CUSTOMER LOYALTY IN THE TELECOMMUNICATION INDUSTRY IN NIGERIA
TABLE OF CONTENTS
CHAPTER ONE    
INTRODUCTION    
1.1Background to the Study    
1.2     Statement of the Research Problem    
1.3    Aim and Objectives of the Study    
1.4     Research Questions    
1.5     Research Hypotheses    
1.6    Scope of the Study    
1.7    Significance of the Study    
CHAPTER TWO    
LITERATURE REVIEW    
2.1    Introduction    
2.2    The Concept of Customer Loyalty    
2.3    Theories of Customer Loyalty    
2.4    Antecedents of Customer Loyalty    
2.5    Empirical Review    
2.6     Theoretical Frameworl
CHAPTER THREE    
METHODOLOGY    
3.1    Introduction    
3.2     Research Design    
3.3    The Population of the Study    
3.4    Sample and Sampling Technique    
3.6    Model Specification    
3.7    Sources of Data    
3.8    Data Collection Instrument and Validation    
3.9    Method of Data Analyses    
CHAPTER FOUR    
Data Presentation And Analyses
4.1 Introduction……………………………………………………………………………………..
4.2         Presentation of data……………………………………………………………………………………………………………..
4.3         Demographic discription of the variable……………………………………………………………………………….
4.4         Response on research objectives………………………………………………………………………………………….
4.5         Response on research hypothesis…………………………………………………………………………………………
CHATER FIVE    
SUMMARY, CONCLUSION AND RECOMMENDATIONS    
5.2     Summary    
5.3    Conclusion    
5.4    Contribution to Knowledge    
CHAPTER ONE
                INTRODUCTION
1.1Background to the Study
The mobile telecommunication industry has become increasingly challenging and complex as an environment to operate in (Kim and Yoon, 2004; Seo, Rangathan, and Babad, 2008). The industry has become intensely competitive and growing at an unprecedented rate during the last several years. The significant growth in the mobile telephone market can be credited to the massive technical advances as well as the increased number of network operators, resulting in fierce competition (Gerpott, Rams, and Schinler, 200). While the increasing number of subscriber base has contributed to competition, the variety of services made available such as short message services (SMS), high-volume data applications, and internet enabled functionalities (MMS, WAP, GPRS etc) have also contributed massively to this process (cf. Seo, Ranganathan and Babab, 2008).
CHALLENGES
The popularity of mobile phones among young consumers is a worldwide phenomenon and Nigeria is no exception. Anattraction with mobile phones and their acquisition is rampant within the youth culture in particular. This has prompted researchers to explore this topic in depth. Numerous studies have been undertaken in various countries including, Pakistan(Nawaz and Usman, 2010), South Korea,(Shin and Kim, 2007), Greece (Santouridis and Trivellas, 2010),France(Lee, Lee andFeick, 2001), USA(Lim, Widdows and Park, 2006), Turkey(Aydin and Ozer, 2005),and South Africa (Van der Wal, Pampallis and Bond, 2002)to name a few, in an attempt to understand this phenomenon. Very few studies in this area have been undertaken in Nigeria in particular. Although, customer loyalty is an imperative factor influencing company’s market share and profitability, it has not been addressed (Buzzell et al., 1975; Raj, 1985; Jensen and Hansen, 2006). Most of the studies that have been carried out cover primarily utilizing mobile phones for communicating with friends and family, accessing news, sports and for personal entertainment. Thus this research will help close the gap by providing empirical information on how to choose a mobile service provider and the factors which affect a consumer’s decision to stay or leave that provider. By doing so, rendered information will provide guidelines for service providers to help develop suitable marketing strategies in order to satisfy their current customers and attract new ones.
