Customer Sat & Customer Loy

Master of international Business Administration
Group 28
Research Paper
Identifying the Linkage between Customer Satisfaction

and Customer Loyalty:
The Case Study of the Egyptian Rotating Equipment
Service Providers
Supervisor: Dr. Nada Basset

Submitted by: Ahmed El-Sockary
Academic Year: 2010
Table of Contents
I. List of Figures...............................................................................................................................5
II. List of Tables...............................................................................................................................6
II. List of Acronyms.........................................................................................................................7
(OEM) Original Equipment Manufacturer.....................................................................................7
Chapter 1: Introduction.....................................................................................................................8
1.1. Overview .............................................................................................................................8
1.2. Problem Statement.................................................................................................................9
1.3. Research Objective................................................................................................................9
1.4. Conceptual Framework..........................................................................................................9
1.5. Thesis Structure...................................................................................................................11
2.1.Definitions................................................................................................................................12
Chapter 4: Data Analysis and Findings..........................................................................................39
4.1. Introduction.........................................................................................................................39
4.2. Descriptive results and analysis of findings........................................................................39
4.2.1. Reliability Test................................................................................................................39
4.3. Sample Descriptive Analysis...............................................................................................40
4.3.1. Service Providers Types...................................................................................................40
4.3.2. Position Type....................................................................................................................41
4.3.3. Independent Variables Results.........................................................................................42
4.3.3.3.2. Networking Distribution over Position Types............................................................50
4.3.3.3.3. Networking Distribution over Service Provider Types..............................................51
4.3.3.3.4. Networking Answers Distribution analysis................................................................51
4.4. Inferential Data Analysis.....................................................................................................52
4.4.1. Correlation between Independent Variables and Customer Satisfaction.........................52
4.4.2. Correlation between Independent Variables and Customer Loyalty................................53
4.4.3. Correlation between Customer Satisfaction and Customer Loyalty.................................54
4.4.4. Ranking Question analysis...............................................................................................55
4.4.4.4. Ranking Question Results Analysis..............................................................................59
4.5. Hypotheses Testing..............................................................................................................60
4.5.1. HP1...................................................................................................................................60
4.5.2. HP2...................................................................................................................................60
4.5.3. HP3...................................................................................................................................60
Bibliography:.............................................................................................................................63
Appendix A: ..................................................................................................................................68
Customer Satisfaction \ Customer Loyalty Questionnaire.............................................................68
Page 2 of 71
Acknowledgement
This thesis study would never have been completed without the important contribution of
many persons. They all deserve individually my thanks and recognition for the valuable
contributions they made.
First of all I would like to thank all my ESLSCA professors for their guidance, support,
knowledge and experience that helped me a lot in my studies.
I also render gratitude to my ESLSCA colleagues, especially intake 28-A friends, for
making my study a memorable one. As well as their understanding and support
throughout my studies.
I am forever indebted to my wife and children for their unconditional love, support and
encouragement. They were truly my inspiration and were ultimately responsible for my
success in life.
Finally, I would like to deeply thank my supervisor, Dr. Nada Basset for making this a
meaningful learning process. Her guidance and encouragement throughout the process
of formulating my ideas was invaluable. Her ability to view things pragmatically was
critical and priceless to the success of this study and needs to be commended.
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Abstract
Loyal customers are always considered as an asset for any business. Satisfaction is the
main driver to maintain this customer loyalty.
Actually both customer loyalty and customer satisfaction have already attracted a lot of
attention among academic and practitioner researchers, the researcher has focused on
the service of the rotating equipment in Egypt using the individual customer as the unit
of analysis.
The aim of this research is to examine the main effect of price, service quality and
networking of the service providers’ representatives on customer satisfaction and hence
on customer loyalty.
Data were collected through a survey from different Egyptian customers dealing with
rotating equipment. A sample of 80 questionnaires was collected from the above
population. SPSS software version 17 was used to analyze the data of the questionnaire
and produce statistical facts about it.
Data analysis revealed that price, service quality and networking of the service
providers’ representatives were important factors affecting customer satisfaction and
hence affecting customer loyalty.
It is envisaged that this study will set a foundation for future research work concerning
this aspect of service business activity in Egypt.
Keywords: Customer loyalty, customer satisfaction, price, service quality and

networking of the service providers’ representatives.
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I. List of Figures
(Figure 4.1) Service providers type frequency
(Figure 4.2) Position type frequency
(Figure 4.3) Price answers distribution
(Figure 4.4) Price distribution Vs position types
(Figure 4.5) Price distribution Vs service provider types
(Figure 4.6) Quality answers distribution
(Figure 4.7) Quality distribution Vs position types
(Figure 4.8) Quality distribution Vs service provider types
(Figure 4.9) Networking answers distribution
(Figure 4.10) Networking distribution Vs position types
(Figure 4.11) Networking distribution Vs service provider types
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II. List of Tables
(Table 4.1) Reliability test
(Table 4.2) Service providers type frequency
(Table 4.3) Position type frequency
(Table 4. 4) Price answers distribution
(Table 4. 5) Quality answers distribution
(Table 4.6) Networking answers distribution
(Table 4.7) Correlation between all variables & customer satisfaction
(Table 4.8) Correlation between all variables & customer loyalty
(Table 4.9) Correlation between customer satisfaction & customer loyalty
(Table 4.10) Q15 Results
(Table 4.13) Ranking Questions Analysis
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II. List of Acronyms
(OEM) Original Equipment Manufacturer
Page 7 of 71
Chapter 1: Introduction
1.1. Overview
In the energy field, rotating equipment (mainly: Steam Turbines, Gas Turbines,
Generators and Compressors) are the major units of running such a business.
The service business for such units is including but not limited to: supplying spar parts,
field service activities, repairs, upgrades and technical support.
The service can be provided by either the OEMs (Original Equipment Manufacturers) or
by non-OEMs. The non-OEMs can be either an ISP (Independent Service Provider) or
one of the other OEMs who produces similar units. The non-OEM service providers
usually use Reverse Engineering to complete their service jobs. “https://intranet-
energy.eps.siemens.com/irj/portal/ei/public/en/processestools/supportbusiness/HRLD20
040601155253/STPH20090922053143”
This business in Egypt it is divided into three main sectors, Utility (Electrical Power
Production), Oil and Gas (production, processing and petrochemicals) and Industry
(such as fertilizers, paper mills, chemicals and spinning and weaving).
The major OEMs are: GE (General Electric), Siemens, Alstom, Sulzer, Hitachi and
Ansaldo while the major ISP’s are: Wood Group and GTS (Gas Turbine Services).
Most of the OEMs are interested in non-OEM service activities as it gives better market
situation and decreases the competitors’ profit. For example Siemens has a business
unit called “TurboCare” which is responsible for non-OEM service activities.
“https://workspace.siemens.com.eg/wppages/CompanyProfileandPresentations.aspx”
This study claims the multiple factors affecting customer satisfaction and investigating
the relationship between customer satisfaction and customer loyalty by studying the
effect of these factors on customer loyalty.
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1.2. Problem Statement
What are the effects of the main factors affecting customer satisfaction towards service
provider(s) on customer loyalty?
1.3. Research Objective
To study the effect of the factors affecting customer satisfaction on customer loyalty and
eventually its likely impact on service providers’ performance. As maintaining customer
loyalty in marketing development strategies cannot be ignored. Especially, in a business
market which has numerous competitors, keeping good relationships with business
customers could be vital for organizational success.
This will help the service providers to find the best practice to benefit of such relationship
and its driven factors, either to protect their business or to attack competitors.
Protecting their business means that the will use “Defensive Strategy” to sustain their
current customers and they have to decide what the best strategy to do so is.
Attacking competitors means that they will use “Aggressive (Offensive) Strategy” and
they have to decide what the best strategy to do so is.
1.4. Conceptual Framework
The proposed framework of this research was to study the effect of customer
satisfaction on customer loyalty under these variables that affects customer satisfaction:
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1.4.1. Dependent Variable
Y1: Customer Loyalty
1.4.2. Independent Variables
X1: Customer Satisfaction (Intervening Variable)
X2: Price
X3: Service Quality
X4: Networking of the Service Providers’ Representatives
1.4.3. The Research Model Diagram
1- Price
2- Service Quality
Customer Satisfaction Customer Loyalty
3- Networking of the Service
Providers’ Representatives
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1.5. Thesis Structure
This section demonstrates the full research study methodology and report structure as a
preface. This study is composed of five chapters. Chapter one provides an overview,
problem definition, and research objective for the subject under study, an introduction of
the problem and identifies the theoretical frame work. Chapter two describes some
relevant international data collected by other researchers through the literature review
that are relevant to the research subject. Chapter Three provides a deeper insight of all
aspects mentioned in chapter one outlining in more depth the problem the researcher is
facing and hypothesis to be tested. It also explains the research methodology used
during the study and demonstrates and justifies the approach taken and introduces the
tools and instruments of this research. The research takes the form of a quantitative
research, and the findings are collected through questionnaire. Chapter four will cover
data analysis, collection and findings. Chapter five will provide the conclusion,
recommendations and further research work.
A final section of this report which is references and appendices consists of extra
information that is related to the main content of this research.
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Chapter 2: Literature Review
In the following literature review, the researcher begins with an outline of the
conceptualization of customer satisfaction and customer loyalty and provides an
overview of their relationship.
2.1. Definitions
2.1.1. Customer Loyalty
(Dekimpe, Steenkamp, Mellens, & Vanden, 1997; Dick & Basu, 1994) stated that
although loyalty has been defined in various ways, there are two main
approaches: behavioral and attitudinal approaches. In earlier days, most
researchers had focused on the behavioral concept. While (Newman and
Werbel, 1973) defined loyal customers as "those who re-bought a brand,
considered only that brand, and did no brand-related information seeking."
Similarly, (Tellis, 1988) measured loyalty as "repeat purchase frequency" or
"relative volume of same brand purchasing."
Furthermore, for (Jacoby and Chestnut, 1978), customer loyalty is a prejudiced

