Research Project on

A Study on Factors Influencing Customer Loyalty in Pakistan Telecommunication Industries in Karachi

Program: MBA-EV Semester: Final 2013 Submitted by:

Zulfiqar Ahmad Registration No: MBA-Eve/03-11/011 Supervised by: Mr. Tahir Iqbal

A Research Project submitted in partial fulfillment of the requirements for the Degree of MBA (Finance) DADABHOY INSTITUTE OF HIGHER EDUCATION KARACHI

APPROVAL SHEET

This research is entitled A study on factors influencing customer loyalty in Pakistan Telecommunication Industry in Karachi. Prepared by Zulfiqar Ahmad is accepted in partial fulfillment for the award of Masters degree of Business Administration (Finance).

______________________ Tahir Iqbal Research Supervisor

LETTER OF TRANSMITTAL

To, Mr. Tahir Iqbal Course: Research Project 02nd Sep., 2013

Dear Sir, Enclosed is a copy of A study on factors influencing customer loyalty in Pakistan Telecommunication. This report is about the research made during the 4 months of time period and effort, based on the need of the study, research methodology, findings, limitations and future need. This research gives useful information regarding the factors involved in customer loyalty in Pakistan telecom. Although this research is made for academic purpose, but the importance of the study cannot be ignored. I hope that this report is acceptable to the Dada Bhoy Institute of Higher Education and to you, while keeping in view the scope of my limited knowledge The project was very interesting and challenging, this was throughout a learning experience. At the end say thank to you for giving me the opportunity to extend my knowledge and ability to look things in a different way.

Yours sincerely Zulfiqar Ahmad

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Table of Contents
ACKNOWLEDGMENTS................................................................................................. 5 ABSTRACT ....................................................................................................................... 6 CHAPTER 1: INTRODUCTION .................................................................................... 7 1.1 OVERVIEW ........................................................................................................... 8 1.2 PROBLEM STATEMENT ......................................................................................... 9 1.3 HYPOTHESIS ....................................................................................................... 10 1.4 OUTLINE OF THE STUDY..................................................................................... 11 1.5 DEFINATIONS ..................................................................................................... 12 1.5.1 Defination of Customer Loyalty .................................................................... 12 1.5.2 Defination of Perceived Value ...................................................................... 12 1.5.3 Defination of Service Quality ....................................................................... 12 1.5.4 Defination of Corporate Image ..................................................................... 13 CHAPTER 2: LITERATURE REVIEW ...................................................................... 14 2.1 THE CONCEPT OF CUSTOMER LOYALY ............................................................... 15 2.2 Determinants of CUSTOMER LOYALTY.............................................................. 17 2.2.1 Service Quality and Customer Loyalty .......................................................... 17 2.2.2 Customer Servicce/Care, Customer Satisfaction and Customer Loyalty ...... 21 2.2.3 Importance of Perceived Value ..................................................................... 22 2.2.4 Importance of Trust ..................................................................................... 24 2.3.5 Corporate Imange and Customer Loyalty ..................................................... 25 CHAPTER 3: RESEARCH METHODS ...................................................................... 29 3.1 3.2 3.3 3.4 4.1 4.2 METHODOLOGY OF DATA COLLECTION ............................................................. 30 SAMPLING TECHNIQUE ....................................................................................... 30 SAMPLE SIZE ...................................................................................................... 30 STATISTICAL TECHNIQUE ................................................................................... 30 FINDING AND INTERPRATION OF RESULTS .......................................................... 32 HYPOTHESIS ASSISSMENT SUMMARY ................................................................. 44

CHAPTER 4: RESULTS ................................................................................................ 31

CHAPTER 5: DISCUSSION, IMPLICATIONS, AND CONCLUSIONS ................ 47 REFERENCES ................................................................................................................ 49 APPENDIX ...................................................................................................................... 57

ACKNOWLEDGMENTS
This dissertation would not have been possible without the guidance and the help of my teacher Mr. Tahir Iqbal, who one way or another contributed and extended their valuable assistance in the preparation and completion of this study. Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project.

ABSTRACT Telecom services in Pakistan are clearly changing and growing. Due to rapid development of communication technologies in past few years and changing demand of customers, the paradigm of mobile telecommunication services is now moving from simple voice-centered communication to a combination of high speed data communication and multimedia. With all this, the perceptions, believes and anticipations are changing. It is very important to identify all of these things. Secondly the service provider in Pakistan are working in a very tough competition. All of the service provider are providing more or less equal services. So it is very critical to know the exact best service provider. But still there are some factors that can make a service provider the best in the market. In this research paper total four of the factors will be studied, however the all of the variables were studied before. Moreover all these variables were not studied in any single research in Pakistan or may not be disclosed. In this research, relationship of the service quality, corporate image, perceived value and trust with the customer loyalty is discussed. In this research, total four hypothesis are developed which are about impact of corporate image, trust, perceived value, and call quality on customer loyalty. The Authors objective was to find out the relationship between customer loyalty and these four factors. For this I adopted convenience sampling and developed a questionnaire. From this research I expected the result that all of my hypothesis were accepted. Service providers have to make it differentiating for their customers by improving their Overall reputation, customer support, and convenience in procedures.

Keywords: Customer loyalty, value, Pakistan mobile telecom service, service quality, corporate image.

