MNP Switchover

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CUSTOMER WILLINGNESS TO USE MOBILE NUMBER PORTABILITY

Introduction

Mobile Number Portability (MNP) is a facility that allows the mobile users to

change their Service provider while retaining their phone number. The retention of

the same number will enable some business customers to maintain their contacts

and flow of business. Also there is a possibility of reduction in prices due to

increased competition. Many studies have shown that change of mobile number

when the service provider is changed is a major barrier and acts as a switching

cost for changing service provider.

With the advent of Mobile number portability, it is important to study what

factors majorly result in the intention to switch the service provider by the

customer. By removing the barrier of change in number, will the consumers be

more inclined to switch service providers or do the switching barriers still remain

high remains to be studied. Similar study was conducted in Korean context and

was found that the customers perceive higher switching barriers even after the

introduction of mobile number portability. This study will be conducted in Indian

context to analyze the effect of Customer satisfaction, switching costs on the

customers intention to switch in the context of mobile number portability.

Mobile number portability in the US and Korean markets: Other Studies

In the US, MNP was introduced nationwide in May 2004[1]. It was observed

that the number of customers who changed their service providers was far less

than expected in the first year of introduction of MNP. It was inferred that this was

due to the positive impact that MNP had on subscribers in terms of increased

retention strategies. It could be said that the switching barriers were not completelyremoved with the advent of MNP. MNP was introduced in Korea in January

2004[2]. It was observed that there was no significant movement in the number of

subscribers after the introduction of MNP, same as in the US. The reasons found

were that Service providers developed customer lock-in strategies thus retaining

the customers and reducing the effect of MNP.

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LITERATURE REVIEW

Customer satisfaction and willingness to switch

Customer Satisfaction was recognized as major outcome of marketing

activity which helps in explaining post purchase phenomenon such as repeat

purchase and brand loyalty. Oliver (1999) defined Customer Satisfaction as the

consumers sense that consumption provides outcomes against a standard of

pleasure versus displeasure. Eshghi, Roy and Ganguli (2008) suggested that

relational quality, competitiveness, reliability, reputation and transmission quality

are significant predictors of customer satisfaction. Aydin and Ozer(2005) defined it

as customers overall (dis)satisfaction with the brand based on all encounters and

experiences with that particular brand. Hence, in the study overall customersatisfaction with the service provider was evaluated instead of consumers specific

transaction experiences. They also suggested that increased customer

satisfaction, increased trust in the firm and switching costs are essential for

customer loyalty. Customer loyalty is a relationship between relative attitude

towards on entity and repeat patronage behavior (Dick and Basu, 1994. Oliver

(1999) suggested that customer satisfaction and Customer Loyalty are linked

inextricably. Harris and Goode (2004) suggested the satisfactions mediating rolein the relation between perceived quality or value and loyalty. Antn, Camarero,

and Carrero (2007) have confirmed that the mediating effect of customer

satisfaction between the predisposing (poor service quality and low firm

commitment) and precipitating factors (price unfairness and anger incidents) of

dissolution and the consumers switching intention. Also, Spiros P. Gounaris,

Nektarios A. Tzempelikos, KalliopiChatzipanagiotou (2007) explained how

customer percieved value influences, through customer satisfaction and loyalty,the buying behaviour of consumers.

Perceived price and customer satisfaction

In our study, the term perceived price is to mean the degree of reasonability

which a customer associates a given price fixed for the usage of the mobile

service, value- added services charges and the monthly rental charges. This is

mainly a perception factor in the consumer mind. We test for the influence of this

factor, the perceived price on the construct of customer satisfaction. Customer

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satisfaction in turn encompasses the comprehensive view of the mobile service

provider in the customer`s mind. While customer satisfaction is contingent on

several factors, herein we explore the effect of the perceived price on the same.

