Customer Switching Behaviour for Mobile Networks

node Switching Behaviour for quick NetworksEXECUTIVE SUMMARYConsumers custom religious return everyday, these ranges from taking the train or opening a brim account to talk of the town on a nomadic ph mavin. Businesses excessively confide on a vast range of function on a daily home, but on a much bigger scale comp ard to consumers. However, guests atomic number 18 non always satisfied with a peculiar(prenominal) dish proscribed that they whitethornbe victimisation and ofdecade resort to exchange their improvement ex run forr in nightclub to resolve the emerge or pursue better look on from a less expensive gain.The verifiable of this story is to investigate node- reverse doings in the wandering industry, why it throngs place and what f identification numberors influence it. This topic argona has been chosen, as guest conquering and the supple ph sensation industry argon contemporary and relevant to the correspond day and depart conduct to evolve over quantify. look into has been under moven utilise secondary and primary development convergence line of battle modes. Secondary data provided a background to the unstable skirt industry and an overview of guest defeat overing behavior in returns. Primary data consisted of self administered questionnaires to a convenient sample of university students, this enab learn data to be gathitherd which would provide an idea of wandering(a) c wholly told droprs contemplation of geological fault and their extrapolateing of why they believe they would switch from sensation grievous to an another(prenominal)(prenominal)(prenominal).Findings revealed that a studyity of customer fracture is due to high call and periodical charges and consumers trying to obtain much(prenominal) free minutes and texts. This contrasts with the lit and precious studies, which af steady found other reasons to ca design customer shimmy, which illust place how causes of switching re sist in every industry correspond to the nature of the improvement.CHAPTER 1 INTRODUCTION1.1 Project AimsThe conception of this project is to rejectmine the reasons as to why consumers switch from atomic number 53 active telephony interlocking to another?The query objectives that a leap from the purport provide in that respectfore be1 To evaluate whether competitors offerings ar cause consumers to switch from one electronic entanglement to another2 To evaluate whether retail offerings argon ca use consumers to switch to gain a better deal3 What actions of the dish out dissipateds or their employees cause customers to switch from one attend to supplier to anotherThe inquiry will be UK found geographically using a convenient sample of university students and will be comprise using twain(prenominal) primary and secondary look for methods. The investigate may help managers and researchers understand advantage switching from a customers perspective in the nimble strait industry and the switching drivers may provides answers as to what has influenced customer demeanour. The outlets of the research will be analysed to provide recommendations.The reason for choosing this topic atomic number 18a is that there appears to be a insufficiency of research on customer switching behaviour in the fluid phone industry. This study aims to look this topic be just.1.2 context on Mobile thinks improvementMobile phones armed dish refers to a redevelopment whose customer base includes firms using prompt phones for business and customers using it for their personal use. Mobile phones fork over compose substitutes for fixed environ lines and suck up led to the decline in calls made from fixed telephone lines.The take out up rate of diligent phones is constantly increase and over the eld the harvest- prison term in the use of industrious phones has been dramatic. accord to EMC brisk user offsprings r apieceed the 1.5 meg mar k in June 2004 and is set to pay 2 billion by July 2006 and 2.45 billion by the end of 2009. (http//www.cellular.co.za, 2005)Mobile phones today ar not solely used to sort forth calls, additional value added go much(prenominal) as Short pass on Service (SMS), Mul clippingdia pass along Service (MMS), radio, internet access and so on. This means that the benefits and use of agile phones is in like manner expanding, which is likewise lend to industry growth. This has be accomp all a focus point for the various operators as intense competition has led to increasingly lower voice call prices. SMS was first used in 1992 and is currently the fastest ontogenesis communications technology in history. Worldwide, 135 billion text messages were move person to person in the first quarter in 2004 (http//www.cellular.co.za, 2005). Retail revenues from voice and data runs (including MMS, SMS) account for 79% of the union revenue of the tetrad main UK energetic operators (Vodafon e, O2, Orange and T-Mobile), which accounted for 13.6 billion in revenues in 2003, (see appendix 1).CEPG Research Company conducted a study of the mobile telecommunications industry in 2002, in which findings showed that turnover had reached 32 billion a year, with the sector contribution to GDP cosmos 19.4 billion (2.2%), (ofcom.org.uk/research/telecoms, 2005).The demand for mobile phones has neer been so great as it has turn over a must occupy for people of all ages consumers are constantly exever-changing their outdated phones for the latest colour handsets. The popularity of mobile phones is immense and it is sensed that this interest in mobile phones will continue to grow over the next decade or so, as demand accessions and bran-new models and technology is introduced to mobile phones.1.3 Mobile Phone Service IndustryThe mobile phone industry is one of the fastest ripening sectors of the British economy, with the UK making up the second largest mobile merchandise in Eu rope, with a share of 18% (Datamonitor, Nov 2004). This growth is due to movers such as changes in government policies towards communication (deregulation), economic growth and developments in selective information technology. The more(prenominal)(prenominal) novel growth has come from quick mobile phone users upgrading their handsets, which sustain led to mobile phone companies and interlocking operators targeting first time buyers (Datamonitor, Nov 2004). Mobile phones are not only seen as a vital element for success in business but also as a much wanted item for social use. This is unmistakable in the increasing number of individuals some(prenominal) young and old who instantaneously nourish at least(prenominal) one mobile phone.As indicated by an Oftel report, in Britain over one trillion people possess a mobile phone instead of a fixed telephone line. 2.3 trillion UK residents live without a fixed line telephone at home. The popularity of the fixed line phone drastically declined after the aggregate introduction of mobile phones to the UK. It is expenditure noting however, that fixed phone line companies beat not taken this quietly and throw retaliated by introducing mobile phones pertained to fixed home lines and companies such as BT setting up their own mobile internets i.e. BT until of late possess O2 and also offering special discounted rates to encourage customers to use their fixed lines.There are four main network providers in the UK they are T-mobile, O2, Vodafone and Orange. In 2004 there were 342.43 million mobile subscribers, which is an increase of 8.54 percent from the preliminary year and a penetration rate of 87.63 percent. T-mobile UK accounted for 15.06 million subscribers, Orange UK had 13.75 million, O2 UK had 13.06 million and Vodafone UK had 12.98 million (mobile communications).Recently there hand over been changes in monetary value of ownership of the major mobile phone networks. T-mobile is now one of the three strategic growth line of businesss of Deutsche Telekom, a German network provider and O2 is now owned by Spanish firm