CHAPTER 1
INTRODUCTION

1.1 OVERVIEW
Pakistani mobile telecommunication services are clearly exhibiting signs of an abrupt industry paradigm change and symptoms of a market in transition. Due to rapid development of information and communication technologies in past years and increasing demand from customers, the paradigm of mobile

telecommunication services is now moving from simple voice-centered communication to a combination of high speed data communication and multimedia. Some other factors such as the growth of the wireless internet, and the use of different packages in corporate world all contribute to emphasize the appearance of a transition period in the mobile telecommunication services market. Also, a stagnation rate of diffusion, indicated by a fall in the rate of increase in subscriber numbers, suggests that the market may have now reached maturity. If we talk about the few past years, telecommunication in Pakistan describes the overall environment for the growing mobile telecommunications, telephone, and internet markets. In 2008 Pakistan was the worlds thirst fastest growing telecommunications market. Pakistans telecom infrastructure is improving with foreign and domestic investments into fixed-line and mobile networks; fiber systems are being constructed throughout the country to aid in network growth. Mobile Telecommunications: In January 2004 the Ministry of IT issued its Mobile Cellular Policy with objectives to: 1. Promote efficient use of radio spectrum; 2. Increase choice for customer of cellular services at competitive and affordable prices; 3. Encourage private investment in the cellular mobile operators; 4. Recognize of the right and obligations of mobile cellular operators;
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5. Provide for fair competitions among mobile and fixed line operators; and 6. Provide and effective and well defined regulatory regime that is consistent with international best practices. The mobile telecommunications sector is seeing very large year-to-year growth in Pakistan. Approximately 90 percent of Pakistanis live within areas that have cell phone coverage and more than half of all Pakistanis have access to a cell phone. With 108 million mobile subscribers in April 2011, Pakistan has the highest mobile penetration rate in the South Asian region. According to the Pakistan Telecommunication Authority (PTA), Mobilink continues to lead the market with 32.9 million subscribers, followed by Telenor with 26.1 million, Ufone with 20.4 million, Warid Telecom with 18.1 million, and Zong with 10.3 million, according to Telecom Indicators; by PTA 3 June 2011. All telecom companies are working to broaden their networks in the Azad Jammu and Kashmir and Northern Areas, which were largely ignored until recently. Five of the seven Agencies of the tribal areas have mobile coverage. (www.pta.gov.pk)

1.2 PROBLEM STATEMENT

Brief Overview The change of paradigm and the symptoms of a market in transition are driving the industrys restructuring efforts and intensifying completions between companies. Pakistani mobile carriers are aware of importance of a customeroriented business strategy as a condition for sustaining their competitive edge and maintain a stable profit level, and off course for their survival. As the numbers of subscribers has reached its almost saturation level, creating new and securing new customer is not only difficult but also costly in terms of marketing. Hence, it is becoming an industry-wide belief that the best core marketing strategy for the future is to try to retain existing customers by heightening customer loyalty and customer value.
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Purpose of Research Previous studies tell that, the companies which grow with the time passing are developing and increasing customer loyalty (Lee & Cunningham, 2001; Reichheld, 1996). This paper analyses the antecedents of customer loyalty and the structural relationship between these factors in the Pakistani mobile telecommunication services industry. As researchers knowledge no such previous research was made in Pakistan telecom, or may be made but was not disclosed. It was very interesting for researcher to study the customer loyalty factors in Pakistan telecom because there is very tough competition between the service providers. So in such tight environment customers are free to make a choice. Study was made to know those factors, which are considered by the customer in such an environment. Graphical Model Trust Call Quality

Customer Loyalty

Perceived Value

Corporate Image

1.3- HYPOTHESIS
H1: Trust has significant impact on customer loyalty. H2: Service quality has positive impact on customer loyalty. H3: Perceived value has significant effect on customer loyalty. H4: Corporate image has significant impact on customer loyalty.
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1.4- OUTLINE OF THE STUDY

Chapter #1 In chapter 1 describes the brief history of telecommunication in Pakistan, its major service providers and Pakistan Telecommunication Authority rules in short. Purpose of the study is also discussed, where the main contents of research are also discussed. This chapter also covers the research hypothesis, supported by the ample references of different authors. Key terms and definitions are also described in this chapter. Chapter #2 In depth review of the literature is described in chapter 2. Research is based on the service quality, trust, perceived value, customer satisfaction and customer loyalty. This chapter includes the in depth overview of the above given variables. Variables are taken from the journals which were previously proved by the other researchers, supporting tags are given at each variable support. Chapter #3 Chapter 3 includes methods used for data collection and reason to use them. What are the sampling techniques used and why they are used? This chapter also defines sample size taken for research, instruments used for data collection, research model development and them the statistical technique used in the research, which is Chai-square technique. All the methods and techniques are supported by the references and solid reasons, which were accepted in the previous research studies. Chapter #4 Chapter 4 defines the research results and their interpretations. The overall research hypotheses and their results summary is given, which gives the clear understanding of research purpose, hypothesis and their results, proving rejected or accepted and further interpretation of the research hypothesis. Chapter #5
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Chapter 5 is closing chapter, where research is discussed briefly implications of the research are also discussed in the chapter. Need of future research and its importance is also given.

