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A REPORT
ON
Loyalty Based Program
For
Mobile Telecom Operators
By
Pragya Modi
12BSP0871
3HD Media
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1. INTRODUCTION
1.1 Telecommunication Industry - Introduction
Access to telecommunication services has become the prime mover of the socio
economic development in this information age. The role of Telecommunication, an
engine of growth with multiplier and the social leveler, has been globally well
recognized. To bridge the prevailing information gap between the connected and the
not connected , gov ernments the world over have endeavored to ensure the ubiquity of
telecommunication nationwide. Provision of universal access to basic telecommunication
services at affordable price is considered important by the governments of all countries
and mandated by their policies, regulation or legislation. The Indian telecom market has
been displaying sustain high growth rates. Riding on expectation overall high economic
growth and consequent rising income levels, it offers an unprecedented opportunity for
foreign investment. A combination of factor is diving growth in the telecom market,
promising rich return on investment.
Universal service is a dynamic concept that provides for nation-wide coverage, non-
discriminatory access, and widespread affordability. Nationwide coverage requires huge
investment and also entails high operating cost. To meet the criterion of affordable
pricing, the revenue may fall short of cost and hence cause deficits. The universal service
policy has to reconcile the three contending criteria, i.e. availability, accessibility and
affordability.
Availability Provision of telephone service, whenever and wherever required, i.e. even
in uneconomic areas such as rural and remote.
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Accessibility Uniform, Non-discriminatory tariff in the service area- No discrimination
in terms of price, service and quality regardless of geographical location, based on the
geographical averaging.
Affordability telephone service should be priced so that most users can afford it. Inuneconomic areas, this may mean tariff such as rental below cost.
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The telecom industry is one of the fastest growing industries in India. India has
nearly 200 million telephone lines making it the third largest network in the world after
China and USA. With a growth rate of 45%, Indian telecom industry has the highest
growth rate in the world.
- Indias mobile phone subscriber base is growing at a rate of 82.2%.
- China is the biggest market in Asia Pacific with a subscriber base of 48% of the total
subscribers in Asia Pacific. Compared to that India s share in Asia Pac ific Mobile
phone market is 6.4%. Considering the fact that India and China have almost
comparable populations, India s low mobile penetration offers huge scope for growth.
1.2 History of Indian Telecommunications
Started in 1851 when the first operational land lines were laid by the government
near Calcutta (seat of British power). Telephone services were introduced in India in
1881. In 1883 telephone services were merged with the postal system. Indian Radio
Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the
foreign telecommunication companies were nationalized to form the Posts, Telephone
and Telegraph (PTT), a monopoly run by the government's Ministry of Communications..
The first wind of reforms in telecommunications sector began to flow in 1980s when the
private sector was allowed in telecommunications equipment manufacturing. In 1985,
Department of Telecommunications (DOT) was established. It was an exclusive provider
of domestic and long-distance service that would be its own regulator (separate from the
postal system). In 1986, two wholly government-owned companies were created: the
Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and
MTNL.
In 1990s, telecommunications sector benefited from the general opening up of the
economy. Also, examples of telecom revolution in many other countries, which resulted
in better quality of service and lower tariffs, led Indian policy makers to initiate a change
process finally resulting in opening up of telecom services sector for the private sector.
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Telecommunication sector in India can be divided into two segments: Fixed Service
Provider (FSPs), and Cellular Services. Fixed line services consist of basic services,
national or domestic long distance and international long distance services. The state
operators (BSNL and MTNL), account for almost 90 per cent of revenues from basic
services. Private sector services are presently available in selective urban areas, and
collectively account for less than 5 per cent of subscriptions. However, private services
focus on the business/corporate sector, and offer reliable, high- end services, such as
leased lines, ISDN, closed user group and videoconferencing.
Cellular services can be further divided into two categories: Global System for Mobile
Communications (GSM) and Code Division Multiple Access (CDMA). The GSM sector
is dominated by Airtel, Vodfone-Hutch, and Idea Cellular, while the CDMA sector isdominated by Reliance and Tata Indicom. Opening up of international and domestic long
distance telephony services are the major growth drivers for cellular industry. Cellular
operators get substantial revenue from these services, and compensate them for reduction
in tariffs on airtime, which along with rental was the main source of revenue. The
reduction in tariffs for airtime, national long distance, international long distance, and
handset prices has driven demand.
1.3 Cellular Service
1.3.1 Overview
1. There are five private service operators in each area, and an incumbent state
operator. Almost 80% of the cellular subscriber base belongs to the pre-paid
segment.
2. The DoT has allowed cellular companies to buy rivals within the same
operating circle provided their combined market share did not exceed 67 per
cent. Previously, they were only allowed to buy companies outside their
circle.
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1.3.2 Growth Drivers
Opening up of international and domestic long distance telephony services are
growth drivers in the industry. Cellular operators now get substantial revenue from these
services, and compensate them for reduction in tariffs on air time, which along with
rental was the main source of revenue. The reduction in tariffs for airtime, national long
distance, international long distance, and handset prices has driven demand.
1.3.3 Types of services:
The telecommunication industry enrolls in itself a varied range of services that
has been improving over a period of time. This services includes a various kind of
services that are
[A] Mobile services
Mobile products can be divided into two parts on the basis of payments.
1. Prepaid
2. Postpaid
There are two kinds of products in the mobile industry on the basis of technology.
1. GSM-product & services
GSM is by the most broadly deployed digital wireless standard in the world. It has over
400 million customers to date in over 150 countries, with service provided by over 400
operators. Other technologies used are CDMA & TDMA.
2. CDMA- product & services
CDMA is a digital communication technology to provide PCS service used by some
carries in which an air interface assigns a code to each data packet sent over the air. The
name CDMA is often used to refer to the IS-95 communication standard.
