e-sRC

CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Mobile telecommunications have become an increasingly needed service with a
very high penetration rate in most countries. With the extensive mobile
telecommunications usage, the mobile services market is now recognized as the
most competitive part of the telecommunications sector. The emergence of
competitive markets have led to lower prices, which has also resulted in the
widespread use, (coverage) greater variety (product development) and quality of
mobile services (Naser , Salleh & Gelaidan, 2012).
Mobile telecommunications technologies have developed over successive generations. The first
generation (1G) appeared in the 1950s. The second generation (2G) or GSM technology which
was released in 1995 with enhanced supplementary services was used extensively, but was
challenged globally by the next (third) generation (3G) technologies. This sequence of
generations is characterized by increasing capacity and richer content of the message (product
development). Further penetration of 3G depends on the integration of telecommunications and
multimedia services, which turned out to be more complicated than most experts predicted
(Dunnewijk & Hulten, 2007). In the 1990s, the rapid growth rate was accompanied by critical
changes in the telecommunications markets. The usual way to call someone has changed from
using the telephone booth or a fixed telephone line to using a personal phone that is potable and
movable. This growth is also responsible for the intense competition between service operators
in the telecommunication industry. This competition is forcing the operators to adopt effective
strategies in order to satisfy the customers. (Nasser, Salleh & Gelaidan, 2012).
Mobile service providers need to understand the importance of customer satisfaction and loyalty
while planning strategies for user retention. The remarkable diffusion of mobile services has
gone beyond experts‟ expectations. From a marginal industry „„in the shadow” of other
telecommunications providers (e.g., fixed lines and the internet), it has become a leading
segment, providing commodity services. As such, the penetration of mobile phones is almost
twice as high as that of personal computers (International Telecommunication Union, 2003).
Hence, today‟s customers are more concerned about having high quality telecommunication
services that satisfy them. Quality of service is becoming increasingly important to differentiate
between competing organisations (Turel & Serenko, 2006). This is a Key Performance Indicator
(KPI) in return for customer satisfaction.
On the network coverage, return on investment and asset prior to 2001, the number of connected phone
lines in Nigeria was 450,000 for an estimated population of 120 millions at the time and the level of
investment in the telecommunication sector was just about US$50 million only (Ajala, 2005; Ajayi,
2006). Six years after, the Foreign Direct Investment (FDI) in the telecommunication sector has reached
$9.5billion, the largest after the oil and gas industry and is still growing both in terms of subscribers’ base
and infrastructural development (Nigerian Communication Commission, (NCC) 2014). The telecoms
sector has turned Nigeria into one of the preferred investment destinations in the world as foreign
investors now fall over themselves to establish presence in a country acknowledged as one of the most
lucrative markets (NCC, 2014).
According to Roger (2010), there are five GSM and 13 CDMA-based network operators in Nigeria. The
GSM operators include Airtel, MTN, MTEL, Globacom, and Etisalat while CDMA network operators
include Multilinks, Starcomms, O‟net, and Visafone amongst others. Consumers of telecommunications
products and services in Nigeria varied in terms of taste, need and expectation. This has made user
satisfaction very important in today‟s business world. According to Deng, Lu, Wie and Zhang (2009), the
ability of service providers to create high degree of satisfaction is crucial for product differentiation and
developing strong relationship with the user. Hanif, Sehrish and Adnan (2010), assert that user
satisfaction makes the phone users loyal to one telecommunication service provider. Satisfying the user
can help build long and profitable brand relationships with their users (Eshghi, Haughton & Topi, 2007).
It is costly to generate satisfied and loyal users of a product or service. However, according to Gustafsson,
Johnson and Roos (2005) a telecommunication service provider needs to concentrate on the improvement
of service quality and charge appropriate fair prices in order to satisfy its users. Ahn, Han and Lee (2006)
noted that users get satisfied with a brand more if they get all the needed services accumulated in that
very brand. User satisfaction according to Herrmann, Xia, Monroe and Huber (2007), is directly
influenced by price perceptions while indirectly through the perception of price fairness. In today‟s
market, the mobile technology has been extremely competitive and service providers are moving
aggressively to attract versatile users by offering some meaningful attractive promotions and services
(Rahman, Haque & Ismail 2010). The image of a service provider is also a consideration to a subscriber,
thus according to Lambert (1980), brand plays an important role in user‟s selection of service.
The issue of customer satisfaction has received considerable interest or attention in recent years.
