26 Abstract Unlike the open competition economic sec- tors where tens, hundreds or even thousands of companies ‘struggle’ to provide consumers not only with services but also with special util- ity, the regulated markets (power supply, public transportation, public safety etc.) are dominated by a limited number of service providers. Some- times the situation is pushed to the point where a few companies ‘control’ the market and set the prices. Although the power and gas supply is still ‘dictated’ by the Romanian authorities, the direc- tives of the European Union coerce the govern- ment to deregulate the utility sector and liberalize prices. For the companies concerned, this entails a better customer orientation and an adaptation of their services to the customers’ expectations and preferences. From this point forward, the util- ity suppliers will have to better cope with the pub- lic’s various forms of dissatisfaction with prices, performance or communication etc. The authors of the current paper attempt to analyze how some characteristics of the market- ing mix of utility providers may contribute to a proper understanding and building satisfaction with two surveyed regional providers. The find- ings reveal significant management implications which help utility providers better channel their efforts into the proper knowledge of markets and particularly the target segments that they ap- proach. Keywords: public administration, public services, public utilities, customer satisfaction, market regulation, Romania. A CUSTOMER-ORIENTED APPROACH TO SATISFACTION WITH PUBLIC SERVICE PROVIDERS. EMPIRICAL FINDINGS FROM A MARKET UNDERGOING LIBERALIZATION* Dan-Cristian DABIJA Raluca BĂBUŢ (COMIATI) Ciprian-Marcel POP Dan-Cristian DABIJA Assoc. Prof., PhD, Department of Marketing, Faculty of Economics and Business Administration, Babeş-Bolyai University, Cluj-Napoca, Romania Tel.: 0040-740-189.659 / 0040-264-418.652 / 3 / 4 / 5 E-mail: cristian.dabija@econ.ubbcluj.ro Raluca BĂBUŢ (COMIATI) Lecturer, PhD, Department of Marketing, Faculty of Economics and Business Administration, Babeş-Bolyai University, Cluj-Napoca, Romania E-mail: raluca.babut@econ.ubbcluj.ro Ciprian-Marcel POP Associate Professor, PhD, Department of Marketing, Faculty of Economics and Business Administration, Babeş-Bolyai University, Cluj-Napoca, Romania E-mail: marcel.pop@econ.ubbcluj.ro * Acknowledgment: This paper has been co-financed from the European Social Fund, through the 2007-2013 Human Reso- urces Development Operational Sector Program Project num- ber POSDRU/1.5/S/59184 “Performance and excellence in the post-doctoral research within the economic field in Romania”. Transylvanian Review of Administrative Sciences, Special Issue, pp. 26-49 27 1. Introduction A well-organized public sector with services adapted to the citizens’ requirements and characteristics must be a reality within a well-functioning market economy. The central and, particularly, the local public administration bodies must ensure that the public services essential for citizens (electricity or thermal energy, lighting, clean-up, public safety and order, regional or local transportation, support for the disabled, educational or medical assistance, payment of fines, taxes and fees) are always pro- vided according to the highest standards. The supply of these services requires a lot of personnel, time and effort, does not generate profit, and is often viewed as a millstone around the neck of the central or local administration bodies. Consequently, a real challenge for both the company and the top management of local or national public administration is to make the operation of these services more effective so that the citizens may be satisfied with them (Wright, Chew and Hines, 2012). The constant and, as far as possible, the impeccable supply of these services will guarantee the advancement of the human society (Ionescu, Lăzăroiu, and Iosif, 2012; Brezuleanu, Brezuleanu and Iatco, 2013). Operating on a relatively highly-regulated market, the regional energy suppliers – Electrica Furnizare Transilvania Nord (EFTN) and E.ON Gaz – represent two quasi- monopolies for the captive citizens (domestic consumers) who are unable to choose another supplier. There are special instances when the customer may give up the ser- vices of the gas company and set up his/her own heating system (heat pump, solar panels etc.). Similarly, the citizen may give up the services of the electricity supplier and set up his/her own power systems (solar panels, wind systems etc.). However, due to the high financial costs and the red tape, such solutions are unlikely, or less likely, to be implemented. Since it is physically impossible to have the two services (electricity and gas) sup- plied by several companies, the two suppliers are not compelled by any means to adopt a marketing approach (focused on adapting the products and services to the customers’ requirements and needs). Naturally, the concerned regulation bodies im- pose the price ranges (tariffs), the conditions on the supply safety, and the sanctions to be applied in case of failure to ensure the optimal supply. Although gaining cus- tomers’ satisfaction is not the most important goal of the two companies, the citizens’ opinions and perceptions should change due to the personnel’s behavior, the services provided and the investment programs for the renewal of the supply infrastructure. 2. The public sector – the energy market in Romania The energy market in Romania, be it the electricity or the natural gas market, has been liberalized for several years from a legislative standpoint. Liberalization involves the existence of many organizations capable of providing consumers with services specialized in producing, distributing or supplying the needed products or services. Liberalization also makes it possible for consumers to reduce the final costs, ensures a relatively free price, and turns the energy-producing process into a more 28 effective one (Trăistaru, 2010a; Transelectrica, 2013). Liberalization allows consum- ers to freely choose or change the supplier, whenever they wish or see fit, without being charged extra fees, in addition to those stipulated by the contract. In reality, however, the Romanian citizen is a captive consumer, unable to freely choose his/her supplier (Electrica, 2013). This is accounted for by the lack of proper law-enforcement procedures – despite the legal possibility to migrate from the regulated towards the free market – and the fact that the majority of energy suppliers are still owned by the state which, for social and political reasons, prefers to impose a regulated, below the market, price (Trăistaru, 2010a, 2010b). Table 1 presents a short overview on the major energy providers in Romania. Table 1: Major energy providers in Romania Type of service Providers State owned / Private Observations (year when it entered the Romanian market, % of shares, type of price) Electricity (regional providers) E.ON Moldova (E.ON Germany) Private 2005 (24,6% of former Electrica Moldova) + capital increase to 51%, prices are not liberalized CEZ Oltenia (CEZ Cehia) Private 2005 (24,6% of former Electrica Oltenia) + capital increase to 51% + acquisition of shares from other shareholders in 2009, prices are not liberalized ENEL Romania (ENEL Italy) Private 2005 (51% of former state owned Electrica Banat and Electrica Dobrogea) + 2007 (67,5% of former Electrica Muntenia Sud), prices are not liberalized Electrica State owned 78% Electrica Furnizare (former Electrica Distribuție Transilvania