respondents who had made a purchase recently, a maximum of six months back,
are requested to fill the questionnaire. A structured questionnaire on Five point Licker scale
(tangibility, responsiveness, assurance, reliability and empathy) used to collect the data.
3.4. Data Type, source and Data Collection Instrument

Primary data obtained through online self-administered questionnaires to selected customers.

Because Self-administered questionnaires are a useful way of collecting data as a less expensive
to administer, helps to eliminate the possibility of interviewer bias and derives more honest
feedback than methods that involves interview The data collected through the stated source used
to determine the logistics service quality dimensions mostly affect the customer satisfaction. The
secondary data gathered through critical evaluation of reference of books, published and,
unpublished materials and other relevant written materials.
3.5. Data Analyzing Technique

The collected survey data analyzed using statistical package for social sciences (SPSS)
application program like descriptive statistics such as frequency, percentage, mean and standard
deviation used to assess service quality and measure customer satisfaction level. Each answered
research questions are accordingly and outputs of the analysis presented in tables and charts and
later their implication explained. Because it attempts to describe systematically a situation,
problem, phenomenon, service or program, or provides information about, describes attitudes
toward an issue.

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CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION

1.1.Samples and response rate

A total of 384 questioners were distributed, and 379 were received back. After excluding 14
invalid questionnaires, a total of 365 valid questionnaires were accepted for a high response rate
of 98.69%. Therefore, out of the 384 questionnaires distributed, 95.05% of the subjects returned
valid questionnaires.

1.2.Demographic characteristics of respondents

Descriptive statistics (frequency distribution) is used to discuss the general demographic
characteristics of respondents. Age, gender and occupation of respondents are discussed in the
below table.
Variables Frequency Valid Percent
Below 18 24 6.6
Age 18 – 30 180 49.4
31 – 45 161 44
Male 253 69.2
Gender
Female 112 30.8
Occupation Student 24 6.6

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 Private Employee 281 76.9
Public Employee 20 5.5
Self-employed 32 8.8
Unemployed 8 2.2
Table 2. Demographics of respondents
As table 2 depicts, from the total respondents, the age group of 18-30 constitutes the highest
percentage share (49.4%) followed by the age group 31-45 with 44%. The gender distribution of
respondents is dominated by male respondents with 69.2% while the female respondents
constitute 30.8% of respondents. Considering the employment status of respondents, the above
table shows that from the total number of respondents, 76.9% of respondents are private
employees, 8.8% are self-employed, 6.6% are students, 2.2% are unemployed and the remaining
8.8% are self-employed.
1.3.Visits of respondents on CLS Logistics PLC.
To determine respondents‟ level of familiarity with CLS Logistics PLC and their level of awareness
about services provided, they were asked the number, frequency their visit.
Variables Frequency Valid Percent
Frequency of visit Once 64 17.60%
Twice 72 19.80%
More than two
228 62.60%
times
Once 132 36.30%
Frequency of purchase Twice 108 29.70%
made More than two
124 34.00%
times
< 1 Month 77 21.00%
Duration from last
< 3 Month 120 33.00%
purchase
< 6 Month 168 46.00%
Table 3. Respondents’ level of familiarity
As table 3 shows majority of the respondents (62.6%) visited CLS Logistics PLC more than two
times previously and 19.8% of respondents visited two times. Only 17.6% percent of respondents
visited CLS Logistics PLC once. This indicates majority of respondents are more familiar to CLS
Logistics PLC.

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The table also shows how respondents frequent purchase from CLS Logistics PLC. 36.3% of the
respondents have made a purchase from CLS Logistics PLC once and 34.1% of the respondents have
made a purchase more than two times. The remaining 29.7% states that they have made a purchase
two times. This implies that majority of the respondents have more purchasing experience from CLS
Logistics PLC.
46.2% of respondents‟ states that it has been less than six months since their last purchase from CLS
Logistics PLC. While 33% and 20.9% of respondents have indicate that it had been less than three
months and one month, since they have made their last purchase respectively. This implies that
majority of the respondent have recent experience.

1.4.Tangibility
The components of tangibles are measured through five variables. According to Figure 1, the
proportion of giving Disagree scores to logistics service‟s tangibles is quite high. Physical
facilities of logistics companies are evaluated “Disagree” or “Strongly Disagree” by 40% of
customers, whereas the percentage of positive evaluations (“Agree” or Strongly Agree") is
only22%. Moreover, the results show that the customers have a really high expectation on the
development of IT, modern facilities and methods to protect goods with high average score.
However, the current facilities that CLS Logistics having is of poor quality, which resulted in the
analysis. These criteria should be noted in order to improve logistics service quality.

