CRM I N MOBI LE TELECOM SERVICES:A STUDY ON THE I MPACT OF SERVI
CEQUALI TY, SERVICE LOYALTY AND LOYALTYI NDI CES ON THE PERFORMANCE
OFSERVI CE PROVI DERSA THESI SSubmitted byVANIHARI DASANin Partial
Fulfillment of the Requirementsfor the Degree ofDOCTOR OF
PHILOSOPHYSCHOOL OF MANAGEMENTFACULTY OF ENGI NEERI NG AND
TECHNOLOGYSRM UNI VERSI TY, KATTANKULATHUR- 603 203SEPTEMBER
2012iiDECLARATI ONI hereby declare that the dissertation
entitledCRM I N MOBI LETELECOMSERVI CES:ASTUDYONTHEI MPACTOFSERVI
CEQUALI TY, SERVI CE LOYALTY AND LOYALTY I NDI CES ON
THEPERFORMANCE OF SERVI CE PROVI DERS submitted for the
DegreeofDoctorofPhilosophyismyoriginalworkandthedissertationhasnotformedthebasisfortheawardofanydegree,diploma,associateshiporfellowshipofsimilarothertitles.IthasnotbeensubmittedtoanyotherUniversity
or Institution for the award of any degree or diploma.Place:Date:
VANIHARI DASANiiiSRM UNIVERSITY, KATTANKULATHUR603 203BONAFI DE
CERTI FI CATECertified that this thesis titled CRM I N MOBI LE
TELECOMSERVI CES:ASTUDYONTHEI MPACTOFSERVI CEQUALI TY, SERVI CE
LOYALTY AND LOYALTY I NDI CES ONTHEPERFORMANCEOFSERVICEPROVI
DERSisthebonafideworkof Ms.VANI HARI DASANwhocarriedouttheresearch
under my supervision. Certified further, that to the best of
myknowledgetheworkreportedherein
doesnotformpartofanyotherthesisordissertationonthebasisofwhichadegreeorawardwasconferred
on an earlier occasion for this or any other candidate.Dr.
SHANTHIVENKATESHSUPERVISORAssistant Professor (SG) - MarketingSRM B
School, VadapalaniSRM UniversityChennai
600026.ivACKNOWLEDGEMENTThis thesis work has received support,
sacrifice and blessings of
severalwell-wishers.Theforemostamongthemismyresearchguide,
Dr.ShanthiVenkatesh (ShanthiMaam). From the day Ijoined to this
day, ShanthiMaam hasbeen a great, constant and reliable source of
advice and guidance. In fact more than aguide she has ever been a
very good mentor. It had been a great learning experienceworking
with a person whose academic and research standards are exceedingly
hightomatch.My overwhelming thanks aredue toShanthi
Maam,forhelpingmeincountless number of ways during the course of
the research program. Iam lost
ofwordstodescribeherpatienceincorrectingmythesisandherhighlevelofcommitment
toperfection. I profusely thank her for believingin my abilities
andeducating me in the art of coherent writing.I thank Prof. J
ayashree Suresh, Dean, School of Management, forherconstant support
throughout my research program.Her boundless enthusiasm
andcommitment to research is an inspiration to me. I thank her for
her critical
evaluationofmywork,herinvaluablecommentsonmyresearchtopicthathelpedmeinimproving
the quality of the thesis.I thankherfor theinterestshe evincedin
mywork and grateful to her for her timely help and
assistance.IthankmyDoctoralCommitteemembers,
Prof.P.T.Srinivasan,Prof. M. JXavier, Prof. V. JSiva Kumar and
Prof. U. Srinivasa Raghavan
forvtheiradvice,helpandsuggestions.Theywereverykeentoprovidemewithconstructive
suggestions to enhance the quality of my thesis.Iam very gratefulto
the Management ofSSN Institutions,who
havekindlysponsoredmeformyresearchatSRMUniversity.Iam
gratefultoProf.B.Srinivasan,Director,SSNSchoolofManagement&ComputerApplications,
Prof.R.Balasubramanian,Head ofDepartment,MBAand
myfellowcolleaguesforprovidingmewithaconduciveenvironmentforpursuingresearch
in my workplace.I express thanks to the enumerators who collected
the data to validate myhypothesis. I also thank the respondents for
their cooperation and patience in fillingthe
questionnaire.Thegreatestgratitudeisdueformyfamilythatcannotbeadequatelyexpressedin
words. I wouldnot have attempted this doctoral study (with tons
ofcommitment at home) but for their love, support and infinite
patience.Above all, I thank God for his supreme grace and
presence.VANIHARI DASANviABSTRACTThe Indian Telecom Industry has
come a long way in achieving its
dreamofprovidingaffordableandeffectivecommunicationservicestoitscustomers.Faced
with a growing market and increasing competition, companies in the
telecombusiness are adopting to the new technological imperatives
in order to out-performtheir competitors. One such approach in the
adoption of an information technology(IT) to move towards customers
is the Customer Relationship Management (CRM).CRM efforts aim at
improving service quality and service quality is foundto be having
a definite impact on customer loyalty. This study aims at
understandingthebehavioral aspects thatplay
agreaterroleinunderstandingcustomerloyalty,improvingservicequalityandtherebyenhancingCRM.Datacollectedfromtheresidential
users of mobile services from Chennai is used for the
study.Inordertosustaininthecompetitiveenvironment,thisstudy
providesinsightstothepractitionersonthepathsthatleadtocustomerloyalty.Thepathmodel
uses three constructs, namely the Extended SERVQUAL Scale with
sevendimensions, SERVLOYAL Scale with seven dimensions and Loyalty
Indices with 3dimensions. Using Data EnvelopmentAnalysis (DEA), the
study uses the insightsfrom path model to provide a method to
evaluate the effectiveness of CRM practicesofthe mobile service
providers so that they can refine their strategies to improveloyal
customer
base.viiAlthoughZeithamletal.(1996)reportastrongassociationbetweenoverall
service quality and service loyalty across multiple companies, the
findings ofthis study clearly portray the quality-loyalty
relationship with reference to the IndianMobile segment. This
underlines the importance of a multidimensional approach toservice
loyalty. The path models confirm the relationship between service
quality,serviceloyaltyadloyaltyindices.Thisstudyfurtherstrengthens(Bloemeretal,1999)
with a clear focus on linking perceived service quality and service
loyaltyas a multi-dimensional perspective.The insight from this
study can be used in other service sectors to measureservice
quality and service loyalty and develop robust CRM systems that can
mapand predict customer loyalty levels.viiiTABLE OF CONTENTSCHAPTER
NO. TI TLE PAGE NO.ABSTRACT viLI ST OF TABLES xviLI ST OF FI GURES
xixLI ST OF SYMBOLS AND ABBREVI ATI ONS xx1 I NTRODUCTI
ON1.1STATEMENT OF THE PROBLEM 71.2OBJECTIVES 91.3HYPOTHESES
91.4DELIVERABLES OF THE STUDY 101.5SCOPE AND LIMITATIONS OF THE
STUDY111.6CHAPTERISATION 111.7SUMMARY 132LI TERATURE REVI
EW2.1INDIAN TELECOM INDUSTRY 142.2CUSTOMER RELATIONSHIPMANAGEMENT
152.3SERVICE QUALITY 172.3.1Service Quality Definition based
onFunctional Quality 172.3.2Positive Relationship between
servicequality with customer satisfaction 18ixCHAPTER NO. TI TLE
PAGE NO.2.3.3Positive Relationship between servicequality with
customer loyalty and retention202.3.4Positive Relationship between
servicequality with profitability 202.3.5SERVQUAL in Telecom
202.3.6Service Quality Measurement and Models212.3.7Service Quality
Dimensions 242.4SERVICE LOYALTY 252.4.1Defining Service Loyalty
252.4.2Dimensions of Service Loyalty 272.5LOYALTY INDICES
282.6LITERATURE RELATING TO LINKAGEOF SERVICE QUALITY,
SATISFACTIONAND LOYALTY 302.7INSIGHTS AND INADEQUACIES 322.8SUMMARY
343 RESEARCH METHODOLOGY3.1INTRODUCTION 353.2RESEARCH DESIGN
353.2.1Area of the Study 363.2.2Instrument Development 363.2.2.1
Variables considered for the Study363.2.2.2Demographic Variables
363.2.2.3Extended Service QualityDimensions 37xCHAPTER NO. TI TLE
PAGE NO.3.2.2.4Service Loyalty Dimensions 393.2.2.5Loyalty Indices
423.2.3Sampling Method 433.3PROPOSED CONCEPTUAL MODEL 443.4PRE-TEST
453.5DATA COLLECTION 453.6SUMMARY OF RESEARCH METHODS 453.7DATA
EDITING, CATEGORISINGAND CODING 463.8DATA ANALYSIS PROCEDURES
463.8.1Structural Equation Modeling 463.8.1.1Measurement Model
493.8.1.2 Structural Model 493.8.1.3 Models Goodness-of-Fit
Assessment 493.8.1.4 AMOS 523.8.2Multiple Regression
533.8.2.1Measurement of Variables 543.8.2.2Coefficient of
MultipleDetermination (R2) 553.8.2.3Interpretation of
RegressionVariate 563.8.3Data Envelopment Analysis 563.9PROCESS OF
ANALYSIS 613.10SUMMARY 61xiCHAPTER NO. TI TLE PAGE NO.4 THE I NDI
AN TELECOM I NDUSTRY:STATUS ANALYSI S4.1INDIAN TELECOM INDUSTRY AN
OVERVIEW 624.1.1Basic Service Providers 624.1.2Value added Service
Providers 634.2THE INDIAN TELECOM INDUSTRY:HISTORICAL PERSPECTIVE
644.3GROWTH OF THE INDIAN TELECOMSECTOR 664.3.1Indian Telecom
Industry Pre privatization 664.3.2Indian Telecom Industry Post
Privatization 674.4INDIAN TELECOM INDUSTRY:A COMPETITIVE ANALYSIS
734.4.1PEST Analysis 744.4.2Michael Porters Five Forces Model
804.5INDIAN MOBILE SECTOR 844.6KEY TRENDS IN INDIAN TELECOM
864.7DETAILS OF MOBILE SERVICEPROVIDERS CONSIDERED FOR THE STUDY
884.7.1Bharthi Airtel 884.7.2Aircel 894.7.3Idea Cellular
904.7.4Vodafone 90xiiCHAPTER NO. TI TLE PAGE NO.4.7.5BSNL
914.7.6Reliance 914.8SUMMARY 925 DATA ANALYSI S5.1INTRODUCTION
935.2PROFILE OF THE RESPONDENTS 945.2.1Classification based on
Service Provider 955.2.2Classification based on Plan
955.2.3Classification based on Age 965.2.4Classification based on
Length of Use 975.2.5Classification based on Monthly
Expenditure975.2.6Classification based on Education
985.2.7Classification based on Occupation 985.3DESCRIPTIVE
STATISTICS 995.3.1Mean and Standard Deviation 995.3.2Normality
1045.4TEST OF RELIABILITY 1045.4.1Service Quality Dimensions
1055.4.2Service Loyalty Dimensions 1075.4.3Loyalty Indices
1085.5FACTOR ANALYSIS 1095.6HYPOTHESES TESTING 1185.6.1ANOVA
1185.6.2Linear Regression 1255.7PATH MODEL 135xiiiCHAPTER NO. TI
TLE PAGE NO.5.7.1Relationship between Service Qualityand Service
Loyalty 1355.7.2Relationship between Service Qualityand Loyalty
Indices 1385.7.3Relationship between Service Loyaltyand Loyalty
Indices 1405.8ASSESSING THE EFFECTIVENESS OF CRMPRACTICES USING
DATA ENVELOPMENTANALYSIS 1415.8.1Effectiveness of Service Quality
onService Loyalty 1425.8.1.1Behavioural Loyalty
1435.8.1.2Attitudinal Loyalty 1495.8.1.3Cognitive Loyalty
1515.8.1.4Conative Loyalty 1525.8.1.5Affective Loyalty
1535.8.1.6Trust Loyalty 1555.8.1.7Commitment Loyalty
1565.8.2Effectiveness of Service Quality onLoyalty Indices
1575.8.2.1 Advocacy Loyalty Index (ALI)1575.8.2.2Purchase Loyalty
