SERVICE QUALITY AND CUSTOMER SATISFACTION IN THE PUBLIC SECTOR ORGANIZATIONS: Evidence from selected transport service

departments in Amhara Regional State, Ethiopia

1Belayneh Aniley, 2Yebicha Fenta 1Lecturer, 2Lecturer

1Department of Marketing Management2Department of Marketing Management

1Bahir Dar University, Bahir Dar, Ethiopia, Post Box 79,(E-mail: belaynehaniley@gmail.com or

aniyebcha@gmail.com )

AbstractEvolution of economies worldwide highlights the fact that the service industry is growing faster than any other sectors. In contrary, the productivity and consequently the quality of this sector seems to be declining. Therefore, designing quality service is considered as a major challenge in service organizations and especially in those who want to have a customer based design. The purpose of this study is to identify the factors determining service quality in the road and transport sector, and ways of improving service delivery and customer satisfaction. By using a SERVPERF approach, the study focuses on the measurement of service quality, and examines overall customer satisfaction with the services of the five road and transport business processes under the control of Amhara regional state transport authority. Consequently, a model depicting overall service quality was developed and tested empirically among the respondents. Reliability (Cronbach Alpha coefficients) analyses were carried out to determine the consistency of the construct. Moreover, five factors were used to address quality of services,

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and satisfaction levels of service users whose opinions and concerns are deemed vital in making public services in the region better organized, need based, and more competitive.With respect to the correlations among variables, almost all the service quality dimensions were found to have statistically significant associations with customer satisfaction. From multiple regression analysis, while the dimension of ‘reliability’ and ‘assurance’ were reported to have significant effects on customer satisfaction, the largest contribution was made by overall service quality. The ‘reliability’ and ‘responsiveness’ elements of service quality were also emerged as the most important factor in estimating overall service quality, in the context of road and transport related services. Thus, while the importance of service factors are prioritized in view of the findings pertaining to Amhara region transport authority service delivery, all the service quality attributes identified with the SERVPERF dimensions are equally applicable in ascertaining quality problems and improving service quality standards to consistently deliver the required services based on customer needs.

Keywords: Service Quality, SERVPERF, Customer Satisfaction, Public Transport Service, Ethiopia

1. IntroductionThe service industry (both in the public and private organizations) plays an increasingly important role in the economy of many countries. As the largest sector in many countries, the services industry has to adjust to the dynamic changes of regulations as set by the government and the growing demands of the customers as well as the diversified and sophisticated technology. Differing with private sector, the public sector aims to serve all citizens’ basic needs and services meanwhile the private sector being more aggressive to gain profit and big market share. Over the three decades the public sector has undergone something of a ‘service revolution’. This is due to the vast global economic reform, whereas community entities have brought about widespread reformation to their economic activities ranging from public service productions to service operations to create greater efficiency and productivity as well as to reduce administrative cost similar with private sector (Beckett, 2000).

In most developed countries, quality concepts such as total quality management (TQM) and new public management (NPM) have been adopted by public sector organizations since the early 1990s. These new market based reforms have also been initiated by different developing countries as well in the last two decades. As such, the New Public Management (NPM) reform movement is characterized by the provision of high quality services that citizens value demanding, measuring and rewarding improved organizational and individual performance advocating managerial autonomy, particularly by reducing central agency control recognizing the importance of providing the human and technological resources managers need to meet their performance target and maintaining receptive to competition and open mindedness about which public purposes should be performed by public servants as opposed to the private sectors or non-governmental organization (Borins, 1995 as cited by Mohammed, 2008). However, regardless of

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the growing applicability of quality concepts in public service management, the issue remains largely under investigated.

In today’s global competitive environment delivering quality service is considered as an essential strategy for success and survival (Parasuraman et al., 1985; Reichheld and Sasser, 1990; Zeithaml et al., 1990). These days, customers have become more knowledgeable and sophisticated in demanding for their rights partly due to technological upsurge and industrial interplay. As a result, their expectations of service quality delivery have risen considerably. Thus, the pursuit of quality services in both private and public sector organizations is driven by the need to survive and remain competitive.

