Factors influencing customer loyalty in the South African mobile phone market.
Date
2014-07-28
Authors
Nkhumeleni, Mpho
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Abstract
ABSTRACT
The competition in mobile phone market in South Africa has become fierce and all
mobile operators have realised that they need to protect their existing customer
base. Industry revenue grew at an average of 40% in the beginning of the last
decade compared to 4% at the end of the decade. Customer churn to other
technologies such as Internet Protocol Systems threatens the existence of mobile
phone service providers. These technologies offer voice and/or video
communication markets (e.g. Skype) using fixed line phones. It is therefore
important to understand factors that influence customer loyalty in the South
African mobile phone market to eliminate the churn. Mobile phone operators’ tend
to focus on customer lock-in strategies such as bundling of services and devices,
fixed term contracts, and offering of handsets locked to a particular network
(Pynnonen, 2008) rather than customer loyalty. The author is not aware of any
academic study that focused on customer loyalty in the South African mobile
phone market.
Given the nature of the research problem and the purpose of the research, the
most appropriate research method was survey questionnaires that were
administered to a stratified random sample of 107 mobile phone subscribers. The
questionnaire contained various questions and statements that represented
constructs suggested by the literature review. A five-point Likert scale rating and
open-ended questionnaire was used in collecting responses.
The main findings of this study indicated that the South African mobile phone
customers are influenced by seven (7) factors. Factors showed valid internal
reliability with the construct identified in the literature survey. The resulting model
used the F statistic that significantly suggested an overall relationship in the data,
i.e. together these factors have a strong predictive value in Customer Loyalty. The
study concluded that customer satisfaction and trust have a positive effect on
customer loyalty. Corporate image and service quality have a weak influence on
customer loyalty and switching cost demonstrated no positive effect on customer
loyalty. South Africans appear to be more committed to their chosen network
provider and their chosen brand of handset.There is not enough service and product differentiation in the mobile phone
market in South Africa. Better handset deals at the time of acquiring the mobile
phone seems to be what makes customer choose the service provider. Customers
would rather keep to their current service provider as there are no compelling
reasons to switch service provider.
In the long term, the mobile phone service providers should look beyond low rates
when it comes to keeping good customers and encouraging loyalty. They should
focus on the factors that influence customer loyalty as themes of Customer
Relationship Management (CRM). Striving to improve CRM performance will help
to attain a higher level of customer loyalty.
Description
MBA 2012
Keywords
Cell phone services industry, Mobile communication systems, Consumer behavior.