LV Thạc sỹ_Improving customer satisfaction at LIMVINA company

The research objects of the thesis are to analyze the situation of customersatisfaction during using LIMVINA co., ltd’s products & services, to find outand evaluate factors impacting on

I would like to express my deepest gratitude to my supervisor, Doctor …

Hanoi, Oct …

…

TABLE OF CONTENTS

LIST OF TABLES……… 4

LIST OF FIGURES……… 5

EXECUTIVE SUMMARY……… 6

CHAPTER 1: INTRODUCTION……… 8

1.1 Rationale……… 8

1.2 Research problem……… 10

1.3 Research objective……… 11

1.4 Research questions……… 11

1.5 Research methodology……… 11

1.6 Research scope……… 13

1.7 Thesis structure……… 14

CHAPTER 2: THEORETICAL BACKGROUND……… 15

2.1 Overview on customer satisfaction……… 15

2.1.1 Customer satisfaction concept……… 15

2.1.2 Factors impacting on customer satisfaction……… 18

2.2 Service quality concept……… 18

2.2.1 Overview on service quality……… 22

2.3 Service quality model……… 24

2.3.1 SERVQUAL Instrument……… 24

2.3.2 The Expectation-Service Gap Grid Model……… 28

2.4 Factor impacting on Service quality……… 29

2.4.1 External factors……… 29

2.4.2 Internal factors……… 31

CHAPTER 3: CUSTOMER SATISFACTION AT LIMVINA CO., LTD… 33 3.1 Overview of LIMVINA CO., LTD……… 33

3.2 Research Findings……… 38

3.2.1 Customer survey result……… 38

3.2.2 Result of in-depth interview……… 46

3.2.3 General Analysis of Customer survey and in-depth interview……… 47

3.2.4 Problems and Causes……… 53

CHAPTER 4: RECOMMENDATION……… 56

4.1 Orientation of company about Customer Satisfaction……… 56

4.2 Recommendation for improving customer satisfaction at LIMVINA… 57

4.2.1 Human resource quality improvement……… 57

4.2.2 Diversifying service……… 60

4.2.3 Applying customer satisfaction measurement (CSM) in quality of service……… 61

4.2.4 Strengthening communication with customers……… 62

4.2.5 Expanding service supplied network……… 63

4.2.6 Strengthening logistic system……… 64

4.2.7 Recommendation about LIMVINA’s organization structure……… 64

CONCLUSION……… 66

DECLARATION OF ACADAMIC HONESTY……… 67

REFERENCES……… 68

APPENDICES……… 70

LIST OF TABLE

Table 1 In-depth interview structure……… 13

Table 2 LIMVINA’s turnover……… 36

Table 2 The SERVQUAL Score (Gap Score)……… 39

Table 3 The Mean SERVQUAL Score (Mean Gap Score)……… 42

LIST OF FIGURES

Figure 1 “Five Gap” Model of Service Quality……… 25

Figure 2 Perceived Service Quality……… 28

Figure 3 The Expectation – Service Gap Grid Model……… 31

Figure 4 Limvina’s Organization structure……… 38

Figure 5 Gap Score Chart……… 42

Figure 6 The Mean Gap Score by Five Dimensions……… 44

Figure 7 Expectation-service Gap chart……… 45

Figure 8 Quadrant for Expectation – Service Gap……… 46

Figure 9 LIMVINA’s new organization structure……… 65

EXECUTIVE SUMMARY

It seems self-evident that companies should try to satisfy their customers.Satisfied customers usually return and buy more, they tell other people abouttheir experiences, and they may well pay a premium for the privilege of doingbusiness with a supplier they trust Statistics are bandied around that suggestthat the cost of keeping a customer is only one tenth of winning a new one.Therefore, when we win a customer, we should hang on to them.

However LIMVINA is facing with the problem is that decreasing in itscustomer’s loyalty 5% of customers left LIMVINA to other suppliers areregarded as alarmed percentage of customer loyalty for LIMVINA

Moreover, Vietnam is becoming WTO member since 2007 and now on theway of WTO integration route until 2012 Day by day Vietnam opens itsmarket larger This creates both chance & threat for LIMVINA FDIincreasingly invest into Vietnam Almost of FDI projects are manufacturingfactories Demand for generators and generator related services increases This

is a chance for LIMVINA to extend its market share However, there isappearance of more competitors in the industry Recognizing that customersatisfaction is the key of success for not only LIMVINA but also for allcompanies, the author choose topic “improving customer satisfaction atLIMVINA CO., LTD” to be the research project for master of businessadministration thesis

The research objects of the thesis are to analyze the situation of customersatisfaction during using LIMVINA co., ltd’s products & services, to find outand evaluate factors impacting on customer satisfaction, to understandcustomer’s expectation about LIMVINA’s service quality and to proposerecommendations and solutions for Limvina co., ltd to improve its customersatisfaction

To collect primary data, the author conducted a survey with questionnaires,and in-depth interview To collect secondary data, the author use LIMVINA’sreports.

