Chapter 3 theoritical framework

CHAPTER 3

THEORETICAL FRAMEWORK

3.1 CONCEPT OF PERCEPTION

Perception is the organisation identification and interpretation of sensory information

in order to represent and understand the environment. All perception involves signals in

the nervous system, which in turn result from physical stimulation of the sense organs. For

example, vision involves light striking the retinas of the eyes, smell is mediated by odor

molecules and hearing involves pressure waves.

Perception is not the passive receipt of these signals, but can be shaped by learning,

memory and expectation. Perception involves these "top-down" effects as well as the

"bottom-up" process of processing sensory input. The "bottom-up" processing is basically

low-level information that's used to build up higher-level information (i.e. - shapes for

object recognition). The "top-down" processing refers to a person's concept and

expectations (knowledge) that influence perception (Choudhry, 2002). Perception depends

on complex functions of the nervous system, but subjectively seems mostly effortless

because this processing happens outside conscious awareness.

It refers to how the brain organizes and interprets sensory information. Until fairly

recently, perception was considered by the school of psychology called behaviorism to be

largely a passive and inevitable response to stimuli. Today's cognitive scientists, however,

explain perception as an active process in which the brain treats external stimuli as raw

material to be shaped, aided by our experience. Earlier in this century gestalt psychologists

made a major contribution to the theory of perception by studying the ways people

organize and select from the multitude of stimuli that are presented to them.

The process of perception begins with an object in the real world, termed the distal

stimulus or distal object. By means of light, sound or another physical process, the object

stimulates the body's sensory organs. These sensory organs transform the input energy into

neural activity - a process called transduction.

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Perception is a sensory experience of the human beings of the world around them and

involves both the recognition of environmental stimuli and actions in response to these

stimuli. Through the perceptual process, it is gained information about properties and

elements of the environment that are critical to our survival. Perception not only creates

experience of the world around; it allows all human beings to act within given

environment.

Perception includes the five senses; touch, sight, taste smell and taste. It also includes a set

of senses involving the ability to detect changes in body positions and movements. It also

involves the cognitive processes required to process information, such as recognizing the

face of a friend or detecting a familiar scent.

3.2 NEED FOR STUDY OF CUSTOMER PERCEPTION

In today’s globalising economy competition is getting more and fiercer. That means

it becomes more difficult for products and services to differentiate themselves from other

offerings than ever before. Not only is the number of competitive offerings rising due to

globalisation of production, sourcing, logistics and access to information. Many products

and services face new competition from substitutes and from completely new offerings or

bundles from industry outsiders. Since product differences are closed at an increasing

speed and many companies try to win the battle for customers by price reductions,

products and services tend to become commodities.

On the other hand, customer behaviour becomes more hybrid. On one hand,

customers are increasingly price sensitive – searching for bargaining at marketplaces or

buying their groceries at discount markets. On the other hand they enjoy branded and

luxury goods. One and the same person may plan a weekend trip with a no-frills airline and

a stay at a five-star-hotel.

In the result, customers have a wider choice of often less distinguishable products

and they are much better informed. For many offerings the balance of power shifts towards

the customer. Customers are widely aware of their greater power, which raises their

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expectations on how companies should care for them. Bringing it all together, it becomes

ever more difficult to differentiate a product or service by traditional categories like price,

quality, functionality etc.

In this situation the development of a strong relationship between customers and a

company could likely prove to be a significant opportunity for competitive advantage. This

relationship is not longer based on features like price and quality alone. Today it is more

the perceived experience a customer makes in his various interactions with a company (e.g.

how fast, easy, efficient and reliable the process is) that can make or break the relationship.

Problems during a single transaction can damage a so far favorable customer attitude.

