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Transcript of MNP Switchover
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CUSTOMER WILLINGNESS TO USE MOBILE NUMBER PORTABILITY
Introduction
Mobile Number Portability (MNP) is a facility that allows the mobile users to
change their Service provider while retaining their phone number. The retention of
the same number will enable some business customers to maintain their contacts
and flow of business. Also there is a possibility of reduction in prices due to
increased competition. Many studies have shown that change of mobile number
when the service provider is changed is a major barrier and acts as a switching
cost for changing service provider.
With the advent of Mobile number portability, it is important to study what
factors majorly result in the intention to switch the service provider by the
customer. By removing the barrier of change in number, will the consumers be
more inclined to switch service providers or do the switching barriers still remain
high remains to be studied. Similar study was conducted in Korean context and
was found that the customers perceive higher switching barriers even after the
introduction of mobile number portability. This study will be conducted in Indian
context to analyze the effect of Customer satisfaction, switching costs on the
customers intention to switch in the context of mobile number portability.
Mobile number portability in the US and Korean markets: Other Studies
In the US, MNP was introduced nationwide in May 2004[1]. It was observed
that the number of customers who changed their service providers was far less
than expected in the first year of introduction of MNP. It was inferred that this was
due to the positive impact that MNP had on subscribers in terms of increased
retention strategies. It could be said that the switching barriers were not completelyremoved with the advent of MNP. MNP was introduced in Korea in January
2004[2]. It was observed that there was no significant movement in the number of
subscribers after the introduction of MNP, same as in the US. The reasons found
were that Service providers developed customer lock-in strategies thus retaining
the customers and reducing the effect of MNP.
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LITERATURE REVIEW
Customer satisfaction and willingness to switch
Customer Satisfaction was recognized as major outcome of marketing
activity which helps in explaining post purchase phenomenon such as repeat
purchase and brand loyalty. Oliver (1999) defined Customer Satisfaction as the
consumers sense that consumption provides outcomes against a standard of
pleasure versus displeasure. Eshghi, Roy and Ganguli (2008) suggested that
relational quality, competitiveness, reliability, reputation and transmission quality
are significant predictors of customer satisfaction. Aydin and Ozer(2005) defined it
as customers overall (dis)satisfaction with the brand based on all encounters and
experiences with that particular brand. Hence, in the study overall customersatisfaction with the service provider was evaluated instead of consumers specific
transaction experiences. They also suggested that increased customer
satisfaction, increased trust in the firm and switching costs are essential for
customer loyalty. Customer loyalty is a relationship between relative attitude
towards on entity and repeat patronage behavior (Dick and Basu, 1994. Oliver
(1999) suggested that customer satisfaction and Customer Loyalty are linked
inextricably. Harris and Goode (2004) suggested the satisfactions mediating rolein the relation between perceived quality or value and loyalty. Antn, Camarero,
and Carrero (2007) have confirmed that the mediating effect of customer
satisfaction between the predisposing (poor service quality and low firm
commitment) and precipitating factors (price unfairness and anger incidents) of
dissolution and the consumers switching intention. Also, Spiros P. Gounaris,
Nektarios A. Tzempelikos, KalliopiChatzipanagiotou (2007) explained how
customer percieved value influences, through customer satisfaction and loyalty,the buying behaviour of consumers.
Perceived price and customer satisfaction
In our study, the term perceived price is to mean the degree of reasonability
which a customer associates a given price fixed for the usage of the mobile
service, value- added services charges and the monthly rental charges. This is
mainly a perception factor in the consumer mind. We test for the influence of this
factor, the perceived price on the construct of customer satisfaction. Customer
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satisfaction in turn encompasses the comprehensive view of the mobile service
provider in the customer`s mind. While customer satisfaction is contingent on
several factors, herein we explore the effect of the perceived price on the same.