Nord, Electrica Distribuție Transilvania Sud, Electrica Distribuție Muntenia Nord), prices are not liberalized 23,6% Electrica Distribuție Muntenia Sud 24,9% Electrica Distribuție Banat 24,9% Electrica Distribuție Dobrogea 27% Electrica Distribuție Moldova 27% Electrica Distribuție Oltenia Water supply Regional providers State owned Regulated prices, depending on the regional production and distribution costs Gas (regional providers) GDF Suez Energy Romania (Gas de France) Private 2005 (30% of former Distrigaz Sud) + capital increase to 51%, prices should be fully liberalized within fi ve years E.ON Gaz Distribuție Romania (E.ON Germany) Private 2005 (30% of former Distrigaz Nord) + capital increase to 51%, prices should be fully liberalized within fi ve years Congaz Constanța Private Coshared by Ruhrgas, SNP Petrom, Distrigaz Sud, Petroconst Constanţa and the local communities of Medgidia, Ovidiu, Kogălniceanu and Cogealac, prices should be fully liberalized within fi ve years Thermal Local providers State owned Mostly owned by local communities, price level depends on the type of fuel as well as on the subsidies given by authorities Sources: Proprietatea Fund in 2013, the companies’ web pages, Wikipedia. Romania’s accession to the European Union entailed the acceptance by the Roma- nian government of complete liberalization of the energy market. Thus, a timetable 29 was agreed upon to ‘align’ the gas and electricity prices for domestic consumers and non-domestic consumers by the end of 2017 and by December 31st, 2015, respectively (Pîrvoiu, 2013). In compliance with these regulations, the regulated prices of natural gas for economic operators were done away with as of December 1st, 2012, while for domestic consumers they were eliminated on July 1st, 2013. As for the electricity mar- ket, the removal of price regulation started on September 1st, 2012 for non-domestic customers and will further be effective on July 1st, 2013 for domestic consumers. The responsibility for supervising, controlling and regulating the Romanian energy sector rests with the Romanian Energy Regulatory Authority (ANRE). The main function of the said authority is to set up, on an annual basis, the tariffs/prices to be paid by the captive consumers (Trăistaru, 2010a, 2010b). ANRE will have to ensure the proper enforcement of these regulations, in compliance with the terms of the new law. The complete liberalization of the Romanian electricity market started on September 1st, 2012 while that of the gas market started on December 1st, 2012 (Liberalization of the energy market, 2012). Although the short-term effect of the liberalization of the energy market on the end consumer is the adjustment of the current prices, the process may be thought of as beneficial due to the number of competitors in the field of energy production (for example, due to the use of alternative energy sources, wind power, biomass, geother- mal or solar). On the other hand, the number of energy producers varies according to the type of the market – households versus companies, the latter segment being more attractive to energy producers because price is determined freely between sup- ply and demand (Liberalization of the energy market, 2012). The energy market is an oligopoly to the ‘captive’ households, while these are relatively unattractive to energy producers as they consume very small quantities. At the same time, liberalization entails the increase of decision-making transpar- ency and of the objectivity concerning the access to these services of the end customer and the setting up of the final prices (Transelectrica, 2013). In the future, the compa- nies operating on the energy market will be able to provide the domestic custom- ers with both natural gas (heating) and electricity. At the time being, however, the legislation on the development of infrastructure for the supply of energy products is ambiguous and the customer is highly hampered in choosing the preferred supplier (Trăistaru, 2010b). The main players in the sector of electricity are the companies that supply nuclear energy (NuclearElectrica), water energy (Hidroelectrica), thermal energy (Termoelec- trica) as well as those which produce green energy from renewable sources, mainly wind, solar, geothermal or biogas (Trăistaru, 2010b). The liberalization of the elec- tricity market made room for the European concerns – RWE Germany, E.ON Ger- many, EFTN Italy, Electrabel Belgium, CEZ the Czech Republic, Iberdola Spain etc. – to herald their intention of approaching the market by each type of energy (nuclear, water, thermal, alternative). The production capacities of these companies have been relatively small until now, significant investments being announced for the following 30 years, such as the building of other nuclear reactors at Cernavoda and the develop- ment of wind farms (Fantaziu, 2013). Moreover, the big steel mills – ArcelorMittal – also announced their intention to produce electricity (Matache, 2013). Several companies operate on the home gas market, both in the field of extrac- tion and distribution, and in the field of supply to the end consumers, both domestic and industrial. According to the data provided by ANRE, about 82% of the gas con- sumed in 2012 was extracted from the Romanian fields by the five domestic compa- nies (Amromco Ploieşti, Romgaz intern, OMV Petrom, Foraj Sonde, Raffles Energy), and the remaining 18% was imported by about 11 companies – Azomureş, Arelco Power, GDF Suez Energy Romania, Elcen Bucharest, Conef Gaz, Interagro, Intergaz, Romgaz Import, Mol Energy Trade, OMV Petrom Gas, Wiee Romania SRL. The big- gest producers are the companies Romgaz and OMV Petrom (ANRE, 2012). While sig- nificant shares of the Romanian free gas market are held by the companies Interagro and Romgaz (each holding about 21%), OMV Petrom Gas and Petrom Sucursale (each holding about 15%), GDF Suez Energy Romania and E.ON Energie Romania (each holding about 6%), the biggest players on the regulated market are GDF Suez Energy Romania (with a share of 55%) and E.ON Romania (with a share of 35%). The suppli- ers Congaz, Intergaz and Petrom Distribution have each a market share of 1% while the rest of shares are held by companies such as Gaz Est Vaslui, Wirom Gas, Gazvest, Distrigaz Vest, CPL Concordia etc. (ANRE, 2012). Overall, ANRE certified 74 compa- nies to conduct activities in the gas sector on the Romanian territory (ANRE, 2013). 