1.5 DEFINITIONS
1.5.1-Definition of customer loyalty Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers. Customer loyalty is one of the most frequently addressed subjects in the marketing and service literature (Andreassen and Lindestad, 1998) 1.5.2-Definition of Perceived Value The worth that a product or service has in the mind of the customer. The consumer's perceived value of a good or service affects the price that customer is willing to pay for it. in order to obtain a higher price for their products, producers may pursue marketing strategies to create a higher perceived value for their products. low perceived value drives customers towards switching to others products to increase perceived value, which consequently contributes to a decline in loyalty (Anderson and Srinivasan, 2003). 1.5.3-Definition of Service Quality Service quality is a comparison of customer expectations with performance of service delivered. It is the measure of how well delivered service matches the buyers expectations. In telecom the service quality ingredients are call quality, pricing structure, mobile devices, value-added services, convenience in procedures, and customer support. Van der Wal et al. (2002) find out that, consistent quality affect U.S. consumer loyalty. Service quality has been measured by call quality. According to Lin and Wang (2006) there is a positive relationship in perceived value and customer loyalty. 1.5.4- Definition of Corporate Image
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Corporate image is the perception in consumers mind about the corporate entity behind a brand. For example Unilever, behind its every brand has a good impact on consumers due to its credibility in the market. Positive corporate images can greatly increase the speed of new product adoption because of credibility of the manufacturers claims. According to Andreassen (1999), corporate image has significant positive impact on customer loyalty.

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CHAPTER #2
LITERATURE REVIEW

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2- LITERATURE REVIEW
2.1- The Concept of Customer Loyalty The need for customer loyalty in business has been recognized by many scholars. Customer loyalty is one of the most frequently discussed subjects in the marketing and service literature (Eshghi et al., 2007; Heskett and Sasser, 2010). There is a excess of definitions of loyalty or customer loyalty in the present literature. Customer loyalty is customer repeating purchase intention to some specific products or services in the future (Jones et al., 1995). It is making customers feel committed: When the benefits are meaningful to them, they will stay on (Grossman, 1998). Loyalty is used to describe the willingness of a customer to continue patronizing a firms goods and services over a long period of time and on a repeated and preferably exclusive basis, and voluntarily recommending the firms products to friends and associates (Lovelock, 1996). Customer loyalty is the result of an organizations creating a benefit for customers so that they will maintain and increasingly repeat business with the organization (Anderson and Jacobsen, 2000). From the forgoing, loyalty in telecommunication market is concerned with the length of time and the frequency with which customers stay and remain on a network. The longer the time a customer remains on and the more frequently a customer patronizes a network, the more that customer becomes loyal. It is

therefore the desire of all network providers firms in Pakistan to retain large number of their customers on their networks. Customer loyalty provides the foundation for a companys sustained competitive edge. Different researchers have given credence to the reason why developing customer loyalty is beneficial to firms, including GSM providers. Developing and increasing loyalty is a crucial factor in companies growth a nd performance (Reichheld, 1996). Customer loyalty is one of the key factors and can help a company achieve long-term success (Andres, 2007). The significance of customer loyalty is that it is closely related to the companys continued survival and to strong future growth (Fornell, 1992). Hence, for a company to maintain a
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stable profit level when subscription level has reached saturation point, the market is mature and competition is fierce, a defensive strategy which strives to retain existing customers is more important than an aggressive one (Fornell, 1992). Ndubisi (2005) point out that the cost of serving a loyal customer is five or six times less than a new customer. Walsh et al. (2005) state that it is better to look after the existing customer before acquiring new customers. From the above, it is evident that a telecom firm that promotes customer loyalty has a lot to benefit from. The current level of GSM growth and intense competition in Pakistan has left the network providers with no option other than seeking to maintain the existing customers and lock them into loyalty. Bulk of the current marketing efforts by these firms is aimed at retaining and making customers loyal. According to Oliver (1999) loyalty is a deeply held commitment to re-buy, reuse a preferred product or service consistently in future. Loyal customers consistently come back to buy more, they're more willing to stay despite increases in price and they become strong advocates for the brand in their own social circles and online.One discovery by Xerox changed the conventional wisdom, because the Xerox totally satisfied customer were six times more likely to repurchase Xerox products over the next 18 months than satisfied customers. Customers who have freedom to choices is not enough to make them loyal. The only way is loyal customers are totally satisfied customers (Frederik F. Reichheld and W. Earl Sasser, Jr., HBR, 1990). There are three approaches of customer loyalty, the behavioral approach, the attitudinal approach and the integrated approach (Oh, 1995). Customer loyalty has been the subject of considerable research and has been defined and measured in various ways (Oliver, 1997). Customer loyalty may be defined as the customers fulfillment response to a consumption experience, or some part of it. Customer satisfaction I a pleasurable fulfillment response while dissatisfaction is an unpleasurable one (Buttle, 2004). Satisfaction and dissatisfaction are two ends of a continuum, where the location is defined by a comparison between expectations and outcome. Customers would be satisfied if the outcome of the service meets expectations. When the service quality exceeds
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the expectations, the service provider has won a delighted customer. Dissatisfaction will occur when the perceived overall service quality does not meet expectations (Looy, Gemmel & Dierdonck, 2003). Sometimes customers expectations are met, yet the customer is not satisfied. This occurs when the expectations are low (Buttle, 2005). For example, the customer expects the flight to be late and it gets late. Customer satisfaction is considered to be one of the most important outcomes of all marketing activities in a market-oriented firm. The obvious need for satisfying the firms customer is to expand the business, to gain a higher market share, and to acquire repeat and referral business, all of which lead to improved profitability (Barsky, 1992). Studies conducted by Cronin and Taylor (1992) in service sectors such as: banking, pest control, dry cleaning, and fast food; found that customer satisfaction has a significant effect on purchase intentions in all four sectors. Similarly, in the health-care sector, McAlexander et al. (1994) found that patient satisfaction and service quality have a significant effect on future purchase intentions. In mobile communication service sector, it would be important to develop marketing strategies that promote profitability by retaining existing customers through customer loyalty and value (Kim, Park and Jeong, 2004). Many researches find that high service quality relatesrelatively high customer satisfaction (Cronin et al, 2000) which further leads to loyalty (Ennew and Binks, 1999; Lai et al, 2009). 2.2- Determinants of Customer Loyalty Since customer loyalty has become major cause for organizations, a major concern is to find out the determinants or drivers of customer loyalty (Kumar et al., 2011). This section discusses the determinants of customer loyalty. 2.2.1- Service Quality and Customer Loyalty Quality is conformance to requirements (Crosby, 1996). Quality is the comparison of perceived performance and expected performance (Kang, 2006). Service quality is the customers overall impression of the relative inferiority/superiority of
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an organization and its service offerings (Bitner et al., 1990). The firm's ability to create and sustain competitive advantage depends upon the high level of service quality provided by the service provider (Yoo and Park, 2007). Therefore, providing a consistently high quality service quality can differentiate one GSM provider from others. Theoretically, positive relationships between service quality, customer

