Is the Bus Running Late?: New Technological Solutions in the Transportation Sector

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Faculty of Economic Sciences, Communication and IT

Marie Halvardsson Carl-Fredrik Herö

Is the Bus Running Late?

New Technological Solutions in the Transportation Sector

Service Management

Bachelor Thesis – C level

Date/Term: Spring 2007

Supervisors: Carolina Camén

Patrik Gottfridsson

Karlstads universitet 651 88 Karlstad

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Preface

This thesis is the result of a lot of hard work, but also a lot of inspiration and laugher, during a few intense weeks in the spring of 2007.

We would like to thank our supervisors Carolina Camén and Patrik Gottfridsson at CTF - Service Research Center at Karlstad Univerity for their guidance and support during the entire process.

Furthermore we would like to thank Karlstadsbuss, with a special thought to those responsible for Live, for the opportunity, and the commission, to conduct this study regarding Live.

Finally we would like to thank family and friends whom had to share our attention with this thesis. Your support made us reach the goalline.

Karlstad 11 june 2007

____________________________________ ____________________________________

Marie Halvardsson Carl-Fredrik Herö

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Abstract

From having relied on its employees in the interaction with customers, the service industry now move towards an increased adoption of technology to enhance the value of the service offering to the customer. This development has also reached the public transport sector which is traditionally seen as low-tech.

In this study we investigate how the customers experience the use of high-tech supporting services within a low-tech context. The case that is used is the city-bus transport provider Karlstadsbuss who provide a high-tech supporting service called Live, which delivers real- time information on bus departures through a website, a WAPsite, and electronic boards at certain bus stops.

Focused group interviews were used to get in-dept information from commuters of how they perceive Live. Results show that respondents do not use Live website or WAPsite because the information is not worth the effort of use. Commuters question the service because many buses do not run according to the Live-schedule. Still the commuters say they benefit from Live because it contributes alternative ways of finding departure times, and it presents an overview of departure options. However, if the information is in real-time or not is of secondary importance.

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Table of Contents

1.1 INTRODUCTIONAND BACKGROUND ... 2

1.2 PURPOSEAND RESEARCH QUESTION... 3

1.3 DELIMITATIONS...3

1.4 CASE PRESENTATION... 3

1.5 THESIS OUTLINE...4

2. METHOD...5

2.1 INTERVIEWS, FOCUS GROUPSOR OBSERVATIONS... 5

2.2 PRIMARYAND SECONDARY DATA... 6

2.3 DATA COLLECTION PROCEDURE...6

2.3.1 Degree of Structure and Moderation... 6

2.3.2 Developing Questions...6

2.3.3 Recruiting Participants... 7

2.3.4 Group Construction...8

2.4 DATA ANALYSIS...8

2.5 DISCUSSIONOF TRUSTWORTHINESS... 9

2.5.1 Credibility...9

2.5.2 Transferability... 9

2.5.3 Dependability... 10

2.5.4 Confirmability... 10

2.5.5 Criticism of the Sources... 10

3. THEORETICAL PERSPECTIVES... 12

3.1 ASPECTSOF TECHNOLOGY READINESSAND CULTURE... 12

3.1.1 Value in Services... 13

3.2 THE SERVICE OFFERING...14

3.2.1 The Service Concept...14

3.2.2 Basic Service Package...14

3.2.3 Service Process and Service System...15

3.3 SERVICE QUALITY...16

3.4 TECHNOLOGY-BASED SERVICE...17

3.5 SELF-SERVICE TECHNOLOGIES... 18

3.5.1 Customer Assessment of Technology-Based Service Encounters... 19

3.6 THEORETICAL FRAMEWORK ... 19

4. RESULTS AND DISCUSSION...21

4.1 WHAT KINDOF SERVICEIS LIVE?... 21

4.1.1 Live From a Service Management Perspective...21

4.2 HIGH-TECH SUPPORTING SERVICE...22

4.2.1 Customer Assessment of Technology-Based Service ...22

4.2.2 Service Quality... 25

4.3 TECHNOLOGY-READINESS... 29

5. CONCLUSIONS AND FUTURE RESEARCH DIRECTIONS...32

5.1 MANAGERIALIMPLICATIONS...33

5.2 FUTURE RESEARCH... 34

6. REFERENCES... 35

Appendix

1. Question guide (in Swedish)

2. How Live works and WAP usage in Sweden 3. Summaries from the focus groups

4. German summary

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1. Introduction and Research Problem

In this section we present the background of the problem and research question that is

investigated in this study. Furthermore we present the purpose of the study, its limitations, the case that is studied, and the thesis outline.

1.1 Introduction and Background

The technological development during the past decade has made it possible for companies and other organizations to reach their customers and business interests in new ways (Cunliffe, 2000). At the same time the use of computers and the Internet in private homes increases, which might indicate that people are more comfortable with the use of technological interfaces.

Increased use of technological solutions has in many ways changed the way we understand services and how services are delivered. As an example the use of internet has to a greater extent enabled customers to compare, and in some cases, test services before they decide to buy them. For firms delivering services, the Internet presents a possibility to expand to other markets, and to offer new core services, supporting services, and facilitating services. At the same time the risk of additional competitors increase due to the fact that many Internet based services often have low barriers to entry (Echeverri & Edvardsson, 2002).

Technology is a means to produce services in a more efficient way, often enhancing the value of the service for the customer. However, technological solutions are not enough. Behind every service, technology-based or not, there has to be a customer demand, sometimes the customer is not aware of this demand, and thus it can be created by the service company (Edvardsson, 1997).

The service industry has formerly been recognized as a “low-tech, high-touch” industry where the front-line personnel are the key resource in a company. Self-service technologies change the way customers and service personnel act in the service encounter. In some encounters the customer takes a more active role and in extreme cases produces the entire service alone (as in self-scanning in supermarkets), in other encounters the technology helps the staff with more information to make them reach better decisions (as in Customer Relationship Management databases) (Meuter et al., 2000; Lovelock & Wirtz, 2007).

The introduction of high-tech support services in low-tech industries is of particular interest in this study. Technology does not only enable new services to be developed, many low-tech industries are now trying to increase customer satisfaction and, in the end, profitability by introducing high-tech support services (Dabholkar et al., 2003). Retailing is one example of a low-tech industry where the technology infusion, through supporting services like self-

scanning, has increased customers control, reliability and ease of use (Dabholkar et al., 2003).

