Chapter 2- Review of Literature

Review of literature is a systematic search of existing facts on a particular topic. It is very useful
to know what has happening and what has been found out on the topic and to decide what should
be found out in future research. In this review, we provide a framework for establishing the
importance of our study as well as a benchmark for comparing results with other findings.
2.1 Literature Review
Kotler & keller, (2006) hold that companies recognize the importance of satisfying and retaining
customers. To them, the following are interesting facts about customer retention, acquiring new
customers can cost five times more than the cost involved in satisfying and retaining current
customers, the average company loses 10 percent of its customers each year, and the customer
profit rate tends to increase over the life of retained customers.
The need for customer loyalty in business has been recognized by many scholars. Customer
loyalty is one of the most frequently discussed subjects in the marketing and service literature
(Eshghi et al., 2007; (hasket & sasser, (2010) There is a plethora of definitions of loyalty and/or
customer loyalty in the extant literature. Customer loyalty is customer repeating purchase
intention to some specific products or services in the future (Jones et al., 1995). It is making
customers feel committed: When the benefits are meaningful to them, they will stay on
(Grossman, 1998). Customer loyalty is one of the key factors and can help a company achieve
long-term success (Andres, 2007). Ndubisi (2005) and Pfeifer (2005) point out that the cost of
serving a loyal customer is five or six times less than a new customer. Walsh et al.(2005) state
that it is better to look after the existing customer before acquiring new customers. From the
above, it is evident that a mobile telecom firm that promotes customer loyalty has a lot to benefit
from.
Basically, customers are assets that need to be acquired before they can be managed for profit.
More importantly, organizations go out of business when they lose consumers. That is why
efforts are being made towards retaining the customers of an organization ,barak, (2010).
According to the Information, Telecoms and Media (2010), the telecommunications industry is at
a point marked by saturation, competition, stagnant revenue growth, increasing customer care
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Chapter 2- Review of Literature

and subscriber acquisition costs. As such, the ability to retain an existing customer has become
critical to revenue mobilization. Mobile operators have appreciated that the cost of acquiring a
new customer is incrementally greater than the cost of retaining an existing one. The findings of
the research can be used by service providers in building relationship with corporate customers
and in designing loyalty programmes. Airtel would adopt the findings to have competitive
advantage over its rivals in the industry. Understanding, managing, growing and retaining its
customers are some of the key initiatives critical for their success in the coming years. Customer
retention is an important objective in competitive and mature markets. According to (dawkings,
2013), customer loyalty and customer satisfaction are integral parts of customer retention
process. (dawkings, 2013) pointed out that focusing efforts on retaining customers must be done
in the context of customer experience. They suggested that, to win or retain customers,
organizations should identify potential defectors, communicate with customers, listen to front
line people, treat valuable customers well, be fair and win the right customers back. Furthermore,
the greater the experience a customer has with a service provider the greater the chances of
meeting his expectations in perceived values, hence his retention. Service quality is also
considered a major determinant in customer retention and building value relationship (Venetis
and Ghauri, 2004). An organizations ability to remain in business is a function of its
competitiveness and its ability to win customers from the competition. Customer loyalty is
viewed as the strength of the relationship between an individuals relative attitude and repeat
patronage. The relationship is seen as a Cognitive, affective, and co-native antecedents of relative
attitude are identified as contributing to loyalty, along with motivational, perceptual, and
behavioral consequences (Dick and Basu, 1994). Behavioral loyalty is defined as the consumers
tendency to repurchase which is revealed through behavior that is measured and directly impacts
brand sales ,digbasu, (2008). A repurchase pattern is determined as actual purchase frequency as
the proportion of occasions in which a specific brand is purchased as compared to the total
number of purchased brands and/or the actual amount of purchase. Earlier loyalty researchers
have simply measured behavioral variables to predict the customers purchasing behavior in the
future (Beck and Parks, 2003). Behavioral loyalty focuses on realistic data, which can facilitate
calculation of customer life-time value, and assist in developing cost-effective marketing
strategies while attitudinal loyalty emphasizes the importance of understanding why customers
buy (OMally, 1998). Behavioral loyalty is the consequence of prior behavior and observed
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Chapter 2- Review of Literature