Index (PLI) 1595.8.2.3Defection Loyalty Index
(DLI)1605.8.3Effectiveness of Service Loyalty onLoyalty Indices
1615.8.3.1 Advocacy Loyalty Index (ALI)161xivCHAPTER NO. TI TLE
PAGE NO.5.8.3.2Purchase Loyalty Index (PLI) 1635.8.3.3Defection
Loyalty Index (DLI)1645.8.4Summary of Data Envelopment
Analysis1655.9SUMMARY 1656 FI NDI NGS6.1FINDINGS FROM
DESCRIPTIVESTATISTICS 1676.2FINDINGS FROM ANOVA
1676.2.1Demographics on Service Quality 1676.2.2Demographics on
Service Loyalty 1686.2.3Demographics on Loyalty Indices
1686.3FINDINGS FROM LINEAR REGRESSION1696.3.1Relationship between
Demographicsand Service Quality 1696.3.2Relationship between
Demographicsand Service Loyalty 1706.3.3Relationship between
Demographicsand Loyalty Indices 1706.3.4Relationship between
Service Qualityand Service Loyalty 1706.3.5Relationship between
Service Qualityand Loyalty Indices 1716.3.6Relationship between
Service Loyaltyand Loyalty Indices 171xvCHAPTER NO. TI TLE PAGE
NO.6.4FINDINGS FROM THE PATH MODEL 1726.5FINDINGS FROM DATA
ENVELOPMENTANALYSIS 1726.5.1Effectiveness of Service Quality
onService Loyalty 1726.5.2Effectiveness of Service Quality
onLoyalty Indices 1736.5.3Effectiveness of Service Loyalty
onLoyalty Indices 1746.6SUMMARY 1747.DI SCUSSI ON7.1INSIGHTS FROM
LITERATURE AND GAPS1757.2ATTEMPTS BY THIS STUDY TOFILL THE GAPS
1767.3RESEARCH IMPLICATIONS 1797.4MANAGERIAL IMPLICATIONS
1807.5CONCLUSION 181REFERENCES 183APPENDI X I QUESTI ONNAI RE
199PUBLI CATI ONS BASED ON THI S RESEARCH 203CURRI CULUM VI TAE
204xviLI ST OF TABLESTABLE NO. TI TLE PAGE NO.4.1 Important dates
and events in the IndianTelecom Industry 654.2Status of the Indian
Telecom Industry in 1993-94 665.1Classification based on Service
Providers 955.2Classification based on Plan 965.3Classification
based on Age 965.4Classification based on Length of Use
975.5Classification based on Monthly Expenditure
975.6Classification based on Education 985.7Classification based on
Occupation 995.8Descriptive Statistics of the Interval Scaled
Variables1005.9Cronbachs Alpha for Service Quality dimensions
1065.10Cronbachs Alpha of Service Loyalty dimensions
1075.11Cronbachs Alpha of Loyalty Indices 1085.12KMO and Bartlett's
Test Service Quality 1095.13Factor Analysis Service Quality
Dimensions 1105.14KMO and Bartlett's Test Service Loyalty
1115.15Factor Analysis Service Loyalty Dimensions 1115.16KMO and
Bartlett's Test Loyalty Indices 1125.17Factor Analysis Loyalty
Indices 1125.18Confirmatory Factor Analysis Service Quality
1145.19Confirmatory Factor Analysis Service Loyalty 114xviiTABLE
NO. TI TLE PAGE NO.5.20Confirmatory Factor Analysis Loyalty Indices
1145.21One-Way ANOVA Demographic Variableson Service Quality
1195.22One-Way ANOVA Demographic Variableson Service Loyalty
1225.23One-Way ANOVA Demographic Variableson Loyalty Indices
1245.24Relationship between Demographic Variablesand SERVQUAL
Dimensions 1255.25Relationship between Demographic Variablesand
SERVLOYAL Dimensions 1275.26Relationship between Demographic
Variableson Loyalty Indices 1295.27Relationship between SERVQUAL
and SERVLOYAL1305.28Relationship between SERVQUAL and Loyalty
Indices1325.29Relationship between SERVLOYAL and Loyalty Indices
1345.30Service Provider Details 1425.31Input and Output Parameters
Behavioural Loyalty1435.32Ratios for Efficiency 1445.33Relative
Efficiency on Behavioural Loyalty 1495.34Input and Output
Parameters Attitudinal Loyalty 1505.35Relative Efficiency on
Attitudinal Loyalty 1505.36Input and Output Parameters Cognitive
Loyalty 1515.37Relative Efficiency on Cognitive Loyalty
1525.38Input and Output Parameters Conative Loyalty 1535.39Relative
Efficiency on Conative Loyalty 154xviiiTABLE NO. TI TLE PAGE
NO.5.40Input and Output Parameters Affective Loyalty
1545.41Relative Efficiency on Affective Loyalty 1555.42Input and
Output Parameters Trust Loyalty 1555.43Relative Efficiency on Trust
Loyalty 1555.44Input and Output Parameters Commitment Loyalty
1565.45Relative Efficiency on Commitment Loyalty 1575.46Input and
Output Parameters Advocacy Loyalty Index1585.47Relative Efficiency
on Advocacy Loyalty 1585.48Input and Output Parameters Purchase
Loyalty Index1595.49Relative Efficiency on Purchase Loyalty
1595.50Input and Output Parameters Defection Loyalty
Index1605.51Relative Efficiency on Defection Loyalty 1615.52Input
and Output Parameters Advocacy Loyalty Index1625.53Relative
Efficiency on Advocacy Loyalty 1625.54Input and Output Parameters
Purchase Loyalty Index1635.55Relative Efficiency on Purchase
Loyalty 1635.56Input and Output Parameters Defection Loyalty
Index1645.57Relative Efficiency on Defection Loyalty 1645.58Details
of Best Performer on various Dimensionsusing Data Envelopment
Analysis 165xixLI ST OF FI GURESFI GURE NO. TI TLE PAGE
NO.3.1Conceptual Framework for the Study 444.1Porters Five Forces
Model 825.1CFA Service Quality 1155.2CFA Service Loyalty 1165.3CFA
Loyalty Indices 1175.4Path Diagram of Service Quality on Service
Loyalty1365.5Path Diagram of Service Quality on Loyalty
Indices1385.6Path Diagram of Service Loyalty on Loyalty
Indices1407.1Conceptual Framework 1767.2Model from Observations
178xxLI ST OF ABBREVI ATI ONSTRAI Telecom Regulatory Authority of
IndiaDoT Department of TelecommunicationsMoC Ministry of
CommunicationsNTP National Telecom PolicyMTNL Mahanagar Telephone
Nigam LimitedVSNL Videsh Sanchar Nigam LimitedGSM Global System for
Mobile CommunicationsCDMA Code Division Multiple AccessWLL Wireless
Local LoopARPU Average Revenue Per UnitMoU Minutes of UsageMVAS
Mobile Value Added ServicesCRM Customer Relationship
ManagementSERVQUAL Service QualitySERVPERF Service
PerformanceSERVLOYAL Service LoyaltyALI Advocacy Loyalty IndexPLI
Purchase Loyalty IndexDLI Defection Loyalty IndexSEM Structural
Equation ModelCFA Confirmatory Factor AnalysisRMSEA Root Mean
Square Error of ApproximationRMSR Root Mean Square ResidualGFI
Goodness of Fit IndexxxiCFI Comparative Fit IndexAMOS Analysis of
Moment StructuresDEA Data Envelopment AnalysisDMU Decision Making
UnitPEST Political, Economical, Social andTechnological1CHAPTER 1I
NTRODUCTI ONTelecommunications is one of the prime support services
needed for therapid growth of any developing country. India has
emerged as one of the youngestand fastest growing economies in the
world today. One of the sectors that has shownthe signs of
profitability andcontributed significantly to the country's economy
isthe telecom industry. In fact, the Indian telecom market has
gained recognition
asoneofthemostlucrativemarketsglobally.Thevastruralmarketholdsahugepotentialtodrivethefuturegrowthofthetelecomcompanies.Further,theGovernment's
initiatives forincreasing the telecom connectivity in rural areas
arealso likelyto aid the telecom service providers to extend
theirservices in theunconnected rural
areas.Telecommunicationscompaniesrecognizethatbecomingcustomercentric
is very important to their long term competitive advantage, as many
playersoffer similar features. Customer centricity depends on
having a single view of thecustomer data that gives clear insight
into the customer segments, their behavior
andpurchasingpatterns.Telecomorganizationsneedaccesstodatathatisaccurate,reusable,
and productive, so that they can create a holistic, real-time view
of theircustomers.The history of the Indian Telecom sector goes way
back to 1851, whenthe first operational landlines were laid by the
then British Government in Calcutta.After India became an
independent country in 1947, all foreign
telecommunicationcompanieswerenationalizedandamonopolyorganizationwasformedbytheGovernment
of India, incorporating Post, Telephone and Telegraphs.2Originally,
the telecom sector, like most other infrastructure sectors
wasownedandcontrolledbytheGovernmentofIndia.TheDepartmentofTelecommunications
(DoT),reporting to the Ministry ofCommunications (MoC)became the
key body for policy issues and regulation, apartfrom being the
basicserviceproviderfortheentirecountry.ByanactofParliament,theTelecomRegulatory
Authority ofIndia (TRAI) was formed to be the regulatory agency,
tomonitor the activities of the telecom body.The Telecom Commission
was set up with administrative and
financialpowersoftheGovernmentofIndiatodealwithvariousaspectsofTelecommunications
in the year 1989. The multi-pronged strategies followed by
theTelecom Commission have not only transformed the very structure
of this sector buthave also motivated all the partners to
contribute in accelerating the growth of thesector.Indiais the
secondlargestcountry in population and seventh largestinterms of
area. Despite the government making several concentrated efforts
throughthe Five-year Plans, to provide efficient communication
system to the people of thecountry, due to increasing population,
non-accessibility to remote and village areasand non-availability
of adequate resources, the national tele-density was only 1.1 inthe
pre-liberalization period (till 1990), which was far low when
compared to theglobal average of 12 for the same period.The world
began to witness the changing phase of the telecom industryof India
since 1994, when the Indian Government initiated the New Telecom
Policy(NTP),withabroadobjectivetoenableavailabilityofaffordablemeansofcommunication
for the citizens of the country. The prime focus of the objectives
ofNTPwastoincreasethetele-density of thecountry by
15in2010.Forthisthecountry required an additional investment of
Rs.5000 billion. In order to meet theinvestment requirements and to
realize the broad objectives of the telecom policy ina phased
manner, it became necessary that the government allowed private
playerstooperateintheindustry.Thegovernmentalsosensedtheprivateparticipationimperatives
for achieving the same in an efficient manner. Hence it was decided
to3open the sectorforprivate participation,simultaneously inboth
basic andmobileservice
segments.TheotherobjectivesofNTP1994include,creatingamodernandefficienttelecommunicationsinfrastructureandtransformingthetelecommunicationssector
to a greater competitive environment in both urban and rural areas.