It is one of the most popular research topics in marketing (Patterson, 1997; Naeem, 2010; Karna,
2004; Churchill, 1982; Spreng Mackezie & Olshavsky, 1996; Yoon, 2010) and has attracted
significant attention from top management in many companies (Bernhardt, 2000). A customer is
satisfied when an offer performs better than expected and is dissatisfied when expectations fall
below performance (Bolton, 1991). Kotler (2006) points out that whether the buyer is satisfied
after purchase or not depends on the offer‟s performance in relation to the buyers expectations.
Similarly, customers have expectations with regard to the behaviour of service employees. When
these are exceeded, the level of customer satisfaction with the service provider is positively
influenced (Thurau, 2004).
Customer satisfaction can be derived from this product (Churchill, Gilbert & Carol (1982;
Oliver, 1993; Homburg & Rudolph, 2001; Westbrook, 1980) which relates to the customer‟s
evaluation of the product performance based on such characteristics as durability, dollar value,
technical sophistication, and ease of use (Homburg & Giering 2001), consumption experience
(Bearden & Teel, 1983) and price (Anderson, 1996). Moreover, customer satisfaction with
salesperson performance has received considerable attention (Sheth, 1973) which relates to the
interaction between the sales personnel and the customer and the ability of the sales
representative to meet a customer‟s unique needs (Homburg. & Giering, 2001). In addition,
service encounter plays a prominent role in customer satisfaction (Suprenant, 1987, Bitner,
1990).
Customer satisfaction is often seen as a the crucial link in establishing long term relationships
(Patterson, 1997; Karna, 2004) and few businesses can survive without establishing solid
relationships with their customers (Morgan & Hunt, 1994 Dwyer, Schurr, & Oh, 1987).
According to Kotler (2006), One key to customer retention is customer satisfaction, a satisfied
customer stays loyal and longer‖ and loyalty drives profitability and growth (Heskett, 1994;
Pugg, 2002). Loyal and satisfied customers are best achieved by loyal and satisfied employees
(Heskett, 1994). It is widely recognized from literature that without satisfied and motivated
employees it is impossible to produce world-class products and impossible to achieve satisfied
and loyal customers (Eskildsen & Dahlgaard, 2000).
Customer satisfaction is the customer‟s feeling of pleasure or displeasure, which results from
comparing a product‟s perceived performance (or outcome) in relation to customer expectations
(Kotler, 2003). This expectation according to David (1999) is formed from past buying
experience, advice of friends and associates and marketers and competitions, information and
promises. Thus, if performance falls short of expectation, the consumer is dissatisfied. If
however, the performance matches expectation, the consumer is satisfied. If the performance
exceeds expectation, the consumer is highly satisfied or delighted (Thomas & Sasser, 2001).
North Western zone of Nigeria comprises of seven states i.e Kano, Kaduna, Katsina, Kebbi,
Jigawa, Sokoto and Zamfara, with a total population of 24,939,821 (NPC 2006), the zone is one
of the largest market of GSM service providers in Nigeria. GSM service providers are taking
advantage of this zone because they are present in the zone and exploring market opportunities
which will increase their market share and profitability. The Researcher has been staying in the
zone for over twenty years now and considering the religious and conservative nature of the
people in the zone, that usually affect their decision, it become very necessary to ascertain the
level of their satisfaction with the GSM service providers.
History was made in the socio-economic life of this country on August 6th, 2001
when Econet Wireless Nigeria, as it was then called (now Airtel) became the first
company to launch commercial GSM services in Nigeria. Other GSM service
providers such as MTN, MTEL and GLOBACOM subsequently followed with the
launch of their services respectively (Ndukwe, 2005). Nigerians were delighted
and full of expectations of a break from the bitter past,with improved services,
business transactions and generally, improved socio-economic well-being.
However, the extent to which these expectations have been met is left to empirical
study like this to unravel. Apparently, it is on the basis of the above understanding
that since the emergence of GSM sector in Nigeria up till date, the operators have
and are still investing huge amount of money on advertising, upgrading of facilities
and coverage expansion to deliver superior quality services to the customers.
1.2 Statement of the Problem
Experts observed that consumers of telecommunication products and services in
Nigeria are quite diverse in their attitudes, tastes, needs and expectations (Ndukwe,
2008). Arguably, these differences explain, in part, the reasons why consumers do
not subscribe to the same networks. In the past few years, consumers of
telecommunication services in Nigeria, as Shehu (2008) acknowledged were the
privileged few endowed with the economic power to enjoy telecommunication
services. This was the period characterized by few but highly expensive available
lines so that the choice of a GSM service provider was apparently, a matter of
having the money and choosing whichever operator was available. However,
analysts and even the most casual observers agree that the situation is quite
different today (Ajayi, 2006). As at now, there are no less than five different GSM
service providers in Nigeria, all of which operate in North Western Nigeria. These
operators also offer varied services and enticements in addition to basic
telecommunication services to attract and keep customers. Thus, consumers have
the opportunity to evaluate, sometimes critically, these varied offerings (Product
development) before selecting a GSM provider (Ajayi, 2006).
