Switching intentions of mobile prepaid telecommunication customers in South Africa

Abstract

The South African prepaid mobile telecommunications market has become increasingly competitive, with the late entrants to the market viz. Cell C and Telkom Mobile resorting to price as a weapon to differentiate themselves. This has led to the incumbents i.e. Vodacom and MTN to (reluctantly) join in the price war thereby triggering a dynamic competitive landscape that is characterised by high levels of churn. The incumbents’ appetite to join the price war is suspicious, it suggests that these service providers are not conscious to the comprehensive factors behind the mobile prepaid customers’ desire to switch between competitors, they seem to perceive price as the only trigger. A self-administered quantitative study comprising of both online and offline surveys was conducted to understand the underlying factors and variables behind the mobile prepaid customers’ switching intension in South Africa. The study employed the PPM (Push-Pull-Mooring) framework, which Bansal et al. (2005) demonstrated its pragmatism, empirical validity and its applicability as a research framework to understand consumer switching intensions and behaviour. The results of the study indicates that perceived poor customer satisfaction and high prices are push factors that have a significant contribution to the mobile network prepaid switching intension. Perceived good competitor reputation and attractive alternatives were found to be salient pull factors of the customer switching intension whilst, switching costs as a mooring effect were not significant to deter customers from switching to an alternative service provider. Managers need to consider developing hybrid plans (between prepaid/postpaid) that supports the average spend per user revealed in this study. Moreover, they need to fully understand the prepaid customer purchase decision journey to tighten the marketing mix of their propositions. Offering low perceived pricing should not be at an expense of their network investment. Relationship building initiatives such as loyalty programs should be developed to build loyalty and deter customers from switching