Dissertation / Master's Thesis

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  • 1. SMM 210Assessing Quality and Customer Satisfaction with servicedelivery of mobile telecommunication networks in the UK. Dissertation Student Number: 0847416MBA International Business

2. Market Research on Service Quality and Customer Satisfaction 2010 ABSTRACTPurpose - There are a lot of service quality dimensions derived from the ServiceQuality models and frameworks. The aim of this dissertation is to find out thesignificance of these dimensions as perceived by the customers and compare it withthe level of service offered by the UKs Mobile Service Providers.Review/Methodology A review was conducted on the relevant models and the gapswere found using the Qualitative (Focus Group Interview) and Quantitative research(Questionnaire) methods.Findings Five attributes of service quality are found to be deemed with highimportance by the customers and lacks attention from the Mobile Service Providers.Limitations/Implications As this research has been conducted using limited timeand resources, the Mobile Networks could conduct research specific to their marketpotential and offered service level.Keywords Service Quality, customer satisfaction, mobile telecommunicationnetworks, customer expectations and SERVQUALDeadline: Monday 16th August 20102|Page 3. Market Research on Service Quality and Customer Satisfaction 2010Table of contents 1. INTRODUCTION.............................................................................................51.1. Background of the study....51.2. Overview of Telecommunications Market.......61.3. The current state of telecommunication industry in the UK.61.4. Problem Identification & Purpose of the Study..81.5. Research Questions91.6. Research Objectives...91.7. Significance and Limitations of this dissertation102.LITERATURE REVIEW.................................................................................112.1. PurposeofLiterature review.112.2. Customer Psychology.112.3. Role ofCustomer Satisfaction...122.4. MeasuringCustomer Satisfaction.132.5. CustomerSatisfaction Indices(CSI) ..132.6. Disconfirmation Models..152.7. Service Quality.162.8. Relationship between Service Quality and Customer Satisfaction 183|Page 4. Market Research on Service Quality and Customer Satisfaction 2010 2.9.Service Quality Dimensions 19 2.10. Service Quality Models 19 2.11. SERVQUAL.2 0 2.12. GronroosModel of SERVQUAL..23 2.13. Addressing the Research Questions...243. RESEARCH METHODOLOGY.................................................................26 3.1.Research Purpose ...26 3.2.Research Philosophy...26 3.3.Research Approach 27 3.4.Research Method 27 3.5.Operationalisation of Concepts.303.5.1.Minnesota Customer Satisfaction Index (MnCSI)..303.5.2.Defining Hypothesis....323.5.3.Disconfirmation Models.333.5.4.Over-all Satisfaction...333.5.5.Procedures to test Hypotheses..344|Page 5. Market Research on Service Quality and Customer Satisfaction2010 3.6. Sample Selectionand DataCollection..37 3.7. Reliability38 3.8. Validity394. DATA ANALYSIS AND DISCUSSION.41 4.1. Introduction41 4.2. Demographic profile..41 4.3. Assessing Customer Satisfaction with the Service Quality41 4.3.1.Results of Minnesota Customer Satisfaction Index42 4.3.2.Results of Disconfirmation Models and Over-all Customer Satisfaction Measure...43 4.3.2.1. Irrespective of cellular network...43 4.3.2.2. With respect to cellular networks....47 4.4. Customer satisfaction with each service quality dimension..575. SUMMARY AND CONCLUSION.............................................................656. BIBLIOGRAPHY........................................................................................69 1. INTRODUCTION1.1 Background to the study:During the last few years, the Telecom industry has experienced an enormousgrowth across the world and there has been a rapid growth in the wireless technology(Bharat Book Bureau, 2008). According to an industry market study, by 2013 the5|Page 6. Market Research on Service Quality and Customer Satisfaction 2010telecommunications industry is anticipated to attain revenue of $2.7 trillion with anaverage growth rate of 10.3 percent an year (Bharat Book Bureau, 2008). In thepresent dynamic and interactive market place, the organisations are proposing variousstrategic methods to achieve effective Customer Satisfaction (CS) strategy decisionsand eventually increase the CS success rates to sustain long term relationship with theprofitable customers (Chien and Su, 2003; Gronroos, 1994). Loyal customers arereported to have higher customer retention rates, commit a higher share of theircategory spending to the firm, and are more likely to recommend others to becomecustomers of the firm. (Keiningham et al., 2007, p. 362). Hence the organisations arebecoming more customer centric, giving more importance to retaining old customer asthe business would end up spending an approximate of five times more in attractingnew customers than retaining the