There has been a body of research carried out in the past, in various sectors, on
the influence of this factor on the overall customer satisfaction levels. Carmen
Antn, Carmen Camarero, and MirthaCarrero (2007) found evidence in the
insurance industry that unfair pricing is a determinant to customer satisfaction. In
fact, they have concluded that unfair pricing strongly impacts switching, in a direct
and indirect manner via customer satisfaction.Chada and DeepaKapoor (2009)
have stated that Customer satisfaction in turn affects the price senility of a
customer. EvangeliaBlery, Nick Batistatos et al (2008) conclude that the perceivedprice is negatively affects a repeat purchase of a customer in a negative manner.
Makam S Balaji (2009) examined the effects of various factors, including perceived
price on customer satisfaction in the Indian mobile telephony sphere and found it
to be strongly associated. The findings of Muhammad Mohsin Butt and Ernest
Cyril de Run (2008) show that the satisfaction levels of Pakistani mobile
telephone service users satisfaction is dependent on price, among several other
factors
Perceived service quality and customer satisfaction
Perception of service quality can occur at multiple levels in an organization
1) Corporate service
2) Physical environment
3) Interaction with the service providers
T. Koivuma ki, A. Ristola and M. Kesti(2006) conceptualized that the servicequality depends upon the above mentioned factors. The physical factors involves
the physical product and supports, interactive quality refers to the interaction
between the customer and the service provider, and the corporate quality is
symbolic in nature and involves the perception about the company in the minds of
the customers and its brand image. Service quality is defined as a global
assessment that is the customers overall impression of the relative
inferiority/superiority of the service provider and its services. Further, Rusk and
Zahorik supported the expectation-perception gap for measuring service quality.
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The main antecedents to perceived service quality are the customer expectation
and perceived performance (Bitner and Hubert). Further, Richard Spreng, Linda
Shi,Thomas Page suggested that net Customer Satisfaction has a marginally
higher impact on switching intention than total perceived service quality. Also,
A.Taylor,ThomasL.Baker(1994) concluded that Consumer satisfaction moderates
the relationship between the quality of service and intention to switch. Zhilin
Yang, Robin T. Peterson (2004) found that switching costs moderate the
relationship between satisfaction and perceived value. Next, Hsin-Hui (Sunny) Hu,
Jay Kandampully and Thanika Devi Juwaheer(2009) examined the association
and impact of customer satisfaction and perceived value and found that customer
satisfaction is affected by perceived service quality. Das, BhagabanMohanty,Sangeeta(2007) carried out a study in the Indian context and found that better
perceived service quality leads to increased customer satisfaction.
The importance of service quality in service organizations has been proven as a
critical determinant of competitiveness (Lewis, 1989). However, despite the
increasing importance of the service industry and quality service as a critical
success factor, service quality concepts are not well developed within the service
sector. In the context of this review, it was found that the service sector is stillbehind the manufacturing sector in terms of embracing philosophies such as Total
Quality management (TQM) (Wilkinson, et al 1991).Dale and Cooper (1992)
describes Total Quality Management (TQM) as the involvement of every member
of the organisation co-operating to furnish products and services that meet their
customers needs and expectations. Linking to this, Wilkinson and Witcher (1991)
further state quality in service organisation goes beyond the mere application of
quality management into the whole organisation. Quality becomes the way of lifethat inspires every part of the organisation. Quality is critical for competitive
success. The potential of IT to improve the quality of travel and tourism services is
currently under-exploited (Poon, 1993). However, companies do recognise that
they can develop an effective competitive strategy by lowering distribution costs
and improving the service provided.
Research about the relationship between service quality and profitability
began academically with the Profit Impact of Marketing Strategies (PIMS) cross-
sectional company database (Zeithaml, 2000 p.71). The major benefits of the
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PIMS database are that it allowed researchers to examine the impact of service
quality on financial outcomes after controlling for the effects of other variables such
as price. (Zeithaml, 2000 p.71).One of the major criticisms of PIMS research is
that, perceived service quality is reported from the firms perspective rather than
the customers perspective. (Zeithaml 2000 p.74).Seminal studies using the
PIMS database uncovered significant associations among service quality,
marketing variables, and profitability (Zeithaml 2000 p.74).
