The Indian mobile phone market is highly competitive with more than 150 device manufacturers trying to attract the. Research Article December 2013

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1 An Analytical Study of Customer Satisfaction influencing Brand Loyalty and foster Recommendation for Mobile Services Providers of Indian Telecom Industry Abstract: Mr. Kumar Ratnesh, Research Scholar, Mewar University, Rajasthan, India Dr. Amit Kansal, Professor IIMT Management College, Meerut, India The Indian mobile phone market is highly competitive with more than 150 device manufacturers trying to attract the with their schemes and offers. Most of these producers focus their efforts on the low-cost feature phone market, which constitutes over 91 per cent of overall mobile phone sales, offering a huge scope for growth. India added 1.49 million GSM subscribers in July, taking the total GSM user base in India to million. Moreover, in June the GSM telecom operators added 2.33 million new subscribers, to take the user base to million at the end of the month, according to the data released by Cellular Operators of India (COAI). The GSM incumbents Bharti Airtel, Vodafone and Idea Cellular have jointly crossed 70 per cent in revenue market share and had a 99.6 per cent share of the incremental revenues during the June quarter, as per the latest figures released by TRAI.The mobile value-added services (MVAS) market is expected to reach US$ 9.5 billion in 2015, from US$ 4.9 billion in 2012, as per a joint research report by Wipro Technologies and the Internet and Mobile of India (IAMAI).A total of 9.4 million smartphones were shipped into the country, registering a growth of per cent on an annual basis. India also witnessed 73.5 million mobile handset shipments for the January-April period. I. Introduction India is the world s second-largest telecommunications market, with 898 million subscribers as on March. The sector's revenue grew by 13.4 per cent to reach US$ 64.1 billion in FY12.Telecom infrastructure in India is expected to increase at a compound annual growth rate (CAGR) of 20 per cent during to reach 571,000 towers in 2015.Internet traffic in India is expected to reach to 2.5 exabytes per month in 2017 from 393 petabytes per month in 2012, as per a Cisco study. In addition, the wireless connectivity in India is expected to grow at about 40 per cent traffic by 2017, up from 38 per cent in 2012.India has immense opportunities for telecom operators and is one of the best markets for telecom business. Right now, we feel the Indian market is ripe for M&A stories, highlighted Mr Dmitry Shukov, CEO, Sistema Shyam Teleservices (SSTL). India has recorded crore mobile users as per Juxt s study titled, India Mobile Landscape (IML). More than 29.8 crore, about 54 per cent, of these device owners are in rural areas as compared to 25.6 crore in cities and towns," added Mr Mrutyunjay, Co-founder, Juxt.The telecommunications industry attracted foreign direct investments (FDI) worth US$ 12,866 million during April 2000 to June, an increase of 7 per cent to the total FDI inflows, according to data published by Department of Industrial Policy and Promotion (DIPP).Moreover, the cumulative revenue of telecom service providers was recorded at Rs 54,284 crore (US$ 8.32 billion) in the January-March quarter, as per Telecom Regulatory Authority of India (TRAI) data. Key Developments & Investments Viom Networks Ltd has won a contract to provide Wi-Fi and other Internet-related services at the Chennai International Airport. The deal is expected to be in the range of Rs 20 Rs 30 crore (US$ US$ 4.59 million) Tata Consultancy Services (TCS) has been selected to deploy a new rating and billing system for Macau's telecom service provider, CTM. The solution will allow CTM's customers to receive faster response to enquiries and enable them to better manage their services and bills, according to the company's press statement Aegis, the global outsourcing and technology services firm under Essar Group, has won a human resource outsourcing contract from Saudi Telecom Co, further extending its existing relation with the company. The deal is estimated to be in the range of US$ 50- US$ 60 million Videocon Mobile Services plans to invest Rs 800 crore (US$ million) in Gujarat for opening over 500 towers and 150 exclusive outlets in -14 Reliance Communications (RCom) and Tata Teleservices Ltd (TTSL) have joined hands under a 2G intra-circle roaming arrangement. Under the agreement, RCom will use 5,000 towers of TTSL across 14 GSM circles while the latter will gain access to an equal number of towers in RCom's CDMA network to improve its reach Bharti Airtel has raised its stake to 51 per cent in four entities of Qualcomm's wireless broadband business in India. In addition, the firm plans to launch an international fibre-optic cable link to boost internet speeds in Bangladesh Ratnesh et al. Page 84