Telefonica. Orange was sold to German mobile phone network Mannesman, which was hence taken over by Vodafone, who sold Orange to France Telecom. Orange has a strong network in the UK and overseas but recent management finales by France Telecom have reversed their user growth and subscriber numbers, which has been partly due to customers switching to other networks. Customers atomic number 50 become interested that, if their chosen network provider is owned by a firm overseas, their necessitys will not be met as well as they could by a UK owned provider. Additionally events such as these mountain give way to switching behaviour finished customer disarray, as found by Oftel (2003), where many consumers switched due to astonishment over re- grungeing of the network.1.4 Customer Switching Behaviour in the Mobile Phone IndustryAccording to research by TNS Telecom Trak, consumers tend to use their handsets for about twenty months in the first place upgrading to a new one. Telecommunications regulator OFTEL found that this is also the average amount of time that a bulk of mobile phone users will stay with the very(prenominal) mobile provider for. Oftels research ascertained that 90% of consumers thought about changing their network when changing handsets.Oftel published a report in April 2003, which provided an overview of the call findings of trends in consumer behaviour in the mobile trade base on a residential consumer position conducted in February 2003. Research was carried out by Recom (Research in Communications) amongst a representative sample of 2,289 UK adults, 75% of who claimed to have a mobile. Findings revealed that 26% of mobile customers have switched network/ supplier. There was a strong indication that the origin in switching in the last quarter was a reflection of wonder over re-branding and rise in mob ile penetration. ane in ten (9%) of mobile customers were found to have switched network at least twice since owning a mobile, including customers switching back to a previous operator.Men (37%) and younger mobile users, 15-34 (38%) were found to be closely in all likelihood to switch multiple times, which included returning to a antecedently used network. Although the switching differed concord to type of package, 36% of contract customers had switched multiple times compared to those on prepay (33%).24% of customers had switched once in the last 6 months, compared to three in ten (28%) of those that had switched twice and 43% that had switched more than 3 times.The same survey also revealed that in November 2002, 34% of consumers stated that they had switched mobile network, which was believed to have a moment of customer cloudiness caused by the re-branding of O2 (formally BTCellent) and T-mobile ( bingle2One). until now this rise was temporary and soon returned to the pre vious level of 27%.In February 2003, 7% of T-mobile customers say that they had switched network having previously being with One2One, this was the same for O2 customers who had switched from BTCellnet. This accounted for 3% of all switchers who were confused by the re-branding during February. The current role of mobile consumers that have switched mobile network persist ins at 26%.When looking at at multiple switching, two in ten (18%) of mobile customers had changed their network once, and seven out of ten claimed to have never switched network.CHAPTER 2 LITERATURE REVIEWThis chapter will suss out all existing publications related to the mobile phone industry with a focus on customer switching habits and their contact elements such as consumer lifestyles, servings themselves, competitor offerings and loyalty to help understand the research line of work.This chapter will also review the contributions other researchers have made to the concepts of switching behaviour, and it should be famed that literature on mobile phone preference is sparse and issues relating to why customers truly switch assists expects unexplored in merchandising literature which will be explored through this study.2.1 categorisation of operateThere is no one single comment of utilitys that is universally accepted, although many authors have attempted to define it. Yet very few products are blow% service or 100% tangible, they usually consist of a combination of both.Gronroos (1990) defines go asA service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, takes place in interactions surrounded by the customers and the service employee and/or natural resources or nigh(a)s and/or systems of the service provider, which are provided as solutions to customer problems.This illustrates the fact that services tush take place through physical form, for example this project is refer with customers switching networ k provider service (which is intangible) but to have that service to begin with, customers need to bargain for a mobile phone, which is a tangible product. Therefore switching behaviour in such a situation may differ from switching a service, which is not integrated with hardware this may be due to the fact that when physical products are also involved, the costs and risk of switching is different to when there is provided a service alone. Brassington (2003) acknowledged that most products tend to have a combination of both physical goods and service e.g. get a gas appliance this would require the professional fitting service as well as get of the appliance itself.Kotler (1997) also recognised that nearly services are a combination of both a service and a product and has incorporated this in his commentary of servicesAny act or performance that one party brook offer to another that is essentially intangible and does not response in the ownership of anything. Its production m ay or may not be level(p) to a physical product.This emphasises two key elements1. Intangibility A Service terminatenot be fancy in front it is leveraged,2. Lack of ownership there is no ownership in a pure(a) service as there is no physical product involved.This is further illustrated in the calculate 1 below which illustrates Kotlers (1997) four categories of products, which are1. A pure service2. A major service with accompanying minor goods/services3. A tangible good with accompanying service4. A pure tangible product refreshing services are being introduced on a daily basis to satisfy and meet all customer needs from individual consumers to business consumers. The service industry comprises the bulk of todays economy. In 2001, it represented 80 percent of the GDP of the USA (U.S Bureau of Economic Analysis).Keiningham et al (2003) said there is a growing recognition among managers of the richness of measuring the share of business a customer conducts with a cross servi ce provider (share-of-wallet) as opposed to spredicate re get a product or service at some point in the future or continuing to keep a business birth with a service provider. This indicates the importance of retaining and admiting customers and the importance of the relationship with them.Research carried out by Bitner (1990) Boulding at al, (1993) looked at service part in service organisations, Crosby Evans and Cowles (1990) Crosby and Stephens (1987) researched relationship quality and Cronin and Taylor (1992) looked at overall satisfaction with regards to the issue of customer retention in service organisations. These researchers all agreed that service organisations could improve the likelihood of customers inclination to take a breather with a occurrence service organisation, as it is these features that contribute to customer satisfaction and the growth of the organisation. The supra studies all illustrated strategies relating to customer retention in services. Yet issu es relating to why customers actually switch services remain unexplored in merchandise literature.2.2 Characteristics of ServicesWhen describing the main characteristics of a service, it cigaret be depicted as being intangible, as a service has no