market share (Olshavsky and Granbois, 1979). Measuring only behavioral aspects of loyalty may
overestimate true loyalty between intentionally loyal and spuriously loyal customers (Day, 1969;
Prichard, Howard, and Havitz, 1992). Customer loyalty and satisfaction are integral part of
customer retention process. Customer Retention is a primary measure of loyalty. There is a
positive relationship between changes in satisfaction and share of wallet. In particular, the initial
satisfaction level and the conditional percentage of change in satisfaction significantly
correspond to changes in share of wallet. This is basically based on the two variables that is
customer retention factors and customer loyalty in taking the decisions regarding to the subject.
It is not guaranteed that every customer retained, generates contribution. Therefore the concept
of Customer lifetime Value plays an important role. According to them they want to exceed
customer satisfaction but there are still required if the company seeks the delight customer. As far
as concern services quality is considered as a major determinant in customer retention and
building value relationship. (ghari, 2013) The quality of the service has various elements namely:
a) Reliability, b) Responsiveness, c) Assurance, d) Empathy, and e) Tangibles as identified by
Parasuraman et al. (1985). According to huber 2005) Customer Experience Management (CEM)
-helps to satisfy customer needs, increase customer retention and optimize business performance
and profitability. Strategic CEM uses customer feedback to prioritize actions and improve
processes, so as to optimize overall business performance by developing better customer-centric
strategies.
One of the most important factor in analysis Analysis of data is a general ways involves a
number of closely related operations, which are performed, with the purpose of summarizing the
collected data, organizing these in such a manner that they answer the research questions
(Kothari, C.R.1990). In this chapter, the data collected were systemically processed, tabulated
and made suitable for analysis and interpretations. Gender differentiation is also an important
deciding factor of the goods and services for gender distinguished goods and services. For
example, products of shaving sets such as razor, cream and brush, are meant for males only.
Likewise, lipsticks, nail polish etc., are especially for females. In these goods, the gender
distinguishing feature is meaningless. But, in the case of common goods and services, the gender
takes a deciding role in peculiar situations. In the case of landline connection, the role of gender
can be studied. Age is an important attribute to fix the consumer decisions and it plays a role in
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Chapter 2- Review of Literature

decisive status in the case of consumer goods. The landline was the only telecom service in the
days of youngster years of them. As no any other telecom device was in vogue, the landline had
been their choice for oral communication in those days. The present old generation had landline
telephone in their young ages and it implies that there was no other means of telecom service
except the landline service. Marital status of consumers is one of the factors that decides
purchase or non-purchase of the goods and services in selected cases. In the case of telecom
service, it is a common service required for all the persons irrespective of the marital status.
Companies can achieve better retention rates, reduce acquisition costs and boost market share by
addressing the root causes of customer attrition and applying targeted treatment strategies that
involve all service channels and functions in an end-to-end effort to improve the customer
experience. Todays customers want it allcompetitive pricing, value for money, and above all,
high quality service. Whats more, they wont hesitate to switch providers if they dont find what
theyre looking for. Even in industries where satisfaction is relatively high, loyalty levels are
declining. And thanks to social mediathe ultimate in word-of-mouth communication
individual switching decisions can have rapid and widespread consequences. Accentures most
recent global research exposes the scale of the challenge. Despite a small overall decline in
switching levels, two in three customers have changed providers in the past year in at least one of
the industries covered in the research because of dissatisfaction with service. Retention strategies
based on customer value and profitability are critical to successhence the importance of
analytics. By leveraging a diversity of data demographic and behavioral (products, usage,
interaction), as well as value-relatedretention analytics can predict just when and why
customers are likely to churn. They determine the customers' value to the company in terms of
both current and future revenue and profitability, as well as their influence on other customers.
They also infer the drivers of churn by using multi-dimensional analysis in novel ways.
Correlating churn with the interactions a customer has had with the company can trigger
retention treatments, as well as identifying areas where the customer experience needs to be
improved. This may sound straightforward, but it requires the ability to build a service
interaction history across all interaction channels retail, contact centers, Web and Integrated
Voice Response (IVR) systems.

