Trust, Image and Association, affecting loyalty towards telecom service providers in India: A study on BSNL

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1 41 Trust, Image and Association, affecting loyalty towards telecom service providers in India: A study on BSNL Vivek Agrawal, Research Scholar, GLA University, Mathura, U.P,India. Vikas Tripathi, Associate Professor, GLA University, Mathura, U.P, India. Vivek K Tripathi, Assistant Professor, Hindustan College of Sc and Tech., Mathura, U.P, India. ABSTRACT India has come out as one of the youngest and fastest growing economies in the world. Telecommunication industry is one of the sectors that has shown the sign of profitability and contributed significantly to the country s economy. India is one of the fastest growing mobile markets in the world due to this; many foreign players are entering in Indian Market. In recent years there are many changes in Indian telecom industry because of which product development and Market development is constantly changing and hence there is a situation of hyper competition. In this situation customer retention is assuming more importance then customer acquisition as former provides platform for later. The biggest cost to any company is customer switch. Bharat Sanchar Nigam Limited, first PSU to start providing telecom services to market and has enjoyed leadership position in market for long. With rise of competition and entry of private multinationals scenario is changing. This paper is an attempt on exploring the factors which are influencing the loyalty of customer of BSNL in today s environment. The paper tries to investigate the variables that influence the perception of the mobile phone customers to remain them loyal with existing service providers. Keywords: customer switching, hyper competition, customer acquisition, loyalty, PSU. INTRODUCTION In the present era Telecommunication industry is the fastest growing market in the world. The Indian telecommunication Industry is the second largest among the emerging economies of Asia 1. This fast growth has been possible due to various positive and proactive decisions of the government and contribution of both by the private and public sector players. Due to large growth and development has made the Indian mobile phone markets more and more competitive. To sustain its present in Indian Telecom market BSNL needs to take drastic steps and changes for not only to retain the customers but also to attract new customers. All the mobile companies 1 assumed that Value added Services increases the customer loyalty, but does it fulfill all the needs of the mobile users and the only factor to make the customers loyal? By providing good quality services mobile service providers can build up customer commitment (lee et al., 2001) LITERATURE REVIEW All the economic and social services in India has penetrated by the use of mobile phones services. According to Telecommunication Department of India the mobile phone users increased from million at the end of Jun, 09 to million at the end Sep, Bharti, Airtel, Reliance and BSNL have lost revenue market share in FY 11 3, due to this reasons mobile service providers should find out those factors which build the customer relationship and make the customers loyal to the service providers. Companies are using different strategies for maintaining the customer base and retain them but BSNL loosing their customer base so it show that there is a strategic gap between BSNL and its competitors to attract and retain their customers. The strategies which are used for marketing the product has to be shifted to retaining customers from attracting new customers. This is also suggested and supported by Reichheld (1996), and Kim et al. (2004) who confirmed that in the future the best marketing strategies are to retain the existing customers by providing quality services and make them loyal. CUSTOMER LOYALTY Loyalty is a general concept which is generated from the consumer behavior which incline that the customer either return to shop, to a company or outlet to purchase something again, which affect the profitability and success of the company. There is no universally agreed definition of loyalty (Jacoby & chestnut, 1978, Dick & Barn, 1994; Oliver, 1999). It is that felling due to which customer 2 0report%20-Sep /news

2 42 involve is repeat purchasing frequency or relative value of same-brand purchasing (Beertie et al. 2002). But Reichheld (1996), Lee and Cunningham 2001 find that perception of any customer affects his judgment to be loyal towards any product or services. By developing and increasing the loyalty in the customer mind, companies can ensure its proper growth and economic performance as well. So there is a requirement that the companies should frame their marketing strategy in such a way that the company may able to retain their existing customers by increasing their loyalty and value (Kim et al. 2004). Jones and Sasser (1995) propose three measures of loyalty that could be used in segmentation by loyalty: customer s primary behavior recency, frequency and amount of purchase; customer s secondary behavior customer referrals, endorsements and spreading the word; customer s intent to repurchase- is the customer ready to repurchase in the future? Customer Loyal Dubious Disloyal Committed Behaviourally Reducer Leaver Figure 1: Customer loyalty Based on this customers could be segmented by their loyalty as follows (Figure 1). 1. Committed or emotionally loyal customers these are active customers who use certain products or services and declare to use them in future and also recommend the same to others. 2. Behaviorally loyal customers these are the customers who use certain products or services and declare that they will continue to use in future but do not agree to recommend to others. 3. Ambivalent or dubious customers these are the customers who use certain products or services but do not know which products they will use in the future. 4. Disloyal reducers customers who have reduced or will reduce the percentage of the product or the service in their usage. 5. Leavers customers who declare, that they will certainly leave this product or the service. Factors Affecting Customer Loyalty 4 4 Affecting customer loyalty: do different factors have various influences in different loyalty levels? Andres Kuusik, Tartu University Press 2007 Trust According to Morgan and Hunt (1994), it has been hypothesize that trust is a most important and a major factor which influence commitment and relationship in continue brand trust which leads to be brand loyal. Chanderi adn Holbrook 2001 found that brand trust is directly related to loyalty and purchase. It is that factor which helps the organization and company to sustain even in the time of uncertainty (Moorman et al. 1992, Doney et al. 1997; Dwyer et al. 1987). Image Always customer s show or project their self image by their performances consciously or unconsciously. Belk s theory define that people define themselves by possessions that they have create or mange (Belk 1998). Alternatives of the brand personally also influence the customer brand loyalty (Kim et al 2001) and it enhances the self image (Tidwell and Hoagan 1993). According to Oliver (1999) for the complete loyalty the product or services (consumable) must be a part of the customer s self identity and his or her social identity.