existing customers in terms of time, money andresources (Reichheld, 1996; Pizam and Ellis, 1999). As the growth of the organisation and its survival in the market is driven bycustomer loyalty and customer retention, each of these companies is continuallyimproving on their service quality standards to survive in this highly competitivemarket (Keiningham et al., 2007). Hence, in order to maintain these service qualitystandards, organisations frequently adopt new measures to check if the customers aresatisfied with the service quality provided. For e.g. by conducting customer surveysand analysing the acquired data statistically, which would help them make the rightdecision to increase customer satisfaction and eventually customer loyalty amongtheir customers (SPSS White Paper, 1996). Organisations adopt both quantitative andqualitative methodologies to evaluate CS and the data obtained from these measuresprovide constructive feedback to help the organisation know the satisfactory level ofits customers with its products, which would help the organisation to: i) take reliablesteps to improve the quality of service, ii) adding more value to its customers and iii)achieving high customer satisfaction rates (Amaratunga et al., 2002).1.2 Overview of the UK Telecommunications Market: Telecommunications is one of the best growing sectors of the UK economy.The competition developed strongly in 1984 after the privatisation of British Telecom6|Page 7. Market Research on Service Quality and Customer Satisfaction 2010(BT) and as of 2004, the UK had an approximate of 170 fixed telecommunicationsprovider and 59 mobile service providers (CWU research, 2004). The market for fixedtelephone network has been declining since the evolution of mobile / cellular phonenetworks and in 2003 due to flat call volumes and pricing competition, it fell by400m (CWU research, 2004). Eventually, the consumers preferred the cellular phonenetworks as the mode of communication which was faster and easier than the fixedtelephones (CWU research, 2004). According to the UK Mobile Operator Subscriber Data, Statistics and MarketShare 2006 - 2008, there are five primary cellular network operators in the UK:Vodafone, Telefonica O2, T-Mobile, Orange and 3 UK and it was reported to have73.1 million cellular service subscribers in the last quarter of 2007, which representsalmost 9% of the total European mobile subscriber market and another statisticalreport from IE market research Corp reveals that the wireless market is anticipated toachieve 126% by 2010 and gradually the total subscribers would also reach 78 millionby 2010 (Telecoms Market Research, 2008).1.3 The current state of telecommunication industry in the UK: Today, the telecommunication industry has undergone a rapid transformationcreating a lot of new challenges for infrastructure and service providers. The rapidadvances in technology and increased market turbulences have added a lot of value tothe telecom industry (Lia and Whalley, 2002). Recently T-Mobile and Orange merged becoming a giant in the telecomindustry having 28.4 million customers and now they are the largest cellular serviceprovider in the UK with an approximate of 37% of the entire mobile market (BBCNews, 2009; The Register, 2010). The 3G network is up to 40 times faster in data than the 2g or the GSMnetworks. This high connection speed adds on more features such as sending Pictures,MMS (Multimedia Messaging Service) or video clips and also promotes high qualitysound (Robins, 2003).7|Page 8. Market Research on Service Quality and Customer Satisfaction 2010 However this rapid growing mobile market is expected to face capacity-crunchi.e. due to the increasing existence of several MVNOs (Mobile Virtual NetworkOperators), the mobile data traffic has gradually increased 200% in 2009 andaccording to the reports of Ofcom, few service providers such as O2 are about to hitthat capacity (Xln Business Community, 2010). Hence, this capacity-crunch maybring down the quality of service delivery necessitating the network operators to takeprecautions in order to maintain their service delivery standards.The market share of mobile telecom industry in the UK as of September 2009:Fig 1.3a Market Share of Mobile telecom industry in the UK(Source: Guardian News, 2009) The Fig 1.3a indicates that, as of September 2009, T-Mobile / Orange had37% of market share being the highest, followed by O2 with 28%, Vodafone with23% and 3-mobile with the least at 5.8%.The total number of subscribers for the UKs mobile telecom industry as onSeptember 2009:8|Page 9. Market Research on Service Quality and Customer Satisfaction 2010Fig 1.3b Number of subscribers for the UKs mobile telecom industry(Source: Guardian News, 2009) The Fig 1.3b indicates that, as of September 2009, T-Mobile / Orange had28.4 million customers being the highest followed by O2 having 21.5 millioncustomer, Vodafone with 17.7 million customers and 3-mobile having the least at 4.5million customers.1.4 Problem Identificat