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Chapter 2- Review of Literature

Coyne (1989) states that customer satisfaction has measurable impact on customer retention, in
that, when satisfaction reaches a certain level, on the high side, loyalty increases dramatically; at
the same time, when satisfaction falls to a certain point, loyalty reduces equally dramatically.
Payne and Frow (2005) stated that organizations are increasingly recognizing that enhanced
customer satisfaction leads to better customer retention and profitability. Many organizations are
now reviewing their customer service strategies to find ways to boost retention rates as a means
of improving their business performance. Often, this entails a fundamental shift in business
emphasis from customer acquisition to customer retention. While staff and management commit
to focusing specific efforts on retaining customers, it must be done in the context of the overall
customer experience. Thus, Dawkins and payne & frow, (2005) stated that in order to win or
retain customers as a strategic business objective, one has to listen to front-line people, identify
potential defectors, communicate with known customers, treat valuable customers well, be fair
(even when one does not have to) and win the right customers back. The power of attitudinal
loyalty predicting future purchase behavior and providing sufficient explanation of true
customer loyalty has fallen short (Kraus, 1995; Li and Petrick, 2008, Opermann, 1999) because
the attitude-based loyalty framework limits the operationalization of dynamic relationships
between customers and providers (Fournier, 1998). Managers appear to rely more heavily on
customers actual repeat behavior rather than attitudinal loyalty for more realistic status of
business performance for estimating customer life-time value and developing cost-related
strategies. Price is the amount of money charged for a product or service, or the sum of the
values that customers exchange for the benefits of having or using the product or service (Kotler
&Armstrong, 2010). Nowadays, due to breathtaking competition, the telecommunication service
providers tend to offer innovative services as well as competitive prices just to attract handful
magnitude of customers (Haquea et al.,2011). Price plays a vital role in telecommunication
market especially for the mobile telecommunication service providers. Customer service is one
of the most important considerations in the evaluation of a supplier (Jackson et al.,1985) and the
effectiveness of the level of customer service will enhance customer retention and reduce
switching between and among service providers (Oyeniyi & Joachim, 2008; McDougall &
Levesque, 2000; Wang & Shiek, 2006). Bharti: Telecom giant Bharti Airtel is the flagship
company of Bharti enterprises. Bharti Airtel, formerly known as Bharti Tele-Ventures Limited
(BTVL) is Indias largest mobile service provider. It was founded in 1985. Airtel is the largest
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Chapter 2- Review of Literature

mobile service provider in India in terms of number of subscribers. It also offers fixed line
services and broadband services. It has shown its presence in all f circles of the country. Bharti
Airtel since its inception has been at the forefront of technology and has steered the course of
the telecom sector in the country with its world class products and services. Switching cost had
been investigated extensively in literature. It is argued that switching is related to poor service
quality in banks (Benkenstein and Stuhlreier, 2004); reaction to high price (Gerrard and
Cunnininggham, 2004); and customer satisfaction (Bowen and Chen, 2001).Some other
researchers, however, had different argument. There is an argument in literature of the benefits
of switching cost to prevent consumers from switching service providers (Ganesh, Arnold and
Reynolds, 2000; Keaveney and Parthasarathy, 2001). In terms of classification, Burnham, Frels
and Mahajan (2003), classified switching cost as procedural switching costs, financial switching
costs, and relational switching costs. These costs were found to be negatively correlated to
consumers intention to switch service providers. Klemperer (1995) developed three types of
switching cost: artificial cost, learning cost and transaction cost. In utility, however the most
appropriate cost is the transaction cost. A consumer must be aware that he can switch service
providers before he takes steps. The next step is to decide whether to search and then whether to
switch.
The effect of customers defection or switching could be significant on revenues and service
continuity. Therefore, to reduce the level of customers switching to other service providers in a
dynamic competitive environment, service providers develop strategies to respond to consumers.
Keeping customers can be challenging but as markets mature, successful retention strategies
are becoming an increasingly essential element of competitive advantage for many different
industries. Accenture experience shows, moreover, that such strategies can be developed. They
hinge, crucially, on really understanding what motivates different customers to churna
capability dependent on sophisticated analytics. They also require the support of senior
leadership, strong governance and the commitment to build a whole new set of capabilities that
accelerate speed to market, maximize campaign return while minimizing risk and ensure the
right experience for the right customer. Equipped with an end-to-end operating model that
optimizes customer interactions across all channels, companies can ensure delivery of a better
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Chapter 2- Review of Literature