physical ratio but hoboful take place through a tangible product as is the field with mobile phones and network providers, as discussed earlier. A service can also be castd using a tangible noun as Shostack (1987) exemplified that an airline means transportation and a hotel means lodging lease. berry (1980) described a good as an object, a device, a thing in comparison to a service which is a deed, a performance, an effort. This further illustrates the fact that consumers cannot see, touch, hear, taste or smell a service all they can do is baffle the performance of the service as said by Carman and Uhl, (1973) and Sasser et. al, (1978) but, the experience may not be possible in all cases without some form of hardware in addition.B ecause services are delivered by individuals, each service experience will differ from another as a result each leverager will receive a different service experience. Additionally, when a consumer purchases a good, they own it, yet with a service the consumer only has temporary access or use of it, as the service is not owned, only the benefit of it is. Wyckham et al (1975) and Kotler (1986) defined this concept as ownership.2.3 The Services market MixAs previously discussed above, many features separate services from tangible products, yet the merchandise principles remain the same for both. One limited difference is that there is close contact between individual employees from the supplier organisation and the customer themselves. Because of this, the traditional merchandise mix needs to be re-evaluated in terms of the 7ps.Product This refers to the features of the product or surrounding it, which in this case would be a good service or supplementary services surrounding it. T hese features should be benefits, which the customer would desire, and the surrounding features would be competing products performance. (Lovelock and Wirtz, 2004).Place and clipping Delivering a service to customers involves place, time of delivery and distribution channels used. Delivery can be done both physically and through electronic distribution channels according to the nature of the service being provided. Services can be delivered directly to customers or through intermediary firms, e.g. rental outlets. (Lovelock and Wirtz, 2004).Promotion and pedagogics these are three fold, firstly information and advice needs to be provided to customers, target customers need to be persuaded towards a product, and they need to be further to take action. Service promotional communication are usually educational, ratting potential customers of the benefits of the service, where and when to obtain it and how. These communications are delivered through individuals (sales people) or medi a (TV, radio, newspapers etc.). (Lovelock and Wirtz, 2004).Price and Other User Outlays In services monetary value refer to rates, fees, admissions, charges, tuition, contributions, interest etc. (Gabbott and Hogg, 1997).Physical Environment A firms service quality can be perceived through the appearance of buildings, landscaping, vehicles, interior furnishing, equipment, staff members, signs, printed materials and other transparent cues. These are physical test and impact customer impressions. (Lovelock and Wirtz, 2004).Process A service is delivered to a customer through a process, which is the method and actions in the service performance. Poor processes can result in loath and ineffective service and restless customers. Front line staff may also find it problematic to do their jobs well as a result of pitiable process, which can again lead to service failure. (Lovelock and Wirtz, 2004).People Services tend to involve direct interaction between customers and firms employees . The experience of the interaction, for example talking to call centre staff, can influence the customers perceptions of service quality. The implication is that firms need to train and motivate their employees to correspond good service quality. (Lovelock and Wirtz, 2004).2.4 marketing in ServicesImage is often a key factor in differentiating a service from its competitors. Marketing is therefore important in service because it enables the customer to link an image with a brand. Examples of these can be seen on delivery vehicles, which are painted, hotel soap and shampoos etc.When consumers have no experience with a product, they tend to trust a favoured or well-known brand crap therefore service marketers need to build a prospering brand image.Some consumer theorists have joined service quality with consumer behaviour intentions, in that the quality of the service will determine whether the consumer frame with that particular provider or defects to a competitor. When consum ers perceive high service quality, the behavioural intentions will be positive, as they will remain with the service provider. In contrast, poor service quality will lead to the relationship with the customer weakening resulting in defection to a competitor.Financially the firm will benefit more by retaining customers through increasing service quality this is demonstrated in the symbol 2 below.The figure above shows that the more favourable a firms service quality is, the more likely the customer is to remain with the firm, benefiting the firm. But when the service quality is poor, the customer will show unfavourable behavioural intentions, which will result in defecting/ switching. This highlights that in baseball club to prevent customers from switching and to enable the firm to continue making profits, the firm needs to retain customers through good service quality.Service firms and service marketers need to recognise the import of these reasons as they can lead to negative e ffects on share and profitability as noted by Rust and Zahorik (1993). This can arise from negative word of mouth, which will in turn deter potential customers. These reasons can also help markets to plan their promotional campaigns according to the aspects that are causing customers to switch. As maintained by Reichheld and Sasser (1990) companies can boost profits by almost 100% by retaining just 5% more of their customers.2.5 Marketing in the Mobile Phone IndustryAs the market becomes more combative, firms will endeavour to maintain their market share by focusing on retaining their current customers. It can be said that recent competition amongst mobile phone networks has become aggressive, especially with all the competitive price plans and handsets on offer, which are being promoted by the networks. More recently a camera wars are taking place between mobile brands as consumers are considering this an important feature when purchasing mobile phones, Marketing time (2004).When network 3 entered the market, they were able to encourage many consumers to switch mobile networks from their existing providers to 3. this was done using contend and direct advertising comparing brand and product features with those of competing networks. Marketing magazine (2004). As a result of this, 3 were able to reach the one million-customer mark faster than any other network since launching.It is patent that mobile phone networks are being innovative in their marketing tactics in the aim of securing higher customer bases. Much of the marketing the mobile networks today to do this are directed towards consumer muddiness tactics. Consumer confusion tactics are where consumers are provided with large amounts of decision-relevant information, in regards to mobiles, this is seen in the form of deals, discounts, leaflets, newspaper adds and television system advertising line rentals from as little as 99p per month. Confusion marketing and overload aims to confuse consumers in to a state of stress and frustration, resulting in information overload and sub-optimal decisions. Price confusion is the most common confusion marketing tactic used in the mobile telephone market today in social club to assist companies to gain a competitive advantage. It