2 Government Initiatives The telecom tower provider industry has been granted the 'infrastructure' status, a move that will make tower providers eligible for viability gap funding, higher limit on external commercial borrowings (ECBs), lower import duties and exemptions on excise duty on telecom infrastructure equipment. The Government of India's decision to allow 100 per cent foreign direct investment (FDI) in telecommunication sector will enable foreign telecommunication companies to buy out their Indian partners. At present, India permits up to 74 per cent FDI in the sector - 49 per cent through the automatic route and the rest after Foreign Investment Promotion Board (FIPB) approval. The Government intends to make India a teleport hub, enabling it to become an up-linking/down-linking centre. The initiative is expected to facilitate foreign investments, better technology and sustainable employment opportunities in the country. The Government has recently given its nod to 74 per cent of FDI in DTH, IPTV, and mobile TV Reliance Jio Infocomm (RJIL) has received an approval from the Department of Telecommunications (DoT) to test the messaging feature on the fourth-generation long-term evolution (4G LTE) platform The new guidelines issued by the DoT according to which foreign entities can participate in the upcoming 2G auctions directly and obtain a licence. The initiative is expected to make the upcoming auctions more attractive to certain foreign players such as Telenor, which wanted to bid directly without an Indian partner in the auctions. There will be a lock-in period of three years Road Ahead On back of ongoing investments into infrastructure, the country is projected to witness high penetration of internet, broadband, and mobile subscribers in the near future. Various policy initiatives by the Indian government have led to a complete transformation of the industry in the last decade. It has achieved a phenomenal growth during the last few years and is poised to grow further. The current scenario in Indian market has also given impetus to the information and communication technology (ICT) exports and in turn it forms the most significant component of the internet's impact on the country s GDP. Nevertheless the private consumption and investment from private and public sector have greater potential to grow in the future, as per a report by McKinsey and Co. Exchange Rate Used: INR 1 = US$ as on September 8, Problem Areas: Customer retention Gaining new customers Customers loyalty Low profit margins Government regulation Rate of technology obsolescent 3.3 Problem Statement: Consumer switching behavior across mobile service providers: Companies prime focus is to create loyal customers and retaining current customer & get benefitted from them. Customers are switching to other MSP because they are not satisfied. Consumers are not satisfied on account of marketing mix elements. 3.4 Objectives of study This research consists of different objectives. They are as follows: To find out the satisfaction towards the various services provided by telecom service providers. To find out the relationship between loyalty, foster recommendation and satisfaction with various services provided by the MSPs. II. Literature Review Debnath (2008), in his study, he explained that the prime focus of the service providers is to create a loyal customer base by benchmarking their performances and retaining existing customers in order to benefit from their loyalty. With the commencement of the economic liberalization in 1991, and with a view to expand and improve telecom infrastructure through the participation of the private sector, the Government of India permitted foreign companies holding 51 percent equity stake in joint ventures to manufacture telecom equipment in India. The Indian Government has announced a new policy, which allows private firms to provide basic telephone services. There had been a monopoly of the state-owned department of telecommunications. However, several companies are expected to benefit from the policy change. Kalavani (2006) in their study analyzed that majority of the respondents have given favourable opinion towards the services but some problems exist that deserve the attention of the service providers. They need to bridge the gap between the services promised and services offered. The overall customers attitude towards cell phone services is that they are satisfied with the existing services but still they want more services to be provided. Kumar (2008), in their study titled Customer Satisfaction and Discontentment vis-a-vis BSNL Landline Service: A Study analyzed that at present, services marketing plays a major role in the national economy. In the service sector, telecom industry is the most active and attractive. Though the telecom industry is growing rapidly, India's telecom Ratnesh et al. Page 85