experience for all their customers. There exists an interaction between the desired results and
customer satisfaction, customer loyalty and customer retention. They may go by other names
such as patients, clients, buyers, etc. without the customer it is impossible for any business to
sustain itself. Achieving the desired results is frequently a result of customer actions. Any
business without a focus on customer satisfaction is at the mercy of the market. Without loyal
customers eventually a competitor will satisfy those desires and your customer retention rate will
decrease.
Dissatisfied customer Looking for someone else to provide product or service
Satisfied customer Open to the new better opportunity
Loyal customer Returns despite offers by the competition

One of the ways to help obtain loyal customers is by having products and services that there is
very little chance that the customer requirements will not be met and make them delightful. Of
course one of the difficult is, understanding the true customer requirements. Even when you have
the requirements in advance the customer can and will change them without notice or excuse.
Having a good recovery process for a dissatisfied customer is a necessity. The customer rate
quality of the service as the most relevant one and hence Airtel Broadband services should
maintain the quality in services and should make improvements in this feature. Some customers
are planned to discontinue because of high billing and after sales service is not good. Though it is
a small percentage the company should focus on these to keep the brand image in the minds of
people. If any complaint is observed from the customers, it should be dealt quickly. This will
reduce the chance for dissatisfaction. Many dissatisfied customers asked for more information
about other plans or change of plans. So the dissatisfaction may be due to providing wrong plans
by the sales persons. So the company can make use of this opportunity to retain its customers by
providing the right plans. The study revealed the picture of customers retention and loyalty
which help Airtel broadband to encourage more people to be the customers/consumers of Airtel
landlines.

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Chapter 2- Review of Literature

Blumberg and Luke (2008) did not address the question of whether respondents with both a
landline and a cell phone are likely to behave differently from those with either only a landline or
only a cell phone. A difference is expected because, for instance, those reached on a cell phone
who also have a landline differ demographically from those reached on a landline. This suggests
that the influence of cell phones may not be simply a non coverage issue, but also a non response
issue since frequent use of a cell phone may result in a decreased likelihood of answering a
landline. There are also respondents who will answer a landline but have a cell phone for outgoing calls only and respondents who share a cell phone. Because of these issues, an analysis of
the impact of cell phones needs to take into consideration the respondents relative use of their
cell phone and landline. Not only might the type of person that owns a cell phone be different
than those who do not, but the use of the cell phone may also influence the attitudes and
behaviors of the owner. Rich Ling discusses the impact of cell phones on society. One of his
conclusions is that having a cell phone increases communication with the intimate sphere of
friends and family at the expense of speaking to strangers. Cell phones also allow instant
communication with others through both talk and text, which may lead to a greater expectation
of quick satisfaction of needs. These effects would theoretically be felt by all who use a cell
phone for more than emergency purposes and should be greater in those who use their cell phone
more often. This again stresses the importance of including the relative use of cell phones into
the analysis.
A study done by The Pew Research Center reported that those with lower incomes are less likely
to own a landline telephone and more likely to be cell-only. They found that 29 percent of those
reached on a landline reported an income above $75,000 compared to 16 percent of cell-only
respondents, and 21 percent of landline users reporting an income less than $30,000 compared to
41 percent of those with only a cell phone.
Cooil et al., (2007) Customer loyalty and satisfaction are integral part of customer retention
process. Customer Retention is a primary measure of loyalty. There is a positive relationship
between changes in satisfaction and share of wallet. In particular, the initial satisfaction level and
the conditional percentage of change in satisfaction significantly correspond to changes in share
of wallet. Income and length of the relationship negatively moderate this relationship Loyalty
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Chapter 2- Review of Literature