satisfaction, and customer loyalty are well documented in the extant literature. Services Quality is considered as a major determinant in customer retention and building value relationship (Venetis and Ghauri, 2004). Service quality results in repeated sales and increased market share, which leads to customer loyalty (Buzzell and Gale, 1987). Providing a high service quality can lead an organization to charge premium price (Brown et al., 1992). High service quality enhances customers favorable behavioral intentions while simultaneously reduces their unfavorable intentions (Zeithaml et al., 1996). The implication of the above discussion is that with high service quality, GSM customers are attracted, and when happy and satisfied, and have an increased propensity to stay longer with their GSM service provider. Empirical findings have shown positive relationships existing between service quality and customer satisfaction, on one hand and between service quality and customer loyalty, on the other hand in a number of industries. For example, Elnan and Andersen (1999) found a positive relationship between service quality and customer satisfaction in the bus industry in Norway. Coner and Gungor (2002) found that service quality would lead towards more loyal customers in the Turkish Metropolitan retail market. Turel and Serenko (2006) found that perceived service quality and perceived value are the key constructs affecting the customer's satisfaction with mobile services. Satisfaction in turn leads to customer loyalty. Zeithaml et al. (2008) develop a conceptual model that correlates service quality, customer satisfaction and customer loyalty. The model shows that service quality results from reliability, assurance, responsiveness, empathy and tangibles. Service quality is determined by reliability, responsiveness, assurance, empathy, and tangibles (Parasuraman et al., 1985). These can be considered as the
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determinants of the broad service quality, but what are the specific determinants of telecommunication service quality? Jahanzeb and Tasneem (2011) discuss these under the following broad headings: communication guarantee, settlement service, value added service (VAS) and technology innovation. Communication guarantee results when the quality of network of the service provider is satisfactory and there are negligible rates of call failure. The settlement service refers to the prompt and accurate billing service that also enhances customer satisfaction. Customer satisfaction level can also be influenced by VAS, for example, GPRS, Media file sharing, news updates and so on. Finally, technology innovation refers to the feature where in the service provider rolls out new technology on a regular basis. According to Seth and Deshmukh ( 2004), The subject of service quality is very rich in context of definitions, models and measurement issue. Several researchers explored the subjects with varying perspectives and using different methodologies. The following factors seem to be suitable for comparative evaluations of the models: Identification of factors affecting service quality. Suitability for variety of services in consideration. Flexibility to account for changing nature of customers perceptions. Directions for improvement in service quality. Suitability to develop a link for measurement of customer satisfaction. Diagnosing the needs for training and education of employees. Flexible enough for modifications as per the changes in the

environment/conditions. Suggests suitable measures for improvements of service quality both upstream and down stream the organization in focus. Identifies future needs (infrastructure, resources) and thus provide help in planning. Accommodates use of IT in services. Capability to be used as a tool for benchmarking.
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With these issues as focus this present study is undertaken to understand the service quality models in the above light. In earlier studies on mobile telecommunication services, service quality Has been measured by call quality, pricing structure, mobile devices, value-added services, convenience in procedures, and customer support (Kim 2000; Gerpott et al., 2001; Lee, Lee, & Freick, 2001). As the earlier researches revealed that service quality is a kind of attitude that is formed by the difference between customers expectations (Parasuraman, Zeithaml, & Mitchell, 1990). In this context call quality there is the difference between the pricing structure of different service providers, although the value added services, procedures and customer support are more or like same. According to the previous researches made in telecommunication suggest that service quality is not only the factor influencing the customer loyalty, as in German mobile communication consumers find service price, phone number portability and benefit most effective loyalty (Grepott, 2001). Korean study tells that switching costs, brand image and perceived service quality are the ingredients of customer loyalty. So there is difference in perceptions of people due to different strengths of relationship across cultures. The number of service quality dimensions varies from industry to industry (Asubonteng, McCleary, & Swan, 1996). According to Btner and Hubert (1994) service quality is customers evaluation judgment, where the degree of superiority of performance with respect to the product. This report choses the conceptualization of Kims (2000), Grepott et al., (2001), Lee et al., (2001), where service quality is measured by call quality, pricing structure, value added services, convenience in procedures and customer support. According to Anderson and Sullivan (1993), there are strong linkages between service quality dimensions and overall customer satisfaction. The practice of excellent service quality has been proven that customer satisfaction will significantly lead to customer loyalty. While the number of underlying dimensions has been shown to vary with the service setting, it appears
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reasonable to suggest that the service core and relational dimensions will emerge in nearly all cases as they form the basis for the service. One of the most critical elements in a service market such as the advertising industry, is the development of client relationships. Service quality and customer satisfaction has become very important issue for private sector organization, however we can say that this is important for both customer as well as organization. Determination of service quality and customer satisfaction is very complex issue because both issues differ from product to product and person to person. Quality is the combination of need as well as expectation of customer (Parsuraman et al 1991). customer satisfaction is execution of customer response towards service provider. Satisfaction leads a customer towards loyalty. The more a customer is satisfied the more he will be loyal (Oliver 1997).

