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Customer Relationship and Loyalty in Cellular Services Industry; An Empirical Investigation

Researchers:
M. Nadeem ndm.bestyahoo.com
Abdul Basit bst_punjabianyahoo.com

ABSTRACT
Purpose: The objective oI current research is to study the eIIects oI relationship marketing
on customer loyalty and customer satisIaction in the cellular services industry.
Methodology: Final analysis was perIormed on 141 valid responses. Reliability oI scale was
checked by using Cronbach`s Alpha statistic. Correlation analysis was employed to study the
relationship between customer relationship satisIaction and relationship improvement
(independent variables) and Customer Loyalty. Further Regression analysis was carried out in
order to test the hypothesis.
Findings: The statistical analysis oI this research revealed that there is a positive and
signiIicant alliance between customer satisIaction and customer loyalty. Further the research
reveals that among other variables customer relationship improvement has greater
contribution towards building long term loyalty.
Practical implications: This research highlights the need oI capitalizing on Relationship
Marketing Ior the attainment oI loyal customers as the outcomes oI this paper show that those
mobile networks who have been involved in the Relationship Marketing Ior a long time and
are continuously working on it have more loyal and satisIied customer base than their
competitors.
Originality/value: To the best oI researcher`s knowledge this research is the Iirst oI its kind
which studies customer relationship and loyalty oI the customers oI diIIerent mobile network
operators in Pakistan.
Keywords: Relationship Marketing, Customer SatisIaction, Customer Loyalty, Relationship
Improvement, Pakistan.
Paper type: Research Paper.
INTRODUCTION
In Pakistan the telecom sector is growing at a very high speed. There are about 95.5 million
mobile users in Pakistan according to a study conducted in July 2009.
Pakistan telecommunication business has these main segments:
a) Mobile segment
b) Wireless local loop
c) Fixed line
d) Internet services
e) Pay phone services
The basic purpose oI conducting this study was to measure/determine the customer
satisIaction and brand loyalty due to relationship marketing. The research is emphasized on
mobile network operators thereIore by inIormative means Pakistan has maximum mobile
penetration velocity in south Asia region. There are Iive companies that are working in
Pakistan. These companies market detail is as:
The Mobilink is in service in Pakistan since 1994 and it is a part oI Egypt
Telecom Company with 35 market shares. UIone was previously owned by Pakistan
telecommunication company Ltd, but now it has been operated by the Etisalat group oI UAE.
It has 21 market shares and is very beneIicial Ior the Pakistani investors to invest in. Warid
is under control oI Abu Dhabi group oI United Arab Emirates and also the Iourth member oI
Warid is Wateen groups with the 18 market shares. Telenor is the Iresh telecommunication
mobile network company in Pakistan and has 20 market shares.
Zong was previously Paktel, but then it was under control by the China mobiles and was
named as the Zong which is now one oI the most booming telecommunication companies in
Pakistan. Zong has about 6 market shares.
Telecommunication industry have an optimistic eIIect on Pakistani economy,
because this business industry pays oII a decent amount oI tax towards Government oI
Pakistan, this business is also Iigured out as an employment prospects creator in Pakistan.
Relationship marketing is a tool used by various business units to establish
precious as well as common strategic relationships with customers. (Ravald A, 1996). This
research is conducted through the process oI examining prior work completed on this area
originated in the literature reviews oI other papers. The research ends through an argument
about the outcomes, discoveries, limitations oI the research and suggestions Ior any Iurther
research in the Iuture.
LITERATURE REVIEW
Relationship marketing:
Relationship marketing as a whole has become known as one oI the glooming and leading
models in marketing (Gronroos, 1994b). Relationship marketing has emerged as a sign oI
relationship between the customers and the business organization, it acts as a source which
propagates and magnetizes the customers Ior a business organization. (Berry et al., 1983, p.
66). Relationship marketing and customer relationship are related to each other as cause and
eIIect, it is the maniIestation oI mutual exchange understanding and IulIillment oI promises
and agreements established between the customers. It is a Iactual approach which Iacilitates
that, how to manage and enhance a relationship to identiIy the objectives, aims, proIits and