3. Marketing mix of public services There are a number of striking similarities between the marketing mix of public utilities and that of private suppliers. In fact, both mixes will, of necessity, include a product offer, prices, distribution and promotion elements, personnel, and physical evidences (Nedelea, 2006b, p. 94). From the marketing point of view, the public prod- uct comprises the whole range of elements that stimulate the demand of services of this kind. It is made up of all material (tangible) and immaterial (intangible) character- istics of this sector, as well as the surrounding atmosphere (Munteanu, 2003, p. 196). It is very important/relevant to the current public supplier to differentiate/delineate its product as precisely as possible: cultural and sports services, social assistance services, public order, education services, electricity supply, health services, road building etc. The heterogeneous nature of public services demands that a compromise be reached between performance and flexibility, between standardization and differen- tiation (Tănăsescu, 2008, p. 51). Although it seems quite simple, this compromise is not easily worked out because each beneficiary of the public services has his/her own expectations, needs, preferences, attitudes and criteria for assessing the degree of ser- vice differentiation. Due to economic reasons and in order to make the supply faster, more simple and accessible, the public utilities standardize the supply to a great ex- tent, which sometimes brings them in conflict with the customers’ interests. For in- stance, the regional electricity company, Electrica Furnizare Transilvania Nord-Vest, 31 in its attempt to adapt somewhat to the market needs, provides standard services that are priced according to the minimum basic consumption. The company also provides other consumption variants/opportunities in the form of seven different tariff systems to choose from, depending on the quantity of consumed energy, the time-of-day and the nature of the supply circuit (EFTN, 2013). As far as the gas supplier is concerned, flexibility represents the customer’s op- portunity to choose between the billing based on the estimated quantities within the consumption program agreed on by customer and supplier, and the billing based on meter reading and sending the reading to the supplier (E.ON, 2013). The price of public services exhibits a number of peculiarities. For instance, al- though some public services are apparently supplied for free, they are indirectly fund- ed through taxes and duties paid by the citizens. The state authorities are faced with an acute dilemma when it comes to the services that must be supplied on a regular basis (safety, public order, medical services). Thus, the services must be supplied re- gardless of the costs incurred and the citizens must permanently be granted access to them (Barbu, 2011, pp. 46-56; Olteanu, Ionescu and Barbu, 2013). When developing the price strategy, the public utilities adopt a cost-oriented as well as a demand-oriented approach. Thus, an attempt is made to optimize costs and the utility of the public prod- uct. However, some problems may arise because the citizens-customers perceive util- ity in a different manner. To some customers utility is identical to low tariffs whereas others expect the products and services to have intrinsic characteristics (quality, reli- ability) (Munteanu, 2003, p. 213; Lutilsky, Vasicek and Vasicek, 2012, pp. 413-419). Two tariff systems are used in Romania to price the local public services: real pric- ing where the amounts paid by the citizens are directly proportional to the received service quantity, and the global pricing. In the latter case, the price for the public service is calculated according to some formula and does not reflect the real costs (Costea, 2000, pp. 140-141). Whereas the former tariff setting is similar to a price sys- tem set by the market, in the case of the global pricing the extra consumption is not reflected in costs. For that reason, many view this method as being unfair. The tariffs for electricity and gas are set by decisions of Romanian Energy Regu- latory Authority, a distinction being made between domestic consumers and those assimilated to domestic consumers, on the one hand, and non-domestic consumers (companies), on the other hand (Electrica Furnizare, 2013). The nominal value of the electricity tariffs paid by Romanians is one of the lowest in Europe. Benchmarked against the purchasing power, the electricity tariffs paid by the Romanian captive domestic consumers are above the average in the European Union and almost twice as high as that in France. The gas price paid by the Romanian population is the low- est in the European Union, both in terms of the nominal value and in relation to the purchasing power (Finanţiștii, 2012). Distribution of public services refers to the time and place/space where customer- citizens have access to the offer of public products and services. Distribution is heavily 32 influenced by service intangibility and inseparability. Therefore, the direct distribu- tion channel prevails while intermediaries are resorted to only in special circumstanc- es (Munteanu, 2003, p. 344). The distribution policy of the analyzed public utilities is translated into finding the optimal location for desks, offices and public relation cen- ters (Dabija and Băbuţ, 2012). Suppliers must identify solutions to a number of prob- lems that might arise within these units, such as the waiting time, personnel kindness and competence, atmosphere and cleanness of customer relation centers (Kotler and Lee, 2008, p. 99). The satisfaction of the customer-citizens’ needs begins with solving these problems and creating a pleasant and attractive atmosphere. The importance of placing support desks close to the customer has been understood by electricity and gas suppliers as well. Consequently, they have opened customer relation centers close to the customers where they have the opportunity to dial special numbers twenty- four seven and send complaints, dissatisfactions or objections (Pranic and Roehl, 2012, pp. 244-247). The role of the marketing communication is to inform, to educate and, sometimes, to persuade the target market to adopt a proper behavior (Kotler and Lee, 2008, p. 135). In the case of public services, the messages usually convey information of public util- ity. Therefore, public communication should make citizens aware of the existence of public organizations, their duties and modus operandi, the legality and timeliness of the decisions adopted. At the same time, public communication should serve as a means of knowing people’s needs and expectations so that public institutions, by their role and duties, may be able to meet them and, thus, serve the general interest (Nedelea, 2006b, p. 131). The purpose of the communication campaigns in the public sector is to persuade citizens that the goal of the public decisions being made is the common welfare and, thus, citizens are expected to support them. Hence, the citizen must be informed about the existence and the operation method of public services, attention must be paid to when s/he voices his/her dissatisfaction, and his/her desires and needs must be attended to (Wright, Chew and Hines, 2012, pp. 433-450). The PR and advertising campaigns of gas and electricity suppliers are aimed at turning the spotlight on the supplier in order to build and improve its image and pro- mote its values. The campaigns inform the customer-citizens about the characteristics of services and the improvements these undergo, and about the investment projects or the social responsibility actions being performed. Another means of communication between gas and electricity suppliers and citizens is the virtual environment. The sup- pliers developed specialized platforms (Oficiul virtual Electrica, 2013; MyLine E.ON, 2013) where customers may create their own accounts, check the updated consump- tion, upload meter readings, pay the bills for the received services, file complaints or suggestions and find out the calculation formula for the electricity/gas prices. Ad- ditionally, the platforms may be used to find answers to frequently asked questions, find information about contracts, tariffs and duties, and see the contact information and the working hours of the customer relation offices etc. 33 The personnel policy is the best means of interaction between the public utilities and citizens. Customers sometimes identify the supplier’s image with their perception of the office personnel or the maintenance employees. Therefore, the contact person- nel’s lack of receptiveness and politeness or