1

Order Winners, Order Qualifiers, and Quality Perception in Service Operations

Autoria: Eliane Pereira Zamith Brito, Ricardo Luiz Beneduzzi Aguilar, Luiz Artur Ledur
Brito
Abstract
Car assemblers and their dealers have been developing strategies to avoid losing customers of
maintenance service business after the vehicle warranty period. However, the results of those
initiatives have been disappointing considering that only 25% of the car maintenance market
is served by authorized car dealers. Through the analysis of customer expectations about
service it was possible to identify means to better deal with customers and increase the
probability of their retention, adjusting operations design and variables. This study identified
the service attributes customers perceive as order qualifying and order winning factors in the
decision about the car maintenance service provider. Data were collected from a probabilistic
sample of some 400 owners of 1995 to 2002 1000cc powered engine cars in Uberlndia,
Brazil. Analysis was done integrating operations and marketing conceptual approaches using
several multivariate techniques. Authorized dealers offer proved to be strategically weak,
focused in order qualifiers rather than order winners. Directions for improvement in the
operations of both authorized dealers and independent shops could be derived.
Introduction
The automotive industry, in Brazil, is one of the major industries in the country with over 16
billion dollars of net sales in 2001 (ANFAVEA 2004, p. 50). This paper is concerned with a
closely related industry, the car maintenance business. The Brazilian fleet was 16 million cars
in 2001, while sales of new cars totaled 1.3 million units (ANFAVEA, 2004). Assuming the
standard one year warranty period, more than 14 million car users had eventually to choose
where to have his or her car repaired. Another aspect is age distribution of the Brazilian fleet
of cars. The average age was, in 2001, 9.8 years, 36.8% of the cars between one and five
years, and 25.3% between six and ten (FENABRAVE, 2003). Two types of service providers
serve this market. The service department of authorized car dealers is the first alternative
offered to the customer, at least during the warranty period, after the acquisition of a new car.
The other alternative is the independent repair shop.
The importance of maintenance service to the network of car dealers linked to the car
assemblers is increasing. According to FENABRAVE (2001) the after sales service increases
dealers productivity and profitability. Those services, which include sales of parts and
maintenance service, can diminish the dealer dependence on car sales that have heavily
fluctuated during the 90s in Brazil. Urdan (1999) studied the change in operational results
composition of authorized dealers finding that the share of parts and services department rose
from 15% in 1989 to 46% in 1996.
Although the after sales service is an important revenue source to the authorized car dealers,
most consumers use the network of independent maintenance supplier after the warranty
period. According to ABRIVE (2003), 75% of the total car maintenance services are done in
independent shops, leaving only one fourth of the business to the authorized dealers. Given
the initial lead represented by the warranty period, when the authorized dealers have the
chance to demonstrate their service quality to all customers, this situation should be quite
concerning to them. On the other hand, independent shops can face a potential challenge

should the authorized dealers improve their performance, given the lead the latter have during
the warranty period.
The present study addressed the customer choice related to this situation. It objective was to
identify the attributes that determine this choice and, consequently, how the service offers of
both providers could be improved and adjusted to customer preferences.
Marketing usually addresses this issue from the perspective of customer satisfaction
evaluation. The assumption is that satisfied customers are expected to be more loyal. A
prolific stream of literature on service quality evaluation has been developed, of which the
SERVQUAL scale (PARASUNAMAN; BERRY; ZEITHAML, 1988) is one of the most well
known scales used. Operations strategy, on the other hand, attempts to reconcile market
requirements and operations resources (SLACK; LEWIS, 2003). Hill (1993) introduced the
idea of order winning and order qualifying factors as an approach to determine the ideal
design of an operation. The market approach in isolation focuses on the perception of quality
of the current service provider, leaving in the background the weight of the alternatives
offered to the customer. It also does not develop what should be done in the operation as a
consequence of that. The operations approach, on the other hand, does not emphasize the
current relationship of the customer with his or her current supplier. This paper intends to
combine both approaches as a broader way of addressing the problem. An analysis covering
both quality service elements and other attributes related to the design of the operation was
done. A probabilistic sample of 400 subjects was investigated with a structure questionnaire.
Results were analyzed using several multivariate techniques and the main attributes leading to
customer decision could be identified and classified in order winning and order qualifying
factors. The strategic weakness of the authorized dealers offer could be identified and
indications of how the operations of both authorized dealers and independent shops could be
made more competitive were suggested.
In the next three sections, service operations are defined and a review of marketing and
operations approach to service is offered. The methodology used in the research is described
in the following section. Results and analysis are then presented and commented. A
conclusions section ends the paper and suggests path for future research.
The definition and characteristics of service operations
One of the first service definitions is a market transaction performed by an organization or an
entrepreneur without the transfer propriety rights of tangible products (JUDD, 1964 p.59;
1968, p.1). Grnross (1978, 1980) adds that service benefits are delivered through an
interactive experience between customer and people from the service provider and the
intensity of this interaction varies as a function of many factors. This early definition has been
expanded by several authors. Bateson and Hoffman (1999, p. 9-10) point that most services
combine tangible goods with the performance of a number of activities. For example, car
maintenance service is a combination of parts activities developed by people, both necessary
to the delivery the agreed outcome the repaired car. They remember that is hardy to find a
pure service or good and that, in fact, any offer is a combination of services and goods. The
same position is taken by most modern authors (CORREA; CAON, 2002; LOVELOCK;
WRIGHT, 2001).
Grnroos (1978; 1980), Zeithaml and Bitner (2000, p. 12), Zeithaml, Parasuraman and Berry
(1985) describe the main service characteristics in comparison to goods. The most basic and