City bus transportation is another typically low-tech service, the timetable is presented in a static paperback brochure and it is not possible for commuters to know in advance if the bus runs according to schedule or not. It is not until today that some transport companies have used new technology to make travelling easier for their customers. Karlstadsbuss is a city bus company in Sweden who ofers their commuter the possibility to know, in real-time, when the bus leaves the stop. Through an Internet website, a WAPsite1 or by electronic boards at the

1 Wireless Application Protocol

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bus stops the customers can immediately see if the bus is on its way and if so within how many minutes.

1.2 Purpose and Research Question

The service Live by Karlstadsbuss is a way of delivering real-time departure information to their commuters. A recent study showed that only 13% of the commuters in Karlstad knew what Live is and only half of these actually use the website and WAPsite of this service (Attityd i Karlstad, 2006).

The purpose of this study is to investigate how customers perceive the introduction of new high-tech supporting services in traditional low-tech industries.

To find out how the customers perceive a high-tech service within the low-tech industry we use the case of Karlstadsbuss and Live, the research question of this study is as follows:

How does the service Live contribute to customer’s perception of the service offering by Karlstadsbuss?

1.3 Delimitations

This study is limited to the real-time information service offered by Karlstadsbuss. Although there are similar services offered by other companies in other cities in Sweden, we have not, due to time-constraints, carried out any comparison study.

Customers perception of the service Live is the important issue in this study. Because of this we do not investigate other aspects of Karlstadsbuss such as its organization, or its service personnel. Furthermore, we do not intend to investigate any technical aspects of the service such as the user-friendliness of the website and WAPsite. The sources or causes to problems stressed by our respondents are not verified with Karlstadsbuss. We do not take a position on how well Karlstadsbuss have succeeded with their service, we only present the different opinions expressed by respondents in the focus groups.

1.4 Case Presentation

In Karlstad, a city of more than 80000 inhabitants (www.karlstad.se), the public transport within the city is handled by Karlstadsbuss. The company is controlled by the local government, not by the administrative province (county) which is the most common arrangement in the rest of Sweden when it comes to public transport. In 2006 commuters travelled with Karlstadsbuss 4 284 735 times. Karlstadsbuss wish to expand the amount of travels further and continue to be ranked high in surveys on how people perceive their service performance2.

The buses are run by an external contractor providing buses and drivers. However,

Karlstadsbuss and the contractor have agreed on certain goals to guarantee a perceived high quality by the customer. The four main criteria is kind reception, clean and tidy buses and reliable and safe to ride with Karlstadsbuss3.

2 Interview with personnel responsible for Live 26 April 2007

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Karlstadsbuss have since 1994 provided electronic boards (e-boards) on more crowded bus stops. The first years the e-boards only displayed departure time according to the static timetable. A couple of years later the system was upgraded and the electronic boards have since then displayed calculated real-time departure time. In 2004 the service expanded to offer the same information on Internet and through WAP. At the same time Karlstadsbuss created the brand “Live!” instead of the often used label “Real-time”, to get a less technical feeling to it4. A more detailed presentation of the service Live is included in Appendix 2.

1.5 Thesis Outline

The thesis outline is presented in order to guide the reader through this thesis and to give a quick overview of the different chapters.

Introduction and research problem

In chapter 1 we present the background of this thesis and the purpose together with the research question. We also give a short presentation of the study-case.

Method

The method chapter presents how the study was carried out. We also discuss the trustworthiness of this study.

Theoretical perspectives

In the third chapter we present the theoretical perspectives that our analysis is based upon. The chapter ends with a model of our theoretical framework.

Results and Discussion

In chapter 4 we present our findings and connect them to the framework model.

Conclusions

The last chapter presents our conclusions and managerial implications. We also answer our research question, and finish the chapter with proposals for future research.

4 Interview with personnel responsible for Live 26 April 2007

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2. Method

In this chapter the research process and the methodology used to collect data for the research is described. Before research process is explained, we discuss the different methods that can be used in a qualitative research; interviews, focus groups and observations, and why we decided to use focus groups. The chapter ends with a description of how the data was analysed and a discussion about the trustworthiness of the study.

The method approach used in scientific research is often divided into quantitative or

qualitative. Researchers that use a quantitative approach search for general information that can be presented in numbers. These figures are meant to be applied to a whole population and to give “the bigger picture” of a certain phenomenon. The data is collected using questions with given answers, these questions are easy to categorize and statistical methods are often used to find numerical descriptors like mean and standard deviation. The problem with quantitative methods is that they cannot answer any in-depth questions (Jacobsen, 2002).

The opposite of a quantitative method is a qualitative method. A qualitative method is used when researchers want to gain a deeper understanding of a phenomenon, and when the researchers are more open to unexpected answers. The data could be collected using interviews, focus groups or observations. The problem with this method is that the result is often very narrow and sometimes only valid for the specific object that has been investigated (Jacobsen, 2002).

The two methods also differ in what way the research is carried out. To use a quantitative method the researchers have to categorize and structurize the answers before the investigation, while the qualitative method demands the data to be categorized after the data has been

collected (Jacobson, 2002).

The choice of method should be answered by the purpose of the research (Jacobsen, 2002).

We want to find out what bus travelers think about the service Live and how they perceive it;

we cannot know in advance what answers we are going to get. This is why we need to use the qualitative method.

2.1 Interviews, Focus Groups or Observations

Qualitative research can use interviews, focus groups or observations (Jacobsen, 2002). The interview is a conversation between the researcher and the respondent and can be used when the opinion of the single individual is of interest. The interview is useful because the

researcher can ask attendant questions to gain a deeper understanding. The focus group is much like an interview and at the same time a guided group discussion. In this situation the researcher acts more as a chairman than an interviewer, moderating the discussion instead of just asking questions (Morgan, 1998a). Observations are basically a method to investigate how people behave, not what they say or how they perceive a phenomenon (Jacobsen, 2002).

Focus groups are also particularly useful when experiences from certain circumstances are of interest (Jacobsen, 2002). An interview is often formal and the respondent does not always think through his or her answers, a focus group on the other hand, can trigger a chain of thoughts and the participants can help each other to express their experiences in more detail which would not be possible in a regular interview (Jacobsen, 2002). Focus groups enable us to find out how different actions are motivated, understand differences between people, and to

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find out how participants in a group together respond to a phenomenon or subject (Wibeck, 2000). The focus groups included bus commuters in Karlstad, both those who use Live from the Internet and WAP, and those who only use the e-boards.