has been found that this tactic of confusion marketing appears to work and confuses customers to such an extent that they end up being persuaded by this marketing literature and the information overload that they are provided with that they purchase the plan that is sold to them without investigating it further as they impression that they have all the information that they need and have made an informed quality.Confusion usually arises from 3 main sourcesi) Over choice of products and stores there are independent mobile phone makes opening up regularly, and new mobile phones are being introduced to the market every month.ii) Similarity of products all the price plans available are very interchangeable in terms of price as well as network call charges.iii) Ambiguous, misleading or inadequate information conveyed through marketing communications For example, many retailers are offering line rental for 99p per month, what consumers are not aware of is that they have to pay the full line rental for the first sise months and then they claim their cash back.But using confusion marketing can have indecorous effects on consumers. The information overload can cause consumers to shop around, which can reduce brand loyalty towards the firm.2.6 Decision Making Process for Mobile PhonesWhen customers purchase a product or service they go through a complex process of three stages the pre purchase stage (decision to buy), the service crash stage and the post purchase stage. This can be applied to the purchasing of mobile phones.The post purchase stage will determine the customers future intentions on whether or not to remain loyal to that service provider or to switch service. During the post purchase stage, customers evaluate service quality and their satisfaction/dissatisfaction with the service experience. This is done by comparing what was initially expected with what they perceived they legitimate from a particular provider. If expectations are met, customers are likely to be satisfied and therefore more likely to make repeat purchases and remain loyal. If customer expectations are not met, customers may complain about poor service quality, suffer in silence or resort to switching service provider. It has become bare in recent years that customers no longer suffer in silence with bad service to the extent that they previously and if they experience service that they are not satisfied with then are more likely to switch in order to receive a better service/better value for their money.When considering the purchase process of mobile phones, again there are complex factors, which influence the decision the decision process which include both macro and microeconomic c onditions, but it generally tends to follow the traditional buying process. When faced with the problem of whether or not to purchase a mobile phone, consumers will initially take part in an information search before choosing which one to buy. The consumers decision-making process is directed by preferences that the consumer has already formed regarding a particular brand. Beatty and Smith (1987) and Moorthy et al (1997) argue that this means the consumer is most likely to make a choice based on a limited information search and without evaluating fully all the alternative brands available. As indicated by Dhar and Wertenbroach (2000), limited information search and evaluation of alternatives can result in a situation where the consumers choice is drive by hedonic considerations. Utilitarian goods are considered to be instrumental and functional whereas hedonic good are seen as being fun and exciting, but some goods can have both features, as stated by Barta and Ahtola (1990). With relation to mobile phones the choice has both utile (e.g. communication, SMS, planning) and hedonic (e.g. games, music, camera) features. Wilska (2003) believes the younger the consumer gets, the more they value the voluptuary features in their mobile phones. The mobile phone market is a technology driven market, therefore products are created based on consumers possible future needs which tend to be hedonistic features.Riquelme (2001) explored the level of knowledge consumers have when choosing between different mobile phone brands. The study focused on main factors, which were telephone features, connection fee, access cost, mobile-to-mobile phone rates, call rates and free calls), which respondents had to rate according to importance. Findings revealed that respondents with previous experience about products predicted their choices well, although they over-estimate the importance of features, cal rates and free calls and under-estimated the importance of the monthly access fee , mobile-to-mobile phone rates and the connection fee.2.7 Customer Switching BehaviourThere is no one clear interpretation of customer switching, due to the wishing of research into this area, although very few authors have attempted to define it. According to Brassington (2003) customer switching refers to consumers who are not loyal to any one brand of a particular product and switch between two or more brands within the category.Switching behaviour has also been referred to as defection or customer exit (Hirschman, 1970 Stewart, 1994) and refers to a customers decision to stop purchasing a particular service or patronising the service firm completely as agued by Bolton and Bronkhurst (1995) and Boote, (1998). Yet it can be argued that this is not a valid definition of customer switching as this definition refers to the consumers behaviour as abandonment of the use of a product/service although, whereas switching is concerned with consumers using one product/service provider an d then decision making to switch to another.Many models have attempted to portray customer switching behaviour in services yet they all imply that switching derives from a gradual dissolution of relationships as a result of multiple problems encountered over time as found by Bejou and Palmer (1998) and Hocutt (1998).2.8 Causes for Dissatisfied Service and SwitchingBitner et al (1994) has looked at the events that lead to fit and dissatisfying service encounters for customers from an employees point of view. Bitner et als (1994) study found that employees were inclined to describe the customers problems with external causes such as delivery system failures as the most prominent followed by problem customers. A small percentage of dissatisfactory incidents were classified as spontaneous negative employee behaviours such as rudeness or lack of attention. It was evident that the employees were biased in terms of not blaming themselves for failures.Past research associating customer an d employee views on hypercritical factors compelling customers to switch offers assorted assumptions. Schneider and Bowen (1985) and Schneider, Parkington, and Buxton (1980) found a strong relationship between employee and customer attitudes regarding service quality on the whole in the banking service. The results from their study contradicted those of a study carried out by cook and Swartz (1989). Data was collected from patients based on experiences with their physicians and were compared to what physicians perceived of the experiences of their patients. Results showed large differences in return associated to patient satisfaction in general. Thus researchers have different views regarding customer and employee attitudes on service quality. When considering switching in the financial service, Mintel multinational Group believes the critical factor causing consumers to switch providers is price. Price is a sensitive issue and one that is close to the heart of customers so it i s perceived that they may consider switching on the basis of this if they are not satisfied with the service they are receiving. But it can be concluded that the customers view holds great value, as it is their opinion that brings in business for a firm.Bolton Brankhurst (1995) and