Further,the NTP 1994 aimed at providing equal opportunities for all
players, including
theprivateplayers.Thusbreakingthebarrierstoentry,theprivatesectorprovidersforayedintothehithertomonopolytelecomsectorofIndia,byfirstenteringtheCellularSegmentin1994.But,thebasictelecomservicenamelytheFixed-lineSegment
was at the hands of the government monopoly service provider DoT,
till1998. The very first private player to begin operations in the
fixed-line segment wasBharti Telecom. The company was given license
in 1998 and subsequently began itsoperations in the segment in
2002.Theentireprocessofreform gainedfurthermomentum
withtheannouncementofthe New NationalTelecom Policy of1999
(NTP1999).Thegovernmentstartedtoissuelicensestomultipleplayerstooperateinallthesegmentsoftheindustry.Italsomadeprovisionstodiscriminatetheserviceproviding
functions and the regulatory functions of DoT, so that exclusive
serviceproviders are created to cater to the specific requirements
of different segments ofthe population. The most noteworthy
achievements of NTP 1999 were as follows:Creation of the Public
Sector Telecom Service ProvidersOne of the important objectives of
NTP 1999, was to separate the serviceproviding and regulatory
functions of DoT. Subsequently, exclusive telecom serviceproviders
were floated to deploy the restructuring strategies in the sector,
complyingwiththeobjectiveslaiddownbyNTP-1999.Thepolicyseparatedtheserviceproviding
function and policymaking and licensing function of the DoT. A
brief noteon the public sector telecom service providers is as
follows:4 The Bharat Sanchar Nigam Limited (BSNL) was floated to
functionas the government owned corporate entity to provide telecom
servicesto the entire country For the metro cities of Delhi and
Mumbai, the Mahanagar TelephoneNigam Limited (MTNL) became the
service provider. Meanwhile, the international telecom services
were entrusted with
theVideshSancharNigamLimited(VSNL).Asaresultofthedisinvestment
policy adopted by the Government of India, in the late1990s the
company was sold to a private enterprise Panatone A Tata Group
Company.Entry of Private
PlayersSubsequenttotheannouncementmadeinNTP1999,thegovernmentstarted
issuing licenses to multiple private service providers to provide
services ineach telecom circle. Consequently,the private service
providers kick-started theiroperations in fixed-line segments in
theyear 1994 and subsequently, themarketswitnessed private players
in mobile segment since 1996.With the entry of private players in
the telecom segment, the sector beganto witness the collapse of
monopoly on the whole. Thus, the sector that was
hithertocharacterizedbymonopolyscenariograduallymovedintocompetitivemarketstructure,
with multiple players offering a variety of
services.AsaresultofprivatizationoftheIndianTelecomindustry,themostexcited
are the consumers. When there was monopoly, the users were left
with nochoice but to accept whatever the monopoly service provider
gave to them. But inthe presentcompetitivescenario, consumers
areable toexerttheir preferences
astheyarenowofferedavarietyofoptionstochoosefrom.Thetelecommarketenvironmentiswitnessingbrandnewchallengesbothfromtheperspectivesofservice
providers and service users.5Current Trends in Telecom I
ndustryAccordingtotheTelecomRegulatory Authorityof
India(TRAI),thenumber of telephone subscriber basein the country
reached 653.92 million as onMay 31, 2010, an increase of 2.49 per
cent from 638.05 million in April 2010. Withthis the overall
tele-density (telephones per 100 people) has touched
55.38.According to Business Monitor International, India is
currently adding 8-10 million mobile subscribers every month. It is
estimated that by mid 2012, aroundhalf the country's population
will own a mobile phone. This would translate into 612million
mobile subscribers, accounting for a tele-density of around 59 per
cent by2012.Moreover, according to a study conducted by Nokia, the
communicationssector is expected to emerge as the single largest
component of the country's GDPwith 15.4 per cent by 2014. According
to the latest figures made available by theVoice & Data study,
Samsung posted a growth of 21.7 per cent to register revenuesof Rs
5,720 crore in 2010-11 from India, from Rs. 4,700 crore in the
previous fiscal.Nokia on the other handhad aflatgrowth, with
revenues of Rs. 12,929 crore in2010-11from
IndiacomparedtoRs.12,900in
thepreviousfiscal.Accordingtoexperts,homegrown
companieslikeMicromax,Karbonn,Lava,Spiceandothermobile handset
firms importing from China have eaten into market share of
multi-national firms on the back of low-cost dual-SIM feature
phones.With the availabilityofthe 3Gspectrum,about275 million
Indiansubscribers will use 3G-enabled services, and the number of
3G-enabled
handsetswillreachcloseto395millionby2013-end,estimatesthelatestreportbyEvalueserve.AccordingtoaFrost&
Sullivanindustry analyst,by2012,fixedlinerevenues are expected to
touch US$ 12.2 billion while mobile revenues will reachUS$ 39.8
billion in India. Moreover, in an attempt to boost auction of 3G
spectrum,thegovernmenthasallowedprospectivebidderstoraiseshort-termfundsfrom6domestic
market, which can be refinanced through external commercial
borrowings(ECBs) within 12 months.The Indian Mobile
SectorGloballyintermsofmobilesubscriptions,Indiaistheworldssecondlargest
wireless marketafter China. Atthe end of March 2011, the total
wirelesssubscribers (GSM, CDMA & WLL (F)) base was 812 million.
As a result the overalltele-density rose to 71% by end of March
2011 as against 4 % in March 2001.
Thisgrowthofthesectorcanbeclearlyattributedtothefavorableandimprovedregulatory
structure, declining handset prices and innovative pre paid tariff
structure.With increasing competition and the needfor increasing
the subscriberbase in rural markets, the call rates are declining.
This has led to decrease in
ARPU.Therefore,inspiteofunprecedentedgrowthinthemobilesubscriberbase,theoperator
margins are declining quarter on quarter.The success of an
organization depends on the degree to which they
areorientedtowardscustomers.Thisrequiresgainingcustomerinsightinordertounderstand
and manage the dynamics of customer expectations which forms a
partof the critical success factors of any service provider. In the
light of the sharp rise inthe overall tele-density, the growth of
this sector is attributed to the favorable andimproved regulatory
structure, declining handset prices and innovative pre paid
tariffstructure. But with increasing competition and the need for
increasing the subscriberbase in rural markets, the call rates are
declining. This has led to decrease in ARPU.Though the Minutes of
Usage (MoU) is increasing, however the same is being offsetby the
lowering tariffs of operations. This can be attributed to the major
subscriptiongrowth that is coming from bottom of the pyramid.As
ARPU declines, the challenges for operators are to increase
revenuesby differentiating their offerings and develop alternative
streams by offering morevalue added services to the existing
customers. The decrease in average revenue canalso be attributed to
the structure of the Indian Mobility Marketwhich
islargely7prepaid.Thismeansthatmostofthesubscribersaddedarefromthebottomofpyramid
with low usage resulting in low ARPU.In terms of market share, 92 %
of the subscriber base in India is on pre-paid connection, with the
remaining 8% on post-paid subscriptions. This has
alsogivenrisetoopportunitiesforgeneratingincreasedrevenue,throughexploringpotential
Mobile Value Added Services (MVAS)like subscription packs of
news,alerts etc and more exclusive roaming services tailored to
pre-paid subscribers.
WiththeassumptionthattodaysValueAddedServicesbecomestomorrowsCoreServices,
both these types of services together are referred in this study as
Mobileservices.Thusinlaunchinganyofitsservices,thetelecomserviceprovidersshould
focus it from the perspective of customer
orientation.TodaysIndianconsumeristransformingrapidly.Theconsumerisgrowingricher,younger,aspiringandspecificinhis/herneedsthaneverbefore.Consumersnowvalueconvenienceandchoiceatparalongsideexpectingbettervaluefortheirhard-earnedmoney.Arangeoftelecomserviceprovidersareattempting
to serve the needs of this emerging new-gen of Indian consumers.
Thelast decade has witnessed a colossal transition in the paradigms
with the emergenceof many privateplayersin thetelecom domain,someof
whom haveinvestedinIndian operationsbasicallylooking atthe
promisingtakeaway from the changinglifestyles of Indian consumers.
They have specially tailored their modus operandi tomeet the
life-style demands of the upwardly mobile Indian consumers of
today. Thebulging purses and liberalized market are making telecom
being looked up as thebig thing for India.1.1 STATEMENT OF THE
PROBLEMThebeneficiariesofthecompetitionbeingconsumers,thetelecomplayers
in todays environment are required to design and deploy
customer-centricstrategies not only to grab a share in the market
but also to sustain in the market in8the long-run. The players have
realized the importance of constant service-qualitydelivery to the
customers for long-run sustainability. Customer relationship
signifiesidentifying the needs of the customers and stretching out
ways and means to
satisfythem.Tobeprecise,itmeansachievinghighcustomerprofitabilitycustomerrevenuesoverandabovecustomercosts,whichdemandsmatchingcustomerexpectationswithcustomersatisfaction.Thehighcostofcustomeracquisitionismaking
todays businesses understand the importance of retaining the
customers forlong-run sustainability.Customer Relationship
Management (CRM) aims at narrowing the gapbetween the company and
its customers. In Telecom Sector, CRM plays a vital rolein not only
bringing the customers close to the company, but also in
identifying thechanging behavioral pattern of the customers. In
technology-dynamic markets liketelecom, an efficient CRM system is
essential, since the customer attrition is highdue to the presence
of close substitutes and near-zero switching costs.With satisfied
customers becoming retained customers and the
retainedcustomersbecomingloyalcustomers,itbecomesinterestingtostudytheeffectivenessofcustomerloyaltythroughCRMimplementationintheIndianMobile
sector.This study helps the mobile service providers in determining
the servicequality parameters that influence service loyalty
parameters which in turn influenceloyaltyindices.Previous
studieshaveestablishedtheinfluenceofservicequalityaspectsonthecustomerloyalty.Therearesomestudiesthatreflectbehavioralaspects
of the customers and the relationship on loyalty. But any such
contemporarymanagementpracticeswhenadoptedbycertainindustrysectorsneedtobeconfirmed
for its
effectiveness.ThusCRMwhichisbeingwidelyadoptedbythemobileserviceproviders
needs to be measured with respect to the degree to which the
customersturnadvocates;thedegreetowhichthecustomersreturntothecompanyforrepurchase
i.e. in the context of cross selling and up selling and the degree
to which9the customers show symptoms of defection. Even though some
of these aspects
havebeenexploredbypreviousresearcherstoagreatextent,itisfeltthatnotmuchattention
has been drawn into measuring the effectiveness of loyalty,
particularly
forsustainedpresence.Henceitisfeltthatacloserstudyonthisaspectwouldbeworthwhile.Thestudyfurtherprovidesusefulinformationandopensupnewavenues
for future research.1.2 OBJ ECTIVESThe study has the following
objectives:1. To identify customer perceptions of service quality
of mobile servicesused by them.2.