cited characteristic is intangibility. Services are actions that cannot be seen, felt, tasted, or
touched. This poses some challenges to managers. They cannot inventory service in order to
meet fluctuations in demand. Besides, quality is difficult to be assessed and communicated to
consumers, and the service concept can be easily copied. A second characteristic the high
dependence on human performance, people may act differently each time they execute one
task and customers, for many reasons, can also perceive the action differently any time they
receive the service. This heterogeneity is also hard to manage. Thirdly, the production and
consumption of service usually occur simultaneously and to be convenient service has to be
produced close to customer, resulting in small-scale production process. Therefore, most
services cannot benefit from significant economies of scale. Perishability is another service
characteristic. Customer cannot have propriety rights linked to service as well as return or
resold since is not possible to inventory them. Planning and production are consequently
important activities in the management of service.
Another view is that all these differences are more an issue of grade than of nature.
Perishability, for instance, is frequently a characteristic of goods too, with similar implications
in inventory and planning. A BigMac, for instance, has only a few minutes of lifetime before
it is discarded as unfit for consumption. In this sense, it becomes quite acceptable to adapt
many of the operations approaches and techniques, initially developed for manufacturing to
services (CORREA; CAON, 2002).
Both marketing and operations fields offer approaches to analyze service performance. The
next two sections explore, in an integrative mode, these two approaches, leading up to the
approach taken by this research.
Marketing approach to service and customer satisfaction
The marketing service literature tries to understand the consumer choice for service provider
through the analysis of customer satisfaction models such as SERVQUAL. On the other hand,
operations literature addresses a closely related issue considering the matching of market
requirements and operations resources.
There is a rich line of research in marketing on evaluation and measurement of customer
satisfaction. According to Parasuraman, Berry and Zeithaml (1991) the service quality
evaluation results from a comparison between what is expected by customers and the service
received. The expectation can be used here in two different ways. Expectations can be
understood as the way customers believe the service is going to be delivered and secondly it
can be related to the service desired by customers. Berry and Parasuraman (1991, p.59)
emphasize the evidences that expectations are dynamic and vary due to many factors. They
also explain that there is a layer bellow the desired level that can be acceptable what they
called as zone of tolerance. The minimum acceptable level of service is called adequate
service. Two factors can affect the desired service level - the enduring service intensifiers and
the personal needs. Five factors influence the perception of service as adequate: transitory
service intensifiers, perceived service alternatives, customer self-perceived service role,
situational factors, and predicted service.
Parasuraman, Berry and Zeithaml (1985) developed a model to measure quality of service
after consumption. It is called SERVQUAL and it is probably the best known model used to
measure quality of service. It focuses on measuring quality perception after customer has
received the service. The SERVQUAL evaluates customer satisfaction using five dimensions:

reliability, tangibles, responsiveness, assurance, and empathy (PARASURAMAN; BERRY;