3.3 PERCEPTION AND CUSTOMER SATISFACTION

The consequence for companies is that they have to adapt their ways of competing

for customers. Traditionally, companies have focused their efforts of customer relationship

management on issues like customer satisfaction and targeted marketing activities like

event marketing, direct marketing or advertising. Although doubtless necessary and

beneficial, these activities are not longer enough. They narrow the relationship between

company and customer down to a particular set of contacts in which the company invests

its efforts. Most likely this will produce not more than a satisfied customer who is well

aware of the companies’ offerings and has a positive attitude towards them. However, a

satisfied customer is not necessarily a loyal one.

If a customer is satisfied that means that a product of service has met his expectations

and that he was not dissatisfied by it. Customer satisfaction is doubtlessly very important.

It is the precondition for repeat purchases and it prevents the customer from telling others

about his disappointing experiences. A loyal customer, however, is more than a customer

who frequently purchases from a company.

The difference is the emotional bond which links the customer so closely to the

company that he develops a clear preference for these products or brands and is even

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willing to recommend them to others. Loyal customers truly prefer a product, brand or

company over competitive offerings. Thus loyalty goes beyond a rational decision for

known quality or superior price-performance-ratio. It is about the customers’ feelings and

perceptions about the brand or product.

When the customer makes his buying decision, he evaluates the benefits he perceives

from a particular product and compares them with the costs. The value a customer

perceives when buying and using a product or service go beyond usability. There is a set of

emotional values as well, such as social status, exclusivity, friendliness and responsiveness

or the degree to which personal expectations and preferences are met. Similarly, the costs

perceived by the customer, normally comprise more than the actual price. They also

include costs of usage, the lost opportunity to use other offering, potential switching costs

etc. Hence, the customer establishes an equation between perceived benefits and perceived

costs of one product and compares this to similar equations of other products.

Based on this, customer loyalty can be understood as to how customers feel about a

product, service or brand and whether their perceived total investments with it live up to

their expectations. The important point here is the involvement of feelings, emotions and

perceptions. In today’s competitive marketplace, these perceptions are becoming much

more important for gaining sustainable competitive advantage.

Customer perceptions are influenced by a variety of factors. Besides the actual

outcome – i.e. did the product or service deliver the expected function and did it fulfill the

customers need – the whole process of consumption and all interactions involved are of

crucial importance. In today’s globalised information driven economy this can also

comprise issues like how other customers or influencing groups perceive the product or

brand? The degree to which the customer feels the actual marketing campaign addresses

the most important issues Responsiveness and service quality of any affiliates, e.g.

distribution partners

3.4 CHARACTERISTICS OF PERCEPTION

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Customer perceptions are dynamic. First of all, with the developing relationship

between customer and company, his perceptions of the company and its products or

services will change. The more experience the customer accumulates, the more his

perceptions will shift from fact-based judgments to a more general meaning the whole

relationship gains for him. Over time, he puts a stronger focus on the consequence of the

product or service consumption.

Moreover, if the customers’ circumstances change, their needs and preferences often

change too. In the external environment, the offerings of competitors, with which a

customer compares a product or service will change, thus altering his perception of the best

offer around. Another point is that the public opinion towards certain issues can change.

This effect can reach from fashion trends to the public expectation of good corporate

citizenship.

Research has been done on the impact of market share on the perceived quality of a

product. Depending on the nature of the product and the customers’ preferences, increasing

market share can have positive or negative effects on how the customer perceives the

product.

The concept of customer perception does not only relate to individual customers in

consumer markets. It is also valid in business to business situations. For example, a

competitor benchmarking survey of a large industrial supplier revealed that the market

leader, although recognised for excellent quality and service and known to be highly

innovative, was perceived as arrogant in some regions. If we take into consideration that

there are about four other large players with a similar level of quality and innovative ideas,

this perceived arrogance could develop into a serious problem.

