CHAPTER – 1

1.1 HISTORICAL PERSPECTIVE OF AUTOMOBILE INDUSTRY:

Transportation is the basic necessity of all human beings. The history of the

automobile began 4100 years ago when the first wheel was used for transportation. The most

primitive means of transportation for early humans were animals like bulls, oxen, horses,

donkeys, etc, but as the human activities became more and more of laborious, the anxious and

innovative minds of human beings invented wheeled carts, chariots and the do.

In the early 15th century Portuguese arrived in China, which led to the interaction

between the cultures and invention of many new technologies including the creation of a

wheel. By the 1600’s small steam powered engine models had been developed but it was

another century before a full sized engine power vehicle was created. Further, the want of

more carrying capacity, more speed and luxury propelled the invention of automobiles in 18 th

century. The first steam powered automobile capable of carrying people was butyl by

Nicolas-Jospeh Cugnot in the year 1768 (Eckermann & Erik, 2001).

Subsequently, in 1807 the first internal combustion engine was developed by

Francoise Issac de Rivaz followed by the invention of first petrol/gasoline run engines by

Karl Benz (Eckermann & Erik, 2001). Many vehicle thereafter made their presence felt like
oil fired steam car in 1815 (Georgano, 1985), four seat steam in 1838 (Georgano, 1985), high

wheeled steam buggy in 1865, liquid fuelled internal combustion engine by Seigfried Marcus

in 1870, Marcus-II in 1883. It is universally acknowledged the older version of the

automobiles which are prevalent now the “Internal Combustion Engines” was first invented

by Karl Benz in 1886.

So far as advent of Automobiles in India is concern, the first car ran on Indian road in

1897 which was directly imported. The factual development of Indian automobile

manufacturing started in the year by launching of Hindustan Motors in 1942 followed by

Premier in 1944 followed by Mahindra and Mahindra in 1945 (Piplai, 2001). By 1950’s and

1960’s the growth components of Indian Auto sector was lull mainly because of license raj

(Kamala and Doraiswamy, 2007). Up till the 1980’s the Indian Auto sector was majorly

dominated by the local companies. But after 1986, in view of early partial liberalization, the

international auto makers were allowed to invest in India, as the result of which auto makers

like Suzuki, Toyota, Hyundai started their joint ventures with existing Indian automobile

companies (Economic and Political Weekly). By 2000, India had 12 off shoot global

automobile manufacturers. Since then the Indian automobile sector has tremendous growth

on par with all the categories and sub categories scoring a place as one of the largest in the

world. Cut to 2014 onwards, the Indian auto industry accounts to about 7.1% of the Indian

GDP (IBEF). In FY April 2015 to January 2016 alone the total manufactured automobiles

stands out to be 19.8 million vehicles, which included commercial vehicles, passenger

vehicles, three wheelers and two wheelers (IBEF).

The production of all the types of vehicles is seen growing at an average rate of

3.90% year-on-year basis. This shows the huge demand for the automobiles in India. The
researcher has attempted to study the domestic potentiality and sales pattern in order to

foreground the study in the succeeding chapters. The sales of the Passenger Vehicles in India

grew by 8.13 % in April 2015 -January 2016. Within the Passenger Vehicles, Passenger Cars

grew by 10.18%, during April 2015 -January 2016 over April 2014 - January 2015. The sales

of Commercial Vehicles in India grew by 9.43% in April-January 2016 over April-January

2015. The sales of Medium & Heavy Commercial Vehicles grew by 30.19%.

So far as the market share bifurcate is concerned the passenger vehicles holds a

maximum market share with 13%, followed by Commercial vehicles with 3%, Three

wheelers with 3% and two wheelers with 81% market share. Referring to the Indian Brand

Equity Foundation (IBEF), the Indian Auto sector is also a prominent auto exporter since

2005. In the financial year 2014-15 census 31% of the small cars sold globally are

manufactured in India. In April 2015 - January 2016, exports of Commercial Vehicles

registered a growth of

18.36 per cent over April 2014 - January 2015. Sensing this potentiality and growth in both

domestic and international markets the Indian government has encouraged international

investment in the form of FDI’s (Foreign Direct Investments) under the automatic route.