ZEITHAML, 1991). The dimensions of service quality were well discussed by many authors,
but there seems to be no agreement among them. Harrison-Walker (2002) proposes two
dimensions, Carman (1990) poses that dimensions depends on the sector analysed. Bouman
and Wiele (1992, p.10-12) present a tri-dimensional perspective to quality measurement to
automotive services. These authors initially developed their scale using the five dimensions of
SERVQUAL. However, their research findings could not support those five dimensions. The
authors proposed then only three dimensions: courtesy to customer, tangibles, and trust.
Rodrigues (2001, p.120) developed a study on perception of service evaluation in the
Brazilian market identifying factors such as service price to the customer, service lead-time,
honesty of service provider and trust in the service provider personnel as important to
customers perception of quality. He concluded that service seems to be a tri-dimensional
construct and this number of dimensions tends not to vary. The dimensions defined by the
author are tangible elements, interaction between customer and service provider, and the
service provider responsibility. Although the names given by authors to some quality service
dimensions are different, there seems to have some convergence between Grnroos (1984, p.
42), Sureshchandar, Rajendran and Anantharaman (2002), Rodrigues (2001), and Bouman
and Wiele (1992) about the importance of customers and employees relationship. There is
also convergence about the tangible dimension. Sureshchandar, Rajendran and Anantharaman
(2002, 2001) and Sureshchandar, Rajendran and Kamalanabhan (2001) observed that aspects
related to humans are more relevant than those technical aspects to deliver quality service.
They want to emphasize the importance managers have to give to human resources, instead to
the other aspects. Maybe because of this approach, focused on the evaluation of an already
decided service supply, price rarely comes into consideration when evaluating services.
Bouman and Wiele (1992) and Rodrigues (2001) adapted the SERVQUAL dimensions in
order to have a scale adjusted to evaluate the automotive service. An important different
between the Bouman and Wiele (1992) proposed scale and SERVQUAL is that the former
use only one question to measure expectations and perception. Differently, Rodrigues (2001,
p.119) explains that he adapted the SERVQUAL scale, because he wanted to measure
something different. The idea is not to measure the perceived quality service, but what
customer expects about the service he or she is just to buy, as done in the present study.
Most of these works focus on evaluation of quality perception and not on the decision taken
by the customer to maintain or change current service supplier. There is a hidden assumption
that highly satisfied customers tend to be loyal. This relationship between loyalty and
customer satisfaction is covered by other authors (JONES; SASSER, 1995; HESKETT et al.,
1994; REICHHELD; SASSER, 1990; REICHHELD, 1996; SCHNEIDER; BOWEN).
Fitzsimmons and Fitzsimmons (2002) discuss the criteria used by customers to select a
service provider. The focus is on the phase before the buying decision. The criteria cited by
the authors are availability or accessibility, convenience or location, reliability, customization,
price, quality measure through the comparison between before and after service quality
perception, service provider reputation, guarantees, and responsiveness. This list of criteria
has a substantial overlap with the attributes analyzed by Parasuraman, Berry and Zeithaml
(1985). It is important to note, however, the inclusion of price and reputation that can be used
in the decision process of service provider.

The focus of this study is the analysis of the complex situation where a consumer is engaged
in a continuing relationship with a service provider. In this case, all the theoretical analysis of
his satisfaction with this service is thus applicable, but he or she is constantly exposed to the
offer of an alternative service provider. His satisfaction with the current supplier has clearly a
bearing to his future choices, but it interacts with the nature and characteristics of the
alternative offer. His process of choice is then more complex than simply analyzing his
satisfaction. Most of the marketing literature is then covering one aspect of this decision
situation. The operations management literature offers a complementary perspective to the
above development.
Order winning and order qualifiers
Slack and Lewis (2003) and Hill (1993) define Operations Strategy as the reconciliation of
market requirements and operations resources. The market requirements are expressed in
terms of performance objectives categorized into quality, speed, dependability, flexibility,
degree of customization, innovation, and cost. These performance objectives constitute a link
between the market determined competitive factors and the operations resources that
influence performance. One way to assess the relative importance of the competitive factors
was offered by Hill (1993) with the concept of order-winning and order-qualifying factors.
The basic approach is the concept of fit: adjusting the operations parameters as to achieve a
determined specified level of performance. Hill explains that the Operations Department is
not responsible by all order winning factors. Factors such as brand name, design leadership
have to be managed by other areas in the company.
Hill (1993, p.43) says that the idea is to define the criteria are important to customer decision.
These criteria have to be defined clearly at the business strategy level otherwise managers will
determine their own standard for the business. He also notes that most companies are in
markets characterized by differences that have to be understood in details in order to craft the
offer to the chosen market segment. This discussion refers to production of tangible goods,
but the reasoning can be used to services as well.
According to the author, order qualifiers are those criteria that the company must comply with
to be considered as a possible supplier. Having a good performance in these criteria, however,
is not enough to win the orders and exceeding the threshold limit for these factors influences
nothing or very little in the customer final decision. The order-winner criteria are those that
make up the company differentiation in comparison to the competitors and allow suppliers
that hold them to win the orders. The higher a supplier scores in these factors, the higher the
chances of winning the order. Both groups of criteria are essential to the business success.
Therefore, suppliers must guarantee meeting the qualifying criteria in order to get into and
stay in a market place, while performance in the order winning criteria is the key to win the
battle for customers preference.
The definition of criteria and their classification into qualifying or winning order categories is
a task that must be reviewed over time and Marketing and Operations have to walk hand to
hand in the process, otherwise unrealistic requirements can emerge. Hence, there is a clear
need of connecting marketing and operations approaches especially when dealing with a
practical and competitive situation.
The situation this research intends to explore can be better understood by integrating both
approaches previously described. Customers, in this case, car owners, are more or less