and retention although positively moderate with share of wallet it is necessary to examine the
cost of maintaining the particular customer. It is not guaranteed that every customer retention
generates contribution. Therefore the concept of Customer lifetime Value (CLV) plays an
important role. In creating loyalty and thereby CLV, it would be prudent to explore qualities of
loyalty.
Rundel Thiele, (2005) Two types of primary loyalty qualities had been identified in the previous
researches, i.e. Attitudinal Loyalty and Behavioral Loyalty, out of which attitudinal loyalty could
be the most important dimension for marketers to monitor.
Richard Lee, Jamie Murphy, University of Western Australia (2005), their study investigates
determinants that cause landline phone Customers to transit from being loyal to switching. It
concluded that there are different factors which affect the Customers to switch from loyalty to
switching intentions such as price, technical service quality, Functional service quality, switching
costs, etc. But, the rating was given that price is the most important factor which affects the
Customers to switch loyalties to another provider.
Mohammed Sohel Islam (2008), in his study examined the relationship between switching cost,
corporate image, trust and Customer loyalty. The research finds that although all the independent
variables, switching cost, corporate image, and trust have certain degree of relationship with the
dependent variable, Customer loyalty, only trust has the strongest relationship with Customer
loyalty.
Leonard Waverman, et al (2003) investigated into telecom sector and the authors find that mobile
phones in less developed economies are playing the same crucial role that fixed telephony played
in the richer economies in the 1970s and 1980s. Mobile phones substitute for fixed lines in poor
countries, but complement fixed lines in rich countries, implying that they have a stronger
growth impact in poor countries. Many countries with under-developed fixed-line networks have
achieved rapid mobile telephony growth with much less investment than fixed-line networks
would have needed. The research also provides new estimates of demand elasticitys in
developing countries we find both the ownprice and income elasticitys of mobile phone
demand to be significantly above That is, demand increases much more than in proportion to
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Chapter 2- Review of Literature

either increases in income or reductions in price. They also suggest that mobile phones are
substitutes for fixed-line phones.
As the competition in the telecom industry increases day by day, it reduces the revenues and
profits of these industries and it becomes very difficult for them to sustain in this environment.
There are some factors that influence the word of mouth which has an impact on the switching
behavior of people from one service provider to other service providers. They are customer
value, customer satisfaction, switching barriers and customer loyalty. Some studies stated that
mobile data services have become new opportunities for the service providers. They fulfils
several needs of the people like critical needs, decision needs, entertainment needs etc. (Anckar ,
& Incau, 2005).
Customer value defines in terms of benefits gained by the customers from the product or service
on the basis of quality, money, benefit received or social psychology etc. (Feng, Ming, Deng &
Jaw, 2009).
Customer satisfaction can be defined by two perspectives named transaction perspective and
cumulative perspective (Kuo Ying-Feng, Wu Chi-Ming, Deng Wei-Jaw, 2009). The first
perspective indicates evaluation on recent purchase experiences (Boulding, W., Kalra, A.,
Richard, S., & Zeithaml, V. A., 1993) and the second perspective indicates evaluation on all
purchase experiences (Fornell, Claes, Michael D. Johnson, Eugene W. Anderson, Jaesung Cha,
and Barbara Everitt Bryant, 1996).
Customer Loyalty refers to the commitment of the people towards the particular product or
service to repurchase that product or service in the future (Oliver. Whence Consumer Loyalty?
1999).