2.2 Primary and Secondary Data

Data collected from focus groups are sometimes referred to as primary data, which means that the researcher has collected the data for its particular purpose. The other source of information is secondary data, data collected from other researches with a different purpose. An academic research should use both kinds of data since they can strengthen or reject each others results.

It is also important to backup the conclusions from the research from prior results in similar researches (Jacobsen, 2002).

2.3 Data Collection Procedure

2.3.1 Degree of Structure and Moderation

Concerns regarding what degree of structure to use in focus groups can be answered by the purpose of the study. If the aim is to find answers to predetermined questions a more structured form is recommended, but if the goal is to explore new subjects a less structured form is of better use (Morgan, 1998a). The degree of structure of the focus groups in this study was chosen to be of the more structured kind, but not to the most extreme design. The reason for this was because we needed customers opinions about the service Live, and at the same time find out how and why the service is being used. We used a structured interview guide to enable us to gain answers to the most important questions, but at the same time it was allowed for the respondents to discuss more freely about themes which seemed important to them, even if these were not included in the question guide.

The same moderator was used with all groups to avoid biases that might be caused by changing moderator. Structured interviews demand an active moderator who can keep the group on track, whilst a less structured group depends on a moderator who can help them on the way towards finding new ideas about the subject at hand (Morgan, 1998b). As we were two people working on this study one of us acted as moderator whilst the other made notes during the interviews and only interacted when asked by the moderator. The notes were used as backup to the recording of the interviews, an example being to note when the participants were nodding as agreeing to a statement, because this is not heard on tape. At the beginning of every session we asked for permission to tape the conversation, and we explained that the data used would be completely anonymous.

At the beginning of each meeting we allowed for the participants to have coffee, juice and a sandwich or cinnamon-bun to accomplish a less formal feeling. They were asked to fill out a small questionnaire to make them think about the subject at hand.

2.3.2 Developing Questions

The question guide was developed by categorising the questions into opening, introductory, transition, key, and ending questions, much like Krueger has suggested (Krueger 1998). This was done to make moderation easier, and to make sure that all questions filled their purpose.

The question guide is attached in Appendix 1.

When the first draft was finished, we asked a few people to examine if the questions answered our purpose, and some of the questions had to be revised. When we had a set of questions ready we decided to try them in the first focus group. In the test group we were able to check

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almost all questions except those connected to the WAP function, due to the fact that none of the respondents had used it. After the test group, some of the questions were deleted and some had to be added. To change questions between groups is generally avoided, this to be able to compare the results and to see contrasts in answers (Krueger 1998) There are, however, situations when one might consider changing questions. Krueger (1998) suggests that when a question clearly does not work it should be replaced, and if past responds lead to another level it might open for developing more questions to be asked in following groups. This is very much what happened in our trial-session; we discovered topics that had to be addressed and realized that some of the questions had to be revised in order to clarify them.

Because of our choice to have groups consisting of different constellations of users and non- users, we had to adjust the questions to the group at hand, but we had the same moderating question form (Appendix 1) as base for all groups.

Before the session started, we gave background information to our group participants to avoid tacit assumptions. The participants often want to know why they are gathered and need to know the purpose of the session in order to be able to figure out how and in what manner they can respond to questions, and also to be able to feel comfortable talking to the others and expressing their opinions (Krueger 1998). The amount of information given was adjusted to the knowledge level of the group at hand.

2.3.3 Recruiting Participants

We needed to find commuters in Karlstad who were either users or non-users of Live on internet and WAP, this to find out both how users perceive this part of the service, and also what the reasons are to why some commuters do not use the service. We experienced difficulties during the recruitment and therefore used more than one method to find respondents.

First we decided on using open solicitation to target the “Live on internet”- and WAP-users.

We tried to reach users of the website and WAPsite by placing an advertisement asking for help on the Karlstadsbuss homepage and the Live homepage. Open solicitation can be useful when one is seeking participants of a specific category but they can not be located. Open solicitation was not as successful as we thought it would be. The advertisement was on the homepage for three weeks and had about 200 hits resulting in only two group participants.

We also performed random sampling at different bus stops within the city. During eight days of three weeks of the recruitment period we asked people at different bus stops if they would like to participate in this study. We made no difference between commuters and asked as many as we could before their bus arrived. We were astonished to see that almost no one was interested to participate, simply because they did not know what Live was, or did not feel they had time to participate; in general people seemed disinterested in the subject. When we

contacted the four people collected by this method a second time to confirm their participation, only one could still participate.

The results of recruitment at bus stops caused a need to further adjust the method for sampling. This time we tried referrals, which is a way of using other persons as sources for potential participants (Morgan, (1998b). We contacted people who we knew had used the Live website or WAPsite, and also asked people that we knew travelled by bus on a regular basis. We asked known users if they knew other users that we could contact. Referrals gave us 13 participants.

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To reduce the risk of participants not showing up at the session we rang each respondent the day before, or in the morning of the day of the interview. This was very successful resulting in only two people, both in different groups, not showing up due to other obligations.

2.3.4 Group Construction

Morgan (1998b) claims that the typical group size should be six to ten participants, Wibeck (2000) on the other hand recommends a minimum of four and a maximum of six participants.

Because we were not able to assemble the participants on fewer occasions than four, we had to use two groups with only three participants. This is not solely negative, small groups open for more time for each individual, which makes it possible to hear more about the experiences from each person (Morgan, 1998b).

The optimal number of groups is three to five (Morgan, 1998b; Wibeck, 2000). More than five groups are often not necessary since less new information will be obtained for every performed group discussion.

In total we did four interviews described in the table presented below.

Users of WAP/Internet Non-users

Group 1 (test) 1 2

Group 2 4

Group 3 3

Group 4 2 3

2.4 Data Analysis

First we transcribed all interviews to a level where the statements were written as they were said. Second, we went through all transcripts independent from each other, marked statements which were of interest to the research question and also noted if other subjects of particular interest to the respondents were discussed intensely although not being an answer to a question asked by the moderator. Third we compared the results and found that we had

marked almost exactly the same statements and issues. Fourth, we sorted these statements into categories discussing different aspects of Live in relation to the theoretical framework. Finally we present these results in chapter 4 Results and Discussion. In the discussion we use quotes from the focus groups to a large extend to backup our analysis.