psychological manner exhibited recurrently as a commitment response whilst
(Healy, 2007) points out that it is an important attitude that favors good marketing
relationships and a person’s repeat patronage.
(Kandampully and Suhartanto, 2000; Bowen and Chen, 2001) stated that in
general, the term “loyal customer” refers to customers who continue to purchase
and maintain a positive attitude towards the same product or service provider
and also continuously recommend products and services to others.
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(Oliver, 1997) stated that recently, loyalty has been defined from the attitudinal
perspective as well. Attitudinal loyalty includes cognitive, affective, and cognitive
aspects defined customer loyalty as a profound devotion to regularly repurchase
of a favored product or service.
He also stated that the customer would maintain this behavior despite strong
marketing efforts from alternative companies. The competitors are then efficiently
defeated. This explanation underscores the view that customer loyalty is a
behavior response to the environment.
(Pritchard et al, 1999) argue that understanding how or why a sense of loyalty
develops in customers remains one of the most crucial management issues.
(Dick and Basu, 1994) add that customer loyalty should be integrated into the
broader marketing theory. To assist in this transition, they posited a framework
that conceptualized loyalty in terms of attitudes and behaviors, and suggested
that while loyalty was influenced by a customer’s repeat purchase behaviors and
intentions, it was determined by a “favorable attitude that is high compared to
potential alternatives” (p.100). Further, they contended that true or premium
loyalty only occurs when the customer has both attitudinal loyalty and behavioral
loyalty.
(Amine, 1998; Sharp et al, 1999; Wong et al, 2001) stated that this view of
customer loyalty being divided into two distinct and complementary approaches
is consistent amongst most academics, and forms the basis of customer loyalty
definition adopted for this study. Additionally, (Sharp et al, 1999), with (Foster
and Cadogan, 2000) found that the use of separate conceptualizations of
attitudinal and behavioral loyalty allows for an examination of the relationship
between the two constructs that finding partial support for attitudinal loyalty acting
as an antecedent to behavioral loyalty.
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(Oliver, 1997), and Oliver (1999) also posited four phases for a customer to
become loyal. First, loyalty in the cognitive phase is based on either prior
knowledge or experience-based information about a brand. Second, loyalty in the
affective phase is a liking or attitude toward a brand. Based on cumulatively
satisfying usage occasions, it implies feelings toward a brand. Nevertheless, this
form of loyalty remains subject to switching. Third, cognitive loyalty is defined as
a customer's behavioral intention to keep on purchasing a product in the future,
and therefore it is harder to dislodge than affective loyalty.
Action loyalty is the final stage among loyalty phases, in which motivated
intention is transformed into readiness to act. Action loyalty is related to the
behavioral approach. Oliver's view sheds light on the development of loyalty from
attitude to behavior.
The definition of (Oliver, 1999) captures the essence of these words. It captures
the essence of loyalty which is repurchase a product of service and includes
another essential aspect of loyalty, which is a long term focus. The word
commitment suggests determination and is reminiscent of some form of a
relationship. The definition of (Oliver, 1999) seems to be the most powerful one
of all above mentioned definitions. Therefore, this definition of customer loyalty
will be used in this thesis.
Based on the review of loyalty concepts, Oliver's definition, which includes

attitudinal and behavioral aspects of loyalty, was adopted. Customer loyalty is "a
deeply held commitment to re-buy or re-patronize a preferred product or service
consistently in the future, despite situational influences and marketing efforts
having the potential to cause switching behavior" (Oliver, 1997, p. 392).
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(Yanamandream & White, 2006) ask their respondents to define customer loyalty
in a business context. Respondents mention several dimensions of loyalty, like
repurchasing over an extended period of time, the development of confidence or
trust, preferential treatment, value, commitment and relationship-specific
investments. Long term is the key. Some respondents mentioned that being
recognized, and receiving useful current market information, and being made to
feel as part of an industry network or family can influence their customer loyalty.
(Dick & Basu, 1994; Cooil, Keiningham, Akosy & Hsu, 2007; Han, Kwortnik &
Wang, 2008) stated that it is agreed on that loyalty consists of an attitudinal and
a behavioral component. In the article by (Raimondo, Miceli & Costabile, 2008), it
was mentioned that the attitudinal dimension of loyalty consists of a favorable
attitude toward a firm or a brand (relative to other firms offering the same product
or service), where the behavioral dimension consists of repeated buying
behavior. (Rundle-Thiele & Bennett, 2001) distinguished behavioral and
attitudinal loyalty in a way that behavioral loyalty deals with (brand) loyalty in
terms of the actual purchases observed over a time period and attitudinal loyalty
deals with stated preferences, commitment or purchase intentions.
(Chaudhuri & Holbrook, 2001) described it the following way: “Behavioral, or

purchase, loyalty consists of repeated purchases of the brand, whereas
attitudinal brand loyalty includes a degree of dispositional commitment in terms of
some unique value associated with the brand (p. 82)”.
(Geyskens, Steenkamp & Kumar, 1996) mentioned that attitudinal loyalty

produces positive outcomes for organizations, because it gives rise to stronger
and more stable relationships, reduces opportunism, and generates positive
word of mouth.
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(Bennett & Rundle-Thiele, 2002) stated that in marketing literature, attitudinal
loyalty is often described as preference for the brand.
“Therefore, brand preference may in fact be regarded as a higher order construct

in the sense that “preference” would likely be an outcome based upon customers’
expectations or experience (i.e. satisfaction)” (Keiningham, Cooil, Aksoy,
Andreassen & Weiner, 2007, p. 364).
(Rundle-Thiele & Mackay, 2001) stated that brand preference can be described
as the degree to which customers prefer specific brands relative to competing
alternatives.
The researcher is following (Roehm, Bolman Pullins & Roehm Jr, 2002, Yi &
Jeon, 2003, Bell & Lal, 2002 en Mägi , 2003), loyalty programs are able to
stimulate both attitudinal loyalty and behavioral loyalty.
Accordingly, the focus here will be on attitudinal loyalty, since indirect customers
are taken into account. It is hard or even impossible to measure behavioral
loyalty in this setting, since most of the times there are no data of the customers’
past or current purchase behaviors.
2.1.2. Customer Satisfaction
(Sindhav et al., 2006) stated that satisfaction is essentially an overall assessment

of the customer’s experience with a product or service. Moreover, (Oliver, 1999)
said it is “sense that consumption provides outcomes against a standard of
pleasure versus displeasure”. Therefore, according to (Bloemer and Lemmink,
1992) satisfaction is related to a psychological attitude felt during the customer's
consumption.
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(Kotler, 1977; Keith, 1960) both stated that if the customer’s needs are satisfied,
he would have the intention to repurchase again in the future.
As per (Aspinall, Nancarrow, & Stone, 2001; Reinartz & Kumar, 2002), customer
satisfaction refers to a customer’s evaluation of a specific transaction. A
customer is satisfied when a purchase performs better than expected and is
dissatisfied when expectations exceed performance.
(Johnson and Fornell,, 1991) defined customer satisfaction as a customer’s