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With both the above products all the operators are providing following services.
a) Call management services
b) SMS based services
c) Value added serviced) Roaming
e) Other services operator specific
(a) Call management services
CLIP-Caller line identification presentation
Call wait/ call hold
Call conference
CLIR- caller line identification restriction
Itemized bill
Call Divert
Call Barring
Missed Call Alerts (MCA)
Voice Mail Service
(b) SMS based services
Text messaging
Mobile mail
Magic Messaging (Group Message)
Global SMS
M-chat (chatting thru SMS)
M-chat (messenger)
(c) Value Added Services
News
Travel
Dictionary
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Stocks
Mobile banking
Reminder
TV services
Ringtone
Logos
Picture messages
Y! mail
Y! messenger
Cricket
Astrology
Flash SMS, Blink SMS
Caller tune or dialer tone
(d) Roaming
Within India
-in circle
-outside circle
Outside India
(e) Other operator specification services
GPRS Services (GSM only)
-polyphonic ringtone
-java games
-downloads
-news-cinema
-3D wallpapers
-Web site
Fax and data services
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Enterprise business solution
PC to phone telephoning
Device based internet telephoning
Domain based e-mail services
[D] Others
1. V-SAT (Very Small Aperture Terminal)
Data communication at speed up to 64 kbps
Support of X.28 & X.25 protocols for data communications.
Voice facility on the V-SAT with connection to public telephone
network (PSTN of BSNL)
Access to BSNL s RABMN network & I -net phase 1 & 2 networks.
Access to international data networks through GPSS of VSNL.
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BHARTICELLULAR
LTD.
Corporatestructure
Bharti Cellular td. Is the mobile operating arm of the Bharti
Televentures.
Bharti Televentures is 28.5%-owned by SingTel. The operator
is listed on the national, Mumbai and New Delhi stock
exchange.
Bharti cellulars offer mobile services under its Airtel brand.
Financial andoperational
performance
Bharti reported mobile revenue of 13,431 Crores for the year
2008-09- a year on-year growth of 63%.
Bharti had 93.92 mn mobile subscribers for year 2009, at
growth rate 51.53%.
Companystrategy
Bharti is the largest GSM player in the Indian mobile service
market.
The company has operational networks in 22 out of 23 circles
across India.
The operator is investing in expanding its network nationwide.
It is working with Ericsson, Siemens and Nokia in a network
management outsourcing arrangements to help speed
deployment and increase the efficiency of its network
expansion.
Products andservices
Bharti operates a GSM network, over which it is currently
rolling out edge technology.
It offers pre-paid and post-paid voice, MMS and Internet
access services.
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BSNL
Corporate
structure
BSNL is state owned incumbent operator, serving all areas of
the country apart from Mumbai and New-Delhi.
BSNL offers mobile services under the brand name CellOne.
Financial andoperational
performance
BSNL reported a mobile subscriber base of 52.15 mn with
growth rate 58.70%.
Companystrategy
BSNL entered in the mobile market in 2002, some six years
after the first private operators started services.
The company has operational a networks in 23 out of 23
circles across India (it does not operate in Mumbai and New
Delhi).
The operating is targeting lower-income users (it is the largest
GSM operator in the poorer states of Bihar, Orissa, Assam, and
North-East.
BSNL has followed Reliance s aggressive tariff stance in the
pre-paid sector, while also lowering its fixed national tariffs to
improve its competitiveness in the voice sector.
Products andservices
BSNL operates a near-nationwide GSM network, covering
every operating circle expect Mumbai and New Delhi.
It offers pre-paid and post-paid voice services.
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VODAFONE-ESSAR
Corporatestructure
It is the joint venture of the England based mobile group and
the Indian conglomerate Essar Group.
Financial andoperational
performance
Vodafone reported a mobile subscriber base of 68.77 mn with
growth rate 27.85%.
Companystrategy
Vodafone Essar previously Hutchison-Essar entered the
mobile market in 1995 in the first wave of operator licensing.
The operator has a presence in all four metro circles in India.
The operator is expanding its business and increasing market
share through a combination of growth by acquisition (it has
acquired the operation of Fascle and Aircel in the year to
September 2004) as well as network investment.
The operator launched EDGE services in July 2004.
Products andservices
Vodafone- Essar currently offers GSM services across 22
circle in India. It offers Pre-paid and Post-paid voice, MMS and Internet
access services.
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IDEACELLULAR
Corporatestructure
Idea cellular is owned by AT&T group
Financial andoperational
performance
Idea cellular had 38.89 mn subscribers with growth rate of
62.03%.
Companystrategy
The operator is currently placed fourth in the mobile market.
Telecom Malaysia and Singapore s STT Telemedia are poised
to become the largest shareholders in the largest shareholders
in the operator, once they acquire AT&T s 33% stake in it.
The operator is expanding primarily through acquisition- in
June 2004, it fully incorporated the Kerala, Haryana and
UttarPradesh West Operation of Escotel. The operator is also
interested in making further acquisition in the market but such
moves must wait until the shareholder structure of the operator
has been finalized.
Products andservices
Idea offers GSM services across 21 circles in India, including
the metro area of the Delhi.
It offers Pre-paid and Post-paid voice, MMS and Internet
access services.
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RELIANCECOMMUNICATION
Corporate structure
Reliance communication is the local telecom service
provider unit of diversified conglomerate Reliance Group
that is Anil Dhirubhai Ambani Group.
The company offers mobile services under the brand
Reliance Mobile.
Financial andoperational
performance
Reliance Mobile had 72.67 mn subscribers with growth
rate of 55.84 %.
Company strategy
Reliance is the second largest player in the mobile servicemarket.
The company targets the prepaid mobile market in india,
primarily with its CDMA service, which offers both full
and (cheaper ) limited mobility services to end users.
The operator is aggressively pricing its prepaid services
and the particular on net tariffs, as a means of increasing
its market share.
Rural sector is targeted through launch of tariffs low
priced handset with a price range of Rs 999 to Rs 18000.
Products andservices
The operator has CDMA2000 1x network, covering 23
circles operating across India
Reliance offers prepaid and post-paid voice services,
International Calling Card, as well as MMS and Internet
access. It also offers limited mobility services over its
WLL network.