Focus groups are meant to be more of a group discussion between people than an interview.

This way the participants can feel more comfortable and talk more freely about the subject at hand, which often result in a more spoken language than an interview may have. The

quotations in chapter four can therefore sometimes be difficult to read because we sought not to alter the quotes. However, because the focused group discussions were conducted in Swedish and the results are presented in English we found that it was necessary to translate the quotes.

2.5 Discussion of Trustworthiness

To be able to claim that a study is trustworthy, the researchers need to show an awareness of the possible strengths and weaknesses in the research (Arbnor & Bjerke, 1994).

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Trustworthiness is often described using the terms reliability and validity, mostly for

quantitative research, but also qualitative research (Jacobsen, 2002). Reliability aims to secure that the result will be the same independently of who performs the study, and if the study is performed repeatedly. Validity aims to confirm that the researchers have measured what they intended to measure. The validity also concern the possibility of generalization of the results, that is, if the result is valid for other situations than the one described in the particular study.

However it has been discussed whether a qualitative study can be judged using these concepts (Bryman & Bell, 2005). Therefore our discussion of trustworthiness uses the criteria

presented by Lincoln and Guba found in Bryman and Bell (2005). The reasons for this are that these better reflect the characteristics of qualitative research. The terms used are: credibility (correspondent to internal validity), transferability (correspondent to external validity), dependability (reliability), and confirmability (objectivity).

2.5.1 Credibility

Credibility corresponds to the internal validity, that is the degree to which there is a possibility to generalize from the results (Bryman & Bell 2005)

We believe that it is possible to come to some general practical conclusions from the results of this study. It is however difficult to implicate any safe theoretical conclusions because the amount of respondents is not large enough. These opinions are based on the fact that there was an even distribution between sexes, and both young as well as adults have contributed.

There were however no respondents over the age of 52 due to trouble of recruiting at that age level. This may have affected the conclusions, especially with regards to technology-

readiness. Overall the focus groups all came much to the same conclusions, we therefore find that additional groups would not have affected the results of the study to a large extent.

It is possible that the results of this study were affected by the number of people participating in each group. However, this affect can be both positive and negative because in small groups everybody can express their opinions, at the same time there is a loss of group dynamics that might enhance richness of discussion (Morgan, 1998b).

We recorded every session and this might have caused the respondents to ”hold on” to some of their thoughts. Even though everybody agreed to the recording, and at the end of the session when asked if the recorder had affected the discussion at all they said no, it is still possible that it might have affected them.

There is always the possibility that the respondents can misinterpret the questions asked.

Because the interviews concerned more than one person we believe that this source of error is minimized because potential misinterpretations could immediately be discussed within the groups.

2.5.2 Transferability

Transferability correspond to external validity, that is the degree to which there is a possibility to transfer the results of the study to other situations (Bryman & Bell 2005)

We believe that the results from our study can be applied to similar situations, by this we

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we have described Swedes opinions concerning time and punctuality which is affecting both commuters and drivers. Furthermore we have described the use of WAP in Sweden

(Appendix 2) which is not exclusively for Karlstad, it is however important to remember that the use of WAP has had a sharp increase since year 2005 and our interpretation, based on these facts, can be out of date very soon.

There are other characteristics that need to be examined in the new situation to be able to apply the results from this study. The respondents mention that Karlstad is a small city with relatively few bus lines making it easy to remember the lines they travel most frequently. This situation is specific to Karlstad and must be examined in the new area if the results are to be transferred.

2.5.3 Dependability

Dependability is comparable to reliability. To ensure dependability Guba and Lincoln find that it should be possible for researchers to audit a study in order to be able to judge it. To make this possible, researcher must present a thorough and accessible description of the research process (Bryman & Bell, 2005) In the chapter on method we have included all parts of the research process, and furthermore enclose the questions that were used (Appendix 1), because of this we find that it will be possible for others to replicate the study to a great extent. However, because human beings are all unique an additional study would be somewhat different.

2.5.4 Confirmability

Confirmability is the section in which the researcher has the possibility to verify and confirm the procedure of the research and concern the discussion of whether the researcher has tried to be objective and have not let personal opinions affect the empirical findings and

conclusions. Because qualitative research is based upon the spoken word of the respondent, the interpretation by the researcher is important in the conclusions of the study (Bryman &

Bell 2005).

We have aimed to keep a neutral language, both body- and verbal language. At the beginning of each session we briefly described how the service works in plain facts. During the analysis we avoided the use of quotations if questions where perceived as leading, these are not included in the results. We believe that we have not let any personal opinions affected the findings to a questionable degree, but we are however aware of the fact that it is never possible to reach complete objectivity, regardless of method used or procedure of a study.

2.5.5 Criticism of the Sources

A scientific research has to base its theories on relevant and credible sources. Thurén (2005) states that four principles can be used to evaluate sources:

Authenticity – the source is what it claims it to be

Relation of time – the time between the described occurrence and the time where it is written down, the longer time between, the more reasons for being critical.

Independence – the source should be detached from other sources

Tendency of freedom – there should be no reason to suspect that the source gives a misleading picture due to economical, political, personal or other reasons.

The criteria independence in academic articles has to be adjusted. Academic articles often use other academic articles to secure the quality of its own article (Merriam 1994).

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This thesis is built mostly on written sources, both academic articles and books, written by active researchers in the business administration area. The articles come from well-known journals like Journal of Service Research, Journal of Marketing, Harvard Business Review and International Journal of Production Economics.

We have also used visitor statistics from Karlstadsbuss, and a study performed by Attityd i Karlstad commissioned by the local government. Attityd i Karlstad is a research company with customers like Pfizer (a well-known pharmaceutical company), we consider the

customers of Attityd i Karlstad to be credible and thereby give Attityd i Karlstad credibility.

We have also used information, which is distributed either to external or internal customers, from Karlstadsbuss in our thesis. Information to the public can be considered to be more positive in order to strengthen the image of the company. From this material, we have only used the parts that describe the technical aspects of the traffic supervision system to get a better understanding.

