台灣有機產業服務缺口之研究：以PZB模型為架構 - 政大學術集成

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(1)國立政治大學企業管理研究所. 碩士學位論文. 台灣有機產業服務缺口之研究：以 PZB 模型為架構治. 立. 政. 大. ‧ 國. 學. An Empirical Investigation of the Service Gaps of. ‧. sit. y. Nat. the Organic Agriculture Industry in Taiwan:. io. n. al. er. Taking the PZB Model as Framework. Ch. engchi. i n U. v. 指導教授：羅明琇博士研究生：陳英君. 中華民國一零四年一月.

(2) 摘要隨著消費者行為的快速變化以及消費者對服務品質的要求提高，提供高品質的服務已經成為企業重要的策略。本研究透過「PZB 模型」從服務提供者和消費者兩個角度來探討台灣有機產業裡存在的服務缺口。這些年有機連鎖店不斷的成長並成為重要的銷售通路之一，因此本研究選定有機連鎖公司以及有機連鎖店的消費者為研究對象。本研究採取個案研究方法，透過文獻、深度訪談、二手紀錄等方式蒐集資料，以有機連鎖公司以及消費者對服務缺口之觀點來分析及探討，並提出具參考價值的建議，讓相關企業未來可加以運用。. 立. 政治大. 研究結果顯示目前有機產業裡的連鎖公司採取較被動的方式來了解消費者. ‧ 國. 學. 的需求；由於台灣有機產業裡的連鎖公司大多為中小企業，有限的能力和資源常. ‧. 成為滿足消費者需求最大的阻礙；有機連鎖公司缺乏服務品質的衡量指標，在供應商管理方面還需要加強；以上因素造成服務缺口的存在。此外，針對一般大眾. y. Nat. io. sit. 對有機概念的推廣和教育還需要持續加強；產品資訊、品質、以及價格成為消費. n. al. er. 者在衡量服務品質的重要考量；加強推廣行動更能夠滿足消費者對有機產業的期. Ch. i n U. v. 望；另外，提升消費者對有機產品之信心亦為重要的改進方向。. engchi. 關鍵字：有機產業、PZB 模型、有機連鎖店.

(3) Abstract Facing rapid changes of customer behavior and increasing customers demand on service quality, delivering high quality service is adapted as an important strategy in businesses. This study applies the PZB Model to investigate the service gaps in the organic industry in Taiwan from the perspective of both service providers and customers. In recent years organic chain stores have become an important distribution channels for organic products. Therefore, organic chain store companies and organic. 政治大 study collects and analyzes data by collecting literature review, gathering secondary 立. chain stores customers are selected to be respondents. Using case study method, this. data, and conducting interviews with organic chain store companies and customers.. ‧ 國. 學. The findings can serve as reference to future improvement in the industry.. ‧. This study finds that current companies still use passive approaches to. sit. y. Nat. understand customer demands. Since most of companies in this industry are small and. io. er. medium enterprises, limited capabilities and resources often become barriers when fulfilling customer demands. Companies are lacking of service performance. al. n. v i n C h program. All U measurement and quality improvement of these situations can cause the engchi existence of service gaps. Other findings showed that in general organic customers. already have an understanding of the organic concept. However, the industry still needs efforts to communicate with people who currently aren’t customers. Product information, product quality, and price become important considerations for customers in assessing service quality in this industry. Moreover, customer trust and confidence in organic products should be increased and became an important focus of the government as well as the management to stimulate industry growth.. Keywords: organic agriculture industry, the PZB Model, organic chain stores.

(4) TABLE OF CONTENTS 1.. Introduction ........................................................................................................... 1 1.1. Research background and motivation ............................................................ 1 1.2. Research objectives ........................................................................................ 2 1.3. Research process and brief introduction of chapters ..................................... 3. 2.. Literature review .................................................................................................. 6 2.1. Service quality ............................................................................................... 6 2.1.1. Definition ............................................................................................. 6. 治政 2.1.2. Measurement model ............................................................................. 7 大立 2.2. The PZB Model............................................................................................ 15 ‧ 國. 學. 2.2.1. The PZB Model.................................................................................. 15. 3.. ‧. 2.2.2. The importance of the PZB Model and its application in industries . 21 The organic industry in Taiwan ............................................................................ 24. y. Nat. io. sit. 3.1. The definitions of organic agriculture .......................................................... 24. n. al. er. 3.2. The development of the organic industry in Taiwan .................................... 25. Ch. i n U. v. 3.3. The roles in the distribution channel of the organic industry in Taiwan ...... 27 4.. engchi. Methodology ........................................................................................................ 45 4.1. Research method .......................................................................................... 45 4.2. Case selection............................................................................................... 46 4.3. Interview questions design ........................................................................... 47 4.4. Data collection ............................................................................................. 53. 5.. Analysis, result, and solutions ............................................................................ 57 5.1. Company A .................................................................................................. 57 5.1.1. Gap 1 Customer expectations-management perceptions gap ............ 58 5.1.2. Gap 2 Management perceptions-service quality specifications gap .. 60 i.

(5) 5.1.3. Gap 3 Service quality specifications-service delivery gap ................ 62 5.1.4. Gap 4 Service delivery-the external communication gap .................. 66 5.2. Company B .................................................................................................. 67 5.2.1. Gap 1 Customer expectations-management perceptions gap ............ 67 5.2.2. Gap 2 Management perceptions-service quality specifications gap .. 69 5.2.3. Gap 3 Service quality specifications-service delivery gap ................ 71 5.2.4. Gap 4 Service delivery-the external communication gap .................. 73 5.3. Customer Y .................................................................................................. 74. 政治大 5.5. Cross-case analysis ...................................................................................... 77 立. 5.4. Customer Z................................................................................................... 75. 5.5.1. Gap 1 Customer expectations-management perceptions gap ............ 77. ‧ 國. 學. 5.5.2. Gap 2 Management perceptions-service quality specifications gap .. 78. ‧. 5.5.3. Gap 3 Service quality specifications-service delivery gap ................ 80. sit. y. Nat. 5.5.4. Gap 4 Service delivery-the external communication gap .................. 82. io. er. 5.5.5. Gap 5 Expected service-perceived service gap .................................. 83 5.5.6. Summary of service gaps ................................................................... 85. al. n. v i n Ch 5.6. Solutions ...................................................................................................... 86 engchi U 5.6.1. Solutions for gap 1 ............................................................................. 86 5.6.2. Solutions for gap 2 ............................................................................. 87 5.6.3. Solutions for gap 3 ............................................................................. 88 5.6.4. Solutions for gap 4 ............................................................................. 89 5.6.5. Solutions for gap 5 ............................................................................. 90 6.. Conclusions and recommendations ................................................................... 95 6.1. Findings........................................................................................................ 95 6.2. Managerial implications............................................................................... 98 6.3. Contributions.............................................................................................. 100 ii.

(6) 6.4. Limitations and future research ................................................................. 100 References ................................................................................................................. 102 Transcript ................................................................................................................... 113. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. iii. i n U. v.

(7) LIST OF TABLES Table 1. The definition of service quality .............................................................. 7 Table 2. 2001, 2012-2013 Organic agricultural land and farm statistics ............. 26 Table 3. Percentage of distribution channels of the organic industry in Taiwan . 28 Table 4. List of Taiwan organic chain stores ........................................................ 34 Table 5. Taiwan organic chain stores distribution ............................................... 35 Table 6. Labels for agricultural product in Taiwan .............................................. 40 Table 7. 2014 Taiwan authorized certification bodies and their labels ................ 42. 政治大. Table 8. Interview protocol .................................................................................. 49. 立. Table 9. Data collection – service providers ........................................................ 54. ‧. ‧ 國. 學. Table 10. Data collection – customers ................................................................. 55. n. er. io. sit. y. Nat. al. Ch. engchi. iv. i n U. v.