involved in a sequential stream of service encounters with one or both types of service
providers (authorized dealers and independent repair shops). Their satisfaction with previous
service deliveries has certainly an influence on future decisions and may even lead to loyalty
to a particular service provider. When they make a new decision, however, they consider
additionally the different attributes of the possible offers (the order qualifiers and order
winners) and make a new choice, continuing the process. The next section describes this
approach in detail.
Methodological approach
The population analyzed can be described as owners of 1995 to 2002 1000cc powered engine
cars of Uberlndia City (state of Minas Gerais in Brazil). A probabilistic sample consisting of
400 car users was drawn, so research results can be said to represent the population analyzed,
ensuring external validity. The selection used data on city population held by the research
institute that conducted the interviews. Data were collected in November, 2003.
A structured questionnaire was used to evaluate 30 service attributes. The field research used
as starting point the scale developed by Rodrigues (2001). This author built a 27-variables
scale to analyze consumer expectation of automotive service before the buying decision.
Other three variables were included to compose the actual scale used in this research
following our discussion on marketing and operations approaches. Those variables were
organizational image (GRNROOS, 1984; FITZSIMMONS; FITZSIMMONS, 2002), trust
(MAYER; DAVIS; SCHOORMAN, 1995) and price (FITZSIMMONS; FITZSIMMONS,
2002). This list of 30 attributes is thus a comprehensive list of all factors the customer could
consider when renewing his choice of service supplier. The scale was then submitted to a
series of qualitative pre-tests until a clear understanding was achieved among respondents.
The affirmatives proposed related to the variables listed in Exhibit 1.
Equipments general condition
Site general condition
Employees appearance
Keep the established schedule
Capabilities to absorb not estimated costs generated
by internal problems or fails
Stick to the forecast and prices
Receipt correction and precision
Do right at first time
Keep promises
Pay attention to modifications demanded by the
customer
Disposition to solve customers problems
Disposition to explain de service development
Attendants disposition and quick response
Dedication to the service details
Disposition to communicate price changes

Attendants ability to be trusted

Employees knowledge and experience
Employees courtesy and politeness
Organization climate and environment
Organization capability to anticipate possible
problems
Employees discretion
Adequate opening hours
Disposition to adapt to customer schedule
Company openness to negotiate
Employees disposition to know customers
Company disposition to adopt specific solutions
Individual and personal attention
Trustful mechanics
Image of being reliable
Value for money service

Exhibit 1 Research variables list

Source: The authors

Personal interviews were conducted to gather the research data. First, respondents had to
inform their options for car maintenance after the warranty period (independent shop or
authorized dealers) and several demographic and car characteristics. Then they were asked to
evaluate how they expected both authorized dealers and independent shops to perform in each

one of the 30 selected attributes. Finally, respondents had to identify and rank, among the 30
variables, the six attributes they judged most relevant for their choice process.
The data were analyzed using descriptive statistics and several multivariate techniques. A
logistic regression was developed using as a dependent variable the choice for one type or
another of service provider as informed by respondents. The results highlighted which factors
led to this choice and their relative importance. Factor analysis was used to judge the scale in
comparison to previous studies testing scale validity and reliability. Other multivariate
techniques offered further understanding of customer decision process.
Results and research findings
Two thirds of respondents were customers of independent shops, coinciding closely with the
data declared by FENABRAVE (2003a), the official speaker for the sector. Respondents were
predominantly from the male gender (75%). One possible explanation for this could be that
the car maintenance role in most families is still taken by men. One of the filters used in the
research was the requirement that the respondent was responsible for the car maintenance.
The first stage of the analysis was to conduct a factor analysis on the 30 attributes
investigated. Analysis was done separately for the evaluations of independent shops and for
the authorized dealers evaluations. The factors extracted were compared to and matched the
dimensions examined in previous studies as in Rodrigues (2001). Construct validity could then
be assured.
Initially each group of variables was subjected to the Bartletts sphericity test and KaiserMeyer-Olkin (KMO) check for sample adequacy and no problems were identified, ensuring
the sample and data were adequate for the factor analysis procedure. Factor analysis was done
using the principal components method and Varimax rotation of the resulting factors. Results
indicated three factors corresponding to the dimensions identified by Rodrigues (2001) for the
same service context (car maintenance). Tables 1 and 2 shows the factor loadings and the
values of Cronbachs Alpha for the independent repair shops and authorized dealers
respectively. Results indicate consistency of the identified dimensions ensuring construct
validity and reliability. This was an expected result since most the selected attributes were
based on the tested and validated instrument developed by Rodrigues (2001) which also had
its origins in the validated SERVQUAL developed by Parasunaman, Berry and Zeithaml
(1988).
The first extracted factor can be related to the Customer Relationship factor identified by
Rodrigues (2001) and captures the elements related to the process of service delivery. The
second factor can be associated to the Supplier Responsibility factor of the same research that
covers the content of the service. The third factor refers clearly to the Tangible Elements
dimension, also identified by Rodrigues (2001).