Hitherto the sector has attracted enough FDI’s and several auto makes and thri

ancillaries have started investing in India. A total of US$ 14.32 billion worth of FDI has been

attracted in a span of April 2000 to December 2015 (DIPP). Automotive Mission Plan (AMP)

2016-2026 prepared by SIAM and Government of India, the Indian automotive sector has the

potential to generate annual revenue of US$ 300 billion by 2026, creating 65 million jobs and

can contribute 12% to India’s GDP. Two-wheeler production is projected to rise from 18.5

million in FY15 to 34 million by FY20. Leading auto maker Maruti Suzuki expects Indian

passenger car market to reach four million units by 2020, up from 1.97 million units in 2014-
15. Furthermore, passenger vehicle production is expected to increase to 10 million in FY20

from 3.2 million in FY15. The government aims to develop India as a global manufacturing

as well as a research and development (R&D) hub. It has set up National Automotive Testing

and R&D Infrastructure Project (NATRiP) centers as well as a National Automotive Board to

act as facilitator between the government and the industry.

1.2 MAJOR AUTOMOBILE COMPANIES IN INDIA:

● Tata Motors

Tata Motors is the largest automobile company of Asia headquartered in Mumbai,

India. Annual Projected revenue for 2010-11 is US$ 27.629 billion. It also occupies the

number one position in commercial car segment. Tata Motors enjoys 31.2% of market share

in the multi-utility vehicles, which in luxury car segment, it has 6.4% market share. Most of

the Tata Motors' vehicles are sold predominantly in India and over 4 million vehicles have

been produced domestically within India. Tata sold 52,531 units of vehicles during

September 2009, comparing to 49,647 units during September 2008 (a growth of 6%). In

domestic market, Tata Motors sold 49,650 units during the same period, comparing to 45,234

units in September 2008.

● Maruti Suzuki India Limited (MSIL)

Maruti Suzuki India is an undisputed leader in the Indian automobile industry. Started

its journey in February 1981 as Maurti Udyog Limited, the company created history in the

Indian automobile market with its hugely popular four-wheeler model Maruti 800. The

company became the first Indian automobile company to manufacture one million vehicles in

1994. The company became Maruti Suzuki India Limited on September 17, 2007.

Maruti's average revenue for the year ending 2010-11 is US$7.13 billion. Maruti sold 83,306

units of vehicles in September 2009, comparing to 71,000 units in the same month in the
previous year (with a growth rate of 17.3%). It also exported 11,712 units during September

2009, comparing to 6,318 units in the same month in the previous year (with a growth rate of

85.4%).

● Mahindra & Mahindra Limited (M&M)

Mahindra &Mahindra Limited is another auto-giant in India. A part of the Mahindra

Group, M&M is the largest SUV maker in the country. In September 2009, M&M registered

a domestic sale of record 26,921 units, comparing to 22,729 units in September 2008 (with an

increase of 18.4%). On the other hand, it sold 15,296 units of UV in the same period

comparing to 10,641 units in September 2008 (with a whooping growth of 43.7%).

● Honda Siel Cars India Limited (HSCI)

Honda Siel Cars India Limited, a joint venture between the Japanese auto giant Honda

Motor Company Limited and the Indian company Siel Limited, started its operation in

December 1995. In September 2009, HSCI sold 5,794 units, comparing to 3,104 units in

September 2008 (with a growth rate of 86.7%).

● Toyota Kirloskar Motor Private Limited (TKM)

Toyota Kirloskar Motor Private Limited is another top Indian automobile company. A

joint venture between the Japanese auto giant Toyota Motor Corporation and Kirloskar

Group, TKM has a number of car models including Innova, Corolla, Fortuner, Camry and the

Land Cruiser Prado. It sold 7,657 units in December 2009.

● Hindustan Motors

Hindustan Motors is another top automobile company in India. It was once country's

largest car manufacturer before Maruti Udyog overpowered it. Its popular model

'Ambassador' has been extensively used as government limousine as well as taxi cab in India.
Besides a steady growth in India's fiscal system, the expansion of Indian middle class has

also played a major role in drawing the attention of international auto manufacturers towards

the Indian Automobile Market. Moreover, India is one nation which provides skilled

workforce at cutthroat prices making itself a preferable manufacturing centre.

1.3 MAJOR INITIATIVES OF GOVERNMENT OF INDIA TO

SUPPORT AUTOMOBILE SECTOR:

The Government of India has taken many initiatives to support the Indian Automobile

Sector; some of them are listed below

● Government of India has made automobiles manufacturing as the main driver of

‘Make in India’ initiative, as it expects passenger vehicles market to triple to 9.4

million units by 2026

● Government has announced to provide credit of Rs 850,000 crore (US$ 124.71

billion) to farmers in the Union budget of 2015-16, which is expected to boost the

tractors segment sales.

● Ministry of Road Transport, Highways & Shipping announced plans to set up a

separate independent Department for Transports, which will comprise of experts from

the automobile sector to resolve issues like - fuel technology, motor body

specifications and fuel emissions, apart from exports.

● Government of India plans to promote eco-friendly cars in the country i.e. CNG based

vehicle, hybrid vehicle, and electric vehicle and also made mandatory of 5 per cent

ethanol blending in petrol.