McDougal (1996) have looked at customer switching behaviour in relation to complaints, which they believe leads up to the defection. They suggested, that this field should be further explored, as there is a lack of research that tries to investigate the correlations between the factors that influence service switching and those that influence complaints before switching. Complains are again another major area of concern. The firstCustomer Switching Behaviour for Mobile NetworksCustomer Switching Behaviour for Mobile NetworksEXECUTIVE SUMMARYConsumers use services everyday, these ranges from taking the train or opening a bank account to talking on a mobile phone. Businesses also rely on a wide range of s ervices on a daily basis, but on a much larger scale compared to consumers. However, customers are not always satisfied with a particular service that they maybe using and often resort to switching their service provider in order to resolve the issue or pursue better value from a less expensive service.The objective of this study is to investigate customer-switching behaviour in the mobile industry, why it takes place and what factors influence it. This topic area has been chosen, as customer switching and the mobile phone industry are contemporary and relevant to the present day and will continue to evolve overtime.Research has been undertaken using secondary and primary data collection methods. Secondary data provided a background to the mobile phone industry and an overview of customer switching behaviour in services. Primary data consisted of self administered questionnaires to a convenient sample of university students, this enabled data to be collected which would provide an i dea of mobile phone users contemplation of switching and their understanding of why they believe they would switch from one service to another.Findings revealed that a majority of customer switching is due to high call and monthly charges and consumers trying to obtain more free minutes and texts. This contrasts with the literature and precious studies, which have found other reasons to cause customer switching, which illustrates how causes of switching differ in every industry according to the nature of the service.CHAPTER 1 INTRODUCTION1.1 Project AimsThe aim of this project is to determine the reasons as to why consumers switch from one mobile phone network to another?The research objectives that arise from the aim will therefore be1 To evaluate whether competitors offerings are causing consumers to switch from one network to another2 To evaluate whether retail offerings are causing consumers to switch to gain a better deal3 What actions of the service firms or their employees ca use customers to switch from one service provider to anotherThe research will be UK based geographically using a convenient sample of university students and will be done using both primary and secondary research methods. The research may help managers and researchers understand service switching from a customers perspective in the mobile phone industry and the switching drivers may provides answers as to what has influenced customer behaviour. The results of the research will be analysed to provide recommendations.The reason for choosing this topic area is that there appears to be a lack of research on customer switching behaviour in the mobile phone industry. This study aims to explore this topic are further.1.2 Background on Mobile Phones ServiceMobile phones service refers to a service whose customer base includes firms using mobile phones for business and customers using it for their personal use. Mobile phones have become substitutes for fixed telephone lines and have led to t he decline in calls made from fixed telephone lines.The take up rate of mobile phones is constantly increasing and over the years the growth in the use of mobile phones has been dramatic. According to EMC mobile user numbers reached the 1.5 billion mark in June 2004 and is set to reach 2 billion by July 2006 and 2.45 billion by the end of 2009. (http//www.cellular.co.za, 2005)Mobile phones today are not solely used to make calls, additional value added services such as Short Messaging Service (SMS), Multimedia Messaging Service (MMS), radio, internet access and so on. This means that the benefits and use of mobile phones is also expanding, which is also contributing to industry growth. This has become a focus point for the various operators as intense competition has led to increasingly lower voice call prices. SMS was first used in 1992 and is currently the fastest growing communications technology in history. Worldwide, 135 billion text messages were sent person to person in the f irst quarter in 2004 (http//www.cellular.co.za, 2005). Retail revenues from voice and data services (including MMS, SMS) account for 79% of the total revenue of the four main UK mobile operators (Vodafone, O2, Orange and T-Mobile), which accounted for 13.6 billion in revenues in 2003, (see appendix 1).CEPG Research Company conducted a study of the mobile telecommunications industry in 2002, in which findings showed that turnover had reached 32 billion a year, with the sector contribution to GDP being 19.4 billion (2.2%), (ofcom.org.uk/research/telecoms, 2005).The demand for mobile phones has never been so great as it has become a must have for people of all ages consumers are constantly exchanging their outdated phones for the latest colour handsets. The popularity of mobile phones is immense and it is perceived that this interest in mobile phones will continue to grow over the next decade or so, as demand increases and new models and technology is introduced to mobile phones.1.3 Mo bile Phone Service IndustryThe mobile phone industry is one of the fastest growing sectors of the British economy, with the UK making up the second largest mobile market in Europe, with a share of 18% (Datamonitor, Nov 2004). This growth is due to factors such as changes in government policies towards communication (deregulation), economic growth and developments in information technology. The more recent growth has come from existing mobile phone users upgrading their handsets, which have led to mobile phone companies and network operators targeting first time buyers (Datamonitor, Nov 2004). Mobile phones are not only seen as a vital element for success in business but also as a much wanted item for social use. This is evident in the increasing number of individuals both young and old who now have at least one mobile phone.As indicated by an Oftel report, in Britain over one million people own a mobile phone instead of a fixed telephone line. 2.3 million UK residents live without a fixed line telephone at home. The popularity of the fixed line phone drastically declined after the mass introduction of mobile phones to the UK. It is worth noting however, that fixed phone line companies have not taken this lightly and have retaliated by introducing mobile phones linked to fixed home lines and companies such as BT setting up their own mobile networks i.e. BT until recently owned O2 and also offering special discounted rates to encourage customers to use their fixed lines.There are four main network providers in the UK they are T-mobile, O2, Vodafone and Orange. In 2004 there were 342.43 million mobile subscribers, which is an increase of 8.54 percent from the previous year and a penetration rate of 87.63 percent. T-mobile UK accounted for 15.06 million subscribers, Orange UK had 13.75 million, O2 UK had 13.06 million and Vodafone UK had 12.98 million (mobile communications).Recently there have been changes in terms of ownership of the major mobile phone networks. T-mobile is now one of the three strategic growth areas of Deutsche Telekom, a German network provider and O2 is now owned by Spanish firm Telefonica. Orange was sold to German mobile phone network Mannesman, which was then taken over by Vodafone, who sold Orange to