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Chapter 1

THE PROBLEM AND ITS SETTING

Background of the Study


In todays global competitive environment, delivering quality service is considered
as an essential strategy for success and survival (Parasuraman et al., 1985; Reichheld
and Sasser, 1990; Zeithamlet al., 1990). Even the public sector organizations have
come under increasing pressure to deliver quality services (Randall and Senior, 2008)
and improve efficiencies (Robinson, 2008). Customer needs and expectations are
changing when it comes to governmental services and their quality requirements.
However, service quality practices in public sector organizations is slow and is further
exacerbated by difficulties in measuring outcomes, greater scrutiny from the public and
press, a lack of freedom to act in an arbitrary fashion and a requirement for decisions to
be based in law (Teicher et al., 2009)
In United States, service quality has been deteriorating in recent years and the
behavior of service personnel is the primary cause. Poor customer service is so
rampant that people seldom stop to consider how common it is to encounter company
representatives who are rude, careless, or poorly trained. Making matters worse are the
systems that large companies have put into place to minimize the contact with
customers in the course of their transactions. (Buchana, 2010)
In the Philippines, customers were likely to end at least one business relationship
a year due to poor customer service. One of the major complaint in the Philippines is
that customer service representatives are not empowered to make decisions. In

Addition, service quality expectations and perceptions in the Philippines are influenced
by consumers experience. (http://pcoo.gov.ph/government_directory.htm)
In Davao del Sur, the sole distribution utility that delivers power is Davao Del Sur
Electric Cooperative popularly known as DASURECO. Thus, the researchers found out
that there are consumers undergoes some problems with regards on how DASURECO
personnel offer their services which leads to their dissatisfaction. In fact, service quality
is considered an issue in the electricity distribution.
Therefore, the global, national and local problems above pose urgency for the
conduct of the study. With this, the study aiming to determine the level of consumer
services like meter, service drop, streetlight, transformer, pole and line with the level of
satisfaction of its consumers is hereby conducted.
Statement of the Problem
This study was conducted to evaluate the consumer services and the level of
consumers satisfaction of Davao Del Sur Electric Cooperative.
Specifically, this study sought to answer the following questions:
1.

What is the demographic profile of consumers of Davao Del Sur Electric

Cooperative in terms of:


1.1 Sex;
1.2 Age; and
1.3 Status?
2. What are the consumer services of Davao Del Sur Electric Cooperative
in terms of:
2.1 Meter;

2.2 Service Drop;


2.3 Streetlight;
2.4 Transformer;
2.5 Pole ; and
2.6 Line?
3. What is the level of consumers satisfaction of Davao del Sur Electric
Cooperative in terms of:
3.1 Tangibility;
3.2 Reliability;
3.3 Responsiveness;
3.4 Assurance; and
3.5 Empathy?
4. Is there any significant relationship between the services and the level
of consumers satisfaction of Davao Del Sur Electric Cooperative?
Hypothesis
The study was tested the null hypothesis below at 0.05 level of significance:
Ho. There is no significant relationship between the consumer services of Davao
Del Sur Electric Cooperative with the satisfaction of its consumers.
Review of Related Literature
This part of the study presents some of the reviews of the related literature that
would help the readers to completely understand the purpose and content of this study.
The information gathered from previous research works, selected books, unpublished
thesis and internet was synthesized by the group.

The brief reviews of the related literature are presented below:


Consumer Service
Kotler et al. (2009) defined service as any intangible act or performance that one
party offers to another that does not result in the ownership of anything Thus service
can be an intangible offer by one party to another in exchange of money and
satisfaction for pleasure. In this regard, Bastos and Gallego (2008) provide evidence
that customer service quality directly affects satisfaction and satisfaction directly affects
the positive behavioral intentions.
Nathan (2011) studied and concluded that the major factor for the low level of
satisfaction of the domestic consumers is due to the very poor rating for the advance
information and notices which shows that the power distribution company is complacent
and in future it needs to be more alert and inform the consumers in advance so that the
consumers can plan according to the information. According to Newby & McManus
(2000) excellent quality of customer services is based upon not just the knowledge and
skills of the individual but also upon the way that the organization as a whole, from top
management downwards, pulls in the same direction and presents a clear, positive
message to customers.