(8) LIST OF FIGURES Figure 1. Research process .................................................................................... 4 Figure 2. Technical and functional quality model .................................................. 9 Figure 3. The PZB Model .................................................................................... 11 Figure 4. Attribute Service Quality Model .......................................................... 12 Figure 5. PCP Attribute Model ............................................................................ 14 Figure 6. Extended model of service quality ....................................................... 19 Figure 7. Distribution channels of the organic industry in Taiwan ...................... 27. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. v. i n U. v.

(9) 1.. Introduction This chapter gives an overview of research background, motivations, research. objectives, research process, and brief introduction of chapters in this study.. 1.1. Research background and motivation The organic industry in Taiwan started in 1986. Although the industry started almost 30 years ago, the development of the organic industry has been slow. However,. 政治大 safety issues in recent years, 立 the organic industry in Taiwan has seized greater. as a result of rising environmental awareness and health consciousness, also food. ‧ 國. 學. opportunities. More and more people realize the value of organic products. The organic industry becomes more important in the governance agenda as development. ‧. of organic agriculture is proposed as future goal for Taiwan (Council of Agriculture,. sit. y. Nat. Executive Yuan, R.O.C. (Taiwan), 2013). The organic industry growth can be seen. n. al. er. io. through the growth of organic chain stores in Taiwan. In the past organic shops, which. i n U. v. are usually owned by farmers, served as the main channel for customers to buy. Ch. engchi. organic products. However, as there are increasing numbers of businesses in investing in the organic industry, organic chain stores surpass and replace organic shops as the main channel (董國昌, 2007). In 2011, organic chain stores reached 300 stores in total (候昱成, 2011). In 2014, there were more than 500 organic chain stores in Taiwan (see Table 5). Organic chain stores are different from retailers in general. While retailers focus on selling products, organic chain stores offer more attentive service. They maintain intimate long-term relationship with customers. Thus, service quality is important for organic chain store companies, especially in competitive market in recent years. It is 1.

(10) widely accepted that higher standard of living leads customers to place higher value on service quality. Therefore, understanding customer needs and expectations on service quality, as well as meeting customer demands has become an important strategy for businesses. Improvement in service quality can bring positive impact on profitability (Dedeke, 2003; Lee & Hwan, 2005). One approach to improve service quality is by identifying gaps in current service. The gap occurs when there is difference between customer expectations and perception in service. Relating to these reasons, this study aims to investigate the service gaps inside the organic industry.. 政治大 the results can be considered as a reference for the industry in the future. 立. This study applies the PZB Model to investigate the possibility of service gaps, hence. ‧ 國. 學. 1.2. Research objectives. ‧. Using the PZB Model as research framework, the purpose of this study is to. y. Nat. er. io. sit. investigate service gaps in order to improve service quality in the organic industry in Taiwan. These investigations are conducted not only to explore the gaps in the. n. al. Ch. i n U. v. industry, but also to examine how and why the gaps exist. This study investigates the. engchi. service gaps from both customers’ and service providers’ perspective. Through investigation from service providers’ perspective, researchers can understand actual situations and limitations in providing service. Therefore, they can make applicable solutions for possible improvements of service quality. The objectives of this research are: 1. Identifying service gaps in the organic industry in Taiwan from both service providers’ and customers’ perspectives 2. Providing solutions to eliminate the service gaps in order to improve service quality in the industry 2.

(11) 1.3. Research process and brief introduction of chapters The following are steps in the process of this study: a. Research objectives Determining research direction and research purposes. b. Literature review and industry background Collecting literature and understanding industry background to gain objectives and feasible research framework. c. Research method. 政治大. Selecting data collection method. As data collection approach, this study. 立. chooses multiple case studies method. Furthermore, develop the interview. ‧ 國. 學. questions.. d. Case selection. ‧. Selecting interview respondents. Two organic chain companies and two. Nat. sit. y. customers are selected for the interviews.. n. al. er. io. e. Interview and data collection. i n U. v. Collecting interview data from the selected respondents and presenting the interview results.. Ch. engchi. f. Data analysis Analyzing the interview result, comparing the result through cross-case analysis, and providing solutions to reduce the service gaps. g. Conclusions and recommendations Summarizing findings, providing conclusions based on analysis, and making recommendations as reference for future research and practitioners.. 3.

(12) The process of this study is described below.. Research questions. Industry background. Literature review. Research method. 立. Case selection 治政大. ‧ 國. 學. Interview and data collection. io. n. al. sit. Conclusions and recommendations. er. Nat. y. ‧. Data analysis. Ch. i n U. Figure 1. Research process. engchi. v. This study is classified into six chapters. The content of each chapter is summarized below: Chapter 1: Introduction This chapter explains research background, motivations, research objectives, research process, and a brief introduction of chapters in this study. Chapter 2: Literature review This chapter highlights literature review of service quality, service quality measurement models, and the PZB Model 4.

(13) Chapter 3: The organic industry in Taiwan This chapter gives an introduction and development of the organic industry in Taiwan. Chapter 4: Methodology This chapter explains research method, case selection, interview questions, and data collection process. Chapter 5: Result, analysis, and solutions This chapter presents results and analysis from data collection, also gives. 政治大 Chapter 6: Conclusions and recommendations 立 solutions for companies in reducing service gaps.. This chapter summarizes findings, solutions, research limitations, also provides. ‧ 國. 學. recommendations for future research.. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. 5. i n U. v.

(14) 2. Literature review This chapter gives the overview of service quality measurement models, the PZB Model and its applications in industries and management fields.. 2.1. Service quality As for retailers, delivering better service quality is a basic strategy to create competitive advantage (Dabholkar, Thorpe, & Rentz, 1996). Moreover, it becomes an. 治政大 satisfaction, loyalty, Service quality can influence customers’ purchase decisions, 立 acquisition and retention (Dedeke, 2003). Therefore, improvement in service quality. important strategy for businesses to gain customers in highly competitive market.. ‧ 國. 學. can influence company’s profitability (Lee & Hwan, 2005). The measurement of. n. al. er. io. sit. y. Nat. 2.1.1. Definition. ‧. service quality became an important topic for management.. i n U. v. Service quality is defined as the extent to which a service meets customer needs. Ch. engchi. and expectations (Asubonteng, McCleary, & Swan, 1996). It is related, but not equivalent to satisfaction (Asubonteng et al., 1996; Parasuraman, Zeithaml, & Berry, 1988). The definitions of service quality are summarized in Table 1.. 6.

(15) Table 1. The definition of service quality Definition. Scholar. Service quality is customer’s subjective views on the service (Garvin, 1984) the consumer perceived. Service quality is overall customer evaluation on different (Lehtinen & dimensions during service process. Service. quality results. from. Lehtinen, 1991) comparison. of. customer (Grönroos, 1984). expectations and service performance.. 政治大 These evaluations are combined together to achieve an overall 立. Service quality is evaluations of performance at multiple levels. (Brady & Cronin,. ‧ 國. 學. service quality perception.. 2001). Source: summarized by this study. ‧ sit. y. Nat. Based on above definitions, service quality in this study means customers’. io. er. evaluation on service performance which is resulted from comparison between their. al. v i n C expectation, the higher the servicehquality e n gis.cService h i Uquality is also measured high n. perceptions and expectations on service. Hence, the closer the perception to customer. when service performance or customer perception exceeds customer expectations.. 2.1.2. Measurement model Most services are intangible. Services, with high labor content, are usually heterogeneous. Services are offered different, depending on provider. In some cases, production and consumption of services are often inseparable (Berry, 1980; Carman & Langeard, 1980). Those characteristics make service quality difficult to measure. 7.