Wireless communication technology, particularly cellular networks have spread swiftly throughout Nigeria within the past decades making it the main form of telecommunication in the area. One manifestation of this is the move from analog to cellular system phones whereby, the proportion of analog versus digital users has steadily decreased. In 1992, the Federal Government of Nigeria established the Nigeria Communications Commission (NCC) by decree 75 to regulate the activities of telecommunications services in the country. The need for the establishment of this commission was partly due to the poor performance of NITEL, the nation’s telephone service provider and partly to open up the telecommunications sector and attract private investors. This poor performance had resulted in the low tele density of 0.04 in Nigeria up till 1999, a situation that was considered one of the lowest in sub-Saharan Africa. With the coming into existence of the commission, there was the liberalization of the telecommunication sector which allows private sector participation leading to the licensing of Global System of Mobile Communications (GSM) operations in 2001. Through this policy, the nation moved from a monopolistic telecommunication market towards a fully liberalized one which allows competition.  Importantly, the de-regularization of the sector through the removal of state monopoly rights has made it possible for private participation in the mobile telephone sector in many parts of the world, particularly Nigeria. The Government of Nigeria’s restructuring of the state owned monopolistic telecommunication sector and subsequently, limiting her control has contributed to a more open and free market system. Now there is an equal playing field for all the brands in the sector to function effectively and profitably without unnecessary interferences from the government.
The GSM revolution in Nigeriastarted in August 2001, with the licensing of three mobile operators, MTEL, Econet (now Airtel) and MTN by NCC, and since then the facade of information and communications technology in Nigeria has been transformed. Globacom and Etisalat were later licensed to operate thereby making the GSM operators to be five (5). Participation by such players has injected a certain level of energy and competitiveness in the market. Today, Nigeria’s mobile telecommunication market can be described as extremely competitive. Since the GSM launch, mobile telephone has rapidly become the most popular method of voice communication in Nigeria, relegating CDMA (Coded Division Multiple Access), a much earlier introduced telecommunication platform, to the background.
Nigeria has maintained its lead as African’s largest telecom market with active subscribers of 92,006,608 by the end of February, 2012 (Nigerian Communications Commission, 2012), relegating South Africa to second place with about 60 million subscribers. This represents a tele-density of 68.68% up from a tele-density of 0.73% in 2001. The explosive growth rate in the market has thrown up intense rivalry among the GSM operators and necessitated the need to engage in marketing activities that would enable them to retain a large portion of their customers and make them loyal. Notwithstanding, the competition has breathed newness into the sector, making it more effective and efficient. The industry can now boast of reasonable levels of service quality, value-added services and active engagement with, and contribution to society. With the deregulation of Nigeria’s telecommunication sector, along with its intense competition and advances in information and communication technology (ICT), considerable pressure has mounted on the companies to demonstrate their capacity to create customer value and remain attractive to consumers.This is more so as the market has become saturated and with little opportunity to attract new customers. The resultant competition has led to the reduction in tariff, introduction of new and innovative products, advertising blitz, rising sales promotion, and innovative customer service (care). All of these are aimed at both attracting new customers and retaining the existing customers. The high growth of subscribers resulting in impressive financial performance of the GSM providers has necessitated the need to study the factors that influence customer loyalty in the market. The sky-high growth in the subscriber base of the GSM has led to intense and cut-throating competition in the GSM market of Nigeria. While it is true that customers differ in terms of their loyalty to a particular brand, it is equally certain that customers who may identify the current levels of service offering as below industry standard or their expectations may intensify their search for alternative service provider considered superior. In the United States, for example, customers are provided with financial incentives to subscribe to or switch from one operator to the other (Lai, Griffin, and Babin, 2009) The competition is exacerbated by the lower switching costs among the subscribers of the various networks, which manifest in the rate of recurrence at which they (subscribers) freely enter and leave the networks.