Presenting suitable training services create possibility for

increasing the level of customer service and hence the customer satisfaction. Using
trained staffs also, increases the accountability of the company (Nilda et al., 2009).
Chiosa, N. (2010) states that the assurance of the power quality supplied
to consumers represents one of the most important issues that have to be fulfilled,
related to substation ancillary services power supply sources. On the other hand, one of

the strategies of presenting better customer services in power industry is to provide


proper trainings to personnel and customers (Khaksar et al, 2010).
Gera (2011) investigated the link between service quality, value, satisfaction and
behavioural intentions in a public sector bank in India and one of their results states that
Service quality was found to significantly impact on customer satisfaction and value
perceptions In addition, consumer service is synonymous to satisfaction, by obligation
and definition. It is one of the most important issue concerning business organization of
all types, which is justify by the customer oriented philosophy and the principles of
continues improvement in modern enterprise. For the reason, customer satisfaction
should be measured and translated into number of measurable parameter. The act of
measuring customer satisfaction from ones services can be considered as the most
reliable feedback (such that it provides client preferences and experiences in an
effective, direct, meaningful and objective way). Thus, customer satisfaction may be
considered as a base line standard of performance and a possible standard of
excellence for any business organization (Gerson, 2013).
Meter
Nivass et al, (2012) states that a smart meter is an electrical device that records
consumption of electrical energy and various other electrical parameters and enables
the measurement of energy in both directions (export and import). The smartness of the
system lies in its bi-directional energy measurement capability, interoperability,
compactly sizes energy nodes with aesthetic display and ability to be interfaced with a
web server making it web based monitoring system which can be used for remote
management applications.

The energy meter is an electrical measuring device, which is used to record


Electrical Energy Consumed over a specified period of time in terms of units. Every
house, small factory, business establishment, shops, offices etc. need at least one
energy meter to register power consumption. The supplier of electrical raises the bill on
the basis reading shown by this meter. The producer of electricity sale the electricity to
the electricity boards and boards has to sale this energy to the consumer. Consumer
needs to pay the amount against the bill raised by the supplier. The data generate by
the energy meter is the base to raise the bill by power supplier.
In addition, meter can be classified as services which include broken glass
creeping, disconnection for calibration, no seal, pull-out, relocation, replacement,
sparking, stuck-up, tampered and tilted.
Service Drop
In electric power distribution, a service drop is an overhead electrical line running
from a utility pole, to a customer's building or other premises. It is the point where
electric utilities provide power to their customers. At the customer's premises, the wires
usually enter the building through a weatherhead that protects against entry of rain and
snow, and drop down though conduit to an electric meter which measures and records
the power used for billing purposes, then enters the main service panel. The utility's
portion of the system ends, and the customer's wiring begins, at the output socket of the
electric meter. The service panel will contain a "main" fuse or circuit breaker, which
controls all of the electrical current entering the building at once, and a number of
smaller fuses/breakers, which protect individual branch circuits. There is always a main

shutoff switch to turn off all power; when circuit breakers are used this is provided by the
main circuit breaker. Service drop conductors and underground lateral conductors are
the conductors coming from the service point to the service entrance conductors or,
sometimes, directly to the service equipment itself.
Streetlight
Qin Li-jun et.al (2011) introduced an intelligent streetlight energy-saving system
based on LonWorks power line communication technology. It uses

power line

communication technology to realize the networking of streetlight equipments and


collects and analyzes the operation condition of streetlights based on
SmartServer,

combined

with Streetlight Vision

Monitoring

Software

to

i.LON
achieve

thestreetlights' remote monitoring and scheduling so as to achieve the network


management of streetlight equipments and the target of energy saving and emission
reduction. However, it specifically introduces the overall structure of the system and the
technical details, structure, functions and characteristics of the various components and
analyzes the economic and environmental benefits achieved from the application of the
system.
Municipalities can save significant operating costs and enhance the quality of
street lighting service with an energy-efficient street lighting project. Emerging
technologies are available today that are more energy efficient, result in improved
lighting quality and visibility and provide reduced maintenance costs over incumbent
technology. The use of energy efficient traffic signals, streetlights and other outdoor
area lighting presents a significant opportunity for local governments to lower energy
bills and improve the quality of lighting service. The electricity used for outdoor area

lighting accounts for a significant portion of a local government's energy bill. Streetlights
alone can represent from 5 percent to over 60 percent of a municipal government's
energy expenditures.
Transformer
Purwadi,