Toanalyzetheserviceloyaltydimensionsthatimpacttheloyaltylevels of
the customers3. To assess the loyalty indices that provide
directives for strengtheningCRM4.
Topresentapathmodelforestablishingandconfirmingtherelationship (if
any) existing among service quality,service loyaltyand loyalty
indices5. To provide suggestions to the service providers tobase
their CRMstrategies on the findings of the study.1.3
HYPOTHESESH01:Thereisnosignificantrelationshipbetweendemographicvariables
and service quality
dimensions.H02:Thereisnosignificantrelationshipbetweendemographicvariables
and service loyalty
dimensions.H03:Thereisnosignificantrelationshipbetweendemographicvariables
and loyalty indices.10H04:There is no significant relationship
between service quality andservice loyalty.H05:There is no
significant relationship between service quality andloyalty
indices.H06:There is no significant relationship between service
loyalty andloyalty indices.1.4 DELI VERABLES OF THE
STUDYThisstudywoulddeliverananalyticalinsighttothestrategicpolicyoptions
to the competing service providers, industry onlookers and others
concernedwiththeindustrywhoareinvolvedintheCRMpractices.Totheacademicresearcher,
the study would provide a knowledge base to probe further, into
newhorizons of research.The specific deliverables are:
Thestudywouldprovideinsightontheimpactofdemographicvariables on the
service quality, service loyalty and customer loyaltyof the mobile
service provider. The confirmatory factor analysis would give a
research insight as tothe influence of each of the latent factors
in strengthening the
CRMpractices,whiletheconfirmatorypathrevealsthecriticalqualityvariable(s)
to concentrate on in order to improve service loyalty. The study
would suggeststrategies forimprovementto the variousplayers tomatch
the expectations and to sustain in the competitiveenvironment.111.5
SCOPE AND LI MI TATI ONS OF THE STUDYThe following are the scope
and limitations of the study.
Thefindingsofthestudycanbeextendedforfurtherresearchonvaried
perspectives and other sectors namely,Insurance and
BankingHospitalityHealthcareand other segments where service
quality plays an important role in CRM. The study is confined only
to the GSM and CDMAmobile usersegment and as such the results
derived may not be applicable to theother segments of the industry.
The study limits its applicability to Chennai city and can be
extendedonly to markets having similar demographic, geographic and
socio-economic characteristics. The study applies convenience
sampling method of data collection,and the limits that apply to
this sampling method of data collectionhold good for this study
also.1.6 CHAPTERI SATI ONChapter 1 presents the introductory
perspectives and an overview aboutthe Indian Telecom industry. The
chapter includes an introduction to the
researchproblem,theresearchobjectivesandgivesthescopeandlimitationof
thestudyconcepts.12Chapter 2 provides a detailed overview on the
literature reviewed by theresearcher in order to have an insight
into the research studies undertaken in relatedareas; to identify
the research gaps and also to obtain a sound knowledge about
themethodological issues.Chapter 3 focuses on the research
methodology for the empirical study.The research design is
discussed in terms of the scale development,
questionnairedesign,datacollection,andparticipantselection,andsamplesizedesign,dataediting,
coding and categorizing and analyzing procedures.Chapter 4 presents
a comprehensive note on the path of growth trendsand transitions of
the Indian Telecommunication industry. It also covers a
detailedcompetitive analysis of the Indian Telecom
Industry,Chapter5presentstheprocessesandresultsofthepreliminarydataanalysis
andhypothesis testing are discussed in detail. Profile of
participants andresponserateforthis study aredescribed.Preliminary
dataexaminationincludesdescriptive statistics of mean and standard
deviation, and normality. Reliability ofthe measurement scales are
examined, followed by the testing of hypotheses.Chapter 6 discusses
on the findings arising from the research, which
willthrowlightonthesignificanceofthepathmodelsandthefindingsontheeffectiveness
using Data Envelopment Analysis.Chapter 7 covers the overall
conclusions of the dissertation.
Conclusionsaredrawnabouttheresearchproblemandtheimplicationsforresearchersandpractitionersarediscussed.Limitationsofthestudyareidentifiedandareasforfurther
research are suggested.131.7 SUMMARYThis chapter provides the
foundation for the thesis. It provides a
contextandjustificationforthestudy.Theresearchproblemandresearchquestionsaddressedinthestudywereintroduced.ThemainpurposeofthisstudyistoinvestigatewaystostrengthenCRMpracticesbytheMobileServiceProviders.Methodologyunderlyingthepurposeofthestudywasbrieflydescribedandjustified.
Definitions of the key concepts are also presented. Some
delimitations ofthe scope are delineated and a chapter structure
was provided for the whole thesis.On these foundations, the thesis
proceeds with a detailed description of the researchbeginning with
the chapter two - Literature Review.14CHAPTER 2LI TERATURE REVI
EWThis chapter covers a detailed overview of the literature
reviewed by
theresearcherinordertohaveaninsightintothetheoreticalframeworkandmethodologicalissuesrelatedtothestudyundertaken.Forthispurposetheresearcher
has reviewed research papers and articles published in both
Internationaland National journals and also several popular and
focused books which give broadperspectives on the conceptual
framework of the study undertaken. The details of theliterature
reviewed by the researcher are arranged chronologically in the
followingsections.2.1 I NDI AN TELECOM I NDUSTRYRekha J ain (1993)
reviewed the policy changes in the Indian TelecomSector during the
initialstages ofpost liberalization. The author explained that
inresponsetothebusinessneedsoffaster,cheaper,andmorevariedmodesofcommunication,thetelecommunicationsectorinmanycountrieshadundergonerapid
technological and structural
changes.Athreya(1996)describedaboutthesignificantchangesintheIndianTelecommunicationssectorduringtheNTP1993.Heidentifiedthreephasesofchanges.
First, there was a policy vacuum almost up to 1990. Second, there
was ashift in telecommunication policy brought about by a paradigm
shift in
governmenteconomicpolicy.Third,difficultieswereexperiencedinimplementingthenewpolicy.J
ain(2001)explainedthatspectrumauctionshadbeenusedwithsignificant
success in many developed countries. He analyzed that while India
wasone of the early adopters of spectrum auctions, its success in
service provision had15been low. The author examined the issues in
auction design that contributed to
thedelayandreviewedthekeyelementsinthedesignprocessnamelyacoherentregulatoryframework,choiceofserviceareas,flexibilityforserviceareaconsolidation,standardsandtheirrole,convergence,managingpublicserviceregulation
and managing defaults.2.2 CUSTOMER RELATI ONSHI P
MANAGEMENTShethandParvatiyar(1995)focusedtheirworkonunderstandingthemotivations
of consumers to engage in relationships. They emphasized that in
ordertodevelopaneffectivetheoryofrelationshipmarketing,itisnecessarytounderstand
what motivates consumers to reduce their available market choices
andengageinarelationalmarketbehaviorbypatronizingthesamemarketerinsubsequent
choice
situations.Bakeretal(1998)noticedthatitismoreproductivetoconsiderRelationship
Marketing to be a third dimension of the existing Transactional
Modelthantodevelopaseparateparadigm.Accordingtotheauthors,two-dimensionalmarketingmodelisdescribedasreflectingthemarketingofproducts(dimension
one)tomarketsegments (dimensiontwo),facilitatedby channels
andsupportedbypromotionandpricing.Thethirddimension,relationships,isintroduced
as a spiraldiagram that elevates the customer above the two planes
ofproductsandmarkets,andindoingso,generatesabarriertoentryofpredatorsellers.J
oe Peppard (2000) has emphasized that CRM should not be looked
fromanarrowperspective.HepresentedaCRMframeworkwhichwasbasedonincorporatinge-business
activities,channel management, relationshipmanagementand back
office / front-office integration within a customer centric
strategy.VeithKrneretal
(2000)developedaconceptualmodelforCRMinBusiness Media. They used a
case study to conceptualize the CRM practices in afinancial
industry.16Russell S. Winer et al (2001), gave a framework for the
CRM concepts.They analyzed the needs for CRM as a strategy and
explained in detail the intrinsicactivities involved in CRM
practices.InjazzandPopovitch(2003)emphasizedthatCustomerRelationshipManagement
(CRM)is a combination ofpeople,processes and technology thatseeks
to understand a company's customers. It is an integrated approach
to managingrelationships by focusing on customer retention and
relationship development.Payne and Frow (2005) developed a
conceptual framework for customerrelationship management (CRM) that
helps broaden the understanding of CRM andits role in enhancing
customer value and, as a result, shareholder value. The
authorsexploreddefinitionalaspectsofCRM,andtheyidentifiedthreealternativeperspectivesofCRM.Theauthorsemphasizedtheneedforacross-functional,process-oriented
approach that positions CRM at a strategic
level.KumarandReinartz(2006)explainedthatCustomerRelationshipManagement(CRM)dealswithapplyingdatabasemarketingtechniquesatthecustomer
level to develop strong company-to-customer relationship. CRM
involvesidentifyingdifferenttypesofcustomersanddevelopingspecificstrategiesforinteracting
with each customer. Examples of such strategies are
developingbetterrelationships with profitable customers,locatingand
enticing with new customersthat will be profitable and finding
appropriate strategies for unprofitable
customers.ChiekoMinamiaandJohnDawson(2008)focusedontheeffectsofcustomer
satisfaction with CRM, customer retention and profit management,
and theeffects of CRM technique on performance. CRMis regarded as
the integration
ofrelationshiptechnology(i.e.dataconsolidatinganddatamining)withloyaltyschemes.
In this analysis a direct effect of CRM implementation on return on
equity(ROE) was supported; however, a negative impact
ofcustomization on ROE wasfound.17Robert Gee (2008), highlighted
that organizations must understand whatdrives both value and
delight for their customers. Adopting a customer centric
visionenablesanorganizationunderstandtheircustomers,delivercustomerdelightanddriveforloyalty.Differentcustomershavedifferentrequirementsandwillbedelighted
in different ways. Database segmentation and data analysis are
critical ifan organization is to generate loyalty from different
customer segments. A
win-backstrategyisrecommendedaspreviouscustomersarelesscostlytowin-backcompared
to the costs of acquiring of new customers.Hyunchul Ahna et al
(2011) points out that as the competition
betweenmobiletelecomoperatorsbecomesevere;itbecomescriticalforoperatorstodiversifytheirbusinessareas.Especially,themobileoperatorsareturningfromtraditional
voice communication to mobile value-added services (VAS), which
arenew services to generate more average revenue per user (ARPU).