Table 1 Evaluation of independent shops factor analysis

Source: Authors
Components
Disposition to adapt to customer schedule
Employees discretion
Value for money service
Employees disposition to know customers
Adequate opening hours
Individual and personal attention
Trustful mechanics
Employees courtesy and politeness
Company disposition to adopt specific solutions
Attendants disposition and quick response
Attendants ability to be trusted
Company openness to negotiate
Image of being reliable
Organization climate and environment
Disposition to communicate price changes
Capabilities to absorb not estimated costs generated by internal problems or fails
Pay attention to modifications demanded by the customer
Keep promises
Disposition to explain de service development
Disposition to solve customers problems
Do right at first time
Receipt correction and precision
Stick to the forecast and prices
Organization capability to anticipate possible problems
Dedication to the service details
Employees knowledge and experience
Site general condition
Equipments general condition
Employees appearance
Keep the established schedule
Cronbach -

1
.744
.678
.661
.654
.653
.625
.615
.589
.584
.576
.573
.543
.542
.537
.507
.432
.145
.238
.406
.387
.305
.260
.210
.471
.491
.445
.133
.171
.235
.325
0.932

2
.114
.340
.222
.121
.167
.312
.300
.488
.330
.493
.473
.248
.321
.480
.319
.261
.767
.744
.678
.631
.630
.592
.583
.552
.532
.496
.286
.230
.247
.396
0.917

3
.197
.116
.058
.296
.062
.271
.239
.176
.119
.213
.189
.336
.378
.184
.212
.363
.300
.346
.050
.307
.382
.266
.270
.147
.174
.346
.815
.814
.680
.479
0.808

Table 2 Evaluation of Authorized Dealers factor analysis

Source: Authors
Components
Disposition to adapt to customer schedule
Adequate opening hours
Individual and personal attention
Employees disposition to know customers
Employees discretion
Company openness to negotiate
Company disposition to adopt specific solutions
Value for money service
Disposition to explain de service development
Keep promises
Do right at first time
Pay attention to modifications demanded by the customer

1
.763
.688
.659
.655
.653
.641
.634
.533
.500
.154
.112
.145

2
.135
.097
.251
.232
.171
.266
.260
.453
.464
.766
.718
.713

3
.120
.161
.089
.090
.315
.205
.118
.153
.141
.211
.226
.282

Attendants ability to be trusted

Keep the established schedule
Trustful mechanics
Disposition to solve customers problems
Organization capability to anticipate possible problems
Attendants disposition and quick response
Employees knowledge and experience
Dedication to the service details
Employees courtesy and politeness
Disposition to communicate price changes
Image of being reliable
Organization climate and environment
Site general condition
Equipments general condition
Employees appearance
Stick to the forecast and prices
Receipt correction and precision
Capabilities to absorb not estimated costs generated by internal problems or fails
Cronbach -

.318
.154
.390
.387
.234
.519
.242
.505
.459
.165
.183
.309
.027
.067
.225
.285
.394
.279
0.879

.685
.611
.598
.573
.567
.563
.539
.524
.507
.501
.499
.420
.167
.189
.330
.209
.147
.251
0.922

.172
.239
.189
.192
.207
.138
.388
.176
.295
.004
.339
.407
.824
.790
.586
.548
.467
.384
0.752

Having established construct validity, the analysis now focuses on the decision factors. The
responders at the end of the interview indicated the importance of each factor, by selecting and
ranking the six most important factors they considered when making a decision. The ten most
important factors presented in Exhibit 2 for both groups. For the selection of this list, the
factor ranked first received a weigh of six, the second five, the third four and so on. This way
of ranking followed the study of Carvalho and Leite (1997). Results are very similar for both
groups.
Current users of independent repair shops
Stick to the forecast and prices
Value for money service
Do right at first time
Trustful mechanics
Keep promises
Disposition to solve customer's problems
Keep the established schedule

Current users of authorized dealers

Do right at first time
Value for money service
Trustful mechanics
Stick to the forecast and prices
Employees knowledge and experience
Keep the established schedule
Keep promises
Pay attention to modifications demanded by the
customer

Employees knowledge and experience

Pay attention to modifications demanded by the
customer
Disposition to solve customer's problems
Equipments general condition
Equipments general condition
Exhibit 2 Most important decision factors indicated by consumers groups
Source: Authors

These are the factors the consumers say they consider when making a choice. The related
question is whether service providers should design their operations accordingly. This type of
analysis has several limitations. First, the consumers may not be telling the whole truth, they
may say they value these aspects, but their actions may not support this. The fact that both
groups identify the same aspects is an indication of this since they make different choices.
Second, some aspects may be deemed important, but if all alternative providers have a similar
offers they will not influence the decision. In the operations management jargon, they will be
order qualifiers, but not order winners. A further analysis is necessary.