First of all, it is important to define what service quality means, because
quality in service industry is different to quality in manufacturing. In manufacturing,
quality means zero defects (Foley et al, 1997). Whereas in service industry,
Cooper et al cited in Baum (2006, p.84) distinguish three characteristics whichseparate tourism as service from manufactured goods: intangibility, perishability
and inseparability (Foley et al, 1997; Williams and Buswell, 2003).Goods are
tangibles whereas services are intangibles (Williams and Buswell, 2003).
Intangibility means that the product cannot be displayed. Perishability signifies that
the service which has not been sold is lost and inseparability involves the
simultaneous production and consumption of the service (Foley et al, 1997, p.6;
Williams and Buswell, 2003; Baum, 2006).It is also necessary to explain the difference between service quality and
customer satisfaction (Gabbott and Hogg, 1997; Johnston and Clark, 2005;
Zeithaml et al, 2006). Satisfaction is the customers evaluation of a product or
service in terms of whether that product or service has met the customers needs
and expectations (Zeithaml et al, 2006, p.110). Furthermore, according to
Zeithaml et al (2006) and Johnston and Clark (2005), customer expectations are
influenced by different factors such as price, customers mood, word-of-mouth,company marketing, past experience as well as personal needs. Nevertheless,
service quality is an element of the customer satisfaction. When customers judge
the quality of service they look at five different dimensions (Zeithaml et al, 2006).
According to Kunst and Lemmink (1997), Parasuraman, Zeithaml and Berry (PZB)
classified ten dimensions in 1985 and, in 1988 they cut down to five: tangibility,
reliability, responsiveness, assurance and empathy (Fitzsimmons and
Fitzsimmons, 2008)
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Moreover, another model contributes to the customers perceptions: the
Grnrooss model. In 1982, he found two dimensions in service quality: technical
and functional quality. The technical quality is what the consumer receives, it can
be measured objectively, whereas, the functional quality is how the technical
elements are transferred, which needs to be measured subjectively (Williams and
Buswell, 2003; Kunst and Lemmink, 1997; Foley et al, 1997).
In addition, service quality and customer satisfaction are not measured in
the same way. As the report noticed above, the customer satisfaction is the
difference between what the customer expects and what the customer perceives.
When this difference is compared, three levels of expectation are identified:
exceptional quality or positive disconfirmation, satisfactory quality or simpleconfirmation and finally, unacceptable quality or negative disconfirmation.
Exceptional quality means that expectations are exceeded; satisfactory quality
signifies that expectations are confirmed and unacceptable quality means that
expectations are not met (Fitzsimmons and Fitzsimmons, 2008; Williams and
Buswell, 2003).
Perceived switching barrier as a moderatorSwitching barrier can be seen as a hurdle for the customers to switch from
one service provider to another. The Perceived switching barrier is increasingly
affecting the intention of the customer to switch from one service provider to
another. Anne Wan-Ling Hu and Ing-San Hwang (2009) found that significant
correlation exists between various types of switching costs-relational and
procedural and customer intention to switch. Further, Albert Caruana(2003)
describes three types of costs involved in - learning , contractual and transaction.Moeover, Markus Blut, HeinerEvanschitzky,VerenaVogel,DieterAhlert(2007)
concluded that switching barriers have an impact on customer loyalty.