3.5 OUTCOMES OF PERCEPTION

Customers here are well aware the main characteristics of all the offerings available

at the market are largely comparable. So they might use the development of a new product

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generation of their own to switch to a supplier that can serve them not better or worse, but

with more responsiveness and understanding. Companies have done a lot to improve

customer satisfaction and customer relationships in the past. As discussed above, this will

not be enough anymore. Any serious effort to manage customer perceptions starts with a

good measurement system. Companies must be truly willing to look at the whole process

of interaction through the customers eyes. For many companies, this requires a more or

less extensive shift in mindset, since most departments from development to sales will be

involved. The backbone of any customer perception management and measurement

system, however, is thorough market research and surveys. There are several aspects of

measuring customer perceptions.

First of all the company has to find out how it and its offerings are perceived by the

customers. It is essential to identify what the customer is actually buying and which

features are most important to him. Only this way it is possible to align the internal focus

and resources to the customer’s expectation. This information is of greater value if it can

be compared to the customers’ perception of competitive offerings. Not only will this

reveal relative strengths and weaknesses, it is also a valuable source of ideas for

improvement.

Besides that, surveys should also identify the relative importance of several

influencing variables in the eyes of the customer. To know what matters most to the

customer helps to set priorities for projects. Of course, as with any market research

activities, it should be based on a careful customer segmentation. Customer groups that

differ by frequency of use, social status, geographical region or other criteria, are likely to

have different expectations and preferences. Hence, they will probably perceive an offering

in different ways.

Zeithaml et al (2003) suggest incorporating several behavioural-intentions questions

to identify signals that are potentially favourable or unfavourable for the company.

Questions for behaviour intentions are potentially of higher validity and richer diagnostic

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value than the “overall service quality” or “customer satisfaction” variables. Since these

questions are directed at potential future actions they can not only indicate of changes in

demand and market trends. They also provide early warning signs and help to take to take

timely corrective action.

Only if a company knows which features of its products and services or which other

points of contact with the customer are considered most important by the customers, it can

develop appropriate strategies. Such a strategy will not only help the company to

strengthen the emotional bond with the customer through targeted improvements and

activities. It may also have the positive side effect that the customers’ whole experience

leads him to the conclusion that this company really understands his distinctive needs and

really takes him seriously. Hence, the customers’ perception of the whole company may

improve beyond a positive attitude towards a particular product.

CHAPTER 5

RESEARCH METHODOLOGY

Methodology is the attempt to validate the rationale behind the selected research design

and provide justification of why it is appropriate in solving the selected research problem.

It is the process by which the researcher evaluates the tools that produce research findings.

This research is a sample survey because it takes a considerable part from a large

population (landline customers of the BSNL of Erode telecom district) and analyses the

sample part in order to make meaningful interpretations and conclusions.

5.1 Pilot Study

Pilot study is an informal exploratory investigation which serves as a guide for a larger

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study. A pilot study is a small-scale replica and a rehearsal of the main study. Pilot studies

are concerned with administrative and organizational problems related to the whole study

and the respondents. It has been done in selected areas of Erode telecom district in order to

know the scope and possibilities of the present research. It highlights the real situation of

customers who switch over the landline to cellular phones in the study area.

5.2 Geographical Area of the Research

Erode telecom district is the geographical area of the present research. It consists of two

revenue districts viz., Erode district and Gobichettipalayam district.

5.3 Period of the Study

The study was undertaken in six month period i.e, January – June, 2012. This was the

period of field survey to collect the primary data from the customers of the BSNL landline

service in Erode Telecom District.

5.4 Data UsedBoth types of data i.e., primary data and secondary data are used in this research. Sources

of the primary data are the landline customers of the BSNL of Erode telecom district. At

the same time, the secondary data have been collected from books, journals, records of the

BSNL and web sites.

5.5 Variables of the Study

Variables of the study are identified with the help of literature and usage pattern of the

customers in respect of the landline phone. In social science studies, two types of variables

are used.(Pauline V.Young, 1998). This study is not an exception to this. The variables are

of two types of the present study are demographic (or personal / socio-economic) variables

and research variables.

The first category of variables includes gender, age, educational status, occupation, annual

income, area of residence, period of usage of landline telephone etc.