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3. INDUSTRY ANALYSIS
3.1 Porters five force model:
Barriers to entry
Product differentiation very difficult Licensing requirement Investment in technology & network Government standards and laws
Bargaining powerof customer
Customersloyaltiesare harderto retain
Switchingcosts arelowerbecause of no. of
player inmarket
Easyavailabilityof products& services
Rivalry among competitors
high competition inmajor player in telecomindustry
high competition due toprivate sector andpublic sector operators
CDMA providerspushing hard
Low margin basedintense competition
Bargaining powerof supplier
Limited noof playersinequipmentmarket
Networkandtechnologyproviders
are limitedIn numbers
A newtechnological serviceprovidedby firmsdependson supplier
Threats of substitutes
Mobile subscribersuse e-mail, fixed line,CDMA and vice-versa
Technologicaldevelopment makingsubstitute moreaccessible
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FORCE -1 RIVALRY AMONG THE EXISTING PLATERS
Rivalry among the existing players is intense even though only few players are permitted
in each of the service areas or circles. The rivalry among existing players in the telecom
industry is moderately high. The followings are the main reasons for such type of rivalry.
Mergers/acquisitions and joint venture
Rivalry is high in India because due to the mergers and acquisition among the
existing players try to gain market share and economies Vodafone Essar joint
venture scales. We can take example Vodafone Essar joint venture, Airtel
acquired Hexacomm, and Idea acquired Escotel.
The number of competitors:
Rivalry intensifies as the number of competitor s increases and as competitors
become more equal in size and capability. In telecom industry there are number
of competitors exist and also increasing. So that it is harder for one or two firms
to win the competing battle and dominate the market. Further 64 more new
player are given license to operate in india.
Demand for the product:
Rivalry is usually stronger when demand for the product is growing. Here the
demand for the mob ile is growing faster. The demand in all the user groups i.e.residential users, business users, educational users and health users is increasing
at higher rate and as a result of this the Rivalry is increasing.
Use of price cut methods and other competitive weapons:
The higher use of price cut methods and other competitive weapons shows that
the Rivalry is higher in the industry. Here all the telecom companies like BSNL,
RELIANCE, TATA, AIRTEL, VODAFONE, IDEA and all others companies
are cutting their prices for compete the other companies. They try to provide
better services like instrument, coverage facility, internet facility and some other
extra services. So we can say that the Rivalry is moderately high in this industry.
Dissatisfaction of competitors:
Rivalry is stronger when one or more competitors are dissatisfied with their
market position and launch moves to bolster their standing at the expense of the
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rival. In telecom industry, especially in the mobile sector, the competitors are not
satisfied with their current market position and they are trying to capture more
market share by using various competitive weapons. And as a result of such
dissatisfaction the Rivalry is becoming stronger.
High exist barriers:
Rivalry tends to be more vigorous when it cost more to get out of business than
to stay in and compete. As the investment of the various companies is very high
for entering in such industry (like reliance has invest thousands crore of rupees
for establishing fiber optics network, BSNL has invest high amount of money for
establishing is network), it is not easy for the companies to get out of the
business easily so the only way for them is to stay in the business and compete.
So the Rivalry is high in this industry.
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FORCE-2 THREATS OF NEW ENTRANTS
Threats of new entrants are moderate in telecom industry because of the
high entry barriers to new inexperienced comer and foreign firms (like
Vodafone) who have already existence in more than one country as telecom
service providers. No surprise, in the capital-intensive telecom industry the
biggest barrier to entry is access to finance. To cover high fixed cost, serious
contenders typically require a lot of cash. When capital markets are generous, the
threat of competitive entrants escalates,. When financing opportunities are less
readily available, the pace of entry slows. Meanwhile, ownership of a telecom
license can represents a huge barrier to entry. There is also a finite amount of
good radio spectrum that lends itself to mobile voice a nd data applications. Inaddition, it is important to remember that solid operating skills and management
experience is fairly scarce, making entry even more difficult.
High entry barriers
Because of the barriers to entry, it becomes very difficult for the new players to
operate in India because of the government licensing policies.
High competition
Competition in telecom industry is very high because of numbers of domestic
and foreign players into the market and their capability of providing innovative
services and very well know-how of technology.
High capital investment
One of the important factor to consider while entering into the telecom industry
is the huge capital requirement for the investment.
Older and well established players who have a nationwide network
Presently, there are many no. of strong players like Bharti Airtel, BSNL, MTNL,
Vodafone, Idea, VSNL, and Reliance into the market with nationwide network.
These players have established their position into the market as well as in the
mind of customer also.
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License fee
New entrance are required to pay the license fee, entry fee and fixed the revenue
share license fee at 6 percent and follow the rollout obligations.
Continuously evolving technology
The technology in telecom industry is changing and on mobile its changes from
1G to 3G at very fast rate as the every player in the industry is coming with new
services and application.
Falling tariffs
Call tariffs are declining in telecom industry due to high competition, which
results in less revenue for telecom operator.
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FORCE-3 THREATS OF SUBSTITUTES
The threats from the substitute products a re moderate in the telecom industry.
Threats from wireless in local loop (WLL) based limited mobility was
considerably reduced after TRAI imposed the mobility of WLL based basic
operator to 25km revenue share domestic long to 5%. The threats are depend on
the following tree factors.
Whether attractive priced substitutes are available
Whether buyers view the substitutes as being satisfactory in terms of
quality, performance and other relevant attributes.
Whether buyers can switch to substitute easily.
The following are some substitute for the telephone and mobile.
On line chat:
On line chat, which can be done through internet is a major substitute for
the telecom services. People can communicate with each other using web
cameras and microphones. This substitute is good in performance as well
as cheaper in price. So the industry has significant threats from growth of
this substitute facility. Obviously earlier this facility required the use of
telephone lines but
Now a day s using radio lines and other facilities one can use this facility
without using telephone lines.
E-mail:
The faster way of communication is through electronic mail. It is cheapas well as faster way of communication. But the main disadvantage of
this substitute is that the use of email is not easy for everyone in compare
of simple mail so far as backward areas of India are concern. So we can
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FORCE-4 BARGAINING POWER OF SUPPLIER
At first glance, it might look like telecom equipment suppliers have
considerable bargaining power over telecom operators. Indeed, without high-tech
broadband switching equipment, fiber-optic cables, and mobile handsets and
billing software, telecom operators would not be able to do the job of transmitting
voice and data from place to place. But there are actually a large number of large
equipment makers around.