GSM service providers charge different tariffs for services offered to their
subscribers depending on the packages a customer subscribes to. For instance,
MTN has packages for tariff ranging from supersaver, mtn zone, family and
friends, beta talk, weekends super talk, free night call, xtra value, awu4u, prestige,
xtra special postpaid, pulse, start pack, diamond yellow, true talk, xtra pro, ipulse
and specific tariff for internet users. GLOBACOM has packages for tariff ranging
from infinito, bounce, overload, twin bash, free night calls and family and friends
and specific charges for data users. ETISALAT has packages for tariff ranging
from easy starta, easy life, easy cliq, easy flexi, talk zone and different charges for
data subscribers. AIRTEL also has packages for tariff ranging from smart value,
smart connect, smart talk, smart trybe, smart trybe junior, premier and each data
user are charges differently. On each of the these packages, the charges for calls,
messages, and internet services differ. There is no permanent package on any
network. New packages are designed almost on a monthly basis which makes tariff
charges by service providers more competitive and these forces down tariff
charged. The flexibility of tariff charges by service providers due to competitive
market could have effect on customer satisfaction and the performance of GSM
service providers. Based on the foregoing, it becomes necessary to carry out this
study.
GSM Service providers have been trying to make network coverage available in
every part of the Country. It is in the light of this that they keep investing in the
state of the art technology by installation of max antenna, laying underground
cables, hiring and training of personnel to make services available always. This is
the reason why one network will be available in a certain area and another will not.
Availability of network is what will determine subscription to certain service
providers; availability of network signals the performance of the GSM service
providers as a result, ascertaining whether or not the network is available becomes
necessary, hence, the need for this study.
Customer care services are channels by which GSM operators received complaints,
suggestions and feedback from their customers. Based on this, improvement,
amendments, clarifications can be made concerning the services offered. In the
light of above, GSM operators keep training their staff in the units on how to
properly address problems, complaints, suggestions arising from customers. They
open more centers and create more avenues like toll free lines, websites, and
others. Despite these aforementioned performances, experts observed that a lot still
needs to be done. It was on that basis that this research was carried out.
Due to developments in technology, globalization has made product development
one of the rapidly growing affairs for competing firms. As manufacturers of phone
devices introduce the latest to the market, it becomes necessary for service
providers to acquaint themselves with these innovations, so that facilities available
in the new products can be harmonized with services rendered. In this view, today
phones perform different functions aside making calls, and sending text messages
that had been from the initial stage. Some phones come with added conveniences
that enhance financial transactions, E-Commerce and different social media like
twitter, facebook, 2go, and whatsapp which aids service of marketers, journalist,
and others. These widen the functions of GSM operators and create more profits
for the companies. Again the study becomes fundamental due to changing space of
technology and in turn varieties of products which require identification of target
subscribers.
Quality of service is key to customer satisfaction. Over the years, there have been
bitter complaints from customers of GSM companies, as acknowledged by experts,
on the poor quality of services rendered by GSM operators ranging from call
drops, call diversion, messages diversion, call interruption, and access to internet.
The companies have been promising through different mediums to improve on the
quality of services rendered, some providers have tried while others are still
battling with this menace. Quality of service is a continual operation or activities;
as a result an improved quality of service today may suffer downgrade in few
weeks or months. As a result of this fluctuation in quality of GSM services, it was
necessary to conduct a survey that will reveal the situation of quality of service.
Despite attempts by the GSM operators to woo customers in Nigeria, problems
still linger such as: complicated tariffs, lower customer satisfaction, inefficient
service delivery, interconnectivity problem, deceptive promotions, unsolicited
promotions, unsolicited short messages (SMS), call drops, and unfairly and
unjustifiable billings. These are performance indicators. Therefore, the GSM
providers in Nigeria are faced with the challenges of demonstrating customerfocused and continuous service improvement, as a way to ensuring customer
satisfaction, brand supremacy and ultimately customer loyalty (Hashim, 2014).
Despite the high growth market of cellular phone communication, the research in
customer satisfaction is still in its initial stages (Aydin & Özer, 2006; Sharma &
Ojha, 2004; Woo & Fock, 1999). A survey of cellular phone customers in Hong
Kong revealed that transmission quality and coverage of network are most
important (Woo & Fock, 1999). Others have examined the link between loyalty,
switching cost and switching behaviour (Aydin & Özer, 2006; Lee & Feick, 2001).
