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The factors affecting customers satisfaction in VNPost corporation

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RESEARCH PROJECT
(BMBR5103)

THE FACTORS AFFECTING
CUSTOMERS’ SATISFACTION
IN VNPOST CORPORATION

STUDENT’S FULL NAME

: PHUNG VIET PHUONG

STUDENT ID

: CGS00019880

INTAKE

: September, 2015

ADVISOR’S NAME & TITLE

: DR. BUI PHI HUNG, DBA

F


Advisor’s assessment
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Advisor’s signature


ACKNOWLEDGEMENT

First of all, I wish to express my most sincere gratitude and appreciation to
Dr. Bui Phi Hung for his initial orientation, valuable guidance, patience and
encouragement throughout the development of this project.
I would also like to send my greatly appreciation to staffs of VNPost Express
Joint Stock Company (VPC), who help me conducting the delivery and collection
questionnaires by hand in shortest time as they could.
Third, I would like to thank all lecturers who transmitted the uncountable

fund and invaluable of knowledge via all modules of MBA program designed by
Open University Malaysia as well as great supports of HUTECH’s admin team. I
could not fulfil this MBA program without them.
Finally, I heartily thank to my family for their great supports and on-going
encouragements. I could not complete this research project without them.


ABSTRACT
Service quality has become one of the top priorities in business nowadays
because it remains customer satisfaction and loyalty, growth and profitability.
Factors affecting customers’ satisfaction are extremely important for businesses in
finding way to fulfill satisfaction to customers thereby gaining success in sales.
Customer’s satisfaction appears only when the company meets the expectations and
needs of customers.
This research reviewed main factors, including service quality, pricing and
payment, distribution channel, and diversifing services, from which affected
customers’ satisfaction in VNP through 150 delivery and collection of
questionnaires. Most of respondents, who are VNP’s customers, are companies.
Data collected were analyzed using SPSS 22 for Window i.e. Cronbach’ alpha
coefficients, factor analysis, and multiple linear regression analysis. The result
indicates that service quality, pricing and distribution channel are good predictors of
customers satisfaction, in which distribution channel is the most important
contribution, while service diversification does not meet the recommended
standards of analysis.
However, all these factors only meet customers’ satisfaction in medium
level. Managers should think over to improve service quality, then lead to satisfy
customers in higher level in case VNP want to survise in today dynamic market.


TABLE OF CONTENT

CHAPTER 1 - Introduction .................................................................................. 1
1.1 Company brief introduction ............................................................................ 1
1.2 Research problem statement ........................................................................... 1
1.3 Purpose of the research ................................................................................... 2
1.4 Scope of the research ...................................................................................... 3
1.5 Significance of research.................................................................................. 3
1.6 Limitation of the research ............................................................................... 3
CHAPTER 2 – Literature review ......................................................................... 5
2.1 Definition of construct – The attributes of ECS .............................................. 5
2.2 Factors influencing on customers’ satisfaction................................................ 6
2.2.1 Customers’ satisfaction ............................................................................ 6
2.2.2 Customers’ satisfaction and its antecedents .............................................. 7
2.2.2.1 The relationship between service quality and customers’ satisfaction 7
2.2.2.2 The relationship between price and payment and customers’
satisfaction .................................................................................................... 9
2.2.2.3 The relationship between distribution channel and customers’
satisfaction .................................................................................................. 10
2.2.2.4 The relationship between service diversification and customers’
satisfaction .................................................................................................. 11
2.3 How to measure customers’ satisfaction ....................................................... 12
CHAPTER 3 – Research methodology ............................................................... 15
3.1 Data collection ............................................................................................. 15
3.2 Research method .......................................................................................... 16
3.3 Data analysis ................................................................................................ 17
CHAPTER 4 – Research finding and analysis ................................................... 18
4.1 Information of customers.............................................................................. 18
4.2 Reliability test .............................................................................................. 19