There are a number of domestic private players like Himachal Futuristic,
Global Telecommunication, Bharti Telecom, Tata Telecom, Shyam Telecom etc.
are serious players in the field. Nortel, Lucent, Cisco, Nokia, Alcatel, Ericsson,
Tellabs are just a few of the foreign supplier names. There are enough vendors,
arguably, to dilute bargaining power. The limited pool of talented managers and
engineers, especially those well versed in the latest technologies, places
companies in a weak position in terms of hiring and salaries.
In telecom industry the bargaining power of supplier is lower than
moderate. The main reasons are as following.
Grey markets The handset market is very competitive with substantially lower handsets
prices offered by the grey markets.
Number of suppliers
The numbers of telecom equipment suppliers are in big size. There are
many domestic as well as foreign players operating in India. With the
government putting in place an attractive trade and investment policy for
telecom equipments, it is expected that this step will intensify
competition, as it will attract foreign players into the telecom equipment
manufacturing sector. Some of the important measures announced by the
government include no industrial license required to set-up a
manufacturing unit; automatic approval of 100 per cent foreign equity;
full reparability of dividend and capital invested and confessionals import
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duties of five per cent for import of certain equipment (for cellular, ISP
networks).
Commoditization of communications equipments
Many communications equipments have been commoditized these days;
Thereby, the equipment providers had turned their focus to providing
good customer services in efforts to win customers.
Telecom industry consolidation
As the telecom industry consolidates, the number of communications
equipment buyers will decrease. In this environment, equipment buyers
(telecoms) are expected to gain more bargaining power over the
equipment providers. The communications equipment industry is likely to
go through its own wave of M&A. mergers will not only allow equipment
providers to gain back market power, but also at the same time refresh
their product portfolios with new and acquired technologies.
Government policy
With the government putting in place an attractive trade and investment
policy for telecom equipments. It is expected that this step will intensify
competition. Some of the important measures announced by the
government include to industrial license required to set-up amanufacturing unit; automatic approval of 100 per cent foreign equity;
full reparability of dividend and capital invested and confessionals import
duties of five per cent for certain equipment (for cellular, ISP networks).
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FORCE-5 BARGAINING POWER OF CUSTOMERS
For the telecom industry the bargaining power of the customer is
moderately low. The followings are the main reasons for this argument.
Low penetration rate
Penetration rate is low (compared to other countries with similar
economies and population) but demand is increasingly at a high rate.
Market fragmentation
Buyers are fragment with no influence on price or product even though
the new entrants of MTNL and BSNL as well as the option of WLL allow
them to switch services.
Switching cost
The switching cost of buyers to competing brands is relatively high.
Because switching from one service provider to another the customers
have to face many problems like changing the number, problem of
current account balance and problem of activation charge for new
connection. So they mostly prefer the existing connection instead of
switching to the new one.
The number buyers As the number of buyers is low the bargaining power of the customer is
high but here the number of buyers is very high so the customers are not
that much important for the companies and their bargaining power is low.
Buyers discretion in whether and when they purchase the product
Here the customers have not discretion in whether and when they
purchase the product. Because for ex. In mobile when the card is expiring
after some time; the customer has to recharge it within the given period to
remain its card number as it is.
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4. LITERATURE REVIEW
Debnath (2008), in his study, he explained that the prime focus of the service providers is
to create a loyal customer base by benchmarking their performances and retainingexisting customers in order to benefit from their loyalty. With the commencement of the
economic liberalization in 1991, and with a view to expand and improve telecom
infrastructure through the participation of the private sector, the Government of India
permitted foreign companies holding 51 percent equity stake in joint ventures to
manufacture telecom equipment in India. The Indian Government has announced a new
policy, which allows private firms to provide basic telephone services. There had been a
monopoly of the state-owned department of telecommunications. However, several
companies are expected to benefit from the policy change.
Kalavani (2006) in their study analyzed that majority of the respondents have given
favourable opinion towards the services but some problems exist that deserve the
attention of the service providers. They need to bridge the gap between the services
promised and services offered. The overall customers attitude towards cell phone
services is that they are satisfied with the existing services but still they want more
services to be provided.
Kumar (2008), in their study titled Customer Satisfaction and Discontentment vis-a-vis
BSNL Landline Service: A Study analyzed that at present, services marketing plays a
major role in the national economy. In the service sector, telecom industry is the most
active and attractive. Though the telecom industry is growing rapidly, India's telecom
density is less than the world's average telecom density as most of India's market is yet to
be covered. This attracts private operators to enter into the Indian telecom industry,which makes the Bharat Sanchar Nigam Limited (BSNL) more alert to run its business
and survive in the market.
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6. DATA ANALYSIS
6.1 Analysis of Demographic Variables:
1) Gender:
In this research, out of 258 respondents 72.86% are male and 27.14% are female.
2) Occupation:
In this research, out of 258 respondents, 51.55% are students, 23.25% are working
employees, 22% are running their own businness, 1% are retired from their work and 2%
are from other than these categories.
0
50
100
150
200
Male Female
Male (72.86%)
Female(27.14%)
Gender
0
20
40
60
80
100
120
140
STUDENT EMPLOYEE BUSINESS RETIRED OTHER
STUDENT(51.55%)
EMPLOYEE(23.25%)
BUSINESS (22%)
RETIRED (1%) OTHER (2%)
Occupation
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3) Type of Service User:
In this research, out of 258 respondents, 81.4% respondents are using pre-paid services
and 18.6% respondents are using post-paid services. So, it shows that there are more
number of pre-paid users than post-paid users.
4) Age:
In this research, out of 258 respondents, 10% are respondents are below age 20, 69% are
between age 20 to 30 years, 12% are between age 30 to 40, 5% are between age 40 to 50,
and 5% are from age above 50.
0
50
100
150
200
250
PRE-PAID POST-PAID
PRE-PAID(81.4%)
POST-PAID(18.6%)
Type of Service User
0
50
100
150
200
Below 20 20-30 30-40 40-50 Above 50
Below 20 (10%)
20-30 (69%)
30-40 (12%)40-50 (5%) Above 50 (5%)
Age
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5) Multiple Users:
In this research, out of 258 respondents, 37% consumers are using more than 1 MSPs
services and 63% consumers are using only 1 MSPs services.