(16) (Parasuraman, Zeithaml, & Berry, 1985). In order to develop measurement of service quality, different concepts of service quality dimensions were proposed. However, many scholars agree service quality can be categorized into two major dimensions. The first dimension refers to service outcome. It’s referred as “outcome quality” by Parasuraman et al. (1985) or as “technical quality” by Grönroos (1984). The second dimension is associated with how the service is delivered. Parasuraman et al. (1985) called this dimension as “process quality”, while Grönroos (1984) called it as “functional quality”. According to. 政治大 process. Service quality refers to the total combination of process quality and outcome 立 Lehtinen & Lehtinen (1991), service output cannot be separated from its production. quality. By controlling service delivery process and process quality, service provider. ‧ 國. 學. also controls output quality.. ‧. Because of various concepts of service quality, many scholars proposed different. sit. y. Nat. views of service quality measurements. Some of service quality measurement models. io. n. al. er. are discussed below.. A.. i n U. v. Technical and functional quality model (Grönroos, 1984). Ch. engchi. The technical and functional quality model was the first measurement model of service quality. Grönroos (1984) proposed two dimensions of service quality: technical quality and functional quality. Technical quality refers to the result or the outcome of the service which customers actually receive. Functional quality refers to how the service is delivered which is the interaction between service personnel and customer. Grönroos argued that functional quality is more important than technical quality. Both technical and functional quality together with other factors, such as tradition, ideology, word of mouth, and pricing, affect image of service provider. The image of service provider affects customer perception of service quality. Customers 8.

(17) assess service quality by comparing their expectation and the actual service they perceived. Grönroos stated when company has a positive image, customers can compensate with negative functional or technical quality. In the organic industry, food safety and consumption risks are serious issues for customers. Company’s positive image may be easily deteriorated when trust issues occur. Besides, since there are increasing numbers of marketing channels, customers can easily change to other retailers or other channels. Then, Grönroos’ proposition of image role cannot be applicable in this. 政治大 functional quality. Further method to measure technical and functional quality is not 立. industry. Furthermore, this model doesn’t clearly explain elements of technical and. explained either. Since this study aims to identify possible elements of service quality. ‧ 國. 學. and seek possible method to improve service quality, it needs measurement. ‧. framework that can adequately describe service elements. Then, this model won’t be. n. al. er. io. sit. y. Nat. considered as research framework in this study.. Ch. engchi. Figure 2. Technical and functional quality model Source: Grönroos (1984) 9. i n U. v.

(18) B.. The PZB Model (Parasuraman et al., 1985) The PZB Model is a service quality evaluation model proposed by Parasuraman,. Zeithaml, and Berry in 1985. There are two kinds of service quality measurements in the PZB Model: internal and external measurements. The internal measurement includes gap 1 to gap 4. These gaps are measurements for internal operation of the service provider. The external measurement refers to gap 5, which measure service quality from customers’ perspective. The idea that the model proposed is that customer perceptions of service quality is affected by four gaps (gap 1 to gap 4) which. 政治大 to control gap between customer perceptions and expectations (gap 5). The five gaps 立 occur on the service provider’s side. Therefore, managers should focus on these gaps. in this model are:. ‧ 國. 學. a. Gap 1 or gap between customer expectations and management perceptions. ‧. b. Gap 2 or gap between management perceptions and service quality. sit. y. Nat. specifications. io. er. c. Gap 3 or gap between service quality specifications and service delivery d. Gap 4 or gap between service delivery and the external communication,. al. n. v i n C h service and perceived Gap 5 or gap between expected service. Service quality engchi U. e.. is difference between expectation and perception.. The PZB Model is a framework that enables management to identify shortages on service quality systematically. It also provides guidelines to improve service quality. Hence, the PZB model is considered suitable for this study purposes.. 10.

(19) Word of Mouth. Past Experience. Personal Needs. Communication. Expected Service Gap 5 Perceived Service. Customer Service Provider. Service Delivery. External. (including pre- and. Communications to. post-contacts 治政 Gap 3 大立Translation of Perceptions. Customers. Gap 4. into Service Quality Specifications. ‧. Gap 2. sit. io. er. of Customer Expectations. y. Management Perceptions. Nat. a l Figure 3. The PZB Model v i n Source: (1985) C h Parasuraman et al. U engchi. n. C.. 學. ‧ 國. Gap 1. Attribute Service Quality Model (Haywood-Farmer, 1988) According to the Attribute Service Quality Model, a service organization has. high quality of service if it meets customer preferences and expectations consistently. The model categorizes service organization based on their relative degree of service customization, labor intensity, contact and interaction between service organization and their customers. The model proposes that service in general consists of three attributes: professional judgment, physical facilities and processes, and behavioral aspects. Each attributes has several factors which are presented in Figure 4 below. 11.

(20) This model can help service organization to find out quality factors in top priority for their business. The model helps management in designing service in the beginning of design phase. However, since the Attribute Service Quality Model does not provide guideline for identifying service quality problems and improving service quality, it cannot assist management to achieve quality improvement and for this reason, this model cannot be applied as research framework in this study.. Professional Judgment Diagnosis, competence, advice, guidance,. 政治大 flexibility, discretion, knowledge 立. 學. 4 5. 3 1. ‧. ‧ 國. innovation, honesty, confidentiality,. 2. sit. y. Nat. Physical facilities and processes:. Behavioral aspects:. io. location, layout, décor, size, facility,. er. n. al. Timeliness, speed communication (verbal,. reliability, process flow, capacity,. Ch. engchi. balance, flexibility, timeliness, speed, ranges of services offered,. iv n friendliness, tact, attitude, tone of voice, U non-verbal), courtesy, warmth,. communication. dress, neatness, politeness, attentiveness, handling complaints, solving problems.. 1. Short contact/interaction intensity-low customization, for e.g. Hardware/grocery shop 2. Medium contact/interaction intensity-low customization 3. High contact/interaction intensity-low customization, for e.g. Education 4. Low contact/interaction intensity-high customization, for e.g. Clubs 5. High contact/interaction intensity-high customization, for e.g. Health care services Figure 4. Attribute Service Quality Model Source: Haywood-Farmer (1988). 12.

(21) D.. PCP Attribute Model (Philip & Hazlett, 1997) PCP Attribute Model provides three overlapping service attributes with. hierarchical structure. These attributes are pivotal (end products or outputs), core, and peripheral (conjointly representing inputs and processes) that determine customer satisfaction. The pivotal attributes represent customer expectation to achieve or receive. These attributes are considered to be the most determining factor on customer’s decision to approach the organization and bring the greatest influence on the satisfaction level. Customer satisfaction can be reached if the pivotal attributes. 政治大 in the bottom are considered to have lower degree of influence on the customer 立 have achieved customer requirements. The core attributes and the peripheral attributes. satisfaction.. ‧ 國. 學. When the service is performed only once, and all the outputs in the pivotal. ‧. attributes met all of the customer’s requirements, the customer can be expected to be. sit. y. Nat. satisfied even if the degree of achievement of core and peripheral attributes is low. As. io. er. the service is performed more frequently, the core and peripheral attributes may begin to gain greater importance. Customers may demand higher degree of achievement of. al. n. v i n core and peripheral attributes C (Philip & Hazlett, 1997). h e n g c h i U As for disadvantage, this. model can’t provide clear dimensions of three attributes. The model was initially proposed to challenge the PZB Model, but it lacks validation from researches. Hence, the PCP Attribute Model can’t be applied in the research framework of this study.. 13.

(22) 立. 政治大. ‧. ‧ 國. 學 er. io. sit. y. Nat. n. a l Figure 5. PCP Attribute Model i v n Source: C h Philip and Hazlett (1997) U engchi. Different views on service quality and its dimensions led to development of various service quality measurement models. There is no consensus among scholars in defining the best applicable model. However, the PZB Model is mostly used approach to study service quality (Mauri, Minazzi, & Muccio, 2013). The outcome level of service quality depends on people who are involved in providing the services. Then, it’s important to understand factors that influence service provider in providing service. Although there are many service quality measurement models, most of models don’t provide further explanation such as 14.