their improper behavior could ruin other marketing efforts made to satisfy the needs of the customer-citizens. Conversely, the kindness and professionalism of the counter staff exerts a positive effect on the image of the public utility. Among the goals of a proper personnel policy one should include the personnel recruitment and coordination, their proper motivation, ensuring they are highly efficient in every activity performed, their assessment and remuneration, their involvement in marketing events and gaining the personnel’s loyalty (Homburg and Stock, 2001). The personnel of gas and electricity suppliers working in customer relation and bill payment centers as well as the emergency repair staff may undoubtedly check whether or not citizens are satisfied with the company’s service performance or the level of tariff acceptance. In fact, the personnel may notice the customer’s reaction to tariff changes and the various actions performed by the company, which takes the form of a valuable feedback for the decision-making factors. Physical evidence stands for the actual space where public services are supplied, including the interior design (decor), atmosphere and how well it is equipped. It is the place where the direct contact between the supplier’s employees and citizens takes place (Nedelea, 2006a, pp. 416-419). The intangibility of public services and the diffi- culty of expressing and perceiving their quality turn physical evidence into a tool that should help the citizen ‘see’, understand, appreciate and, mainly, recognize the utility of the service. To many payers, physical evidence is the needed indicator that helps them appreciate properly the quality of services to be purchased, which contributes to building a positive image of the supplier (Lovelock, 1983, p. 199). A number of aesthetic factors (architecture, design, color etc.) have been consid- ered by the gas and electricity suppliers when developing customer relation centers, so that the customer-citizens’ attitude and mood may be positively influenced. Thus, customer relation centers convey the image of prompt service so that queuing may be avoided as much as possible. 4. Customer orientation and the citizens’ satisfaction with the products and services of public utilities Nowadays the public services market in Romania is characterized by three conver- gent courses of action: privatization, decentralization and deregulation (Tănăsescu, 2008, p. 52). Within this context, it is imperative for the suppliers operating on the mar- ket to understand that merely providing services is not enough for citizens. Although very few customers can afford to shift to alternative heating or energy systems (heat pumps etc.), the dependence on a single supplier (which creates monopoly) tends to become history. Therefore, the orientation towards the citizens’ needs has to become a top priority, even a must, for public utilities. Whereas customer satisfaction is a major goal that exerts a significant, even overwhelming, effect on the success and profitabil- 34 ity of the other (private) service providers, in the public sector the citizens’ satisfaction and contentment generates trust in suppliers and a favorable image about them. Exhibiting customer orientation presupposes the integration of expectations, de- mands and desires of the target group into the offer of the utility suppliers. To this ef- fect, the companies may choose to develop service packages adjusted as best as possi- ble to the customer-citizens’ socio-demographic profile (the income, in particular). For instance, the electricity supplier may charge customers lower tariffs for the night-time power or the power consumed during low-consumption periods so that citizens may timetable specific activities during these intervals (washing, ironing etc.). Similarly, the gas supplier could make a more attentive tariff differentiation of customers ac- cording to the quantity consumed. Customer orientation also implies giving a prompt reply to complaints and suggestions (Pop et al. 2012), ensuring a proper maintenance of equipment, conducting regular checks on the supply infrastructure and making always sure that customers are satisfied. The satisfaction felt by an individual represents the extent to which the service provided or its components produce a satisfactory level of fulfillment/contentment by comparison with the citizen’s expectations (Oliver, 1999, pp. 33-44). Therefore, satis- faction is understood as the consumer’s emotional reaction to the gap between his/her expectations and the adequate offer (Henning-Thurau, Gwinner and Gremler, 2002). The customers-citizens’ expectations with regard to public services are influenced by a number of factors the most significant of which are culture, individual needs, the image of the public service supplied, the past experience with the service, the utility obtained by consuming the service in comparison with other similar services, sta- tus, age, ethnic group, the frequency and regularity of service usage etc. (Nedelea, 2006b, p. 49). Suppliers may influence the citizens’ degree of expectation and thus prevent them from becoming dissatisfied by providing information on the objective conditions that citizens must satisfy to benefit from the services and on what can be expected with regard to the service quality. Another factor that differentiates the public sector from the private sector is the opportunity for the customers-citizens to sometimes be exempt from payment for the public service because they are legally entitled to it. At the same time, the access and eligibility of customers-citizens to the public services or programs is dependent on a mixture of social and political reasons (Şandor and Raboca, 2004; Collins and Kim, 2009). The public utility can gain a number of advantages by paying increased atten- tion to the customers-citizens’ satisfaction: increase of income, considerable support for obtaining funds, increase in operational effectiveness and the improvement of the activity indicators (Kotler and Lee, 2008, pp. 164-167). This is further facilitated by five main practices: supporting employees to provide faultless service, securing infra- structures and systems that foster (and not suppress) the service, creating customer relation management systems, applying the principles of total quality management (TQM), searching for customers’ expectations and determining their degree of satis- faction (Kotler and Lee, 2008, pp. 168-175). 