Consequently, research on how to enhance customer service quality has raised considerable attention in public service sector. Most studies on marketing literature have proposed that government services should be more entrepreneurial oriented. Due to the public sector reforms, many government agencies have been encouraged to adopt private sector management practices in their administrative system (Mabey& Skinner, 1998), an increased competition and the abolition of monopolies (Morley &Vilkinas, 1997), cost effectiveness, accountability, and an emphasis on developing a customer focus akin to the private sector (Kouzmin et al., 1999).

Public sector organizations are responsible and accountable to the citizens and communities of their countries as well as to their customers or clients. In our context, the government of Ethiopia has undergone different public sector reforms of which one is the civil service reform with the impetus to meet the needs and aspirations of the society. As such, the public sector has been given increasing attention to improve upon service delivery and to demonstrate that it is customer-centered. According to Gowan et al (2001), service provision is more complex in the public sector than in the private sector. This is because it is not simply a matter of meeting expressed needs but of finding out unexpressed needs, setting priorities, allocating resources and publicly justifying and accounting for what has been done.

Indeed, the survival of any organization (business, government or non-government) depends on the satisfaction of its stakeholders. Customers being the major and critical ones among those stakeholders, they are the sources of profits for a profit making organizations and the primary reason for being in operation for any non-profit making organizations. Thus, customers are considered as the backbone of any organization (Robert-Phelps, 2003).

However, often organizations fail to know the importance of their customer. Service quality is given high premium in the private sector as it holds the key to survival, competitiveness, customer satisfaction and customer loyalty. However, a lot of public sector organizations lack the culture, systems and processes to deliver high quality services. In light of these, the purpose of this study is devoted to examine the service quality delivery, performance and customers’ (clients’) satisfaction with reference to the services of city administration transport business processes or departments under Amhara national regional state transport authority.

2. Objectives of the StudyThe main objective is to assess the service quality of transport related services and customer satisfaction, with particular reference to city administration transport offices in Amhara regional state.

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More specifically the study intends:1) To see the applicability of SERVPERF instrument in public transport service sector. 2) To determine the level of customer satisfaction with transport related services.3) To explore the relationship among service quality dimensions, and customer

satisfaction.4) To examine the relative importance of service quality dimensions in enhancing

overall service quality and customer satisfaction.5) To assess the degree of influence overall service quality maintain in determining

customer satisfaction.

3. Research QuestionsThe key research questions explored are:1) What are the variables affecting the process of delivering quality service in public offices

administering road and transport services?2) What are the relationships among service quality dimensions, overall service quality and

customer satisfaction?3) How service quality dimensions and overall service quality affects satisfaction of customers?4) What are the causes for customer dissatisfaction with the transport related services provided

by city administration transport offices in Amhara region, Ethiopia?

4. Research Instrument For this study, questionnaire is selected as appropriate instrument for obtaining primary data in survey research method. Cronin and Taylor (1992) developed SERVPERF instrument which is mostly applicable for measuring service quality in various sectors with minimum reduction and improvement (Newman, 2001; Cui et al., 2003). SERVPERF is a performance only (based on customer’s perceptions of service delivery) measure to service quality.

This study is therefore employed the SERVPERF scale designed by Cronin and Taylor (1992) to measure service quality. These included five service dimensions identified by initially by Parasuraman et al. (1988). The questions in the surveys are tailored to identify customer perceptions of service quality practices and outcomes within the Amhara region public service sector (particularly, transport).

Perceived service quality was assessed through a series of statements directly related to the five SERVPERF dimensions noted above with a 7-point likert format of ‘strongly agree’ (7) up to ‘strongly disagree’ (1). The service performance will be obtained by computing the mean score from the customers’ perception rating for each item and dimension. With the same fashion, respondents were required to indicate the level of overall service quality and satisfaction with the services of city administration level transport offices (table 1).

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Table 1: SERVPERF Dimensions/Items

Dimension Code ItemsTangibility TAN1

TAN2 TAN3

TAR4

The service departments have up-to-date equipment. Physical facilities of the department are visually appealing. The employees at different service departments are well dressed and neat in appearance. The service departments have visually appealing materials associated with the service.

Reliability REL1REL2REL3REL4REL5

Employees show sincere interest in solving customers’ problems. When any transport related service is promised, it will be done.Service employees perform the service right the first time. Service departments provide services at the time promised. The service department keeps customers’ records accurately.