overall evaluation of the performance of an offering to date.
(Oliver, 1999) said that it also contains a significant affective component, which is
created through repeated product or service usage.
In a service context, (Boulding et al., 1993) stated that the overall satisfaction is
similar to overall evaluations of service quality. Compared with more episode-
based or transaction-specific measures of performance, overall evaluations are
more likely to influence the customer behaviors that help a firm, such as positive
word of mouth and repurchase.
(Gustafsson, Johnson, & Roos, 2005) defined customer satisfaction as a

customer’s overall evaluation of performance for a current offering.
(Czepiel, Rosenberg and Akerele, 1974) stated that customer satisfaction as an

overall evaluation representing a sum of subjective reactions from a customer
regarding products with varied attributes.
(Cooil et al, 2007) defined that customer satisfaction and retention are generally
considered among the most important long term objectives of firms.
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(Keith, 1960; Leavitt, 1960) said that the marketing concept suggests that a
satisfied buyer will likely return to purchase again, or at least, consider
purchasing again. According to (Reichheld and Sasser, 1990) repeat customers
cost less to serve than new buyers, benefiting a firm’s cost structure.
Additionally, (Ching et al 2004, Verhoef 2003) stated that maximizing customer

retention rates and minimizing customer defections are primary strategic
objectives for most firms, as evidenced by companies' emphasis on customer
relationship management. Thus, previously satisfied buyers may help firms both
reduce marketing costs and develop more stable levels of sales when a large
number of satisfied buyers are retained to purchase again in the future.
(Oliver, 1980) said that there are several definitions of customer satisfaction in
the marketing literature. It is generally accepted that satisfaction is a
psychological state that a consumer experiences after consumption.
(Muller, 1991) argues that customer satisfaction will become a key factor for
business success in the future. (Singh, 1991) also noted that customer
satisfaction is a dimension of multiple items evaluated as a satisfaction
measurement, which can vary from business to business.
However, (Verhoef, 2003) argues that longitudinal data that combine survey
measures with subsequent behaviour should be used to establish a causal
relationship between perceptions and behaviour.
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For example, (Bolton, 1998) finds a positive effect of overall customer
satisfaction on the duration of the relationship, and (Bolton and Lemon, 1999)
show a positive effect of overall satisfaction on customer usage of services.
(Mittal and Kamakura, 2001) show a strong, albeit nonlinear, effect of customer
satisfaction on repurchase behaviour, such that the functional form relating
satisfaction to repurchase is marginally increasing. (Ostrom and Iacobucci, 1995)
also hold that customer satisfaction is a multiple-item measurement that
evaluates such items as product price, service efficiency, service personnel
attitude, overall business performance, and ideal business service.
(Kotler, 1996) proposed from his integration of various theories that satisfaction is
a difference function between perception and expectation. Accordingly, customer
satisfaction is an expression of pleasure or disappointment resulting from a
comparison between perception and expectation of product function/effect.
Customer satisfaction is a subjectively positive or negative feeling arising from a
comparison between pre-consumption expectation and post-consumption
perception.
2.2. The Relationship Between Customer Loyalty And
Customer Satisfaction
(Fornell, 1992) stated that the satisfaction of business customers leads to

customer loyalty. Additionally, (Oliva et al., 1992) state that in the relationship
between customer loyalty and customer satisfaction that customer loyalty will
increase significantly when satisfaction accomplishes a certain level and at the
same time customer loyalty will drop dramatically if the satisfaction level drops to
a certain point. (Tepeci, 1999) stated that highly satisfied customers tend to be
more loyal customer than the customers who were merely satisfied.
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(Fornell, 1992; Fornell et al., 1996) stated that this overall satisfaction has a
strong positive effect on customer loyalty intentions across a wide range of
product and service categories, including telecommunications services.
While both (Bolton and Lemon, 1999; Fornell et al., 1996) said as an overall
evaluation that is built up over time, satisfaction typically mediates the effects of
product quality, service quality, and price or payment equity on loyalty.
According to (Oliver, 1999), it should be noted that repurchase is affected by

cumulative satisfaction rather than individual episodic satisfaction or satisfaction
to affect loyalty, frequent or cumulative satisfaction is required so that individual
satisfaction episodes become aggregated or blended."
(Johnson, Anderson, and Fornell, 1995) also argued that cumulative customer
satisfaction is a fundamental indicator of a firm's current and long-run
performance. (Myron, 2005) asserted that customer satisfaction is a predictor of
loyalty. In their study of customer satisfaction, (Anderson and Sullivan 1993)
found that, with antecedent and consequence variables; customer satisfaction
has a positive effect on customer-repeat purchase behaviour, an expression of
customer loyalty. (Anderson and Sullivan, 1993) also showed that customer
loyalty is the chief consequence of customer satisfaction.
(Bitner, 1990) considered that customer satisfaction as an antecedent variable

that positively impacts customer loyalty. (Müller, 1991) argued that customer
satisfaction becomes a key factor for business success. (Kotler, 2002) considers
that customers constantly think about what kind of product or service can
maximize value, and thus establish an expectation of value as a shopping
reference. (Lam, Shankar, Erramilli, and Murthy, 2004) hold that customer
satisfaction has a strong impact on customer loyalty.
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(Reichheld and Sasser, 1990) hold that a satisfied customer will have greater
customer loyalty, which suggests a much greater chance for repeat purchases in
the future.
(Barnes, 1994) summarized that many companies should be trying to keep their
current customers because satisfied customers stay loyal to the products or
services of a company and it is better to invest more money and put more efforts
into this than any other marketing campaign.
(Szymanski and Henard, 2001; Bearden and Teel, 1983) sum up as quite a few
researchers suggested a strong relationship between customer satisfaction and
customer loyalty that leads to an increase of both sales and profitability.
The researcher supports that last ideas according to his personal observations
during the actual business practicing. Customer satisfaction is the main driver
towards customer loyalty. In the other words, keeping the loyal customer satisfied
will help a lot in keeping his loyalty, while dissatisfying loyal customers will lead to
break his loyalty.
2.3. The Importance of Customer Loyalty and Customer