● Government of India has formulated a Scheme for Faster Adoption and

Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric
 Mobility Mission 2020 to encourage the progressive induction of reliable, affordable

and efficient electric and hybrid vehicles in the country

● The Automobile Mission Plan for the period 2006–2016, designed by the Indian

government is aimed to accelerating and sustaining growth in this sector

1.4 FOREIGN DIRECT INVESTMENTS IN AUTOMOBILE SECTOR:

The sector has attracted enough FDI’s and several auto makers and their ancillaries in

India. A total of US$ 14.32 billion worth of FDI has been attracted in a span of April 2000 to

December 2015 (Source: DIPP). Some of the most important investments and developments

in the sector are listed below

● Honda Motorcycle and Scooter India (HMSI) has opened world’s largest scooter plant

in Gujarat

● Ford has launched its iconic Ford Mustang in India and will make its debut in second

quarter of FY2016. Also, Ford plans to manufacture two families of engines by 2017,

a 2.2 litre diesel engine codenamed Panther, and a 1.2 litre petrol engine codenamed

Dragon, which are expected to power 270,000 Ford vehicles globally in India

● Nissan Motor Co. Ltd is in discussion with Government of India to bring electric and

hybrid technologies to India

● The world’s largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc

and Toyoda Gosei Co are setting up plants and increasing capacity in India

● General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the

capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by

2025

● US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$ 513.5

million) in Maharashtra, to manufacture Jeep Grand Cherokee model

 ● Mercedes Benz has decided to manufacture the GLA SUV in India. The company has

doubled its India assembly capacity to 20,000 units per annum

● Germany-based luxury car maker Bayerische Motoren Werke AG’s (BMW) local unit

has announced to procure components from seven India-based auto parts makers

1.5 SEGMENTS OF INDIAN AUTOMOBILE MARKET:

● Two-wheeler automobile segment

In this segment, motorcycles accounts for major Indian Automobile market share. The

chief players in this segment is Hero Honda which delivers 50% motorbikes to the Indian

market besides sharing 46% in scooter market and TVS for 82% in moped market.

● Three-wheeler automobile segment

Around 41% of the three-wheelers in India are utilized for merchandise transfer

purpose. In this segment Piaggio and Bajaj are the leading players with 40% and 68% of

market share respectively.

● Car segment

Accounting to 79%, Cars rule the passenger automobile in India. The chief players in

this segment are Maruti Suzuki and Mahindra. While Maruti Suzuki enjoys full-fledged

monopoly in multi-purpose automobiles sector with 52% of market share, Mahindra have

42% market share in utility vehicles. However in the area of commercial automobiles, Tata

Motors rule the Automobile Industry of India with 60% of market share besides being the

fifth biggest producer in the world of medium & heavy marketable vehicles.

1.6 INDIA’S AUTOMOBILE SERVICE SECTOR:

In the era of Internet, the Indian Automotive Customers are tuned to the global

markets and products. The Indian customers expect the same level of product and service
quality. The wide range of models from different manufacturers with not much change in the

specifications within same price band has made it easy for customers to switch from one

brand to another. So the challenge of attracting the customers, selling and retaining them with

world class services has turned out to be great challenge for all the automobile manufacturers.

As already discussed in the preceding section, the India’s automotive sector has witnessed a

steady influx by the introduction of global automotive players. The sector is also getting

enough of support and inclination from the government. But, as the population of the vehicles

increases the need for an efficient and economical service network becomes essential to

sustain competition in terms of product range, quality and service. Year on year the new

vehicles should be sold, serviced and maintained. Hitherto, service depth and quality turn out

to be the most important components to gaining customers and retaining them.

Typically, the performance of any auto manufacturer in terms of market share or

customer experience per se depends upon the health of the automobile service networks

namely the distributor, dealers and sub-dealers. So, in a way the dealers and manufacturers

have to create up the mobility in building the capacity to sell and serve the customer better.

Arora (2012), has pointed out three important pillars as three S’s on which the Indian

Automobile service sector essentially stands–

i. Service Infrastructure – essentially Automotive Dealers (appointed by the

manufacturer) located at the right locations.

ii. Supporting infrastructure – Showroom with good ambience, well equipped

workshop and availability of Automotive Spares

iii. Skilled Manpower to assist the entire service pattern

 ICRA Report (2012), titled “Indian Automotive Dealership Industry” the automotive

dealership was considered to be the low investment business with majority of investments in

inventory which the dealer operator has to have in the form of spares. But with the rising

prices of real estate, rentals, operative expenses, investments on customer centric showrooms

with standard specifications has increased the upfront investments for the new dealers has

pressurized financial performance of the dealerships. Also, in order to attract and retain

customers and to sustain stiff competition the dealers are forced to pass on the discounts at

the cost of dealer’s commissions and/or margins. Further, to add to the agony of dealership

businesses, advent of third party service providers such as Castrol bike points, Bosch Multi

Brand Car services, Carnation, MyTVS bike points etc, have created a dent in the way dealers

have been operating. In such scenario, effective sales and services for customers have become

utmost important for all the dealer service centers in India to sustain high levels of

competition. The competitiveness and less differentiated products at almost same levels of

pricing have called in for more attention towards customer satisfaction and retention for

automotive dealers and manufacturers.

