Course code: FEAD21

Course name: Service and Market Oriented Public Transportation

Examination: Final Assignment

Latest date of submission: 1/19/2015

Student Name:

Ayuwandira F. Sadu 920209-T121

Purwo Anggoro Putro 811117-T438

Name of Course Coordinator: Samuel Petros Sebhatu, Ph.D

A. INTRODUCTION

Along with the rapid growth of population in most part of the world, people are getting more concern over sustainability issues. Especially in the capital cities of advanced countries, such as London, Sydney, Tokyo, etc. Certainly, travel has been one of the top priority of people’s daily need in big cities. However, in most cases, travel and sustainability are heading toward different direction. Congestion, air pollution, noise pollution and fuel scarcity are only few things which contributed by the increasing number of people’s travel by using private vehicles. Therefore, it is necessary to unite governments vision with other actors’ (firms, citizens, etc) participations to achieve the city sustainability.

Particularly, Sydney, New South Wales as the most populous city in Australia (PopulationLabs.com,2011) certainly generates a great deal amount of trips everyday. However, the government has a vision to the city which is Sydney 2030 that green, global, and connected. The travel behaviour of the citizens that highly dependant in using the private vehicle can be considered a challenge to achieve this vision. Therefore, in order to achieve this, the city requires a well integrated public transportation system to support activities of the citizens. Thus, the government established Transport for NSW to manage the integrated public transportation by road, rail and water in New South Wales. Transport for NSW centrally manages six agencies to deliver transport services in New South Wales, which are: State Transit Authority, Rail Corporation NSW, Sydney Ferries, Sydney Metro, MTS Holding Company Pty Ltd, and Roads and Maritime Services (Transport for NSW, 2013). In addition, the government also established several policies to achieve the city sustainability.

Undoubtedly, it requires a good cooperation within the organization and a good interrelation among the stakeholders in public transport service provision to be able to successfully create value to the customers (i.e. the reliable transport service system). As explained in Enquist, Camen, & Johnson (2011, p. 220), this interaction is considered as a value network which “creates value by facilitating network relationship between organizations and the customers using a mediating technology”.

Not only the authority, operators and suppliers have to be well cooperated. Customers also necessary to be involved in the process of public transport service delivery because they are considered as the raison d’être (Gebhardt, Carpenter, & Sherry Jr., 2006). Customers’ voices have to be taken into account because they are the reason behind the existence of public transport provider. Therefore, it is also pivotal for the public transport provider to implement value co-creation efforts and market orientation concept in their way of doing the business. As stated by Grönroos and Gummerus (2014, p.221) that value co-creation can be used to engage with customers, which is the main goal of marketing for an organization to gain mutual benefit for both parties (i.e. a satisfied customer and a profitable company). Also, adopted from Kohli & Jaworski (1990), by implementing market orientation, it is expected that the customers’ voice can be translated into action, which is a service improvement in public transport service delivery and eventually resulted in satisfied customers and good business in the long run. Thus, by implementing value co-creation in the value network and market orientation within the organization in public transport service provider, it is expected that citizens in Sydney region can consider to change their travel behaviour by shifting from private vehicle to public transport and eventually the sustainable in travel perspective can be achieved.

This paper mainly focus on State Transit Authority (STA) business in Sydney region as the case study. STA is chosen because it boasts the largest bus fleet in Australia. STA operates three businesses, i.e. Sydney Buses, Newcastle Buses and Ferries and Western Sydney Buses (StateTransit Authority, 2014). In addition, STA also has the same vision with the Sydney’s goevernment in the term of transport sustainability. Therefore, this paper will explain about the implication of value co-creation, market orientation and travel sustainability based on these two research questions:

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How do value co-creation and market orientation concepts implemented in State Transport Authority in the value network of public transport service provision? How do these implementations of value co-creation and market orientation concepts in State Transport Authority assist the stakeholders within the provision of public transportation service in the value network to change the travel behaviour of citizens of Sydney and achieve the transport sustainability in Sydney region?

B. THEORITICAL FRAMEWORK

1. Value Co-Creation

Value co-creation is defined as “the process of creating something together in a process of direct interactions between two or more actors, where the actors’ processes merge into one collaborative, dialogical process.” (Grönroos and Gummerus 2014, p.209). In this concept, it is the consumers who participate in the process of value-creation also acts as a value co-producer when they add value to the product by using it (Toffler, 1980; Kotler, 1986; Tapscott and Williams, 2006, cited in Gebauer, Johnson and Enquist 2010). Based on this explanation, it can be said that customers, especially in public transport service, shift from a passive customer to an active customer (Prahalad 2004, cited in Gebauer, Johnson and Enquist 2010). According to Prahalad (2004) (cited in Gebauer, Johnson and Enquist 2010), there are five activities in value co-creation which are:

a. Customer engagementCustomer engagement related to the providers which persuading customers through advertising and promotions that trigger the participation of customer through the promotional message. This activity can be considered as a form of marketing of an organization (Prahalad, 2004 cited in Gebauer, Johnson and Enquist 2010). Customer engagement can be also in a form of customer complaints which can be used to improve the service performance (Lovelock and Wirtz, 2007 cited in Gebauer, Johnson and Enquist 2010).