That means, cross-selling is critical for mobile telecom operators
to expand their revenues and profits.In this study, the authors
propose a customer classification model, which may beused for
facilitating cross-selling in a mobile telecom market. This model
uses thecumulated data on the existing customers including their
demographic data and thepatterns for using old products or services
to find new products and services withhigh sales potential.2.3
SERVI CE QUALI TY2.3.1 Service Quality Definition based on
Functional QualityAccordingtoBerryetal
(1988),ServiceQualityisdefinedasglobaljudgement or attitude
relating to the superiority of the service. Bitner, Booms
andTetreauly(1990)definesitasthecustomer'soverallimpressionoftherelativeinferiority
/superiority of the organization and its services.Carman (1990)
describes the replication and testing of the
SERVQUALbattery(A.Parasuramanetal;seerecord1986-10681-001),whichmeasurestheperceived
quality of a service situation. The scale was tested in 4 service
settingsdifferent from those ofthe originaltest: a
dentalschoolpatient clinic, a business18school placement center, a
tire store, and an acute care hospital. Six basic
questionsofinteresttotheretailerwerediscussed:(1)thenumberof
dimensionsandhowgeneric they are, (2) the extent to which item
wording can be changed, (3)
servicesituationsthatincludemultipleservicefunctions,(4)thevalidityofanalyzingdifferences
between expectations and perception, (5) the point at which
expectationinformation should be obtained, and (6) the
relationshipbetween expectations
andimportance.AsubontengandSwan(1996)defineitasthedifferencebetweencustomers
expectations for service performance prior to the service encounter
andtheir perceptions of the service
received.Thesestudiesprimarilyfocusedonfunctionalqualityaspects(i.e.,
pertaining to service delivery process or how the services are
delivered)
andinadequatelyaddressedtechnicalqualityaspects(i.e.,issuesconcerningwhatisactuallydelivered).However,researchersincellularmobilecommunicationemphasized
that technical quality attributes play an important role in forming
servicequality perceptions of customers.2.3.2
PositiveRelationshipbetweenServiceQualitywithCustomerSatisfactionDanaher
and Gallagher (1997) used the study of an actual hotel
servicedelivery process and partitioned into five distinct service
encounters; check-in,
theroom,therestaurant,thebreakfastandcheck-outandinvestigatedhowqualityfactors
were related to their respective encounters and how cumulative
satisfactionlevels impact on each other and over time. Average
satisfaction levels for each of thefive encounters were found to be
significantly different. Moreover, there was a cleartrend in the
cumulative satisfaction results. Check-in resultedin high
satisfaction,the room was not so satisfying and the restaurant
rated the worst. Satisfaction scoresrose after the breakfast
experience and rose again after check-out.19Ko de Ruyter et al
(1997) argued that there is a conceptual overlap
aswellasdistinctionsbetween,theroleofexpectationsandperceptionsandthequestions
whether service satisfaction is a super ordinate concept to quality
or viceversa. They developed an empirical model which was tested in
a health care
settingtodeterminethenatureoftherelationshipbetweenservicequalityandservicesatisfaction.Theresultssuggestthatservicequalityshouldbetreatedasanantecedentofservicesatisfaction.Itwasalsofoundthatservicesatisfaction,inaddition
to service quality, is a direct function of disconfirmation and
perception.Christine and Binks (1999) emphasized that within any
service there
isscopeforconsiderablevariationinthedegreestowhichbothpartiesbecomeinvolved
in the relationship; beyond a certain minimum level, customers and
serviceproviders may be more or less participative. However,
participative behavior shouldyield benefits. Customers who are more
willing to share information and developcloser personal contacts
might be expected to benefit in terms of a higher quality
ofserviceprovision,becausetheproviderwillbemoreknowledgeableabouttheirneeds
and expectations.Leisen and Vance (2001) emphasized that the
successful standardizationof service quality in the
telecommunication industry across multiple nations
demand,asaprecondition,thatthecountriesinquestionexposesimilarservicequalitydimensions
and that the importance of these dimensions to overall satisfaction
withthe service is also similar. The authors investigated if these
conditions were met
inthetelephoneservicessectorofthetelecommunicationindustryintheUSAandGermany.Confirmatoryfactoranalysisresultsofvariousalternativedimensionalities
provided the best support for a five-dimensional
conceptualizationin both countries. However, the two countries
differ in their respective
importanceevaluationsofparticularservicequalitydimensions,whichmakeitdifficulttoprovide
a standardized service quality solution.202.3.3
PositiveRelationshipbetweenServiceQualitywithCustomerLoyalty and
RetentionRanaweeraandNeely(2003)presentedaholisticmodelofcustomerretentionincorporatingservicequalityperceptions,priceperceptions,customerindifference
and inertia. Data from a large-scale postal survey of telephone
users inEngland showed that perceptions of service quality have a
direct linear
relationshipwithcustomerretentioneveninmassserviceswithlowcustomercontact.Priceperceptions
and customer indifference too were found to have a direct linear
effecton retention.2.3.4 Positive Relationship between Service
Quality with ProfitabilityBloemer et al (1999) et al, argued that
the relationship between
perceivedservicequalityandserviceloyaltyisanissuewhichrequiresconceptualandempirical
elaboration through replication and extension of current knowledge.
Theauthors focus on the refinement of a scale for measuring service
loyalty dimensionsand the relationships between dimensions of
service quality and these service loyaltydimensions. The results of
an empirical study of a large sample of customers fromfour
different service industries suggest that four dimensions of
service loyalty canbe identified: purchase intentions,
word-of-mouth communication; price sensitivity;and complaining
behaviour.2.3.5 SERVQUAL in TelecomWang and Lo (2002) identified
that service quality, customer
satisfactionandcustomervaluearethemostimportantfactors of
businesssuccessforeithermanufacturersorserviceproviders.Theauthorshavepaidattentiontothemeasurement
model of service quality in Chinas mobile phone market based on
thewell-known SERVQUAL model, but with modification on the basis of
focus groupdiscussionsandexpertopinionstoreflectthespecificindustry
attributesandthespecialculture ofChina.Emphasisisthen paid tothe
studyofthe dynamicrelationships among service quality, customer
value, customer satisfaction and their21influences on future
behaviors after the key drivers of customer value and
customersatisfaction are identified.J
ohnsonetal(2002)providedanoverviewofservicequalityanddiscussed its
potential for offering a competitive advantage; to test several
researchpropositions concerning service quality in the Thai
telecommunications industry; theresults indicated that perceptions
and expectations of service quality level showed
nosignificantdifference.Aposthocanalysisfoundthatthetelecommunicationindustry
received excellent ratings on tangibles, particularly customer
service
staffsdress,andlowratingsonempathy,particularlyserviceprovidersinterestdifferences.
Tangibles are an aspect of service quality that is extremely
important tothe Thai telecommunication customer.According to
Hannikainen et al, (2002), service quality is capability of
anetwork to provide services and to fulfill user's expectations.
According to
TelecomAuthorityofIndia(2007),servicequalityisanindicatorofperformanceofanetwork
and of the degree to which the network conforms to the stipulated
norms.2.3.6 Service Quality Measurement and
ModelsBerryetal(1990)conductedastudyonimprovingcustomerservicequality.
They identifiedfive dimensions that customers use tojudge a
company'sservice; discussed the potential causes of service role
ambiguity and identified thepossibilities that arise when a
customer experiences a service problem. According
totheirstudy,theprincipaldimensionsthatcustomersusetojudgeacompanysservice
are: Tangibles
-Theappearanceofphysicalfacilities,equipment,personnel,andcommunicationmaterials.
Reliability -Theabilitytoperformthepromisedservicedependably and
accurately.22 Responsiveness
-Thewillingnesstohelpcustomersandtoprovide prompt service.
Assurance - The knowledge and courtesy of employees andtheir
ability to convey trust and confidence. Empathy
-Theprovisionofcaring,individualizedattention to customers.Berry
and Parasuraman (1992)emphasized thata welldesigned
andimplementedservicequalityinformationsystemraisesthepossibilitythatacompanywillinvestserviceimprovementmoneyinwaysthatactuallyimproveservice.
The five elements of the service quality information system are;
(i)
measureserviceexpectations,(ii)emphasizeinformationquality,(iii)capturecustomers'words,(iv)linkserviceperformancetobusinessresults,and(v)reacheveryemployee.Carvalho
and Leite (1999) extended the Parasuraman Berry -
ZeithamlconjecturetoassessthequalityofpostalservicesinBrazil.Aqualitativestageyieldedalistcomprising39attributeitems.Inthequantitativestagethethree-columnformatofaSERVQUALquestionnairewasemployedtopermitthecomputationofimportanceweightsandtolerancewidthsforeachattributeitem.Therewasaninverseassociationbetweenimportanceandtoleranceofservicequality
attributes.Hanjoon Lee et al (2000) explained that service quality
is an elusive
andabstractconstructtomeasure,andextraeffortisrequiredtoestablishavalidmeasure.Theauthorsinvestigatedthepsychometricpropertiesofthreedifferentmeasurementsofhealth-careservicequalityasassessedbyphysicians.Themultitrait-multimethod
approach revealed thatconvergentvalidity was
establishedformeasuresbasedon thesingle-item global
ratingmethodandmulti-item ratingmethod.Furthermore, discriminant
validity for the seven health-care service qualitydimensions
measured by the three methods was not well established. The high
levelsof inter-dimensional correlations found suggested that the
service quality dimensionsmay not be separable in a practical
sense.23Michael K Brady et al (2002) described that service quality
be
measuredusingaperformance-onlyindex(SERVPERF)asopposedtothegap-basedSERVQUALscale.Theintentof
theresearchwastoexaminetheabilityof
theperformance-onlymeasurementapproachtocapturethevarianceinconsumers'overallperceptionsofservicequality.Theresultsoftheirstudiesindicatethatservice
quality is properly modeled as an antecedent of
satisfaction.Parasuraman(2005)usedthemeans-endframeworkasatheoreticalfoundationtoconceptualizeconstructsrefines,andtestsamultiple-itemscale(E-S-QUAL)formeasuringtheservicequalitydeliveredbyWebsitesonwhichcustomersshoponline.Usingtwostagesofempiricaldatacollection,thestudyrevealedthattwodifferentscaleswerenecessaryforcapturingelectronicservicequality.