(23) sources of the problems. The PZB Model, however, provides more comprehensive measurement for service quality and identify problem source systematically. The model also provides direction for improving in service quality that focus on service provider. To summarize, this study chooses the PZB Model as research basis because of following reasons: . The PZB Model provides systematic and comprehensive assessment on service quality, which can assist this study to achieve its purposes: to identify possible gaps in industry and give further recommendation to. 政治大 The PZB Model has been supported by many researchers. The great 立 improve service quality.. . numbers of literature on the PZB Model provide better understanding of the. ‧ 國. 學. model.. ‧. Further literature of the PZB Model is presented in the next section.. sit. n. al. er. io. 2.2.1. The PZB Model. y. Nat 2.2. The PZB Model. Ch. engchi. i n U. v. The PZB Model was first developed on the expectation-confirmation theory suggested by Oliver in 1980 which illustrates how customers assess quality (Oliver, 1980). The PZB Model aims to identify service gaps, the difference between customer expectations and perceptions on service provided by service provider (gap 5) and other four gaps (gap 1 to gap 4) that influence the size of this expectations-perceptions difference (see Figure 3). In this model, customer expectation is defined as what customer desire and want. The model suggested that service quality can be improved by minimizing these gaps (Liao, 2011). 15.

(24) In their study, Parasuraman et al. (1985) used exploration research method to develop the conceptual model of perceived service quality. They conducted interviews on four companies from different service sectors. The companies came from retail banking service, credit card service, securities brokerage service, and product repair and maintenance service. The three authors used executive and focus group interviews, and investigated service quality from companies’ executive management and customers’ perspective. The authors also introduced ten dimensions of service quality (Parasuraman et al., 1985): a.. 政治大 billing, keeping records correctly, performing the service right at the 立. Reliability: consistency of performance and dependability, accuracy in. designated time.. ‧ 國. 學. b.. Responsiveness: willingness or readiness of employees to provide service,. ‧. timeliness of service such as mailing a transaction slip immediately, calling. y. sit. Competence: possession of the required skills and knowledge to perform the. io. er. c.. Nat. the customer back quickly, giving prompt service.. service, knowledge and skill of the contact and support personnel, research. n. al. Ch. capability of the organization. d.. engchi. i n U. v. Access: approachability and ease of contact, the service is easily accessible by telephone, waiting time to receive service is not extensive, convenient hours of operation, convenient location of service facility.. e.. Courtesy: politeness, respect, consideration, friendliness of contact personnel, consideration for the consumer's property, clean and neat appearance of public contact personnel.. f.. Communication: keeping customers informed in language they can understand and listening to them, explaining the service itself and its cost, assuring the consumer that a problem will be handled. 16.

(25) g.. Credibility: trustworthiness, believability, honesty, company reputation, having the customer's best interests at heart, personal characteristics of the contact personnel.. h.. Security: freedom from danger, risk, or doubt, physical safety, financial security, confidentiality.. i.. Understanding/knowing the customer: understanding customer needs, learning the customer's specific requirements, providing individualized attention, recognizing the regular customer.. 政治大 customers in service facility. 立. Tangibles: physical evidence and representations of the service, other. 學. ‧ 國. j.. The authors found certain overlaps among the dimensions. The ten dimensions. ‧. then were shortened into five dimensions (Parasuraman et al., 1988):. y. Nat. a. Tangibles: physical facilities, equipment, and appearance of personnel. al. v i n C h to help customersUand provide prompt service Responsiveness: willingness engchi n. c.. er. io. and accurately. sit. b. Reliability: company’s ability to perform the promised service dependably. d. Assurance: knowledge and courtesy of employees and company’s ability to inspire trust and confidence e. Empathy: caring, individualized attention the company provides its customers These dimensions were further developed as a base for SERVQUAL scale, a multiple-scale instrument that can help assess customer perceptions and expectations on service. The authors also introduced the extended PZB Model. It focused on factors that may influence four gaps (gap 1 to gap 4) on the service provider side. The 17.

(26) extended model helps investigating organizational barrier in delivering service (see Figure 6) (Zeithaml, Berry, & Parasuraman, 1988). In 1991, they reassessed factors that influence gap 1 to gap 4. They found that perception of feasibility under gap 2, supervisory control, role conflict, and role ambiguity under gap 3 have weak influence. (Parasuraman, Berry, & ZeithamI, 1991). Explanations of each gap in the PZB Model are presented below.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 18. i n U. v.

(27) Marketing research orientation. Gap 1. Upward communication Levels of management. Management commitment to service quality Goal setting. Gap 2. Task standardization Perception of feasibility. 立. Tangibles. 政治大 Gap 5. Reliability Responsiveness. (Service. 學. ‧ 國. Teamwork. Quality). Employee-job fit. Empathy. ‧. Technology-job fit Perceived Control. y. Nat. Gap 3. er. al. n. Role ambiguity. io. Role conflict. sit. Supervisory control system. Ch. engchi. i n U. v. Horizontal communication. Assurance. Gap 4. Propensity to overpromise. Figure 6. Extended model of service quality Source: Zeithaml et al. (1988). 19.

(28) Gap 1: Customer expectations - management perceptions gap Gap 1 refers to the difference between customer expectations on service and management perceptions of customer expectations. Customer expectations on service depend on word of mouth, personal needs, past experience, and external communication. The size in gap 1 may be influenced by marketing research, upward communication, and levels of management. Marketing research orientation is determined by the amount of marketing research, usage of marketing research, and degree to which marketing research focuses on service quality issues. Upward. 政治大 employee-to manager communication, and quality of contact between top managers 立. communication includes direct interaction between managers and customers,. and contact personnel. The size of this gap can also be determined by number of. ‧ 國. 學. layers between customer contact personnel and top managers.. ‧. sit. y. Nat. Gap 2: Management perceptions - service quality specifications gap. io. er. Gap 2 refers to the difference between management perceptions of customer expectations and service quality specifications. This gap indicates that although. al. n. v i n C hexpectations, thereUmay be difficulties in creating service providers aware of customer engchi service specification. The size in gap 2 may be influenced by management. commitment to service quality, the existence of formal process in setting goals for service quality, task standardization, capabilities or system for meeting specifications (Zeithaml et al., 1988).. Gap 3: Service quality specifications - service delivery gap Gap 3 refers to the difference between service quality specifications and service delivery. This gap indicates that although a company has well established service specification, there may be difficulties to deliver it to customers. The size in gap 3 20.

(29) may be influenced by internal organization such as teamwork, employee-job fit, the availability of appropriate tools to perform service, and the degree in which employees perceive that they are in control of their jobs and can act flexibly.. Gap 4: Service delivery - the external communication gap Gap 4 refers to the difference between service delivery and the external communication of the service with customers. The size in gap 4 may be influenced by internal communication and external communication. Internal communication refers. 政治大 communication marks communication between marketing and operation as well as 立. to coordination between departments that have contact with customers, while external. external communication to customers, such as advertising and contact between. ‧ 國. 學. personnel and customer.. ‧ sit. y. Nat. Gap 5: Expected service - perceived service gap. io. er. All four gaps described above will influence the distance in gap 5. Gap 5 refers to the difference between customer expectations and perceptions of service quality.. n. al. Ch. engchi. i n U. v. 2.2.2. The importance of the PZB Model and its application in industries The PZB Model is one of the most popular service quality assessment models (Asubonteng et al., 1996; Babakus & Boller, 1992; Finn & Lamb, 2000; Teas, 1993). The PZB Model receives positive responses from researchers and practitioners (Avkiran, 1994; Babakus & Boller, 1992; Bojanic, 1991; Finn & Lamb, 2000), meanwhile it also creates a certain degree of criticisms (Seth & Deshmukh, 2005). Rosen and Karwan (1994) argued that the dimensions of quality haven’t achieved clarity. The PZB Model is lacking in offering difference in importance 21.