Responsiveness

RES1 RES2 RES3 RES4

Employees tell customers exactly when services will be performed. Employees offer prompt services to customers. Employees are always willing to help customers. Employees are never too busy to respond to customers’ request.

Assurance ASU1ASU2ASU3ASU4

Service employees are capable to instill confidence in customers. Customers feel safe in their transactions with employees.Service employees are courteous at all times.Employees have the knowledge to answer customers' questions.

Empathy EMP1EMP2EMP3EMP4EMP5

Employees give individual attention to each customer.Have convenient operating hours to all customers.Employees give personal attention to all customers.Employees have customers’ best interests at heart.Employees understand customers' specific needs.

5. Population and Sampling Procedure All customers of the transport departments’ services in the selected city administration in Amhara region are considered to be the target population. These are vehicle owners (including taxi, Bajaj, automobiles, buses, and trucks), drivers, taxi and Bajaj associations, drivers training organizations, vehicle inspection organizations, and garages. The study focuses on five (5) selected city administration level transport departments operate under the umbrella of Amhara national regional state transport authority. The selected city administrations include Bahir Dar, Gondar, Dessie, Debre-birhan, and Debre-Markos. The city administration’s transport office has four (4) transport business processes (or departments) namely; road safety, driver-vehicle competency certification, transport service arrangement, and transport service infrastructure business processes (departments). The above locations are chosen among other cities in the region primarily because of the fact that a large number of customer populations have been served with diversity of services which may in turn lead to high prevalence of quality issues. The other reason is time and other resource constraints by the researchers.

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Sample Size determination:

Yamane Taro (1967) provides a simplified formula to calculate sample sizes. This formula is used to calculate the sample size taking into account 95% confidence level, 5% precision level and total population size.Hence, the sample size of customers is computed using the following formula:

n= N1+N (e2)

Where:n = size of sample e = maximum tolerable sampling error=5%N= population size Consequently, the ultimate figure is computed as:

n= 43,3361+43,336(e2)

n=396 RespondentsTherefore, the total customer respondents will be selected using simple random sampling technique, (specifically the lottery method). To arrive at the respective sample size for each respondent, the population of each selected city administration transport office is divided by the total population for the study, multiplied by the total sample size. Below is a table depicting the sample for the study and those for the different transport offices (Table 2).

Table 2 Table showing population and sample of the study for customers

City Administration Transport office

Customers Population Sample

Bahir Dar 14,238 130Gondar 7,464 68Dessie 9,209 84Debre-birhan 4,157 38Debre-Markos 8,268 76Total 43,336 396

Source: ANRS, Transport Authority (2014)

Conceptual Framework

The proposed conceptual model (as depicted in Figure 1) is developed based on literature and four service factors such as service dimensions, service quality, service performance and customer satisfaction. This model uses a five dimensional and slightly modified SERVPERF instrument developed by Cronin & Taylor (1992) in exploring service quality, service performance and client satisfaction in a public sector organization. The SERVPERF has proved to

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be an invaluable tool for service organizations to better understand what their customers or clients value and how well they are meeting the needs and expectations of customers and clients. It provides a benchmark based on customer opinions of an excellent organization, on the ranking of key attributes and on comparison to what employees of service organizations believe customers feel.

The SERVPERF instrument is accepted as a standard tool for assessing various dimensions in service quality. The five service dimensions are considered to relate to distinctive features of public service quality and are therefore incorporated in the present conceptual model. These dimensions are:

1) Tangibles- physical characteristics of the service, such as the decor, ambience, technology, and equipment that are viewed as contributing to a public servant’s ability to provide a desired level of service;

2) Reliability- a public servant’s ability to perform promised services in a dependable and accurate manner;

3) Responsiveness- a public servant’s willingness to assist users and provide prompt service while being aware of the need for flexibility in customizing services to the needs of individual customers;

4) Assurance (including competence, courtesy, credibility and security)- The knowledge and courtesy public service providers show to customers and their ability to convey trust and confidence;

5) Empathy (including access, communication, understanding the customer) - The degree of caring and individual attention a public servant shows to the users of various transport department services.

This model equips the public sector and related decision making sectors managers with information about the present services customer's perception, that they understand and perceive what is the customer's needs and expectation (Alvani & Riahi, 2003). Below is a conceptual model of the relationship among service dimensions, overall service quality and customer satisfaction; developed based on review of extant literature.