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The second category of variables includes the following:

Deposit amount,

Free calls permitted,

Monthly rent,

Call rate,

Easiness in connection,

Billing system,

Voice clarity,

Customer service,

Line/technical fault Cross talk, prior information and

Grace period

These variables are related towards the usage of landline connection, getting the

landline connection, cost involved, concessions granted and practical problems at the time

of usage of landline.

The variables are taken into consideration in this study in different ways. In respect of the

first category variables (demographic or personal or socio-economic) are included in the

questionnaire at the beginning section and they are considered with the formulating

hypotheses of the study.

The second category variables (research variables) are brought into the study to know

the practical problems arising at the time of usage. Then the variables are used to measure

the satisfaction, awareness of the customers, to study the attitude of the customers and to

rank the variables. For theses purposes, the variables are grouped into different segments.

Based on three aspects i.e, attractive factors, discouraging factors and expectation factors,

the variables are classified into three groups. The customers ranked these factors as per

their perception.

The satisfactory variables are taken into consideration and they are listed as call rate,

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free calls, rental plans, billing system, mode of payment, voice clarity, on line balance

enquiry, service, and grace period and information service.

Occupation and income of the landline customers are the two demographic variables to

correlate with the satisfactory variables.

5.6 Formation of Hypotheses

Hypothesis is a logical assumption whose validity is subject to testing with the help

of statistical tool. In social science research, its role is dominant in nature and the

formation of suitable hypothesis is of high degree of nearness and relevance to the

objectives and variables of the study. The present study frames the following three major

hypotheses on the basis of the objectives and variables of the study.

5.7 Hypotheses of the Study

The following hypotheses are concerned with the personal (or demographic) variables in

relation to the research variables:

HO1- There is significant association between the technical problem and gender of the

customers

HO2 - There is significant association between the technical problem and age of the

customers

HO3 - There is significant association between the technical problem and educational

qualification of the customers

HO4 - There is significant association between the technical problem and occupation of the

customers

HO5 - There is significant association between the technical problem and annual income of

the customers

HO6 - There is significant association between the technical problem and area of residence

of the customers

The following hypotheses are concerned with the reasons for having the landline phone

and demographic factors of the customers (gender, age, educational qualification,

occupation, annual income and area of the residence).

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HO7 - There is significant association between the reasons for having the landline phone

and gender of the customers.


and age of the customers.


and educational qualification of the customers.

HO10- There is significant association between the reasons for having the landline phone

and occupation of the customers.


and annual income of the customers.


and area of the residence of the customers.

The following hypotheses are concerned the demographic factors (age group,

educational qualification, occupation and annual income) of the landline customers with

ten satisfaction variables ( call rate, free calls, rental plans, billing system, mode of

payment, voice clarity, on - line balance enquiry, service, grace period and information

service)

HO13 - There is a significant variation between age group of the customers and call rate.

HO14 - There is a significant variation between age group of the customers and extent of

free calls.

HO15 - There is a significant variation between age group of the customers and rental plans.

HO16 - There is a significant variation between age group of the customers and billing

system.

HO17 - There is a significant variation between age group of the customers and mode of

payment.

HO18 - There is a significant variation between age group of the customers and voice

clarity.

HO19 - There is a significant variation between age group of the customers and on - line

balance enquiry.

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HO20 - There is a significant variation between age group of the customers and service.

HO21 - There is a significant variation between age group of the customers and grace

period.

HO 22 - There is a significant variation between age group of the customers and

information service.

HO23 - There is a significant variation between educational qualification of the customers

and call rate.


and free calls.


and rental plans.


and billing system.


and mode of payment.


and voice clarity.


and on - line balance enquiry.


and service.


and grace period.


and information service.

HO33 - There is a significant variation between occupation of the customers and call rate.

HO34 - There is a significant variation between occupation of the customers and free calls.

HO35 - There is a significant variation between occupation of the customers and rental

plans.