This thesis discussed customer satisfaction at LIMVINA basing on customerexpectation and customers’ perception, customers’ assessment The structure

of this study was constructed based on the SERVQUAL instrument submitted

by Parasuraman, and the research on the employees of customers in Northernprovinces, with the analytical tool of excel The purpose of this study was todiscuss the difference between customers’ expectation and customers’perception The study used Five Gaps Score Model for reference To measureLIMVINA’s service quality and customer satisfaction, the original model wasbased on sixteen attributes under five dimensions: Tangible, Reliability,Responsiveness, Assurance, and Empathy The Expectation-Service Gap Gridwas also used in the data analysis to identify shortfalls under these fivedimensions In addition, author also conducted interviews with managers ofpurchasing departments, directors of customers in order to find gap servicemore detail

Research results indicated that: Overall, service quality at LIMVINA fellbelow customer’s expectation, all attributes had negative mean scores

 The customers are not satisfied with company’s ability to provide service as promised And the cause is Vietnamese engineers lack

experience

 Responsiveness of LIMVINA is not on time and quick And the causes

are weak inventory and logistic activities and company’s location are farfrom customer’s place

 Customers are not satisfied with LIMVINA’s staff enthusiasm And

the cause is that Employees work passively and they think reward &contribute is not fair

 Range of LIMVINA’s service is narrow, lack of service to meet customer demand

 Author found shortfalls about LIMVINA service quality from customer survey, in-interview managers & director of customers Concurrently, author got also their comments for improving quality of service From then LIMVINA can improve its customer satisfaction.

Base on the collected data, author analyzed, assessed LIMVINA servicequality and gave several recommendations for improving customersatisfaction: Human resource quality improvement; expanding service suppliednetwork, strengthening communication with customer, diversifying servicerange, strengthening logistic system, applying Customer SatisfactionMeasurement (CRM) in quality of service and recommendation aboutLIMVINA’s organization structure

CHAPTER 1: INTRODUCTION 1.1 Rationale

COMPANY NAME: LIMVINA CO., LTD

Head-office: #506, CT3-2 Block, Me Tri Ha Urban zone, Me Tri ward, TuLiem Dist., Hanoi

Business scope: Trading

Main trading products: Generator LIMVINA is the sole agent ofEASTPOWER – the Korean brand name of generator in Vietnam

Services: engineering services (Installing, maintaining, repair)

Customers: Manufacturing companies

It seems self evident that companies should try to satisfy their customers.Satisfied customers usually return and buy more, they tell other people abouttheir experiences, and they may well pay a premium for the privilege of doingbusiness with a supplier they trust Statistics are bandied around that suggestthat the cost of keeping a customer is only one tenth of winning a new one.Therefore, when we win a customer, we should hang on to them

During 3 years running the business, LIMVINA sees that 5% of customer left

it for other suppliers The percentage of customer returns to use LIMVINA’sproduct and service is 0% This has caused decrease in turnover and badimpact on the company’s long-term strategy, reputation Through a verbalsurvey, we recognize some reasons of decrease in customer’s loyalty arequality of machine, late delivery time

Moreover, Vietnam is becoming WTO member since 2007 and now on theway of WTO integration route until 2012 Day by day Vietnam opens itsmarket larger This creates both chance & threat for LIMVINA FDIincreasingly invest into Vietnam Almost of FDI projects are manufacturingfactories Demand for generators and generator related services increases This

is a chance for LIMVINA to extend its market share However, there isappearance of more competitors in the industry To win in the competitiondebate, improving customer satisfaction is essential for LIMVINA CO., LTD

The verbal survey is not enough for LIMVINA to find out reason whycustomer left it for others and what customers expected about product andservices.

With the above reasons, I choose this topic to do the research with the hopethat the research can help to find out weakness, mistake in our customersatisfaction policies Since then, we can avoid mistake and have solution toincrease level of customer satisfaction in the future, reduce time, cost for thecompany

1.2 Research Problem

Problem statement: How to improve customer satisfaction at LIMVINA CO., LTD

At present, LIMVINA’s customers are manufacturing factories in the Northern

of Vietnam Almost of them is Korean FDI projects located in Industrial parks.With power cut often in the summer, keeping stable production is the mostimportance requirement for them That why every factories have to buygenerator and generator related services (installing, maintaining and repair)

Each customer buys generator just 1 or 2 times but to keep the generator workwell they have to buy generator related services monthly or quarterly (after

2500 hours of machine-working.)

However, LIMVINA is facing with the problem is that decreasing in itscustomer’s loyalty 5% of customer who left LIMVINA to other suppliers isregarded as alarmed percentage of customer loyalty for LIMVINA Thismeans that the level of customer satisfaction at LIMVINA is decreasing “How

to improve customer satisfaction at LIMVINA Co., Ltd” is the problemstatement for this research

1.3 Research Objective

The research has four main objectives as follows:

- To analyze the situation of customer satisfaction during using LIMVINA co.,ltd’s products & services

- To find out and evaluate factors impacting on customer satisfaction

- To understand customer’s expectation about LIMVINA’s service quality

- To propose recommendations and solutions for Limvina co., ltd to improveits customer satisfaction

1.4 Research Questions

To match and gain the above objectives, we set out some questions that need

to find the answers to solve the problem:

- What is the current status of customer satisfaction of Limvina’s product &services quality?

- What are factors impacting on customer satisfaction?

- What are points of view and expectation of customers about product, servicesand customer care?

- How to improve customer satisfaction?

1.5 Research Methodology

Data collection:

Sources of data collection: Secondary data & Primary data

Data collection methods for secondary data: From company’s reports,

company profile, website…From these data, we can know the frequency ofbuying goods and services of LIMVINA customers The frequency is an index

to show a level of customer satisfaction

Data collection methods for primary data:

To collect primary data, the author did survey and in-depth interview.