The basic E-S-QUAL scale developed in the research is a 22-item
scale
offourdimensions:efficiency,fulfillment,systemavailability,andprivacy.Thesecondscale,E-RecS-QUAL,issalientonlytocustomerswhohadnonroutineencounters
with the sites and contains 11 items in three dimensions:
responsiveness,compensation, and contact.Mahapatra andKhan (2006)
provided a systematic integrated approachfor modeling customer
evaluation of service quality applied to technical education.The
authors identified that the quality of service largely relates to
human behaviour,the quality dimensions and items under each
dimension of the measuring
instrumentwidelydifferdependingontheapplicationtothetypeofservicesetting.Thestakeholders
in an educational setting range from students to recruiters, with
varyinglevels of interaction with the system and expectations from
the system. Therefore, itis advisable to identify the minimum
numberofservice items thatsuitallthestakeholders before
implementing any quality improvement programme. To this
end,EduQUAL, a survey-based model, has been specially developed to
suit a technicaleducation
system.AnitaSethetal(2008)developedavalidandreliableinstrumenttomeasure
customer perceived service quality incorporating both service
delivery aswell as technical quality aspects. The
resultingvalidated instrumentcomprised
of24dimensionsincludingreliability,responsiveness,assurance,empathy,tangibles,convenience,
and customer perceived network quality.2.3.7 Service Quality
DimensionsResearchershavetriedtooperationalizeservicequalityfromdifferentperspectives
for different service applications. Based on their conceptual /
empiricalstudies, researchers derived and proposed differentservice
quality dimensions forvarious service
applications.Berryetal(1988),identifiedfivedimensionsnamely,reliability,responsiveness,
assurance, empathy and tangibles. The application areas are
telecomcompanies, brokerage and insurance companies and
banks.LehtinenandLehtinen(1991)identifiedfivedimensionsnamely,physical
quality,corporatequality,interactivequality,processquality
andoutputquality. The application areas identified are restaurants,
disco and pub restaurants.Rosen and Karwan (1994) identified six
dimensions namely,
reliability,responsiveness,tangibles,access,knowingthecustomerandassurance.Theapplication
areas are teaching, restaurant, bookstore and health care.J ohnson
et al (1995)identified three dimensions namely, input
quality,process quality and output quality. This study was based on
bank customers in
theUK.SiuandCheung(2001)identifiedsixdimensionsnamely,personalinteraction,policy,physicalappearance,promises,problemsolvingandconvenience.
The study was based on the service quality delivery of a
departmentstore chain.Alzola and Robaina (2005) identified five
dimensions namely,
reliability,design,guarantee,empathyandsecurity.ThisstudywasbasedonElectronicCommerceB2C.Improvementsinservicequalitycanalsoenhance25competitiveness.Several
dimensionsof competitivenesshavebecomerelevantinIndia and have been
researched across levels.2.4 SERVICE LOYALTY2.4.1 Defining Service
LoyaltyServiceloyaltyisthedegreetowhichacustomerexhibitsrepeatpurchasingbehaviorfromaserviceprovider,possessesapositiveattitudinaldisposition
toward the provider, and considers using only this provider when a
needfor this service
arises.Thisdefinitionsuggestsserviceloyaltyisamatterof
degree,rangingfrom the completely loyal customer to one who will
never consider using a providerin the future. According to this
definition, an extremely loyal customer is one who(a) regularly
uses a service provider, (b) really likes the organization and
thinks veryhighly of it, and (c) does not ever consider using
another service provider for thisservice. Conversely, an extremely
non-loyal person (a) will never use the
provideragain,(b)hasnegativefeelingstowardtheorganization,and(c)welcomessuggestionsaboutotherprovidersandiswillingtotryanyotherprovider.Thisthree-dimensional
definition is consistent with Zeithaml, Berry, and
Parasuramans(1996)operationalizationoftheloyaltytocompanyfactorintheirbehavioral-intentionsbattery.Thefiveitemsthey
use tomeasureloyaltyinclude(1)sayingpositive things about the
company, (2) recommending the company to someone whoseeks advice,
(3) encouraging friends and relatives to do business with the
company,(4) considering the company the firstchoice to buy
services, and (5)
doingmorebusinesswiththecompanyinthenextfewyears.Thus,ineffect,theirmeasureincludes
items from all three dimensions of the proposed service loyalty
definitionlisted above.Jacoby et al (1978) have explored the
psychological meaning of loyaltyin an effort to distinguish it from
behavioral (i.e., repeat purchase) definitions.
Theiranalysisconcludesthatconsistentpurchasingasanindicator
ofloyaltycouldbeinvalid because of happenstance buying or a
preference for convenience and
that26inconsistentpurchasingcouldmaskloyaltyifconsumersweremulti-brandloyal.Because
of these possibilities, the authors conclude that it would be
unwise to
inferloyaltyordisloyaltysolelyfromrepetitivepurchasepatternswithoutfurtheranalysis.Czepiel
and Gilmore (1987) emphasized that essentially social nature
ofservice encounters, a short-run phenomenon, provides the
occasions in which
buyerandsellernegotiatethetermsoftheirexchangerelationship,along-runphenomenon.
Defined as the mutual recognition of special status between
exchangepartners,exchangerelationshipsinsureefficacyforthebuyer,astheymitigatemarket
volatility for the seller. Understanding how economic exchange is
played outagainst a background of social exchange can yield
actionable insights.Murray (1991) explored the information needs of
service consumers. Inthe purchase decision process, search behavior
is motivated in part by perceived riskand the consumer's ability to
acquire relevantinformation with which
purchaseuncertaintycanbeaddressed.Marketingtheorysuggeststhatconsumersuseinformation
sources in a distinctive way to reduce the uncertainty associated
withservices.Dicketal(1994)explainedthatCustomerloyaltyisviewedasthestrengthoftherelationshipbetweenanindividual'srelativeattitudeandrepeatpatronage.Therelationshipisseenasmediatedbysocialnormsandsituationalfactors.Cognitive,affective,andconativeantecedentsofrelativeattitudeareidentifiedascontributingtoloyalty,alongwithmotivational,perceptual,andbehavioral
consequences.Kandampully (1998) explained the premise of `quality
of service as thecompetitive edge in gaining market leadership
which has been well recognized bothin academic research and by
leading service organizations. However, it has becomeincreasingly
important for organizations to find ways, not only to reach the
top, butto maintain that leadership in an ever increasing
competitive market-place. In orderto protect their long-term
interest, service organizations are seeking ways to forge27and to
maintain an on-going relationship with their customers. It is
argued that long-term superiority of a service firm is dictated by
the organizations ability to maintaintheir relationship with the
customer by offering `service loyalty: a demonstration ofthe
organizations commitment to maintain the service promise. The
author arguesthat service loyalty precedes customer loyalty. The
author emphasizes how a firmsservice employees develop the
emotional connection with customers which leads toexceptional
service and the ability to exceed customer
expectations.Gustafssonetal (2005)intheirstudy of
telecommunicationsservices,examine the effects of customer
satisfaction, affective commitment, and calculativecommitmenton
retention. Thestudy further examines the potential
forsituationaland reactional trigger conditions to moderate the
satisfaction-retention
relationship.Theresultssupportconsistenteffectsofcustomersatisfaction,calculativecommitment,andpriorchurnonretention.Priorchurnalsomoderatesthesatisfaction-retention
relationship.RecentlytoevaluateServiceLoyalty,aServloyalconstructbasedonsevendimensionshasbeenintroducedbySudhaharetal(2006).Theauthorsemphasizethatbesidesthebehaviouralandattitudinaldimensionstherefigurecognitive,
conative, affective, trust and commitment dimensions.2.4.2
Dimensions of Service LoyaltyA review of the literature suggests
the service loyalty construct consistsof three separate dimensions:
behavioral loyalty,attitudinal loyalty, and
cognitiveloyalty.BehavioralLoyalty:Earlydefinitionsofloyaltyfocusedalmostexclusively
on its behavioral dimension. In particular, loyalty was interpreted
as aform of customer behavior (such as repeat purchasing) directed
toward a particularbrand over time. Although current thought infers
that loyalty includes more than justa behavioraldimension, some
researchers continue to measure loyalty exclusivelyon the
behavioral
dimension.28AttitudinalLoyalty:Scholarshavequestionedtheadequacyofusingbehaviorasthesoleindicatorofloyalty.Day(1969),inparticular,criticizedbehavioralconceptualizationsofloyaltyandarguedbrandloyaltydevelopsasaresult
of a conscious effort to evaluate competing brands. Others have
suggested thisattitudinal dimension includes consumers preferences
or intentions (e.g.,
Pritchard1991).AfterDayscriticism,attitudegainedincreasingattention
asanimportantdimensionofloyalty.Overtime,scholarsbegantoconsidercustomerloyaltyashaving
two dimensions: behavioral and
attitudinal.CognitiveLoyalty:Inadditionaltothebehavioralandattitudinaldimensions,afewscholarsincludewhathasbeentermedacognitiveform
ofloyalty (Lee and Zeiss 1980). Some studies suggest loyalty to a
brand or store meansit comes up first in a consumers mind when the
need for making a decision as towhattobuyorwhere togoarises,while
othersoperationalize
loyaltyasacustomersfirstchoiceamongalternatives.Similarly,Dwyer,Schurr,andOh(1987,
p. 19) argue that being committed to a relational exchange
virtually precludesconsidering other exchange partners)) such
customers have not ceased attending
toalternatives,butmaintaintheirawarenessofalternativeswithoutconstantandfrenetictesting.Thissuggestsalternativeorganizationsarenotseriouslyconsideredbytrulyloyalcustomerswhensubsequentpurchasesaremade)aviewpointstronglysupportedbyothers.Thatis,acustomerwhoisconsideredextremely
loyal does not actively seek out or consider other firms from which
topurchase.2.5 LOYALTY INDI CESBob E.Hayes (2007)feltwhilemany
objectivemeasuresof customerloyalty exist (e.g., defection rate,
number ofreferrals), customer surveys remain afrequentlyusedway
toassesscustomerloyalty.Thereareafewreasonsforthepopularityofcustomersurveyuseincustomerexperiencemanagement.First,customer
surveys allow companies to quickly and easily gauge levels of
customerloyalty. Companies may not have easy access to objective
customer loyalty data ormay simply not even gather such data.