HO36 - There is a significant variation between occupation of the customers and billing

system.

HO37-There is a significant variation between occupation of the customers and mode of

payment.

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HO38 - There is a significant variation between occupation of the customers and voice

clarity.

HO39 - There is a significant variation between occupation of the customers and on - line

balance enquiry.

HO40 - There is a significant variation between occupation of the customers and service.

HO41 - There is a significant variation between occupation of the customers and grace

period.

HO42 - There is a significant variation between occupation of the customers and


HO43 - There is a significant variation between annual income of the customers and call

rate.

HO44 - There is a significant variation between annual income of the customers and free

calls.

HO45 - There is a significant variation between annual income of the customers and rental

plans.

HO46 - There is a significant variation between annual income of the customers and billing

system.

HO47 - There is a significant variation between annual income of the customers and mode

of payment.

HO48 - There is a significant variation between annual income of the customers and voice

clarity.

HO49 - There is a significant variation between annual income of the customers and on -

line balance enquiry.

HO50 - There is a significant variation between annual income of the customers and

service.

HO51 - There is a significant variation between annual income of the customers and grace

period.

HO52 - There is a significant variation between annual income of the customers and


5.8 Data Collection Instrument: Questionnaire

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The first five objectives of the present research require primary data so that the

questionnaire was constructed to achieve the objectives. So, the structure of the

questionnaire has been designed to achieve the objectives of the study as follows:

A. Demography of the customers: It provides the personal profile i.e., gender, marital

status and age of the customers and socio economic profile i.e., education, income,

occupation etc. This section provides the background information about the customers

of landline.

B. Details of Landline Connection: This section presents the basic details of the

landline connection of the customers such as period of usage, type of connection,

nature of problem faced, mode of payment of telephone bill, complaints regarding the

usage etc.,

C. Experience in the Usage of Landline (usage pattern): This division deals with the

practicing the landline connection by the customers.

D. Levels of Satisfaction: Ten variables are taken into consideration for this

measurement. Likert’s five point scale is used.

E. Levels of Awareness: Eight variables are taken for the measurement of awareness

and three point scale is used.

F. Study of Attitude of the customers: This section deals with ten attitude statements

and five point scale is used to study the attitude of the customers.

G. Ranking of Attractive, discouraging and expectation factors:

Eight attractive factors, five discouraging factors and five expectation factors are

included in this section.

5.9 Pre Test

Pre test is a test to check the validity and appropriateness of the questions. A sample set of

about 100 respondents was taken to test the questionnaire. Through this test, the researcher

deleted certain items in the questionnaire which were found to be unanswerable by the

customers and thus the research tool has been modified and restructured to give

meaningful results of the present study.

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5.10 Population and Samples

Population of the study is the BSNL landline customers of Erode Telecom District of

Tamil Nadu, India. Size of population of the study is 1,07,897 (as on 01.01.2011). As it is

a large one to be managed, sampling method has been adopted.

Sample size was determined with the help of sample size calculator. The minimum

sample size requirement is 270 at 90 percent confidence level, 383 at 95 percent

confidence level and 660 at 99 percent level of confidence. The real sample size is 1,020

with the expectation of reliable results.

Erode telecom district has two revenue districts viz., Erode and Gobichettipalayam.

Erode district has 65,410 landline customers and Gobichettipalayam district has 42,487

customers. So, the size of the samples selected from the two districts is of in the proportion

of 65,410: 42,487. Thus, the samples selected from the Erode and Gobichettipalayam

districts are 618 and 402 respectively.

In selecting the samples from each regions of district, multi stage sampling has been

adopted. In Erode district, 1 corporation, 3 municipalities, 9 taluk headquarters, 20

panchyat unions, 33 town panchayats, 64 village panchayats and 646 villages are identified

at the first stage. In the next stage, 618 sample customers are selected from these segments

from 1 corporation, 3 taluk headquarters, and 10 village panchayats.