There has been a body of research carried out in the past, in various sectors, on

the influence of this factor on the overall customer satisfaction levels. Carmen

Antn, Carmen Camarero, and MirthaCarrero (2007) found evidence in the

insurance industry that unfair pricing is a determinant to customer satisfaction. In

fact, they have concluded that unfair pricing strongly impacts switching, in a direct

and indirect manner via customer satisfaction.Chada and DeepaKapoor (2009)

have stated that Customer satisfaction in turn affects the price senility of a

customer. EvangeliaBlery, Nick Batistatos et al (2008) conclude that the perceivedprice is negatively affects a repeat purchase of a customer in a negative manner.

Makam S Balaji (2009) examined the effects of various factors, including perceived

price on customer satisfaction in the Indian mobile telephony sphere and found it

to be strongly associated. The findings of Muhammad Mohsin Butt and Ernest

Cyril de Run (2008) show that the satisfaction levels of Pakistani mobile

telephone service users satisfaction is dependent on price, among several other

factors

Perceived service quality and customer satisfaction

Perception of service quality can occur at multiple levels in an organization

1) Corporate service

2) Physical environment

3) Interaction with the service providers

T. Koivuma ki, A. Ristola and M. Kesti(2006) conceptualized that the servicequality depends upon the above mentioned factors. The physical factors involves

the physical product and supports, interactive quality refers to the interaction

between the customer and the service provider, and the corporate quality is

symbolic in nature and involves the perception about the company in the minds of

the customers and its brand image. Service quality is defined as a global

assessment that is the customers overall impression of the relative

inferiority/superiority of the service provider and its services. Further, Rusk and

Zahorik supported the expectation-perception gap for measuring service quality.

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The main antecedents to perceived service quality are the customer expectation

and perceived performance (Bitner and Hubert). Further, Richard Spreng, Linda

Shi,Thomas Page suggested that net Customer Satisfaction has a marginally

higher impact on switching intention than total perceived service quality. Also,

A.Taylor,ThomasL.Baker(1994) concluded that Consumer satisfaction moderates

the relationship between the quality of service and intention to switch. Zhilin

Yang, Robin T. Peterson (2004) found that switching costs moderate the

relationship between satisfaction and perceived value. Next, Hsin-Hui (Sunny) Hu,

Jay Kandampully and Thanika Devi Juwaheer(2009) examined the association

and impact of customer satisfaction and perceived value and found that customer

satisfaction is affected by perceived service quality. Das, BhagabanMohanty,Sangeeta(2007) carried out a study in the Indian context and found that better

perceived service quality leads to increased customer satisfaction.

The importance of service quality in service organizations has been proven as a

critical determinant of competitiveness (Lewis, 1989). However, despite the

increasing importance of the service industry and quality service as a critical

success factor, service quality concepts are not well developed within the service

sector. In the context of this review, it was found that the service sector is stillbehind the manufacturing sector in terms of embracing philosophies such as Total

Quality management (TQM) (Wilkinson, et al 1991).Dale and Cooper (1992)

describes Total Quality Management (TQM) as the involvement of every member

of the organisation co-operating to furnish products and services that meet their

customers needs and expectations. Linking to this, Wilkinson and Witcher (1991)

further state quality in service organisation goes beyond the mere application of

quality management into the whole organisation. Quality becomes the way of lifethat inspires every part of the organisation. Quality is critical for competitive

success. The potential of IT to improve the quality of travel and tourism services is

currently under-exploited (Poon, 1993). However, companies do recognise that

they can develop an effective competitive strategy by lowering distribution costs

and improving the service provided.

Research about the relationship between service quality and profitability

began academically with the Profit Impact of Marketing Strategies (PIMS) cross-

sectional company database (Zeithaml, 2000 p.71). The major benefits of the

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PIMS database are that it allowed researchers to examine the impact of service

quality on financial outcomes after controlling for the effects of other variables such

as price. (Zeithaml, 2000 p.71).One of the major criticisms of PIMS research is

that, perceived service quality is reported from the firms perspective rather than

the customers perspective. (Zeithaml 2000 p.74).Seminal studies using the

PIMS database uncovered significant associations among service quality,

marketing variables, and profitability (Zeithaml 2000 p.74).