Second, results from customer surveys can
be29moreeasilyusedtochangeorganizationalbusinessprocess.Customersurveyscommonlyincludequestionsaboutcustomerloyaltyaswellasthecustomerexperience(e.g.,product,service,support).Usedjointly,bothbusinessattributeitems
and loyalty indices can be used (e.g., driver analysis,
segmentation analysis) toidentify reasons why customers are loyal
or disloyal. Finally, objective measures
ofcustomerloyaltyprovideabackwardslookintocustomerloyaltylevels(e.g.,defection
rates, repurchase rates). Customer surveys, however, allow
companies toexamine customer loyalty in real-time. Surveys ask
about expected levels of
loyalty-relatedbehaviorandletscompanieslookintothefutureregardingcustomerloyalty.Customers'ratingsof
asetofloyaltyquestionssuggestthattherearethree, very general,
loyalty constructs, Advocacy, Purchasing and Defection;Advocacy
Loyalty: reflectsthedegreetowhichcustomerswilladvocate of the
companyPurchasing
Loyalty:reflectsthedegreetowhichcustomerswillincrease their
purchasing behaviorDefection Loyalty: reflects the degree to which
customers willshowsymptoms of defecting to competitorsThe evidence
from previous studies (Bob E. Hayes, 2007) shows that theAdvocacy
Loyalty Index (ALI) ,the Purchasing Loyalty Index (PLI) and
DefectionLoyaltyindex(DLI)measurethreedifferenttypesofloyalty.Eventhoughthesetypesofloyalty
arecorrelated(advocates
tendtobepurchasers),therelationshipbetweentheALIandPLIisnotperfect,suggestingthattheseloyaltyindicesmeasure
unique constructs. Customer loyalty is not a unidimensional
construct, butrather a multidimensional construct that can help
reliability measured. When we saya customer group has high vs. low
loyalty, we need to clarify to which loyalty weare referring. It is
possible that a given customer group can have different levels
ofloyalty (e.g.,high
advocacy,lowpurchasing).Itisclearthatablanketstatementabout levels
of "customer loyalty" can be ambiguous.302.6 LI TERATURERELATI
NGTOLI NKAGEOFSERVI CEQUALI TY, SATI SFACTI ON AND
LOYALTYTorstenJ.Gerpottetal (2001)havedoneastudy
ontherelationshipbetween customer satisfaction (CS), customer
retention (CR) and customer loyalty(CL) in the German Mobile
Telecom Market. They developed a two-staged model
inwhichoverallCShasasignificantimpactonCLwhichinturninfluencesacustomer's
intention to terminate/extend the contractual relationship with his
mobilecellular network operator (CR). They identified mobile
service price and personalservice benefit perceptions as well as
(lack of) number portability between
variouscellularoperatorsassupply-relatedvariableswhichhasstrongeffectsonCR.Mobile
network operators' perceived customer care performance had no
significantimpact on CR.Chih-Ping-Wei
andI-Tang-Chiu(2002)studiedonchurn predictionintelecom. The authors
emphasized that a mobile service provider wishing to retain
itssubscribers needs to be able to predict which of them may be
at-risk of changingservices and will make those subscribers the
focus of customer retention efforts.
Inresponsetothelimitationsofexistingchurn-predictionsystemsandtheunavailability
of customer demographics in the mobile telecommunications
providerinvestigated, they proposed a churn-prediction technique
that predicts churning
fromsubscribercontractualinformationandcallpatternchangesextractedfromcalldetails.Thetechniqueiscapable
of identifyingpotential churnersatthecontractlevel for a specific
prediction time-period.Moon-KooKim
etal(2004)hadstudiedtheeffectsofcustomersatisfactionandswitchingbarrieroncustomerloyaltyinKoreanmobiletelecommunication
services.The study was undertaken when theKorean
telecomindustrywasshiftingitsstrategicfocusawayfromattractingnewcustomers,towards
retaining existing customers through the promotion of customer
loyalty.J ohn Hadden etal (2007)analyzed thata business incursmuch
highercharges when attempting to win new customers than to retain
existing ones. As
a31result,muchresearchhasbeeninvestedintonewwaysofidentifyingthosecustomers
whohave ahigh risk of churning. However customer retention
effortshave also been costing organisations large amounts of
resource. In response to theseissues, the authors suggested that
the next generation of churn management shouldfocus on
accuracy.Sung Ho (2007) used the customer relationship management
perspectivetoinvestigatecustomerbehavior.Theauthorsdifferentiatebetweencustomersthroughcustomersegmentation;trackscustomershiftsfromsegmenttosegmentover
time, discovers customer segment knowledge to build an individual
transitionpath and a dominant transition path, and then predicts
customer segmentbehaviorpatterns.Koustuv Dasgupta et al (2008)
examined the communication patterns ofmillions of mobile phone
users, to study the underlying social network in a large-scale
communication network. The key purpose is to address the role of
social ties
intheformationandgrowthofgroups,orcommunities,inamobilenetwork.Inparticular,
the study focused on the evolution of churners in an operators
networkspanning over a period of fourmonths. Based on
theirfindings, they proposed aspreading activation-based technique
that predicts potential churners by examiningthe current set of
churners and their underlying social network. The efficiency of
theprediction is expressed as a lift curve, which indicates the
fraction ofallchurnersthat can be caught when a certain fraction of
subscribers were
contacted.Ying-FengKuoetal(2009),studiedtherelationshipsamongservicequality,perceivedvalue,customersatisfaction,andpost-purchaseintentioninmobile
value-added services. The main findings are as follows: (1) service
qualitypositively influences both perceived value and customer
satisfaction; (2)
perceivedvaluepositivelyinfluencesonbothcustomersatisfactionandpost-purchaseintention;
(3) customer satisfaction positively influences post-purchase
intention; (4)service quality has an indirect positive influence on
post-purchase intention
throughcustomersatisfactionorperceivedvalue;(5)amongthedimensionsofservicequality,
customer service and system reliability is most influential on
perceived32valueandcustomersatisfaction,andtheinfluenceofcontentqualityrankssecond;
(6) the proposedmodel is proven with the effectivenessin explaining
therelationshipsamongservicequality,perceivedvalue,customersatisfaction,andpost-purchase
intention in mobile added-value services.Fujun et al (2009)
proposed and tested an integrative model to
examinetherelationshipamongservicequality,value,image,satisfaction,andloyaltyinChina.Theauthorsrevealthatservicequalitydirectlyinfluencesbothperceivedvalueandimageperceptions,thatvalueandimageinfluencesatisfaction,thatcorporate
image influences value, and that both customer satisfaction and
value
aresignificantdeterminantsofloyalty.Thus,valuehasbothadirectandindirect(throughsatisfaction)impactoncustomerloyalty.Othervariablesmediatetheimpact
of both service quality and corporate image on customer loyalty.2.7
I NSI GHTS AND I NADEQUACI ESThe review of literature has provided
insights on the following areas:1. The impact of privatization of
telecom sector on the mobile serviceproviders and the
subsequentpenetration into themarkethas givenrise to cut-throat
competition among the mobile service providers.2. This rising level
of competition in turn has forced the mobile serviceproviders to
focus on various customer centric strategies wherein theservice
providers concentrate on sustained competitive advantage.3.
Customerson the otherhand are welleducated,demanding
andwillingtospendforbettervalueformoney.Thisandtheaboveaspects have
turned the attention of the service providers to
dependonatechnology-drivenstrategieswherethereisaneedtocollect,maintain,
manage and analyse customer details and their purchasingbehaviour
which would help them to bundle up offers which wouldsatisfy a
specific need of a specific segment of customer in a
specific33periodoftime.ThisistheCustomerRelationshipManagement,acontemporary
management practice.4.
ThoughCRMevolvedinaveryshortduration,itsapplicationiswidespread in
services which involve huge set of customer base.5. Theimpactof
CRMpracticesinvariouscountriesandonvariousindustry verticals gives
a positive insight as to the level of maturity ofits practices.6.
Whendecidingtochooseatelecommunicationserviceprovider,customers
often takeintoaccountthe service quality,servicepriceand customer
service. While the first two factors can be controlled bythe
telecom company, the last factor seems to be the most
influentialand the hardest to get right as well. One outcome of
good
customerservice,whichdependsontheservicequalityofthetelecomproviders
positively results in a certain degree of behavioral attitudewithin
the customers which in turn grows into loyalty. Thus a
loyalcustomermayturnadvocatetothecompany;purchasemorefrequently,purchasemorequantityorpurchasemorevarietyofservices
or if disloyal switch to
competitors.Theliteraturereviewedaboveindicatescertaininadequaciesinthefollowingareas:1.
While there are individual studies on CRM implementations
(Payne&Frow,Finnegan&Willcocks,RobertGee),ServiceQuality(DanaherandMattsson,WangandLo,JohnsonandSirikit,Gale,Rudie
and Wansley,Zeithaml & Bitner), Relationship between CRMand
Customer Loyalty (Mosad Zineldin, Majumdar, Terblanche andBoshoff,
Gustafsson et al) and Loyalty Indices (Bob E. Hayes), it
isnoticedthatastudyonthelinkageespeciallywiththechangingdemographic
patterns of the customers,if any, arising outof theseconcepts seems
to be missing. Hence it is felt that such an existing34gap can
befurther exploredand studied and the present attemptistowards such
a linkage. Itis also afact that the CRM practicesinIndian Telecom
is in the matured stage. Hence such a linkage
studyparticularlyinthetelecomindustrywouldbetimelytoprovidemanagerial
insights in order to further strengthen the CRM practice inthis
highly competitive industry.2.
Identifyingtheinfluenceofservicequalitydimensions,serviceloyalty
dimensions on each of the loyalty indices, namely advocacyloyalty
index, purchase loyalty index and defection loyalty index.3. Even
though some of these aspects have been explored by
previousresearchers to a great extent, it is felt that not much
attention has
beendrawnintomeasuringtheeffectivenessofloyalty,particularlyforsustained
presence.2.8
SUMMARYThischapterprovidesanoverviewoftheliteraturereviewedbytheresearcher.Thecruxofeachmaterialreviewedbytheresearcherispresentedchronologically.
It also includes a section on the insights obtained and
inadequaciespresent in the literature review, which the present
study is aiming to bridge.35CHAPTER 3RESEARCH METHODOLOGY3.1 I
NTRODUCTIONMethodology is the key to finding answers to the
question that
initiatestheresearchandthereforecomprisesaveryimportantpartofanystudy.Theresearch
methodology that is chosen has to enhance the reliability and
generalizationofthe results. It should furthermore be cost
effective, efficient and versatile. Thisbalance can only be
obtained by using the appropriate methodology for gatheringdata.As
previous research on strengthening ofCRM practices by the
Indianmobile service providers through customer loyalty are
limited, the current study
canbedefinedasanearlyattemptwiththeaimtodevelopthebodyofknowledgeregarding
the existing phenomenon.3.2 RESEARCH
DESIGNTheresearchdesignadoptedforthisstudywasdescriptiveinnature.Descriptive
research is a type of conclusive research that has its major
objective asthe description of something- usually market
characteristics or functions
(Malhotra,2006).Thecurrentresearchusedaquantitativeapproach.Quantitativeresearchmethodology
seeks to quantify the data and typically applies some form of
statisticalanalysis (Malhotra, 2006). The benefits of quantitative
research are that researchersrely on large samples to show
statistical effect and can generalize the findings fromthe sample
to the population (Churchill and Iacobucci, 2002).363.2.1 Area of
the
StudyThedatafortestingtheproposedmodelswerecollectedamongtheresident
mobile subscribers in Chennai. Chennai, capital of Tamil Nadu is
the
fourthmostpopulousmetropolitanareaandthefifthmostpopulouscityinIndia.Thepopulation
of Chennai is 4.6 million (2011 census).3.2.2 I nstrument
DevelopmentThe instrument was designed using scales from previous
related
research.Sincethisstudyattemptstoverifytherelationshipsbetweentheconstructs,quantitative
research methodology is employed. Instrument is in Appendix
I.Scalesfortheindependentandthedependentvariableswereadoptedfromtheextantliteratureduetotheirrelevancetothestudy'scontextandpastmeasurement
reliability.3.2.2.1Variables Considered for the StudyIn order to
comply with the objectives laid down for the study,
certainindependentvariableswereconsideredforanalyzingbehavioralpatternofthemobile
subscribers, which are as follows: Demographic Variables Extended
Service Quality Parameters Service Loyalty Parameters Loyalty
Indices3.2.2.2Demographic VariablesThe Demographic Variables
considered for the study are: AgeLength of Use37 Monthly
Expenditure Education Occupation3.2.2.3Extended Service Quality
DimensionsThe service quality aspects of the mobile service
providers were analyzedbased on the following dimensions. These
dimensions areidentified based on theSERVQUAL Construct. This
extended SERVQUAL (Seth et al,
2008)instrumentdeterminesservicequalitystructurebycombiningbothfunctionalaswellastechnical
quality (i.e., network quality in cellular mobile context)
attributes.ThustheextendedSERVQUALconstructhasthefollowingsevendimensions:Reliability
- refers to the ability toperform the promised service dependably
andaccurately. Contact employees perform the service right the
first time The service provider provides the service at the
promised time The customer is kept well-informed about the progress
of their complaints Billing system is accurate and error free Bills
are received on time.Responsiveness-refers to willingness to help
customers and provide prompt service Contact employees give you
prompt service The customers complaints / queries are taken
seriously The customers complaints are resolved quickly The service
provider is always willing to help you.38Assurance-refers to
knowledge and courtesy ofemployees and their ability toinspire
trust and confidence
Contactemployeesarefriendlyandpolitewhilehandlingyourcomplaints /
queries
Theyhavetheadequateknowledgeoftariffsandplansofserviceproviders The
behaviour of contact employees instils confidence in you You feel
safe in your transactions with your service providerEmpathy- refers
to caring, individualized attention the firm provides its customers
For lodging the complaints service provider is easily accessible
They have your best interests in heart Contact employees give you
individual attention The employees understand your specific
needsTangibles-refers to appearance
ofphysicalfacilities,equipment,personalandcommunication materials
Service provider's physical facilities are visually appealing
Contact employees appear neat Materials associated with the
service(such as pamplets etc) are
visuallyappealingConvenience-implies flexible and comfortable
facilities to suit the customer needs. They have convenient
business hours Ease of lodging the complaints / queries Your
service provider provides flexibility in the payment of bills
Application formalities are simple39Customer Perceived Network
Quality - an indicator of network performance interms of voice
quality, call drop rate, network coverage and network congestion.