3 density is less than the world's average telecom density as most of India's market is yet to be covered. This attracts private operators to enter into the Indian telecom industry, which makes the Bharat Sanchar Nigam Limited (BSNL) more alert to run its business and survive in the market. Seth et al (2008), in their study titled Managing the Customer Perceived Service Quality for Cellular Mobile Telephone: an Empirical Investigation analyzed that there is relative importance of service quality attributes and showed that responsiveness is the most importance dimension followed by reliability, customer perceived network quality, assurance, convenience, empathy and tangibles. This would enable the service providers to focus their resources in the areas of importance. The research resulted in the development of a reliable and valid instrument for assessing customer perceived service quality for cellular mobile services. Fernandez (2007) in their study titled Understanding Dynamics in an Evolving Industry: Case of Mobile VAS in India analyzed that Mobile Value Added Services (VAS) is a rising star in the fast growing wireless business. In the paper, attempt is made at understanding the strategic dynamics of the evolving environment within which the Indian players are operating, the challenges and structure of the same. Our literature and industry review indicates that - while the value chain of industry is complicated yet one can observe the bipolar nature of bargaining powers between mobile network operators and content aggregators. Kalpana and Chinnadurai (2006) in their study titled Promotional Strategies of Cellular Services: A Customer Perspective analyzed that the increasing competition and changing taste and preferences of the customer s all over the world are forcing companies to change their targeting strategies. The study revealed the customer attitude and their satisfaction towards the cellular services in Coimbatore city. It was found that advertisement play a dominant role in influencing the customers but most of the customers are of opinion that promotional strategies of cellular companies are more sale oriented rather than customer oriented. 5.1 Research model III. Research Methodology Satisfaction with Basic Services: - N/W coverage - Call rates - Roaming Facilities Satisfaction with VASs: - SMSs - GPRS/Internet - Caller tunes - Various alerts Satisfaction with Convenience: - Availability of Customers Store - Availability of Recharge Points/Bill Payment Options (Post-paid) - Types of recharge vouchers/plans Post-paid) Consumer Loyalty Consumer Foster Recommendation Dependent Variables Satisfaction with Other Services: - Customization - Query Resolved by Customer Care - Waiting time for having connected with representative Independent Variables Ratnesh et al. Page 86

4 5.2 Hypotheses: H1: Consumer Loyalty towards MSP is significantly related to Satisfaction with Basic Services. H2: Consumer Loyalty towards MSP is significantly related to Satisfaction with VASs. H3: Consumer Loyalty towards MSP is significantly related to Satisfaction with Convenience. H4: Consumer Loyalty towards MSP is significantly related to Satisfaction with Other services. H5: Consumers foster recommendation is significantly related to Satisfaction with Basic services. H6: Consumers foster recommendation is significantly related to Satisfaction with VASs. H7: Consumers foster recommendation is significantly related to Satisfaction with Convenience. H8: Consumers foster recommendation is significantly related to Satisfaction with Other services. : Hypothesis 1: Ho: Consumers satisfaction with Call rates of MSPs is not significantly related to Income of H1: Consumers satisfaction with Call rates of MSPs is significantly related to Income of Income Income and Call rates Cross Tabulation Consumers satisfaction with Call rates of MSPs Total Total Pearson Chi-Square Likelihood Ratio Linear-by-Linear Here, significance value is that is less than So, null hypothesis is rejected and alternative hypothesis is accepted. So, test shows that Consumers satisfaction with Call rates of MSPs is significantly related to Income of. Hypothesis 2: Ho: Consumers satisfaction with Availability of Customer stores is not significantly related to Age of H1: Consumers satisfaction with Availability of Customer stores is significantly related to Age of AGE Age and Availability of Customer Stores Cross Tabulation Availability of Customer Stores Total Total Ratnesh et al. Page 87

5 Pearson Chi-Square a Likelihood Ratio Linear-by-Linear Here, significance value is which is less than So, null hypothesis is rejected and alternative hypothesis is accepted. So, test shows that Consumers satisfaction with Availability of Customer stores is significantly related to Age of. Hypothesis 3: Ho: Consumers satisfaction with Caller Tunes services of MSPs is not significantly related to Age of H1: Consumers satisfaction with Caller Tunes services of MSPs is significantly related to Age of Caller tunes Caller Tunes and Age Cross Tabulation AGE Bel Abo 50 Total Total Pearson Chi-Square a Likelihood Ratio Linear-by-Linear Here, significance value is which is greater than So, here there is not enough evidence to reject null hypothesis. So, test shows that Consumers satisfaction with Caller Tunes services of MSPs is not significantly related to Age of. Hypothesis 4: Ho: Type of Service opted by the is not significantly related to Occupation of H1: Type of Service opted by the is significantly related to Occupation of Service Service and Occupation Cross Tabulation Occupation STU EMP BUS RET OTH Total Total Pearson Chi-Square a Likelihood Ratio Linear-by-Linear Ratnesh et al. Page 88