4.3 Factor analysis ................................................................................................. 25

4.3.1 Factor analysis of Service Quality.............................................................. 26
4.3.2 Factor analysis of Price and Payment ......................................................... 27
4.3.3 Factor analysis of Distribution Channel ..................................................... 28
4.3.4 Factor analysis of Service Diversification .................................................. 29
4.4 Result of study................................................................................................. 31
4.4.1 Relationship between customers’ satisfaction and its antecedents .............. 32
4.4.2 Strongest factor impacting on customers’ satisfaction ................................ 34
CHAPTER 5 – Discussion and recommendations ............................................. 36
5.1 Discussion ....................................................................................................... 36
5.2 Recommendations ........................................................................................... 37
5.3 Limitations of study and further research ......................................................... 40
REFERENCES .................................................................................................... 42
APPENDIX 1: Questionnaire ............................................................................. 46
APPENDIX 2: Presentation of business research .............................................. 50


LIST OF TABLES
TABLE 4.1 – Type of company............................................................................. 18
TABLE 4.2 – Size of company .............................................................................. 19
TABLE 4.3 – Results of reliability of service quality ............................................ 20
TABLE 4.4 – Results of reliability test of pricing and payment ............................. 21
TABLE 4.5 – Results of reliability test of distribution channel .............................. 22
TABLE 4.6 – Reliability test of service diversification .......................................... 23
TABLE 4.7 – The structure of hypotheses after reliability test............................... 25
TABLE 4.8 – Final component matrix of factor analysis of service quality ........... 26
TABLE 4.9 – Final component matrix of factor analysis of price and payment ..... 27
TABLE 4.10 – Component matrix of factor analysis of distribution channel ......... 28
TABLE 4.11 – Component matrix of factor analysis of service diversification ...... 29
TABLE 4.12 – Summary of factor analysis ........................................................... 30
TABLE 4.13 – Model summary of customers’ satisfaction .................................... 32

TABLE 4.14 – Coefficients of customers’ satisfaction (CS) .................................. 32


LIST OF FIGURES
FIGURE 1 – Measuring model for customers’ satisfaction .................................... 12
FIGURE 2 – Theoretical framework of this research ............................................. 13
FIGURE 3 – Distribution of questionaire items ..................................................... 16


ABBREVIATION
BSO:

Breadth of service offering

CCI:

Call center for handling of interrogation

CS:

Customers’ satisfaction

DC:

Distribution channel

DHL:

DHL Express Corporation


ECS:

Express courier service

EMS:

Express Mail Service

FedEx:

Federal Express Corporation

IIA:

Investment in asset

INC:

International and national coverage

IOS:

Integration of service

OTD:

On-time delivery

PAQ:


Price appropriating with quality

PBE:

Pricing attaching to the brand and experience

PP:

Price and Payment

SD:

Service diversification

SSS:

Safety and security of shipment

SQ:

Service quality

TNT:

TNT Express Corporation

ROS:

Reliability of service


UPS:

United Parcel Service

VPC:

Vietnam Post Corporation


CHAPTER 1 – INTRODUCTION

1.1. Company prief introduction
Vietnam Post Corporation (VPC) was established on the basis of
implementing

the

pilot

Project

on

establishing

Vietnam

Posts

and


Telecommunications Group (VNPT) in 2005. VPC has 67 dependent units
(including 63 provincial and municipal posts, National Newspapers Distribution
Company, Datapost Company, VNPost Logistics Company, Training Centre); 02
one-member limited liability companies with 100% of the charter capital held by
the VPC; 03 joint-stock companies with more than 50% of charter capital held by
VPC and 08 associated companies. Currently, Vietnam Post is a member of the
Universal Postal Union (UPU) and has close cooperation relations with almost all
countries in the world. They are striving to become a leading enterprise to provide
post and delivery services, Finance and Retailing services in Vietnam and to be the
best choice for customers.

1.2. Research problem statement
Express courier service (ECS) is indispensable in business activities all over
the world. It helps companies cuting down operating and inventory costs, and
moreover, ECS plays an important role in affecting the capability of most of
companies’ operations such as sales, production, customer support functions,
logistics and storages.
Vietnam’s express industry has grown significantly in recent years thanks to
the opening and booming of Vietnam economy. The growth rate of courier express
market in Vietnam would stay stabilize at 25%-30% in upcoming years (D&T
Express, 2011). Moreover, Vietnam became the official member of World Trade
Organization (WTO) since 2007; thereby leading to growth with the rapid pace of


international business cooperation and the continuous increase of import-export
products of the country, which will create a great business opportunities for the
luxury industry Vietnam Expressway in the near future (Nguyen and Nguyen,
2011).
Currently, there are about 75 express courier companies operating in

Vietnam, including international corporations such as DHL, FedEx, UPS and TNT
accounted for 80% market share, while the share of EMS operated by VPC is only
8% (D & T Express, 2014). Nicolaus analysts (2008) described the market as an
exclusive show orderly group of "multinational" (Parcel Scene one "order
oligopoly", 2008). It is difficult for VPC and small businesses to compete with the
"multinational" in this industry due to the limitations on the quality of service and
value added services. So, by indentifying factors affecting customer satisfaction in
courier services in HCM City, the study may help VPC improving the quality of
their services and improve the competitive position their competition in Vietnam
express market.