2.2.2- Customer Service/Care, Customer Satisfaction and Customer Loyalty Customer service is a process that takes place between a buyer, a seller, and third party and can influence demand in the market (Innis and La Londe, 1994). The third party may include companies that have been licensed by a marketing company to provide customer service. Customer care is used in a wider sense and goes far beyond the traditional role of customer service and support; it encompasses all the functions along the entire service delivery value chain (Katz et al., 1998). Customer service is a system of activities that comprises customer support systems, complaint processing, speed of complaint processing, ease of reporting complaint and friendliness when reporting complaint (Kim et al., 2004). Customer service is one of the most important considerations in the evaluation of a supplier (Jackson et al., 1985). A supplier's reputation for good service attracts potential customers and keeps existing customers loyal. Good service additionally provides protection from price competition (Hartley, 1989). Customer service can produce customer behaviors that can indicate whether a customer will remain with or defect from an
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organization (Zeithaml et al., 1996). Specifically, the high levels of competition among service providers in Nigeria necessitate adoption of different customer service techniques to satisfy and retain the customer. The effectiveness of the level of customer service will enhance customer retention and reduce switching between and among service providers (Oyeniyi and Joachim, 2008). Therefore, customer service includes all help and assistance GSM providers offer to customers directly or indirectly prior to, during, and after purchase to provide exciting customer experience with their products. If well leveraged, it has a potential to offer a competitive advantage to GSM service providers and make them to attract and retain customers. GSM providers in Nigeria provide customer through toll free customer care line, help desk and websites. Because of its convenience, cost free and availability, majority of subscribers in Nigeria are most likely to be served by their network providers through toll free customer care line. McDougall and Levesque (2000) found that all telecommunication service providers in Malaysia differentiate themselves a high level of customer service and this has become the most important and significant driver in customer satisfaction. Lucas (2005) is of the opinion that by providing excellent customer service and dealing with dissatisfaction as soon as it is identified, companies can ensure that customers remain loyal and keep coming back. From the foregoing discussion, GSM providers, in addition to the provision of a high service quality and offering of an attractive and fair price, should also pay more than a passing attention to the delivery of high and effective customer service/care. They should invest substantial resources on infrastructure, information technology (IT) and human resources that would provide leverage for effective and quality customer care. They should remember that the entire idea of customer care in the telecomsector is about delivery exciting customer experience. 2.2.3- Importance of Perceived Value According to Kims, Park and Jeong (2004) it is very important to develop maketing strategies that extend profitability by retaining the existing customers through customer loyalty and value. Previous researches have revealed that only
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the high service quality is not the reason to buy it (Olshavsky, 1985). That is why this study aims to determine the value perception of the customers, and to give understanding to service providers. By this study we will come to know that, how much important is the value perception, and how to manage the value in customers. Perceived value has gained recent attention as a stable construct to predict buying behavior (Chen and Dubinsky, 2003). Additionally, customers value perceptions have been found to increase their willingness to buy and decrease their intentions for alternatives (Hellier et al., 2003). Earlier research supports the importance of commitment in relationship marketing and the need to understand the reasons behind the behavior (Hellier et al., 2003).Early views on commitment focused solely on repeat purchase behavior, but current definitions of customer commitment include both the attitudinal and behavioral component (Oliver, 1999). In service marketing commitment has been found to be the most important driver of customer behavior (Roos et al., 2005).). Purchase based on habit is referred to as inertia (Gounaris and Stathako poulos 2004). Roos et al., 2005 have found that committed customers can identify differences between the service offerings of other telecommunications service providers and appreciate the benefits offered by their own service provider, but the uncommitted customers cannot state any differences. In accordance to differences in the level of commitment, it is important to distinguish the difference in value dimensions influence on commitment in order to be able to plan effective marketing strategies( Minna Pura ,2005). Customer advocates are vital sources for future revenue streams and market intelligence as they offer insight about their needs and provide the opportunity for firms to tailor products, pricing, distribution channels, and marketing communications (Zablah et al., 2004). Customer advocacy reflects combinations of marketing resources that contribute to a more efficient and effective marketing enterprise, including voluntarily sharing customer-specific information in firm-sponsored marketing research activities, word-of-mouth referrals, and increasing levels and proportions of current purchasing