b. Self-serviceSelf-service can be referred to a system that allows customers to accomplish certain activities (order, buy, or exchange) without any direct interaction with the provider’s staffs (Meuter et al. 2000 cited in Gebauer, Johnson and Enquist 2010). In self-service, customers are required to be active to create the value for themselves. This activity can reduce operational costs and enhance the effectivity of the service to the customers (Normann and Ramirez, 1993 cited in Gebauer, Johnson and Enquist 2010).

c. Customer experience;“Services can create memorable experiences and events for customers”, according to Prahalad, 2004; Pine and Gilmore, 1998 (cited in Gebauer, Johnson and Enquist 2010). Therefore, it is necessary for a service provider to enhance their service quality for a better customer experience which can lead to satisfied customers. As explained by Johnston and Kong (2009) (cited in Gebauer, Johnson and Enquist 2010, p. 516), “the enhancement of these experiences can provide a competitive advantage, increase customer satisfaction and loyalty, and instil confidence through the creation of positive emotional bonds.”

d. Problem-solvingAs explained in Gebauer, Johnson and Enquist (2010), a service provider may combine the self-service opportunity to guide customers in solving the problem they encountered during their experience in using the service. By using their own skills and knowledge to solve the

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problem, it can be said that the customer has become an important operant resource in the creation of value (Constantin and Lusch, 1994 cited in Gebauer, Johnson and Enquist 2010).

e. Co-designingCo-designing is the process when the customers cooperate with the service providers in creating a new product or service (Prahalad, 2004 cited in Gebauer, Johnson and Enquist 2010). However, it is important to give insight and guidance to customers in the co-designing process (Payne et al., 2008 cited in Gebauer, Johnson and Enquist 2010). In several cases, co-designing can not be fully implemented regarding to the powerful influence of the government (e.g. politician).

2. Value Network

Value network can be referred to a network relationship between the organisation, customers, and other actors to create value using a mediating technology, according to Stabell and Fjeldstad (1998) (cited in Enquist, Camen and Johnson 2011). It is also mentioned in Enquist, Camen, & Johnson (2011) that relationship between actors in a value network is considered as collaborative. Therefore, it is necessary for contracts and performance measurement to be utilized in a value network to achieve values for all actors (Enquist, Camen, & Johnson, 2011). In public transport provision, Enquist (1999,2003) (cited in Gebauer, Johnson and Enquist 2010) explains that it is important to consider various dialogues among the stakeholders or actors which are:a. Governance dialogue : the interaction between politicians and PTA (Public Transport

Authority). According to Enquist, Johnson, & Camén (2005), this dialogue is a principal-agent dialogue about certain mission. Along with PTA, the principal set regulations and new policies.

b. Contractual dialogue : the interaction between PTA and operator. PTA acts as the system integrators and cooperate with operator (i.e. subcontractor) under certain agreement in a contract to deliver the service to the customers. The PTA also conducts performance measurement in order to ensure the operator has been delivering the business according to the contract. Binding by the contract allows both parties to cooperate under certain procedures to generate value for the customers.

c. Customer dialogue : the interaction between operator and customer. This interaction is direct and customers along with operator co-create value. This interaction can affect how the customers perceive the quality of the service from the operator. Oftentimes, how the customers perceived the service quality can be used as feedbacks to the operator to enhance the service performance.

d. Citizen dialogue : the interaction between the principal and citizen. Enquist, Johnson, & Camén (2005) explain that this dialogue could be viewed as a feedback-dialogue between the citizens and politicians or principals about the Public Transportation service delivery.

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Stating by Enquist, Johnson, & Camén (2005, p. 34), “in a value-creating stakeholder network, customers and market-orientation become necessary”. They also add that all of the stakeholders in the network are triggered by different interests and their own goals, which is it can be the common good of the principals; the internal efficiencies of the PTA, and the customer satisfaction and pricing efficiencies of the operators.

This paper mainly focus on the actors in value network which revolve around contractual and customer dialogue due to the limitation of data regarding the other dialogues. Besides, the contractual and customer dialogue are the perfect case study in implementing the contextualization of value network because the strong bond and high dependability between PTA, operator and customers.