3 43 Satisfaction Various past studies discovered that there is a direct relationship between loyalty and customer satisfaction. It has been observed that satisfied customers become loyal otherwise move to another vendor. Satisfaction affects the performance of service organization (Heskett et al, 1994, Rucci et al, 1998, fredericks, 2001, Reichheld, 2004). The success of any enterprise depends on various factors out of which customer satisfaction is found to be the best forecaster of customer loyalty (Chadha, S.K. & Deepa Kapoor). Relationship (Association) To retain an important and valuable relationship, the loyalty is most desirable factor. (Moorman et al., 1992), so in this manner the importance of relationship is determined by the Loyalty of the customer towards the service provider. The future development and the survival of the company is interrelated with loyalty (Fornell, 1992). Loyalty is the main character for the companies if they want to be mature, make their presence in the market and to improve the performance and profitability Objective 1. To assess customer s loyalty towards BSNL. 2. To find main components for loyalty of BSNL customers. 3. To establish a relationship between loyalty and and other components. RESEARCH METHODOLOGY Research Design For this research, research design is descriptive. This research is conducting to find the loyalty of the customers towards BSNL and factors which are affecting the customer s loyalty. DATA COLLECTION The secondary data in this research collected from the existing literature and World Wide Web. For the collection of primary data questionnaire was prepared with 18 items as independent on likert scale to know the level of agreement from strongly disagree to strongly agree. Sample size and Region For this research the sample size was 250 out of which 211 questionnaire were filled correctly. The target respondents of this research are from the Agra and Mathura region. Statistical tools In this research factor analysis used for reduction of factors and multiple regression analysis used for establishing the relationship between the dependent and independent variable. For these tools SPSS and MS-Excel were used. ANALYSIS OF DATA Firstly the reliability test was done in which the value of 18 independent items in which the value of Cronbach s Alpha is which shows that items are reliable. Which has been shown in table 1 and table 2? Table 1: Case Processing Summary N % Cases Valid Excluded (a) 0.0 Total a Listwise deletion based on all variables in the procedure. Table 2: Reliability Statistics The paper finds the factors that force the customers to be a loyal to their service provider. For this factor analysis is used to reduce the factors. For this initially Kaiser-Mayer-Olkin (KMO) was 0.680, which shows that factor analysis is appropriate for the purpose of reduction of items. The value of KMO has shown in table 3. Table 3: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..680 Bartlett's Test of Sphericity Approx. Chi-Square df 153 Sig..000

4 44 Table 4: Component Variables the overall service quality offered by this operator are satisfactory is having professional competences the performance of the frontline employees is satisfactory The service quality is consistence providing by the mobile operator This operator s reputation is high according to me This mobile operator is involve in corporate social responsibility The operator delivered a good brand image to its customers This operator concerned with the consumer s interest, so it is reliable. This operator is trustworthiness in the policies and practices The service process is secure of this operator. there is an emotional bonding between me and my mobile phone operator I would miss my mobile operator if I switch operators the public image of my mobile operator makes me proud Table 4 shows that all the 18 independent items were reduced to 13 items. This table shows that all these reduced 13 items categorized under 4 components. These components are satisfaction, trust, image and association with the service provider. After reducing the factors the reliability was checked for the individual component for which Table 5 shows the value of Alpha is for the component trust, table 6 shows the reliability for the component satisfaction; table 7 shows the reliability for image and table 8 for the component Association. All the values are approximately satisfactory for applying the further statistical tools. Table 5: Reliability Statistics for Trust Alpha N of Items Table 6: Reliability Statistics for satisfaction Table 7: Reliability Statistics for image.670 3