So if the telecom industry wants the retention of their customers towards their brands they have
to track the values of their customers because customer value has a highest effect on the loyalty
of the customer. Also there are two most important factors that effects the customer value and
they are perceived sacrifice and service quality. Therefore for customer retention reducing
customer sacrifice and improving the service quality is very essential.
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Chapter 2- Review of Literature

Some other studies stated that people spread both positive and negative word of mouth. They
have several ways now- a- days to communicate positive and negative information and opinion
to customers about different service providers. (Elliot & Warfield, 1993; Feick & Price, 1987;
Walsh and Mitchell, 2001; Williams and Slama, 1995) stated in the research paper An
investigation of negative word-of-mouth communication among market mavens that customers
are influential and knowledgeable to buy different service providers. The research also suggested
that buyers brand evaluations are greater affected by the negative word of mouth than positive
word of mouth (Arndt, 1967; Mizerski, 1982; Richins, 1983, 1987; Wright, 1974). Studies also
indicate that people spread negative word of mouth twice times more than people spread positive
word of mouth who are satisfied with the service providers (Hart et al., 1990; Kotler & Keller,
2006; Richins, 1987).
As people spread negative word of mouth more increasingly than negative word of mouth so to
reduce this threat they have to proactively disseminate the positive word of mouth or they have
to quickly address any negative consumer concerns. Thus, it is important for the firms to prevent
the occurrence of negative word of negative word of mouth rather than to stop the negative word
of mouth. The customer switching behavior is greatly affected by the negative word of mouth so
if the firms are not able to prevent the negative word of mouth they have to bear loss as they are
not able to gain profits from the customers because of their switching behavior from one service
provider to other service provider.
Also some of the telecom service providers are not able to provide after sales service to their
customers and are unable to handle the complaints of their buyers. This is also the main reason of
the switching behavior of people from one service provider to other. The telecom industries can
prevent the negative word of mouth by making online and offline open and honest
communications with the people. The industries have the chance to convert their losses into their
assets by viewing their complaints as opportunities. Using various media the firms can target the
customers by spreading the positive word of mouth. Viral marketing can be used to encourage
the customers to use the service providers by the firms to improve their sales and profits and
prevent from the switching behavior of customers.

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Chapter 2- Review of Literature

Sweeney & Swait (2008) in his studies in the research paper A Study on airtel Brand Credibility
on landlines phones With Reference to Internet Service Providers in india has stated that in this
competitive market that to survive in this competition customer attraction towards the service
provider and retention towards that brand is necessary. Service industries have to take care of
both customer satisfaction and customer retention which affects the word of mouth. For retaining
the customers towards their service providers brand credibility plays a very important role. This
study revealed that brand credibility have a positive influence on word of mouth through
customer loyalty and satisfaction. Therefore more and more telecom service provider tries to
attract more and more customers towards their brands.
Heskett, Jones, Loveman, and Sasser (1994) in his studies said that focus on technology and
frontline staff is more important in the economics than to attract the customers. Customer
satisfaction and loyalty is influenced by the products and services offered by the telecom service
providers. Now-a-days customers are more attracted towards vast brand and names so the
telecom industries that have more reputation in the market are gaining the advantage of this and
are able to attract more and more customers. It also depends on the priorities of the customers to
which telecom companies they give priorities to purchase the products and services. In todays
scenario the industries are trying to build a global market and high speed system for offering the
products and services to customers that guides to generate a competitive market for companies
both internationally and domestically.
Scholars said that to retain customer is less costly then to attract customers as a huge cost is
involved in attracting the customers through advertising and promotion activities. If the telecom
industry is able to identify the needs, wants and desires of the customers they become able to
retain their customers and if the customers are satisfied with that service provider they do not
switch from that service provider to other service provider. As all the people have their own
perceptions which are different from each other therefore the industries have to understand the
behavior of every person.
Ganeshan Malathi and N.M. Selvaraj (2005) studied the choice of brands among consumers and
reasons for the same and studied the problems faced by the respondents with respect to mobile
services. The study revealed that 90 per cent of cell phone users were male, 73 per cent of the
respondents were satisfied with the mobile services, 30 per cent of the respondents opines that
billing pattern offered by the service provider was good, 44 per cent of the respondents are
23

Chapter 2- Review of Literature

motivated by their friends to avail the mobile services, 40 per cent of the respondents agreed that
cell phone was a cheaper mode of communication.