Satisfaction
As for the relationship between customer loyalty and profitability, (Smith and
Wright, 2004) believe that customer loyalty is strongly correlated to both sales
growth rates and ROA (return on assets). However, in another study by (Reinartz
& Kumar, 2002), adverse conclusions are proposed. These authors claim, firstly,
that a high level of loyalty does not necessarily lead to increases in profitability. In
fact a negative relationship may exist between the two factors.
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In their view, the outcome depends on whether customers are treated as
“barnacles” (high loyalty but low profitability) or “butterflies” (low loyalty but high
profitability). (Srivastava et al. 1998) point out that the vulnerability of cash flows
may reduce with the increase of customer satisfaction, loyalty, and retention of
customers, while sustained, long-term customer loyalty can boost the stability of
a business and reduce the cost of capital. In addition, customer loyalty can
enhance the residual value of the business. In general, the author used
conceptual logic to argue from the empirical findings for a stronger link of
customer satisfaction to stock returns and shareholder value.
(Reichheld, 1996) said in general, the longer a customer stays with a company,
the more that customer is worth. Long term customers buy more, take less of a
company's time, are less sensitive to price, and bring in new customers. Best of
all, they have no acquisition or start-up cost. Good long-standing customers are
worth so much that in some industries, reducing customer defections by as little
as five points from, say, 15% to 10% per year-can double profits. CEOs buy the
idea that customer loyalty matters; they would prefer to have loyal customers.
But without doing the arithmetic that shows just how much a loyal customer is
worth over the whole course of the customer life cycle, and without calculating
the net present value of the company's present customer base, most CEOs
gauge company performance on the basis of cash flow and profit. They rarely
study the one statistic that reflects how much real value the company is creating,
the one statistic with predictive power: customer retention.
(Reichheld, 1996) said that what keeps customers loyal is the value they receive.
One of the reasons so many businesses fail is that too much of their
measurement, analysis, and learning revolves around profit and too little around
value creation. Their CEOs become aware of problems only when profits start to
fall, and in struggling to fix short-term profits, they concentrate on a symptom and
miss the underlying breakdown in the value-creation system.
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They see customer issues as subsidiary to profits and delegate them to the
marketing department. In the most egregious cases, years of continuing
defection can mean that former customers-people convinced by personal
experience that the company offers inferior value-will eventually outnumber the
company's loyal advocates and dominate the collective voice of the marketplace.
When that moment arrives, no amount of advertising, public relations, or
ingenious marketing will prop up pricing, new-customer acquisitions, or the
company's reputation.
(Reichheld, 1996) also stated although some executives do realize that profits
are really a downstream benefit of delivering superior value to customers-and
that customer loyalty is therefore the best indicator of strategic success or failure
they lack the tools they need to focus their organizational learning on this most
basic building block of profitable growth. They make the most of standard market
research, including customer-satisfaction surveys, but such tools are simply not
up to the task. (See the insert "The Satisfaction Trap.") And yet the message that
relative value is declining-and all the information a company needs to make
sense of that bad news and design possible remedies-is available from the day
trouble starts. Defecting customers have most of that information. They are
always the first to know when a company's value proposition is foundering in the
face of competition.
To summarize the benefits, (Reichheld and Teal, 1996) propose that retaining
customer loyalty can contribute to the ‘life cycle of profits’ to the company
including: revenue growth over time, cost saving over time, referral income, and
price premiums. Thus, (Kohli and Jaworski, 1990) stated, maintaining customer
loyalty in marketing development strategies cannot be ignored. Especially, in a
business market which has numerous competitors, keeping good relationships
with business customers could be vital for organizational success.
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As for the relationship between customer Satisfaction and profitability in the form
of share holder value, (Gruca and Rego, 2005) found that customer satisfaction
creates shareholder value by increasing cash flow growth and reducing its
variability. For instance, these authors claim that a one point advance in
customer satisfaction on a scale of 0-100 was associated with a 7% increase in
cash flow. (Berger et al., 2002; Fornell, Mithas, Morgeson, & Krishnan, 2006;
Reichheld, 1996) pointed out that the improvement in key marketing measures
including customer satisfaction and loyalty or share of customers have also been
examined in terms of their contribution in enhancing customer base value as an
investment in technology to enhance manufacturing capability.
(Anderson et al., 1994; Ittner & Larcker, 1998b; Scharitzer & Kollarits, 2000)
considered that there is no absolute positive relationship between customer
satisfaction and profitability. In their view, those firms are probably investing their
limited resources in the wrong (unprofitable) customers.
The researcher does not agree with this point as this might be true for some
cases but cannot be generalized as most of the writers agree with the positive
relationship between customer satisfaction and profitability.
In other words, from the above findings, the researcher has concluded that the
maintaining customer satisfaction as it is the main driver for customer loyalty will
lead to better organizational performance.
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2.4. Factors That Affect Customer Satisfaction, And Customer
Loyalty in the Service Business
(Ostrom and Iacobucci, 1995) stated that customer satisfaction is a multiple-item

measurement that evaluates such items as price of provided service, service
quality, service personnel attitude (networking of the company’s representative),
overall business performance, and ideal business service.
2.4.1. Price
As (Huber et al., 2001) stated, pricing is a sign of product or service value and
also one of the important dimensions of the marketing mix. The price competition
rule in the business market is an important criterion when business customers
are selecting products or services. In a real purchase situation, especially in
business markets, the buyers will not decide to purchase a product or service on
the basis of only one criterion (e.g. product quality) but normally consider several
performance levels (price, delivery and other support services) and obviously,
price is a critical factor that concerns buyers very often the most.
Where (Kotler, 2003) said: a price negotiation is regularly designed for different
customers depending on the relationship between buyers and sellers but mainly
based on the product or service features. However, the price that suppliers offer
must be reasonable and attractive in order to get business customers’
acceptance. Therefore, price acceptance from business customers (including
retailers and wholesalers) is crucial for a manufacturing firm or supplier.
Marshall (1980, p. 260) defines price acceptance as “…the excess of the price
which a man would be willing to pay rather than go without having a thing over
what he actually does pay is the economic measure of his satisfaction surplus”.
Page 25 of 71
(Monroe, 1990) stated that price acceptance refers to the maximum price that
business buyers are prepared to pay for the products or services.
More to the point of price acceptance, there is another factor for suppliers to
consider regarding the price. The perceived price fairness or unfairness is also
an important psychological factor which has an influence on customers’ reaction
to price.
(Matzler et al. 2006) defined price fairness as a perception of the customer

whether the difference between another comparative party and the socially
accepted price is reasonable and acceptable. Moreover, customers will perceive
a price as fair if there is no discrimination on price and no abuse of market power
in price setting.
Where (Herrmann et al., 2000) defined price fairness can be differentiated into
two aspects which are: (1) Price-quality ratio as perceived by the customer and
considered to be a dimension of price satisfaction. (2) The correlation of a
product’s real price and the price of a comparative other party or socially
accepted price.
According to equity theory (Adams, 1963) customers’ establish their judgment by

comparing the price they paid (investment) to the quality of product and service
they received (benefits).
Page 26 of 71
2.4.2. Service Quality
2.4.2.1. Definition
(Alexandris et al., 2001; Chiou & Droge, 2006; Hightower et al., 2002) has noted,
past work has shown that offering high-quality service is crucial for the
development of loyal patrons. The service quality–agency loyalty association
reflects a process through which the provision of quality services yields stronger
customer satisfaction that strengthens agency commitment and the likelihood of
repeat purchase.
(Dick & Basu, 1994) stated that conceptualizations of loyalty typically consider
the construct in terms of two components—attitudinal and behavioural loyalty.
Attitudinal loyalty, also referred to as psychological commitment, examines the
thoughts and feelings consumers express toward specific service providers.
Alternately, (Iwasaki & Havitz, 1998) stated that behavioural loyalty is most often
comprised of indicators that examine actual purchase or use frequency, duration,
and consistency.
(Burns & Graefe, 2006; Tian-Cole, Crompton, & Wilson, 2002; McCleary,
Weaver, & Hsu, 2006) stated, while the relationship between service quality and
customer loyalty has been observed repeatedly in the services marketing
literature. In this context, satisfaction is seen as a mediator of the service quality–
loyalty relationship. Most investigations have limited their analyses to the effect of
service quality on satisfaction alone.
Similarly, (Ko and Pastore, 2007) observed a positive association among

indicators of service quality and overall satisfaction.
Page 27 of 71
2.4.2.2. Customer Satisfaction and Service Quality
(Gronroos 1984) said satisfaction from service quality is usually evaluated in

terms of technical quality and functional quality. While (Donabedian 1980, 1982)
said usually, customers do not have much information about the technical
aspects of a service; therefore, functional quality becomes the major factor from
which to form perceptions of service quality. (Czepiel 1990) stated that service
quality may be defined as customer perception of how well a service meets or
exceeds their expectations. (Sachdev and Verma 2004) defined that service
quality can be measured in terms of customer perception, customer expectation,
customer satisfaction, and customer attitude. (Ekinci, 2003) indicates that the
evaluation of service quality leads to customer satisfaction. (Rust and Oliver,
1994) define satisfaction as the “customer fulfillment response,” which is an
evaluation as well as an emotion-based response to a service.
(Eboli and Mazzulla, 2007) measured customer satisfaction in the context of bus
service on various factors including availability of shelter and benches at bus
stops, cleanliness, overcrowding, information system, safety, personnel security,
helpfulness of personnel, and physical condition of bus stops. TCRP Report 100
identifies the following elements at bus stations for efficient service: shelters,
waiting rooms and seating, doorways, stairways, escalators, signage and
information displays, public address systems, and passenger amenities
(including shelters, benches, vending machines, trash receptacles, lighting,
phone booths, art, and landscaping).
In a study on Internet banking by (Geetika et al. 2008), consumers gave the

highest weight to the quality of service while selecting a particular bank. In
another study of customer satisfaction with banking services by (Jham and Khan
2008) factors of customer satisfaction were traditional (basic) facilities,
convenience, behavior of employees, and the environment of bank.
Page 28 of 71
(J. D. Power and Associates, 2008a) measured overall customer satisfaction of
electric utilities through six factors: power quality and reliability, customer service,
company image, billing and payment, price, and communications. (J. D. Power
and Associates, 2008b) also measured customer satisfaction with high-speed
and dialup Internet service providers based on five factors: performance and
reliability cost of service, customer service, billing, and offerings and promotions.
In another study by (J. D. Power and Associates, 2008c), they that found
communication (information systems) is to be a determinant of customer
satisfaction for customers of utility companies.
(Ribiere et al., 1999) identified customer satisfaction with hospital information