6) Income:
In this research, out of 258 respondents, 13% are having income less than 1 lac, 20%
having income between 1 lac and 2 lacs, 28% having income between 2 lacs and 3 lacs,
18% having income between 3 lacs and 4 lacs, and 21% having income above 4 lacs.
0
50
100
150
200
Consumers using more
than 1 MSPs' services
Consumers using only 1
MSPs' services
Consumersusing more
than 1 MSPs'services (37%)
Consumersusing only 1
MSPs' services(63%)
Multiple Users
0
10
20
30
40
50
60
70
80
400K
400K (21%)
Income
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6.2 Mean Interpretation:
Overall Mean Table:
This mean table shows mean of each variable as responded by the respondents. If
we take cut-off mean as 3.5 then, there are several factors which have mean more than
3.5 and are highlighted in above table. From the respondents point of view, they a re
more satisfied to factors highlighted above. So, these 10 factors are more important to
them for their satisfaction.
Mean Table (All MSPs)
Variables Mean Value
Network coverage 3.85
Call rates 3.79
Roaming Facilities 3.66
SMSs 4.12
GPRS/Internet 3.57
Caller tunes 3.60
Various alerts 2.83
Availability of customer stores 3.98
Availability of recharge points/Bill-Payment option
4.35
Types of recharge vouchers/Plans 4.27
Customization 3.19
Query resolved by customer care 3.82
Waiting time for having connected withrepresentative
3.46
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6.3 Companywise mean tables:
1) AIRTEL:
This mean table shows mean of each variable as responded by the respondents. If
we take cut-off mean as 3.5 then, there are several factors which have mean more than
3.5 and are highlighted in above table. From the respondents point of view, they are
more satisfied to factors highlighted above with Airtel. So, these 11 factors are more
important to them for their satisfaction.
Mean Table (AIRTEL)
Variables Mean Value
Network coverage 3.90
Call rates 3.76
Roaming Facilities 3.79
SMSs 4.43
GPRS/Internet 3.76
Caller tunes 3.87
Various alerts 2.98
Availability of customer stores 4.02
Availability of recharge points/Bill-Payment option
4.51
Types of recharge vouchers/Plans 4.32
Customization 3.48
Query resolved by customer care 4.30
Waiting time for having connected withrepresentative
3.97
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2) VODAFONE:
This mean table shows mean of each variable as responded by the respondents. If
we take cut-off mean as 3.5 then, there are several factors which have mean more than
3.5 and are highlighted in above table. From the respondents point of view, they are
more satisfied to factors highlighted above with Vodafone. So, these 12 factors are more
important to them for their satisfaction. So, Vodafone customers are satisfied with all
factors taken in this research except various alert services.
Mean Table (VODAFONE)
Variables Mean Value
Network coverage 4.23
Call rates 4.23
Roaming Facilities 4.05
SMSs 4.32
GPRS/Internet 3.82
Caller tunes 3.71
Various alerts 3.26
Availability of customer stores 4.27
Availability of recharge points/Bill-Payment option
4.79
Types of recharge vouchers/Plans 4.79
Customization 3.60
Query resolved by customer care 4.15
Waiting time for having connected withrepresentative
4.05
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3) IDEA:
This mean table shows mean of each variable as responded by the respondents. If
we take cut-off mean as 3.5 then, there are several factors which have mean more than
3.5 and are highlighted in above table. From the respondents point of view, they are
more satisfied to factors highlighted above with Idea. So, these 9 factors are more
important to them for their satisfaction. So, above table shows that Idea customer are not
much satisfied with call rates and roaming facilities which are part of basic services.
Mean Table (IDEA)
Variables Mean Value
Network coverage 4.12
Call rates 3.42
Roaming Facilities 3.14
SMSs 3.72
GPRS/Internet 3.56
Caller tunes 3.72
Various alerts 2.84
Availability of customer stores 4.26
Availability of recharge points/Bill-Payment option
3.96
Types of recharge vouchers/Plans 3.82
Customization 3.28
Query resolved by customer care 3.86
Waiting time for having connected withrepresentative
3.86
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4) BSNL:
This mean table shows mean of each variable as responded by the respondents. If
we take cut-off mean as 3.5 then, there are several factors which have mean more than
3.5 and are highlighted in above table. From the respondents point of view, they are
more satisfied to factors highlighted above with BSNL. So, these 6 factors are more
important to them for their satisfaction. So, above table shows that BSNL customer is not
much satisfied with other services. They are also dissatisfied with VASs.
Mean Table (BSNL)
Variables Mean Value
Network coverage 3.28
Call rates 3.79
Roaming Facilities 3.91
SMSs 3.98
GPRS/Internet 3.02
Caller tunes 3.02
Various alerts 2.53
Availability of customer stores 3.72
Availability of recharge points/Bill-Payment option
4.23
Types of recharge vouchers/Plans 4.36
Customization 2.62
Query resolved by customer care 3.15
Waiting time for having connected withrepresentative
2.26
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5) RELIANCE MOBILE:
This mean table shows mean of each variable as responded by the respondents. If
we take cut-off mean as 3.5 then, there are several factors which have mean more than
3.5 and are highlighted in above table. From the respondents point of view, they are
more satisfied to factors highlighted above with Reliance mobile. So, these 6 factors are
more important to them for their satisfaction. So, above table shows that Reliance mobile
customer is not much satisfied with other services and basic services. They are satisfied
with VASs most.