10

The next step in the analysis was to perform a logistic regression with the choice of service
provider as the dependent variable and the consumer evaluation of his/her current supplier in
each of the attributes as independent variables. The logistic regression suits itself perfectly for
this application. The interpretation of the coefficients of the logistic regression indicates which
attributes are associated to an increase or decrease of the probability that a customer will chose
one or another service supplier.
The dependent variable was coded 0 choice for an independent supplier and 1 choice for a
authorized supplier. The sign of the coefficients of the logistic regression for each attribute
indicate its association with one or another service provider. Coefficients with negative sign
contribute to the regression leading to zero. These attributes are associated to the choice of an
independent supplier. On the other hand, positive B coefficients show attributes are associated
to the choice for an authorized dealer as a supplier.
Table 1 presents the results of the logistic regression. It includes the B coefficients resulting
from each variable, its respective standard deviation, the statistics Wald (ratio between the
coefficient and its standard deviation, squared) and the calculated statistics significance. Only
the attributes p-values less than 0.05 were included in Table 3.
Table 3 Main attributes influencing customer choice
Source: The authors
Employees appearance
Image of being reliable
Equipments general condition
Site general condition
Attendants disposition and quick response
Company openness to negotiate
Value for money service
Disposition to solve customers problems
Constant

Coeficient B

Std error

Wald

Sig.

0,792
0,585
0,521
0,368
0,352
-0,362
-0,468
-0,475
-11,365

0,154
0,130
0,188
0,164
0,137
0,112
0,097
0,128
1,423

26,400
20,317
7,691
5,025
6,637
10,476
23,438
13,679
63,798

0,000
0,000
0,006
0,025
0,010
0,001
0,000
0,000
0,000

The attributes that are associated to customers choice for an authorized supplier are related to
visual and appearance attributes, with emphasis on the personal presentation of the contact
attendants (B= 0,792), the general state of the equipment (B= 0,521) and the general state of
the facilities (B= 0,368). The image of reliability of the company in the market (B= 0,585) and
the availability and support of the contact attendants (B= 0,352) also characterize the
evaluation of those that opt for an authorized supplier.
Disposition to solve customers problems, company openness to negotiate and value for
money service are attributes that regular customers of independent shops tend to value higher.
This can be interpreted as the perceived ability that independent shops have to adapt itself to
customers demand. The value for money attribute (B= -0,468) is the one that contributes most
to the choice of an independent supplier, followed closely by the attribute disposition to solve
the customers problem (B= -0,475).
The logistic regression showed that these are the attributes where differences in performance
evaluation do exist. It does not imply in causation. One attribute may be valued differently
simply because the two suppliers have different characteristics. For example, employees
appearance is clearly better evaluated by customers of authorized dealers, but this may be

11

simply a consequence of a common practice by all authorized dealers. Since all have
employees with better appearance, the factor showed up as differentiation factor. The
additional question of relevance is which of these factors (where the differences are perceived)
is truly important for customers decision? The solution is to cross check this list of factors
with the factors deemed important for the decision by customers (Exhibit 2). The intersection
of these two sets of attributes constitutes the attributes that are important and where the
customers perceive a difference in performance.
Only value for money service, disposition to solve customers problems, and site general
condition meet both these criteria. Most of the attributes where the current consumers evaluate
the authorized dealers better are not in the list of important attributes. This indicates a serious
flaw in the strategy of authorized dealers. They are being different (better) in attributes, the
customer does not use as an important decision criteria. An exception to this is the general site
condition. Independent shops are performing differently better in two highly valued attributes:
value for money and disposition to solve customers problems. These are the two order
winners for the independent shops.
These results are based on the expected evaluation of attributes of the customer current
supplier. We also explored the evaluation of the expectations that these customers have for the
alternative supplier. The attributes evaluated are the same as the ones used to evaluate the
service supplier chosen. The same logistic regression was carried out for the not chosen
supplier and the result is a group of attributes that indicate why a type of supplier was not
chosen. Table 4 presents the results of this regression.
The coefficients of the regression is identify the attributes valued (expectation) differently by
consumers not choosing a certain supplier type. Since the valuation of the attributes referred
now to the supplier not chosen, the more negative the coefficient, the more the attribute is
contributing for the service of the independent supplier not to be chosen. In the same way, the
more positive the coefficient of an attribute, the more this attribute is contributing for the
service of the authorized supplier not to be chosen.
Table 4 Main attributes leading to lost of customers
Source: The authors
B Coefficient
Image of being reliable
Site general condition
Equipments general condition
Employees discretion
Disposition to communicate price changes
Capabilities to absorb not estimated costs generated by internal
problems or fails
Trustful mechanics
Stick to the forecast and prices
Employees disposition to know customers
Employees courtesy and politeness
Value for money service
Constant

Std
Wald
Error Statics

Sig.