beneIits oI all the consumers and concerned business members? (Gronroos, C. 1996, p. 11).
Relationship marketing is a various activities based strategy, these activities jointly help in
building, increasing and retaining oI diIIerent business related customer relation trades,
which shows that in a business the relation with customers is Iormed through these activities
however these activities are not essentially known (Morgan and Hunt, 1994). The diIIerence
between usual and relational business deals is because oI the relationship marketing strategy,
the researchers exercise this strategy Ior its appearance and proceeding. (Macneil, 1978). The
most eIIective relationship marketing is based on the Iundamental marketing, quality and
customer service as these help in the provision oI satisIaction to the customers, which not
only assist in keeping a hold on the current customers but also aids in making new customers
through these relational strategies (Christopher et al, 1991).
Customer loyalty:
Loyalty means, 'A customary tendency to buy a product, usually one out oI many (Ehrenberg
and Scriven, 1999). In the Iew previous years the processes oI examining the eIIects oI
satisIaction oI customers that inIluence loyalty have got so much evolution. (Szymanski and
Henard, 2001). It has been examined that iI a customer don`t have Ieelings and dedication
towards the produce oI a business, then the loyalty Ior that produce by that customer cannot
be carried out Ior long (Day, 1969; Reichheld, 1996). II a customer Irequently buys a
product, them it is that strong dedication oI that customer that makes him buy the same
product again and again then it is loyalty even though iI that customer is being Iorced not to
buy it by some external sources (Oliver, 1999, p. 34). A loyalty is that which has aspects oI
Ieelings and manners, that`s why it is assumed that consumers which are IaithIul to the
business products through there consistent manners display more Iavorable attitudes towards
that business, in comparison to the business rivals and also act as the Ieedback Ior that
business (Dick and Basu, 1994).
Customer satisfaction:
Whenever there is a need to Iind out or measure the customer loyalty then the satisIaction is
mostly used, the reason Ior that is the strong relationship between the customer loyalty and
the customer satisIaction (Anderson and Sullivan, 1993; Fornell, 1992; Taylor and Baker,
1994), some consider the relationship to be interchangeable (Hallowell, 1996). The customers
can become loyal by many ways but by the provision oI satisIaction, the customers are likely
to become more loyal (Coyne, 1989; Oliva et al., 1992). SatisIaction is one oI the most
important variables which have been used Ior the customer loyalty but some other variables
are also Ior the loyalty and one oI these variables is the perceived service quality oI the
customer (Andreassen, 2001, Sirdeshmukh et al., 2002). It is a Iact that all the businesses and
companies always want their customers to be loyal to them and Ior this purpose the customer
satisIaction is the biggest tool available Ior them to Iind out and measure the degree oI their
customer`s loyalty towards them and this is reason why it is being used Irom a long time as to
know the loyalty oI the customers (Fornell et al., 1996). The satisIaction oI the customers has
always been proved as one oI the best indicator oI the customer loyalty (Fitzell, 1998). The
loyalty is the commitment oI a customer with the company or person Irom whom he/she is
taking any kind oI services, that how much that customer trust that company or person? and
that how much that customer is satisIied with their quality and perIormance? (Bansal and
Taylor, 1999) and emotionally (Ranaweera and Prabhu, 2003). The loyalty oI a customer is
the commitment oI that customer with the service provider, thereIore there are two types oI
customers one oI them are the emotionally loyal customers who remains loyal in almost all
situations with the services oI their services provider and the others are the satisIied
customers who may become loyal not Ior the longer periods oI time but just Ior the ease oI
the availability oI that service (Schulz, 2005). In order to Iind out and measure the loyalty oI
a customer the satisIaction has always been proved as one oI the reliable variable to measure
it (Zeithaml et al., 1996). Mostly when a research is conducted to measure or Iind out the
loyalty oI the customer then the satisIaction oI the customer is considered as one oI the
important variables to measure it and the reason Ior that is the strong relation between the
customer loyalty and the customer satisIaction which has been proved by various previous
studies (Anderson, 1994; Olsen, 2002).
Relationship improvement:
A member oI a business organization can only show his Iull commitment towards customers