Mean Table (RELIANCE MOBILE)
Variables Mean Value
Network coverage 3.41
Call rates 3.63
Roaming Facilities 3.22
SMSs 3.74
GPRS/Internet 3.67
Caller tunes 3.78
Various alerts 2.33
Availability of customer stores 3.15
Availability of recharge points/Bill-Payment option
3.78
Types of recharge vouchers/Plans 3.52
Customization 2.63
Query resolved by customer care 3.30
Waiting time for having connected withrepresentative
2.59
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6.4 Chi-Square Tests:
Hypothesis 1:
Ho: Consumers satisfaction with Call rates of MSPs is not
significantly related to Income of consumers
H 1: Consumers satisfaction with Call rates of MSPs is significantly
related to Income of consumers
Income and Call rates Cross Tabulation
Income
Consumers satisfaction with Call rates of MSPs
2 3 4 5 Total
1 7 4 10 11 32
2 4 11 20 17 52
3 0 15 30 29 74
4 0 7 13 27 47
5 0 5 24 24 53
Total 11 42 97 108 258
Chi-Square Tests
Value df Significance
Pearson Chi-Square 42.542 12 .000
Likelihood Ratio 38.124 12 .000
Linear-by-Linear
Association
14.559 1 .000
N of Valid Cases 258
Here, significance value is 0.000 that is less than 0.05. So, null hypothesis is rejected and
alternative hypothesis is accepted. So, test shows that Consumers satisfaction with Call
rates of MSPs is significantly related to Income of consumers.
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Hypothesis 2:
Ho: Consumers satisfaction with Availability of Customer stores is
not significantly related to Age of consumers
H 1: Consumers satisfaction with Availability of Customer stores is
significantly related to Age of consumers
Age and Availability of Customer Stores Cross Tabulation
AGE
Availability of Customer Stores
1 2 3 4 5 Total
1 0 2 2 13 8 25
2 8 15 21 54 80 178
3 0 2 9 9 10 30
4 0 4 2 2 5 13
5 0 0 0 6 6 12
Total 8 23 34 84 109 258
Chi-Square Tests
Value df SignificancePearson Chi-Square 27.947 a 16 .032
Likelihood Ratio 28.361 16 .029
Linear-by-Linear
Association
.012 1 .912
N of Valid Cases 258
Here, significance value is 0.032 which is less than 0.05. So, null hypothesis is rejectedand alternative hypothesis is accepted. So, test shows that Consumers satisfaction with
Availability of Customer stores is significantly related to Age of consumers.
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Hypothesis 4:
Ho: Type of Service opted by the consumers is not significantly
related to Occupation of consumers
H 1: Type of Service opted by the consumers is significantly related to
Occupation of consumers
Service and Occupation Cross Tabulation
Occupation
Service
STU EMP BUS RET OTH Total
1 112 51 36 3 6 208
2 20 10 20 0 0 50
Total 132 61 56 3 6 258
Chi-Square Tests
Value df Significance
Pearson Chi-Square 13.585 a 4 .009
Likelihood Ratio 13.997 4 .007
Linear-by-Linear Association
2.659 1 .103
N of Valid Cases 258
Here, significance value is 0.009 which is less than 0.05. So, null hypothesis is rejected
and alternative hypothesis is accepted. So, test shows that Type of Service opted by the
consumers is significantly related to Occupation of consumers.
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6.5 ANOVA Tests:
Hypothesis 5:
Ho: Means of Consumers satisfaction with Network Coverage of
Vodafone, Airtel and Idea are same ( voda= airtel= idea )
H 1: Means of Consumers satisfaction with Network Coverage of
Vodafone, Airtel and Idea are not same ( voda airtel idea )
ANOVA
Sum of
Squares
df Mean Square F Sig.
Network
Coverage
Between Groups 3.333 2 1.666 1.528 .220
Within Groups 187.547 172 1.090
Total 190.880 174
Here, significance value is 0.220 > 0.05. So, there is not enough evidence to reject null
hypothesis. So, Null hypothesis is accepted. So, test shows conclude that the means of
Consumers satisfaction with Network Coverage of Vodafone, Airtel and Idea are same
(voda= airtel= idea ). It means that, consumers satisfaction with network coverage provided
by Vodafone, Airtel and Idea are almost same.
Hypothesis 6:
Ho: Means of Consumers satisfaction with Convenience of Vodafone,
Airtel and Idea are same ( voda= airtel= idea )
H 1: Means of Consumers satisfaction with Convenience of Vodafone,
Airtel and Idea are not same ( voda airtel idea )
ANOVA
Sum of
Squares
df Mean Square F Sig.
Convenience
Between Groups 10.315 2 5.157 10.235 .000
Within Groups 86.670 172 .504
Total 96.984 174Here, significance value is 0.000 < 0.05. So, null hypothesis is rejected. So, alternative
hypothesis is accepted & it shows that the means of Consumers satisfaction with
Convenience of Vodafone, Airtel and Idea are not same . It means that, consumers
satisfaction with convenience provided by Vodafone, Airtel and Idea are different. 6.7
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So, above table shows name of the extracted 10 factors by new 4 factors. The 4 new
factors are as follow.
Customized VASs Convenience
Network Coverage
Call Tariff
So, from this factor analysis, there are mainly 4 factors that influence the customers most.
6.8 Factor analysis: (Company wise)
The factor analysis for individual company s data shows same result as it was for
overall factor analysis except for Idea cellular. In Idea cellular there were two more
factors such as Query resolved by customer care and waiting time for having connected
with representative are included in component 3. So, for Idea cellular these two factors
are also affecting satisfaction of the consumers, otherwise it is same as it is for other
companies.
ExtractedComponents
New NameComponent Extracted Factors
FactorLoadings
Value
Customized VASs
Component
1
GPRS/Internet 0.876
Caller tunes 0.829
Various alerts 0.764
Customization 0.775
ConvenienceComponent
2
Availability of customer stores 0.747
Availability of recharge points/Bill-Payment option
0.894
Types of recharge vouchers/Plans 0.881
Network Coverage
Component 3
Network coverage 0.719
Call Tariff Component
4
Call rates 0.772
Roaming Facilities 0.779
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6.9 Hypothesis Testing with Regression: (Before factor analysis)
The variables taken for this analysis are the variables which were initially
considered for the study.
6.9.1 Regression for Consumer Loyalty towards MSP as dependent variable
and Satisfaction with Basic Services, Satisfaction with VASs, Satisfaction
with Convenience, Satisfaction with Other Services as an independent
variables.