(2011)

explains

that

the

main

and

auxiliary

power

transformer installed have been fulfilled their design life, the concept of simple
replacement of power transformer in the system considering it as weak or potential
source of trouble is no more valid in the present scenario of financial constraint. Today
the paradigm has changed and many efforts are being directed to explore new
approach/techniques of testing, monitoring, diagnosis, life assessment and condition
evaluation and possibility of extending the life of existing power transformer. In this
effort of extending the life of existing power transformer, testing and diagnostics of
power transformer conditions become very important step whether it is possible to
extend certain time of useful life beyond design life and save investment on new
power transformer. It mainly asses the life condition of total insulation system of
power transformer due to failure of insulation material considered to be major factor in
power transformer,
Transformers are commonly used in applications which require the conversion of
AC voltage from one voltage level to another. There are two broad categories of
transformers: electronic transformers, which operate at very low power levels, and
power transformers, which process thousands of watts of power. Electronic
transformers are used in consumer electronic equipment like television sets, VCRs, CD
players, personal computers, and many other devices, to reduce the level of voltage

from 220V (available from the AC mains) to the desired level at which the device
operates. Power transformers are used in power generation, transmission and
distribution systems to raise or lower the level of voltage to the desired levels. The basic
principle of operation of both types of transformers is the same. Transformers find many
applications in electric power distribution where they are employed for increasing or
decreasing voltage levels.
Pole
Crosby (2011) states that utility poles often support wires and other components
for many utilities such as electric power, telecommunications, cable television, and fiber
optic. Transmission lines typically carry the electric power from the source to
substations where distribution lines branch off to supply the surrounding businesses and
homes with power. From the genre of poles including lighting, traffic, and homeland
security, this report focuses only on lighting. Light poles are typically freestanding poles
with light fixtures at the top.
These are the insulators which prevent energized wires from coming in contact
with each other or the utility pole, primary wires are on top of the pole and usually carry
12,000 volts of electricity from a substation, Cutouts act like a fuse and open when there
is a problem with the line or a section of it, the neutral wire is below the transformer and
acts as a line back to the substation and balances out the amount of electricity or load
on the system and the transformers convert higher voltage electricity carried by primary
wires and lowers the voltage for use by customers.
Line

Nerves (2012) consider the impact of transmission line rentals on the pricing of
Flexible Electricity Contracts, which allow flexible scheduling of electric energy, using a
no-arbitrage approach. A Flexible Electricity Contract requires the buyer or seller to
schedule the amount of energy to be supplied for each time interval. Given stochastic
models for spot and line rental prices, this approach determines the optimal price of the
Flexible Electricity Contract by determining the opportunities that can be advantageous
to the buyer or seller, and setting the price of the contract such that there is no
arbitrage. Simulations are conducted using spot and line rental price information from
the

Philippine

Wholesale Electricity Spot

transmission line rentals

has

Market.

significant

It

impact

shows
on

that
the

considering
pricing

of

Flexible Electricity Contracts. Futhermore, it also considers the impact of daily and
hourly scheduling provisions on the contract prices.
Consumer Satisfaction
According to Nicola (2012), customers or members satisfaction refers to the
extent to which customers are happy with the products and services provided by a
business. Customer satisfaction levels can be measured using survey techniques and
questionnaires. Gaining high levels of customer satisfaction is very important to a
business because satisfied customers are most likely to be loyal and to make repeat
orders and to use a wide range of service range of services offered by a business.
Thus, Afsar et al. (2010) asserted that acquiring a new customer is always expensive
because it costs higher in the acquisition of a customer than in retention customers as it
happens only when customers have repeatedly purchased the products and services
and the volume of purchase increases.