Tangibility
70%
60%
50%
40%
30%
20%
10%
0%
Being
Providing
Having a equipped with Overall
proper means Integerated Good Looking
Wider net of modern Tangibility
to protect ITs staffs
branch Offices physical Score
goods
facilities
Strongly Disagree 20% 3% 11% 22% 0% 11%
Disagree 33% 9% 44% 47% 14% 29%
Neutral 22% 66% 28% 11% 59% 37%
Agree 20% 12% 9% 14% 20% 15%
Strongly Agree 5% 10% 8% 6% 7% 7%
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Strongly Disagree Disagree Neutral Agree Strongly Agree
Figure 2: Tangibility Analysis
Despite customers do not think that CLS Logistics have enough branch offices, they do not
expect the number of offices to be too large. More than half of the customers‟ attitude toward the
appearance of the staffs is neutral. The customers do not care about the outfit. Of all the criteria
with respect to tangibles, the one with have more negative evaluation (69%) is the integration of
IT‟s. When managing logistics businesses, taking into account the advantages of IT makes it
easier and more convenient for the customers to interact. Customers also appreciate to be able to
track their cargo online. The second highest evaluation concerns modern facilities, 55% of the
customers have positive evaluation for this criterion. Customers also pay attention to the methods
of protecting goods. The logistics company has to provide proper packaging according to the
characteristics of products to be transported. Tangible features of the service are essentially
constant over time. For a current customer, the tangible expected service from a firm is close to
the tangible perceived service. On this situation, the customer knows the quality ex-ante, he/she
has no surprises and he does not evaluate this dimension as very important.

1.5.Reliability

Reliability
60%
50%
40%
30%
20%
10%
0%
Being able Provide
Empoying Fulfill Provide
to track Keeping service that
enough staff service Accurate Overall
condition of transaction the time
to provide without service in Reliability
goods record they
service on problem or the first Score
through accurately promised to
time danger place
internet do
Strongly Disagree 2% 0% 0% 11% 0% 0% 2%
Disagree 51% 3% 2% 26% 3% 1% 14%
Neutral 29% 26% 32% 46% 20% 25% 30%
Agree 15% 54% 45% 14% 35% 44% 35%
Strongly Agree 3% 17% 21% 3% 42% 30% 19%

Strongly Disagree Disagree Neutral Agree Strongly Agree

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Figure 3: Reliability Analysis
Reliability is measured by six criteria, in which there are three that assess the performance of
salesperson (service time available, keeping promises and keeping transaction records) and the
remainder concerns the basic performance activity of the logistics. Figure 2 shows positive
results on reliability, since more than 50% agree that the current service is good. The overall
good performance also shortens the gap between perception and expectation. The importance of
the six criteria is highly appreciated by the customers. The three most important ones are provide
accurate service in the first place (74 percent of positive evaluation), provide services within the
agreed time frame (77 percent of positive evaluation) and fulfill services without problems or
damage (17 percent of positive evaluation). Even though the current condition of service is
relatively good, those three criteria have the biggest significance, implying that customers expect
even higher performances. Fulfilling services free of damage is the most noticeable one.
Therefore, it is strongly recommended for the logistics company to focus especially on bridging
this gap as much as possible.
1.6.Responsiveness

Responsiveness
80%
70%
60%
50%
40%
30%
20%
10%
0%
Informing customers
Responding request
Solving problem as about condition of Overall
and compliant in a
soon as possible goods by phone or Responsiveness Score
satisfactory way
SMS
Strongly Disagree 0% 0% 0% 0%
Disagree 8% 21% 5% 11%
Neutral 67% 41% 47% 52%
Agree 10% 25% 37% 24%
Strongly Agree 15% 13% 11% 13%

Strongly Disagree Disagree Neutral Agree Strongly Agree

Figure 4: Responsiveness Analysis

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Responsiveness is measured by three criteria that indicate how the sales staffs communicate with
the customers. The results (see Figure 3) show that the current service is “Not very good”,
whereas the expectation is high. This result could be expected to some extent, given the fact that
the success of a deal depends strongly on the sales staffs. If the salesperson cannot convince the
customers that their services are much better than competitors, or make the customers trust in the
company, then the deal can be off easily. The criterion “Solving problem as soon as possible”,
has the highest expectation (25 percent of positive respond &8 percent of negative respond) and
has the biggest gap. Therefore, the logistics company need to provide solutions and develop
policies to solve all problems in the fasted way to satisfy customers.
1.7.Assurance
Assurance is measured by the ability of staffs to work with customers in terms of expertise
required of a salesperson. From Figure 4, one can conclude that the most important element is
having good knowledge about logistics and the ability to convey the information so that the
customers can understand it well. The criterion “Staff communicates with you in a proper
manner”, has more than 50 percent negative respond, whereas “employing staff expert for their
positions” has the biggest negative respond. Therefore, employer need to review their
recruitment procedure and invest in training their staff.