Regression output from Excel
Regression Statistics
Multiple R 0.778278
R Square 0.605717
Adjusted RSquare
0.599483
Standard Error 0.857958
Observations 258
ANOVA
df SS MS F
Regression 4 286.0978 71.52445 97.16783
Residual 253 186.2312 0.736092
Total 257 472.329
Coefficients Standard
Error t Stat P-value
Intercept -2.69182 0.326659 -8.24047 9.31E-15
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AVG-BS 0.569968 0.088054 6.47292 4.96E-10
AVG-VA 0.55109 0.079437 6.937464 3.33E-11
AVG-CO 0.47892 0.076147 6.289393 1.39E-09
AVG-OS -0.00159 0.074823 -0.0212 0.983099
6.9.1.1 Prediction Equation:
The prediction equation is LO = -2.6918 + 0.5699 (BS) + 0.5510 (VA) + 0.4789 (CO) -
0.0015 (OS)
Where, LO=Consumer Loyalty towards MSP
BS=Satisfaction with Basic services
VA= Satisfaction with VASs
CO= Satisfaction with Convenience
OS= Satisfaction with Other Services
telling you that LO is predicted to increase 0.5699 when the BS factor goes up by one,
increase by 0.5510 when VA goes up by one, increase by 0.4789 when CO up by one,
decrease by 0.0015 when OS goes up by one, and is predicted to be 0.43 which is
equivalent to zero (0) when all factors rated as minimum that is 1 and also predicted to be
5.29 which is equivalent to five (5) when all factors rated as maximum that is 5. So, it
shows that consumers loyalty towards MSP increases when consumers satisfaction level
is high with all of above factors except OS and consumers loyalty towards MSP
decreases when consumers sat isfaction level is low with all of above factors.
6.9.1.2 Coefficient of determination (R 2):
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The R-squared of the regression is the fraction of the variation in your dependent
variable that is accounted for (or predicted by) your independent variables. For this
regression equation R-squared is 0.6057 so, 60.57% of variance in dependent variable
can be explained by four independent variables.
6.9.1.3 Significance Value for Hypothesis Testing (P):
Now P values for the each independent variable is there in the regression table and if it is
found to be less than 0.05 for each independent variable than the variable has significant
relationship with the dependent variable. From the regression analysis it is found that BS
(Satisfaction with Basic Services), VA (Satisfaction with VASs) and CO (Satisfaction
with Convenience) have P value less than 0.05 so that all these three variables are
significantly related to LO (Consumer Loyalty towards MSP). OS (Satisfaction with
Other Services) has P value greater than 0.05 so, it has no significant relation with LO
(Consumer Loyalty towards MSP).
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6.9.2 Regression for Consumers Foster Recommendation of MSP to others as
dependent variable and Satisfaction with Basic Services, Satisfaction with VASs,
Satisfaction with Convenience, Satisfaction with Other Services as an independent
variables.
Regression output from Excel
Regression Statistics
Multiple R 0.812284
R Square 0.659806
Adjusted RSquare
0.654427
Standard Error 0.764168
Observations 258
ANOVA
df SS MS F
Regression 4 286.5412 71.6353 122.6731
Residual 253 147.74 0.583953
Total 257 434.2812
Coefficients Standard Error
t Stat P-value
Intercept -2.74988 0.290949 -9.45142 2.37E-18
BS 0.672167 0.078428 8.570469 1.03E-15
VA 0.559605 0.070753 7.909287 8.06E-14
CO 0.498385 0.067823 7.348315 2.77E-12
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OS -0.11289 0.066643 -1.69396 0.091504
6.9.2.1 Prediction Equation:
The prediction equation is RE = -2.7498 + 0.6721 (BS) + 0.5596 (VA) + 0.4983 (CO) -
0.1128 (OS)
Where, RE=Consumers Foster Recommendation of MSP to others
BS=Satisfaction with Basic services
VA= Satisfaction with VASs
CO= Satisfaction with Convenience
OS= Satisfaction with Other Services
telling you that RE is predicted to increase 0.6721 when the BS factor goes up by one,
increase by 0.5596 when VA goes up by one, increase by 0.4983 when CO up by one,
decrease by 0.1128 when OS goes up by one, and is predicted to be 0.21 which is
equivalent to zero (0) when all factors rated as minimum that is 1 and also predicted to be
5.33 which is equivalent to five (5) when all factors rated as maximum that is 5. So, it
shows that Consumers Foster Recommendation of MSP to others increases when
consumers satisfaction level is high with all of above factors except OS and Consumers
Foster Recommendation of MSP to others decreases when consumers s atisfaction level
is low with all of above factors.
6.9.2.2 Coefficient of determination (R 2):
The R-squared of the regression is the fraction of the variation in your dependent
variable that is accounted for (or predicted by) your independent variables. For this
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regression equation R-squared is 0.6598 so, 65.98% of variance in dependent variable
can be explained by four independent variables.
6.9.2.3 Significance Value for Hypothesis Testing (P):
Now P values for the each independent variable is there in the regression table
and if it is found to be less than 0.05 for each independent variable than the variable has
significant relationship with the dependent variable. From the regression analysis it is
found that BS (Satisfaction with Basic Services), VA (Satisfaction with VASs) and CO
(Satisfaction with Convenience) have P value less than 0.05 so that all these three
variables are significantly related to RE (Consumers Foster Recommendation of MSP to
others). OS (Satisfaction with Other Services) has P value greater than 0.05 so, it has no
significant relation with RE (Consumers Foster Recommendation of MSP to others ).
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6.10 Hypothesis Testing with Regression: (After factor analysis)
Here the variables are taken after the factor analysis. It means that new four
factors extracted from factor analysis are taken for this regression analysis.
6.10.1 Regression for Consumer Loyalty towards MSP as dependent variable
and Satisfaction with Network Coverage, Satisfaction with Call Tariff,
Satisfaction with Customized VASs, Satisfaction with Convenience as an
independent variables.
Regression output from Excel
Regression Statistics
Multiple R 0.793241
R Square 0.629231
Adjusted R Square 0.623369
Standard Error 0.831982
Observations 258
ANOVA
df SS MS F
Regression 4 297.204 74.30101 107.3414
Residual 253 175.125 0.692194
Total 257 472.329
CoefficientsStandard
Error t Stat P-value
Intercept -2.26292 0.309242 -7.31763 3.34E-12
NC 0.326873 0.053634 6.094556 4.07E-09
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The R-squared of the regression is the fraction of the variation in your dependent
variable that is accounted for (or predicted by) your independent variables. For this
regression equation R-squared is 0.6292 so, 62.92% of variance in dependent variable
can be explained by four independent variables.