(30) weights of each service quality dimension. Their research indicated that different industries have different priority in service quality dimensions. Moreover, the five dimensions (tangibles, reliability, responsiveness, assurance, empathy) only explain from 57% to 71% of the service quality variance (Parasuraman, Berry, & Zeithaml, 1991). The service quality dimensions in the PZB Model also don’t represent all of the factors of competition, such as price factor (Rosen & Karwan, 1994). In addition to the five dimensions, the factors that influence four gaps in the extended model cannot represent all of the factors that influence service quality. For. 政治大 delivering service, in cases which whether the employee fit the job or the employee 立 example, factors that influence gap 3 only focus on employees’ preparation in. has the support needed to deliver service. Yet in some service sectors employee. ‧ 國. 學. performance is not the only matter in service delivery. Teas (1993) pointed that the. ‧. model has ambiguity of conceptual definition and lack of validity. The expectations. sit. y. Nat. measures in the model may be caused by respondents’ misinterpretation of the. io. er. questions (Teas, 1993). Other researchers expressed that the model does not explain the clear measurement procedure of gaps at different levels (Seth & Deshmukh,. n. al. 2005).. Ch. engchi. i n U. v. Despite of those criticisms, the model is reliable and valid in measuring of service quality. The model has been widely applied in many industries. It has been applied in health care and medical service (Babakus & Mangold, 1992; Chiou, Liu, & Tsai, 2012; Reidenbach & Sandifer-Smallwood, 1990), food service and restaurant industry (Johns & Tyas, 1996; Vijayvargy, 2014), shipping service (賴正聲、陳基國、王禮榮、林財生, 2009), education (Hasan, 2008; Shekarchizadeh, Rasli, & Hon-Tat, 2011), telecommunication service (Lai, Hutchinson, Li, & Bai, 2007; Loke, Taiwo, Salim, & Downe, 2011), rental car service (Zhang, Xie, Huang, & He, 2014), and retail (Teas, 1993). Those researches applied the PZB Model by using SERVQUAL 22.

(31) scale questionnaire with customers as respondents, to investigate customer expectations and perceptions in service. The questionnaire is often modified to fit in the industry or service investigated. Although most studies applied the model using quantitative approach to investigate gap 5, some studies applied the whole model by using qualitative approach to investigate and consequently gain better understanding of the service gaps (胡台珍, 2013; 嚴月悅, 2010). The PZB Model is often combined with other research model or tools, such as ISO quality management system. The combination applies ISO 9001 QMS as. 政治大 Liao (2011) found that the PZB Model can give more concrete results when it is 立. measurement factors of the five gaps of the PZB Model (Liao, 2011). In his study,. combined with actual regulation, such as ISO quality management system. The PZB. ‧ 國. 學. Model has been applied not only in industry analysis, but also in specific services. ‧. such as visitors satisfaction toward services a museum provides (江淑芳, 2002).. sit. y. Nat. Furthermore, the model can be applied to investigate stakeholders level of satisfaction. io. n. al. er. (Brønn, 2012), and employees satisfaction towards HR Department (吳伶麗, 2003).. Ch. engchi. 23. i n U. v.

(32) 3.. The organic industry in Taiwan This chapter gives an introduction of the organic industry in Taiwan, including. the definition of organic agriculture, the development of the organic industry in Taiwan, and the roles in the distribution channel.. 3.1. The definitions of organic agriculture The meaning of “organic” is twofold, “ancient” and “back to the ancient”. Before the Industrial Age began, people used to have chemical free farming. Originally, they. 政治大. used natural resources to complete the farming process (陳榮五, 2009). However,. 立. these days the farming process cannot be separated from chemical compounds.. ‧ 國. 學. Responding to the current situation, the organic agriculture is an effort to go back on. ‧. the farming process using natural resources rather than chemicals. IFOAM1 defines organic agriculture as “a production system that sustains the health of soils,. y. Nat. io. sit. ecosystems and people. It relies on ecological processes, biodiversity and cycles. n. al. er. adapted to local conditions, rather than the use of inputs with adverse effects.” As for. Ch. i n U. v. adverse effect, the use of chemical fertilizer or pesticides eventually brings negative. engchi. impact on the ecology. Organic agriculture combines tradition, innovation and science to benefit the shared environment as well as to promote fair relationships and a good quality of life for everything involved in the process (IFOAM, 2008). Both definitions emphasize natural process in farming. Hence, in this study, organic agriculture refers to the farming method that uses natural resources without using chemical inputs in the process. Since Taiwan had a late start in organic. 1. International Federation of Organic Agriculture Movements (IFOAM) was built in France. Since it was founded in 1972, IFOAM has been supporting worldwide organic agriculture movements by working together with close to 800 Affiliates in more than 100 countries. Current headquarters is in Germany. 24.

(33) agriculture (吳東傑, 2005), the technology of organic agriculture in Taiwan is still in the development stage. Consequently, it needs to be enhanced (鄭穆增, 2013)... 3.2. The development of the organic industry in Taiwan Taiwan organic agriculture started late than other countries. Germany and other European countries started to promote organic agriculture in 1924, while United States started in 1947, and Japan started in 1935. The organic industry in Taiwan. 治政大 and other universities to Taiwan University, National Chung Hsing University, 立 evaluate the feasible implementation of organic agriculture in Taiwan. The main. began in 1986 when Taiwan Council of Agriculture invited experts from National. ‧ 國. 學. purpose was to protect Taiwan environment, which already had many pollution. ‧. problems. The pollution led to degradation in air quality, water quality, and other environmental problems. The evaluation result showed high feasibility of. y. Nat. er. io. sit. implementing organic agriculture in Taiwan. In the same year, Taiwan Council of Agriculture started to promote organic agriculture, by planning, promoting standards. n. al. Ch. i n U. v. and regulations, promoting organic fertilizers as substitutes for chemical fertilizers (吳東傑, 2005).. engchi. According to the government statistics data, the total organic agricultural land in Taiwan expanded from 900 hectare in 2001 to 5900 hectare in 2013 (see Table 2).. 25.

(34) Table 2. 2001, 2012-2013 Organic agricultural land and farm statistics Organic. 2001. 2012. 2013. agricultural Farm. Hectare*. Farm. Hectare*. Farm. Hectare*. land and farm Rice. -. 493.39. 856. 2006.88. 870. 2058.97. Vegetable. -. 171. 997. 1784.58. 1070. 1957.24. Fruit. -. 159. 393. 713.26. 433. 833.31. Tea. -. 56. 201. 407.87. 229. 447.23. Other crops. -. 386. 640.01. Total. -. 2988. 5936.76. 政 417治 937.14 大 897.91 2864 5864.73 立 19. 學. ‧ 國. *rounded. Source: 有機農業全球資訊網 (2001, 2012, 2013). (http://info.organic.org.tw/supergood/front/bin/ptlist.phtml?Category=105937), summarized by. ‧. this study. y. Nat. io. sit. The sales of health related products, including organic products, have increased. n. al. er. in recent years. Two drivers that contribute most for this growth are increasing. Ch. i n U. v. diet-relates health concerns and aging population (Wolf, 2014). The first driver of. engchi. organic product demand in Taiwan is recent series of food hygiene and safety scandal, such as plasticizing agent in food in 2011, poisonous starch, blended oil and rice, chemical essence inside natural bread in 2013, and rancid oil in 2014. These recent scandals have made people start paying more attention to their diet, increasing the growth of health conscious customers. The second driver for this growth is aging population2 (鄭穆增, 2013). Aging population become significant problem with late. 2. According Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. (Taiwan), population over 60 years old accounted for 17.4%, or about 407 million people, increased by 180.000 people compare with 2012, while population under 19 years old has significant decrease (20.98% in 2013, compare with 21.56% in 2012) 26.