In term of financial outlay it costs subscribers as low as N100 to acquire SIM (Subscriber Identification Module) and this makes it cheaper for subscribers to navigate from one network to another. Such trends are beginning to inform companies that performance improvements and profitability can be achieved by focusing on retaining and maintaining existing profitable customers. Thus, the strategic need for retaining current customers has increased dramatically (Seo, Ranganathan, and Babab, 2008).With the competition becoming tough, service providers realized that retaining one’s existing customer base is important as much as the acquiring of a new customer (Coyles and Gokey, 2005). There is also a problem of the declining growth in the GSM subscriber base in Nigeria making it more difficult to attract new subscribers and necessitating again the need to retain the acquired customers. Thiscondition, according to Long and Chun (2004) makes mobile telecommunication companies not only to promote their service quality, but also change their marketing core strategy to holding their existing customers by enhancing and optimizing the customer loyalty.
Management scholars have long argued that the principal guarantee of business growth and profitability is on shifting attention from the activity of attracting customers to one which relies on retaining and maintaining relationship with existing customers (e.g., Ravald and Gronroos, 1996),In the light of this intense competition, the major challenge confronting all the mobile operators in Nigeria, therefore is the determination and execution of various marketing initiatives that would not only lead to attraction of new subscribers, but also retention of the existing ones who would then become loyal customers. There are overwhelming arguments supporting that it is more expensive to win new customers than to keep existing ones (Reichheld and Sasser, 1990; Ennew and Binks, 1996; Harmozi and Giles, 2004; Pfeifer, 2005;). Berry (1980) observed that “having customers not only acquiring customers is crucial for service firms.” The criticality of this assumption is based on the notion that it cost as much as 6 times more to win new customers than it does in keeping an existing one (Rosenberg and Czepiel, 1984, p. 45). Reichheld (1993) posit that, in relation to a specific industry, the possibility of increasing profits by up to 60% is greater when potential customer migration is reduced by only 5%. The fundamental principle underlying these assumptions is rooted in relationship marketing’s emphasis on the maintenance of relations between the company and its external actors, with customers classified as the most important actor. This activity facilitates the creation of customer loyalty so that a stable, mutually beneficial, and long-term relationship is sustained. Thus, a leading business strategy depends on the ability to build and maintain loyal and valued customer relationship; resulting in positive consequences including reducing alternative search behaviour, repeat purchase, spending on ancillary services, creating exit barriers, stimulating consumer cooperative behaviour etc. (Baloglu, 2002; Andeleed, 1996; Reichheld, Markey, and Hopton, 2000).
A brief evaluation of the literature reveal that the ability of service firms to provide superior customer value is regarded as one of the most successful strategies for achieving favorablebehavioral intentions (e.g., Cronin, Brady and Hult, 2000; Olaru and Purchase, 2008), hence sustainable competitive advantage. Thus, it has become imperative for Telecom brands in Nigeria’s Mobile telephone market to understand that customer-oriented business strategy is the most attractive option for achieving competitive advantage, and profitability, and importantly, as a guarantee for survival. Needless to say, all strategic priorities and activities should be founded on creating superior customer value and loyalty thereby. It is critical for these players to identify the various dimensions related to customer loyalty and how they could be improved so that customer bonds are strengthened and customer loyalty achieved as a result. Various constructs including service quality, satisfaction, network quality, switching barriers, brand image/corporate reputation, customer care service, call tariff plans, promotions, etc. are connected in different ways to customer loyalty in the mobile telecommunication sector (e.g., Wang and Lo, 2002); each producing distinctive outcomes given their separate settings.
1.2     Statement oftheResearch Problem
As competition intensifies, companies are confronted with various threats and opportunities in an effort to sustain their market position. In Nigeria’s flooded mobile services market, where both carriers and subscribers have either reached or nearing their climax; attracting and creating new customers, has become tremendously difficult, and also very costly in terms of marketing spend. With mobile penetration rate standing at 84.9%, new subscriptions are expected to slow down and also stabilize, as observed in other markets (Santourisdis and Trivellas, 2010). However, multiple subscriptions continue to see steady growth. Currently there are four mobile service providers, of which they are strong international brands, competing for the patronage of over twenty one million mobile phone users; based on past trends the competitive landscape is expected to get ugly in the foreseeable future. Evidently, a gap exists in the literature regarding customer relationship development and organizational growth in the Nigerian telecommunication context, which this survey tends to fill.