3. Market Orientation

Changes in deregulation and competitive market in the public transport organisations and system needed to be market oriented (Fellesson and Friman, 2008). Market orientation was defined by Kohli and Jaworski (1990) as “the organization wide generation of market intelligence pertaining to present and future customer needs, dissemination of the intelligence across departments, and organization wide responsiveness to it.” The three elements in market orientation are intelligence generation, intelligence dissemination, and responsiveness (Kohli and Jaworski, 1990).

a.   Intelligence generation in public transportationAccording to Molander et al. (2012) a public transport organisation has to put concern on customer focus through determining both current and future customer’s needs as well as analysing some external factors which may affect their needs and preferences. Further, Kohli and Jaworski (1990) mentioned these external factors can be identified as government regulation, technology, competitors, and other environmental forces.

b.  Intelligence disseminationNaver and Slater (1990) stated market-oriented needs interfunctional coordination that facilitates the dissemination and utilization of market intelligence. Intelligence dissemination was described by Maltz & Kohli (1996) as distributing process of the intelligence which been generated in the organisation. Inter-organizational dissemination is relevant for pursuing market orientation with collaboration among the actors (Molander et al., 2012).

c.  ResponsivenessResponsiveness defined by Kohli & Jaworski, (1990) as the response actions toward the intelligence which being generated and disseminated. In addition, Molander et al. (2012) mentioned that this response is including some actions such as selecting target markets, designing and offering products and services, and other activities that affects the offering being made to the customer.

4. Performance Measurement Through Customer Data

In a contractual dialogue between the PTA and the operator, a performance measurement is necessary. As explained by Franceschini et al. (2007) (cited in Enquist, Camen, & Johnson, 2011), a performance measurement is considered as an approach of estimating and understanding the level of achievement of the expected quality targets. In a value network, performance measurement and contracts are considered as the shared inter-organisational resources that

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reconstructed by shared norms and understandings (Ahrens and Chapman, 2007) (cited in Enquist, Camen, & Johnson, 2011).

Thus, it can be said that performance measurement is a method for the PTA to measure how well the operator in fulfilling the agreement in the contract. Consequently, the measurement result can be deployed to improve the service performance that expected to be followed by the increasing number of satisfied customers. However, Fujii and Kitamura (2003), Mackett and Edwards (1998) (cited in Friman & Fellesson, 2009) argued that an increase in supply (qualitatively or quantitatively) will not automatically followed by an increase in demand and satisfaction. Thus, it is necessary to ensure that investment by the PTA can really attract both the existing and the potential customers by collecting information related to customers satisfaction or how the customers perceive the service performance (Nathanail 2007 cited in Friman & Fellesson, 2009). Fellesson (2014) explains that customers can be the judge of the performance quality and their voices can be used to marketing feedback, quality control, predicting behaviour, market segmentation and input to strategic decisions.

However, it is important to determine what attributes in the service that have to be measured and how the procedure in collecting the data. A wrong approach in conducting the measurement can lead to less accurate data and eventually waste the research investment.

5. Factor Affecting Travel Behaviour

According Ettema et. al. (2010) the transportation system gives a service purpose at fulfilling travel needs. Friman et al (2001a, 2001b) found four factor as constituting service quality in public service are how travellers were treated by staff, service reliability, simplicity of information, design of vehicles and space (related to comfort, safety and cleanliness). Fellesson & Friman (2008) confirmed these by importance of safety, security, service reliability, comfort and quality of staff behavior on the level of satisfaction.

The travel option availability is an essentials determinant of how individuals and household schedule their activities in time and space (Axhausen & Garling 1992; Ettema & Timmermans, 1997; Jones et. al. 1983) (cited in Ettema et. al. 2010). For example, Hildebrand (2003) found that mobility-impaired elderly engage less often in out-of-home activities than other elderly. Also when travel restrictions are less obvious, the need to combine certain activities (e.g. dropping-off children and going to work) frequently necessitates the use of a certain travel mode (Lawton et al., 2008). Complicated travel patterns consisting of several errands to be run during the same journey (or an interconnected sequence of journeys) often make the car, due to its versatility, the most attractive travel mode. Such instrumental reasons tend to dominate in multiperson households with children (Jakobsson Bergstad et al., 2011).

Therefore, in order to encourage people to change their travel behaviour to use public transport, stakeholders in the value network of public transport must implement new policies such as hard transport policy measures and soft transport policy measures. Friman, Larhult, & Garling (2013) explain that hard transport policy measures are mainly focused on road tolls, congestion charges, and increased fuel price. While, soft transport policy measures are targeted at motivating and encouraging car users to voluntarily change their travel behaviour to achieve a sustainable travel (Richter, Friman, & Garling, 2011). They explain that soft transport policy measures can be in a form of travel planing and marketing, and even campaigns.