Yourserviceproviderprovidessufficientgeographicalcoverage(onhighways,
inside the buildings and basement)
Youexperienceminimumprematureterminationofcallsduringconversation
(ie call drops) You get clear and undisturbed voice
Yourcallgetsconnectedtothecalledpersonduringthefirstattemptmost of
the time You are able to make calls at peak hours3.2.2.4Service
Loyalty
DimensionsAccordingto(ChaudhuriandHolbrook,2001;BandhopadhyayandMartell,
2007), Service Loyalty has two dimensions, namely, Behavioural
Loyaltyand Attitudinal Loyalty. Recently, to evaluate Service
Loyalty, a Servloyal construct(Sudhakar et al, 2006) based on seven
dimensions has been introduced. Besides thebehavioural and
attitudinal dimensions, there figures cognitive, conative,
affective,trust and commitment dimensions.The seven dimensions are
explained with the
items.BehaviouralLoyalty-referstothecustomerswillingnesstocontinuetherelationship
with the provider in the short period. It does not imply a
commitment tothe provider, but simply expresses the degree of
loyalty in the immediate future. I will transact with this mobile
service provider again for future needs I will try new services
that are provided by the service provider I will recommend other
people to patronize this service provider40 I will say positive
things to other people about the services providedby the mobile
service operatorAttitudinal Loyalty -refers to the predisposition
towards the provider deriving froma psychological process. I will
continue to patronize this mobile service provider / service evenif
the service charges are increased moderately I have strong
preference to this service provider I will continue to use this
service provider regardless of changes inthe service I am likely to
pay little more for the services when situation
arisesCognitiveLoyalty-isthe psychologicalstate ofmind which
isbased on
theinformationavailabletotheconsumerabouttheserviceperformancewhichindicates
that one service provider is preferable to its alternatives.
Cognition can bebased on prior or vicarious knowledge or on recent
experience-based
information.Loyaltyatthisstateofmindisdirectedtowardthebrandbecauseofthis"information"
(attribute performance levels). To me, this service provider would
rank first among others I would continue this service for a long
period of time I will deal exclusively with the service provider
The service of the provider reflect a lot about who I
amConativeLoyalty-is the phase ofloyalty development which is
influenced
byrepeatedepisodesofpositiveaffecttowardtheserviceprovider.Conation,bydefinition,impliesabrand-specificcommitmenttorepurchase.Conativeloyalty,then,is
aloyaltystate thatcontains
what,atfirst,appearstobethedeeplyheldcommitment to buy. In effect,
the consumer desires to repurchase, but similar to any"good
intention," this desire may be an anticipated but unrealized
action.41 I have found this provider better than others Repeatedly,
the performance of this provider is superior to that of
itscompetitorsAffective Loyalty refers to the state when the
customerfeelsinvolved with theservice provider. Affective loyalty
is the state of mind that is developed as a result
ofalikingorattitudetowardtheserviceprovideronthebasisofcumulativelysatisfying
usage occasions. This reflects the pleasure dimension of the
satisfactiondefinition and pleasurable fulfillment. The loyalty
exhibited is directed at the degreeof affect (liking) for the
service provider. I like the terms of the service provider I like
the performance and services of the provider I have a positive
attitude toward this provider I am satisfied with my decision to
stay with this providerTrust loyalty -refers to the state which is
developed as a result of the belief on
thecompetenceoftheserviceprovider.Iftheserviceproviderhastherequiredexpertise,
to perform his/her activities, carry out his/her obligations or
accomplisheshis/her promises, the consumer gets a feeling of
security about the service provider. The employees of the service
provider give individual attention The employees understand my
specific needs and go out of their wayto help me The employees
respond caringly when I share my problems The personnel at the
service provider are filled with professionalismand
dedicationCommitmentLoyalty-regards the deepestinvolvementofthe
customerin
therelationshipwiththeprovider.Thecustomersshowhighdegreeofcontinuedassociation
with the service provider.42 I am committed to the service provider
Even when I get to hear any negative information about the
provider,I would still continue with this service provider I like
switching from one service provider to another My
continuedassociation with theserviceproviderisimportant
tome.3.2.2.5Loyalty I ndicesBob E. Hayes, 2007 identifies key
drivers of loyalty for service providersand introduces new customer
loyalty metrics designed to help companies
increaserevenuethroughnewandexistingcustomers.Theinstrumenttomeasureloyaltyindiceswereusedtounderstandtherespondentsperceptionabouttheirlevelofagreement
with respect to questions, each on a five point Likert Scale (1
StronglyDisagree and 5 Strongly Agree). He has identified three
loyalty indices namely,AdvocacyLoyaltyI ndex(ALI )-reflects the
degree to which customers willbeadvocates of the company.
Likelihood to choose the service again Likelihood to recommend
Likelihood to pass on positive feeling about the services
Likelihood to continue purchasing the same products /
servicesPurchasingLoyaltyI ndex(PLI )- reflects the degree to which
customers willincrease their purchasing behavior. Likelihood to
increase frequency of purchasing Likelihood to purchase different
products / services43Defection Loyalty I ndex (DLI ) - reflects the
degree to which customers willshowsymptoms of defecting to
competitors. Likelihood to continue this only as a supplementary
connection Likelihood to switch to a different provider3.2.3
Sampling
MethodConveniencesamplingwasusedbecausethesamplingunitswereaccessible,easytomeasureandrequiredtheleasttimeandcostexpenditure(Ko,
1995).. It also takes into account the operational difficulties
associated in theprocess of data capturing. However,by going
through this method of sampling itwas ensured that all units of
population were adequately represented. In determiningthe sample
size the following factors were taken into consideration:Dispersion
of the population Time taken by the respondents to complete the
questionnaire Resources required completing the survey Respondents
willingness to part with information.Burns and Bush (1999) believe
that sample size affects the accuracy ofresults. Sample size also
has a direct impact on the appropriateness of the
statisticaltechniques chosen (Hair et al., 1998). The size of the
sample for this research
wasdesignedinaccordancewiththecriterionforapplyingtheanalyticaltechniquechosen.
Since this study used Structural Equation Modeling and regression a
largesample was required for this multivariate technique. The
sample size was fixed
foraround550,asasmallsamplesizemightprovidelessaccurateestimatesof
thedegree of relationship among the variables due to unstable
correlations (Bordens andAbbott, 1996).All variables in the study
were identified through a review of the
relevantresearchandliterature.Externalvalidityreferstotheresearchersabilitytogeneralize
the results of the study from the sample to the population from
which the44sample was drawn (Gay, 1987). One of the threats to
external validity occurs if
thesampleisnotrepresentativeofthepopulation.Thebestprotectionforequalrepresentationoccurswhenasamplehasbeenrandomlyselected(Fink,1995).Sampling
error refers to chance variation among the means (Gay, 1987) due
toinfluencesnotunderthecontrolof
theresearcher.Samplingerrorsarenormallydistributedandcanbecontrolledifasufficientlylargenumberofsubjectsareselected
from the population. Sampling error for this study was controlled
throughthe selection of a sample large enough to be representative
of the
population.Measurementerrorreferstoinconsistenciesinmeasurements.Themeasurementerrorwascontrolledbyemployinginstrumentswhichhavebeenshowntobereliableandvalid.Inordertoaddresspossiblemeasurementerrorreliability
tests were employed on the scale items.3.3 PROPOSED CONCEPTUAL
MODELIn developing the proposed research model, we examine and
confirm therelationship between service quality, service loyalty
and loyalty indices which aremultidimensional variables. Also the
influence of the demographic variables on
eachofservicequality,serviceloyaltyandloyaltyindicesareexamined.ThesemultidimensionalvariablesbecomethelatentfactorsinstrengtheningtheCRMimplementation
by the Indian Mobile Service Providers.Figure 3.1 Conceptual Frame
Work for the Study453.4 PRE-TESTThe purpose of questionnaire
pre-testing is to ensure that item wording,flow of questions,
suitability of measurement scales, instructions, and other
aspectsof the questionnaire are understandable. Churchill and
Iacobucci (2002) stress that;data collection should never begin
without an adequate pre-test of the instrument.Therefore, although
the items used in this study were taken from the extant
studieswhich had established the measurement, this step was still
necessary. It was
becausethosewordingshavedifferentmeaningsandconnotationsindifferentculturalcontexts(Sekaran,2003).Questionnairepre-testingcanhelptorectifyanyinadequaciesbeforehand(Sekaran,2003).Afterthequestionnairehadbeendeveloped,thesamewaspre-testedusingapilotstudywith50subscribersinChennai.
Interviews with respondents indicated that the item wording was
clear
andeasytounderstand.Inaddition,analysesofdescriptivestatisticsindicatednoskewness
or kurtosis. Scale reliability was performed on each measure.3.5
DATA COLLECTIONThe questionnaires including covering letter, were
personally distributedtocustomersof mobileservices,duringApril-J
une,2011.Conveniencesamplingmethodwasusedtocol