An exploratory study of factors contributing to customer satisfaction of mobile
user in India has resulted in the construction of three distinct constituents i.e.,
network base service performance, retailer related process performance, and
network operator related performance (Sharma & Ojha, 2004). Delivering a service
performance, which can satisfy customers, is critical for retaining customers and a
tool to protect organizations from customer churn (Brown & Gulycz, 2001).
Marketing scholars and practitioners equally emphasize on the issue of customer
satisfaction for generating loyalty among customers, which helps in maintaining
existing cash flows and guarantee stable future (Teas, 1994; Zeithaml et al., 1996).
Hashed, Salniza and Hamid (2012) examined the relationship between perceived
quality, perceived value, customer expectation and corporate image and discovered
that there is significant relationships. Loke etal (2011) examines the impacts of
reliability responsiveness, assurance emphathy and tangible aspects on customer
satisfaction. The study revealed that these variables impact positively on the
quality of services. Cengiz and Yayla (2000) tested the relationship between
marketing mix, perceived value, perceived quality, customer satisfaction and
customer loyalty. Marketing mix elements were found to have a significant effect
on customer loyalty especially price.
As stated above, these studies were particularly conducted in countries such as
Europe, Asia and America. The cultures and the advanced levels of technology in
these areas might have played a crucial role in the findings of the studies in these
countries. Hence, there is need for this study in a developing country like Nigeria
and particularly North Western zone, Nigeria.
Study by Amusa (2005) on Consumer Behavior in the GSM market using
University of Ibadan and the Polytechnic as a case study, examined the factors
affecting consumer behaviour in the GSM market and the factors that account for
the demand and use of GSM facilities. In another study, Ojo (2005), considered
Consumer Satisfaction in the GSM Industry in Nigeria and the various constraints
against users satisfaction. Olatokun and Bodunwa (2006), in a related study,
carried out a survey on GSM uses and benefits in University of Ibadan. Olatokun
and Nwonne (2012) examined the significance of price, service quality, service
availability, promotion and brand image as it affect users perception in selecting
mobile telecommunication market. Hashim (2014) identified the determinants of
customer loyalty among subscribers of GSM in Northwestern Nigeria. Oyeniyi and
Abiodun (2010) examined switching cost and customer loyalty in the Nigerian
mobile phone market. The study revealed that customer satisfaction positively
affects customer retention and that switching cost affects significantly the level of
customer retention.
Adegoke et al (2008) appraised the performance of GSM operators in Nigeria and
discovered that as revolutionary as GSM may seem to be, many problems have
bedeviled the sector. The problems identified were instability in power supply,
security of infrastructure, menace of social miscreants in host communities,
multiple regulations and taxation as well as inter-network connectivity. They stated
that all these factors contribute in one way or the other to the quality of services
rendered by GSM operators in Nigeria.
None of these studies addressed the performance of GSM service providers and
customer satisfaction. Moreover, many of these studies were conducted in the
Southern zones covering only a particular state or an institution such as Lagos,
Ibadan, University of Ibadan, Ibadan Polytechnic, Banks and Hotels. The findings
from these studies, therefore, cannot be generalized; hence, the need for this study
in North Western zone.
Some of the few studies that have made attempt in the direction of this study were
the works of Hashim (2014), Adeiza (2005. 2010), Jibrin and Ahmad (2014),
Olatokun and Nwonne (2012), and Adeleke and Aminu, (2012). These works had
methodological problems: some concentrated in only one State or institution, while
some dealt with isolated variable indicators. They also used small sample sizes
selected from narrowly defined populations and, moreover, they failed to integrate
the various independent variable sets. As a result, the findings and conclusions of
the studies have limited relevance for broad generalizations. Therefore, this work is
designed to overcome such deficiencies found in previous studies within the
Nigerian context.
Historical experience of Nigeria since the launch of Econet Wireless Mobile (now
Airtel) on August 6th, 2001 has been explosive. The trend has continued with
much flux from which the big four (MTN, AIRTEL, GLOBACOM and
ETISALAT) now dominate the GSM world in Nigeria. Whether these moguls are
meeting the challenges of customer expectations has continued to draw
researchers‟ interest and civil society. Apparently, it is on the basis of the above
understanding that we also embarked on our study.
1.3 Research Questions
The following research questions were designed to guide the conduct of the study;
i. To what extent has tariff charged by GSM service providers affect
customers‟ satisfaction?
ii. To what extent has network [coverage] by GSM service providers affect
customers‟ satisfaction?
iii. To what extent has customer care services provided by GSM service
providers affect customers‟ satisfaction?
iv. What is the effect of service quality on customer satisfaction of GSM
services?
v. What is the effect of product development by GSM service providers on
customer satisfaction?