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
Purwo Anggoro Putro

920209-T121
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 peoples 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 peoples 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 dtre (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 Grnroos 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 (State Transit Authority,
2014). In addition, STA also has the same vision with the Sydneys 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: How do value co1

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. (Grnroos 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 engagement
Customer 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-service
Self-service can be referred to a system that allows customers to accomplish certain activities
(order, buy, or exchange) without any direct interaction with the providers 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-solving
As 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
2

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-designing
Co-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, codesigning 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, & Camn (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, &
Camn (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.

Stating by Enquist, Johnson, & Camn (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 transportation

According to Molander et al. (2012) a public transport organisation has to put concern on
customer focus through determining both current and future customers 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 dissemination
Naver 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. Responsiveness
Responsiveness 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
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
5

(Richter, Friman, & Garling, 2011). They explain that soft transport policy measures can be in a
form of travel planing and marketing, and even campaigns.

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 citys 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
peoples 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
6

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).
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. STAs
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 wheelchairaccessible 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 Years Eve, Sydney Festival and
Sculptures by the Sea by operating additional buses along major corridors (State Transit
Authority, 2014).
7

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
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 Transit
Authority, 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 Transit
Authority, 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 Transit
Authority, 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 NSWs value and Customer Centered as one of STAs
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 NSWs 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).
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 Orientation
STA 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 Generation
STA 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 Dissemination
It 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
9

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.

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).

10

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 customers opinions. On
the first stage, the services (whether it is STA buses, train, ferries, or other operators 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).
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
11

b)

c)

d)

e)

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).
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 STAs staffs, that is, reliable and flexible
service (value for customers); cutting back the operational cost by reducing the 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.
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.
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).
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
12

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.
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 customers 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, & Camn (2005, p. 34) that customers and
market orientation is necessary in value-creating stakeholder network.

13

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
14

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,
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.

15

LIST OF REFERENCES

Enquist, B., Johnson, M., & Camn, C. (2005). Contractual Governance for Sustainable Service.
Qualitative Research in Accounting & Management, Vol.2 Iss 1, p. 29-53.
Ettema, D., Grling, T., Olsson, L. E., and Friman, M. (2010). Out-of-home activities, daily
travel, and subjective well-being. Transportation Research Part A, 44,723-732.
Fellesson, M. and Friman, M. (2008). Perceived satisfaction with public transport services in
nine European cities, Journal of Transportation Research Forum, 47(3), pp. 93103.
Fellesson, M. (2014, November 14). Managing Public Transport Using Customer Data [lecture].
Karlstad: Karlstad University.
Friman, M., Edvardsson, B., & Grling, T. (2001a). Frequency of Negative Critical Incidents and
Satisfaction with Public Transport Services. I. Journal of Retailing and Consumer
Services, 8, 95-104.
Friman, M., & Fellesson, M. (2009). Service Supply and Customer Satisfaction in Public
Transportation: The Quality Paradox. Journal of Public Transportation, Vol. 12, No.4, p.
57-69.
Friman, M., & Grling, T. (2001b). Frequency of Negative Critical Incidents and Satisfaction
with Public Transport Services. II. Journal of Retailing and Consumer Services, 8, 105114.
Friman, M., Larhult, L., & Garling, T. (2013). An analysis of soft transport policy measures
implemented in Sweden to reduce private car use. Transportation, 109-129.
Gebhardt, G., Carpenter, G., & Sherry Jr., J. (2006). Creating a Market Orientation: A
Longitudinal, Multifirm, Grounded Analysis of Cultural Transformation. Journal of
Marketing Vol.70, p.37-55.
Grnroos, C., & Gummerus, J. (2014). The Service Revolution and Its Marketing Implications:
Service Logic vs Service-Dominant Logic. Managing Service Quality, 206-229.
Jakobsson Bergstad, C., Gamble, A., Hagman, O., Polk, M., Grling, T., & Olsson, L. E. (2011).
Affective-Symbolic and Instrumental Independence Psychological Motives Mediating
Effects of Socio-Demographic Variables on Daily Car Use. Journal of Transport
Geography.
Kohli, A., & Jaworski, B. (1990). Market Orientation: The Construct, Research Propositions, and
Managerial Implications. Journal of Marketing Vol.54, p. 1-18.
Maltz, E. and Kohli, A. K. (1996). Market intelligence dissemination across functional
boundaries, Journal of Marketing Research, 33(1), pp. 4761.
Molander, S., Fellesson, M., Friman, M., and Skln, P. (2012). Market orientation in public
transport researchA review. Transport Reviews: A Transnational Transdisciplinary
Journal, 32(2), 155-180.
NSW Government. (2006, July 5). M2000-17 Sydney 2000 Olympics and Paralympic Games
Car Pooling. Accessed on December 26, 2014, from NSW Government - Premier and
Cabinet: http://arp.nsw.gov.au/m2000-17-sydney-2000-olympics-and-paralympic-gamescar-pooling
Narver, J. C. and Slater, S. F. (1990). The effect of a market orientation on business protability,
The Journal of Marketing, 54(4), pp. 2035.
Opal.com.au. (2015). Opal Card. Accessed on January 15, 2015, from opal.com.au:
https://www.opal.com.au/ordercard/?execution=e1s1
16

PopulationLabs.com. (2011). Australia Population Map. Accessed on December 22, 2014, from
PopulationLabs.com: http://www.populationlabs.com/Australia_Population.asp
Richter, J., Friman, M., and Grling, T. (2010). Review of implementations of soft transport
policy measures. Transportation: Theory & Application, 2, 518.
Richter, J., Friman, M., & Garling, T. (2011). Soft Transport Policy Measures: Gaps in
Knowledge. International Journal of Sustainable Transportation, 5, 199-215.
Rose, G., & Ampt, E. (2001). Travel Blending: An Australian Travel Awareness Initiative.
Transportation Research Part D 6, p. 95-110.
State Transit Authority. (2014). Annual Report 2013. Sydney: State Transit Authority.
sydney2030.com.au. (2008). Green/Global/Connected. Accessed on December 15, 2014, from
Sydney 2030: http://www.sydney2030.com.au/
Transport for NSW. (2013). Transport Overview - General's Report to Parliament Vol. 8 .
Sydney: Transport for NSW.
Transport for NSW. (2014). Customer Satisfaction Index 2014. Sydney: Transport for NSW.

17