First of all, it is important to define what service quality means, because

quality in service industry is different to quality in manufacturing. In manufacturing,

quality means zero defects (Foley et al, 1997). Whereas in service industry,

Cooper et al cited in Baum (2006, p.84) distinguish three characteristics whichseparate tourism as service from manufactured goods: intangibility, perishability

and inseparability (Foley et al, 1997; Williams and Buswell, 2003).Goods are

tangibles whereas services are intangibles (Williams and Buswell, 2003).

Intangibility means that the product cannot be displayed. Perishability signifies that

the service which has not been sold is lost and inseparability involves the

simultaneous production and consumption of the service (Foley et al, 1997, p.6;

Williams and Buswell, 2003; Baum, 2006).It is also necessary to explain the difference between service quality and

customer satisfaction (Gabbott and Hogg, 1997; Johnston and Clark, 2005;

Zeithaml et al, 2006). Satisfaction is the customers evaluation of a product or

service in terms of whether that product or service has met the customers needs

and expectations (Zeithaml et al, 2006, p.110). Furthermore, according to

Zeithaml et al (2006) and Johnston and Clark (2005), customer expectations are

influenced by different factors such as price, customers mood, word-of-mouth,company marketing, past experience as well as personal needs. Nevertheless,

service quality is an element of the customer satisfaction. When customers judge

the quality of service they look at five different dimensions (Zeithaml et al, 2006).

According to Kunst and Lemmink (1997), Parasuraman, Zeithaml and Berry (PZB)

classified ten dimensions in 1985 and, in 1988 they cut down to five: tangibility,

reliability, responsiveness, assurance and empathy (Fitzsimmons and

Fitzsimmons, 2008)

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Moreover, another model contributes to the customers perceptions: the

Grnrooss model. In 1982, he found two dimensions in service quality: technical

and functional quality. The technical quality is what the consumer receives, it can

be measured objectively, whereas, the functional quality is how the technical

elements are transferred, which needs to be measured subjectively (Williams and

Buswell, 2003; Kunst and Lemmink, 1997; Foley et al, 1997).

In addition, service quality and customer satisfaction are not measured in

the same way. As the report noticed above, the customer satisfaction is the

difference between what the customer expects and what the customer perceives.

When this difference is compared, three levels of expectation are identified:

exceptional quality or positive disconfirmation, satisfactory quality or simpleconfirmation and finally, unacceptable quality or negative disconfirmation.

Exceptional quality means that expectations are exceeded; satisfactory quality

signifies that expectations are confirmed and unacceptable quality means that

expectations are not met (Fitzsimmons and Fitzsimmons, 2008; Williams and

Buswell, 2003).

Perceived switching barrier as a moderatorSwitching barrier can be seen as a hurdle for the customers to switch from

one service provider to another. The Perceived switching barrier is increasingly

affecting the intention of the customer to switch from one service provider to

another. Anne Wan-Ling Hu and Ing-San Hwang (2009) found that significant

correlation exists between various types of switching costs-relational and

procedural and customer intention to switch. Further, Albert Caruana(2003)

describes three types of costs involved in - learning , contractual and transaction.Moeover, Markus Blut, HeinerEvanschitzky,VerenaVogel,DieterAhlert(2007)

concluded that switching barriers have an impact on customer loyalty.

Patterson, Paul Gand Smith, Tasman analyzed how switching barriers affect the

propensity of the customers to stay with the current service provider. In this study

switching barrier is taken in terms of six forms and they are search costs, loss of

social bonds, setup costs, functional risk, attractiveness of alternatives and loss of

special treatment benefits. The study has proven that switching costs form a major

barrier in the customers willingness to switch service providers. Stefan Buehler

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and Justus Haucap suggest that reducing the switching costs is one of the main

benefits of Mobile Number Portability. Reducing the switching costs will

automatically reduce the switching barrier there by affecting the relationship

between the customer satisfaction and their willingness to switch service

providers. Shin, DongH.and Kim, Won Y. in their study of Mobile Number

Portability in Korean market came to the conclusion that even after the advent of