Assurance
80%
70%
60%
50%
40%
30%
20%
10%
0%
Staff Making you fell
Making you feel Employing staff
communicating trust in staff Overall
secured about experts for their
with you in a and confidence Assurance Score
the Service positions
proper manner in the service
Strongly Disagree 20% 3% 11% 22% 14%
Disagree 33% 8% 44% 48% 33%
Neutral 22% 67% 29% 10% 32%
Agree 16% 12% 11% 17% 14%
Strongly Agree 9% 10% 5% 3% 7%

Strongly Disagree Disagree Neutral Agree Strongly Agree

Figure 5: Assurance Analysis

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 1.8.Empathy

Empathy
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Making you feel Overall, How
Provide Tolerant,
received satisfied are you Overall Empathy
attractive respectful and
personalized with CLS Logistics Score
Promotion patient staff
attention service
Strongly Disagree 3% 10% 22% 4% 10%
Disagree 32% 45% 47% 31% 39%
Figure 6: Empathy Analysis
Neutral 37% 27% 12% 30% 27%
Agree 20% 10% 12%
Empathy variables measure how sales staff members care about30% 18%
customers‟ personal needs
Strongly Agree 8% 8% 7% 5% 7%
(Figure 5). The results show that the logistics company do not provide satisfying service to
Strongly Disagree Disagree Neutral Agree Strongly Agree
customers in term of sympathy. About 69% of customers think that the staffs are not patient
enough and do not have a high level of tolerance, whereas this element is expected to be “Good”.
Besides, promotions are not esteemed as sufficiently attractive, this criterion is noticeably high
negative respond (34 percent). By providing special promotions, the company can maintain a
firm relationship with their customers: customers will be less likely to switch to another logistics
company

1.9.Analysis of customer satisfaction

To determine the level of satisfaction with the service provided by CLS Logistic, respondents
were asked to rate their overall level of satisfaction using a 5-point liker scale (1 means highly
dissatisfied, 2 means dissatisfied, 3 means neutral, 4 means satisfied and 5 means highly
satisfied).

The level of customer satisfaction was analyzed with the descriptive statistics (frequency
distribution) and table 4 presents the result of the analyzed overall customer satisfaction level.

Frequency Valid Percent

Highly Dissatisfied 0 0.0%

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Dissatisfied 55 15.0%
Neutral 26 7.0%
Satisfied 183 50.0%
Highly Satisfied 102 28.0%
Table 4: Customer Satisfaction level with CLS Logistic

As table 4 indicates 50% of respondents reported that they are satisfied with CLS Logistics PLC,
while 28% of respondents found to be highly satisfied with the services provided by CLS
Logistics PLC. 15% of the respondents stated that they are dissatisfied with the service and
finally 7% of them rated their level of satisfaction as neutral. This findings implies that most of
the customer are satisfied with the logistics service provided by CLS Logistics PLC.

CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.1 Conclusion
To provide high-quality services, the logistic services provider must first understand customers‟
needs and expectations. In this study, the service quality scale of logistics provider, CLS
Logistics PLC is conceptualized by five dimensions: tangibles, reliability, responsiveness,
assurance and empathy. The empirical results show that the customers are not satisfied with the
service quality of logistics provider. Besides, this study also finds that logistic services quality is
a process, where customers‟ perceptions begin to form and develop from the order placement to
service completion, and they may place difference emphasis on the service quality. Therefore,
logistic services provider like CLS Logistics PLC should pay more attention to the weakness
such as the shipping link, claims and freight. Furthermore, they need to improve Customer Care
programs. In addition, the government also needs to have many positive policies to create
favorable conditions for logistics services.
The following conclusion is drawn based the findings of the study, which is obtained while
answering research questions:
 Respondents‟ level of familiarity implies that majority of the respondent have recent
experience.

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  On the tangible features of the service, the customer knows the quality ex-ante, he/she
has no surprises and he does not evaluate this dimension as very important.
 Therefore, reliability is strongly recommended for the logistics company to focus
especially on bridging this gap as much as possible.
 The logistics company needs to provide solutions and develop policies to solve all
problems in the fasted way to satisfy customers.
 Therefore, employer needs to review their recruitment procedure and invest in training
their staff.
 By providing special promotions, the company can maintain a firm relationship with their
customers: customers will be less likely to switch to another logistics company.