The fascination of digital gadgets amongst young consumers worldwide, in particular mobile phones, has presented an opportunity for telecommunication marketers to target this group. Majority of mobile phone users have a personal relationship with their phones.They no longer regard them as a mere luxury, but rather as a necessity for everyday life. Thus, choosing an appropriate mobile service provider becomes an important part of owning a phone. For this reason, it is important for mobile service providers to maintain their current customers and attract new ones. Based on a number of groundwork interviews with consumers, it was revealed that customer loyalty to a mobile service provider is affected by the price, quality of service, brand image, switching barriers, customer service satisfaction, trends etc. These factors affect primarily the young who are, by nature, influenced easily by their peers and tend to make hasty and abrupt decisions. Thus, this research will examine the factors that contribute to customer loyalty of mobile service providers among consumers in Nigeria.
GAP 1: PRODUCT CHARACTERISTICS - Price, Service Quality, Brand Image
GAP 2: CUSTOMER CHARACTERISTICS – Customer Satisfaction, Switching Costs
GAP 3: INDIVIDUAL CHARACTERISTICS– personality
PROBLEM DEFINITION
It is no longer enough to derive market advantage on the basis of a superior product (Johnson and Sirikit, 2002); other marketing tactics need to be exceptionally configured and tactically implemented in order to achieve such meaningful growth and profitability. Service quality, value, and customer loyalty are now considered as keys to achieving market dominance (Nielson, 2000). Understanding what underlies these factors, how they are linked, and how they contribute to company success is essential. Customer loyalty is increasingly viewed as a prime determinant of long-term financial performance in a competitive market, which is determined by multitude of interrelated factors (Eshghi et al., 2007).
Therefore, this study examines how price, customer satisfaction, quality service, Brand image, switching costs and personalityaffect customer loyalty in Nigeria’s mobile network communication services sector.
1.3    Aim and Objectives of the Study
The aim of this study is to examinecustomer loyalty in Telecommunication Industry in Nigeria.The objectives of the study are to:
Ascertain the extent to whichproduct characteristicsaffect customer loyalty in Telecommunication Industry in Nigeria;
Determine the extent to which customer characteristics and affect customer loyalty in Telecommunication Industry in Nigeria;
Investigate the extent to which individual characteristicsaffect customer loyalty in Telecommunication Industry in Nigeria;
1.4     Research Questions
Therefore, this study proposes to test the following questions:
To what extent do productcharacteristicsaffectcustomer loyalty in Telecommunication Industry in Nigeria?
To what extent do customer characteristics affect customer loyalty in Telecommunication Industry in Nigeria?
To what extent do individual characteristicsaffect customer loyalty in Telecommunication Industry in Nigeria?
1.5     Research Hypotheses
Therefore, this study proposes to test the following questions:
Product characteristics do not significantlyaffect customer loyalty in Telecommunication Industry in Nigeria;
Customer characteristicsdo not significantlyaffect customer loyalty in Telecommunication Industry in Nigeria;
Individual characteristicsdoes not significantly affect customer loyalty in Telecommunication Industry in Nigeria;
1.6    Scope of the Study
This study describes customer loyalty in Telecommunication Industry.In this research work, the area of study is Nigeria. The study covers the consumers in the university of  Benin City Nigeria
1.7    Significance of the Study
The findings of this study will be of immense benefit to the various operators in the Telecommunication Industry; staff of these organizations will use the knowledge acquired through customer loyalty to render effective service to their customers. The findings of the study will also be of benefit to the society at large since the result of effective customer loyalty in terms of improved service delivery and reduced brand switching will positively affect the social, political, educational, and economic development of the country. The future researchers will also benefit from the study in terms of using it as source of secondary data for literature review generally and empirical review in particularly.