(35) marriage trend3 and low baby born rate4 in Taiwan (中華民國統計資訊網, 2014).. 3.3. The roles in the distribution channel of the organic industry in Taiwan Farmers distribute their produce through direct and indirect distribution channel (see Figure 7 and Table 3). Each player of the supply chain is discussed below.. Certification body. 立. Supermarkets Organic supermarket Restaurants E-Retailer Consumer cooperative. 學. Farmers. ‧ 國. APMG. 政治大 Organic chain stores. Wholesaler Processor. Customers. ‧. Contract farming. er. io. sit. y. Nat. Farmer’s market/direct delivery (order information from blog, page or website) /leisure farm/organic shops owned by farmers. n. al. Ch. engchi. i n U. v. Figure 7. Distribution channels of the organic industry in Taiwan. 3. According to Department of household registration affairs, M.O.I., more than 60% grooms and 50% brides who married in 2013 are older than 30 years old. 4 According to Department of household registration affairs, M.O.I. Taiwan birth rate in 2013 accounted for 8.53. 27.

(36) Table 3. Percentage of distribution channels of the organic industry in Taiwan Distribution. Percentage of Example. channel. distribution. Processor. Organic rice mill company. Wholesaler. Farmers’ association. Organic chain store. Leezen, Santa Cruz, Cotton Land. 21.49%. Supermarket. FreshONE, PXMart, Carrefour. 5.47%. Cooperative. Homemakers Union Consumers Co-op. 3.21%. Delivery service and. home delivery, organic shops owned by farmers,. 15.29%. Short-term direct. agricultural fairs, roadside vendors, traditional. 13.27%. sales. market vendors, farmer’s market. 政治大 and web-based shops 立. ‧. Source: Adapted from Tung (2012). er. io. sit. y. Nat. Farmers. 學. ‧ 國. direct sales. A.. 40.05%. al. Organic farms are usually small in scale and dispersed in Taiwan. According to. n. v i n C h in 2012, 70% ofUthe organic foods and beverage the Organic Trade Association report engchi products consumed in Taiwan were imported from United States as the biggest supplier (Wolf, 2014). Organic agriculture still relies on human resources. It demands labor intensive work, such as weeding, plowing, and harvesting. The average age of Taiwan farmers is 57 years old (Sui, 2014). With aging population, farmers have difficulties to work productively. In 2013 Council of Agriculture launched Youth Project to attract young people to engage in agriculture (Council of Agriculture, Executive Yuan, R.O.C. (Taiwan), 2014). There is an increasing number of young people who return to their. 28.

(37) hometowns and start working in agriculture. However, the regeneration agenda still needs long time. In addition to general farmers, many organic farmers have high education, such as master degree and even doctorate degree. Most of them already have well-paid job, but they manage to pursue healthy or natural lifestyle.. In the past, most of organic agricultural products were marketed through Agricultural Production-Marketing Groups or APMG (see subsection B below) and direct sales, like local traditional market, organic shops, and home delivery. Organic. 政治大 for organic agricultural products. After 2000, organic chain stores replace organic 立 shop, which is owned by farmer, was initially one of the main distribution channels. shops as the main channel (陳淑恩, 2006). Moreover, with competition and rent. ‧ 國. 學. pressure, it‘s getting difficult for organic shops that owned by an individual to survive.. ‧. However, recent trend shows that there are increasing numbers of organic shops that. sit. y. Nat. are registered as small company. There is strong possibility that these shops will grow. io. er. as chain stores in the future.. In 2007, the first farmer’s market in Taiwan was opened by National Chung. al. n. v i n C his established to U Hsing University. Farmer’s market support the small-scale farming engchi system, set up a local food network, encourage organic or ecological farming and a. sustainable community (Tung, 2012). Farmers bring their produce to the local farmer’s market and sell it directly to local customers. Farmer’s market operating hours usually differs in each area. Some markets open every day, while other markets open in certain days, such as every Saturday, or every Sunday in odd weeks. Recently, farmer’s market has become one of the common marketing channels for organic products. By 2012, there were approximately 40 farmer’s markets throughout Taiwan. Nowadays, farmer’s market does not only have form in physical market, but also there is virtual version of farmer’s market. From 2007 the government have encouraged 29.

(38) farmers by providing free portal for farmers5 (黃璋如, 2007). Consequently, farmers are motivated to sell their produce through virtual farmer’s market. The Internet has provided new business opportunities for people and organization. In small businesses, applying the Internet means creating a direct channel. This technology gives advantages for small farmers which often lack access to reliable information of market and pricing. Currently, there are many farmers who promote and sell products through their blog, website, Facebook page, and other third party websites, such as PChome and Yahoo. Internet allows farmers to advertise their. 政治大. products at low cost and make direct contact with customers.. 立. Agricultural Production-Marketing Groups (APMG). 學. ‧ 國. B.. Until 2011, there were more than 6000 APMG in Taiwan (黃群益, 2011). APMG. ‧. is a group of 10 to 15 farmers who gathered based on the same product, the same. sit. y. Nat. region, or the same farmland size. Organic agriculture in Taiwan consists of many. io. er. small farmers. Because the production is often unstable in quantity and inconsistent in quality, farmers usually don’t have bargaining power. Therefore, it’s common for. al. n. v i n small farmers to gather in an C Agricultural Production-Marketing Groups (APMG). hengchi U They will share production cost, gather and sell their produce together to reduce cost. With larger and firmer supply, they have better bargaining power. It’s also easier to find buyer. The buyer companies or wholesalers will process and market the products. They also directly sell the products to retailers. In Taiwan, it’s common that the wholesaler owns the product brand. However, recently there are some APMGs that become independent and start to make their own brands.. 5. Organic Farmer’s E-market (maintain by I-lan University), website: http://market.organic.org.tw/supergood/front/bin/forum.phtml?bbcode=default 30.

(39) C.. Wholesaler It’s common for farmer to have agreement or contract with a wholesaler.. According to Rural Infrastructure and Agro-Industries Division (AGS) of Food and Agriculture Organization of FAO (2012), contract farming can be defined as “agricultural production carried out according to an agreement between buyer and farmers, which establishes conditions for production and marketing of a farm product or products” (Pultrone & Silva, 2012). Types of contract in agriculture farming are marketing contracts, production management contracts, and production contracts with. 政治大 contract is an agreement of pricing before the harvest period. Production management 立. specified resource-providing contracts (Worley & McCluskey, 2000). Marketing. contract is an advance type of marketing contract. It provides more details in. ‧ 國. 學. production, such as farming locations, practices, and schedules. In resource-providing. ‧. production contracts, the contractor retains ownership, rising the degree of control. sit. y. Nat. over the production.. io. er. Wholesalers are mostly non-profit organizations, public interest organizations, and religious organizations. As for example, Tse-Xin Organic Agriculture Foundation6. n. al. is a non-profit organization. v i n C h by VenerableUMaster, founded engchi. Rhi-Chang in 1997.. Tse-Xin assists farmers to convert their farms from conventional to organic farms, promotes organic agriculture by conducting frequent workshops, seminars, and field trips to farms, and introduces organic concept among young generation through study groups. Farmers’ Association is also one kind of wholesalers. Many local Farmers’ Associations buy farmers agricultural products and sell it to distributors, such as supermarkets and organic chain stores. These days some local Farmers’ Associations. 6. Tse-Xin Organic Agriculture Foundation, website: http://toaf.org.tw/ch/index.asp 31.