France Telecom. Orange has a strong network in the UK and overseas but recent management decisions by France Telecom have reversed their user growth and subscriber numbers, which has been partly due to customers switching to other networks. Customers can become concerned that, if their chosen network provider is owned by a firm overseas, their needs will not be met as well as they could by a UK owned provider. Additionally events such as these can contribute to switching behaviour through customer confusion, as found by Oftel (2003), where many consumers switched due to confusion over re-branding of the network.1.4 Customer Switching Behaviour in the Mobile Phone IndustryAccording to research by TNS Telecom Trak, consum ers tend to use their handsets for about twenty months before upgrading to a new one. Telecommunications regulator OFTEL found that this is also the average amount of time that a majority of mobile phone users will stay with the same mobile provider for. Oftels research ascertained that 90% of consumers thought about changing their network when changing handsets.Oftel published a report in April 2003, which provided an overview of the key findings of trends in consumer behaviour in the mobile market based on a residential consumer survey conducted in February 2003. Research was carried out by Recom (Research in Communications) amongst a representative sample of 2,289 UK adults, 75% of who claimed to have a mobile. Findings revealed that 26% of mobile customers have switched network/ supplier. There was a strong indication that the rise in switching in the last quarter was a reflection of confusion over re-branding and rise in mobile penetration. One in ten (9%) of mobile customers w ere found to have switched network at least twice since owning a mobile, including customers switching back to a previous operator.Men (37%) and younger mobile users, 15-34 (38%) were found to be most likely to switch multiple times, which included returning to a previously used network. Although the switching differed according to type of package, 36% of contract customers had switched multiple times compared to those on prepay (33%).24% of customers had switched once in the last 6 months, compared to three in ten (28%) of those that had switched twice and 43% that had switched more than 3 times.The same survey also revealed that in November 2002, 34% of consumers stated that they had switched mobile network, which was believed to have a result of customer confusion caused by the re-branding of O2 (formally BTCellent) and T-mobile (One2One). Yet this rise was temporary and soon returned to the previous level of 27%.In February 2003, 7% of T-mobile customers said that they had switc hed network having previously being with One2One, this was the same for O2 customers who had switched from BTCellnet. This accounted for 3% of all switchers who were confused by the re-branding during February. The current percentage of mobile consumers that have switched mobile network remains at 26%.When looking at multiple switching, two in ten (18%) of mobile customers had changed their network once, and seven out of ten claimed to have never switched network.CHAPTER 2 LITERATURE REVIEWThis chapter will review all existing literature related to the mobile phone industry with a focus on customer switching habits and their surrounding elements such as consumer lifestyles, services themselves, competitor offerings and loyalty to help understand the research problem.This chapter will also review the contributions other researchers have made to the concepts of switching behaviour, yet it should be noted that literature on mobile phone choice is sparse and issues relating to why custo mers actually switch services remains unexplored in marketing literature which will be explored through this study.2.1 Classification of ServicesThere is no one single definition of services that is universally accepted, although many authors have attempted to define it. Yet very few products are 100% service or 100% tangible, they usually consist of a combination of both.Gronroos (1990) defines services asA service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, takes place in interactions between the customers and the service employee and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems.This illustrates the fact that services can take place through physical form, for example this project is concerned with customers switching network provider service (which is intangible) but to have that service to begin with, customers need to purchase a mobile p hone, which is a tangible product. Therefore switching behaviour in such a situation may differ from switching a service, which is not integrated with hardware this may be due to the fact that when physical products are also involved, the costs and risk of switching is different to when there is just a service alone. Brassington (2003) acknowledged that most products tend to have a combination of both physical goods and service e.g. purchasing a gas appliance this would require the professional fitting service as well as purchasing of the appliance itself.Kotler (1997) also recognised that some services are a combination of both a service and a product and has incorporated this in his definition of servicesAny act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.This emphasises two key elements1. Intangibility A Service cannot be experience before it is purchased,2. Lack of ownership there is no ownership in a pure service as there is no physical product involved.This is further illustrated in the Figure 1 below which illustrates Kotlers (1997) four categories of products, which are1. A pure service2. A major service with accompanying minor goods/services3. A tangible good with accompanying service4. A pure tangible productNew services are being introduced on a daily basis to satisfy and meet all customer needs from individual consumers to business consumers. The service industry comprises the majority of todays economy. In 2001, it represented 80 percent of the GDP of the USA (U.S Bureau of Economic Analysis).Keiningham et al (2003) said there is a growing recognition among managers of the importance of measuring the share of business a customer conducts with a particular service provider (share-of-wallet) as opposed to simply repurchasing a product or service at some point in the future or continuing to keep a busin ess relationship with a service provider. This indicates the importance of retaining and maintaining customers and the importance of the relationship with them.Research carried out by Bitner (1990) Boulding at al, (1993) looked at service quality in service organisations, Crosby Evans and Cowles (1990) Crosby and Stephens (1987) researched relationship quality and Cronin and Taylor (1992) looked at overall satisfaction with regards to the issue of customer retention in service organisations. These researchers all agreed that service organisations could improve the likelihood of customers intention to remain with a particular service organisation, as it is these features that contribute to customer satisfaction and the growth of the organisation. The above studies all illustrated strategies relating to customer retention in services. Yet issues relating to why customers actually switch services remain unexplored in marketing literature.2.2 Characteristics of ServicesWhen describing t he main characteristics of a service, it can be depicted as being intangible, as a service has no physical dimension but can take place through a tangible product as is the case with mobile phones and network providers, as discussed earlier. A service can also be described using a tangible noun as Shostack (1987) exemplified that an airline means transportation and a hotel means lodging rental. Berry (1980) described a good as an object, a device, a thing in comparison to a service which is a deed, a performance, an