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Customer Satisfactio

n

Empathy

Assurance

Responsiveness

Reliability

Tangibility

Service Quality

Figure 1. Conceptual framework

6. Results6.1 Reliability Analysis The reliability of the scale was assessed by dimension reliability in order to look into the measurement of public service quality in the subsequent sections. Cronbach coefficients (alpha) values were computed for each factor to assess the reliability of each dimension and the total scale. The results in column 3 of Table 3 shows that Cronbach’s alpha values were found to be within the range of 0.607 for ‘tangibility’ and 0.868 for ‘responsiveness’, indicating that all of the service quality dimensions have reasonable reliability. Based on the reliability test all the values for each dimension is high except ‘Tangibility’ and ‘Assurance’ (0.664) dimensions which is fairly below 0.7, the widely accepted limit for high reliability test as recommended by Nunnally (1998).

Besides, the value of alpha for the total scale (i.e. overall scale reliabiity) were computed and found to be 0.89 (Table 3), indicating a high level of consistency of service quality measurement items. On top of this, the foregoing analysis indicated that the adapted SERVPERF items were practically reliable and can thus reflect a sound measure of service quality in public service setting.

Table 3: Service Performance Scores and Scale reliability

Factor/Items Mean AlphaFactor 1: Tangibility 4.0642 0.607Modern/ up-to-date equipment 3.2729Physical facilities are visually appealing 4.3721The employees are well dressed and neat in appearance 4.1744Visually appealing materials associated with the service 4.4372Factor 2: Reliability 3.4505 0.804Showing sincere interest in solving customers’ problems 3.2628When transport related service is promised, it will be done 3.4070Service employees perform the service right the first time 3.2140Service departments provide services at the time promised 3.3558The service provider keeps customers’ records accurately 4.0128  Factor 3: Responsiveness 3.3467 0.868Telling customers exactly when services will be performed 3.3837Employees offer prompt services to customers 3.3237Employees are always willing to help customers 3.5442  Employees never too busy to respond to customers’ request 3.1352  Factor 4: Assurance 3.6263 0.664Employees are capable to instill confidence in customers 3.4302Customers feel safe in their transactions with employees 4.2262

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Service employees are courteous at all times 3.5512Knowledgeable employees to answer customers' questions. 3.2977  Factor 5: Empathy 3.5271 0.813Employees give individual attention to each customer 3.7442Have convenient operating hours to all customers 3.3837Employees give personal attention to all customers 3.6628Employees have customers’ best interests at heart 3.4884  Employees understand customers' specific needs 3.3562

Reliability of the total scale   0.890

Table 3 shows the result of perception score and scale reliability of the service quality items.

6.2 Mean Scores of Performance Ratings

The average service performance for public service on the five dimensions is computed and presented in Table 3. The SERVPERF score of each dimension as computed by average values shows: factor 1 consisted of 4 attributes relating to ‘Tangibility’ (Mean=4.0642); factor 2 included 5 attributes of public service quality which is referred to ‘Reliability’ (Mean=3.4505); factor 3 is identified as ‘Responsiveness’ (Mean=3.3467) with 4 attributes; factor 4 composed of 4 attributes which is labeled as ‘Assurance’ (Mean=3.6263); and factor 5 is termed as ‘Empathy’ (Mean=3.5271) with 5 variables. As shown from the above table, the summated mean scores of most factors revealed that public services delivery by road and transport service providers (such as road safety, driver-vehicle competency certification, transport service arrangement, and transport service infrastructure) is poorly performed, as maintaining below average (less than 4 on a 7-point scale), on all service quality dimensions. Specifically, the results of descriptive analysis depicted that the dimension of ‘responsiveness’ (M=3.3467) was perceived to be the lowest by the respondents followed by ‘reliability’ (M=3.4505), ‘empathy’ (M=3.5271), and ‘assurance’ (M=3.6263). This pointed out that customers come to perceive public service providers’ performance on most of the service variables particularly; immediate response to customers’ request, on time service performance/ delivery, interest in solving customers’ problems, provide services as and at the time promised, willingness to help customers, capability to instill confidence in customers, politeness in serving customers, understanding & meeting customers' specific needs, convenient operating hours to all customers, giving personal attention to all customers, availability of modern equipment/facilities, etc. more negatively and unfavorably. To put it another way, the results have shown that customers were reported to be disagreed with most service dimensions explaining the service quality parameters of the selected road and transport service departments.