(40) have their own brands, such as Hualien City Farmers’ Association7 and Luodong Farmers’ Association8.. D.. Retailer Retailers can be divided into organic chain stores, supermarkets, organic. supermarkets, restaurants, e-retailer, also consumer cooperative. The retailer has an important role in building awareness and trust in organic products. “The role of intermediaries is to create efficiency and to satisfy demand,. 政治大 through advertising and customer education, 立. through activities that include building brand and product awareness. Those activities can be created. providing market. coverage, gathering market information, providing breadth of assortment, processing. ‧ 國. 學. orders, customer support, etc.” (Tsay & Agrawal, 2004). In the organic industry in. ‧. Taiwan, not all retailers can play this role. The role of retailer that described above is. y. sit. io. al. n. i.. er. described below:. Nat. mostly played by organic chain stores. Explanations of each kind of retailer are. Organic chain stores. Ch. engchi. i n U. v. Organic chain stores are usually owned by companies. The companies use franchise systems and direct ownership models to expand their market. Besides company, there are also religious organizations that serve as retailer. One example is Leezen Co., Ltd.9. It was founded in 1995 by a visionary Venerable Master Jih-Chang. As a devoted Buddhist, he believes that human beings and nature should live in harmony. Therefore, he considers pesticides and fertilizers to have a negative impact on people’s health and hence endanger the life of future generations. Master. 7. Hualien City Farmers’ Association, e-shop: http://www.hcfa.org.tw/. 8. Luodong Farmers’ Association, e-shop: http://www.lotungfa.org.tw/. 9. Leezen Co., Ltd. website, http://www.leezen.com.tw/ 32.

(41) Jih-Chang guided his disciples to return to nature by practicing organic farming. In 2011, there were approximately 300 organic chain stores in Taiwan (候昱成, 2011), and more than 500 stores by the end of July 2014 with more than 60% of chain stores located in northern Taiwan (see Table 4 and Table 5). This increasing demand is not only caused by food safety scandals, but also by the effort that chain stores have made in brand building and marketing. Organic chain stores have important roles in promoting the organic concept to customer. They often carry out health seminars and attractive classes for customers, such as health cooking classes. Based on Common. 政治大. Health Magazine recent report, only 2-3% of products in organic chain stores are. 立. organic (康健編輯, 2012). Most products are natural products, non-toxic products and. ‧. ‧ 國. 學. healthy products.. n. er. io. sit. y. Nat. al. Ch. engchi. 33. i n U. v.

(42) Table 4. List of Taiwan organic chain stores Founded. Total stores. Total capital. Regional development. Santacruz. 1985. 107. 120,000,000. Taiwan. Cotton Land. 1992. 56. 1,000,000,000. Northern Taiwan. Leezen. 1995. 101. 250,000,000. Taiwan. Wonder Bio Land. 1995. 5. UGND. 1996. 9. 2,000,000. Northern Taiwan. Orange market. 1996. 16. 200,000,000. Northern, Central Taiwan. MS Organic. 1997. 22. 20,000,000. 1999. 63. 600,000,000. 2003. 7. Northern Taiwan Taiwan. 20,000,000. 6,200,000. 49. 3,500,000. n. al. 4. 2005. sit. y. Southern Taiwan. 2003. io. Dr. Fish. Taiwan. Northern, Central, and. Nat. Yasaimura. 1999. Northern, Southern. ‧. LOHAS Village. ‧ 國. Yogi House. 治政 3 500,000 大. 學. Organic Yam. 立. Northern Taiwan. Southern Taiwan. er. Brand name*. Ch. engchi. i n U. v. Northern, Central, and Southern Taiwan Northern, Central, and. Qingjing. 2005. 6 Southern Taiwan. Color Food. 2008. 5. 11,000,000. Northern Taiwan. Green Emperor. 2013. 16. 43,000,000. Northern, Central Taiwan. *brands with two stores aren’t presented in the table Source: Data was collected from companies’ websites, Organic Information Portal, TCFA10 (2014), news reports, summarized by this study 10. Taiwan Chain stores and Franchise Association (台灣連鎖暨加盟協會), website: http://www.tcfa.org.tw/ 34.

(43) Table 5. Taiwan organic chain stores distribution Area. Chain stores number. Percentage. by the end of July 2014 Northern Taiwan. 315. 61.88%. Center Taiwan. 85. 16.69%. Southern Taiwan. 104. 20.43%. 5. 0.98%. Eastern Taiwan Total. 509. 政治大. Source: Data were collected from Organic Information Portal and websites of each organic chain store company, summarized by this study. 立. ‧ 國. 學. Both organic chain stores and organic shops have similar preference in market place selection. Most of them can be found near or inside hospitals, schools,. ‧. traditional markets, residential areas, the science technology district, department. Nat. sit. y. stores, or supermarkets. Hence, the potential target market is the public, housewives,. n. al. er. io. teachers, hospital patients and their family, and other people who are concerned about their health (董國昌, 2007).. ii.. Ch. engchi. i n U. v. Supermarkets Customers can find organic products in the supermarket and hypermarket.. Supermarkets usually have less organic product varieties than organic chain stores or organic shops. They often have small corner for organic vegetables. Moreover, some of them often put organic products together with non-organic products. Based on research by Common Health Magazine, 5 biggest organic chain stores and 3 biggest supermarkets have very less variety of organic items. Most of them only have one or two domestic organic agricultural brands. In fact, their supply of the organic products 35.

(44) is unstable (康健編輯, 2012). Supermarkets, such as RT Mart11 and Carrefour12, usually have contract farming in dealing with agricultural product suppliers. Acquisition is also a common approach for these large scale grocery stores, such as in 2006 PX Mart13 acquired Taiwan Sun Make Co., Ltd.. iii. Organic supermarket Recently, there are new organic supermarkets in Taiwan, such as FreshONE, which is owned by Pacific Holdings14. Although these organic supermarkets currently. 政治大. have few store branches, there is positive feedback from customers.. 立. iv. Restaurants. ‧ 國. 學. Diversification has become the most commonly applied strategy to every type of. ‧. business, including organic marketing. Some farmers open their own organic. y. Nat. restaurants, taking advantage of fresh food and “from the farmland to the table”. er. io. sit. philosophy. As for example, All Green Organic Farm15 in Hualien owns organic restaurant called Farmer’s Kitchen. The huge market of organic restaurant is also. al. n. v i n responded by some retailers. InCDecember 2014, organic h e n g c h i U chain stores Cotton Land. opened its first organic restaurant16. Many organic agricultural products also expand their market through school restaurants.. v.. E-retailer The Internet presents exponential opportunities for growth, and marketing online. 11. RT Mart, website: http://www.rt-mart.com.tw/ Carrefour, website: http://www.carrefour.com.tw/ 13 PX Mart, website: http://www.pxmart.com.tw/ 14 FreshONE, website: http://www.freshone.com.tw/ 15 Green Organic Farm, website: http://www.all-green.com.tw/ Farmer’s Kitchen, website: https://www.facebook.com/farmerkitchen 16 Cotton Land, website: http://www.sun-organism.com.tw/news-127.asp 12. 36.