* Survey with questionnaires:

Population & Sampling:

Population: 50 companies They are LIMVINA customers now Most of them

are 100% FDI projects (textile & garment firms, electronic manufacturingfirms) These 50 companies locate in Northern of Vietnam (Hanoi, Bac Giang,Hung Yen, Bac Ninh, Ha Nam, Nam Dinh, Vinh Phuc, Phu Tho, Thai Binh,Hai Duong)

Sample: Base on these figures, the author proposes that the targeted sample

size for this study will be 30 in totals Because of time and cost, the samplingtechnique that the author will use is convenience 6 customers in Bac Giangprovince (include Dinh Tram Industrial zone and Dong Dinh industrial zone),

6 customers in Hung Yen province (including Pho Noi A, B Industrial zonesand outside of IZ), 5 customers in Vinh Phuc province, 4 customers in BacNinh province, 3 customers in Nam Dinh province, 3 customers in Phu Thoprovinces, 1 customer in Ha Nam, 1 customer in Thai Binh, 1 customer in HaiDuong

(See questionnaires at Appendix 1, page 70)

* In-depth interviews: Conducted with manager of purchasing department of

these companies, directors, manufacturing managers, and technical managerswho influence on purchasing decision (10 PEOPLE) (See Guideline for indepth interview at Appendix 3, page 75)

Table 1: In-depth interview & survey structure

Interviewee Data collecting

methods Instruments Type of information

Managers:10 Qualitative Interview Manager’s viewpoints of

Interviewee Data collecting

methods Instruments Type of information

(In-depthinterview) services, their expectation.Specialists

and

Engineers:30

Quantitativemethod (survey) questionnaire

specialists’ opinions aboutLIMVINA’ product &services

* Data analysis method:

The author use Excel computer software to analyze survey result, and analyze information collected from in-depth interview

 Location:

Location of research related to object of getting data and geographical area

to collect useful information This project in implementing in four severalNorthern provinces of Vietnam: Hanoi, Vinh Phuc, Bac Ninh, Hung Yen,Hai Duong, Nam Dinh, Phu Tho, Bac Giang, Thai Binh

 Time:

Defining time for research can help researcher to know when to collectdata

With secondary data, we will get the data of the company within 3 years

from 2008 to 2010 and with Primary data; we will spend time from June toOct 2010 to conduct survey and in-depth interview to create new data

 Chapter 2: Theoretical Background

This chapter included theoretical background, it presented concept of customersatisfaction, concept of service, characteristic of service and Limvina’s service,service indicators,… Besides, SERVQUAL instrument and Expectation –Service Quality was also presented

 Chapter 3: Customer satisfaction at LIMVINA CO., Ltd

Overview of LIMVINA CO., LTD together with research finding andanalyzing were presented in this chapter

 Chapter 4: Recommendation

There would be some recommendations which were presented in this chapter

CHAPTER 2: THEORETICAL BACKGROUND 2.1 Overview on Customer Satisfaction

2.1.1 Customer Satisfaction concept

There are quite a few definition of customer satisfaction Hereafter areexamples of it:

 Customer satisfaction is a transaction-specific affective responseresulting from the customer’s comparison of product performance tosome pre-purchase standard (Halstead, Hartman and Schmidt 1994)

 Business, government, and other nonprofit organizations need measureshow well products and services (performances) are meeting client needsand wants so that they can enhance their own and /or society’s well-being The extent to which these needs and wants are met has come to

be called customer satisfaction (Andreasen 1977)

 Customer satisfaction is a post choice evaluative judgment concerning aspecific purchase selection (Westbrook and Oliver 1991)

 Customer satisfaction results from the interaction of levels ofexpectation about anticipated performance and evaluations of perceivedperformance (Miller 1977)

 Customer satisfaction is the most common of all marketing surveys and

is part of the "big three" research studies in marketing that includemarket segmentation and concept testing (according Scott M Smith)

Most of the above definitions is about consumer satisfaction When doingbusiness to business, customers are companies (not consumers), managersconcern more about the concept of industrial customer satisfaction Industrialcustomer satisfaction is usually considered to be based upon the product'sperformance relative to expectations for those who participated in the

purchase (Tanner, John F.,Jr Industrial Marketing Management, Elsevier

B.V.1996)

The participants in the purchase are initiators, users, influencers, deciders,approvers, buyers, gatekeepers Studying on these people’s satisfaction, a

company may know where they are standing at levels of customer satisfaction.

So that the company may have solution to improve its business

2.1.2 Factors impacting on customer satisfaction

Factors impacting on customer satisfaction could be widely classified undertwo categories i.e suppliers behavior and performance of product and services

The supplier’s behavior mostly depends on the behavior of its senior

subordinates, managers and internal employees All the functional activitieslike customer response, direct product and maintenance services, complaintmanagement etc are the factors that rely on how skillful and trained theinternal and human resources of the supplier are

Performance of products and services This depends on the capability of

supplier to how to nurture the products and service efficiently and how skilledthe employees are It’s all about how the skills are implemented to demonstrateengineering, re-engineering and technological aspects of the products andservices The quality and efficaciousness of the products is also an importantfactor that enables compatible and hassle free functions and operations Thisbears to lower maintenance and higher life of the product which is highlyadmired by the customers