systems in terms of timeliness, accuracy, and completeness. Yet another study
on satisfaction with hospital services by (Andaleeb, 1998) included
communication with patients, competence of staff, staff demeanor, quality of the
facilities, and perceived costs.
(J. D. Power and Associates Reports 2007) stated that customer satisfaction with
full-service moving companies was measured across seven factors:
transportation of belongings, loading service, unloading service, optional
coverage, estimate process, packing service, and insurance/damage claims. This
implies that the quality of basic facilities and other supporting facilities were used
as criteria for satisfaction.
A study on customer satisfaction by (Sonne, 1999) from consultant services

identified various factors including perceived competence of the consultant and
the attitude of consultants toward the customer during the service production
process.
Page 29 of 71
2.4.3. Networking of the Service Providers’ Representatives
(Alexandris et al. 2004) tested a model that had Customer Loyalty indirectly
predicting networking (psychological commitment and positive word-of-mouth
communications and personal relations with the agencies representatives) with
satisfaction the mediator. Significant indirect positive effects on networking
between customers and agencies representatives were observed for all
dimensions of service, including interaction quality, outcome quality, and physical
environment quality witch in turn affects their satisfaction.
(Czepiel, 1990; Czepiel, Solomon, & Surprenant, 1985) stated that interaction
quality refers to the nature of the interactions between the customer and the
company’s representative.
2.5. Conclusion
After reading the above literature review, it can be concluded that customer
loyalty leads to improve the organizational performance through improving the
profitability. Customer satisfaction is a key driver for customer loyalty and it has a
positive effect on it. Increasing customer satisfaction will lead to keep customer
loyalty while decreasing customer satisfaction will lead to lose the owned
customer loyalty. The main factors affecting customer satisfaction are price,
service quality and networking of service provider’s representatives. These
factors in turn affects customer loyalty through their effect on customer
satisfaction and this what this research will try to illustrate.
Page 30 of 71
Chapter 3: Research Methodology and Design
3.1. Overview
This chapter explains in detail, how the researcher plans to perform the research.
The problem statement will be elaborated on further, the research methodology
will be explained and the instruments utilized will be discussed. The researcher
will also explain the population intended for this research, the size of the
subjective sample chosen and the criterion based upon this choice.
Data collection methods will be discussed, as well as its respective analysis;

finally this chapter will be concluded by the limitations of the research and the
ethical considerations imposed.
3.2. Problem Statement Elaboration
Do the factors that affect customer satisfaction towards service provider(s) affect
also customer loyalty?
By studying the effect of each of these three main factors price, service quality
and networking of service provider’s representatives on customer satisfaction
and the direct impact of them on customer loyalty and how it will affect his choice
when a service is needed? Which service provider will the customer will choose,
the OEM or another company? This will be the main goal of this study.
Page 31 of 71
3.3. Research Objective
To study the effect of the factors affecting customer satisfaction on customer

loyalty and eventually its likely impact on service providers’ performance. As
maintaining customer loyalty in marketing development strategies cannot be
ignored. Especially, in a business market which has numerous competitors,
keeping good relationships with business customers could be vital for
organizational success.
This will help the service providers to find the best practice to benefit of such
relationship and its driven factors, either to protect their business or to attack
competitors.
Protecting their business means that the will use “Defensive Strategy” to sustain
their current customers and they have to decide what the best strategy to do so
is.
Attacking competitors means that they will use “Aggressive (Offensive) Strategy”
and they have to decide what the best strategy to do so is.
3.4. Conceptual Framework
The proposed framework of this research was to study the effect of customer
satisfaction on customer loyalty under these variables that affects customer
satisfaction:
Page 32 of 71
3.4.1. Dependent Variable
Y1: Customer Loyalty
3.4.2. Independent Variables
X1: Customer Satisfaction (Intervening Variable)
X2: Price
X3: Service Quality
X4: Networking of the Service Providers’ Representatives
3.4.3. The Research Model Diagram
1- Price
2- Service Quality
Customer Satisfaction Customer Loyalty
3- Networking of the Service
Providers’ Representatives
Page 33 of 71
3.5. Research Questions
The research is aiming to answer the following research questions:
Q1: Is price the main driver of customer loyalty?
Q2: Is the quality of the provided services affects customer loyalty?
Q3: Is networking of the service providers’ representatives has a positive

effect on customer loyalty?
3.6. Research Hypotheses
The research gave the following hypotheses aiming to answer the research
questions:
HP1: Price is not the main driver of customer Loyalty
HP2: Networking of the service providers’ representatives has a positive

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

loyalty
3.7. Research Methodology
Much of the literature reviewed on research paradigms and methodology

suggested that choosing a research philosophy is a subjective matter. (Fisher,
2003) and (Easterby-Smith et al, 2002), amongst others, agree that in practice
any research methods could actually be used. It appears there is no right or
wrong answer to which research philosophy, but some will be more suited to
answering the research question than others.
The researcher is planning to utilize a quantitative method and the data will be
collected by using a questionnaire (appendix A) to collect data. As it is a breadth
study and making statistics to analyze these data
Page 34 of 71
3.7.1.Research Method
The research method undertaken by the researcher will be of a hypothesis

testing type as the researcher is needed to test how true his pre assumed
hypothesis were. As quantitative methods might be the best when the researcher
wants to compare data in a systematic way, make generalizations to the whole
population or test theories with hypothesis. This is particularly complying with this
research objective and the theoretical framework discussed earlier and
hypothesis needed to be tested.
A survey method is used to produce statistical facts for such hypotheses tests as
surveys are the preferred method for those types of questions that involve asking
participants about their own experience.
3.7.2. Research Instruments
The researcher will utilize a questionnaire (Appendix A). This questionnaire

is a personally administrated questionnaire as defined by (Uma Sekaran, 2010).
The personally administer the questionnaires is a good way to collect data as the
survey is confined to a local area, and the researcher is willing and able to
assemble groups of the population to respond to the questionnaire at their
workplace,. The main advantage of this is that the researcher can collect all the
completed responses within a short period of time. If there is any doubts that the
respondents might have on any question could be clarified on the spot. The
researcher is also afforded the opportunity to introduce the researcher topic and
motivate the respondents to offer their frank answers.
3.8. Population
The population of this research is the decision makers in the companies that deal
with rotating equipment services both technical and financial\commercial sectors.
Page 35 of 71
3.9. Sampling Method
As the elements in the population have some known chance or probability of

being selected as a sample subjects, this is a probability sampling.
The researcher has chosen to perform the simple random sampling. This is
because any person of the chosen population has the same effect and his
participation is needed. In the unrestricted probability sampling design, more
commonly known as simple random sampling, every element in the population
has a known and equal chance of being selected as a subject. Simple random
sampling also has the least bias and offers the most generalizability.
3.10. Data Collection Plan
The researcher is planning on exploring different rotating equipment using

companies, in all fields (Electricity Production, Oil and Gas and Industry) that
present the rotating equipment service customers to perform the necessary
data collection.
The researcher will need to receive all necessary approvals prior to performing
any of the questionnaire filling. Since the research instruments used are of
an exploratory nature, the researcher is not expected to have difficulties in
receiving the necessary acceptance to proceed with the research within
the various companies. Further arrangements will have to be organized by
the researcher; such as dates and times to submit the questionnaires and the
dates and times to collect them. The data collection should begin for a period of
two weeks.
3.11. Data Analysis
Since the data has been collected through questionnaire, this information needs
to be analyzed. The analysis process will be performed by The SPSS software
Version 17.0 and the output will be in the form of pie charts, bar charts and
tables.
Page 36 of 71
3.12. Findings Report
The findings report will explain the results provided after the research has
been conducted, the findings should provide the researcher with a possible solid
theory formulation, to the extent of impact of customer satisfaction on customer
loyalty towards the OEM service provider.
3.13. Research Limitations
The main research limitations are the limited sample size as the Egyptian
companies dealing with rotating equipment are not so many. Although all
attempts were made to make this an objective study by clarifying to all
participants that this is totally anonymous questionnaire and this is for the sake of
making an illustrative academic study, biases on the part of respondents might
have resulted with some subjectivity. Also the availability and accessibility of data
from the service providers themselves is another limitation.
3.14. Ethical Considerations
The researcher will strictly adhere to all ethical considerations in conducting this
research. All participants will be aware of their taking part in the research will
be informed clearly; their prior written consent will be provided. All information
provided will be treated as strictly confidential guarding the questionnaire filler’s
privacy is one of the primary responsibilities. The researcher should not
misinterpret the nature of the study, nor should he violate the self-esteem and
self-respect of the subjects. Also the observation should be as non-intrusive as
possible. All recorded notes and findings will be disposed of after reaching the
possible theory formulation in question.
Page 37 of 71
3.15. Conclusion
The researcher provided information on the research design and methodology