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C. EMPIRICAL STUDY

1. Vision of City of Sydney Government in Transport Sustainability

The government of City of Sydney is cognizant of the sustainability issues. Being a city that most populous and attract most visitors in Australia oblige the government to put a lot of attention into the city sustainability, especially a sustainable transport. Hence, one of the city’s vision is Sustainable Sydney 2030: Green, Global, and Connected which created in 2008. Essentialy, the government eager to manage the city into a city that cares about the environment, has a strong economy, supports the arts and connects the citizens to each other and the rest of the world (sydney2030.com.au, 2008). The government has Five Big Moves which “An integrated Inner Sydney transport network” is one of them. This move integrates public transport with a safe walking and cycling network, also establishes and expands transit routes connecting villages, city centre and the rest of inner Sydney (sydney2030.com.au, 2008). Besides, the city encourage the citizen and public transport provider to reduce fossil fuels and replace it by using sustainable biofuels.

Back then, the issue related to the transport and environment has arised in decades, especially since the Sydney Olympic 2000. The government had expected that the amount of car travels would increase due to the high travel demands from Olympic athletes, sponsors, spectators as well as the Sydney commuter users (NSW Government, 2006). This rising car trips would automatically followed by the increasing level of air pollution. Hence the government made several policies to reduce car travel during the Olympic, such as: reduce the reasons for work (holiday scheduling, reassignment of staff to other locations, teleworking, etc), reduce the number of vehicles in certain areas (rewarding to those taking part in car pooling among employees, combine deliveries, etc).

In addition, due to the Olympic, the government also initiate Travel Blending program to change travel behavior of the citizen in using private vehicle and to keep the good air quality in Sydney region (Rose & Ampt, 2001). The aim of this program is to encourage a voluntarily change in people’s travel behaviour. People are given knowledge of their current travel pattern by keeping track of their own travel pattern in a diary. Subsequently, they are given customized feedbacks related to their existing car travels by integrating several transport modes (Rose & Ampt, 2001).

2. State Transit Authority Case Study

The State Transit Authority of New South Wales (STA) is an agency of the Government of New South Wales based in Sydney, Australia. STA responsible for the operations of Sydney Buses and Newcastle Buses & Ferries. It is known as the largest and most modern bus operator in the world due to its bus operation which over 2100 buses. STA operates over 300 routes in Sydney and 26 routes in the Greater Newcastle area (State Transit Authority, 2014).

In Sydney area, STA operates Sydney Buses which serves over 99,000 services each week on more than 300 routes across the Sydney metropolitan area extending into Parramatta and the West. The routes cover local community connections to commuter services into Central Business District (CBD). Sydney buses also operates school bus services on 708 routes each week, while Sydney buses Metrobus services provide direct routes and links to various locations in and Sydney region vicinity (http://www.statetransit.info, 2014).

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a. Value Co-Creation in STA Service Performance

1) Customer Engagement

STA allows the customer to engage with them by providing customers feedback related to the service in the form of queries, suggestions, compliments and complaints that received via Transport Info (call service 131500 and website), letters and other sources. STA also gives information to the customers regarding the enhancement of the services, revised terminal arrangements and temporary diversion due to certain events by sending email updates (State Transit Authority, 2014).

2) Self-Service

In the past few years, there is an increasing trend to self-service automated information channels. Customers perform most of the transactions via web, smart phone apps (number of trip plans) or automated Interactive Voice Response phone service. STA’s website offer information for customers using Sydney Buses and Newcastle Buses and Ferries services, such as route information and schedules, ticketing options, and service and timetable modifications. More than 5.7 million people visited the websites of State Transit, Sydney Buses and Newcastle Buses and Ferries and almost 2.3 million copies of timetables and maps were downloaded by customers during 2012/2013. It is found that most customers prefer to plan their trip via website rather than using the application in their smartphone due to several technical errors (State Transit Authority, 2014).

3) Customer Experience

STA invest a great deal amount of effort in ensuring the customers encounter the best experience when using the service, particularly in the term of reliability, comfortability, safety and security. The top priority is placed on safety and security. All buses are equipped with the most advanced digital CCTV systems, driver protection screens and shatter proof film for windows. Buses also have door safety systems and particular school bus warning systems (State Transit Authority, 2014).

All new buses also feature several facilities which support and assist customers with less mobility, such as kneeling suspension for level entry and a flat floor to make it easier to enter the bus, an extended wheelchair ramp and accommodation for two wheelchairs, and additional priority seating. STA also offers information about timetabled wheelchair-accessible bus services which operate on all main corridors and cross-regional routes (State Transit Authority, 2014).

The buses also furnished with high visibility handrails, interior lighting, improved destination signs and air-conditioning. STA also allows customers to experience the service in major events,such as City2Surf, New Year’s Eve, Sydney Festival and Sculptures by the Sea by operating additional buses along major corridors (State TransitAuthority, 2014).