5 45 Table 8: Reliability Statistics for Association On the basis of above for reduced component the following hypothesis were made. Null Hypothesis:- To test the affect of independent variable 4 hypothesis has been drawn, they are H 1 : Loyalty is affected by trust H 2 : Loyalty is affected by image H 3 : Loyalty is affected by satisfaction H 4 : Loyalty is affected by association Table 9: Rotated Component Matrix Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate Change statistics R Square Change df1 df2 Sig. F Change Durbin-Watson Predictors: (Constant), relationship, satisfaction, trust, image Dependent Variable: loyalty From the Table 9 the variance in dependent variable (Loyalty) is explained to the extent of i.e. 77.9% by all the four independent variables. The unexplained variance in dependent variable is caused by error factor. Table 10: Coefficients Unstandardized Coefficients Standardized Coefficients Collinearity Statistics Model B Std. Error Beta t Sig. Tolerance VIF 1 (Constant) trust image satisfactio n relationshi p Dependent Variable: loyalty Table 10 indicates all the coefficients which was calculated by using the multiple regression analysis. With the above coefficient one can drawn the following regression equation: L = c t i s r + e Where c = Constant t = trust i = image s = satisfaction r = association (relationship) e = error value As all the tolerance values are high so there are no multi colliniarity problems and hence the model is validated. Since the average of summated scale of loyalty is 3.86 so, because it is more than 3, so it is proved that the customers are loyal to BSNL Questionnaire has 18 items as independent variables which have reduced into 13 by using the factor analysis. Factor analysis divided these 13 items into 4 components named trust, image, satisfaction and relationship. On the basis of that H 1, H 2, H 3 and H 4 as null hypothesis were framed which were tested and results are as follows. H 1 (loyalty is affected by trust) is accepted because the significance value is (<0.005) H 2 (loyalty is affected by image) is accepted because the significance value is (<0.005)

6 46 H 3 (loyalty is affected by satisfaction) is accepted because the significance value is 0.000(<0.005) H 4 (loyalty is affected by relation) is accepted because the significance value is (<0.005) Since the summated average is 3.86 for the loyalty so, it has been concluded that customers are loyal. CONCLUSION Apart from various factors that market offers to the companies and industries it is very much pivotal for a company to assess themselves continuously to stand in the consumers mind and market at large. BSNL enjoyed first mover s advantage in the market and market leader position for long in telecommunication sector. With the advent of multinationals the position of BSNL has dwindled to a great extent. Market Share of BSNL reduced to12.76% in total and 10.73% in Mobile in Feb There can be various reasons but as per the study major contributing factors towards this situation can be trust, image and association factor. BSNL positions themselves as service provider with seamless connectivity but there is a major loss of the mentioned factors in recent days. The result is loss of loyalty among customers and hence customer switching, which is the biggest and unaffordable cost that any company has to undergo. REFERENCES [1] Aaker JL (1999). The Malleable Self: The Role of Self-Expression in Persuasion, J. Mark. Res., 36(1): [2] Anderson CJ, Garbing WD (1998). Structural equation modeling in practice: A review and Recommended two step approach, Psychol. Bull., 103(3): [3] Belk RW (1988). Possessions and the Extended Self. J. Consumer Res., 15: [4] Chauduri A, Holbrook MB (2001). The chain of effects from brand trust and brand affect to brand performance: the role of brand loyalty. J. Mark., 65(2): [5] Doney PM, Cannon JP (1997). An Examination of the Nature of Trust in Buyer-Seller Relationships. J. Mark., 61: [6] Dwyer FR, Schurr PH, Oh S (1987). Developing Buyer-Seller Relationships. J. Mark., 51: [7] Fornell C (1992), "A National Customer Satisfaction Barometer: The Swedish Experience". J. Mark., 56: [8] Jones TO, Sasser Jr WE (1995). Why satisfied Costumers Defect. Harv. Bus. Rev., 73(6): [9] Kim CK, Han D, Park S (2001). The effect of brand personality and brand identification on brand loyalty: Applying the theory of social identification, Japanese Psychol. Res., 43(4): [10] Kim MK, Park MC, Jeong DH (2004). "The Effects of Customer Satisfaction and Swithching Barrier on Customer Loyalty in Korean Mobile Telecommunication Services", Telecomm. Policy, 28(2): [11] Lee J, Lee J, Feick F (2001). The impact of the switching costs on the customer satisfaction-loyalty link: mobile phone service in France.MCB University Press. J. Serv. Mark., 15(1): [12] Lee M, Cunningham LF (2001). "A Cost/Benefit Approach to Understanding Service Loyalty". J. Serv. Mark., 15(2): [13] Moorman C, Zaltman G, Deshpande R (1992). Relationships between Providers and Users of Market Research: The Dynamics of Trust within and Between Organizations. J. Mark. Res., 29: [14] Morgan RM, Hunt SD (1994). The Commitment Trust Theory of Relationship marketing. J. Mark., 58(3) [15] Oliver RL (1999). Whence Consumer Loyalty. J. Mark., 63: [16] Reichheld FF (1996). The Loyalty Effect, Harvard Business School Press, Boston. [17] Tidwell PM, Horgan DD (1992). Brand character as a function of brand loyalty. Curr. Psychol., 11(4):