35 5. Research methodology In order to analyze whether citizens can be satisfied by utility providers through various stimuli, two regionally representative companies were selected, namely, the gas supplier E.ON Romania, and the electricity supplier Electrica Furnizare Transilva- nia Nord. Since the services of the two companies are essential for what is considered a decent living, the challenge of the current research is to reveal the impact and sig- nificance of all elements of the marketing mix on customers’ satisfaction with the two investigated suppliers. The gas supplier is a private company whereas the electricity supplier is still under the ownership of the Romanian state. Therefore, it is interesting to find out the extent to which the two companies operating on a regulated market manage to make citizens, through their mix of marketing tools, feel a proper level of satisfaction with their products and services. For meeting the above stated objectives, the authors conducted a quantitative research based on questionnaire administration. The dimensions of the model pre- sented in Figure 1 have been operationalized according to the literature guidelines. Thus, the investigated dimensions were changed into measurable indicators from the customers’ perspective (Pop et al., 2011) and included in the questionnaires which were distributed to customers by means of face-to-face interviews. The analysis of the effect of public utility characteristics (services offer, communication, customer rela- tion center, web presence, service, customer orientation, tariffs) on satisfaction was conducted by means of the structural equations modeling (AMOS 20.0). The answers aggregated into a SPSS database were previously subject to specific tests to check their validity, consistency and reliability. To this effect, use was made of the Cronbach α coefficient, the ‘item-to-total’ correlation, and the exploratory factor analysis. As the tests revealed more than satisfactory values, the econometric models could be applied on the investigated phenomenon, as shown in Figure 1. As the Romanian literature review showed, there are no similar studies focused on citizens’ perception of the public utilities. Consequently, the authors conducted an exploratory research in which they adopted a scientific, systematic and structured approach to the concepts of satisfaction and the marketing mix, which they applied to a regulated market. In this respect, the authors relied on convenience sampling. However, in order to ensure proper research representativeness, a quota sampling on age and gender was used, in compliance with the directives of the Annual Romanian Statistics Yearbook of 2010. Furthermore, the questionnaire was administered in both urban and rural areas. The interviewers were instructed to approach respondents in public places (parks, in the street etc.) and at their workplace or domicile. The ques- tions were framed on a five-point Likert scale (from total disagreement to total agree- ment) and respondents were asked to choose the level that best fits their perception of the concerned supplier. 36 Satisfaction Services offer Communication Customer relation cent rs Web presence Service Tariffs Customer orientation Figure 1: Proposed analysis model (values for the sample as a whole) Source: Authors’ own research 5.1. Operationalization of constructs The following are the conceptualized characteristics that customers perceive with the public utilities analyzed: services offer, communication, tariffs charged, custom- er relation centers (service distribution), supplier’s presence in the media, customer service, and orientation towards customer loyalization (Keller, 1993; Chowdhury, Reardon and Srivastava, 1998, pp. 74-75; Martin-Consuegra, Molina and Esteban, 2007; Arnold, Oum and Tigert, 1983, p. 152; Yoo and Donthu, 2002, p. 387; Hansen and Deutscher, 1977/1978, p. 65; Sirdeshmukh, Singh and Sabol, 2002, p. 34; Léo and Philippe, 2002, p. 137; Binninger, 2008, p. 104). Thus, the quantification of customers’ perception of the services offer took into account the quality of products and services (‘the supplier …. provides high-quality services’) or the entire range of provided services (‘the supplier … has a good services offer’). Since every supplier attempts to communicate with the customers, the analysis focused on the amount of information provided by ads (‘advertising of supplier … is informative’), as well as on the public’s access to extra information materials about the company or its services. The quantification of the supplier’s physical presence was achieved through statements about the accessibility and proximity (convenience) of its location (‘The public utility …. runs a customer relation center in an optimal location/downtown’). As both suppliers have a web presence, citizens were asked to express their opinion about how attractive and accessible their web page is, and about the possibility to make online payments (‘The web page of the public utility … is easily accessible/attractively designed’, ‘The public utility … allows customers the opportunity to make online payments’). The quantification of the customer service was made by assessing the employees’ earnestness in dealing with customers, as well as their professionalism (‘Employees of the supplier … are always earnest/willing to help customers/are always competent’). The customers’ perception of the tariffs charged by suppliers was measured by asking respondents to express their (dis)agreement regarding the manner of setting tariffs (‘the prices of supplier … are fair/acceptable/ethical/constant in time’) and regarding the ratio between the service quality and the price paid (‘The … supplier offers a good 37 quality/price ratio’). The quantification of the extent to which respondents believe the two suppliers are customer-oriented was made through statements about loyalization actions performed by the private sector (‘The supplier … has an attractive loyalization program’ or ‘The supplier … is concerned with responding to customers’ complaints or suggestions’). The assessment of customers’ satisfaction with the provided services was per- formed through a number of statements over which respondents expressed their level of agreement (‘In my opinion, the supplier … honors its promise’, ‘The supplier … have been so far the place where I’ve always made a right decision’, ‘The supplier … is a good choice for me’, ‘I am satisfied with choosing this public utility’, ‘The supplier … would do its best so that my satisfaction should be complete’). 5.2. Sample characteristics Over half of the questionnaires were filled in at respondents’ home (53.3%), one third of them (36.8%) in various public places (in the street, in parks, in front of stores etc.), and only a small number (9.6%) were completed at respondents’ workplace. The research was mainly conducted in the Cluj County, the majority of respondents be- ing residents of Cluj-Napoca city and other smaller villages and communes (Floreşti, Baciu, Dej, Gherla, Săvădisla etc.). Of the more than 1,500 collected questionnaires, only 1,272 could be validated (575 for EFTN and 697 for E.ON). For a better sample representativeness, the selected respondents had not only to know the company, but also to be its clients. Consequently, we were able to obtain a larger number of valid responses, which allowed a more accurate analysis of the collected data. Out of the total sample, 53% are females and 47% are males. In order to assess the citizens’ satisfaction with the selected public utilities, we believe the breakdown of re- spondents is relevant not only according to gender and age group but also according to the size of their household, education, housing status, workplace and the income group to which they belong. The resulted sample structure according to respondents’ socio-demographic profile is presented in Table 2. Table 2: The respondents’ socio-demographic profile according to selected suppliers EFTN E.ON Total n % n % n % Gender Male 276 21,7 327 25,7 603 47,4 Female 299 23,5 370 29,1 669 52,6 Total 575 45,2 697 54,8 1.272 100,0 Age Below 25 84 6,6 109 8,6 193 15,2 26 - 40 175 13,8 196 15,4 371 29,2 41-50 76 6,0 101 7,9 177 13,9 51-60 81 6,4 142 11,2 223 17,5 61-70 125 9,8 122 9,6 247 19,4 71 onward 34 2,7 27 2,1 61 4,8 Total 575 45,2 697 54,8 1.272 100,0 38 EFTN E.ON Total n % n % n % Number of persons per household 1 person 101 8,1 98 7,9 199 16,0 2 persons 214 17,2 266 21,4 480 38,7 3-4 persons 224 18,0 282 22,7 506 40,8 5 and over 5 persons 19 1,5 37 3,0 56 4,5 Total 558 45,0 683 55,0 1.241 100,0 Education High school 135 10,6 139 10,9 274 21,6 