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3. Theoretical Perspectives

In this chapter we review research and further available literature within the service field that address the purpose of this study. To begin with we discuss aspects that affect the attitude shown by customers towards technological solutions; this includes technology readiness, culture, and value. Second we present the service offering and its content, to explain how a supporting service, such as Live in this case, can be seen as a part of the service offering.

Furthermore we discuss how the quality of service can be perceived by customers, both as the total offering, and also through the supporting service and its delivery channels. The

theoretical perspectives are then summed up and presented in a theoretical reference frame which is later used when analysing the results of the study.

3.1 Aspects of Technology Readiness and Culture

With a current increased presence of technology in service encounters the knowledge of how customers adjust to, and embrace this new situation is relevant in order for providers to deliver their services at a suitable level of technology advancement, whether it be high-tech, low-tech, or somewhere in between.

Parasuraman (2000) has tried to define what affects a customer’s choice to turn to SSTs (Self- Service Technologies) or other technology-based services. He found that that there are some characteristics which complies with being ready to accept new technologies, or services resulting in interaction through technology. The term technology-readiness refers to “people's propensity to embrace and use new technologies for accomplishing goals in home life and at work” (Parasuraman 2000 p.308). The level of technology readiness that customers show are built on the characteristics that are included in the following four categories, the first two are drivers of technology readiness, and the last two are inhibitors (Parasuraman 2000 p 311):

Optimism: A positive view of technology and a belief that it offers people increased control, flexibility, and efficiency in their lives.

Innovativeness: A tendency to be a technology pioneer and thought leader

Discomfort: A perceived lack of control over technology and a feeling of being overwhelmed by it.

Insecurity: Distrust of technology and scepticism about its ability to work properly.

Parasuraman (2000) further explain that it is possible for the customer to have both positive and negative feelings about technology, and in the study he also found that even technological optimists and innovators experience anxiety in the same way as less technology-enthusiastic customers.

Furthermore Parasuraman (2000) suggests that further research on possible influences on the technology readiness shown by people, for example across cultures should be of interest. The theme of how cultural aspects might affect the perception of technology is discussed by other researchers (Gong et al., 2007, Leidner & Kayworth, 2006, Zeithaml et al., 2003). Culture is a concept widely discussed and there have bee several definitions presented (Hoecklin, 1994 p.28 for an overview). Hofstedes cultural dimensions5 are among the most applied

frameworks used to describe different cultures (Gong et al., 2007, Bjerke, 1998). The dimensions are based on a difference in preferences among different cultures. What is

preferred in one culture might be disliked by members of other cultures. These differences in

5 The dimensions are: power-distance, individualism/collectivism, uncertainty avoidance, and masculinity.

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preferences cause implications for managers across the globe, because it affects behaviour of people and evaluations made by customers (Hoecklin, 1994).

Sweden, in which this study is situated, is a part of Scandinavia. When it comes to the Scandinavian culture Bjerke (1998) explain that Scandinavians have a very low score on power-distance, which means that the countries are very concerned about everyone being equal, men and women, and between occupational levels. According to Gong et al. (2007 citing Herbig and Miller) cultures with a large power-distance are less innovative, proposing that these high power-distance cultures take less initiative to discuss the introduction of new products and technologies. This should indicate that Scandinavians are innovative, and take initiative to discuss new technology.

Scandinavians are more individualistic, proposing that they put great value on freedom and challenges at work. They can accept rules and regulations as long as they are fair. To be honest, reliable, correct, ethical, and loyal is also important. Scandinavians are also very punctual. They are practically oriented and willing to change and experiment (Bjerke 1998).

This willingness to try new things is also connected to the low score gained by Scandinavians on Hofstedes dimension of uncertainty avoidance. This dimension indicate that rules are allowed to be bent by pragmatic reasons, being tolerant is important, and not feeling that differing behaviour is a threat (Bjerke 1998).

Scandinavian countries score lowest of all on masculinity, which is shown in the

Scandinavian culture through the importance of the expression self-fulfilment. In Scandinavia it is motivating to be part of progress and change, and there is sympathy for the weak in the society (Bjerke 1998).

Much like culture the subject of value is discussed within the service field. When technology changes the service encounter, such as when a high-tech service is present in a low-tech environment, an understanding of how this change the perceived value of the service through the eye of the customer is necessary.

3.1.1 Value in Services

The perception of value is a complicated issue because, as Zeithaml and Bitner (2003) explain, every individual makes up his or her own opinion about what value is:

“When customers discuss value, they use the term in many different ways and talk about a myriad attributes or components. What constitutes value, even in a single service category, appears to be highly personal and idiosyncratic.”(Zeithaml & Bitner 2003 p.490)

In this study we adopt the perspective of value expressed by Heskett et al. (1997). Value for the customer is the actual result of the service and the processes of delivering the service taken together, and put in relation to the price of the service in addition to the price for acquiring the service:

“the value of goods and services delivered to customers is

equivalent to the results created for them as well as the quality of the processes used to deliver the results, all in relation to the price

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of a service to the customer and other costs incurred by the customer in acquiring the service” (Heskett et al., 1997 p. 12).

In the eye of the customer the way in which a service is delivered is often equivalently important as the results delivered. What the customer prefer can however differ from person to person, saying that some prefer volume, some convenience. What is paid to acquire the service can be both monetary and non-monetary, or a combination (Zeithaml & Bitner 2003).

For example if a person receives a free of charge concert ticket, there are monetary costs for the bus ride there, as well as non-monetary costs for the time you spend that could have been used differently.

The service Live is free of monetary charge for commuters, but it still needs to be perceived as valuable in order for the commuters to use the service. The cost that might occur is online transaction cost of the website/WAPsite alternative for delivery. The monetary cost of using the Live WAPsite however is very small since it is text-based6.

Customers evaluate every part of the service they consume, as explained above, and in total these evaluations form the opinion of the value they perceive to have gained from the total service offering.

3.2 The Service Offering

In the development of services, it is important to focus on perceived total quality (Grönroos, 2000; Edvardsson, 1997). From a service provider's point of view, one service offered to customers often consists of several services (Lovelock & Wirtz, 2007; Grönroos, 2000;

Edvardsson, 1997). These services, often referred to as core, facilitating and supporting (or enhancing) services, are described in the service offering (Lovelock & Wirtz, 2007 ; Edvardsson, 1997).