Customer

satisfaction

has

been

defined

in

various

ways,

but

the

conceptualization, which appears to have achieved the widest acceptance, is that


satisfaction is a post-choice evaluative judgment of a specific transaction (Bastos and
Gallego, 2008). Customer satisfaction is the result of a customers perception of the
value received in a transaction or relationship where value equals perceived service
quality relative to price and customer acquisition costs.
Kotler et al. (2009) mentioned that satisfaction can also be a persons feelings of
pleasure or disappointment that results from comparing a products perceived
performance or outcome with their expectation. In addition, Weimer (2010) states that
the goal of every successful business is to maintain high level of customer satisfaction
by providing their clientele with value added transactions through positive customer
service interaction. Thus, customer satisfaction is an abstract concept and the actual
manifestation of the state of satisfaction will vary from person and product/services to
product/services. The state of satisfaction depends on a number of both psychological
and physical variable which operate with satisfaction behaviors such as return and
recommended rate. The level of satisfaction can also vary depending on other factors
the customer, such as other product against which the customer can compare the
organizations products.
According to Wicks & Roethlein, (2009, p.89), customer satisfaction can be
formed through an affective evaluation process and this affective evaluation is done
following the purchase experience by the consumer. Organisations that consistently
satisfy their customers enjoy higher retention levels and greater profitability due to
increased customers loyalty. This is why it is vital to keep consumers satisfied and this

can be done in different ways and one way is by trying to know their expectations and
perceptions of services offered by service providers. In this way, service quality could
be assessed and thereby evaluating customer satisfaction.
Furthermore, according to Ramirez (2010) the importance of customer
satisfaction is apparent when you realize that, without customers, you dont have a
business. A single unsatisfied customer can send more business away from your
company than 10 satisfied customers. The more you focus on customer retention and
customer support, the more long term business youll get. Its worth it to focus on
customer satisfaction strategies, no matter how large or small your company is. A big
part of customer satisfaction is reliability. If customers come to expect a certain mode of
behavior from you and your employees, you should deliver it to them each and every
time. Customers want to be able to rely on you. They expect consistent delivery time (if
applicable) and support. By training your employees to treat all customers with the
same respect, your customers will all have the same experience with your company,
which will increase customer satisfaction. Thus service quality acts as a determinant of
customer satisfaction (Wilson et al., 2008,)
Wicks et al. (2009) has been proven that an organization which consistently
satisfies its customers, enjoy higher retention levels and greater profitability due to
increase customer loyalty. For this reason every company works hard daily to win the
hearts of customers by satisfying them in order that they become loyal customers to
their brands in order to increase sales and profit.
Measuring customer satisfaction could be very difficult at times because it is an
attempt to measure human feelings. It was for this reason that some existing researcher

presented that the simplest way to know how customers feel, and what they want is to
ask them this applied to the informal measures (Levy, 2009, p. 6; NBRI, 2009).
Ahmed et al., (2010) conducted a mediation of customer satisfaction relationship
between service quality and repurchase intentions for the telecom sector among
university students, with SERVQUAL models 5 dimensions (tangibles, responsiveness,
empathy, assurance and reliability) by Parasuraman et al. (1988) to measure service
quality.
Tangibility
Srinivasan (2012) stated that in a service enterprise, consumers often rely on
tangible evidence that surrounds the service to form their own evaluation of the service.
It can be a variety of objects such as carpeting, desks, lighting, wall colours,
correspondence, brochures and the appearance of the firms personnel. The tangible
components focus on two dimensions - equipment and facility and personnel and
communication. In other words, the tangible dimension is about creating first hand
impressions. A company should want all their customers to get a unique positive and
never forgetting first hand impression, this would make them more likely to return in the
future. This is an evidence of facilities, personnel, and communication materials used by
the company while offering services to customers. Tangibles also vary in availability of
kids corners, parking spaces, recreational facilities, food courts. cleanliness, ambience,
maintenance, range of products, layout, shelves, aisles, display signs, promotional
islands and assortments. On other hand, it refers to the physical characteristics
associated with the service encounter, the physical surroundings represented by objects
(for example, interior design) and subjects (for example, the appearance of employees).