1.7 CUSTOMER SATISFACTION IN AUTOMOTIVE SERVICE SPACE:

ICRA Report (2012) explains that the automotive dealership business has varied sources of

revenue which are listed below-

o First and the major being the selling of vehicles (old and new) – As per the

research conducted by ICRA on 125 automotive dealerships in India, they

found that 85% of the revenue comes from selling of vehicles.

o Second being sales of spares, servicing of vehicles, incentives from the

manufacturers, commission from insurance and financing company’s together

accounts to 15%.
 So to say, major revenue is constituted out of sales of vehicles rather than sale of

spares, accessories and other income avenues. But, in view of increased sales push from the

manufacturers is resulting in increased non moving inventory; increased operational expenses

(rentals, employee); investments in modernization of showrooms and owing to the decreased

sale because stiff competition in terms of alternatives in the same price band with similar or

more features and specifications has resulted into higher levels of debt on the dealers. Thus,

dealers have to look on a more than one ways to retain their market share by enhancing the

services being provided by them.

As seen in the previous paragraph where majority of the revenue of automotive

dealers comes through sales, the primary emphasis of all the dealers should be churning

around the “Customer Satisfaction”. Dua and Savita (2013), have explained that Customer

Satisfaction in a service space is an important factor because higher level of satisfactions can

result in many other types of benefits such as

● Loyalty

● Repeat Purchases

● Referrals

● Customer Retention

● Reduced cost of service

● Premium safety

Automotive service providers such as automotive dealers are primarily required and

focused to provide good service quality which should exceed customer expectations and

should result in 100% satisfaction of the customers. Satisfied Customers can more than often

increase organizations income and more likely to purchase more services from the
organization (Reichheld, 1993). Also, the customers generate new businesses for the

organization through positive word-of-mouth (Reichheld, 1996). As stated by Zeithmal.et.al,

(1996) the concept of satisfaction and loyalty is highly prevalent in Service organizations as

compared to product organizations because unlike services, in product organization the

quality is perceived and judged on the basis of product specifications and performance, but

the component of intangibility revolves majorly in services, making it more difficult for

service providers identify different ways to satisfying customers and gain loyalty.

THESIS OULTINE

1.8 OBJECTIVES OF THE STUDY:

i. To understand the concept and theory of customer satisfaction and service quality by

undertaking a thorough literature survey and identifying the gaps there on.

ii. To build a case study of existing and operating automobile dealer to understand the

intricacies of service delivery in the auto service sector and identify the latent

parameters.

iii. To conduct a pilot study among the 30 (10% of the aggregate population) customers

for expectations and perceptions of the service quality in the automobile showrooms

and to validate the parameters.

iv. To conduct a questionnaire survey among 200 passenger vehicle customers in various

automobile dealerships in north Karnataka region.

v. To suggest methodologies and ways to the dealerships in question to improve their

service quality to enhance customer satisfaction.

1.9 SCOPE OF THE STUDY:

The scope of automobile industries has been a increased economic development. It

has vital activities in investment & entry of a number of foreign players. The automobile
helps in transport people & goods over long distance. It has worldwide demand & has

broader scope for logistics & rise in economic growth. It creates per capita income &

National income & it leads to over all development of the country.

As apparent from the explanation above there exist huge scopes to understand the

factors influencing the customer satisfaction in automotive dealers. In order achieve the title

of the study, the researcher will be undertaking following actions and take the research in that

direction

✔ To conduct exhaustive literature survey related to customer satisfaction and to

thoroughly understand the concept of customer satisfaction

✔ To review various models and applications of customer satisfaction

✔ To review the customer satisfaction literature in service sector in general and

automotive service sector in particular

✔ To identify the gaps in the existing literature

✔ To articulate various factors used in the past to measure customer satisfaction

✔ To develop a research framework to do formative assessment of the factors

influencing the customer satisfaction in automobile showrooms (dealers)

✔ To develop research questions, objectives and hypothesis

✔ To develop a comprehensive questionnaire

✔ To conduct a pilot study to authenticate the research questions

1.10 NEED FOR THE STUDY:

The Indian Automotive Industry has come a long way since independence and has

turned to become the most vibrant sector. As quoted by Peter Drucker the automobile

industry “industry of the industries”, which stands true in case of Indian Automotive

Industry. With the contribution of about 7.1% to the Indian GDP (source: IBEF) and
accounting to 22% of contribution in manufacturing GDP, this sector and lucrative export

scenario, this sector has the potential to dominate the global automotive industry.