If the product is having some problem or compatibility issues and requiresfrequent maintenance and support than the customers could get irritated andpossibilities of sudden divert is there which lead to supplier’s financial loss Inthe same way if the product is expecting huge amount of financial and manualresources then customers could get a feeling of dissatisfaction and worry.However, if these aspects are handled efficiently by giving class services anddealing with complaints effectively then dissatisfied customers could beconverted into long time satisfied customers and retaining them becomes easy

It is practically impossible for the supplier to provide all the above explainedfeatures There are always some positive as well as negative features inproducts and services which could lead to delight or irritate customers Thefinal opinion is the sum of overall experiences which a customer percept But

it is also true that more the positive aspects, the more the customer is satisfied.Hence the aim of the supplier should be always to enhance these positivefeelings among all the customers to increase customer satisfaction Thesupplier must identify how to enhance these positive aspects to maximum level

by analyzing the customer’s data and information using CRM system Theindividual liking and disliking of customers differ from customer to customer

It is hence required to target a customer and identify individual requirement tomake them satisfied

Having discussed the above factors that affect customer satisfaction we cansay that higher the satisfaction level, higher is the sentimental attachment ofcustomers with the specific brand of product and also with the supplier Thishelps in making a strong and healthy customer-supplier bonding This bondingforces the customer to be tied up with that particular supplier and chances ofdefection are very less

In term of industrial customer, re-buying action manifests level of customersatisfaction Factors impacting on buying decision are ones affecting customersatisfaction Almost companies have buying center Buying center includesseveral participants with differing interest, authorities, status andpersuasiveness Each member of buying center is likely to give priority to verydifferent decision criteria For example, engineering personnel may beconcerned primarily with maximizing the actual performance of product;production personnel may be concerned with ease of use and reliability ofsupply; financial personnel may focus on the economics of purchase;

purchasing may be concerned with operating and replacement cost; unionofficial may emphasize safety issues, and so on.

Business buyers also respond to many influences when they make theirdecisions Each buyer has personal motivations, perceptions, and preferences,which are influenced by buyer’s age, income, education, job position,personality, attitudes toward risk, and culture

Webster cautions that ultimately, individuals, not organizations, makepurchasing decisions Individuals are motivated by their own need andperceptions in attempting to maximize the rewards (pay, advancement,recognition, and feeling of achievement) offered by the government Personalneeds “motivate” the behavior of individuals but organizational needs

“legitimate” the buying decision process and its outcomes People are notbuying “products” They are buying solutions to two problems: theorganization’s economic and strategic problem and their own personal

“problem” of obtaining individual achievement and reward In this sense,industrial buying decisions are both “rational” and “emotional”, as they serveboth the organizational and the individual needs

2.2 Service Quality Concept

2.2.1 Concept and characteristic of service

Concept of service

Many definitions of service were available but all contain a common them ofintangibility and simultaneous consumption The following represented asample of service definitions:

 Services are deeds, processes, and performances (Valarie A.Zeithaml

and Mary Jo Bitner, Service Marketing, New York: Mc Graw-Hill,

1996, p.5)

 A service is an activity or series of activities of more or less intangiblenature that normally, but not necessarily, take place in interactionsbetween customers and service employees and/or physical resources orgoods and/or systems of the service provider, which are provided as

solutions to customer problems (Christian Gronroos, Service

Management and Marketing, Lexington, Mass: Lexington Books, 1990, p.27)

 Most authorities consider the services sector to include all economicactivities whose output is not a physical product or construction, isgenerally consumed at the time it is produced, and provides added value

in forms (such as convenience, amusement, timeliness, comport, orhealth) that are essentially in tangible concerns of its first purchaser

(James Brian Quinn, Jordan J.Baruch, and Penny Cushman Paquette, Scientific Americould, vol.257, no2, December 1987, p.50)

 A service is a time-perishable, intangible experience performed for a

customer acting in the role of co-producer (James Fitzsimons).

 A precise definition of goods and services should distinguish them on

the basis of their attributes A good is a tangible physical object or

product that could be created and transferred; it has an existence overtime and thus could be created and used later A service is intangible

and perishable It is an occurrence or process that is created and used

simultaneously or nearly simultaneously While the consumer could notretain the actual service after it is produced, the effect of the service

could be retained (Earl Sasser R.Paul Olsen, and D.Daryl Wykoff,

Management of Service Operations, Boston: Allyn and Bacon, 1987, p.8).

LIMVINA’s service is a process from checking machine, finding out problemand cause, supplying spare-part to action of changing parts for the machine,

cleaning, adjusting machine and testing operation The result of service isstably operation of the machine

2.2.2 Overview of Service quality

a Expected service quality

Expectation was defined by Parasuraman, Zeithaml, and Berry (1988,p.17) as

“desires of wants of customers, what they felt a service provider should offerrather than would offer However Parasuraman, Zeithml, and Berry (1990,p.12) noted that the expected service concept was “intended to measurecustomers” normative expectation,” and that these expectations represent and