3.2.1 The Service Concept

The service concept describes how the service provider should satisfy its customers in terms of primary needs and secondary needs (Edvardsson, 1997), referred by Goldstein et al. (2002) as the company's strategic intent. Goldstein et al. (2002) also states that the service concept is vital in the explanation of the technical quality (what is to be done), the functional quality (how this is to be achieved), and the integration between the two (Goldstein et al., 2002;

Grönroos, 2000; Edvardsson, 1997). Heskett (1986 cited by Goldstein et al., 2002) defines it as the way in which the “organization would like to have its services perceived by its

customers, employees, shareholders and lenders”, i.e. the organization’s business proposition (Goldstein et al., 2002 p. 123). “The service concept or concepts determine the intension of the organization” (Grönroos, 2000 p. 165). Lovelock and Wirtz (2007) describe the service concept in terms of core services, supplementary services (divided into facilitating and enhancing service) and delivery processes.

3.2.2 Basic Service Package

The Basic service package originates from Grönroos (1990;2000), who describes the technical quality aspect of the service concept with core services, facilitating services and supporting services.

6 Interview with personnel responsible for Live 26 April 2007

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Core Services

The core service (or services, an organization can offer more than one) is the reason for the company to be on the market. For a transportation company the core service is the actual transport from point A to B. Core services are in general easy for competitors to provide in a similar way. To distinguish the company from its competitors there is a need to offer

complementary services in addition to the core service. These services can be divided into facilitating services and supporting service (Grönroos, 2000).

Facilitating Service

Facilitating services are services not offered as a separate service but rather as a complement to the core service. These services are called facilitating because they facilitate the use of the core service. Facilitating services are a very important part of the service offer because the core service cannot function without the facilitating service. The ticket machine is an example of this kind of service. Without a ticket, you cannot ride the bus. The facilitating service is also an opportunity for the company to add extra value to the core service. If the customer can choose how to pay for the ticket, as in through the use of credit card instead of cash, this adds value, as opposed to a “cash only” situation. The facilitating service can sometimes also be a physical good (as in the credit card that gives you access to your money through an ATM) (Grönroos, 2000).

Supporting Service

Supporting services are also complementary services offered to enhance the value of the core service. Unlike facilitating services, the supporting services are not mandatory. The

supporting service only task is to add value to the core service in order to differentiate the company from its competitors or spontaneously delight customers. The supporting services can in some cases also be a physical good, soap and shoe shine in a hotel room is such goods (Grönroos, 2000).

3.2.3 Service Process and Service System

In order to realize the service concept and offerings, the company also has to clarify the process and the service system (Edvardsson, 1997).

The Service Process

”The service process is the chain or chains of parallel and sequential activities which must function if the service is to be produced” (Edvardsson, 1997 p. 38).

The service process consists of several sub processes both internally and also externally. The result of a service is realized in the interaction between the customer and the company. The deliver process is the part of the service that the customer notice and base his or her opinion of the service quality on. This is also the process that involves the customer and makes him, or her, a co-producer (Edvardsson, 1997). Because of the nature of services, and the fact that customers perform certain parts of the service, the company cannot have full control of all processes. Earl and Kahn (1994 referred to by Echeverri & Edvardsson, 2002) define four kinds of processes that to some parts are tied to the three service categories in the basic service package.

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Core processes Support processes

Network processes: processes not only performed by the organization but also suppliers and customers

Management processes: processes on how the company works with planning organizing and control

The Service System

The service system includes all resources that the company needs in order to be able to deliver the service (Edvardsson, 1997). The service system consists of four components:

The company’s employees

Employees in a service company is often seen as the key resource, it is therefore very important to manage how employees behave in the moment of truth (see for example Grönroos, 1990).

Customers

Very often the customer performs more or less of the job in the service process, the most extreme case is Self-Service Technologies (SSTs). In the same way employees need instructions and education, customers also need to be educated in their specific tasks.

The physical/technical resources

All companies need some kind of physical or technical equipment. Because of the tangibility aspect of these resources, they are a great way to make the whole service more tangible.

Organization and control

This component includes the organization structure, administrative support system, how the interaction between customers, suppliers and partners and how the company is managed in terms of complaint and feedback handling, often referred to as service culture (Echiverri &

Edvardsson, 2002; Grönroos 1990) and finally the companies marketing activities.

3.3 Service Quality

Services have not been studied for more than three centuries, a very short time compared to traditional studies of economics and business administration (Brown et al. 1994). Brown and colleagues (1994) identifies Lynn Shostacks (1977) “Breaking Free from Product Marketing”

as a landmark for the evolution of the service marketing field. However as the service sector has increased in importance throughout the world, so has the amount of research on services.

Services differ from goods and are often described through their specific characteristics of intangibility, heterogeneity, inseparability, perishability, and the ways in which these affect the production, consumption, and evaluation of the service (Zeithaml, et al. 1990,

Fitzsimmons & Fitzsimmons, 1998; Lovelock & Wirtz, 2007).

Different views of what quality is have been presented (Karlsson & Söderstedt, 1997;

Bergman & Klefsjö, 2003; Jönsson, 1995). Within service quality research field there are two main perspectives, the “Nordic” which defines the dimensions of service quality in global terms, and the “American” which uses terms that describe characteristics of service

encounters (Brady & Cronin 2001). In the following paragraphs we first describe Grönroos (2000) perspective as an example of the “Nordic” view, adopted in this study to shred light on the overall assessment of the service offering made by the customer. Secondly, we describe

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the “American” view through the work of Zeithaml and colleagues (1990) showing quality dimensions that are applicable to the encounter in which the use of Live has taken part.

Grönroos (2000) explains that service quality is perceived by customers through two dimensions: a technical and a functional dimension. The technical dimension addresses the actual outcome of the service production process when all service encounters have been completed. The functional dimension relates to how all of the service encounters were executed, it is how the customer evaluates the processes he or she needs to go through to reach the outcome of the encounter. The evaluation of the two by the customer is in turn affected by the customer’s perceived image of the firm, resulting in an assessment of the total quality of the service. (Grönroos 2000) In order to have the customers evaluate a service as high quality both dimensions must be perceived as high quality, and in addition must be supported by a positive image of the firm according to the customer.

Zeithaml and colleagues (1990) found that to be able to know what service quality is to the customer they had to ask the customer. Through research they found that when customers assess service quality they form their opinions by comparing their expected and perceived service and relate it to five dimensions as evaluative criteria (Zeithaml et al. 1990). The nature of the encounter between the high-tech service and the commuter as part of the service

offering address three of the dimensions, these are:

Tangibles

The appearance of physical facilities, equipment, personnel, and communication materials.