expected for this specific research. The problem statement has been described
in detail, the research methodology used, as well as the data collection method
used. The sampling has been explained, as well as the data analysis and report
of the findings. Finally this chapter has been concluded with the research
limitations and the necessary ethical considerations implementation during this
research.
Page 38 of 71
Chapter 4: Data Analysis and Findings
4.1. Introduction
In this chapter the researcher will give the analysis of the collected data as the
result of the SPSS statistics software version 17 for the sample used size which
is 80 participants.
4.2. Descriptive results and analysis of findings
4.2.1. Reliability Test
Reliability test is used to check the reliability and the consistency of the data to
ensure its reliable enough for statistical analysis and efficient results.
Cronbach Alfa test is used to test reliability and the closer its value to 1, the more
reliable the data. From the below (Table 4.1), Alpha=0.738 which is a good
indicator for reliable data.
Scale: All Variables
Case Processing Summary

N %
Cases Valid 80 100.0
a
Excluded 0 .0
Total 80 100.0
a. Listwise deletion based on all variables in the procedure.
Reliability Statistics
Cronbach's Alpha No of Items
.738 5
(Table 4.1) Reliability test
Page 39 of 71
4.3. Sample Descriptive Analysis
4.3.1. Service Providers Types
The sample shows that 42 of the participants are dealing with both OEM % non
OEM service providers while 38 participants are dealing only with OEM service
providers. The below table and graph show this distribution.
Frequency Percent Valid Percent Cumulative Percent

OEM & Non MEM 42 52.5 52.5 52.5
Only OEM 38 47.5 47.5 100.0
Total 80 100.0 100.0
(Table 4.2) Service providers type frequency
Service Providers Types
OEM & Non OEM

Only OEM
(Figure 4.1) Service providers type frequency
Page 40 of 71
4.3.2. Position Type
The sample shows that 48 of the participants have technical position while 32
participants have commercial\financial position. The below table and graph show
this distribution.
Frequenc Valid
Percent Cumulative Percent
y Percent
Technical 48 60.0 60.0 60.0
Commercial
32 40.0 40.0 100.0
\ Financial
Total 80 100.0 100.0
(Table 4.3) Position type frequency
Position Type Technical
Commercial
\ Financial
(Figure 4.2) Position type frequency
Page 41 of 71
4.3.3. Independent Variables Results
The coming part will illustrate the distribution of the answers of the questionnaire
questions that related to each of the independent variable price, quality of
provided services (quality) and networking of the service providers’
representatives (networking).
4.3.3.1. Price
4.3.3.1.1. Price Answers Distributions
The below table and figure show the distribution of different price questions
answers.
Valid
Perc
entC
umul
Frequenc
ative
y
Perc
en
t
Price
1Per
5 6.3 6.3 6.3
cent
1.33 2 2.5 2.5 8.8
1.5 4 5.0 5.0 13.8
1.67 5 6.3 6.3 20.0
2 39 48.8 48.8 68.8
2.33 6 7.5 7.5 76.3
2.5 3 3.8 3.8 80.0
2.67 6 7.5 7.5 87.5
3 6 7.5 7.5 95.0
3.33 1 1.3 1.3 96.3
3.5 2 2.5 2.5 98.8
4 1 1.3 1.3 100.0
Total 80 100.0 100.0
Page 42 of 71
(Table 4. 4) Price answers distribution
Price Frequency
40
35
30
25
Count
20
15
10
5
0
1 1.33 1.5 1.67 2 2.33 2.5 2.67 3 3.33 3.5 4
Price
(Figure 4.3) Price answers distribution
4.3.3.1.2. Price Distribution Over Position Types
Page 43 of 71
Price Vs Position Type
25
20
Technical
Count
15
10
Commercial
5 \ Financial
0
1.33
1.5
1.67
2.33
2.5
3.33
3.5
1
2.67
3
4
Price
Price
(Figure 4.4) Price distribution Vs position types
Page 44 of 71
4.3.3.1.3. Price Distribution Over Service Provider Types
Price Vs Service provider Type
25
20
15
Count
OEM & Non O

10 OEM Only
5
0
1 1.33 1.5 1.67 2 2.33 2.5 2.67 3 3.33 3.5 4
Price
(Figure 4.5) Price distribution Vs service provider types
4.3.3.1.4. Price Answers Distribution Analysis
It is clear from the above figures that neither the position type nor the type of
service provider has an effect on their price questions answers. The distribution
is almost the same with different position types and service providers’ types and
it is homogeneous with the total distribution.
Page 45 of 71
4.3.3.2. Quality
4.3.3.2.1. Quality Answers Distribution

The below table and figure will show the distribution of different quality questions
answers.
Quality Frequency Percent Valid Cumulative

Percent Percent
1 2 2.5 2.5 2.5
1.33 6 7.5 7.5 10.0
1.4 1 1.3 1.3 11.3
1.6 4 5.0 5.0 16.3
1.67 7 8.8 8.8 25.0
1.8 5 6.3 6.3 31.3
2 26 32.5 32.5 63.8
2.2 8 10.0 10.0 73.8
2.33 1 1.3 1.3 75.0
2.4 7 8.8 8.8 83.8
2.6 4 5.0 5.0 88.8
2.67 3 3.8 3.8 92.5
3 2 2.5 2.5 95
3.2 1 1.25 1.25 96.25
3.33 2 2.5 2.5 98.8
3.6 1 1.3 1.3 100.0
Total 80 100.0 100.0
(Table 4. 5) Quality answers distribution
Quality Result
30
25
20
Count
15
10
0
1 1.33 1.4 1.6 1.67 1.8 2 2.2 2.33 2.4 2.6 2.67 3 3.2 3.33 3.6
Quality
Page 46 of 71
(Figure 4.6) Quality answers distribution
Page 47 of 71
4.3.3.2.2. Quality Distribution Over Position Types
Quality Vs Position Type
16
14
12
10
Count
Technical
8
6
4 Commercial
2 \ Financial
0
67
33
33
4
6
1
3
1.
2.
1.
2.
3.
Quality
(Figure 4.7) Quality distribution Vs position types
4.3.3.2.3. Quality Distribution Over Service Provider Types
Quality Vs Service provider Type
12
10
8
Count
OEM & Non O

6
OEM Only
4
2
0
67
33
33
4
6
1
3
1.
2.
1.
2.
3.
Quality
(Figure 4.8) Quality distribution Vs service provider types
Page 48 of 71
4.3.3.2.4. Quality Answers Distribution analysis
service provider has an effect on their quality questions answers. The distribution
is almost the same with different position types and service providers’ types and
it is homogeneous with the total distribution.
4.3.3.3. Networking
4.3.3.3.1. Networking Answers Distribution

The below table and figure will show the distribution of different networking
questions answers.
Cumulative
Frequenc
PercentNetw Percent
y
orking
Valid
2 2.5 2.5 2.5
Percent
1.5 6 7.5 7.5 10.0
1.75 2 2.5 2.5 12.5
2 25 31.3 31.3 43.8
2.25 6 7.5 7.5 51.3
2.5 15 18.8 18.8 70.0
2.75 8 10.0 10.0 80.0
3 9 11.3 11.3 91.3
3.25 2 2.5 2.5 93.75
3.5 3 3.75 3.75 97.5
3.75 1 1.3 1.3 98.8
4 1 1.3 1.3 100.0
Total 80 100.0
100.0 (Table 4.6) Networking answers distribution
Page 49 of 71
Networking Result
30
25
20
Count
15
10
0
1 1.5 1.75 2 2.25 2.5 2.75 3 3.25 3.5 3.75 4
Networking
(Figure 4.9) Networking answers distribution
4.3.3.3.2. Networking Distribution over Position Types
Networking Vs Position Type
12
10
8
Count
Technical
6
4 Commercial
\ Financial
2
0
75
25
75
25
75
5
5
1
4
2.
3.
1.
1.
2.
2.
3.
3.
Networking
(Figure 4.10) Networking distribution Vs position types
Page 50 of 71
4.3.3.3.3. Networking Distribution over Service Provider Types
Networking Vs Service provider Type
14
12
10
Count
8 OEM & Non OEM