relationship enhancement strategy, provided that he/she knows how to deal their customers
according to their requirements and they highly equipped with current techniques oI
inspirations and motivations to enhance relationships (Hennig- Thurau ,2003). Relationship
class is an advanced sort oI erect having as minimum two Iundamental correlated but with
diIIerent magnitudes i.e. trust and satisIaction (Crosby et al. 1990). Relationship worth
analyzes straight optimistic relation Irom interpersonal relationship class to IaithIulness to
Iirm. This verdict ropes the conIlict between Iormer researcher that aIIirmative interpersonal
relationship between contact employees and customers can create supplementary relationship
that links customers to the Iirm (Macintosh and lockshin,1997). Relationship marketing have
shown that a Iirm channelized its work concurrently within diIIerent sort oI markets and
buildup aIIiliations with all related parties within speciIic range oI markets (Kandampully
and Duddy,1999). Relationship improvement means switching eIIorts oI co-workers in
establishing relationship with diIIerent parties having trust on the signiIicance oI particular
relationship ( Williams 1998).
~On the basis oI the literature review, Iollowing hypothesis have been
proposed.
H1: There is a signiIicant, positive correlation between customer relationship satisIaction and
customer loyalty.
Table 3 indicates that there is a positive correlation (R: 0.453) between Customer
Relationship SatisIaction and Customer Loyalty which is also signiIicant at 0.000 level,
thereIore H1 is accepted.
H2: There is a signiIicant, positive correlation between relationship improvement and
customer loyalty.
Table 3 indicates that there is a positive correlation (R: 0.507) between Relationship
Improvement and Customer Loyalty which is also signiIicant at 0.000 level, thereIore H2 is
accepted.
H3: There is a signiIicant, positive correlation between relationship improvement and
customer relationship satisIaction.
Table 3 indicates that there is a positive correlation (R: 0.552) between relationship
improvement and customer relationship satisIaction which is also signiIicant 0.000 level,
thereIore H3 is accepted.
METHODOLOGY
This research has been conducted in order to Iind out the impact oI relationship marketing in
mobile network operators oI telecom sector oI Pakistan and to Iind out the loyalty oI
customers Ior these mobile network operators. For this purpose a sample oI 150
questionnaires was Iilled Irom the University oI Sargodha, Sargodha which is one oI the well
renowned universities oI Pakistan. The questionnaire Ior this research was adopted Irom the
study (Liljander,V. and Leverin, A, 2006). The questionnaires were Iilled Irom the students
oI diIIerent departments oI the university who were the customers oI any one oI the mobile
network operators Irom the Iive main mobile networks in Pakistan named as UIone, Telenor,
Warid, Zong and Mobilink. From a total oI 150 questionnaires, 141 completely Iilled
questionnaires were returned, 4 questionnaires were lost during the process and the remaining
5 were wrongly Iilled.
For conducting this study the data was collected Irom both primary and secondary sources.
The questionnaires were Iilled in the month oI May, 2010. The questionnaire consisted oI the
total 15 questions which were classiIied according to the variables oI this study, the Iirst 7
questions were related to the customer satisIaction next 4 were related to the relationship
improvement and the last 4 were related to the customer loyalty. Three additional questions
were used, Irom which 1 question was about the name oI the mobile network operator used
by the respondents, 1 was about the age oI respondents and 1 was about the gender oI the
respondents. The questionnaires were Iilled Irom 77 male and 64 Iemale respondents. The
Iive-point Likert-type scale was used ranging Irom strongly disagree to strongly agree.
Descriptive statistics and the comparison oI mean have been used to study the response oI the
sample. The Cronbach's Alpha revealed the result Ior the overall homogeneity between the
variables oI this research and the items oI scale used in this research to measure the variables.
Correlation analysis were used to study the relationship between the variables such that these
analysis studied the positive relation oI all the independent variables (customer relationship
satisIaction, relationship improvement) with the dependent variable (customer
loyalty).Regression analysis were also used in order to test the hypothesis Ior this research.
DATA ANALYSIS
Frequency Analysis:
Frequency tables provide the inIormation about the respondent`s gender, age and their mobile
network operators.
Table 1 Table 1.1
Respondent`s gender Respondents age