1.3. Purpose of the research
The purpose of this study was to explore the factors related to customer
satisfaction in the courier industry in HCMC. Therefore, the topic research aims as
follows:
• To have an overview of the attributes of Express Courier Service.
• Examine the relationship between customer satisfaction and its precursor in
Express Mail Service.
• To identify the factors that most influence on customer satisfaction in the
Express Mail Service.
• To assess the level of customer satisfaction in the Express Mail Service


1.4. Scope of the research
This study was conducted on 150 customers of VPC, in which the majority
are companies related to international business. All 150 copies of questionnaires
were manually moved to 150 respondents. courier staff collected them in a week
after the birth, of course, there are prepared. SPSS 22 for windows (or PASW) was
used to analyze the data collected from the survey. Object sampling is a loyal
customer of VPC who can understand some of the properties of the courier service,

and most of them are organizations and business companies.

1.5. Significane of research
In the current context of intense competition, customer satisfaction is an
important factor for businesses to succeed. Customer satisfaction has become a
particularly important issue in the competitive environment for marketing as well as
service companies, including ECS, because of the competitive advantage and
affecting customers’ loyalty.
With important contributions to the success of CS and growth for VPC, there
is a need to address and evaluate the affected factors on customer satisfaction;
which proposed a number of ideas in an effort to help improve the quality VPC
their services and can meet the customer at a higher level. This also allows VPC to
overcome the biggest current issues and challenges - quality of service - facing in
Vietnam’s express service market in order to survive and growing in today's rapidly
fluctuating market.

1.6. Limitation of the research
Like other scientific studies, there is some inevitable limitations faced by
researchers:


Firstly, the data collection phase, authors can only proceed to questions
instead of the interview, in which there is no sufficient evidence for large
construction value (Yin, 2003).
Second, due to geographical constraints, time and physical ability, the survey
questionnaire was not considered prudent before conducting the survey. This might
be a bit subjective in proposing the question.
Third, the use of sampling techniques no probability not generalize the
overall results (Bryman and Bell, 2007), so that the evidence can not be formed into
a chain and information reviewed by the agencies in. Therefore, in this study, indepth exploration of the issues are not completely satisfied.



CHAPTER 2 – LITERATURE REVIEW
Literatures and survey papers on global express delivery industry are rather
limited and difficult to find in academic journals (Subrata et al, 2010). In this
chapter, researcher will go through theories related to the objectives of the thereby
propose hypothesis to capture and fulfill the purpose of the research.

2.1 Definition of construct – the attributes of ECS
According to Oxford Economics (2009), "the core business of the express
industry is delivering, door-to-door transport and value-added next day delivery
shipments or certain time, including documents, parcels and freight. " Subrata et al
(2010) suggested that ECS handles both documents (business communications,
procurement, invoices, letters, brochures, manuals, annual reports, witness only,
etc.) and non-text (spare parts, electronic items, apparels, samples, merchandise,
ATM, etc.).
In the higher levels, ECS is a rapid transit service products that are highvalue products such as pharmaceuticals, electronics and medical equipment,
valuable goods such as news writer normative law, journalism, and perishable
goods (Ohnell and Woxenius, 2003).
Along with transportation, ECS providing value added services such as doorto-door, time of pick up convenient and offers, guaranteed delivery, reliability of
service, safety and security of shipments, the tracking system on time visibility of
goods during shipping, proof of delivery, and the call center to handle the
interrogations.
To meet the demand for business efficiency, ECS take advantage of
overnight shipping known as "downtime" to hand over the shipment from the
shipper to the working day to deliver to recipients on the first day later (next day
delivery). By using all the different modes of transportation such as vans, trucks,


trains, cargo planes and passenger planes to meet the urgent requirements of the

enterprise; ECS has recorded great achievements and contributed an important part
of the global economy (Oxford Economics, 2009).
In many countries, EMS is provided by the postal department. EMS service
quality can not be compared with MNCs such as FedEx, UPS, DHL and TNT which
is the world's leading companies in the courier industry, because EMS is not able to
provide adequate services more value as mentioned earlier. Therefore, MNCs in the
courier industry usually accounts for the biggest piece of the market share.