Patterson, Paul Gand Smith, Tasman analyzed how switching barriers affect the
propensity of the customers to stay with the current service provider. In this study
switching barrier is taken in terms of six forms and they are search costs, loss of
social bonds, setup costs, functional risk, attractiveness of alternatives and loss of
special treatment benefits. The study has proven that switching costs form a major
barrier in the customers willingness to switch service providers. Stefan Buehler
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and Justus Haucap suggest that reducing the switching costs is one of the main
benefits of Mobile Number Portability. Reducing the switching costs will
automatically reduce the switching barrier there by affecting the relationship
between the customer satisfaction and their willingness to switch service
providers. Shin, DongH.and Kim, Won Y. in their study of Mobile Number
Portability in Korean market came to the conclusion that even after the advent of
Mobile Number Portability, customers view the switching barrier to be high. This
might be due to other hidden costs involved in switching and also on the new
customer lock-in strategies developed by the service providers. Dong-Hee Shin
and Won-Yong Kim in their study on U.S Market also concluded that the
customers view the switching barriers as main hindrance to switch serviceproviders even after the introduction of MNP.MNP is expected to reduce switching
costs and thereby reduce the switching barriers. But the other costs as mentioned
before like termination costs, customer lock-in strategies reduce the effect of MNP
in reducing the switching barrier.However,LukaszGrzybowski studied the
relationship between the switching costs and the nature of mobile carriers, which
change, basis the customer characteristics .It was found that the time-based
service provider choice is because of both the switching related cost andconstant tastes. The customer satisfaction is adversely related to the willingness
to switch of the customers. If the satisfaction level with the existing service
provider is high, then the customers are not expected to switch the service
provider. Similarly, if the satisfaction levels are low with the existing service
provider, then the customer is expected to switch service provider readily. But the
Switching Barrier moderates this relation. Even though the satisfaction level with
the current service provider is low, the customers are expected to continue therelationship with the current service provider if the switching barriers are perceived
to be high as mentioned by P. Klemperer (1995). So the Perceived Switching
Barriers moderates the relationship between the customer satisfaction and the
willingness to switch of the customer.
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RESEARCH METHDOLOGY
Observation is another research instrument that can be successful in multicultural
research. It typically involves using descriptive studies of a culture using a
methodology called ethnographic. Ethnographic methodology is a detailed study
of a particular cultural group that describes the groups cultural patterns and world
views. A typical way to perform observational research is to have the researcher
become enmeshed in the culture in order to conduct the observation fieldwork in
order to collect and analyze the data as it pertains to the culture context.
Grounded theory is another form of observation method that allows researchers to
observe participants in a social setting without requiring the researcher to be an
active participant of the group.The participants may also not know they are being observed as well.Human
behavior can be studied in either a traditional or multicultural research study.
Multicultural research studies often are a more valuable process because it can
spotlight issues that are present in a particular culture that may have been missed
by traditional research studies. For a researcher to have a well-rounded study, it is
imperative that they include multicultural research. As with all research, there are
some implementation issues that need to be addressed when conductingmulticultural research studies; however, if the problems encountered by
researchers are addressed during the data can provide great insight into cultural
influences in human behavior.
Measures
The constructs Perceived Price ,Perceived Service Quality, Customer
Satisfaction,Perceived Switching Barrier and the Willingness to switch aremeasured using Multi Item Scale. We use a five point likert scale for this purpose
with responses ranging from 1 to 5,where 1 corresponds to Strongly Disagree
and 5 corresponds to Strongly Agree Perceived Service Quality, Perceived Price
and Customer Satisfaction are measured using multi-item scales adopted from
Chadha, S. K., and DeepaKapoor
Perceived Switching Barrier and Willingness to switch are measured using the
multi-item scale borrowed from Dong-Hee Shin and Won-Yong Kim
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Data Collection
An online intranet survey, by creating a questionnaire and circulating is it to our
target set of respondents. Thus the sampling technique used was convenience
sampling.
Sampling Technique
Non-random Convenient Sampling is used where the sample is taken from
convenient set of students.
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CONCLUSION
The study can be conducted across different countries and regions. There
are many other factors like the Income levels of the customers, the economic
levels, their personalities, and their educational backgrounds etc. whose effects on
the willingness to switch do not contact excessive research support. Data on these
factors can throw more light to how these factors influence the willingness to
switch and hence gives more reliable results. Our study was restricted only to the
people belonging to similar demographic profile within India. The scope of the
study can be widened by involving people from various different parts of the world
and also by moving our focus across borders to other countries as well to obtain a
holistic view of the customers intentions to switch. Effects of Perceived SwitchingCosts, Corporate Brand Image can be analysed on the model
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APPENDIX
The Proposed Model
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Perceived Price
PerceivedServiceQuality
CustomerSatisfactio
n Willingness toSwitch
PerceivedSwitching
Barrier