But in the hindsight, intensified competition in all the categories has forced all

manufacturers to expand their sales and services all over in the past few years, which would

help them to far out their market reach. This has resulted into increase of dealership networks

by 40% (source: MSIL Report, 2014). Consequently due to higher pressures from

manufacturers has raised intense pressure on the dealerships to earn profits and maintain their

sales and commute operations. The rising prices of real estate, rentals, operative expenses,

investments on customer centric showrooms with standard specifications has increased the

upfront investments for the new dealers has pressurized financial performance of the

dealerships. In order to attract new customers and retain existing customers the dealers are

forced to benefit the customers with discounts at the cost of their commissions, as major

revenue for the dealers only comes through sales of vehicles. Hence satisfying customers

becomes the primary focus of the automotive dealers, as it can result increased sales, which

ends up in higher income for the dealers and manufacturers. Also these customers are more

likely to purchase additional products and services and bring new businesses through word-

of-mouth communication.

SIGNIFICANCE OF THE STUDY:

It is a well acknowledged fact that the Indian automobile industry has been a trend setter for

the Indian economy. It is one of the few industries that emerged successfully from the recent

economic slowdown. The industry continues to witness rising competition with influx of

investments and entry of a number of foreign players. The consumer today is spoilt for

choice, more informed, confident and largely influenced by the internet. Automobile players

are take note of this change and experimenting with online marketing with effective use of

the digital medium. Many simple steps taken by the car dealers help in improving the level of

satisfaction level of online consumers .If the website is updated and if it matches the ever
changing needs and preference of online customers and is in well maintained condition, it

will boost buyer‟s satisfaction. A user friendly, efficient and knowledge based website also

helps to gain buyer‟s confidence. This further aids to create a strong and optimistic

perception for both the dealer and the manufacture.

The present study area that has attracted significant interest of the researcher is to

understand the various facts and facets about the customer satisfaction in the automotive

service space (namely the automotive dealers). The outcomes of the study will lay down a

blue print for the dealers and the manufacturers to develop newer strategies and streamline

operations so as to satisfy their customers and keep on serving them in the long run.

CHAPTER CONCLUSION:

This chapter basically attempts to give a clear outlook about the importance of faster and

reliable transportation to human beings which forced them to invent the automobiles. Also, it

gives historical perspective of advent of first ever automobile in India and how this industry

has grown to be the most competitive, prominent and potential industry in India by the turn of

century. The chapter also carves issues and pressures which this growth and competitiveness

has resulted onto the automobile service sector namely the dealers. Further more discussions

in this chapter reveal that achieving customer satisfaction is only solution in sustaining

competitive issues and pressures hence, attaining growth and sustainability in automobile

service sector.
CHAPTER 2
REVIEW OF LITERATURE

For any research undertaken in the area of social sciences or management,

review of literature is necessary as it necessitates familiarity of the concept in

question to the researcher and conclusions evolved therein by the earlier

researchers and analysts. It also assists the researcher in framing the objectives,

building the hypothesis and identifying various models/constructs in order to

undertake the study, also carves the scope for future study.

This chapter outlines various literary works being conducted in the area of

customer satisfaction in general and customer satisfaction in automobile

service sector in particular. The researcher has collected reports, research

papers, conference proceedings, articles from various data base websites like

EBSCO, Emerald Insight, Pro-Quest, Science Direct, Elsevier, etc. The works

primarily are classified on the basis of customer, customer satisfaction; works

which integrates customer satisfaction into automobile service sector, service

quality, etc., which further did build a robust foundation for research and the

study. The researcher has come across plethora of studies on Customer

Satisfaction but only the literature close and relevant to the topic of the study

are considered for the review.