Post secondary 50 3,9 72 5,7 122 9,6 Vocational training 65 5,1 101 8,0 166 13,1 Higher education 291 22,9 354 27,9 645 50,8 Without education 33 2,6 30 2,4 63 5,0 Total 574 45,2 696 54,8 1.270 100,0 Income group (lei) Below 1000 89 9,2 92 9,5 181 18,7 1001 – 2000 142 14,7 171 17,7 313 32,3 2001 – 3000 107 11,1 133 13,7 240 24,8 3001 and over 100 10,3 134 13,8 234 24,2 Total 438 45,2 530 54,8 968 100,0 Source: Own research 6. Results 6.1. Checking data validity, reliability and consistency The testing of data validity, reliability and consistency was carried out in compli- ance with the guidelines of the technical literature (Churchill, 1991, pp. 64-73; Dabija, 2010, pp. 172-180) by resorting to Cronbach α coefficient, the ‘item-to-total’ correla- tion, as well as the exploratory factor analysis. As Table 3 indicates, all constructs of the analyzed model meet the minimum threshold of exactingness set by the literature even if they are not always very high. Table 3: Testing validity and reliability Construct No. items α 1 KMO2 χ2; df; p3 Eigen-value % variance Service offer 4 0,852 0,800 2.183,763; 6; **** 2,772 69,30 Prices (Tariffs) 5 0,910 0,837 4.633,067; 10; **** 3,683 73,66 Supplier’s physical presence 4 0,901 0,835 3.245,16; 6; **** 3,068 77,16 Supplier’s web presence 4 0,904 0,835 3.266,345; 6; **** 3,110 77,74 Personnel 5 0,878 0,809 3.759,565; 10; **** 3,384 67,78 Communication 5 0,908 0,878 4.054,31; 10; **** 3,663 73,26 Customer orientation 2 0,875 0,800 1.187,56; 7; **** 1,177 88,97 Satisfaction 5 0,861 0,802 3.643,391; 10; **** 3,251 65,021 1 – Cronbach α coeffi cient (testing reliability of data); 2 – Kaiser-Meyer-Ohlin criterion (exploratory factor analysis) for each construct of corporate reputation and retail brand value, respectively; 3 – Bartlett’s Test of Sphericity (χ2 – Chi-Square, df – degree of freedom, p – probability; ****p < 0,001; *** p < 0,01; ** p < 0,05; * p < 0,1). 39 As each resulted dimension proved to be stable enough, an exploratory factor analysis was further conducted for the overall characteristics of utility suppliers. In conducting the factor analysis, we took into consideration both the resulted reliability indicators as well as the values shown in the Pattern and in Structure Matrix, respec- tively. Due to space limitations, the authors have only used a brief presentation of the seven dimensions resulted in the factor analysis in strict order of their extraction (Table 4). Table 4: Simplified results of the factor analysis applied to the marketing mix of the analyzed utility suppliers Factor no Title Eigenvalues % of variance Factor 1 Services offer 9,543 32,906 Factor 2 Advertising 3,827 13,197 Factor 3 Physical distribution 2,507 8,645 Factor 4 Personnel 1,891 6,520 Factor 5 Web presence 1,791 6,175 Factor 6 Customer orientation 1,169 4,032 Factor 7 Prices (tariffs) 1,109 3,832 KMO = 0,911 Extraction Method: Principal Axis Factoring. Rotation Method: Oblimin with Kaiser Normalization. Source: Authors’ own research To facilitate data interpretation and increase the consistency of results, in particu- lar when variables scores of the different factors are unreliable as their delimitation is not very precise, literature recommends factor rotation (Backhaus et al., 2008, p. 372). Since we assumed (based on theory) that the existing factor structure is not indepen- dent, we have used a principal axis factoring with oblique rotation (Walsh and Beatty, 2007). The exploratory factor analysis confirmed the possibility of aggregating the entire range of characteristics of the two analyzed utility suppliers as the resulted dimen- sions preserved their stability (Table 4). Consequently, the authors proceeded to mod- el the phenomenon by means of the structural equations (see Figure 2). Satisfaction Service offer Communication Customer relation centers Web presence Personnel Customer orientation Prices (tariffs) 0,706**** 0,021n.s. 0,005n.s. -0,069*** 0,034n.s. -0,075*** 0,168**** Figure 2: Determining factors in building satisfaction with, and loyalty towards public utilities 40 The reliability of the model was assessed by calculating various indicators (GFI, AGFI, TLI, NLI, CFI, SRMR, RMSEA). The indicators, along with the minimum thresh- olds of exactingness set by the literature (Forza and Filippini, 1998; Ju et al., 2006; Jiang and Klein, 1999/2000; Dabija, 2010, pp. 181-183) are presented in Table 5. Table 5: Reliability indicators of the general model Respondents 1.272 χ2 df χ2/df TLI Offer à Satisfaction 0,706**** 3.991,233 565 7,064 0,882 Media à Satisfaction 0,021n.s. RMSEA (≤ 0,08) GFI AGFI CRC à Satisfaction 0,005n.s. 0,069 0,835 0,805 Web à Satisfaction -0,069*** SRMR (≤ 0,08) NFI CFI Personnel à Satisfaction 0,034 n.s. 0,0705 0,879 0,894 Customer orientation à Satisfaction -0,075*** n.s. – not signifi cant *p<0,1 Prices (tariffs) à Satisfaction 0,168**** ***p<0,01 **p<0,05 ****p<0,001 TLI, GFI, AGFI, NFI, CFI > 0,8 Source: Authors’ own research 6.2. Research findings for the general model Service offer As Table 5 indicates, a strong and significant effect on satisfaction is exerted by the services offer of the two analyzed suppliers – EFTN and E.ON (0.706****). At first sight, the results are surprising because respondents do not have the chance of choosing an- other supplier and thus are deprived of an appropriate benchmark. Consumers make comparisons across time and acknowledge the important steps taken to improve the quality and flexibility of the provided services. Suppliers allow consumers to modify the contract terms any time and as often as they want without being charged extra costs. Consumers may sometimes perform contractual changes by phone or via the supplier’s web platform without having to go to customer relation centers. As far as outages are concerned, they happen quite rarely and when they do, they are imme- diately remedied. Power or gas cuts for technical reasons are brought to customers’ knowledge in advance. Prices (Tariffs) As strange as it may seem, the level of the tariffs charged also exerts a significant effect on satisfaction (0.168****). The interviewed citizens are likely to be aware that the price paid for gas and electricity is regulated or ‘controlled’ by authorities, and not a ‘free’ price set by the market competition. Thus, they feel a certain ‘satisfaction’ with the current price, hoping it will not go up in the future. A number of customers are probably aware that the energy price, albeit high by comparison to Romanians’ purchasing power, is below the price level in the European Union. Web presence and customer orientation An interesting and somewhat unexpected situation was revealed concerning the impact on satisfaction of the two suppliers’ web presence and their efforts to draw 41 customers and gain their loyalty. The effect of the two constructs on satisfaction is sig- nificant but negative. The web presence and the customer orientation have revealed an inversely proportional effect on satisfaction to the effect that they contribute to the decrease of the satisfaction level felt by the citizens. These results highlight an increased potential to improve the way in which the supplier decides to define its online presence, interact with the customers and approach them through specific tools to gain their loyalty. Our opinion is that the two suppliers could, at least with regard to the last aspect, choose to develop individualized service packages according to the amount of consumption and the material wealth of the target group. The inversely proportional effect of the web presence