“ideal standard” of performance

Expected service quality played a major role in the service consumer making process In the pre-purchase stage, expected service quality playsinfluence service consumer decisions on which brand or service to buy, whichservice provider was chosen During consumption, expected service qualitycould be affected by the attitudes of service-man, of service woman or veryservice In the post-purchase stage, expected service quality form the basis ofevaluations of satisfaction

decision-Some studies have treated expected service quality as a static variable thatexerted both direct and indirect influence on customer satisfaction In thesestudies, customer expectations were formed prior to consumption; they served

as comparative referents for quality judgments, for determining customersatisfaction, and ultimately for behavior intentions It has been suggested thatmarketers who wish to understand and favorably influence customersatisfaction need to understand and influence customer expectations(Anderson, 1973) Success in influencing customer satisfaction may depend, inpart, on understanding how customer expectations are developed and updated

In this case, expectations were viewed as dynamic since they may change as aresult of the customer’s experience.

b Perceived service quality

Quality could be defined broadly as superiority or excellence By extension,perceived quality could be defined as the consumers’ judgment about aservice’s overall excellence or superiority According to Zeithaml (1988),perceived quality was (1) different from objective or actual quality, (2) ahigher level abstraction rather than a specific attribute or a product, (3) aglobal assessment that in some cases resembles attitude and (4) a judgmentusually made within a consumer’s evoked set Whereas fitness for use (Juran,1984; Lemmink, 1991; Steenkamp, 1989; a.o) was an appropriate definition ofperceived quality of products, it was not when discussing services Thephysical intangibility of services and the often described as the discrepancybetween a customer’s expectations and perceptions of performance (Grönroos,1983; Lewis and Booms, 1983; Parasuraman, Zeithaml and Berry 1985, 1988,1991; Carman, 1990; Colier, 1987; a.o) The rationale behind the development

of this specific definition could be covered by the following espects:

 Because of the inherent physical intangibility of services, mentalprocessing was extremely important but difficult A humanistic,psychological based concept (Jacoby and Olson, 1985) must be treatedconsequently;

 Quality seemed to be the most important issue in services marketing.Whereas the definition of perceived quality of services focuses on theactual perceived performance of the service and was in this respectdistinctive from e.g convenience (Holbrook and Corfman, 1985, VanRaaij, 1988) and the behavioral costs (Verhallen and Van Raaij, 1986).Perceived service quality was less precise and territorial;

 Service quality had to be differentiated from the service level, or servicequantity.

 The stated definition made it possible to model service quality(perception) processes The SERVQUAL model composed byParasuraman et al (1985) was without doubt the most popular and alsomost criticized model in perceived service quality literature

2.3 Service Quality Model

2.3.1 SERVQUAL Instrument

This study used a well-known SERVQUAL instrument that was presented byParasuraman et al SERVQUAL was a widely-tested instrument for measuringservice quality (Carman, 1990; Chia, 1997; Coleman, Xiao & Chollett, 1997;Durvasula, Lysonski & Mehta, 1999; Mad, 1994; Mangold & Babakus, 1991;Steward, Hope & Muhlemann, 1998) It was developed by Parasuraman,Zeithaml, and Berry (1988) based on their Gap Model

Figure 1: “FIVE GAPS” MODEL OF SERVICE QUALITY

There were five gaps in the Gap Model, namely:

Service Quality Gap (Gap 5)

The Service Gap is the difference between customer expectations andcustomer perceptions Customer expectation is what the customer expectsaccording to available resources and is influenced by cultural background,family lifestyle, personality, demographics, advertising, experience withsimilar products and information available online Customer perception istotally subjective and is based on the customer’s interaction with the product

or service Perception is derived from the customer’s satisfaction of thespecific product or service and the quality of service delivery The Service Gap

is the most important gap and in an ideal world the customer’s expectationwould be almost identical to the customer’s perception In a customerorientated strategy, delivering a quality service for a specific product should bebased on a clear understanding of the target market Understanding customer

Recommendations from

friends and relatives Personal needs Past experience

Expected Service Perceived Service

Service delivery (actual experience)

Translation of perceptions into service performance standards

Management perceptions of customer expectations

Guest

External communication

to guests Gap 4

needs and knowing customer expectations could be the best way to close thegap.

External communication Gap (Gap 4)

In some cases, promises made by companies through advertising media andcommunication raise customer expectations When over-promising inadvertising does not match the actual service delivery, it creates acommunication gap Consumers are disappointed because the promised servicedoes not match the expected service and consequently may seek alternativeproduct sources

Service Performance Gap (Gap 3)

This gap exposes the weakness in employee performance Gap may specify theservice required to support consumers but have subsequently failed to traintheir employees, put good processes and guidelines in action As a result,employees are ill equipped to manage consumer’s needs Some of theproblems experienced if there is a delivery gap are:

 Employees lack product knowledge and have difficulty managingcustomer questions and issues

 Organizations have poor human resource policies

 Lack of cohesive teams and the inability to deliver

Service Standards Gap (Gap 2)

According to Kasper at al, this gap reflects management’s incorrect translation

of the service policy into rules and guidelines for employees Some companiesexperience difficulties translating consumer expectation into specific servicequality delivery This can include poor service design, failure to maintain andcontinually update their provision of good customer service or simply a lack of

standardization This gap may see consumers seek a similar product with betterservice elsewhere.

Marketing Information Gap (Gap 1)

The Marketing Information Gap is the difference between the customer’sexpectations of the service provided and company’s provision of the service

In this case, managers are not aware or have not correctly interpreted thecustomer’s expectation in relation to the company’s services or products If aknowledge gap exists, it may mean companies are trying to meet wrong ornon-existing consumer needs In a customer-orientated business, it is important

to have a clear understanding of consumer’s need for service To close the gapbetween the consumer’s expectation for service and management’s perception

of service delivery will require comprehensive market research

The fifth gap was the difference between consumer expectation and their perception of service quality – measured by the difference between what customers expected and what customers perceived about the quality of service.