effort. This further illustrates the fact that consumers cannot see, touch, hear, taste or smell a service all they can do is experience the performance of the service as said by Carman and Uhl, (1973) and Sasser et. al, (1978) but, the experience may not be possible in all cases without some form of hardware in addition.Because services are delivered by individuals, each service experience will differ from another as a result each purchaser will receive a different serv ice experience. Additionally, when a consumer purchases a good, they own it, yet with a service the consumer only has temporary access or use of it, as the service is not owned, only the benefit of it is. Wyckham et al (1975) and Kotler (1986) defined this concept as ownership.2.3 The Services Marketing MixAs previously discussed above, many features separate services from tangible products, yet the marketing principles remain the same for both. One particular difference is that there is close contact between individual employees from the supplier organisation and the customer themselves. Because of this, the traditional marketing mix needs to be re-evaluated in terms of the 7ps.Product This refers to the features of the product or surrounding it, which in this case would be a good service or supplementary services surrounding it. These features should be benefits, which the customer would desire, and the surrounding features would be competing products performance. (Lovelock and Wi rtz, 2004).Place and Time Delivering a service to customers involves place, time of delivery and distribution channels used. Delivery can be done both physically and through electronic distribution channels according to the nature of the service being provided. Services can be delivered directly to customers or through intermediary firms, e.g. rental outlets. (Lovelock and Wirtz, 2004).Promotion and Education these are three fold, firstly information and advice needs to be provided to customers, target customers need to be persuaded towards a product, and they need to be encouraged to take action. Service promotional communication are usually educational, informing potential customers of the benefits of the service, where and when to obtain it and how. These communications are delivered through individuals (sales people) or media (TV, radio, newspapers etc.). (Lovelock and Wirtz, 2004).Price and Other User Outlays In services monetary values refer to rates, fees, admissions, charges , tuition, contributions, interest etc. (Gabbott and Hogg, 1997).Physical Environment A firms service quality can be perceived through the appearance of buildings, landscaping, vehicles, interior furnishing, equipment, staff members, signs, printed materials and other visible cues. These are physical evidence and impact customer impressions. (Lovelock and Wirtz, 2004).Process A service is delivered to a customer through a process, which is the method and actions in the service performance. Poor processes can result in slow and ineffective service and unsatisfied customers. Front line staff may also find it difficult to do their jobs well as a result of poor process, which can again lead to service failure. (Lovelock and Wirtz, 2004).People Services tend to involve direct interaction between customers and firms employees. The experience of the interaction, for example talking to call centre staff, can influence the customers perceptions of service quality. The implication is that fir ms need to train and motivate their employees to ensure good service quality. (Lovelock and Wirtz, 2004).2.4 Marketing in ServicesImage is often a key factor in differentiating a service from its competitors. Marketing is therefore important in service because it enables the customer to link an image with a brand. Examples of these can be seen on delivery vehicles, which are painted, hotel soap and shampoos etc.When consumers have no experience with a product, they tend to trust a favoured or well-known brand name therefore service marketers need to build a favourable brand image.Some consumer theorists have linked service quality with consumer behaviour intentions, in that the quality of the service will determine whether the consumer remains with that particular provider or defects to a competitor. When consumers perceive high service quality, the behavioural intentions will be positive, as they will remain with the service provider. In contrast, poor service quality will lead to the relationship with the customer weakening resulting in defection to a competitor.Financially the firm will benefit more by retaining customers through increasing service quality this is demonstrated in the figure 2 below.The figure above shows that the more favourable a firms service quality is, the more likely the customer is to remain with the firm, benefiting the firm. But when the service quality is poor, the customer will show unfavourable behavioural intentions, which will result in defecting/ switching. This highlights that in order to prevent customers from switching and to enable the firm to continue making profits, the firm needs to retain customers through good service quality.Service firms and service marketers need to recognise the significance of these reasons as they can lead to negative effects on share and profitability as noted by Rust and Zahorik (1993). This can arise from negative word of mouth, which will in turn deter potential customers. These reasons can also help markets to plan their promotional campaigns according to the aspects that are causing customers to switch. As maintained by Reichheld and Sasser (1990) companies can boost profits by almost 100% by retaining just 5% more of their customers.2.5 Marketing in the Mobile Phone IndustryAs the market becomes more competitive, firms will endeavour to maintain their market share by focusing on retaining their current customers. It can be said that recent competition amongst mobile phone networks has become aggressive, especially with all the competitive price plans and handsets on offer, which are being promoted by the networks. More recently a camera wars are taking place between mobile brands as consumers are considering this an important feature when purchasing mobile phones, Marketing magazine (2004).When network 3 entered the market, they were able to encourage many consumers to switch mobile networks from their existing providers to 3. this was done using challenging and dir ect advertising comparing brand and product features with those of competing networks. Marketing magazine (2004). As a result of this, 3 were able to reach the one million-customer mark faster than any other network since launching.It is evident that mobile phone networks are being innovative in their marketing tactics in the aim of securing higher customer bases. Much of the marketing the mobile networks today to do this are directed towards consumer confusion tactics. Consumer confusion tactics are where consumers are provided with large amounts of decision-relevant information, in regards to mobiles, this is seen in the form of deals, discounts, leaflets, newspaper adds and television advertising line rentals from as little as 99p per month. Confusion marketing and overload aims to confuse consumers into a state of stress and frustration, resulting in information overload and sub-optimal decisions. Price confusion is the most common confusion marketing tactic used in the mobile t elephone market today in order to assist companies to gain a competitive advantage. It has been found that this tactic of confusion marketing appears to work and confuses customers to such an extent that they end up being persuaded by this marketing literature and the information overload that they are provided with that they purchase the plan that is sold to them without investigating it further as they feel that they have all the information that they need and have made an informed choice.Confusion