On the other hand, the mean scores further revealed that the selected transport departments performed relatively better in ‘tangibility’ (mean= 4.0642) comprising of items referring visually appealing materials associated with the service (mean=4.4372), and visually appealing physical facilities’ (mean=4.3721).

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6.3 Correlation Analysis

As suggested by Croft (1983), it is essential to undertake correlation analysis between independent SERVPERF dimensions and dependent variables (overall service quality and satisfaction) before conducting regression analysis in developing a model. The size of the correlation coefficient can be used to quantitatively describe the strength of the association between two variables.

Tables 4 illustrates the Pearson-correlation coefficients obtained between various variables (public service quality dimensions, overall service quality, and satisfaction) used in the study. It has been reported that all the service quality dimensions were found to have a statistically significant (p<0.01) correlation with each other, and a strong association(r=0.740) was reported between ‘assurance’ and ‘reliability’, followed by ‘empathy’ and ‘responsiveness’ (r=0.639).

Table 4: Summary of Correlations coefficients

   TAN REL ASU RES EMP OSQ OSA

TAN Pearson Correlation 1Sig. (2-tailed)

REL Pearson Correlation 0.287** 1Sig. (2-tailed)

ASU Pearson Correlation 0.272** 0.740** 1Sig. (2-tailed)

RES Pearson Correlation 0.464** 0.665** 0.541** 1Sig. (2-tailed)

EMP Pearson Correlation 0.204** 0.652** 0.514** 0.639** 1Sig. (2-tailed)

OSQ Pearson Correlation 0.372** 0.414** 0.464** 0.552** 0.412** 1Sig. (2-tailed)

OSA Pearson Correlation 0.426** 0.480** 0.440** 0.492** 0.427** 0.777** 1Sig. (2-tailed)

Note: ** Correlation is significant at the 0.01 level (2-tailed)

TAN- Tangibility, REL- Reliability, ASU- Assurance , RES- Responsiveness, EMP- Empathy, OSQ- Overall Service Quality, OSA- Overall Satisfaction.

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Additionally, perceived dimensions of public service quality were found to be significantly associated with overall service quality and satisfaction (p<0.01), except that the correlation between tangibility and overall service quality was relatively weak (Table 4). Besides, all the SERVPERF dimensions have a positive relationship to overall public service quality and customer satisfaction. From such relationships, a relatively higher correlation (r=0.552) was established between ‘responsiveness’ and overall service quality. And the next good association (r=0.492) was found between ‘responsiveness’ and overall customer satisfaction.

As for the relationship among service quality dimensions, overall service quality and overall satisfaction, it was found that only overall service quality has a strong positive association with customer satisfaction (r = 0.777, p<0.01). Furthermore, significant associations between SERVPERF dimensions and overall customer satisfaction were reported from a low with the dimension of ‘tangibility’ (0.426) to a high with ‘responsiveness’ (0.492).

6.4 Regression Analysis

Multiple Linear Regression (MLR) analysis was conducted to investigate the influence of various variables (independent) in predicting the outcome of another variable (dependent). A regression analysis is a statistical method used to estimate the strength of a relationship between one or more dependent variable and one or more independent variables. In this regard, while the SERVPERF dimensions, adapted for this study, were used as independent variables in the multiple regression model to test their ability to explain and predict overall public service quality and customer satisfaction, the same analysis was also conducted to see the effect of overall service quality on overall customer satisfaction as well (Figure 3).

Furthermore, the data were exposed to multiple regression analysis to check the predictive validity of each dimension or variable using SPSS 16.0 version. In order to study the relationship among overall service quality and overall customer satisfaction, regression analysis was conducted hierarchically for testing significant interaction effects over and above the simple effects of the independent variable. Alternatively, scholars suggest that if a correlation coefficient matrix reveals the degree of association between variables about 0.75 or higher, there may be the condition of multicollinearity, and must be rectified before using such variables as predictors in regression analysis. However, the level of associations in the study, as given in Table 4, were not found to be reached to this value, thus the analysis was assumed to be restraint from the unacceptable levels of multicollinearity.