In addition, gap 5 is a function of gap 1, gap 2, gap 3, and gap 4; that was

Gap 5 = f(gap1, gap2, gap3, gap4)

This means that the service quality was closely related to Internal Communication, marketing, Service Performance, Service Standards, Marketing Information Based on the theoretical development of Parasuraman

“Service Quality Model”, the SERVQUAL (SERVice QUALity) instrument was proposed in 1988 Although, Gap 5 related to other Gaps, but this thesis focused on Gap 5.

Perceived service quality

Figure 2: PERCEIVED SERVICE QUALITY

Source: Reprinted with permission of the American Marketing Association: Adapted form A Parasuraman, V.A Zeithaml, and LL Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research, Journal of Marketing 49, Dall 1985, p.48

Their early investigations (Parasuraman et al., 1988) revealed that the primarycriteria used by customers in assessing service quality could be described byten separate dimensions: Tangibles, Reliability, Responsiveness,Communication, Credibility, Security, Competence, Courtesy, Understanding/knowing the customers and Access Later, they refined and condensed the tendimensions to five: Tangibles, Reliability, Responsiveness, Assurance andEmpathy The 16 expectation/perception items which form the main questions

of the SERVQUAL instrument were derived from the five service dimensions

In the survey, respondents were asked to rate their expectation and perception

of these items Service quality has been dominated by the SERVQUALinstrument, based on the so-called gap model The central idea in this modelwas that service quality was a function of the difference scores or gapsbetween expectations and perceptions (P-E) It has been proposed that servicequality was a multidimensional concept (cf Parasuraman et al., 1985) Fivekey dimensions of service quality have been identified

 Tangibility: The appearance of physical facilities, equipment, personnel,

and communication materials The condition of the physical

2 Expectations met ES ≈ EP

3 Expectations not met ES>EP (Unacceptable Quality)

Gap 5

surroundings (e.g., cleanliness) is tangible evidence of the care andattention to detail that are exhibited by the service provider Thisassessment dimension also can extend to the conduct of other customers

in the service

 Reliability: The ability to perform the promised service both dependably

and accurately Reliable service performance is customer expectationand means that the service is accomplished on time, in the same manner,and without errors every time For example, receiving mail atapproximately the same time each day is important to most people.Reliability also extends into the back office, where accuracy in billingand record keeping is expected

 Responsiveness: The willingness to help customer and to provide

prompt service Keeping customers waiting, particularly for no apparentreason, creates unnecessary negative perceptions for quality If a servicefailure occurs, the ability to recover quickly and with professionalismcan create very positive perceptions of quality For example, servingcomplimentary drinks on a delayed flight can turn a potentially poorcustomer experience into one that is remembered favorably

 Assurance: The knowledge and courtesy of employees as well as their

ability to convey trust and confidence The assurance dimensionincludes the following features: Competence to perform the service,politeness and respect for the customer, effective communication withthe customer, and general attitude that the server has the customer’s bestinterest at heart

 Empathy: The provision of caring, individualized attention to

customers Empathy includes the following features: approachability,sensitivity, and effort to understand the customer’s need One example

of empathy is the ability of an airline gate attendant to make a

customer’s missed connection the attendant’s own problem and to find asolution.

Customers use these five dimensions to form their judgments of servicequality, which are based on a comparison between expected and perceivedservice The gap between expected and perceived service is a measure ofservice quality; satisfaction is either negative or positive Besides, ServiceQuality was also a concept that had aroused considerable interest and debate inthe research literature because of the difficulties in both defining it andmeasuring it with no overall consensus emerging on either (Winsniewski,2001) There were a number of different “definitions” as to what was meant byservice quality One that was commonly used defines service quality as theextent to which a service meets customer’s needs or expectations (Lewis anMitchell, 1990; Dotchin and Oakland, 1994; Asubonteng et al., 1996;Winsniewski and Donnelly, 1996) Service quality could thus be defined as thedifference between customer expectations of service and perceived service IFexpectations were greater than performance, then perceived quality was lessthan satisfactory and hence customer dissatisfaction occurs (Parasuraman etal., 1985; Lewis and Mitchell, 1990)

2.3.2 The Expectation – Service Gap Grid model

Customer expectation were formed by their previous experiences, words ofmouth and the company advertising for these services, the customerscompared the perceived and expected service quality If their perceived is lessthan the expected service quality, customer may lose their interest in thecompany Conversely, if the perceived service quality is greater than theexpected service quality, customer will come back again In deliveringservices, some gaps between customers’ expectation and customers’perception happened to cause unsuccessful service delivery and some gaps

The Expectation – Service Gap Grid was used to identify the service shortfalls

of the companies The results from 16 – item SERVQUAL Instrument(expectation and service gaps was presented in the Chart to determine theexpectation and gap level, then it is converted to the Expectation – ServiceGap Grid to show a macro view of the quality of services delivered by servicecompanies

Figure 3: The Expectation – Service Gap Grid Model

2.4 Factors impacting on Service Quality

2.4.1 External Factors

Mechanism and Policies of Government

Legal environment with mechanism and policies of Government impacted onproviding service and improving quality of service directly and huge.Mechanism and policies of Government created good condition fordevelopment of enterprise but it compelled enterprise to have to improve

quality of service in order to enhance competitive ability, it also forcedenterprise to create and innovate quality of service by itself Mechanism andpolicies of Government created a fair and obvious “playground”, it not onlyensured interests of enterprise about business activities, investment, improvingservice quality but also ensured benefit of consumer If mechanism andpolicies of Government is reasonable it will promote development andimproving service quality of enterprise, and on the contrary, it will inhibitdevelopment and improving service quality of enterprise, it will createdstagnation.