4) Problem Solving

STA allows the customers to use website, smartphone app to solve and arrange their own trips (e.g. bus arrival information). Practical route information is also available at bus stops and ferry wharves. Besides, STA provides individual timetables for every bus

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service in Transport Shops at central points in the Sydney CBD, certain ticket agents and at www.131500.com.au or by contacting the 131500 mobile service (State TransitAuthority, 2014).

In addition, STA located Customer Relations staffs in each depot with a coordinating group in the corporate area which provide accurate responses and resolutions to customers feedbacks related to issues in each operational area. The main issues emerged in customer feedback during 2012/13 are related to the late bus, the bus failing to stop, poor staff behaviour, staff being helpful and the early operating bus (State TransitAuthority, 2014).

5) Co-designing

Prior to customers feedbacks and suggestions, STA change several services, which are: extending the Route 311 through to Circular Quay, and operating some services through to The Rocks and Millers Point; changing the route of a number of X39 services to avoid the congestion points in the City and improve reliability for customers (State TransitAuthority, 2014).

b. Interrelation STA with Other Stakeholders in a Value Network

STA are contracted by Transport for NSW as the Public Transport Authority (PTA) of New South Wales and established under the regulations of Transport Administration Act 1988. As all NSW bus operators, STA operates within the regulatory framework of the Passenger Transport Act 1990 (as amended) (State Transit Authority, 2014).

According to the contract with Transport for NSW, STA is required to provide public transport services in Sydney and Newcastle areas, under four Sydney Metropolitan Bus Service Contracts (SMBSC) and one Outer Metropolitan Bus System Contract (OMBSC) in Newcastle after passed through a competitive tender process with other bus operators. The term of SMBSC and OMBSC were seven years with MBSC launching on July 2013 and OMBSC on July 2006 (State Transit Authority, 2014).

State Transit works along with Transport for NSW in designing, planning and implementing programs to ensure the customer is the core focus in service delivery. This is shown in “Customer Focus” as Transport for NSW’s value and “Customer Centered” as one of STA’s behaviour. In order to ensure that the service delivery is experienced by customers with the expected quality, therefore a performance measurement is required. Transport for NSW regularly conducts performance benchmarking to key performance indicators. Consequently, if STA fail to meet one of the key performance indicators, the monthly payment will be reduced. Transport for NSW makes monthly payments to State Transit related to fixed costs, fuel cost payment, service payment, patronage benchmark, patronage change depreciation change payment, and new fleet periodic payments. The amount of fare revenue in the contract is deducted from these payments (Transport for NSW, 2013).

STA and Transport for NSW also well-cooperate in new services by Transport for NSW, which are the Opal Electronic Ticketing System, the Public Transport Information and Priority System (PTIPS) and for the Transport for NSW Disability Action Plan. In supporting Transport for NSW’s PTIPS, STA cooperates with the Network Control Centre (NCC). NCC uses PTIPS to monitor bus services in real-time, identifying late or early buses, and analyze whatever necessary to improve on-time running (State Transit Authority, 2014).

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By integrating with Opal card, STA allows customers to access various mode of public transportation from buses to ferries in one tap. There are the registered Opal Card and the unregistered Opal Card. The registered Opal Card has to be ordered via online and the customers must complete their profile, while the latter can be purchased in several retailers (opal.com.au, 2015).

c. Market OrientationSTA work together with Transport for NSW in designing and implementing programs to ensure the customer is the core focus when delivering its service and providing customer information. STA along with Transport for NSW focus to be more market orientated in designing the programs and delivering the service from the customers perspectives. From the customers’ voice translated into action, which is a service improvement in public transport service delivery and eventually resulted in satisfied customers and good business in the long run.

1) Intelligence GenerationSTA works closely with Transport for NSW especially Bureau of Transport Statistic has been conducted survey of customer need and preferences and customer satisfaction. Intelligence generated periodically by STA with Transport for NSW through customer surveys, formal and informal discussion, meeting with customer, customer database, and customer feedback. STA together with Transport for NSW takes customers survey from its passenger and ask them to record their view on regular basis. The survey gathers information related to timeliness, ticketing, convenience, accessibility, cleanliness, information and customer service. STA through their website and customer service allow customer give feedback to their service.Based on transport customer survey in November 2011, which survey 6,378 customers across Metropolitan Sydney, that the greatest bus service dissatisfaction indicator about 34 percent was the availability of information about service delays and 27 percent of survey respondents were dissatisfied with the timeliness of bus services.