5.2 Recommendations for the logistics service provider (CLS Logistics PLC).
A first set of solutions that need to be developed are solutions that improve the customer relation
in the sales cycle. A first solution (“guided solution”) is a set of questions, which helps the sales
staff to systematically ask questions to identify the customers' needs, before the salesperson
proposes a particular solution. This enables the sales representatives to spend time on a smaller
number of opportunities.
The next solution is to increase logistics knowledge, ensuring that a combination of the technical
knowledge about the services provided is achieved, with the objective of reducing the necessity
of involving other staff members in the procedures. Moreover, if the sales representatives can
exhibit detailed information about the logistic solutions, it will be easier to convince the
customers and correspondingly customers will have more confidence in the service.
Thirdly, document automation enables the optimization of information communication. If the
sales representative can use IT do automatically generate and transfer all the bidding documents
required, error rates and process times decrease.
Fourthly, the logistic services provider (CLS Logistics PLC) should include sales policies in their
IT framework. When policies such as minimum acceptable prices or minimum acceptable
margins are defined, the IT framework triggers a work flow to a sales manager to approve it. The
tool will guide salespersons into the acceptable price and margin range so that the sales manager
will not have to be involved. This enables considerable timing savings from both the sales
manager and customer perspective.

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Besides, a Customer Care program should be developed. For each customer an account should be
created when they uses a logistics service. The logistic services provider (CLS Logistics PLC)
should record client details in a Customer Relationship Management database. Besides, the
company needs to encourage ideas, suggestions and observations from all staff and establish an
anonymous staff suggestion box. Review recruitment practices to ensure the company employs
the right frontline staff.
In terms of research and development, the main area of innovation is based on the development
and roll-out of information and communication technologies (ICT), which have the capacity to
impact organizational structure, firm strategy, operational procedures and buyer-supplier
relationships. In this regard, efforts towards ICT-enabled innovation should be promoted. After
all, the implementation of new ICT and complementary investments can lead to innovations, and
innovative firms are more likely to grow. Policy makers should envisage the creation of lead
programs in fields of excellence such as logistics and transport. Developing standards for e-
business, facilitating the process of interoperability: Standards allow reducing transaction cost
and increasing competitiveness and interoperability. Policy measures may include active
dialogue with industry on challenges in formation of value networks and potential barriers.

5.3 Recommendations to the stake holders and industry

One the stakeholder is the government, should consider using financial incentives to promote the
logistics development. The government‟s leadership in the country should provide subsidies for
critical logistics infrastructure development. These subsidies should not come with conditions
that interfere with business operations. Investment in logistics should come from the private
sector, and foreign investments should be encouraged. A special fund for inland waterway
transport infrastructure development should be set up. Bonds, fees, and special central
government allocations are possible source of funding. Since logistics enterprises should be the
main driver of logistics industry development, government should create incentives, such as tax
relief and funding assistance, to support the logistics industry, based on actual needs.

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Appendix: Questionnaire

APPENDEX
SAINT MARY UNIVERSITY SCHOOL OF GRAGUATE
STUDIES
Thank you in advance for your willingness to participate in this questioner. The purpose of this
questioner is only for academic purpose. In order to fulfill the requirement of Master‟s degree in
Marketing Management.
Dear sir and customers please make “X” for each question and it as unnecessary to write your
name.

Part one: Demographic information of respondents.

1. Age

□Below 18 □ 18 – 30 □ 31 – 45 □Above 45
2. Gender

□ Male □ Female
3. Occupation

□ Self-employed □ Public - employee

□ Private - employee □ Unemployed
4. How many times did you visit and make business with CLS Logistics?

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 Please Mention ______________________________________

5. How long it has been since you take the last service from CLS Logistics?

□ < 1 month □ < 3 month □ < 6 month □ above six month

Part two: Perception towards logistics service quality

Tangibility
1 Does the organization provide proper means to protect goods?

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

2 Having a wide net of branch offices

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

3 Being equipped with modern physical facilities

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

4 Integrated IT system

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

5 Agree looking Staffs

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

Reliability
6 Being able to track condition of Agree through internet

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

7 Keeping transaction records accurately

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

8 Employing enough staff to provide service on time

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

9 Fulfill service without problem or damage

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

10 Providing service that the time they promised to do
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 □Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
11 Provide accurate service in the first place

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

Responsiveness
12 Solving problem as soon as possible

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

13 Informing customers about condition of Agrees by phone or SMS

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

14 Responding request and compliant in a satisfactory way

□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree

Assurance
15 Staff communicating with you in a proper manner
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
16 Making you fell trust in staff and confidence in the service
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
17 Making you feel secured about the Service
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
18 Employing staff experts for their positions
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
Empathy
19 Provide attractive Promotion
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
20 Making you feel received personalized attention
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
21 Tolerant, respectful and patient staff
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
22 Overall, How satisfied are you with CLS Logistics service?
□Strongly Disagree □ Disagree □ Neutral □ Agree □ Strongly Agree
Overall Level of Customer Satisfaction

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23 Overall, How satisfied are you with CLS Logistics quality service?
□Strongly Satisfied □ Satisfied □ Neutral □ Dissatisfied

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