Economic Potential and market Demand

Demand of consumers increased incessantly in quality and quantity service Inorder to meet demand of customers, enterprise had to always find every ways

to improve service and quality of-service Market Demand was one of factors

to make enterprises has to improve service and quality of service

Economic Potential impacted quite huge on quality of service, if economicpotential is strong, consumer will have enough money to pay for high quality

of service So enterprise can invest in order to improve quality of service

Cultural and Societal Factor

Cultural and Societal Factor of every country and area influenced creatingparticularity quality of service strongly Cultural, society, manners andcustoms, habit of consumption impacted attribute of service directly Itrequired enterprise to provide service with high quality, suitable to mannersand customs of area and country Quality was total attributes which meetdemand of consumers, but it was very wrong if said that all demand ofcustomers was met The service quality attributes met demand of customers

when the demand was suitable with interest of society So, quality of servicedepended closely on Cultural and Societal Environment of country.

Technological Factor

Quality of service depends very strongly on technology, it can exceed level oftechnology Service quality represents specific characteristics of technologywhich creates that service The progress of technology creates ability toimprove service quality Effect of technology is unlimited, thus service wasprovided with more and more perfectly, it met demand of customer well

2.4.2 Internal Factors

Labor force of Enterprise

Labor force of enterprise influenced very strongly on quality of service, it wasdeciding factor in quality of service Although, equipment and technology ofenterprise was very modern but management ability and skillful of labor waslow, service would be provided with low quality Labor factor includedmanagers, staffs of enterprise, even customers In order to create service withhigh quality, all labor force had to participate in service providing process withhigh co-operative spirit If employees are good at professional knowledge theywill create service with high quality

Machines and Equipment of Enterprise

Modern machines and equipment impacted very strongly on quality of service,

it could create service with high quality and suit every market demand Beside,modern machines and equipment made customer to have good first impressionwith enterprise, it would create safe sensation for customer That was one offactors to influence customer’s decision in choosing service

Service Providing Network

Service Providing Network influenced on providing of service, whencustomers had demand to use service, they had to choose convenient locate tobuy services, they could save time and money for traveling Service ProvidingNetwork was also important factor that was mentioned in Marketing Mix.

Management Ability of Enterprise

Enterprise could consider as a “system”, in there co-operation betweendepartment in enterprise would create service with high quality To implementthis work, management ability paid an important role in the service providingprocess With good management ability, managers could operate servicesproviding process smoothly They could meet market demand well

CHAPTER 3: CUSTOMER SATISFACTION AT LIMVINA CO., LTD

LIMVINA CO., LTD was established in 2007 It is running business insupplying industrial equipments & engineering services LIMVINA’s scope ofbusiness was stated in the Business License No 0104001191 issued by HanoiDepartment of Planning and Investments on April 25th 2007.

Head-office: #506, CT3-2 block, Me Tri Ha Urban zone, Me Tri Ward, Tu

Liem Dist., Hanoi city

Work-shop & warehouse: Dai Mo ward., Tu Liem Dist., Hanoi

Tel: +84 4 3787 6300 Fax: +84 4 3787 6301

www.limvina.com

Now, LIMVINA is the sole agent of EASTPOWER generator – 1 brand-name

of Korean in Vietnam

LIMVINA’s main products & services are as following:

Generator set of EASTPOWER: As a sole agent of EASTPOWER generator

in Vietnam, LIMVINA has been distributing the machine in all Vietnam The

machine is special applied to industrial factories with the range of capacity from 55KVA up to 3000KVA.

prime-Installation service: After signing a contract with customer to sell generators,

LIMVINA does import and logistic activities to deliver the machine tocustomer’s factory Then it installs the machine and train customer’s staffshow to operate, maintain and keep safety regulation when they work withgenerator Besides, LIMVINA also does installation for other brand-name ofgenerator if customer requests Some companies did not buy EASTPOWERgenerator, but they need their machine has installed by specialist of generator

so they signed an installation contract with LIMVINA LIMVINA has beeninstalling many kind of generators with brand-name such as Cummins (USA),Mitsubishi (Japan), MTU (Germany), …

Services of maintenance, warranty: As other industrial machines, after each

running period (250 hour), the machine needs to maintain Maintainingmachine will help the machine work smoothly As a result, factory’sproduction is not interrupted LIMVINA supplies maintenance service ofgenerator for its customers Maintenance service included periodic checkinggenerator for problematic issue, supplying spare-parts, engine oil for themachine, and keeping machine clean, cool This service should doneperiodically and by technician of generator

Services of repairing generator: When generator broken, it needs to repair.