-0,941
-0,828
-0,442
-0,283
-0,223

0,148
0,165
0,167
0,130
0,097

40,493
25,162
7,003
4,741
5,240

0,000
0,000
0,008
0,029
0,022

-0,221

0,092

5,792

0,016

0,275
0,358
0,394
0,403
0,537
7,469

0,112
0,107
0,111
0,151
0,118
1,076

6,015
11,109
12,641
7,112
20,690
48,220

0,014
0,001
0,000
0,008
0,000
0,000

12

The main factors where authorized dealers are better evaluated, now by their non-customers
are quite similar to the evaluation made by their own customers, indicating no communication
problem. Image of being reliable, site general condition and equipments general condition
appear in both regressions. Consumers that chose independent shops expect the authorized
dealers to perform better in these dimensions, but despite this, choose otherwise. This is
understandable since only the equipments general condition attribute was included in the list
of most important attributes, and in the last position. Attributes where the independent dealers
are better evaluated are the value for money service, the employees courtesy and politeness,
employees disposition to know the customer, stick to forecast prices and trustful mechanics. It
is important to note that these are performance perceptions by customers currently patronizing
authorized dealers, and so represent their evaluation of a possible supply alternative.
Consumers of authorized dealers expect independent shops to perform better in these
dimensions which implies they perceive to be paying a higher price (value for money
attribute), prices change more often than the competitor does (stick to forecast price), and the
mechanics handling the issue are less trustful. These three attributes were included in the list
of most important attributes influencing the decision. It highlights the weakness of the
authorized dealers offers and the risk that their customers will defect to independent shops.
A summary of the above analysis is presented in Exhibit 3. It shows the attributes where the
evaluation made by the consumers is different. The highlighted attributes are the ones
included in the list of most important attributes the consumers consider when making their
choices. These are the attributes where performance is different and important, the true order
winners.
The chosen type of supplier
Authorized
Independent
Employees appearance
Image of being reliable
Image of being reliable
Site general condition
Authorized
Equipments general condition
Equipments general condition
Site general condition
Employees discretion
Attendants disposition and quick
Disposition to communicate price
Evaluated
response
changes
Supplier
Capabilities to absorb not estimated
costs generated by internal problems
or fails
Value for money service
Disposition to solve customers
Employees courtesy and politeness problems
Independent
Employees disposition to know
Value for money service
customers
Company openness to negotiate
Stick to the forecast and prices
Trustful mechanics
Exhibit 3 Explaining the choice or the no choice of a type of supplier
Source: The authors

Analyzing first column of attributes in Exhibit 3 represents the evaluation of current customers
of authorized dealers regarding their current service provider and the alternative, the
independent shops. Although the authorized dealers are better evaluated in several attributes,
these are not the ones used by consumers to choose. They are probably exceeding in
performance in order qualifier attributes and have only one order winner working in their
favor: the equipments general condition. The independent shops have three order winners: the
value for money service, the stick to forecast and prices and trustful mechanics. These results
indicate the weakness of the authorized dealer supply offer and the need to reconceive their
operations. Their customers are likely to defect at first opportunity.

13

The second column of attributes of Exhibit 3 depicts the evaluation of independent shops by
customers. Their own customers (the lower right quadrant) recognize they perform better in
the value for money service and in the disposition to solve customers problems. These are
rightful order winners and justify their choices. They are also aware that the alternative
suppliers, authorized dealers, perform better in a number of attributes they do not deem so
important. The only aspect they judge important and the authorized dealers do better is the
equipments general condition.
The first logistic regression model was able to predict customer choice in more than 88.4% of
the cases. Omnibus and Hosmer & Lemeshow tests indicated good model performance. The
results of the Omnibus test indicate an adequate performance for the model, in which all
variables included in the analysis picture a significance level above 95%. The calculations of
R-squared of Cox and Snell, which is usually below 1, were also performed. The statistical Rsquared of Nagelkerke is a correction of the statistical value of Cox and Snell, yet its
maximum value is 1. The analysis of these results shows a sound adequacy of the model, in
which the values of R-squared of Cox & Snell and the R-squared of Nagelkerke were 0.498
and 0.692 respectively. Another test to verify the adherence of the model is the zerohypothesis test that the model does not adhere to the results (Hosmer and Lemeshow Test).
The study of the variables resulting from the logistic regression showed positive results, since
the significance value was above 55,3%, well below the 95% necessary to validate the zerohypothesis, therefore rejecting the zero-hypothesis of non-adherence of the model.
The second logistic regression, relating the performance expectation of the alternative supplier
showed also a good model performance. In the results of the Omnibus test all the variables of
not choice showed significance above 95%. The analysis of R-squared of Nagelkerke was
above 0.74, with the inclusion step by step of the 11 variables resulting from the logistic
regression for the evaluation of choice, also showing a good adherence of the model. The
model also showed that the zero-hypothesis, that the model does not adhere to the results, is
not valid, and its calculated significance value was only 10.9%. At last, the predictive capacity
was analyzed. The model showed 89.9% of correct prediction, showing great coherence in the
results and its capacity to predict by measuring the expectations of the services, which supplier
has a greater chance of not being chosen by the client for a service of corrective or preventive
maintenance.
Conclusion
This paper had the intention to study the decision situation faced by a customer in choosing
the service provider for car maintenance. In the Brazilian setting, this choice has two basic
options: using an authorized dealer as a continuation of the service provided during the
warranty period, or using independent repair shops.
An integrative approach combining marketing and operations perspectives was used. Car
maintenance is a service used repetitively by the consumer and each consumer had a current
service provider at the time the research was done. The evaluation of performance of this
service provider had an influence on his subsequent choices. High satisfaction with current
service can lead to loyalty (REICHHELD; SASSER, 1990; REICHHELD, 1996; JONES;
SASSER, 1995). The marketing approach to quality service evaluation covers this aspect. The
customer is also influenced by his perception of the relative value represented by the
alternative offers open to him. Suppliers constantly adjust their operations to have a better fit