2) Intelligence DisseminationIt is important to gather information about customer needs and distribute it in the organization. The intelligence that has been generated becomes useful when it is disseminated among staff, division and decision makers in the organization. STA has five General Manager which responsible for each region (Northern, Eastern, Southern, Western and Newcastle). The divisions in STA to support the regions and manage the wider business are Finance and Administration, People and Bus Systems, Safety, Fleet Operations & Infrastructure and the Information and Communication Unit. From the intelligence that has been generated STA shared, distributed, communicated and coordinated within related division and staff through formal/informal meetings which leads to analysis. A division disseminates the information acquired and responds appropriately to that information.Intelligence that has been generated about bus service delays, it distributed to People & Bus System division, Fleet Operation & Infrastructure division, Information and Communication division. Timelines of bus service information shared to People & Bus System division, Fleet Operations & Infrastructure division. Safety issue communicated and coordinated with Safety division, Fleet Operations & Infrastructure division.

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3) Responsiveness

Action taken in response to on time running and service delay information, STA has been working to response these issues through Public Transport Information and Priority System, it gives priority to busses at traffic signals by altering the sequencing and timing the signals. the PTIPS can inform passengers through text messages to mobile phones. STA operate additional bus timetabled service to ease crowding especially during peak hours.

To increase available fleet and replace the old buses, STA acquired 121 new buses in 2012-13 and purchase only wheelchair-accessible buses, which now total 1,718 (79 per cent of the fleet). This places STA above target towards achieving the next Commonwealth Disability Standards for Accessible Public Transport milestone date in 2017. All new buses are equipped with the most advanced digital CCTV systems, driver protection screens and shatter proof film for windows in response to safety and security issue. Buses also have door safety systems, on board fire alarm, and particular school bus warning systems And also feature several facilities which support and assist customers with less mobility, such as kneeling suspension for level entry and a flat floor to make it easier to enter the bus, an extended wheelchair ramp and accommodation for two wheelchairs, and additional priority seating.

Prior to customers feedbacks and suggestions, STA implemented Bus Operator Skills Development Program, Positive Drive Program and employee training programs. The Bus Operator Skills Development Program aims to maintain and enhance the skills and knowledge of experienced bus operators.The Positive Drive Program introduces a new approach to improving performance through a shift from training to coaching. All bus operators are evaluated on-the-job against the core skills for bus operations; receive a comprehensive report and debrief of their driving; and are supported with coaching where required. The program also recognises good performance and has resulted in a significant improvement in individual performance.

Over the last years customer satisfaction has increased reached 85% and customer complaints against State Transit Authority decreased in 2012-13 customer complaints totalled 35,459 (35,987 in 2011-12).

d. Performance Measurement

Transport for NSW regularly conducts performance measurement across the public transport service in NSW twice a year to measure the level of customer satisfaction in the NSW public transport system. The survey was designed by the Customer Experience Division of Transport for NSW to ensure what service attributes the customers value the most in public transport service (Transport for NSW, 2014).

The survey uses a seven-point scale to differentiate levels of satisfaction from satisfied to dissatisfied. The surveys are conducted in two stages to represent the customer’s opinions. On the first stage, the services (whether it is STA buses, train, ferries, or other operator’s buses) were randomly selected by surveyors to meet quotas and on the second stage, the customers on board those services were also randomly selected by surveyors. 40 customers in each services for train, bus, and rail were picked to reduce sampling error and 100 customers for ferry. The surveys used a 5% margin of error (Transport for NSW, 2014).

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The survey interviewers worked in weekend and weekdays. The respondents were asked about their experience of their current trip or most recent experience using the service. The fax and mail option were provided if the customers were unable to complete the survey on board. Customers were selected to contribute in the survey for train, bus, ferry and train while travelling on a normal day of a typical week. Thus, it does not include school holidays, public holidays or special events. Customers are all users of the public transport in NSW, including local residents, interstate customers and overseas visitors. The survey results are then presented for each overall mode and the individual operating corridors (Transport for NSW,2014).

3. Travel Behaviour in Sydney

Although most trips in NSW were made by private vehicle, there has been a growing proportion of trips made by public transport. Over a decade, the growth public transport trips grew at faster rate 39% than private vehicle 6%. According STA annual report 2013, the passenger numbers of STA are growing 2.6% than 2011/12. STA has been showing good service attribute. Beside that based on the household travel survey 2013 by Transport for NSW the reason to work by public transport are avoiding parking problem, cheaper, faster, less stressful than other mode and do not have a private vehicle.

On the other side, There are groups of individual that execute combine activity prefer using private car than public transport. The reason people go to work by car are because of the convenience and independence of private vehicle, public transport service are indirect and public transport timetable constraints.

D. DISCUSSION

How do value co-creation and market orientation concepts implemented in State Transport Authority in the value network of public transport service provision?