activities(Russell Lacey and Robert M. Morgan 2007). According to Bob

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Weybright (2004) one must look carefully at their product and service. Marketers need to assess the competitive climate in the region, country, and world to determine how it might affect the value of what they have to offer; learn to identify what the purchaser needs to see or experience that supports their sense of value while satisfying the needs that drove the purchase initially; and finally, apply what is learned when making a decision as to where products or services are to be sold, who to sell to, and at what price. 2.2.4- Importance of Trust The concept of trust has become popular in public debate and academic analysis. In high income countries this interest is associated with concern for the decline of trust in governments and professionals, and in developing countries has been prompted by debates around the motion of social capital. Trust has been identified as a major factor influencing such things as capital investment, relationship marketing, cross-cultural communication, learning and various types of cooperation. Trust management is becoming also very important inside the organization. Many of the studies focused the connection between loyalty and trust. Morgannad Hunt define trust as ones confidence in an exchange of value. According to Reichheld and Schefter (2000) customer trust is the primary factor for customer commitment and loyalty. Concept of trust from previous researches is in various of ways. In e commerce trusting beliefs, according to Mayer et al. (1995) are perceptions of attributes of ecommerce, including ability, integrity and knowledge. In telecom trust is trustworthiness including extent to which service is provided, ability to fulfill the commitments.Trust is built up gradually and incrementally, reinforced by previous trusting behaviour and previous positive experiences (Zand 1972; McAllister 1995; Lewicki and Bunker 1996). According to Six (2007) interpersonal trust is a psychological state comprising the intention to accept vulnerability to the actions of another party, based upon the expectation that the other will perform a particular action that is important to you. Arrow (1974) considers trust as a basic element not only for organizations but also for the economy in general, affirming that trust is a lubricant to economic exchange.
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2.2.5-Corporate Image and Customer Loyalty Corporate image is defined as perceptions of an organization reflected in the associations held in consumer memory (Keller, 1993). It is the sum of peoples perceptions of an organization. Images and perceptions are created through all the senses: sight, sound, smell, touch, tastes and feelings experienced through product usage, customer service, the commercial environment and corporate communications (Smith and Taylor, 2004). It is external perception of all human and physical resources of an organization, especially characteristics as employees behaviors and attitudes, communication levels, clothing etc. (Pampaloni, 2006). It is defined as the perception of an organization that customers hold in their memories. Because it works as a filter through which a companys whole operation is perceived, a corporate image reflects a companys overall reputation and prestige (Kim and Lee, 2011). It is obvious that corporate image is concerned with the impression an organization forms in consumers minds and the perception of consumers arising from this impression. It is therefore essential that GSM operators show concern about the way it is perceived by their variety of stakeholders such as employees, customers, shareholders, government, media, and the general public, as this affects initial and repeat purchase. The role of corporate image is pivotal in todays business environment (Gioia et al., 2000). A positive and reinforcing corporate image is capable of generating customer satisfaction and loyalty in organizations. Corporate and brand image have also emerged as determinants of customer loyalty (Gronroos, 1988). There is a relationship between corporate image, customer satisfaction and loyalty. Higher levels of customer satisfaction increases loyalty by building a positive corporate image (Anderson et al., 1994). A well-managed corporate identity unconsciously reassures customers (Smith and Taylor, 2004). Corporate image is influenced both by service quality and customer satisfaction, which in turn influences customer loyalty (Kandampully, 2007). The high point of the above
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discussion is that the reassurance keeps customers coming to do a repeat business and lock them into loyalty. Empirical findings have also shown the relationship between corporate image and customer satisfaction and loyalty. Groholdt et al. (2000) found that corporate image is an important driver of customer satisfaction and loyalty in the industries of soft drinks, banking and telecommunications. Liu (2008) found that corporate image has a significant impression on services quality, customer value, customer satisfaction and customer loyalty in the Chinese telecommunication market. Chen (2002) concludes that building up image is one of the important tasks to retain customers in the Taiwan telecommunication sector. Corporate image is one of the important factors in service evaluation (Bitner, 1991; Gronroos, 1988). Corporate image also affects customer loyalty. In service sector Andreassen and Lindertad (1998) examined the role of corporate image in formation of customer loyalty. The study of Andreasen and Lindestad was replicated by Hart and Rosenberger (2004) in Australia. Corporate image reflects the companys overall reputation and prestige. According to Aydin and Ozer (2005) corporate image emerges from a customers net consumption experience and also the perceived service quality affect corporate image. There is a link between corporate image and customer loyalty (Erdem and Swait, 2004). Corporate image is the perception of constituencies on how an organization actually presents itself (Van Riel, 1995; Argenti, 1998), whilst corporate identity refers to the self-presentation of an organisation through corporate logo, color, and any signal that can easily be seen (Van Riel, 1995). Corporate reputation has a unique meaning and is more long lasting than corporate image. Importantly, it requires a constantly harmonious series of programs (Melewar, 2003) and should be thoroughly crafted in line with the strategy development of an organization. Reputation should thus be seen as a key source of distinctiveness to gain competitive advantage in the changing business environment (Fombrun & Van Riel, 2004: 5).
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In todays competitive business environment, Argenti (1998) points out the importance of corporate image and identity to corporations by developing corporate advertising campaigns as the pivotal intangible asset that should not be ignored by corporations. This can also be considered as a monolithic identity which makes the organization distinctive and interesting (Ind, 1992; Dowling, 1994). Balmer and Greyser (2003) then highlight the importance of multiple identities as a new corporate identity by developing an ACID test to illustrate how multiple identities may enhance the visibility of corporations and combat the corporate deadly sins. Another growing form, apart from corporate image and identity, is corporate reputation which has been paid considerably attention since the 1990s in the corporate communication literature (Balmer and Greyser, 2003). Fombrun and Van Riel (2004) then reveal the importance of corporate reputation for todays corporations to create unique capabilities and gain competitive advantage. By formulating the Reputation Quotient, these reputation scholars have developed a reputation audit to gauge the reputation of corporations. This makes corporations more visible, distinctive, authentic, transparent and consistent in the complex business environment. However, some scholars from different perspectives question the importance of image or identity as a symbol or illustration that portrays the good reputation of organizations to the public. Thus, more realistic models of reputation have been proposed. A good image of organization alone is not enough. Understanding the competencies trait of the corporations may yield distinctiveness to achieve a truly good reputation (Podnar, 2004: 378). Davies et al. (2001) argue for the importance of corporate personality as a key reputation construct to measure both the image and identity of organizations from the perspective of organizational behavior. From the perspective of public relations and psychology, Grunig (1992) and, Grunig and Grunig (2003) argue that image is associated with symbol and needs to be measured by using the quality of relationship management rather than by reputation indicators to portray the goodwill of organizations to their publics. Berens and Van Riel, (2004) stress the element of
27

trust as a key source of corporate credibility to measure the corporate reputation from the perspective of business to consumer literature.