on satisfaction may be ac- counted for by some consumers’ lack of knowledge about the suppliers’ web pages and what can be learned from them, despite the fact that the online platforms are well developed and provide users with many facilities. One should not overlook the fact, however, that certain Romanian consumer segments are not familiar with the Internet while others, by mere habit, probably prefer the classical means of communication with suppliers. At the same time, the lack of viable alternatives makes the web pres- ence uninteresting to those who seek extra information about the current and poten- tial suppliers. Given the intrinsic nature of the market (regulated market) and the type of customers (captive customers), the negative effect of customer orientation on satisfaction is accounted for by the fact that the investigated suppliers are not, and in fact should be little, concerned with adopting consistent measures to optimize the re- lationship with the customers. However, it should be favorably appreciated the effort of the two suppliers to modernize not only the distribution grid, but also the format/ content of bills sent to consumers. The bills often feature information elements on the source of energy used, important data about the company, the services payment op- tions, and the existence of a web page that facilitates communication etc. (Dabija and Băbut, 2012). Within their customer orientation policy, the two suppliers naturally strive to make customers report anything that prevents them from attaining a proper satisfaction. However, the problem lies with the customers who either are unaware of this research tool or do not have the time or interest to fill in the forms, and thus provide the supplier with upbuilding feedback. Communication (Media presence) and personnel The marketing characteristics of utility suppliers that exert an insignificant effect on satisfaction are, contrary to our expectations, the media presence (communication), the interaction by means of customer relation centers, and the personnel service. On second thought, however, it is only natural that these elements should not influence satisfaction significantly for the mere reason that the citizen does not have time to interact with them. The communication of the two utility suppliers has a limited effect because they most often convey general information on the back side of the bill forms (payment options, consumption details etc.) and focus less on the active communication that should impact on the Romanian consumer. The two suppliers 42 sometimes choose to send customers thank-you letters or letters of information about the constituents of the bill or the modernization and maintenance of the distribution grid. These, however, are not perceived by customers/respondents as communication means/tools. Another explanation is the lack of overlapping elements between the communica- tion of public utilities and that of private suppliers in terms of objectives, implementa- tion means or budget. To put it differently, advertising, as it is known and understood by the Romanian consumers from their experience with private companies, is absent from the agenda of public utilities. As to the CSR campaigns launched by the gas and electricity suppliers, these do not draw the attention of, nor are they understood by certain consumer segments. Customer relation centers The contribution of customer relation centers to building satisfaction is absent with the two utility suppliers. This absence is justified at least in the case of the gas supplier E.ON since it outsourced to a great extent the payment of bills within its own units. In order to pay the gas bills, a plethora of payment methods are available to custom- ers (direct debit, pay point, other payment locations). The regional electricity supplier (EFTN) is the only one offering customers, to a certain extent, the opportunity to pay the monthly bill within its own customer relation centers. More and more Romanians choose to pay their bills through the bank systems either for convenience (those who pay services online) or to save time (one can pay several bills during a single visit to the bank in the neighborhood without having to pay extra costs). 6.3. Breakdown of research findings by the two suppliers The breakdown of research findings by the two suppliers revealed a very interest- ing, even surprising, situation. A certain change was recorded in the values of the reliability indicators. However, their values are still within the acceptable limits set by the literature (Forza and Filippini, 1998; Ju et al., 2006), which entitles us to accept the reliability of calculations. As Table 6 shows, respondents are able to make a proper differentiation between the two utility suppliers. Moreover, the elements that help build satisfaction are dif- ferent from one company to another. Even if the values of coefficients that give the size of the impact of the studied factors on satisfaction (service offer, prices, web pres- ence etc.) are relatively close between the two providers, we believe that results allow a correct interpretation. This is especially interesting as the authors are not aware of previous similar studies on the Romanians’ perception of utility providers, such as gas or electricity. Service offer Thus, one can notice the substantial, yet of varying intensity, effect on satisfaction of the two suppliers’ offer. Interestingly, respondents declared themselves better sat- isfied with the gas (0.755****) than with the electricity (0.652****) supplier. This may 43 be accounted for by the fact that gas outages are less frequent than power outages. Additionally, consumers might appreciate the opportunity to send meter readings themselves and adjust the payment of the gas consumption to their financial status (they overpay the consumption during the summer months and declare a lower con- sumption for which they pay less during the winter months when the bills are heftier). Personnel Whereas service has an insignificant effect on building satisfaction in the case of the general model, the situation changes with the breakdown of research findings by the two suppliers. In fact, citizens state that the manner in which the employees of the electricity supplier interact with customers contributes to a very low extent (0.078*) to building the satisfaction with this company. This may be due to the fact that the regional electricity supplier served customers through the personnel of customer rela- tion centers where they can pay in consideration of the monthly-provided services. Web presence Whereas the effect of the gas company’s web presence on satisfaction is significant but inversely proportional, the same effect is insignificant in the case of the electricity supplier. This apparently paradoxical situation may be accounted for by the fact that the web pages of the two suppliers are used to a little extent to find news/new infor- mation. While E.ON allows customers to pay their bills through its web page, EFTN only allows customers to view its content (amount to be paid). The negative impact of the web presence on satisfaction may be due to the lack of a user- friendly naviga- tion while the web page of the gas supplier, for instance, takes much time to load and makes the online payments difficult to process. Customer orientation The customer orientation reveals another interesting situation. While the effect of this element on satisfaction is not significant in the case of the gas supplier, the mea- sures taken by EFTN in this regard