Verma (2008) related that tangible part of product or service package may
include product or equipment. The facility is intentionally designed to encourage the
customer to continuously transact with the activities in the firm. Designs that can be
seen and touched can catch the attention of the customers. Truly says, tangible cues
are directly or peripherally part of a service that can be brought into focus through the
physical representation strategy. If you want to receive a good impression with your
facilities, consider your tangible object representation including the appearance of
employees.
Reliability
Srinivasan (2012) said that reliability refers to the consistency and dependability
of a firms performance. The customer might take to know whether the firm provides the
same level of service each time or its quality varies with each service encounter. It has
been generally found that number of service firms fail to keep up their promises. The
result is that the consumer is willing to pay only when the service provider provides
transactions as promise. Failure to provide reliable service translates a service firm to
an unsuccessful firm.
Vicor (2009) defined reliability as the probability that a device will perform its
required function under stated conditions for a specific period of time. It is the service
company ability to deliver promises on time, ability to perform the promised service
dependably and accurately. It can be measure through speed of service and accuracy
of transactions. Reliability is the consistency of measurement, or the degree to which an
instrument measures the same way each time it is used under the same condition with
the same subjects.

At all times the service providers should be reliable in giving service to the
customer. Performing and maintaining a sincere service to the customer at all times
should be deployed in this way members will retain. Services should be available at all
times so that as members want it, they can have it. It involves working with all your
heart for you to perform the task easily and deliver it without errors. Thats why reliability
rated as the most important dimension as observed by the majority. Reliability is
connected to the consistency of performance and dependability, this aspect includes
keeping promises, showing a sincere interest in solving problem, give right service the
first time, providing the service at the time the company promises to do so and trying to
keep an error free record. It is about showing interest in solving a problem.
Responsiveness
Srinivasan (2012) asserted that responsiveness refers to the readiness of the
employees of the service firm to provide service in a timely manner. It reflects the
preparedness of the firm to provide the service. Sometimes, services are not advertised
till the delivery systems are finetuned and prepared to handle large incoming volumes in
order to meet the customers expectations. In addition, responsiveness is adopting a
can-do attitude, and a willingness to go the extra mile for the customer. Thus, De Silva
defined responsiveness as the outcome that can be achieved when institutions and
institutional relationships are designed in such a way that they respond appropriately to
the universally legitimate expectations of individuals. It is said that it can be viewed from
two angles. Firstly, the user of the health care system is often portrayed as a consumer,
with greater responsiveness being perceived as a means of attracting consumers.
Secondly responsiveness is related to the safeguarding of rights of patients to adequate

and timely care. On the other hand, it is willingness to help customers and provide
prompt service. It also measures the speed of response to complaints and concern,
desire for assisting.
Responsiveness means working hand on hand with the customers. Being
responsive to customers is the baseline of all interactions with them. This serves as the
starting point. If your organization cannot deliver on its promises, then customers will
look elsewhere. It involves working with customers to find better ways to meet their
needs. Time is a very important factor for the entire individual as what the saying goes
every second counts.
Assurance
Srinivasan (2012) declared that assurance is a reference to the courtesy
extended by the service firm to its customers and its competence of service, in addition
to the security of the operations. The firm should have the skills to compete service, be
it professional or knowledge service. The firms personnel should interact with the
customer in a polite and friendly manner and with consideration. Security reflects
customer feelings when he takes the service from the firm that he is free from danger,
risk or doubt. High quality satisfying service requires that a firm understand the
members need in details as also the operational constraints. One of the best factors
customer look into the firm they are transacting with is the security. Of course, everyone
wants secure transaction every time they do so. It gives the factor of how secured they
are if they enter in that firm. The effectiveness and efficiency of the services relies
surely on the security basis. Service providers are expected to be the experts of the

service theyre delivering and building a good relationship towards its members by
developing their trust and confidence to the firm.
Furthermore, the degree courtesy of service providers workers and their ability to
communicate trust to customers. Assurance and empathy involve some of the
dimensions that have been done away with like communication, credibility, security,
competence, courtesy, understanding/knowing customers and access. This is because
these variables did not remain distinct after the two stages of scale purification,
(Parasuraman et al., 1988, p.23). Assurance may vary in concern for customers, staff
attitude, security for transactions, parking.
Empathy
Srinivasan (2012) claimed that a service firm should have the ability to
experience a customers feelings as its own. Empathetic firms understand customer
needs and make their services acceptable to their customers. It should emphasize the
importance of attitudes and performance of contact personnel on how they deal with
their customers. Employees give personal attention towards customer for every concern
they arouse. This includes the ability to show customer that the service provider care
about him. Thus, it is a way of putting our feelings in the customers shoes which gives
way of understanding to their feelings and positions regarding the services they have
rendered. If we try to enter their feelings, we can access how satisfy or dissatisfy they
are on the services. Being able to build good relationship with the customer,
understanding their needs and providing them with personalized services are very
essential.