DEFINITION OF CUSTOMER SATISFACTION

If one views the historical advent of ‘customer satisfaction’ as a concept, it has

been prevalent in the study of marketing since 1950’s, and still today it keeps

up as the most important and relevant topic and raises an unending interest

from the practitioners and academicians in marketing area. Hence, from the

outlook it can be stated that customer satisfaction is the prime domain of

marketing. The processes of customer satisfaction involves in purchase and

consumption. It also links post-purchase attitude of the customer such as

attitudinal change, repeat purchases, and brand loyalty. The primary

assumption of

the researcher considering that the concept of customer satisfaction is a part of

the core marketing activity seems to be correct by the consideration that

customer satisfaction results in revenues and profits. Apparently, in order to

make it more operational and measurable researchers have come out with

various principles, tools and techniques to measure customer satisfaction since

1970’s (Pfaff, 1972) (Fornell, 1992). Nevertheless, by not taking the

presumptions to be true the researcher has reviewed relevant literature in order

to foreground the assumption made in the previous paragraphs. As evident

‘Customer Satisfaction’ is amalgamation of two terms ‘Customer’ and

‘Satisfaction’. Before analyzing the literature related to Customer Satisfaction,

it would be feasible to review these two terms separately.

MEANING OF ‘CUSTOMER’

According to Business Dictionary the term ‘customer’ is defined as “a party

that receives or consumes products (goods or services) and has the ability to

choose between different products and suppliers. A customer (sometimes

known as a client, buyer or a purchaser) is the physical recipient of goods or

services, or a product, or an idea, obtained from a seller, vendor, or supplier via

a financial transaction or exchange for money or some other valuable

consideration. But, there are many varied explanations and definitions so far as

“Customer” is concerned.

Goldner (2006) has defined customer as “any organization or an individual

with whom you have done business over past twelve months”.

Grigoroudis and Siskos (2009) have defined ‘customer’ from two perspectives

Customer is the person that assesses the quality of products & services offered

to him/her and;

The customer is the person or group of people that receives the work output.

Thus, a more precise form of definition of customer “is an individual, a person,

a group or an organization entity to which goods are supplied or services are

being rendered by the supplier in the near or distant past”.

MEANING OF ‘SATISFACTION’ WITH RESPECT TO CUSTOMER

The meaning and definition of ‘Satisfaction’ is a very crucial phenomenon for

customers as well as organizations who are selling products and services.

‘Satisfaction’ ensures the validity of value of the price paid by the customer for

the product/ services and for the organizations it is the factor which decides the

fate of the organization, hence long term sustenance of the business per se.

Now that the two distinctive definitions has been framed on ‘customer’ and

‘satisfaction’. It becomes relevant to see how the past literature defines

‘customer satisfaction’ together. Regardless of exhaustive research been

undertaken since 1950’s the available literature defines ‘customer satisfaction’

in varied forms and formats.

Cardozo’s (1965) has opined that researchers are yet to develop a consensual

definition of customer satisfaction.

Howard and Sheth (1969) has defined customer satisfaction is the buyer’s

cognitive state of being adequately or inadequately rewarded for the sacrifices

he has undergone.

Hunt (1977) stated that the customer satisfaction is an evaluation rendered that

the (consumption) experience was at least as good as it was supposed to be.

Oliver (1977) opines that satisfaction is the consumer’s fulfillment response. It

is a judgment that a product or service feature, or the product of service itself,

provided (or is

providing) a pleasurable level of consumption- related fulfillment, including

levels of under- or over-fulfillment”.

Further Oliver (1981) explains that customer satisfaction is the summary of

psychological state which is the result of the emotion surrounding disconfirmed

expectations is coupled with the consumers’ prior feelings about the

consumption experience.

And Oliver (1981.a) defines customer satisfaction as a customer’s emotional

response to the use of a product or service.

According to Engel and Blackwell (1982) customer/consumer satisfaction is an

evaluation that the chosen alternative is consistent with prior beliefs with

respect to that alternative.

Westbrook and Reilly (1983), defines customer satisfaction as an emotional

response to the experiences provided by, associated with particular products or

services purchased, retail outlets, or even molar patterns of behavior such as

shopping and buyer behavior, as well as the overall market place.

According to Tse and Wilton (1988) customer satisfaction is defined as the

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/service as perceived after its consumption.

Yi (1990) states that basically the definition of ‘customer satisfaction’ has been

preconceived and understood, because the major puzzlement is none of the

researcher could define whether satisfaction is process or outcome.

Berry and Parasuraman (1991) argue that since customer satisfaction is

influenced by the availability of customer services, the provision of quality

customer service has become a major concern of all businesses. Hence,

customer satisfaction is typically defined as a post consumption evaluative

judgment concerning a specific product or service. It is the result of

an evaluative process that contrasts pre-purchase expectations with perceptions

of performance during and after the consumption experience.

As per Peterson and Wilson (1992) the research work on customer satisfaction

is characterized by the absence of definition and methodological

standardization". Hence, the literature is stuffed with different conceptual and

operational definitions of customer satisfaction.

Anton (1996) offers more elaboration on “customer satisfaction” . They state

that customer satisfaction as a state of mind in which the customer’s needs,

wants and expectations throughout the product or service life have been met or

exceeded, resulting in subsequent repurchase and loyalty”.