14

between the market needs and the operations resources (SLACK; LEWIS, 2003). One useful
approach to do this is to identify the order winning and order qualifying factors and adjust
ones operations to satisfy in the order qualifying factors and perform as well as possible in the
order winning factors (HILL, 1993).
The analysis of the sample chosen has shown a clear weakness in the position of the
authorized dealers in this market. This helps to understand the current market share of these
suppliers that is only 25% when they have the opportunity, during the warranty period, to
demonstrate to all future customers the quality of their offer. The current authorized dealers
customers evaluate them with a better performance in only one order-winning factor, the
equipments better condition. No other attributes, where they were better evaluated, seem to be
order-winning factors. On the other hand, these same very customers expect the competitor to
perform better in three order-winning factors: value for money service, stick to forecast prices,
and trustful mechanics. In other words, they see the competitor (independent shops) offering a
lower cost same value service, more likely to maintain the prices they initially promise, and
trust more the mechanics that will do the job. Additionally, they say these are important
factors for their choice decision. The most likely outcome is future customer defections to
independent shops.
An additional point is that the only attribute where the authorized dealers perform better, the
better condition of the equipments, is not so difficult to imitate. Using the resource-based
approach (BARNEY, 1991), resources that are easily imitable cannot be a source of sustained
competitive advantage, they lead at most to a temporary advantage and with time to
competitive parity. In fact, some independent service providers, mostly part of repair chains
are following exactly this approach.
The model can also be used as a managerial tool to identify initiatives that influence customer
expectations and a strategic guide for rethinking the service operations. Managers can then
work on aspects of the operation related to the qualifying and order winning factors,
considering the two groups of customers. Authorized dealers need to change their approach, or
they will continue to lose customers to independent repair shops. The analysis done indicates a
road map of how it could be done. First they need to neutralize the disadvantage they have in
some order winning attributes. One of the main problems is the perception of a better value for
money of the service offered by the independent shop. The lack of economies of scale in
service is a difficulty, but a joint work with car manufacturers integrating the supply chain and
capturing the benefits from such an integration could be a promising area, since it would be
difficult to imitate. Other important attributes are more easily improved. Guaranteeing prices
and estimates and promoting a direct contact of the customer with a mechanic rather than with
a good looking attendant, but with limited technical knowledge could be possible initiatives.
Second, authorized car dealers could try to leverage those attributes were they are recognized
to perform well. They could try to increase the importance given to these attributes by the
consumer. The close relationship with the car manufacturer implying a more updated
technology background, and the brand image can than turn into decisive resources that cannot
be imitated by the independent shops.
The results of the research can also be used to guide the actions of independent repair shops.
Here the focus point is clearly identified. They need to improve the equipments and site
general condition. This move was already taken by some repair shop chains like Precision
Tune Auto Care, a global chain of repair shops with more than 650 shops worldwide, active in
Brazil since 1999.

15

This research has also several limitations. The sample included only cars with engines of
1000cc. Although these represented 66.7% of the sales of new cars in 2002 (ANFAVEA,
2004), the decision drivers for other types of cars may be quite different. The sample was also
filtered by year of manufacturing of the car and cars manufactured before 1995 were not
included. Research was done in Uberlndia with a probabilistic sample, so results can be
considered to have external validity only for this city. Other regions of the country may have
specificities that lead to different results. The impact of convenience, represented by
proximity of location to customer residence or work can be explored. Two areas for future
studies could broaden the understanding of this situation. One would be to focus the decision
moment that occurs at the end of the warranty period when the consumer has to make a
decision to change of maintain its current service supplier. Another would be to investigate
specifically the customers that do decide for a change and investigate the reasons behind this
decision.
The study of customer evaluation of service operations and his or her decision to choose
among different service providers is indeed a fertile ground for future studies. The problem is
complex and its analysis is better understood by combining different approaches offered by
several fields as this research attempted combining operations and marketing approaches.
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