These can be described as how the customer sees the physical surroundings set by the service provider, such as the degree to which the bus is clean and tidy, or the look of the boards presenting timetables.

Reliability

The ability to perform the promised service dependably and accurately. This dimension show how customers rely on the service to be delivered in a predictable manner, such as being sure that the bus leave and arrive on time every time, or that information is accurate.

Assurance

The credibility, trustworthiness, believability, and honesty of the service provider.

Furthermore security, to be free from danger, risk, or doubt, and the competence, such as possession of the skills and knowledge required to perform the service. Courtesy is required through politeness, respect, consideration, and friendliness of contact personnel. This dimension shows how important it is to be truthful, informative, and intelligent, always to look for the best of the customer. For instance it is crucial that bus drivers are excellent drivers as well as being polite to commuters travelling with the company.

In addition to these dimensions we need further knowledge as to what has been found to be specific when it comes to services based on technology, and the customer assessment in the experience of such services.

3.4 Technology-Based Service

According to Grönroos (2000), services can be divided into either high-touch or high-tech.

Services from a traditional point of view has been seen as high-touch (Bitner et al., 2000) which means that the service is mostly dependent on people in the service process. High-tech services are on the other hand based on information technology and automated computer

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systems. Most high-touch services also contain elements of physical resources or computer systems, and high-tech is often dependent on people, not the least when technology fails to live up to customers’ expectations (Grönroos 2000).

The role of technology in services is also discussed by Edvardsson (1997) who stresses that

“technology is not a goal in itself but a means, a means of creating favourable conditions for increasingly better services...”(Edvardsson 1997 p.38), he continues by addressing the issue of being customer-focused and business-oriented when involving new technology

“Technology-run developments seldom result in the best added value, the most attractive services and the best customer-perceived quality”(Edvardsson 1997 p.38). Instead it has been suggested by researchers that development must include customer-involvement in order to create a greater value perceived by customers (Lüthje, 2004; Magnusson et al., 2003;

Echeverri & Edvardsson, 2002).

As mentioned earlier technological innovations affects the development, production and delivery of services. Customers now often produce their own services without interaction with service-personnel, and it is therefore crucial for companies to understand the acceptance-level for technologies amongst their customers (Fitzsimmons & Fitzsimmons, 1998). There are numerous examples of how technology is used within services to different degrees from a tool for service-personnel, to actually being the service-personnel (Bitner et al. 2000).

A key to understand the customer’s impression of a service that is technology based is to gain more knowledge of what it is they encounter when consuming the service, and what parts of these experiences are affected by the infusion of technology. What is encountered can be described by the help of Lovelock & Wirtz (2007) who present a version of the servuction system7 . Within the frame of this system they explain which parts of the service production that are visible to the customer, such as environment, contact personnel, other customers, and the customer self. Non-visible parts of the system are also presented as part of three

overlapping elements: service operations, service delivery, and other contact points. These three elements make up the service marketing system, which presents all possibilities in which customers can learn about and experience an organization. Lovelock & Wirtz (2007) further states that the development of this system is done to make marketers aware of that their involvement is needed in order to research how customers behave during the element of service delivery to be able to create a routine of delivering services the right way.

Lovelock & Wirtz (2007) continue to discusses the service delivery element saying that it is about where, when and how the service product is delivered to the customer. If the service is delivered through impersonal electronic channels, such as a computer or on an electrical board, there is virtually no physical contact with the service provider. At the far end of the scale, having no physical contact, only contact through technology, we find Self-Service Technologies.

3.5 Self-Service Technologies

“Self-service technologies (SSTs) are technological interfaces that enable customers to produce a service independent of direct service employee involvement” (Meuter et al., 2000 p.50)

7 Terminology established by Eiglier and Langeard states that service business is a system which integrates marketing, operations, and customers.

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SSTs differ from traditional services, because they place the customer in a situation where he or she is expected to interact with a machine or device whilst producing the service.

Furthermore this type of service differs by the fact that the place in which this service- encounter takes place vary widely, often outside the actual service company, sometimes at home (Echeverri & Edvardsson, 2002). Echeverri & Edvardsson (2002) explain the problem that new technologies are often not as easy to use as the customers wishes them to be, and that the communication of how to use these facilities often is insufficient. They further state that in most cases of the first encounter with a service, the experience for the customer is of major importance for further use of the service, everything must work.

Today the customer is faced with many types of SSTs, from internet information searches to vending machines and telephone banking, which increases the problem of understanding how the customer experience of such technology solutions might be perceived. Meuter, et al.

(2000) have categorized SSTs in order to get an overview of what is available. They suggest three different categories by referring to the purpose of the self-service technology. The first category is customer service, because many forms of helping customers are now provided through technology. Second, transactions, both consumer and business-to-business sales are enabled through technological solutions. And finally, self-help, which refers to technologies that enable customers to learn, receive information, train themselves, and provide their own services. These categories are enabled and provided to the customer through technology interfaces such as telephone, Internet, and interactive kiosks.

Because technology changes the way customers experience the service encounter we further expand the discussion of assessment of service made by customers in the following section.

3.5.1 Customer Assessment of Technology-Based Service Encounters To make it possible for service providers, who deliver services through self-service technologies, to see what really matters to the consumers and what their major points for assessment are, Meuter et al. (2000) found sources of satisfaction or dissatisfaction with SSTs.

When it comes to points of satisfaction these are described as: solved intensified needs, better than the alternative, and did its job. The categories show that the consumers appreciate when the service can help them in difficult situations which are affected by external environmental factors that add a sense of urgency. Technology encounters are better than the alternative when (divided into subgroups) they are: easy to use, make it possible to avoid service

personnel, save time, when I want, where I want, and finally save money. Some customers are satisfied simply because the technology does what it is supposed to (Meuter, 2000).

Dissatisfying sources on the other hand were described as technology failure, which is when the technology does not work as intended: process failure, that is when there is a failure in the process after the customer-technology interaction; poor design, either regarding the

technology design or the service design in both cases the SST functions correctly, but the design is a problem; and customer-driven failure, which means that the customer in some cases understand that their actions contribute to the result of the encounter and are willing to take some blame when things go wrong (Meuter et al. 2000).