2.2 Factors influencin on customers’ satisfaction
2.2.1 Customer’ satisfaction
Today CS is considered the main factors that brought success for any
business. Customer satisfaction can understand a definition of Kathleen (2005), "A
customer's perception that their needs, desires, expectations, or the desire for
products and services has is complete. "
Therefore, if customers are satisfied with the products / services that they
can repeat their purchase of goods, and also have a good impression about the
image of the goods. In contrast, the dissatisfaction of customers may result in a
negative image of the goods, and as a result that the goods can not be consumed.
Kotler (2004), who is regarded as a father of modern marketing theory asserts that
the interests of customer satisfaction can lead to spread word-of-mouth actively
reduces the cost of the program promotions to attract new customers. Indeed, CS is
seen as an important source of benefits such as customer retention and reputation of
the organization, reliability of services can lead more profit. Once you have
achieved higher profits, it is very easy for companies to conduct successful ECS
value added in the width of the ESC as support services, expanding the base of
services, quality of human resources force, investments in assets and information
systems, and integration of services and so on. and in fact, the increase in value is


indispensable in ECS, Sheth (2001) concluded that "CS can provide you with

important competitive advantage, which can directly lead to increased profit profit
and growth."
CS can generally be regarded as a tool to achieve the business purpose as
well as gain a source of sustainable competitive advantage (Renart, 2001).
2.2.2 Customers’ satisfaction and its antecedents
Ladhari (2008) shows that customer satisfaction is affected by a series of
psychological signal and the perceived quality of services such as product / service
quality, pricing and billing, distribution channels distribution and diversification of
services.
2.2.2.1 The relationship between service quality and customers’ satisfaction
Zeithaml and Bitner (2003) asserts that the quality of service is seen as a
positive attitude of customers or negative regarding the circulation of a service.
Today, the quality of service is accepted as a multidimensional concept. The
diversity of quality of service models are developed and used in the literature as the
scale established by GLOVAL Sanchez et al. (2006), cognitive development SQ
sample by Grönroos (1984), and Donthu SITEQUAL Yoo (2001), and BANKZOT
by Nadiri et al proposed, (2009).
Although some models are being used in various industries, servqual model
was developed and refined by then Parasuraman et al. (1991) received the most
recognition. And it was regarded as a driving force for research activities in the
relationship dimension of service (Srinivas et al, 1999). servqual scale consists of
the following measurements.


Reliability is the ability to provide the services as promised. Businesses must

provide the appropriate quality of service and commitment to advertising.


The response is likely to meet the legal requirements of the customer, and is


willing to provide services quickly.




Ensure courteous attitude, professional style and knowledge of the workers;

especially the ability to create peace of mind, our customers trust.


Empathy is attentive service, special attention to the customer, and the ability

to understand the unique needs of our customers.


Tangible is the facilities, equipment, uniforms, slogans, the arrival of the

employee, and images.
He and Li (2011) stated that "One of the most important investments in the
services sector is to invest in the quality of service", adding that the quality of
service is not only an important element for customer satisfaction but also plays a
very important role in building the brand name for the organization. Leverin and
Liljander (2006) concluded that the structure of the quality of services and CS are
inseparable, and they influence each other through service features. Therefore based
on the features of the ECS is described by Subrata et al (2010), the factors that may
affect the quality of EMS service will be considered as follows.


On-time pick-up: the period has been scheduled before the public and


customers. The delay time pick-up will adversely affect the psychological and
customer satisfaction.


On-time delivery: as one of the measurements of service quality measuring

mass ECS services provided to customers on time and in full.


Reliability of services: related to the business aspects of the service industry

which reflects the quality of services in the consumption phase (Galetzka et al,
2006).


Safety and security of shipments: is the convenience offered by ECS to

ensure that shipments are not lost and damaged during shipping.