LIMVINA can help customer to repair their generator To do this service, itrequires LIMVINA to have a group of skilled-experience engineers and meetcustomers’ requirement timely

All the above services are for industrial customer (organizational customer).Therefore, to analyze quality of these services and customer satisfaction wehave to reference many objectives who influence on buying progress Eachperson in buying progress assesses the services according to different qualities.For example, purchasing staff will evaluate a service that they buy basing onthe service price, delivery time (implementing time), technical staff may base

on how well the machine can work after service done, how professional theservice-man shows him…This is different compared to measuring consumer’ssatisfaction

About LIMVINA’s human resources

LIMVINA has 39 people includes 1 general director, 2 vice director (1 vicedirector in charged of technical department, the other in charged of sales,administration & accounting department, logistic department), 3 peopleworking in the administration & accounting department, 3 people working inlogistic department, 5 people working in sales department and 25 peopleworking in technical department

As the sole agent of EASTPOWER, so LIMVINA gets support fromEASTPOWER Co., Ltd with Korean technician Every quarter, EASTPOWERsends its engineers to LIMVINA to do training, consulting customers ifneeded

Figure 4: LIMVINA CO., LTD’s Organization structure

About LIMVINA’s turnover

Table 2: LIMVINA’s turnover

service decrease in 2009 The decrease in turnover from selling due to somecustomer left LIMVINA to other supplier Most of them are big customer withhigh turnover contribute so that even some new customers arrive but theturnover from selling service still decrease.

About LIMVINA’s customer

LIMVINA’s customers are FDI companies located in the Northern ofVietnam Most of them are Korean firms running business in textile &garment, electronic equipment, auto-mobile’s parts, mobile phone’s partsmanufacturing

LIMVINA has 50 customers in which 20% of them contribute around 80% ofturnover from selling service such as Daeyang Hanoi at Dong Dinh Indsustrialzone, Tan Yen ward, Bac Giang province, Dong Yang E&P Inc at Hung Yen,Pangrim Neotex Vietnam co., Ltd at Phu Tho province, Yakjin Vietnam Co.,ltd at Phu Tho province, Youngone at Hoa Xa industrial zone, Nam Dinhprovince,…some of them left LIMVINA to other supplier According to verbalsurvey, the customer left LIMVINA because of reasons: LIMVINA’s servicequality is not as promised, delivery time is so long, customer-care is not good

Now, LIMVINA just apply excel soft-ware in customer relation management.Every information about customer will be input into the soft-ware, from thatLIMVINA can see its customer situation However, during managingcustomer, LIMVINA has not recognized the importance level of eachcustomer so that they did not care customer adequately This leads to some ofimportant customer left LIMVINA to other competitors, turnover from sellingservice of company decreased Even every quarter, new customers come toLIMVINA but turnover from the new customer is still smaller than turnoverfrom the customer left

3.2 Research findings

3.1.1 Customer Survey Result

The individually survey was one of method to gather finding for this study To

do the survey, in population of 50 companies -most of them are 100% FDIprojects (textile & garment firms, electronic manufacturing firms) These 50companies locate in Northern of Vietnam (Hanoi, Bac Giang, Hung Yen, BacNinh, Ha Nam, Nam Dinh, Vinh Phuc, Phu Tho, Thai Binh, Hai Duong), wechoose 30 companies to be sample The sample as following: 6 customers inBac Giang province (include Dinh Tram Industrial zone and Dong Dinhindustrial zone), 6 customers in Hung Yen province (including Pho Noi A, BIndustrial zones and outside of IZ), 5 customers in Vinh Phuc province, 4customers in Bac Ninh province, 3 customers in Nam Dinh province, 3customers in Phu Tho provinces, 1 customer in Ha Nam, 1 customer in ThaiBinh, 1 customer in Hai Duong In each company chosen, we persuaded 2people to fill in our questionnaires in which 1 person is engineer in charge ofmachine and the other is purchasing staff

The using SERVQUAL instrument in order to request respondents to answerthe five dimensions and 16 questions Firstly, the respondents had to assessLIMVINA service quality which they were involved and then they expressedtheir expectations to LIMVINA service quality Each response was scoredfrom “1” to “7”, in there “1” was “Strongly Disagree” and “7” was “StronglyAgree” In the analysis, the expectation score was subtracted from theperception score for each item in the five service dimensions: Tangible,Reliability, Responsiveness, Assurance, and Empathy The SERVQUALScore for the items pertaining to each of the five dimensions were totaled andthan divided by the number of items making up the dimension TheSERVQUAL Score obtained for the five dimensions were subsequentlyaveraged to obtain an overall measure of service quality The score was high,

the perception was high and on the contrary In addition, the respondents wereasked to indicate the relative importance of each of the service dimensions.

As the purpose of this study, I collected data from engineers & purchasingstaff who involved in LIMVINA’s service A total 60 questionnaires weredistributed to 30 engineers & 30 purchasing staffs in customer-companies.Although the customer was reminded to complete the questionnaire on duedate but there was some people

without feedback As a result, I got 52 questionnaires for analyzing

In survey process, the customers not only answered questions in questionnaire

(see appendix 1) but also they had a lot of comments about LIMVINA’s

service quality, and contribute their idea to make it better

Referring to the results of Appendix 2 and the SERVQUAL Scores were

shown in Table 1

Table 3: The SERVQUAL Score (Gap Score)

PERCEPTION P

EXPECTATION E

GAP SCORE G=P-E

TANGIBLE DIMENSION

1 Spare-parts, materials provided and associated

2 Equipments, means used by employees during

-1.79

3 Employees having a neat, professional appearance 3.84 5.97 -2.13