6 OEM Only
4
2
0
1 1.5 1.75 2 2.25 2.5 2.75 3 3.25 3.5 3.75 4
Networking
(Figure 4.11) Networking distribution Vs service provider types
4.3.3.3.4. Networking Answers Distribution analysis
service provider has an effect on their networking questions answers. The
distribution is almost the same with different position types and service providers’
types and it is homogeneous with the total distribution.
Page 51 of 71
4.4. Inferential Data Analysis
4.4.1. Correlation between Independent Variables and Customer

Satisfaction
The below table shows the correlation between the three independent variables
price, quality & networking and customer satisfaction as an output of SPSS
software.
(Table 4.7) Correlation between all variables & Customer Satisfaction

Customer Satisfaction
Price Pearson Correlation .596**
Sig. (1-tailed) .032
N 80
Quality Pearson Correlation .734**
N 80
Networking Pearson Correlation .620*
N 80
**. Correlation is significant at the 0.01 level (1-tailed).
*. Correlation is significant at the 0.05 level (1-tailed).
From the table we can conclude that the three parameters are effectively related
to customer satisfaction as their three significant factors are less than 0.05.
Price is directly related to customer satisfaction as the Pearson correlation

coefficient is positive. The relationship is medium as the coefficient =0.596.
Quality is directly related to customer satisfaction as the Pearson correlation

coefficient is positive. The relationship is strong as the coefficient =0.734.
Networking is directly related to customer satisfaction as the Pearson correlation

coefficient is positive. The relationship is medium as the coefficient =0.620.
We can rank the effect of the three parameters on customer satisfaction

accordingly, quality of provider service then networking of service providers’
representatives and finally price of the provided service.
Page 52 of 71
4.4.2. Correlation between Independent Variables and Customer
Loyalty
The below table shows the correlation between the three independent variables
price, quality & networking and customer loyalty as an output of SPSS software.
(Table 4.8) Correlation between all variables & Customer Loyalty

Customer Loyalty
Price Pearson Correlation .624*
N 80
Quality Pearson Correlation .833
N 80
Networking Pearson Correlation .711*
N 80
From the table we can conclude that the three parameters are effectively related
to customer loyalty as their three significant factors are less than 0.05.
Price is directly related to customer loyalty as the Pearson correlation coefficient

is positive. The relationship is medium as the coefficient =0.624.
Quality of the provided service is directly related to customer loyalty as the

Pearson correlation coefficient is positive. The relationship is strong as the
coefficient =0.833.
Networking of service providers’ representatives is directly related to customer

loyalty as the Pearson correlation coefficient is positive. The relationship is strong
as the coefficient =0.711.
Page 53 of 71
We can rank the effect of the three parameters on customer loyalty accordingly,
quality of provider service then networking of service providers’ representatives
and finally price of the provided service.
4.4.3. Correlation between Customer Satisfaction and Customer

Loyalty
The below table shows the correlation between customer satisfaction and
customer loyalty as an output of SPSS software.
(Table 4.9) Correlation between Customer Satisfaction & Customer Loyalty

Customer Loyalty
Satisfaction Pearson Correlation .851*
N 80
From the table we can conclude that customer satisfaction is effectively related to
customer loyalty as the significant factor between them is less than 0.01.
Customer satisfaction is directly related to customer loyalty as the Pearson

correlation coefficient is positive. The relationship is strong as the coefficient
=0.851.
Page 54 of 71
4.4.4. Ranking Question analysis
The questionnaire contains 3 ranking questions (Q15, Q16 & Q17) to test the
priorities of each of the three independent variables plus another variable
(nationality) and an option to be added by each participant under (others).
The first outcome of the results that there is no participant added another factor
in the (others) field. This means either they found the given variable sufficient or
they did it add it to make it easier for themselves and fill the questionnaire faster.
4.4.4.1. Q15 Results
The coming table give the results of this question:
Q15 1st Choice

Frequenc
y Percent Valid Percent Cumulative Percent
Valid Price 10 12.5% 12.5% 12.5%
Quality 52 65.0% 65.0% 77.5%
Nationality 0 0.0% 0.0% 77.5%
Networking 18 22.5% 22.5% 100.0%
Total 80 100.0% 100.0%
Q15 2nd Choice
Frequenc
Valid Price 14 17.5% 17.5% 17.5%
Quality 21 26.3% 26.3% 43.8%
Nationality 4 5.0% 5.0% 48.8%
Networking 41 51.3% 51.3% 100.0%
Total 80 100.0% 100.0%
Q15 3rd Choice
Frequenc
Valid Price 30 37.5% 37.5% 37.5%
Quality 13 16.3% 16.3% 53.8%
Nationality 11 13.8% 13.8% 67.5%
Networking 26 32.5% 32.5% 100.0%
Total 80 100.0% 100.0%
Page 55 of 71
Q15 4th Choice
Frequenc
Valid Price 9 11.3% 11.3% 11.3%
Quality 1 1.3% 1.3% 12.5%
Nationality 65 81.3% 81.3% 93.8%
Networking 5 6.3% 6.3% 100.0%
Total 80 100.0% 100.0%
Q1 61st Choice
Frequenc
Valid Price 16 20.0% 20.0% 20.0%
Quality 39 48.8% 48.8% 68.8%
Nationality 0 0.0% 0.0% 68.8%
Networking 25 31.3% 31.3% 100.0%
Total 80 100.0% 100.0%
Q16 2nd Choice
Frequenc
Valid Price 26 32.5% 32.5% 32.5%
Quality 17 21.3% 21.3% 53.8%
Nationality 8 10.0% 10.0% 63.8%
Networking 29 36.3% 36.3% 100.0%
Total 80 100.0% 100.0%
Q16 3rd Choice
Frequenc
Valid Price 19 23.8% 23.8% 23.8%
Quality 9 11.3% 11.3% 35.0%
Nationality 33 41.3% 41.3% 76.3%
Networking 19 23.8% 23.8% 100.0%
Total 80 100.0% 100.0%
Q16 4th Chive
Frequenc
Page 56 of 71
Valid Price 11 13.8% 13.8% 13.8%
Quality 15 18.8% 18.8% 32.5%
Nationality 39 48.8% 48.8% 81.3%
Networking 15 18.8% 18.8% 100.0%
Total 80 100.0% 100.0%
Page 57 of 71
Q17 1st Choice

Frequenc
Valid Price 19 23.8% 23.8% 23.8%
Quality 49 61.3% 61.3% 85.0%
Nationality 4 5.0% 5.0% 90.0%
Networking 8 10.0% 10.0% 100.0%
Total 80 100.0% 100.0%
Q17 2nd Choice
Frequenc
Valid Price 14 17.5% 17.5% 17.5%
Quality 16 20.0% 20.0% 37.5%
Nationality 25 31.3% 31.3% 68.8%
Networking 25 31.3% 31.3% 100.0%
Total 80 100.0% 100.0%
Q17 3rd Choice
Frequenc
Valid Price 26 32.5% 32.5% 32.5%
Quality 13 16.3% 16.3% 48.8%
Nationality 3 3.8% 3.8% 52.5%
Networking 38 47.5% 47.5% 100.0%
Total 80 100.0% 100.0%
Q17 4th Choice
Frequenc
Valid Price 21 26.3% 26.3% 26.3%
Quality 2 2.5% 2.5% 28.8%
Nationality 48 60.0% 60.0% 88.8%
Networking 9 11.3% 11.3% 100.0%
Total 80 100.0% 100.0%
Page 58 of 71
4.4.4.4. Ranking Question Results Analysis
The coming table shows the weighted results of the answers of each of the
ranking questions. The 1st position takes the power of 4, the 2 nd position takes the
power of 3, the 3rd position takes the power of 2 and the 4th position takes the
power of 1.
Weighted Result
Variable
Q15 Q16 Q17 Total
Price 151 191 189 531
Quality 298 240 272 810
Nationality 99 129 132 360
Networking 252 240 207 699
(Table 4.13) Ranking Questions Analysis
The result of these ranking questions says that the quality of the provided service
is the most important variable in customer satisfaction and customer loyalty in the
service of rotating equipment in the energy field in Egypt. Networking of service
providers’ representatives comes second. Then price of provided service comes
third. Nationality of the service provider is the last and it is not one of this study’s
variables.
From the above analysis we conclude that the researcher has chosen important
variables for the Egyptian customers. The ranking of these variables from the
ranking questions is the same as the ranking from the other questions for both
customer loyalty and customer satisfaction as shown before.
Page 59 of 71
4.5. Hypotheses Testing
Based on the above result, the researcher is going to make hypothesis testing for
each of the three research hypothesis.
4.5.1. HP1
The first hypothesis says that the price is not the main driver in customer loyalty.
The research data analysis shows that quality of the provided service is the most
important driver for customer loyalty then networking of service providers’
representatives then price. Accordingly, this hypothesis is true.
4.5.2. HP2
The second hypothesis says that networking of the service providers’