Call center: the customer care center to receive information, requested by

phone, e-mail, web, fax, etc. to resolve customer inquiries.


Ready to serve: as one of the elements to assess the quality of services in the

consumption





Reliable courier: by characteristic of ECS, courier staff is seen as the face of

the service, and dealing directly with customers daily. Thus, the reliability of the
staff courier will strongly influence the image of the service.


Body courier: a friendly staff will create a good relationship with the client,

and then led to CS.
From the discussion above, whether the quality of service in the CS affect
EMS, the hypothesis (H1) is proposed:
H1: Service quality has a significant relationship with customer satisfaction in the
Express Mail Service.
2.2.2.2 The relationship between the Price and payment and customers’
satisfaction
Kotler and Armstrong (2010), the valuation is the amount paid for the
product or service, or the sum of the exchange value or the consumer to use the
product or service rather than the interests of customers. According to Hanif et al
(2010), the price is a very important issue that could lead towards satisfaction, and
support paid to develop CS. Martin-Consuegra et al (2007) assert that the
customer's decision to accept a specific price is directly related to the level of
satisfaction.
Therefore, price and payment needs to be placed in the appropriate level,
acceptable and justified if a company wants to survive in the market. Herrmann et al
(2007) concluded that CS is directly influenced by the factors of price and payment,
while it indirectly through the perception of price fairness. Moreover; Iglesias and
Guillén (2004) asserts that price and payment, along with other factors such as

quality of service, is the predecessor of CS.
Indeed, EMS is not different with other services, and the price of this service
is usually at senior level and is a sensitive issue. This means that the price and
payment plays a vital role in ECS industry. Prices may be discounted 5% off to 55%
depending on the amount of use the ESC, so a policy of flexible price will influence


strongly to CS in particular ECS. Some attributes of pricing and payment are
summarized below.
• Flexible price by volume in the use of EMS service
• Price appropriate with quality
• Price attaching with the brand and level of customer experience
• Term of late payment
• Third-party payment
• Online payment
Based on the discussion above, the second hypothesis (H2) was built:
H2: Price and payment have significant relationships with customers’ satisfaction
in the Express Mail Service.
2.2.2.3 The relationship between distribution channel and customers’
satisfaction
In ECS industry, distribution channel plays a very important role to make a
difference and great success in providing services (Learning Objectives, 2012).
Each courier employee, each pick-up truck and each store is the physical factor, and
also the image and the face of the ECS. The necessity of this distribution to narrow
the gap between the production of the products / services and consumption in place,
in time, quantity, and quality of service, especially in the ECS ( Pranulis et al,
2008). Moreover, Neslin and Shankar (2009) confirmed that CS is an important
issue for the management of distribution channels.
It is not simply that the distribution channels of FedEx, UPS, DHL and TNT
covering more than 200 countries and territories around the world (FedEx profile,

2015; UPS history, 2015; DHL profile, 2015; TNT profile, 2015). Such large
distribution channels to help them expand their business in new markets and meet
the CS, and simultaneously achieve great achievements today.
Banyte et al (2011) concluded that the distribution channel is an
indispensable element in the operations of the organization to meet the CS. From


the features described by Subrata et al (2010), a number of factors under the
distribution channel can affect CS as below.
• Investments in property and infrastructure of distribution channels
• Investments in information systems and technology
• International and national insurance
• The width of the service provided
• Expanding the service facility
• Integration of services
Based on the discussion above, the third hypothesis (H3) is proposed:
H3: distribution channel has a significant relationship with customer satisfaction in
the Express Mail Service.
2.2.2.4 The relationship between service diversification and customers’
satisfaction
In ECS industry, diversification allows the company to leverage their
expertise and special skills to enhance and develop the capacity to achieve both
profitability and meet CS. The noteworthy point, as ECS is considered a type of
professional services, diversified services that enable companies to improve the
quality of their services for CS services door-to-door, the combination of services,
consolidation of shipments to shorten the time of conventional and cost savings to
customers, requiring specialized skills and experience of the staff responsible for
the organization .
Some of EMS services could affect the CS that are listed as follows:
• The service door-to-door: pick-up and delivery shipments or documents at the

client's home.
• Door to Airport / Port services: pick-up and delivery at the customer at the airport
or port.
• Airport / port to service / gateway airport: pickup and delivery shipments at the
airport or port.