6.4.1 The Relationship between service quality dimensions and overall service quality

As can be observed from figure 3, the rating of overall service quality and satisfaction was regressed for each of the five dimensions. In a standard regression analysis, when all the five dimensions are allowed to draw a model for overall service quality, only reliability, assurance,and responsiveness were emerged as the most critical determinant to overall public service quality with a beta value of (β= 0.586, 0.396, 0.295, p<0.001) respectively. As evidenced from

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the result, the strongest impact on tourist satisfaction was made by reliability (β= 0.586), followed by assurance (β=0.369).The explanatory power of this model, as reported by the adjusted R2 value is 0.421, suggesting that 42 percent of the variability in the service quality is predicted by the SERVPERF dimensions. This implies that the elements of service quality such as provision of services and facilities as promised; providing license and competency certification for vehicle inspection and driver training organizations, providing renewal services and monitoring the performance of these organizations, providing license for repair and maintenance service delivery organizations (garage, ‘gomesta’, car wash, etc.) as per the requirement, offering driver training facilities, arranging appropriate parking places and ‘fermata’, offering timely driving license, arranging appropriate transport facilities to various routes in the city/town, opening new routes when needed together with additional fermata and assigning vehicles, monitoring and controlling the appropriateness and fairness of transportation services (city-buses, taxi, bajaj) assigned to different routes by transport enterprises and/or taxi/bajaj associations, ensuring the safety of transportation vehicles through technical inspection, arranging additional vehicles (code-3) whenever shortage of transportation encounters in the city, ensuring the safety of transport users by controlling illegal drivers, checking for the right driving license and taking action for wrong licenses; providing continuous education on road safety, traffic accident, traffic rules and regulations, etc. to drivers and the community at large; knowledgeable, friendly and careful staffs; polite and respectful service staffs; minimum time to get license are the aspects those customers used in their assessment of transport related service quality.

Besides, the results of multiple regression analysis (Fig.3) shows that when each of the SERVPERF dimensions together with overall service quality was examined in predicting overall customer satisfaction in the model, overall service quality contributed the highest (β=0.777, p<0.001), followed by ‘reliability’ (β=0.350, p<0.001), and ‘responsiveness’ (β=-0.203, p<0.01). Notably, the present study revealed that among the SERVPERF dimensions, only reliability and responsiveness were found to be statistically important in predicting overall customer satisfaction in the context of city administration transport departments in Amhara region.

Figure 3: Framework for Overall Service Quality and Customer Satisfaction

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Note: *** Significant at 0.001 level; ** Significant at 0.01 level (2-tailed).

The proportion of explained variance as measured by R-square for overall service quality was relatively higher (R2= 0.603) compared to the SERVPERF dimensions (R2= 0.397) in predicting overall satisfaction. In other words, almost 60% of the variation in overall customer satisfaction is explained by overall service quality in the regression analysis.

On the other hand, two items were asked to answer freely about the reasons for any dissatisfaction with their service experience and their suggestions that can help further improve the delivery of quality service. Accordingly, the following major concerns of service quality and areas of improvement are justified. It takes lengthy procedure for registration and training of driving license together with

unreasonably high cost of fee to get the license at different level. So, it should be changed or reduced.

Some people said that transport service arrangement main department is failed to manage balanced distribution of Bajaj and taxi to different routes in the city.

7. Conclusion The study has demonstrated how the SERVPERF instrument could help transport departments identify the service characteristics that are considered important by customers. In this way, the office can improve the level of quality and the effectiveness of the model can be monitored overtime, with resources being shifted to those areas which most heavily influence customer perceptions of service quality. As the overall perceived service quality is found to be a vital determinant of customer satisfaction in the transport sector, service providers can benefit from increased investment in quality improvements. Besides, reliability and responsiveness were also significant in explaining customer satisfaction. According to this result, the researcher suggests that greater gains in customer satisfaction can be realized by attending to reliability and responsiveness in the road and transport environment. The study provides initial empirical evidence as to the understanding of a number of issues concerning important service quality measurement dimensions and how these variables impact customer satisfaction. Managers of transport business processes can use the current findings to develop service marketing strategies that deepen and enhance customer satisfaction.

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