In fact, Morrison et al. (2009) emphasized empathy as a complex psychological


phenomenon that defies easy definition. In general it refers to the process by which
people identify another persons emotional and mental state. Parasuraman described
empathy as caring individualized attention the firm provides to its customers. Empathy
also characterized ease of communication, attention and patience of the sales staff.
However, it is the care and importance of the service provider gives to an individual
customer, and the degree to which specific customer needs and preferences can be
understood and articulated.
Theoretical and Conceptual Framework
This study is anchored on the work of Oliver (2007) which stated that satisfaction
is a judgment that a product or service feature or the product or service itself, provided
(or providing) a pleasurable level of consumption- related fulfillment including levels of
under or over fulfillment.
In fact, it is also based on Davao Del Sur Electric Cooperative Service
Memorandum No.086758 signed by Member Services Department Chief Mr. Ferdinand
D. Canastra which states that the nature of services they offer are meter, service drop,
streetlight, transformer, pole and line.
With regards to the level of consumers satisfaction, the researchers anchored
the study on the viewpoint of (Parasuraman et al., 1988; Zeithaml et al., 1990) that the
basis of the customers for evaluating the quality of service are the five key dimensions
which includes tangibility, reliability, responsiveness, assurance and empathy. They
reported further that, regardless of the service being studied, reliability was the most

Independent Variable

Dependent Variable

Consumers
Satisfaction

Consumer Service

Meter

Service Drop

Streetlight

Transformer

Pole

Line

Tangibility

Reliability

Responsiveness

Assurance

Empathy

Figure 1. Schematic Diagram Showing the Variables of the Study

important dimension, followed by responsiveness, assurance and empathy. The


intangibles were of least concern to service customers.
The conceptual framework of the study is shown in Figure 1. The independent
variable is the consumer services of Davao Del Sur Electric Cooperative in terms of
meter, service drop, streetlights, transformer, pole and line and the SERVQUAL
approach to measure ] the satisfaction as the dependent variable.
Significance of the Study
The reason of this study is to determine the satisfaction of consumers in services
of Davao Del Sur Electric Cooperative. The outcome of this study may serve as a
reference of the following:
Davao Del Sur Electric Cooperative. The findings of the study will serve as
reference for the administration to determine their strength and weaknesses regarding
their services to their consumers.
Consumers. The findings of the study will serve as an eye opener for the
consumers to look for quality services that will give them satisfaction regarding to their
consumer services.
Future Researchers. Apart from improving their writing skills and confidence in
conducting a research study, this study gives the researcher a sense of academic
fulfillment and pride.
Definition of Terms
The following terms are defined for better understanding of the study. These
terms are elaborated based on their conceptual and operational uses:

Consumer Services. The term is defined as an enterprise or organization


owned by and operated for the benefit of those using its services (www.meriamwebster.com/dictionary/cooperative). In this study, this is relatively combined with the
sub-variables namely: meter, service drop, streetlight, transformer, pole and line.
Consumers Satisfaction. The term is defined as

a measure of how products

and services supplied by a company meet or surpass customer expectation


(http://en.wikipedia.org/wiki). As used in the study, it measures how convinced are the
consumers with regards to the service quality, namely: tangibility, reliability,
responsiveness, assurance and empathy.
Davao Del Sur Electric Cooperative. The term defined as a cooperative which
is tasked with the delivery of a public utility such as electricity, water or
telecommunications to its members. (http://www.thefreedictionary.com/electriccoop) As
used in this study, ,this refers to the sole distribution utility that delivers power to Digos
City and nearby municipalities of Davao del Sur.

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