• Airport / port to door service: pick-up at the airport or port and delivery at the
customer's home.
With the discussion above, Wednesday hypothesis (H4) is recommended:
H4: diversification of services has a significant relationship with customer
satisfaction in the Express Mail Service.

2.3 How to measure customers’ satisfaction
By tradition, the extent of customers’ satisfaction is measured by service
quality, price and payment, and buying process (Kumbhar, 2011). However, Smith
(2007) shows that CS relates to three factors of psychological when evaluating
customer experience about the services and/ or products, including “cognitive (or
evaluation), affective (emotional-feeling and/ or like-dislike) and behavioral
(current and/ or future actions)”, as described in Figure 1 below:
Figure 1 - Measuring model fo customers’ satisfaction (Source: Smith, 2007)


As shown in Figure 1, Smith (2007) stated that "customer satisfaction is
affected by the perceived quality of the product attributes and services, features and
benefits, and was moderated by period expectations of customers about the products
or services. Each structure can affect customer satisfaction have been identified by
researchers. "
Most research on marketing issues as well for similar results regarding the
relationship between the CS and the quality of service, price, purchase process, and

others etc., and this relationship is a invisible connections (and Naser Jamal, 2003).
Therefore, based on the theories mentioned and the features of the courier service;
built theoretical framework shown in Figure 2 to conduct the survey for this study.
It consists of four independent variables (or hypothesis) and a dependent variable (a
concept of CS), which include (1) Quality of service, (2) Price and payment, (3)
distribution channels coordination, and (4) various services.
Figure 2 - Theoretical framework of this research


Chapter summary
Chapter 2 presents a summary of theories related to CS and its predecessor, and is
supported service features affect CS. Besides, the attributes and features of the ECS
be considered carefully, so the model for measuring the impact factor in EMS CS
proposed, including in the following hypothesis:
H1: Service quality has a significant relationship with customer satisfaction in the
Express Mail Service.
H2: Price and payment have significant relationships with customers’ satisfaction in
the Express Mail Service.
H3: distribution channel has a significant relationship with customer satisfaction in
the Express Mail Service.
H4: diversification of services has a significant relationship with customer
satisfaction in the Express Mail Service.


CHAPTER 3 – RESEARCH METHODOLOGY
“Methodology is a form of standardization or framework that allows things to be
compared on a like-for-like basis, and allows findings to be replicated so as to
validate them” (UKdissertation, 2012).

3.1 Data collection

Data collection is an important step of any research, so it must be well
planned. Srivastava and Rego (2011) determined that the data is the direct
collection of the researchers. Specifically, the question is used in this study with the
type of delivery and collection of questionnaires which means that the question will
be sent directly by hand for each application and then collected (Saunders et al ,
2009, p. 362).
There are two types of questions that are self-management and table
management interview questions. In this study, self-management questions to be
used with virtually close the question in the way of delivery and collection
questionnaire (Saunders et al, 2009).
The questions are divided into three sections of 32 questions in detail in
Figure 3:
-

Section A: Company Information includes 3 questions

-

Section B: factors affecting satisfaction consists of 28 questions

-

Section C : customer satisfaction. Most of the questions are described by 5
points Linkert scale (Likert, 1932) of disagree, disagree, neutral, agree and
totally agree.


Figure 3 - Distribution of questionnaire items
Section


Hypothesis

Company

A

B

Information

questions
1 -> 3

H1

Service quality

4 -> 12

H2

Price and Payment

13 -> 19

H3
H4

C


Number of

Label

Distribution
Channel
Service
diversification
Customer’
satisfaction

20 -> 26
27 -> 31

32

This study was conducted on 150 customers of VPC, in which the majority
are companies related to international business. All 150 copies of questionnaires
were manually moved to 150 respondents. courier staff collected them in a week
after the birth, of course, there are prepared. SPSS 22 for windows (or PASW) was
used to analyze the data collected from the survey. Object sampling is a loyal
customer of VPC who can understand some of the properties of the courier service,
and most of them are organizations and business companies.

3.2 Research method
The induction and deduction has existed for many years, and has been
developed by the influence of various movements and theories (Vogel et al, 2011).
inductive method has the ability to set theory from the findings of the researchers
through specific events (Bryman and Bell, 2007). Conversely, deductive method is



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