Yavas, Benkenstein, & Stuhldreier (2004) assert that poor service quality is the root cause of
bank switching, whereas Gerrard and Cunningham (2004) maintain that price is more influential
than service quality when switching banks. Similarly, some studies suggest that customer
satisfaction is an important antecedent of loyalty (Bowen and Chen, 2001; B. Mittal and Lassar,
1998), whereas others oppose this sanguine view (Gerpott, Rams and Schindler, 2001; Mazursky,
LaBarbera and Aiello, 1987).
(Anderson, 1973) Based on the assimilation-contrast theory (Sherif and Hovland, 1961),
consumers have a zone of indifference and tolerate substandard performance provided actual
performance meets a minimum threshold Thus, changes in the determinants may cause switching
once they breach this zone.
(Haquea et al.,2011) Price is the amount of money charged for a product or service, or the sum
of the values that customers exchange for the benefits of having or using the product or service
Nowadays, due to breathtaking competition, the telecommunication service providers tend to
offer innovative services as well as competitive prices just to attract handful magnitude of
customers Price plays a vital role in telecommunication market especially for the mobile
telecommunication service providers.
(Jackson et al.,1985) Customer service is a system of activities that comprises customer support
systems, complaint processing, speed of complaint processing, ease of reporting complaint and
friendliness when reporting complaint. Customer service is one of the most important
considerations in the evaluation of a supplier and the effectiveness of the level of customer
service will enhance customer retention and reduce switching between and among service
providers.

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Chapter 2- Review of Literature

(Smith & Taylor, 2004) It is external perception of all human and physical resources of an
organization, especially characteristics as employees behaviors, attitudes, communication levels,
and clothing (Pampaloni, 2006). Empirical findings have also shown the relationship between
brand image and customer satisfaction and loyalty. Groholdt et al.,(2000) reported that
corporate/brand image is an important driver of customer satisfaction and loyalty in the
industries of soft drinks, banking and telecommunications. Liu (2008) stated that corporate/brand
image has a significant impression on services quality, customer value, customer satisfaction and
customer loyalty in the Chinese telecommunication market.
Harris (2003) sees customer service as anything that enhances the customers experience of a
purchase interaction. Harris added that the ultimate goal of customer service is to achieve
customer satisfaction by meeting customers expectations. Thus, we can say that customer
service is about customer satisfaction. For companies providing pure services/care such as
mobile communications, this indicates the need to achieve excellence in customer satisfaction
regarding both product quality (quality of physical products such as mobile phone handsets,
modems, etc) and the quality of associated sales and after-sales services.
According to Adebayo (2008), in Nigeria, acquiring a new customer can cost 6 to 7 times more
than retaining an existing customer. Happy subscribers reward companies for their emphasis on
service with repeat purchases. When operators make it easy for subscribers in terms of access to
good quality service and prompt complaint resolution, they tend to spend more on the airtime of
that network.
Mitja Pirc, Universitat Pompeu Fabra(2006), Spain, the Mobile telecommunications service
sector, in spite of providing high service quality and striving for Customer satisfaction, is
characterized by dynamic Customer activities and provider switching. By using the consumption
system perspective on mobile services and mobile phone, he provides the explanation on the
factors of Customer switching. It is found that the mobile services usage effect on switching
intentions is curvilinear (positive linear and negative quadratic) and that only the budgetary
constraint regarding the service matters and not the one related to the mobile phone. Past mobile
service providers switching experience also contributes to the intention to switch. Mobile phone

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Chapter 2- Review of Literature

ego involvement has positive impact on Customer retention; however purchase involvement
(both mobile phone and mobile services) increases Customer risk.
Conor Twomey (2008), Department of Statistics, University College Cork, Ireland, they try to
identify hysteresis in the switching patterns of Customers in the Irish mobile phone industry. It
was not until the introduction by the Communication Regulator of full-number portability that
Customers began to take advantage of the savings that switching mobile phone operator could
produce. Through the use of experimental economics and by modelling switching behaviour
using the Preisach model, along with observed and market data suggests that the average
Customer is misguided and misinformed in his/her decision to switch to bill pay. More
realistically though, one can attribute this unexpected result to the enhanced services and mobile
phone subsidies that a Customer receives as a bill-pay Customer.

26