1. Value Co-Creation in Value Network

In the value network, especially in customer dialogue, STA and customers have been working together in co-creating value both for STA (i.e. profitable business by delivering good service) and customers (i.e. reliable public transportation). This is demonstrated by the implementation of value co-creation between STA and customers, as explained below.a) In customer engagement, STA is fully engaged with customers through customers feedback

via telephone, website or even a direct encounter with staff. Given by the explanation of Lovelock and Wirtz, (2007) (cited in Gebauer, Johnson and Enquist 2010) that STA has successfully allowed the customer to engage with STA in the process of improving the service performance. Besides, several customers also engage by giving compliment regarding the service in travel website which can be considered as the promotional message to the service (Prahalad, 2004 cited in Gebauer, Johnson and Enquist 2010).

b) STA also encourage customers to use self-service method. Most customers execute transactions via web or smartphone application to plan their trip. By planning their own trip through the assistance of website and application, the customers and STA are both co-creating value for themselves without the direct help from STA’s staffs, that is, reliable and flexible service (value for customers); cutting back the operational cost by reducing the

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number of the staff (value for STA) (Normann and Ramirez, 1993 cited in Gebauer, Johnson and Enquist 2010). By viewing the increasing trend of the ownership of smartphone, it can be said that it is a good opportunity to STA to introduce another self-service approach to customers (i.e. smartphone application). However, STA apparently still can not provide a reliable and good interface smartphone application, especially in Android device. Hence, the value customers willing to generate (i.e. effectivity in planning the trip via smartphone) is more likely to be destroyed.

c) STA put a lot of effort to ensure the customers to receive a good quality service from the reliability and safety aspect. By replacing all fleet to bus that equip with disabled people facility and installing technology related to safety, the customers’ satisfaction is fully guaranteed. Given by the statement of Johnston and Kong (2009) (cited in Gebauer, Johnson and Enquist 2010), these enhancements of the service can increase customer satisfaction thus lead to the loyalty of the customers.

d) Customers can either independently or dependently to solve problems they encounter during the experience in using the service. STA provides website and smartphone application so that the customers can arrange their own trip or even to determine whether they have to wait for the next bus in the bus stop or to do other errands while waiting for the schedule of the next bus. By arranging their own trip using the website and smartphone application, the customers become an operant resource (i.e. using their own knowledge and skills related to technology) in creating the value (Constantin and Lusch, 1994 cited in Gebauer, Johnson and Enquist 2010).

e) STA is fully understand how important the voice of customers can improve their service. By obtaining and analyzing customers feedbacks, STA is able to improve their service by extending certain routes and operating additional services in certain points. However, customers’ voices can not be directly implemented in the service. STA need to make the final decision with cooperation of PTA, which is Transport for NSW (TfNSW).

In a contractual dialogue, both parties (STA and TfNSW) and customers co-create value for themselves by integrating operant and operand resources (vision, skill and knowledge, technologies, innovations, information, assets, etc) (Enquist, Camen and Johnson 2011). For instance, the new ticketing system, Opal Card can assist customers to generate value for themselves, which is an effectivity in purchasing a travel ticket in one tap without the complex procedure in buying the ticket from the ticket counter each time they want to use each service. TfNSW provides two types of Opal Card with different value proposition and let the customers to render the value or not. If they choose the registered Opal Card then they decide to render the value of maximum service of the card. Therefore, this type of card requires the customers’ willingness to use their own operant resources (skills and knowledge) to order their card via online. While, for the unregistered Opal Card, the value from registered card (i.e. function of auto top up online) may be destroyed.

In addition, STA as the operator manages the business according to certain regulations based on contract under TfNSW. Both parties are working together to co-create value, which is profitable business to STA, while for TfNSW is to achieve its vision in establishing an integrated public transportation and to support the program of the government of City of Sydney (i.e. Sustainable Sydney 2030). Both TfNSW and STA are sharing the same core focus, which is to be customer oriented. Therefore, as explained by Enquist, Camen, & Johnson (2011), it is necessary for contracts and performance measurement to be utilized in a value network, especially between PTA and operator to operate under certain procedures to generate value for customers as the market target.

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TfNSW annually conduct performance measurement in a form of Customer Satisfaction Survey (CSS) to public transport operators in Sydney region. The lack of this survey method is TfNSW randomly chose the operators that can be resulted in a generalized result, instead of a specific result for each operator. As stated in the previous subchapter, a wrong approach in conducting measurement or survey can lead to less accurate data and eventually waste the research investment. To illustrate this: from 15 bus operators in Sydney, TfNSW will randomly chose only 8 bus operators to participate in the survey. Then, the survey result will be generalized for all the bus operators in Sydney. Therefore, it is necessary for TfNSW to conduct CSS for each operator, particularly STA, so they can fully understand in which attribute that still need to be improved. As explained by Fellesson (2014) that customers judgement can be used to marketing feedback, quality control, predicting behaviour, market segmentation and input to strategic decisions.

The full control of TfNSW over STA may be good to achieve TfNSW value (i.e. an integrated transportation system in NSW). However, it is also worth considering that STA is the party that makes the direct encounter with customers. Thus, the judgement of STA is necessary to take into consideration in making the decision in improving the service.