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CHAPTER #3
RESEARCH METHODS

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3.1- METHODOLOGY OF DATA COLLECTION

The study adopted the survey methodology to generate quantitative data. Structured questionnaire was used to collect the data. For all the variables the author have used 5 scale point Likert scale. The questionnaire was covering 4 variables; Trust, Call quality, perceived value, and corporate image. Three question from each of the variable was chosen, so the percentage of variables in questionnaire was equal. Five point likert scale was used with close ended options; rating from 1 to 5 point having option Totally disagree to Totally Agree.

3.2- SAMPLING TECHNIQUE

Convenient Sampling Author intends to adopt the convenient sampling technique. data will be collected from every required area, so that the significance of the study cannot be denied. Sample will be taken from the Karachi city, through getting hard copies filled.

3.3- SAMPLE SIZE

Keeping the variables in view, which were 5 in total, 80 research questionnaires were distributed there were 40 males and 40 females. Response was 100%. Breakup of percentages of respondents with respect to service provider was 20% each, for Telenor, Mobilink, Ufone, Warid and Zong respectively.

3.4- STATISTICAL TECHNIQUE

Chi Square technique I compared observed data with data according to a specific hypothesis for this purpose I used Chi-square technique. I also tested the null hypothesis through this technique, which states that there is no significant difference between the expected and observed result.

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CHAPTER # 4 RESULTS

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4.1- FINDINGS AND INTERPRETATION OF RESULTS In this research five variables are included, in which customer loyalty is only dependent variable, and it was assumed that customer loyalty depends upon all of the four variables. Hypothesis against each variable is tested and discussed below.

H1: Trust has significant impact on customer loyalty.

Count Customer Loyalty >6Month Q1to3 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 1 4 3 6 1 15 >1Yr 0 2 6 6 1 15 >2Yrs 0 1 6 7 4 18 >3Yrs 0 1 1 10 4 16 >4Yrs 0 1 1 5 9 16 Total 1 9 17 34 19 80

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H2: Service quality has positive impact on customer loyalty.

Crosstab Count Customer Loyalty >6Month Q4to6 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 3 1 9 1 1 15 >1Yr 2 7 3 3 0 15 >2Yrs 0 1 10 6 1 18 >3Yrs 0 1 5 6 4 16 >4Yrs 0 0 1 6 9 16 Total 5 10 28 22 15 80

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H3: Perceived value has significant effect on customer loyalty.

Crosstab Count Customer Loyalty >6Month Q7to9 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 1 4 7 3 0 15 >1Yr 4 3 6 2 0 15 >2Yrs 1 6 6 5 0 18 >3Yrs 0 3 4 7 2 16 >4Yrs 0 0 2 2 12 16 Total 6 16 25 19 14 80

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H4: Corporate image has significant impact on customer loyalty.

Crosstab Count Customer Loyalty >6Month Q10to12 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 8 2 4 1 0 15 >1Yr 12 0 3 0 0 15 >2Yrs 5 5 4 3 1 18 >3Yrs 0 0 1 6 9 16 >4Yrs 1 0 1 3 11 16 Total 26 7 13 13 21 80

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Gender Wise
H1: Trust has significant impact on customer loyalty.
Q1to3 * Gender Crosstabulation Count Gender Male Q1to3 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 1 3 8 18 10 40 Female 0 6 9 16 9 40 Total 1 9 17 34 19 80

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H2: Service quality has positive impact on customer loyalty.

Q4to6 * Gender Crosstabulation Count Gender Male Q4to6 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 2 4 16 8 10 40 Female 3 6 12 14 5 40 Total 5 10 28 22 15 80

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H3: Perceived value has significant effect on customer loyalty.

Q7to9 * Gender Crosstabulation Count Gender Male Q7to9 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 1 8 14 8 9 40 Female 5 8 11 11 5 40 Total 6 16 25 19 14 80

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H4: Corporate image has significant impact on customer loyalty.

Q10to12 * Gender Crosstabulation Count Gender Male Q10to12 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 12 5 7 4 12 40 Female 14 2 6 9 9 40 Total 26 7 13 13 21 80

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Age Wise
H1: Trust has significant impact on customer loyalty.
Q1to3 * Age Crosstabulation

Count Age 18-25 Q1to3 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 1 2 8 8 8 27 26-40 0 4 3 14 6 27 41-60+ 0 3 6 12 5 26 Total 1 9 17 34 19 80

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H2: Service quality has positive impact on customer loyalty.

Q4to6 * Age Crosstabulation Count Age 18-25 Q4to6 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 3 4 8 10 2 27 26-40 2 1 9 8 7 27 41-60+ 0 5 11 4 6 26 Total 5 10 28 22 15 80

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H3: Perceived value has significant effect on customer loyalty.