(45) is cost-effective when compared to outbound marketing strategies. Hence e-commerce has grown rapidly 17 . More and more people have joined and experienced the convenience in trading through the Internet. According to MIC18 report, 96% of Taiwanese already have online shopping experience (外貿協會, 2013). Increasing interest in e-commerce and social commerce simultaneously raise the numbers of e-retailers and web-based shops. E-retailers usually provide a platform such as advertising the products, passing customer orders, and distributing product to customers.. vi. Consumer cooperative. 立. 政治大. Consumer cooperative is a union that was established by consumers who share. ‧ 國. 學. the same values. They collect members’ demands, look for desirable farmers and. ‧. directly buy organic products from them. In consumer cooperative, each member can. sit. y. Nat. be regarded as owner of the cooperative. Financial contribution is often paid annually.. io. er. In the end of financial year, all members share cooperative balance surplus and deficit. Homemakers Union Consumers Co-op (HUCC) 19 is an example of consumer. al. n. v i n cooperative. It was established C in 1993 by several housewives in Taiwan. HUCC has hengchi U. made great contribution in promoting the organic concept in many rural areas in Taiwan. The union has 48 branches throughout Taiwan. In 2013, 54140 members and 110 farmers, and 6 APMGs were registered in HUCC.. 17. According to MIC, Taiwan e-commerce industry value in 2013 is approximately NTD 767.3 billion with annual growth rate 16%. It’s predicted will become the next trillion NTD industry in 2015. 18 Market Intelligence & Consulting Institute (MIC) was established in 1987, specialize in research on Taiwan ICT industry development. MIC provides Taiwan government with industrial information and research, also assist in building industrial policy. 19 HUCC website: http://www.hucc-coop.tw/ 37.

(46) E.. Certification body The organic certification was originally conducted by the government. Since. 2001, the certification of crops, excluding rice, was handed to appointed certification bodies. According to 2014’s data, 12 authorized certification bodies were pointed to certify organic agricultural products and 1 certification body was responsible to certify organic livestock (see Table 7). Certification bodies are in charge of certifying products from land certification, production process certification, to product certification. Product that already passed organic certification can use CAS organic. 政治大. label and certification body’s label on its package (see Table 7). The certification will. 立. expire in three years after it is first issued and must be periodically reapplied. Farmers. ‧ 國. 學. must to apply re-assessment in the second and third year. The purpose of this re-assessment is to determine whether the certified farmer can maintain certification. ‧. until the end of valid period.. Nat. sit. y. As mentioned before, problem of organic certification lies on high cost. Farmers. n. al. er. io. deal with burden of first time application cost and re-assessment cost during. i n U. v. certificate valid period and after certificates are expired. Many farmers are. Ch. engchi. small-scaled. They often don’t have enough money to apply or to continue certification. There is a government policy in lowering farmers’ burden by budgeting cost reimbursement program. Farmers who already passed organic certification are eligible for applying cost reimbursement. From 2007, Taiwan government has promoted “Traceability of agricultural products certification system”. This program ensures safety and consistency of agricultural products from the farmland to the table, which consist of whole processes, including production, processing, distribution, retail, until products are into the hands of end customers (周念陵, 2012). In 2007 the government enacted Traceability Agriculture Product (TAP) certification for all 38.

(47) agricultural products. Farmers can voluntarily apply for this certification, except for some certain products specified by the government. The purpose of TAP is to promote information transparency in order to increase customer confidence. The ruling party also proposed OTAP and UTAP (see Table 6). The idea was to combine CAS and CAS organic with TAP. As for example, CAS organic label will be changed into OTAP label. OTAP made it a requirement for organic farmers to obtain an organic certification and TAP certification. However, since there was a big change inside governing party, OTAP and UTAP were disapproved at last. To date, Taiwan has used. 政治大. CAS organic for organic agriculture product and CAS label for certified product.. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 39. i n U. v.

(48) Table 6. Labels for agricultural product in Taiwan Certification. Definition. Label. Good. Label that shows the product is processed through. Agriculture. Good Agricultural Practice. It is desirable natural. Practice. farming conditions to grow crops with appropriate. (GAP). manner, suitable time, and rational use of agricultural materials. The aim is to reduce natural environment damage and improve the quality of. 政治大 Agriculture, from 2019, Taiwan will stop using 立 agricultural. According to Taiwan Council of. GAP label. The council will reject GAP. ‧ 國. 學. application from July 2015 and start introducing. ‧. current GAP certified farmers into TAP system. Label of agricultural product and processed. Agricultural. product that focuses on “quality agriculture” and. Standards. “safe agriculture”.. y. sit. er. io. al. v i n C domestic This label implies that meet U h e n gproducts i h c n. (CAS). Nat. Certified. healthy and safety standard, also packaging quality and specifications. Certified. CAS label for organic agriculture products.. Agricultural. It’s an eligibility mark for organic proven product. Standards. after three years transition period.. Organic (CAS Organic). 40.

(49) Transition. Verification label shows the farmland is currently. period farmland. in the three years transition period for. verification. transforming into organic farmland.. label. Each certification body has its own label.. Traceability. Label that combines traceability and good. Agriculture. agriculture practice.. Product. Consumers can trace the origin of agriculture. (TAP). product by scanning QR code on the label or. 政治大 code. “G” in the middle represents “Good 立. checking the information on website using tracing. Product”. Character “T” in TAP also refers to. ‧ 國. 學. “Taiwan”. TAP label for organic products.. ‧. Organic Taiwan. The government planned to combine CAS organic. Product. and TAP system. In this system, organic farms. (OTAP). will be required to pass traceability verification. er. io. sit. y. Nat. Agriculture. al. n. v i n C hcertification. The OTAP first to get organic label engchi U was developed as a substitute for CAS organic label.. Ubiquitous. TAP label for certified agricultural product and. Taiwan. processed product.. Agricultural. It’s the combination of CAS and TAP system. The. Product. UTAP label was previously proposed as a. (UTAP). substitute for CAS label.. Source: Data was collected from 吉園圃安全蔬果資訊網, 財團法人台灣優良農產品發展協會 (2006), 有機農業全球資訊網(2014), 上下游(2014), summarized by this study. 41.

(50) Table 7. 2014 Taiwan authorized certification bodies and their labels Taiwan authorized Certificate label certification bodies MOA International Foundation of Natural Ecology. Taiwan Organic Produce Association (TOPA). 政治大. Tse-Xin Organic Certification. 立. 學. ‧ 國. Cooperation (TOC). Taiwan Formosa Organic Association. ‧. (FOA). Nat. sit. n. al. er. io. (COAA). y. Chinese Organic Agriculture Association. Ch. FSI International-Asia Pacific Office (FSII). engchi. National Cheng Kung University (NCKU). Agricultural Products Analysis and Certification Center (NCHU). 42. i n U. v.

(51) Universal Certification Service Co., Ltd. (UCS). Harmony Organic Agriculture Foundation (HOA). ECO Garden. Association of Taiwan Tea. 政治大. 立. ‧. ‧ 國. 學 sit. y. Nat. National Animal Industry Foundation. n. al. er. io. Source: 有機農業全球資訊網(2011). i n U. v. (http://info.organic.org.tw/supergood/front/bin/ptlist.phtml?Category=100989). F.. Ch. engchi. Customers In the past, religion was one of main reason to purchase organic products.. However, organic products have been chosen by the health conscious customers and hence nowadays healthy life style has become popular. Organic products can give good impact for health and benefits for the environment, has become the main decisive factors in purchasing organic products. Although Taiwan government has promoted organic industry for more than 20 years, in fact, 60% of Taiwanese have only been aware of the word “organic” for the 43.

(52) past 5-6 years (董國昌, 2011). There are some challenges in marketing organic products because Taiwan customers have their own characteristics. Taiwanese are more price sensitive than others (張嘉薇, 2006; Wolf, 2014). Price often becomes barrier for purchasing organic products (McEachern & McClean, 2002). Organic and non-organic products are quite similar in their appearance. Therefore, most people can’t differ between the two products without the organic label. Eventually, they have doubt in whether organic agricultural products are really organic or not. In addition to these problems, based on scientific testing on products,. 政治大 customers have low confidence in purchasing organic products. 立. some organic brands were proved to contain chemical residues20. As a result, the. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 20. i n U. v. 2010 TVBS news reported chemical compounds were found in organic vegetables, website: https://www.youtube.com/watch?v=Y_z7CFWr2WQ 2012 TVBS news reported pesticide residues were found in organic products, website: http://news.tvbs.com.tw/entry/37037 44.