representatives has a positive effect of customer loyalty. The research data
analysis shows that this hypothesis is true.
4.5.3. HP3
The third hypothesis says that the quality of the provided services has a positive
effect on the customer loyalty. The research data analysis shows that this
hypothesis is true.
Page 60 of 71
Chapter 5: Conclusions and Recommendations
5.1. Main Conclusions
From this study we conclude that the effect of the chosen factors affecting
customer satisfaction (price, quality of provided service and networking of service
providers’ representatives) are also affecting customer loyalty.
Quality of the provided service is the most effective parameter of the chosen
parameters on customer loyalty. The research findings stated that the Egyptian
energy field customers in the rotating equipment services are quality focused
customers. Networking of the service providers’ representatives comes after
quality. Price comes last of the chosen parameters that affecting customer
loyalty.
5.2. Recommendations
The researcher recommends the service providers for rotating equipment in

Egypt who are willing to maintain their customer loyalty to avoid ignoring the
chosen factors in their marketing development strategies to keep their obtained
organizational success. The researcher also recommends them keeping paying
the greatest attention to the quality of the provided services as it is the most
effective driver for customer loyalty. The networking of their representatives with
the customers is also very important and they have to make their representative
socially qualified as they are qualified technically.
Price is also an effective factor but less than the previous two. Most of the
service providers deal with such a business as if it is a priced driven business
which it not the only parameter that affecting the customers’ decision according
to the findings of this study.
Page 61 of 71
This researcher hopes that the above findings will help the service providers to
find the best practice to benefit of such relationship and its driven factors, either
to protect their business or to attack competitors.
5.3. Future Work
The researcher has found in the literature review that the part of the effect of
networking of organizations’ representatives on customer satisfaction and\or
customer loyalty is not well covered and there is a lack of researches in this
topic. The researcher recommends the future researchers who want to make
researches in this field to proceed searching in this topic.
This research might be extended to target different business with a larger

sample.
Page 62 of 71
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Page 67 of 71
Appendix A:
Customer Satisfaction \ Customer Loyalty
Questionnaire
Department : Technical Commercial \ Financial
For the rotating equipment services you are dealing with:

Please answer the following questions regarding the OEM service provider:
1. How Many OEM service providers you are dealing with?

One Two Three More than three
2. How do you rate the service provider representative(s) in

dealing with you?
Excellent Good Fair Bad Very bad
3. If you received any technical support, how do you rate

the technical professionals in dealing with you?
4. If you received any technical support, how do you rate

the technical competence of the engineers and their response
time?
5. How do you rate the products and services and did they meet your
needs and expectations regarding quality and performance?
6. How do you rate the delivery on time performance and the commitment
to meet your delivery expectations?
Page 68 of 71
7. How do you rate the competitiveness of the products and do they
represent best value for total cost of lifetime ownership?
8. Did the price of service provided by the supplier meet your

expectations?
9. How do you rate your satisfaction with the overhaul evaluation of the
services provided by this OEM service provider?
10. If a colleague had a similar problem to yours would you recommend

they use the same service provider?
Yes No N\A
11. Do you feel loyal to this service provider?
Yes No N\A
12. Have you had experience with any of this OEM's competitor
Yes No
13. If yes, do you recommend this competitor to any of your colleagues or

business partners?
Yes No N\A
14. How likely do you think of changing this OEM service provider:
Very Likely Likely Neutral Unlikely Very Unlikely
15. In General, please rank the importance of the following point when
choosing the service provider:
a. Price ……………….
b. Quality of Service ……………….
c. His Nationality ……………….
d. His representatives’ attitude ……………….
Page 69 of 71
e. Other (Please Specify) …………….. ………………
16. When you are evaluating a Non-OEM service provider

before choosing him to do a service for the 1st time, please rank the
following points by their importance in the evaluation process:
a. Price ……………….
b. Quality of Service ……………….
c. His Nationality ……………….
d. His representatives’ attitude ……………….
17. Please rank the following according to importance of the

reasons that make you deciding to change the service provider:
a. Price Increase ……………….
b. Quality of Service decreases ……………….
c. His Nationality changed (Acquired by another company) ……………….
d. His representatives’ attitude change negatively ……………….
18. Do you deal with other service providers than the OEM service
providers (i.e. Non-OEM)?
Yes No
If no, then thank you. You have finished the questionnaire.

If yes, please answer the following questions regarding the
Non-OEM service providers:
19. How Many Non-OEM service providers you are dealing with?
One Two Three More than three
20. How do you rate the attitude of his staff?

21. How knowledgeable and professional have you found the staff of this
services provider?
22. How do you rate knowledge of his staff?

Page 70 of 71
23. How do you rate quality of the provided service?
24. How do you rate price of the provided service?

25. How do you rate your satisfaction with the overhaul evaluation of the
services provided by this Non-OEM service provider?
26. Will you continue to use this services provider?

Yes No N\A
27. Would you recommend this services provider to others?

Yes No N\A
28. Do you feel loyal to this service provider?

Yes No N\A
29. How likely do you think of changing this Non-OEM service provider:
30. How likely do you think of returning back to the OEM service provider:
Thank you for your time.
Page 71 of 71

Customer Sat &amp; Customer Loy

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Customer Sat &amp; Customer Loy

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Master of international Business Administration

Identifying the Linkage between Customer Satisfaction

Supervisor: Dr. Nada Basset

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

(Figure 4.1) Service providers type frequency

(Figure 4.2) Position type frequency

(Figure 4.3) Price answers distribution

(Figure 4.4) Price distribution Vs position types

(Figure 4.5) Price distribution Vs service provider types

(Figure 4.6) Quality answers distribution

(Figure 4.7) Quality distribution Vs position types

(Figure 4.8) Quality distribution Vs service provider types

(Figure 4.9) Networking answers distribution

(Figure 4.10) Networking distribution Vs position types

(Figure 4.11) Networking distribution Vs service provider types

(Table 4.1) Reliability test

(Table 4.2) Service providers type frequency

(Table 4.3) Position type frequency

(Table 4. 4) Price answers distribution

(Table 4. 5) Quality answers distribution

(Table 4.6) Networking answers distribution

(Table 4.7) Correlation between all variables & customer satisfaction

(Table 4.8) Correlation between all variables & customer loyalty

(Table 4.9) Correlation between customer satisfaction & customer loyalty

(Table 4.10) Q15 Results

(Table 4.11) Q16 Results

(Table 4.12) Q17 Results

(Table 4.13) Ranking Questions Analysis

(OEM) Original Equipment Manufacturer

1.3. Research Objective

1.4. Conceptual Framework

Y1: Customer Loyalty

1.4.2. Independent Variables

X1: Customer Satisfaction (Intervening Variable)

X3: Service Quality

X4: Networking of the Service Providers’ Representatives

1.4.3. The Research Model Diagram

2.1.1. Customer Loyalty

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

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

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

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

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

2.1.2. Customer Satisfaction

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

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

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

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

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

2.2. The Relationship Between Customer Loyalty And

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

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

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

2.3. The Importance of Customer Loyalty and Customer

Loyalty in the Service Business

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

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

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

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

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

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

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

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

Customer Sat & Customer Loy

Customer Sat & Customer Loy