reveal a significant, but inversely proportional effect. In other words, EFTN customer orientation efforts have caused a decrease in customers’ satisfaction. Thus, as far as management is concerned, a change of tactics may be required to approach customers, possibly by consolidating the media and the web presence and personnel’s attitude towards customers. Table 6: Comparative effect of the marketing tools on the analyzed utility suppliers Respondents E.ON EFTN χ2 df χ2/df TLI Service offer à Satisfaction 0,755**** 0,652**** 4.607,905 1.024 4,500 0,874 Media à Satisfaction 0,024 n.s. 0,021 n.s. RMSEA (≤ 0,08) GFI AGFI CRC à Satisfaction 0,002n.s. -0,010 n.s. 0,052 0,912 0,881 Web à Satisfaction -0,079** -0,052 n.s. SRMR (≤ 0,08) NFI CFI Personnel à Satisfaction 0,009 n.s. 0,078* 0,0733 0,857 0,885 Customer orientation à Satisfaction -0,057 n.s. -0,115**** n.s. - insignifi cant *p<0,1 Prices (tariffs)à Satisfaction 0,192**** 0,109** ***p<0,01 **p<0,05 ****p<0,001 TLI, GFI, AGFI, NFI, CFI > 0,8 44 Prices (tariffs) The tariffs charged by the two suppliers also contribute to the increase of satisfac- tion felt by respondents. The prices charged by the gas supplier exert a more sub- stantial and significant effect (0.192****) than do the prices of the electricity supplier (0.109**). This difference may indeed result from respondents’ understanding of the fact that the price currently paid is lower than that in other European states. The con- tribution of price to building satisfaction is likely to decrease significantly over time. 7. Conclusions, limitations and research outlook Notwithstanding the regulated market on which the two suppliers operate, the citizens who responded to the questionnaire deemed necessary that the regional sup- pliers – EFTN and E.ON – should take serious account of the possibility to adopt a genuine customer-oriented behavior. We believe that there is increased potential for both suppliers to attract customers and gain their loyalty. A proper customer orienta- tion is obviously hampered by the nature and conditions of the market. Therefore, it is quite difficult to exhibit customer orientation in the context of a regulated market where prices do not fluctuate freely. Moreover, it is difficult to repair and improve the infrastructure and the characteristics of the gas and electricity supply industry. If the two companies operated in a market with strong competition, displaying an ap- propriate customer orientation would be not only a necessity but a reliable strategy to approach the market. It is strategically important for utility providers to exhibit a high customer orienta- tion, satisfy customers and attempt to gain their loyalty. Strengthening a company’s favorable image in the mind of the customer may represent a key element in attracting them and maintaining their loyalty. National statistics show an increasing number of Romanians (albeit tiny by comparison with the total number of households) which opt for alternative energy sources, both thermal and electrical (Micu, 2013). The sup- pliers’ exhibiting a ‘green’ orientation, in accordance with the principles of sustain- able development and social responsibility, may contribute to increasing the value the customers place on the two companies. Thus, should the citizens be fully satisfied with public utility providers, when they purchase a house or build a new one they could choose to connect their houses to the provider’s electricity or gas infrastructure instead of opting for alternative heating or lighting sources. We could state categori- cally that in such a hypothetical situation the two companies are really focused on satisfying the citizens’ needs in order to attract them and, in particular, bind them to the company. In our opinion, the two providers should make constant efforts to adjust their offer to the citizens’ requirements, attempt to draw them and make them fully aware of the highest safety conditions of service provision, at the best/fairest quality price ratio. Last but not least, suppliers should make sure that an attractive and unitary image is embedded in Romanians’ minds. Customers may also be drawn closer by improving the communication methods, focusing more specifically on the online presence, send- 45 ing newsletters on a regular basis and providing friendly, attentive and competent service through the personnel. As shown in Tables 5 and 6, services and service charges exert the greatest impact on customer satisfaction with utility providers. The impact of other factors on satis- faction is minor and shall not be taken into consideration. In other words, the only elements that actually contribute to the perceived image (and, certainly, the customer satisfaction) of utility providers are the services provided and the related prices. If the two companies operated on an open market without a monopoly situation, in which customers themselves were able to decide on the best heating or electricity source (e.g. making use of photovoltaic panels, heat pumps, domestic wind turbines), or if existing infrastructure allowed customers to connect directly to the provider with the best deal, then, the two analyzed companies would surely emphasize the marketing elements given that markets have become fiercely competitive. Although theoretically liberalized, currently the energy market is still highly regu- lated. Through its institutions, the European Union exerts pressure on the Romanian authorities to completely liberalize the energy market. In this context, the suppliers’ customer orientation will become a top priority as they envisage the opportunity of gaining a better market position in the future and increasing the profitability of their own business. Despite the respondents’ status as captive customers, unable to choose another supplier, the decision-making factors of these companies should consider developing a favorable attitude towards the company, and its products and services when they define their goals and strategies. The findings of the current research clearly reveal that citizens are sometimes able to perceive the marketing tools that utility providers use to approach the market and appreciate favorably when products and services are diversified. In fact, the analyzed utility providers intensify their efforts to ‘copy’ the behavior of competing companies by allowing citizens to use various extra payment facilities (cash card, money transfer, direct debit etc.). Therefore, the ongoing and con- sistent effort of these companies to adapt to the new conditions of a market undergo- ing liberalization is to be appreciated. As long as the supplier’s basic offer meets the customers’ expectations and de- mands, the effect of other marketing tools (communication, service etc.) on satisfac- tion should be improved. The suppliers may already have performed concrete actions in this regard but consumers may not have been fully aware of them. Despite being a pilot study, the current research presents a relatively substantial image of the public utility market in the Cluj area. Although a convenience sampling was used, special attention was paid so that two conditions had to be met regarding respondents: they had to be selected according to the quotas from the Annual Ro- manian Statistics Yearbook (gender, age) for the studied area and had to know both providers. The limits pending correction in the future concern mainly the unequal number of persons willing to give answers about how they perceive the investigated companies. 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