6 Here, significance value is which is less than So, null hypothesis is rejected and alternative hypothesis is accepted. So, test shows that Type of Service opted by the is significantly related to Occupation of. ANOVA Tests: Hypothesis 5: Ho: Means of Consumers satisfaction with Network Coverage of Vodafone, Airtel and Idea are same (µvoda= µairtel= µidea) H1: Means of Consumers satisfaction with Network Coverage of Vodafone, Airtel and Idea are not same (µvoda µairtel µidea) Network Coverage ANOVA Sum of Squares df Mean Square F Sig. Between Groups Within Groups Total Here, significance value is > So, there is not enough evidence to reject null hypothesis. So, Null hypothesis is accepted. So, test shows conclude that the means of Consumers satisfaction with Network Coverage of Vodafone, Airtel and Idea are same (µvoda= µairtel= µidea). It means that, satisfaction with network coverage provided by Vodafone, Airtel and Idea are almost same. Hypothesis 6: Ho: Means of Consumers satisfaction with Convenience of Vodafone, Airtel and Idea are same (µvoda= µairtel= µidea) H1: Means of Consumers satisfaction with Convenience of Vodafone, Airtel and Idea are not same (µvoda µairtel µidea) ANOVA Sum of df Mean Square F Sig. Squares Between Groups Convenience Within Groups Total Here, significance value is < So, null hypothesis is rejected. So, alternative hypothesis is accepted & it shows that the means of Consumers satisfaction with Convenience of Vodafone, Airtel and Idea are not same. It means that, satisfaction with convenience provided by Vodafone, Airtel and Idea are different. 6.7 IV. Research & Findings: Customers loyalty depends on Basic Services, Value Added Services and Convenience provided by the MSPs. Foster recommendation (positive word of mouth) by customers depends on Basic Services, Value Added Services and Convenience provided by the MSPs. Customers loyalty and foster recommendation (positive word of mouth) are depending on mainly four factors, i.e. Customized Value Added Services, Convenience, Network Coverage and Call Tariff. Mostly BSNL and Reliance users are using another MSP s services along with their main MSP. Mostly Vodafone, Airtel and Idea users are using only one MSP s services. Mostly Vodafone, Airtel and Idea users are satisfied with the service provided by their respective MSPs. Most of BSNL users are not satisfied with Network Coverage, VASs and Customer care services. Most of Reliance Mobile users are not satisfied with Network Coverage, Roaming Facilities and Customer care services. Customers satisfaction with Call Rates is significantly related with Family Income of Users. Customers satisfaction with Availability of Customer Store is significantly related with Age of users. Type of service opted by users is significantly related with occupation of users. More number of users is using Pre-paid service than Post-paid service. V. Conclusion: We have studied the Indian telecom industry by concentrating on mobile service providers, and observed that there is high competition among the players in the industry. All the players are giving special offers and schemes as per the market conditions to maximize their subscriber base. Competition in telecom industry is heating up, now it s time for Indian telecom players to align up in the new dynamic business environment. Telco majors should think to launch the product according to the needs of customers to satisfy them and make them brand loyal as very soon this blue ocean of Ratnesh et al. Page 89

7 Indian telecom scenario will convert into Red Ocean where the loss of one is the gain of other. According to the results, the most important determinant for satisfaction and their foster recommendation (positive word of mouth) to others are Customized VASs, Convenience, Network Coverage and Call tariff. References: Debnath, Roma Mitra, Benchmarking telecommunication service in India, 2008 ( 9? Fernandez, Fronnie, Understanding Dynamics in an Evolving Industry: Case of Mobile VAS in India, 2007 ( Kumar, Kaliyamoorthy, Influence of Demographic Variables on Marketing Strategies in the Competitive Scenario, 2007 ( Seth et, Etal, Managing the Customer Perceived Service Quality for Cellular Mobile Telephone: an Empirical Investigation, 2008 ( 8.1 Web-sites searched: Ratnesh et al. Page 90