According to Woodruff and Gardian (1996) satisfaction is the evaluation or

feeling that results from the disconfirmation process.

Oliver (1997) stated that "everyone knows what customer satisfaction is until

asked to give a definition. Then it seems, nobody knows". And further most

researchers have defined ‘customer satisfaction’ on the basis of their own

understanding and have tested various models of customer satisfaction while

definitional considerations have received little attention

Merchant Account Glossary (2001) points out that, “Customer satisfaction is an

ambiguous and abstract concept and the actual manifestation of the state of

satisfaction will very from person to person and produce/service to

produce/service ”

Schiffman and Kanuk (2004) have defined customer satisfaction as the

individual’s perception of the performance of the product or service in relation

to his or her expectations. The definitions discussed above clearly show that an

evaluative process is an important component underlying customer satisfaction.

Hence it is evident that the term is related to businesses dealing in product

and/or services. And it depends on the premise of the research

the definition, scope and measuring techniques can be modified, assembled to

measure the component of customer satisfaction. In the successive sections a

review of various international and national literatures has been undertaken in

order to foreground the model fit to measure the customer satisfaction in auto

service sector.

REVIEW OF INTERNATIONAL STUDIES ON CUSTOMER

SATISFACTION IN AUTOMOTIVE INDUSTRY

In this section the researcher has reviewed various research works been carried

out by International authors in the area of customer satisfaction in general and

auto service sector in particular. The researcher has followed a historical

sequence in presenting the studies.

Bell (1967) in his study titled Self-confidence and Persuasibility among Car

Buyers has studied the behavior and feelings of new car buyer about their

purchase and the factors which determine the reactions of customer after

having used and lived with the car. The finding of the study suggests the effect

of a customer‘s self-confidence, personality, and the quality of service they

receive upon their cognitive dissonance.

Edward L. Grubb and Gregg Hupp (1968) have tested a methodology for

measuring self-concept and consumer behavior in comparable terms and,

therefore, to further substantiate the relationship of self-theory to consumer

behavior. In the outcome they have suggested that owners of a specific make of

automobiles perceive themselves as having self- concepts similar to those of

others who own that model of automobile.

Darlin Doman (1983) has mentioned that satisfied customer of new cars share

their experiences with 8 people, whereas dissatisfied customer complain to an

average of 22 people.

Leonard L. Berry et. al. (1985) has said that service quality is an essential part

of service oriented businesses. They have shortlisted 4 important outcomes.

Consumer perceptions of service quality resulting from comparing expectations

prior to receiving the service and actual experiences with the service.

There is specified level of quality on which "exceptions" or "problems" can be

dealt.

Interactions between customers and company representatives can figure

prominently in the quality image of firms.

Raising early expectations to unrealistic levels may result to more initial

business, but this strategy invariably fosters customer disappointment and

discourages repeat business.

William B Dodds (1991) has investigated the effects of the extrinsic cues of

price, brand and store information on the consumer perception of product

quality. They found that price had a positive effect on a perceived quality but a

negative effect on a perceived value and respondents‘willingness to buy.

The study by Parasuraman et. al. (1991) shows that some businesses have more

than just a competitive advantage in customer service; they have staunch

customer loyalty. They have argued that the key to providing best service is to

understand and respond to customer expectations.

Samson Itamer (1992) has studied the decisions that are determined on the

basis of both absolute attributes of alternatives and their relative positions

within the particular choice set under consideration. So far as suggestions are

concerned consumers are less likely to choose alternatives that are selected by

other consumers for reasons which do not apply to them, and that consumers

are less likely to choose alternatives that are offered with unneeded features or

premium even when these features do not reduce the value of a product in any

way.

Goofin and Price (1996) have studied the importance of after-sales services,

because they after sales service ends in increasing the product quality and

gaining competitive advantage and profitable opportunities, and as a result

increases sales and income for the business.

Andrew et. al. (1996) studied the assessment of different measures and

parameters of consumer expertise by examining their ability to predict correct

choices in three stimuli based choice tasks.

Albert Caruana (2000) has explained the distinguishing factors between service

quality and customer satisfaction. A model that links service quality to service

loyalty via customer satisfaction is proposed in his study.

Flynn et. al. (2002) have presented that communicational services is directly

related to customer satisfaction. Customers may have doubts in their minds

after purchasing the products which may hamper their decision making; and the

only way to manage this uncertainty is to establish a long term relationship

with customers through proper communicational services.

Herrmann (2005) in his study titled "The Social Influence of Brand Community

with Evidence from European Car Clubs" has developed and estimated a

conceptual model of different aspects of a consumer's relationship with the

brand, community influence, their intention and the behavior.