2. Market Orientation

STA work together with TfNSW in designing and implementing programs to ensure the customer is the core focus when delivering its service and providing customer information, this is in line with explanation by Molander et. al (2012) that public transport focused on customer through identifying both current and future customer’s need. STA works closely with TfNSW especially Bureau of Transport Statistic has been conducted survey of customer need and requirement and customer satisfaction. The information collected is communicated throughout the organisation as described by Maltz and Kohli (1996), which leads to analysis of the performance and feedback received by the customers. The customer feedbacks are directly analyzed by TfNSW not by STA. Thus the service development are decided and managed by TfNSW. TfNSW gives advice and recommendation to STA, to enhance the overall performance of service for benefit of all customers.

STA has been responsive to the intelligence gathered and disseminated with approval from TfNSW. A steady expansion, their customer focus, responsiveness, high customer satisfaction and continuous change and improvements, takes the feedback into consideration and acts on the area that need improvement or reforms and the report published shows that STA was market oriented. As stated by Felleson and Friman (2008), public transport organizations and system need to be market oriented in competitive market.

Thus, it can be said that along with other stakeholders in the value network, STA has implemented value creation and focused to be a market oriented organization although it still needed several improvement in several parts, especially in self-service system and method in generating market intelligence. This is supported by Enquist, Johnson, & Camén (2005, p. 34) that customers and market orientation is necessary in value-creating stakeholder network.

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How do implementation of value co-creation and market orientation concepts in State Transport Authority assist the stakeholders within the provision of public transportation service in the value network to change the travel behaviour of citizens of Sydney and achieve the transport sustainability in Sydney region?

By engaging with customers in creating the value and translating their needs into actions, it is expected that the customers still loyal in using the service, even attract the potential customers. STA has a strong focus on improving service standard for reliability, convenience, efficiency, customer service, comfort, security and safety to attract more customers as explained by Friman et. al. (2001a, 2001b) Fellesson and Friman (2008).

However, as explained by Fujii and Kitamura (2003), Mackett and Edwards (1998) (cited in Friman & Fellesson, 2009) that an improvement in service does not necessarily mean by an increase in travel demand. This is due to the high ownership of private vehicle in Sydney region. Therefore, it is important for the stakeholders in the value network of public transport (e.g. government, citizen, TfNSW, etc) to cooperate in achieving the sustainable transport, such as combining soft policy and hard policy measures.

For instance, government implements progressive car tax, congestion charge, and increased fee of parking (hard policy measures). In addition, the bus operator, such as STA also improve their service quality. Along with this, government as well as the authority may introduce travel blending as soft policy measures to encourage people to change their travel behaviour (i.e. mix their travel mode, such as car and public transport in one trip).

Based on the household travel survey 2013 by TfNSW, the main reason people go to work by car is because of the convenience and independence of private vehicle. Some people said that public transport service are indirect and the headway time is too long. It makes the individual with combined activities like dropping-off children, going to work, picking-up children and groceries shopping (e.g. a young mother with a full time job) prefer using private vehicle than public transport as stated by Jakobsson Bergstad et. al. (2011). Therefore, it is important for STA to capture this hidden need of certain group and fulfill their travel need. In the future, STA must conduct better customer engagement and responsiveness toward intelligence generation, so the customer can voluntarily change their travel behavior and shift to public transport.

E. CONCLUSION

The roles of STA as operator under the contract with TfNSW act as a constraint to STA in determining the improvement of the service. This is because the performance measurement are conducted by TfNSW. However, a method in conducting performance measurement has to be taken into consideration, so that the survey result will not lead to a terrible decisions. It is better for TfNSW to conduct performance measurement for each public transport operator instead of generalizing all of them. Nonetheless, STA can also take part in the process of service improvement as long as it is approved by TfNSW. This can be considered as a positive approach in generating the value for TfNSW (i.e. an integrated public transportation system in New South Wales). Based on theoretical and empirical compatibility in value creation, STA has successfully engaged the customers in five activities of value creation, which are customer engagement, customer experience, self-service, problem solving, and co-designing. However, STA still requires many development and improvement in self-service part, especially in smartphone application. While, for market orientation,

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STA still need improvement in generating market intelligence from certain group of citizen. Overall, STA is totally committed in engaging with customers and driven to be a market oriented organization.

Thus, along with a great deal amount of effort in engaging with customers and implementing market orientation concept by STA, government with other stakeholders in the value network of public transport in Sydney region need to cooperate in implementing hard policy and soft policy measures. By doing so, it is expected that the Sydney citizens are willing to change their travel behaviour (i.e. mix their travel with using public transport) and ultimately the sustainable transport in Sydney region will be achieved.

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