3.6 Theoretical Framework

To clarify our theoretical framework we will in this part present an analysis model. An

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theories. The purpose is to give a clear overview of how we use the theories presented in chapter 3, in the results and discussion, and conclusion chapters.

A supporting service is a complementary service to the service providers core service. The core service and supporting service form together with facilitating services the service offering. The supporting service should enhance the value of the core service and the service offering, it is not mandatory in order for the core service to function but as the core service is dificult to diversify, supporting services are a great source of competitive advantage and delight customers.

A high-tech supporting service is often some kind of self-service with a technological solution (Self-scanning in Supermarkets, or a real-time bus departure time in this case). Live, in its role as a high-tech supporting service, consists of three parts: electronic boards, the website and the WAPsite. The different categories of self-service technologies found by Meuter et al.

(2000) is used to analyze what reasons there are for satisfaction and dissatisfaction when customers use Live.

The culture in which the service consumption takes place, and the level of technology- readiness influence the customers’ perception of a high-tech service, and we use the work by Parasuraman et al. (2000) on technology readiness to investigate if it also affect the

perception of Live and also relate to the Scandinavian culture.

The service quality dimensions found by Zeithaml et al. (1990) measures general quality and can be used to measure the quality of the supporting service but also the Total Service Offering. In this study we examine the overall perception of Live using three of the service quality dimensions.

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4. Results and Discussion

In this part we discuss and analyze the results from the focus group interviews in the light of the theoretical framework described above. First we discuss what kind of service Live is to the different parties of this service: the commuters, the service provider, and the service management view that we have adopted. This is done in order to see that different views might affect how the introduction of this high-tech supporting service is perceived when related to the service offering.

In this chapter the following words are used frequently:

Internet; the World Wide Web in general WAPsite; the WAPsite of Live

Website; the Karlstadsbuss website for Live (www.karlstad.se/buss/live)

E-boards; the electronic boards placed at bus stops displaying real-time departures Users: respondents who uses Live through internet and/or WAP

Non-users: respondents that do not use Live though internet and/or WAP

4.1 What Kind of Service is Live?

During the research we realized that the understanding of what Live is, differed from the commuters, Karlstadsbuss, and us. In the following section we explain the different views and discuss the different parts of Live.

Karlstadsbuss sees Live as a brand presented to their customers (the commuters), a way to package and deliver information about departures. Live consists, in addition to being a brand, of e-boards, a website, and a WAPsite. Karlstadsbuss has no intention to remove the

paperback timetable. They see Live more as a complementary service to the paperback timetable. The system used to produce the information presented through Live is also used internally for traffic control and supervision. When Live was introduced the system already existed and therefore no new technology installations in the system was needed. The already existing information was repackaged to suit the commuters, and the result was called Live8. The respondents on the other hand see Live as a complete service, or system, including all the technology behind. Because of this some of the comments from the interviews discussing problems with Live is really a discussion of the traffic control system. The fact that customers sometimes include resources as a part of the service is not at all rare (Echeverri &

Edvardsson, 2002).

4.1.1 Live From a Service Management Perspective

Karlstadsbuss service offering includes the actual bus ride, that is the core service which satisfies commuter’s primary need, to get from point A to point B; facilitating services for example different travel passes and other payment methods, and supporting services such as Live. Commuters have several possibilities to find out which time “their” bus leaves from the stop, apart from Live there is the ordinary paperback timetable, which is also available on the Karlstadsbuss website and Kollplatsen which we describe in Appendix 2. The difference between facilitating and supporting services is that the facilitating services are mandatory (Grönroos, 1990; 2000). Even though the paperback timetable is not mandatory for the core service, the buses will still run, the timetable plays a very important role in the service

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offering. Live is a complementary, or supporting service in service management theory (Grönroos, 1990; 2000), because it can enhance the perception of the service offering, the service cannot be purchased separately and it is not mandatory for the core service to function.

Because the commuters have several options of supporting services which present the

timetable, these supporting services compete against each other. The customer will choose the option he or she perceives as the most valuable. The different delivery processes (e-boards, the website and WAPsite), will in fact compete against each other as well. The delivery processes differ from each other on two significant points; the level of customer involvement, and the level of skills. The e-boards do not require any involvement from the customer or any particular skills to use while the website require, not much, but some time to use. The

WAPsite demands, first and foremost that the commuter has a WAP equipped mobile phone and the knowledge how to use the WAP function. Because of this, the commuter will more likely adopt and use the e-boards faster then the website and WAPsite. The e-boards are actually on the bus stop delivering information, whether the commuters wants it to or not.

With regards to the definition of SSTs by Meuter et al. (2000) the website and the WAPsite as technological interfaces are seen as SSTs in this study. Because of this the e-boards are treated differently from the other parts of Live in the analysis. The e-boards are however part of the complete service Live.

4.2 High-Tech Supporting Service

The commuter who has a primary need of getting from point A to point B is placed in a service encounter where technology is infused by the service provider through the

presentation of the supporting service. Live is enabled through technology, both the actual real-time data presented, and also the channels for delivery namely the website, WAPsite, and e-boards. The following analysis of the focused group discussion data is built through the use of the theoretical reference frame model that was introduced in chapter 3.6. We start to look at the parts of Live that are SST, then we move along the model and discuss Live in the light of service quality, technology readiness and culture, and relate this to the overall effect on the customer experience of the service offering by Karlstadsbuss.

4.2.1 Customer Assessment of Technology-Based Service

When the respondents who use the Live website and/or WAPsite describe their experiences with Live we find traces of both the dissatisfying and satisfying factors described by Meuter et al. (2000).

What stands out to be of importance for the users is that the SST solves a very specific need that they have. This need is described by Meuter et al. (2000) as an intensified need, which means that the situation is affected by external environmental factors that add urgency to the transaction. The users (mostly of WAP) argue that their main reason for use is that they travel from less crowded bus stops with few buses departing, and with no e-boards at the stop. One of these respondents in addition state that she relies heavily on WAP because her bus

departure time fluctuates from one day to another “... it fluctuates from seven to ten past...

last Friday it came two minutes past, so I missed it.” The alternative for these users would be to use the paperback timetable, which cannot give them the exact time and therefore would have them wait longer at a bus stop without an e-board, a case that is not attractive in the eyes of these respondents.

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