The same procedure has been followed in Gobichettipalayam district. In the first

stage it is found out that there are 1 district head quarter, 2 municipalities, 6 taluk

headquarters,12 panchayat unions, 8 town panchayats, 36 village panchayats and 428

villages.

In the second stage, 402 samples are selected from the 1 district head quarter, 1

municipality, 3 taluk head quarters, 6 panchayat unions, 3 town panchayats and 20 village

panchayats.

1,200 questionnaires were distributed among the sample customers. They were in

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printed form and they were distributed by the research scholar in person. The 1,080

questionnaires were returned by the customers. Among the 1,080 questionnaires, only

1,020 questionnaires were found correct and duly answered. So, the 1,020 questionnaires

were taken into consideration for the research.

1.10.11 Measurement and Scaling Technique Used

The present study measures the following aspects viz., customers’ satisfaction and their

awareness.

Satisfaction of the customers is measured with the help of five point scale such as

Highly satisfied

Satisfied

Neutral (neither satisfied nor dissatisfied)

Dissatisfied

Highly dissatisfied.

In respect of awareness of the customers, it is commonly known fact that the awareness

can be studied with two extreme ends viz., existence of awareness and absence of

awareness. The existence of awareness is measured with the help of three point scale such

as

Fully aware

Sufficiently aware

Less aware.

Absence of awareness can not be measured so that it is treated at par and it is shown in the

analytical table as it is.

1.10.12 Study of Attitude

The attitude of the customers can be studied with the help of attitude statements. (Bhole K.

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Joshwa, 2005). This study takes the attitude of the customers towards the landline phone

and the BSNL as one of the subject matters. For this purpose, ten attitude statements are

prepared as follows:

Landline is easy to use for old / illiterate people

Landline is the cheapest means of communication

Landline connection is easy to get

Caller ID is must for landline

BSNL provides all details to customers

I read/see the BSNL advertisements carefully

I am willing to recommend the BSNL landline to others

If call rates increase, I will surrender landline

Landline is not necessary in the cell phone era

Usage of landline is out of fashion

The rationale behind the ten statements is the view point of the customers towards the

convenience, cost factor, support of the landline / BSNL, willingness to observe

advertisements, consumption pattern of the customers etc.

The ten statements are studied with the help of five point scale such as

Strongly agree

Agree

Neutral (neither agree nor disagree)

Disagree and

Strongly disagree

1.10.13 Method of Analysis of Primary Data

Analytical part of the present study is mainly based on the primary data so that the

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data are put into analysis with the help of descriptive analysis, (also termed as percentage

analysis).At the outset, the responses of every question are tabulated in separate table with

the percentage. The percentage is a very basic and common tool to study the entire

characteristic of mass data (D.N.Elhance,1983) so that the percentage is used to interpret

the data. The inferences are made by means of majority or minority feature of the data that

is represented by the percentages. This is the initial stage of analysis and then the analysis

section moves into testing the hypotheses with the help of chi square test and ANOVA. .

1.10.14 Tools for Testing the Hypotheses

The hypotheses framed in the present study are tested with the help of appropriate

statistical tools. The common and suitable tools for this purpose are the Chi square test and

Analysis of Variance (ANOVA) and they have been applied accordingly.

1.10.15 Chi Square Analysis

Chi square test is an important test amongst the several tests of significance

developed by statisticians. It is a statistical measure used in the context of sampling

analysis for comparing a variance to a theoretical variance. As a non-parametric test, it can

be used to determine if categorical data shows dependence or the two classifications and

the actual data when categories are used. The chi- square is used to the hypotheses.

1.10.16 ANOVA Test

ANOVA is used to compare the variants of two independent samples. It helps judge

the significance of more than two sample means at one and the same time. This test helps

make to the analysis of total variation in the data into different component and the results

are presented by indicating the sources and causes of variation.

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Chapter 3 theoritical framework

Business

Transcript of Chapter 3 theoritical framework