Ming Wang, Chich-Jen Shieh (2006) in their study have explored overall user

customer satisfaction. A questionnaire survey reveals users ‘perspectives on

service quality by using five dimensions: tangibles, responsiveness, reliability,

assurance, and empathy. The results indicate that the overall service quality has

a significant positive effect on overall user satisfaction. Among these five

dimensions except responsiveness, all of them have a significantly positive

effect on overall user satisfaction.

Saikat Banerjee (2006) undertook a study under the title “Car Market of China,

Current Scenario and Future Trends” and has emphasized that the passenger

car market of China had more competition. The outcome of the study also

reveals that Chinese passenger car industry have quantity-focused production

technology, no bench marked supply of automotive parts, non-serious approach

towards marketing area, and sales and services networks, and there is an

enormous scope for passenger car industry.

Andreas Herrmann.et.al. (2007) have aimed at linking conceptually the

concepts of price fairness and customer satisfaction, and empirically

demonstrating the influence of perceived price fairness on satisfaction

judgment. Further, the study seeks to examine specific factors that influence
fairness perceptions including price perception and consumer vulnerability.

Ali Araghchi (2007) has aimed at investigating and determining the nature of

the service quality construct and its relationship with those of customer

satisfaction, customer experience and behavioral intentions. This study also

aims at identifying the dimension that is the best predictor of overall service

quality, in terms of generating an outcome that identifies dimensions regarding

service quality in Iranian retail stores. This was achieved through performing a

theoretical and empirical study. The theoretical study provided by identifying

relevant theories, determining and defining service quality, customer

satisfaction, customer experience and behavioral intention for retailers in the

industry of Iranian handmade carpet. The empirical study comprised five

hundred questionnaires. The key finding of the study is that service quality is

represented by four dimensions. The dimensions referred to as the best

predictor of overall service quality are tangibility, reliability, responsiveness

and knowledge of employee. Moreover there is a strong relation between

―customer experience from onside and ―service quality, customer

satisfaction, behavioral intention from the other side.

Erdogan H. Ekiz1 and Ali Bavik (2008) have aimed at providing an example

for developing a measurement scale by using car rental services as a case. To

do so, both qualitative and quantitative methods were utilized in three

fundamental stages recommended by Churchill (1979) and Parasuraman,

Zeithaml & Berry (1988). The first qualitative research was undertaken in the

form of twenty three in-depth interviews which produced sixty one items that

described user perceptions. Then, a quantitative study was undertaken to purify

the scale items, examine dimensionality, reliability, factor structure and

validity. After a rigorous statistical analysis an eighteen-itemed scale with six

factors emerged. The study also introduces the setting of the research and
presents a need for scale development briefly, followed by discussion,

implications and limitations.

Kah-Hin Chai and Yi Ding (2009) have investigated the possible spillover

effects of customer satisfaction from product manufacturer to service provider,

and vice versa. The survey results provide empirical evidence for the presence

of spillover effects of quality and customer satisfactions in the mobile phone

industry. This finding suggests that research on the ways in which quality

affects customer satisfaction and loyalty should consider the influence of

partnering firms and suppliers, rather than only examine the relationship within

the same organization. This is particularly relevant in settings where the

simultaneous presence of physical product and the service are needed. In the

mobile phone industry, handset manufacturers and network operators need to

consider whom they partner, depending whether they are the likely receiving or

giving party of the spillover effects. Moreover, these effects are moderated by a

product image gap between the handset and network operator.

Chimun Kumar Nath (2009) has undertaken a correlation analysis of the

responses of customers regarding various attribute ratings of a car. Further it

also seeks to determine the underlying benefits consumers are looking from a

new generation car by classifying them according to their relative importance

they put in the attribute ratings by the method of

principal component analysis. From the study it has been observed that

customers are purchasing new generation cars because of several

considerations and these considerations can be attributed to two major factors

which may be labeled as: economic benefit factor and social benefit factor.

Mohd et al. (2009) have explained after-sales service is the provision of

services to customers before, during and after a purchase. It is one of the

organizational processes which companies perform in considering the growing

competition of the market and for attracting entrepreneurial opportunities for

increasing profitability and better access to the market, as well as increasing the

customer satisfaction level. It has been mostly used to describe services that are

provided to the customer after the products have been delivered.

Dina El Kayaly and Dr Ahmed Taher (2010) have proposed a model which is

the first comprehensive formalization of the three dimensions of marketing

applied to the automobile industry in the Arab World. This study is an attempt

to develop and test a measurement tool aiming at quantifying the factors

affecting satisfaction, customer's satisfaction and loyalty. The validity and

reliability of the measurement scale was te