6.10.1.3 Significance Value for Hypothesis Testing (P):
Now P values for the each independent variable is there in the regression table
and if it is found to be less than 0.05 for each independent variable than the variable has
significant relationship with the dependent variable. From the regression analysis it is
found that NC (Satisfaction with Network Coverage), CT (Satisfaction with Call Tariff),
CV (Satisfaction with Customized VASs) and CO (Satisfaction with Convenience) have
P value less than 0.05 so that all these four variables are significantly related to LO
(Consumer Loyalty towards MSP).
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6.10.2 Regression for Consumers Foster Recommendation of MSP to others as
dependent variable and Satisfaction with Network Coverage, Satisfaction
with Call Tariff, Satisfaction with Customized VASs, Satisfaction with
Convenience as an independent variables.
Regression output from Excel
Regression Statistics
Multiple R 0.813554
R Square 0.661871
Adjusted RSquare 0.656525
Standard Error 0.761845
Observations 258
ANOVA
df SS MS F
Regression 4 287.438 71.85951 123.8086
Residual 253 146.8432 0.580408
Total 257 434.2812
Coefficients
Standard
Error t Stat P-value
Intercept -2.35395 0.283172 -8.31279 5.78E-15
AVG-BS-1 0.213621 0.049112 4.349634 1.98E-05
AVG-CT 0.389817 0.063669 6.12254 3.49E-09
AVG-CVAS 0.460757 0.058971 7.813345 1.49E-13
AVG-CO 0.480304 0.064268 7.473439 1.27E-12
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6.10.2.1 Prediction Equation:
The prediction equation is LO = -2.354 + 0.214 (NC) + 0.390 (CT) + 0.461 (CV) + 0.480
(CO)
Where, RE=Consumers Foster Recommendation of MSP to others
NC=Satisfaction with Network Coverage
CT= Satisfaction with Call Tariff
CV= Satisfaction with Customized VASs
CO= Satisfaction with Convenience
telling you that RE is predicted to increase 0.214 when the NC factor goes up by one,
increase by 0.390 when CT goes up by one, increase by 0.461 when CV up by one,
increase by 0.480 when CO goes up by one, and is predicted to be 0.80 which is
equivalent to one (1) when all factors rated as minimum that is 1 and also predicted to be
5.37 which is equivalent to five (5) when all factors rated as maximum that is 5. So, it
shows that Consumers Foster Recommendation of MSP to others increases when
consumers satisfaction level is high with four of above factors and Consumers Foster
Reco mmendation of MSP to others decreases when consumers satisfaction level is low
with four of above factors.
6.10.2.2 Coefficient of determination (R 2):
The R-squared of the regression is the fraction of the variation in your dependent
variable that is accounted for (or predicted by) your independent variables. For this
regression equation our R-squared is 0.6618 so, 66.18% of variance in dependent variable
can be explained by four independent variables.
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6.10.2.3 Significance Value for Hypothesis Testing (P):
Now P values for the each independent variable is there in the regression table
and if it is found to be less than 0.05 for each independent variable than the variable has
significant relationship with the dependent variable. From the regression analysis it isfound that NC (Satisfaction with Network Coverage), CT (Satisfaction with Call Tariff),
CV (Satisfaction with Customized VASs) and CO (Satisfaction with Convenience) have
P value less than 0.05 so that all these four variables are significantly related to RE
(Consumers Foster Recommendation of MSP to others ).
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7. RESEARCH & FINDINGS:
Customers loyalty depends on Basic Services, Value Added Services and
Convenience provided by the MSPs.
Foster recommendation (positive word of mouth) by customers depends on Basic
Services, Value Added Services and Convenience provided by the MSPs.
Customers loyalty and foster recommendation (positive word of mouth) are
depending on mainly four factors, i.e. Customized Value Added Services,
Convenience, Network Coverage and Call Tariff.
Mostly BSNL and Reliance users are using another MSP s services along with
their main MSP.
Mostly Vodafone, Airtel and Idea users are using only one MSP s services.
Mostly Vodafone, Airtel and Idea users are satisfied with the service provided by
their respective MSPs.
Most of BSNL users are not satisfied with Network Coverage, VASs and
Customer care services.
Most of Reliance Mobile users are not satisfied with Network Coverage, Roaming
Facilities and Customer care services.
Custo mers satisfaction with Call Rates is significantly related with Family
Income of Users.
Customers satisfaction with Availability of Customer Store is significantly
related with Age of users.
Type of service opted by users is significantly related with occupation of users.
More number of users is using Pre-paid service than Post-paid service.
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8. CONCLUSION:
We have studied the Indian telecom industry by concentrating on mobile service
providers, and observed that there is high competition among the players in the industry.
All the players are giving special offers and schemes as per the market conditions to
maximize their subscriber base. Competition in telecom industry is heating up, now it s
time for Indian telecom players to align up in the new dynamic business environment.
Telco majors should think to launch the product according to the needs of customers to
satisfy them and make them brand loyal as very soon this blue ocean of Indian telecom
scenario will convert into Red Ocean where the loss of one is the gain of other.
According to the results, the most important determinant for consumers satisfaction a ndtheir foster recommendation (positive word of mouth) to others are Customized VASs,
Convenience, Network Coverage and Call tariff.
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9. BIBLIOGRAPHY:
9.1 References:
Debnath, Roma Mitra, Benchmarking telecommunication service in India, 2008
(http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=236E2B
6B45CF101465D540FD4401AEB9?contentType=Article&hdAction=lnkhtml&co
ntentId=1742535&history=true>) [Viewed 2/3/10]
Fernandez, Fronnie, Understanding Dynamics in an Evolving Industry: Case of
Mobile VAS in India, 2007
(http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=2086527
F0757A565F9A6CBAC8800F658?contentType=Article&hdAction=lnkhtml&co
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