Q7to9 * Age Crosstabulation Count Age 18-25 Q7to9 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 2 7 8 5 5 27 26-40 2 2 10 8 5 27 41-60+ 2 7 7 6 4 26 Total 6 16 25 19 14 80

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H4: Corporate image has significant impact on customer loyalty.

Q10to12 * Age Crosstabulation Count Age 18-25 Q10to12 StronglyDisagree Disagree Uncertain Agree StronglyAgree Total 9 2 3 4 9 27 26-40 8 1 6 6 6 27 41-60+ 9 4 4 3 6 26 Total 26 7 13 13 21 80

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4.2- HYPOTHESIS ASSESSMENT SUMMARY Every hypothesis is tested against the dependent variable Customer Loyalty. Using the Chi-Square, some results were obtained which are given in detail one by one, According to our first hypothesis;

H1: Trust has significant impact on customer loyalty.

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 28.820
a

df 16 16 1

sided) .025 .040 .000

27.160 15.823 80

a. 20 cells (80.0%) have expected count less than 5. The minimum expected count is .19.

In the above table sig. value is 0.025 < 0.05. In this way our hypothesis is accepted which states that trust and Customer Loyalty has positive relationship.

H2: Service quality has positive impact on customer loyalty. .

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 58.182
a

df 16 16 1

sided) .000 .000 .000

57.775 29.542 80

a. 20 cells (80.0%) have expected count less than 5. The minimum expected count is .94.

In the above table, taking Pearson Chi-Square results, the sig. value is 0.000
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<0.05 which show that our hypotheses H2 is accepted which states that Call Quality has significant impact on customer loyalty.

H3: Perceived value has significant effect on customer loyalty.

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 61.833
a

df 16 16 1

sided) .000 .000 .000

59.050 25.476 80

a. 22 cells (88.0%) have expected count less than 5. The minimum expected count is 1.13.

This Table shows that the sig. value is 0.000 < 0.05, which show that our hypothesis is accepted which shows that there is positive relationship between perceived value and Customer Loyalty, so that our hypothesis H3 is accepted. Perceived value has significant impact on customer loyalty. H4: Corporate image has significant impact on customer loyalty.

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 71.651
a

df 16 16 1

sided) .000 .000 .000

82.862 40.309 80

a. 22 cells (88.0%) have expected count less than 5. The minimum expected count is 1.31.

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Using Pearson Chi-Square we obtained the sig. value 0.000 < 0.05 which means that the null hypothesis is rejected which is, there is no relationship between corporate image and Customer Loyalty, so that our hypothesis H3 is accepted which states that there is significant impact of corporate image on customer loyalty.

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CHAPTER # 5 DISCUSSION, IMPLICATIONS, &CONCLUSIONS

47

DISCUSSIONS AND IMPLICATIONS

The present study is notable, because as to the knowledge of the researcher no such study has been made by others on antecedents of customer loyalty in Pakistan telecom, or may be made but they were not published for all. As it is seen that our all four hypotheses accepted which were trust, service quality, perceived value, and corporate image. In this research this is important that the research was made in Karachi city through convenience sampling and call quality is found to be almost equal for all the networks and that may be the reason. Secondly the procedures are more or less same for changing or subscribing any package. So people find it difficult to switch to or remain with the existing service provider. Service providers have to make it differentiating for their customers by improving their Overall reputation, customer support, and convenience in procedures. According to Sharma and Patterson (1999) trust plays an important role in motivating the customers to remain loyal with the service provider. Although this study also suggests that the trust is important factor because respondents found to be much judgmental in case of trust. Corporate image also plays a vital role to make customers loyal with the service provider. Different people have different perceptions regarding the service provider, it is the service provider who makes credibility among consumers. This study has some limitations. There are other factor influencing customer loyalty, apart from the factors studied above. For example demographic characteristic, usage patterns and life style of consumers. Future studies could focus on examining the factors cited above.

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APPENDIX

Questionnaire on Factors Influencing Customer Loyalty in Pakistan Telecommunication Industries in Karachi

I am Zulfiqar Ahmad student of MBA at DIHE request you to fill the questionnaire below by ticking the most suitable option. Please be informed that all information obtained through this questionnaire is to expand the frontier of knowledge and will be kept confidential.

Biodata
1. Gender: a. Male b. Female b- above 25 yrs b- U-fone c- above 35 yrs c- Telenor d- above 45 yrs d- Warid c-above 2yrs e- Zong d-above 1yrs e2. Age: a- Above 15 yrs above 60yrs

3. Network name: a- Mobilink

4. Duration on Network :a- above 4yrs e-above six months

b-above 3yrs

Key to Options
1 - Strongly Disagree; 2 Disagree; 3 Uncertain; 4 Agree; and 5 Strongly Agree.
S/N Statement on Research Variables 1 2 3 4 5

1. 2. 3. 4. 5. 6. 7. 8. 9.

10. 11. 12.

Trust I trust on the commitment of my service provider. I am satisfied with my service provider on the whole. I recommend my network to friends. Service Quality I find my network coverage wide and extensive. I find uninterrupted connectivity whenever I call. I find my call failure on my network is very rare. Perceived Value Overall service I receive is valuable. Variety of value added services (such as GPRS, free midnight calls, news and so forth) important to me. I receive more valuable services from my network as compare to other network companies. Corporate Image My companys name, quality of services, and variety of products attract me. I am retained with my network because of a range of promotion (advertising, direct marketing, and events). I find a fair and acceptable price of my service provider which promotes its image positively.

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We appreciate your timely filling and return of this questionnaire.

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