Mobile Number Portability, customers view the switching barrier to be high. This

might be due to other hidden costs involved in switching and also on the new

customer lock-in strategies developed by the service providers. Dong-Hee Shin

and Won-Yong Kim in their study on U.S Market also concluded that the

customers view the switching barriers as main hindrance to switch serviceproviders even after the introduction of MNP.MNP is expected to reduce switching

costs and thereby reduce the switching barriers. But the other costs as mentioned

before like termination costs, customer lock-in strategies reduce the effect of MNP

in reducing the switching barrier.However,LukaszGrzybowski studied the

relationship between the switching costs and the nature of mobile carriers, which

change, basis the customer characteristics .It was found that the time-based

service provider choice is because of both the switching related cost andconstant tastes. The customer satisfaction is adversely related to the willingness

to switch of the customers. If the satisfaction level with the existing service

provider is high, then the customers are not expected to switch the service

provider. Similarly, if the satisfaction levels are low with the existing service

provider, then the customer is expected to switch service provider readily. But the

Switching Barrier moderates this relation. Even though the satisfaction level with

the current service provider is low, the customers are expected to continue therelationship with the current service provider if the switching barriers are perceived

to be high as mentioned by P. Klemperer (1995). So the Perceived Switching

Barriers moderates the relationship between the customer satisfaction and the

willingness to switch of the customer.

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RESEARCH METHDOLOGY

Observation is another research instrument that can be successful in multicultural

research. It typically involves using descriptive studies of a culture using a

methodology called ethnographic. Ethnographic methodology is a detailed study

of a particular cultural group that describes the groups cultural patterns and world

views. A typical way to perform observational research is to have the researcher

become enmeshed in the culture in order to conduct the observation fieldwork in

order to collect and analyze the data as it pertains to the culture context.

Grounded theory is another form of observation method that allows researchers to

observe participants in a social setting without requiring the researcher to be an

active participant of the group.The participants may also not know they are being observed as well.Human

behavior can be studied in either a traditional or multicultural research study.

Multicultural research studies often are a more valuable process because it can

spotlight issues that are present in a particular culture that may have been missed

by traditional research studies. For a researcher to have a well-rounded study, it is

imperative that they include multicultural research. As with all research, there are

some implementation issues that need to be addressed when conductingmulticultural research studies; however, if the problems encountered by

researchers are addressed during the data can provide great insight into cultural

influences in human behavior.

Measures

The constructs Perceived Price ,Perceived Service Quality, Customer

Satisfaction,Perceived Switching Barrier and the Willingness to switch aremeasured using Multi Item Scale. We use a five point likert scale for this purpose

with responses ranging from 1 to 5,where 1 corresponds to Strongly Disagree

and 5 corresponds to Strongly Agree Perceived Service Quality, Perceived Price

and Customer Satisfaction are measured using multi-item scales adopted from

Chadha, S. K., and DeepaKapoor

Perceived Switching Barrier and Willingness to switch are measured using the

multi-item scale borrowed from Dong-Hee Shin and Won-Yong Kim

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Data Collection

An online intranet survey, by creating a questionnaire and circulating is it to our

target set of respondents. Thus the sampling technique used was convenience

sampling.

Sampling Technique

Non-random Convenient Sampling is used where the sample is taken from

convenient set of students.

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CONCLUSION

The study can be conducted across different countries and regions. There

are many other factors like the Income levels of the customers, the economic

levels, their personalities, and their educational backgrounds etc. whose effects on

the willingness to switch do not contact excessive research support. Data on these

factors can throw more light to how these factors influence the willingness to

switch and hence gives more reliable results. Our study was restricted only to the

people belonging to similar demographic profile within India. The scope of the

study can be widened by involving people from various different parts of the world

and also by moving our focus across borders to other countries as well to obtain a

holistic view of the customers intentions to switch. Effects of Perceived SwitchingCosts, Corporate Brand Image can be analysed on the model

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APPENDIX

The Proposed Model

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Perceived Price

PerceivedServiceQuality

CustomerSatisfactio

n Willingness toSwitch

PerceivedSwitching

Barrier

MNP Switchover

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