THE EFFECT OF PHYSICAL DISTRIBUTION SERVICE ON CUSTOMERS SATISFACTION (THE CASE OF AMBO MINERRAL WATER BOLE SUB CITY)

Abstract

The study investigated physical distribution and customer satisfaction in ambo mineral water Company (AMW) Plc in Addis Ababa. Companies in the Fast Moving Consumer Goods (FMCGs) sector, especially those in mineral water industry are facing increasingly fierce competition. As it becomes more difficult for the companies to compete on pure product level, creative ones are intensifying their physical distribution service activities to gain a competitive edge. Previous studies commonly focused on the activities of physical distribution service (PDS) without effectively integrating them into the marketing mix. This study offers an integrative framework for presenting PDS activities as a means of achieving higher levels of customer service (PD service) and ultimately customer satisfaction using conceptual customer service/satisfaction model. The main objective of the study is to evaluate the relationship between performance of physical distribution activities and PD service and ultimately evaluate the relationship between PD service and customer satisfaction. Understanding the relationships among the physical distribution variables and the relative importance of each of these variables to overall customer satisfaction will enhance marketer’s ability to develop strategies that are more effective and improve performance goals. The study adopted the survey research design. Two hundred (200) persons comprising of commercial staff, distributors and major retailers randomly selected from a sampling frame of four hundred (400) participated in the study. The instrument used for data collection was structured questionnaire in a 5-point Likert scale. Cronbach alpha was used to determine the reliability of the two sets of questionnaire for the staff and customers of the company which gave values of 0.76 and 0.82 for staff and customers respectively. Frequency, percentage, means, standard deviation and Pearson correlation were used for data analysis. The study found out among others that there is a significant relationship between performance of physical distribution service activities (transportation, warehousing, inventory control and order processing) and physical distribution service (product availability, PDS timeliness, PDS quality, PDS flexibility). And it was also found out that Physical distribution service has significant relationship with overall customer satisfaction. The study then concludes that as performance of physical distribution service activities becomes more effective and efficient in the industry, it would lead to improvement of physical distribution service which will in turn transcend to overall customer satisfaction. It was recommended among others that companies should ensure effective and efficient performance of physical distribution service activities as it will lead to better physical distribution service which will finally lead to customer satisfaction and translate into competitive advantage for the company, perhaps using the “conceptual market-driven customer service standards model (The Customer Service Mirror)” developed in this study to set service standards.