usually arises from 3 main sourcesi) Over choice of products and stores there are independent mobile phone shops opening up regularly, and new mobile phones are being introduced to the market every month.ii) Similarity of products all the price plans available are very similar in terms of price as well as network call charges.iii) Ambiguous, misleading or inadequate information conveyed through marketing communications For example, many retailers are offering line rental for 99p per month, what consumers are not aware of is that they have to pay the full line rental for the first six months and then they claim their cash back.But using confusion marketing can have adverse effects on consumers. The information overload can cause consumers to shop around, which can reduce brand loyalty towards the firm.2.6 Decision Making Process for Mobile PhonesWhen customers purchase a product or service they go through a complex process of three stages the pre purchase stage (decision to buy), the service encounter stage and the post purchase stage. This can be applied to the purchasing of mobile phones.The post purchase stage will determine the customers future intentions on whether or not to remain loyal to that service provider or to switch service. During the post purchase stage, customers evaluate service quality and their satisfaction/dissatisfaction with the service experience. This is done by comparing what was initially expected with what they perceived they received from a particular provider. If expectations are met, customers are likely to be satisfied and therefore more likely to make repeat purchases and remain loyal. If customer expectations are not met, customers may complain about poor service quality, suffer in silence or resort to switching service provider. It has become evident in recent years that customers no longer suffer in silence with bad service to the extent that they previously and if they experience service that they are not satisfied with then are more likely to switch in order to receive a better service/better value for their money.When considering the purchase process of mobile phones, again there are complex factors, which influence the decision the decision process which include both macro and microeconomic conditions, but it generally tends to follow the traditional buying process. When faced with the problem of whether or not to purchase a mobile phone, consumers will initially take part in an information search be fore choosing which one to buy. The consumers decision-making process is directed by preferences that the consumer has already formed regarding a particular brand. Beatty and Smith (1987) and Moorthy et al (1997) argue that this means the consumer is most likely to make a choice based on a limited information search and without evaluating fully all the alternative brands available. As indicated by Dhar and Wertenbroach (2000), limited information search and evaluation of alternatives can result in a situation where the consumers choice is driven by hedonic considerations. Utilitarian goods are considered to be instrumental and functional whereas hedonic good are seen as being fun and exciting, but some goods can have both features, as stated by Barta and Ahtola (1990). With relation to mobile phones the choice has both utilitarian (e.g. communication, SMS, planning) and hedonic (e.g. games, music, camera) features. Wilska (2003) believes the younger the consumer gets, the more they value the hedonistic features in their mobile phones. The mobile phone market is a technology driven market, therefore products are created based on consumers possible future needs which tend to be hedonistic features.Riquelme (2001) explored the level of knowledge consumers have when choosing between different mobile phone brands. The study focused on main factors, which were telephone features, connection fee, access cost, mobile-to-mobile phone rates, call rates and free calls), which respondents had to rate according to importance. Findings revealed that respondents with previous experience about products predicted their choices well, although they over-estimate the importance of features, cal rates and free calls and under-estimated the importance of the monthly access fee, mobile-to-mobile phone rates and the connection fee.2.7 Customer Switching BehaviourThere is no one clear definition of customer switching, due to the lack of research into this area, although very few autho rs have attempted to define it. According to Brassington (2003) customer switching refers to consumers who are not loyal to any one brand of a particular product and switch between two or more brands within the category.Switching behaviour has also been referred to as defection or customer exit (Hirschman, 1970 Stewart, 1994) and refers to a customers decision to stop purchasing a particular service or patronising the service firm completely as agued by Bolton and Bronkhurst (1995) and Boote, (1998). Yet it can be argued that this is not a valid definition of customer switching as this definition refers to the consumers behaviour as abandonment of the use of a product/service although, whereas switching is concerned with consumers using one product/service provider and then deciding to switch to another.Many models have attempted to portray customer switching behaviour in services yet they all imply that switching derives from a gradual dissolution of relationships as a result of mu ltiple problems encountered over time as found by Bejou and Palmer (1998) and Hocutt (1998).2.8 Causes for Dissatisfied Service and SwitchingBitner et al (1994) has looked at the events that lead to satisfying and dissatisfying service encounters for customers from an employees point of view. Bitner et als (1994) study found that employees were inclined to describe the customers problems with external causes such as delivery system failures as the most prominent followed by problem customers. A small percentage of dissatisfactory incidents were classified as spontaneous negative employee behaviours such as rudeness or lack of attention. It was evident that the employees were biased in terms of not blaming themselves for failures.Past research associating customer and employee views on critical factors compelling customers to switch offers assorted assumptions. Schneider and Bowen (1985) and Schneider, Parkington, and Buxton (1980) found a strong relationship between employee and cus tomer attitudes regarding service quality on the whole in the banking service. The results from their study contradicted those of a study carried out by Brown and Swartz (1989). Data was collected from patients based on experiences with their physicians and were compared to what physicians perceived of the experiences of their patients. Results showed large differences inversely associated to patient satisfaction in general. Thus researchers have different views regarding customer and employee attitudes on service quality. When considering switching in the financial service, Mintel International Group believes the critical factor causing consumers to switch providers is price. Price is a sensitive issue and one that is close to the heart of customers so it is perceived that they may consider switching on the basis of this if they are not satisfied with the service they are receiving. But it can be concluded that the customers view holds greater value, as it is their opinion that bri ngs in business for a firm.Bolton Brankhurst (1995) and McDougal (1996) have looked at customer switching behaviour in relation to complaints, which they believe leads up to the defection. They suggested, that this field should be further explored, as there is a lack of research that tries to investigate the correlations between the factors that influence service switching and those that influence complaints before switching. Complains are again another major area of concern. The first