Tables 1 and 1.1 show that that there are '141 total respondents in which '77 respondents
are male and '64 are Iemales and Irom those 26 respondent`s age is between 17 to 19 years,
95 respondents are between 20 to 22 and 20 respondents are between 23 and above
respectively.
Table 1.2
Respondent`s w.r.t. networks







Table 1.2 shows that '45 respondents belong to UIone, and the respondents oI Telenor,
Warid, Zong and Mobilink are '37, '22, '14, '23 correspondingly.
Gender of respondents Frequency
Male respondents 77
Female respondents 64
Total respondents 141
Age of respondents Frequency
17-19 Years 26
20-22 Years 95
23 Years and above 20
Total 141
Mobile network operators of
the respondents
Frequency
UIone 45
Telenor 37
Warid 22
Zong 14
Mobilink 23
Total operators 141
Means analysis:
Table 2
Descriptive Statistics
N Mean Std. Deviation
Customer Relationship
satisfaction
141 3.5917 0.58469
Relationship
improvement
141 3.5035 0.79225
Customer loyalty 141 3.4947 0.73768
Table 2 show the means oI the three variables used Ior this research, in which customer
relationship satisIaction has the maximum mean leading to greater impact on relationship
marketing than other two variables, consequently on the other hand customer loyalty as its
mean is almost equivalent to as relationship improvement but comparatively has low mean
thereIore customer loyalty leads to low impact on relationship marketing, that`s how it can be
observed that all mobile network operators should Iocus on customer relationship satisIaction
Ior better implication oI relationship marketing.
Correlation analysis:
Table 3
Correlation
Customer
relationship
satisfaction
Relationship
improvement
Customer
loyalty
Customer relationship Pearson
satisfaction Correlation
1

.552
**


.453
**


Sig. (2-tailed) .000 .000 .000
Relationship Pearson
improvement Correlation
.552
**
1 .507
**

Sig. (2-tailed) .000 .000 .000
Customer loyalty Pearson
Correlation
.453
**
.507
**
1
Sig. (2-tailed) .000 .000 .000
N 141 141 141
**Correlation is signiIicant at the 0.01 level (2-tailed).
There is a positive and highly signiIicant relationship between customer relationship
satisIaction and relationship improvement (r 0.552**, Sig: .000).
There is positive and highly signiIicant relationship between customer relationship
satisIaction and customer loyalty (r 0.453**, Sig: .000).
There is positive and highly signiIicant relationship between relationship improvement and
customer loyalty (r 0.507**, Sig: .000).
Reliability analysis:
Table 4
Cronbachs Alpha Reliability







The values Ior the Cronbach`s Alpha Ior the combined scale (0.809) as well as all the
variables individually is good except Ior customer loyalty which shows a low reliability
(0.546) with respect to other variables and is also below the minimum satisIactory levels.
Regression analysis:
Table 5
Model Summery
a. Predictors: (Constant), Customer Relationship SatisIaction, Relationship
improvement.
b. Dependent Variable: Customer loyalty.
Regression analysis shows whether hypothesis is suitable or not. Through regression analysis
it was discovered that the R value (correlation) is 0.548 which shows a strong association
between dependent and independent variables. The F value (29.609) is signiIicant at 0.000
levels. The Durbin-Watson is also within the standard ranges which explain that there is no
autocorrelation. On the basis oI regression analysis conducted to test H1 we accept our
hypothesis i.e. there is a signiIicant positive relationship between Customer Relationship
SatisIaction, Relationship Improvement and Customer loyalty.
Variables Number of Items Alpha Reliability
Customer Relationship
Satisfaction
07 0.660
Relationship Improvement 04 0.699
Customer Loyalty 04 0.546
Combined Scale 15 0.809
R

R Square

Adjusted-R
Square
Std. Error of
the Estimate
Durbin-Watson

F

Sig.
.548
a
.300 .290 .62152 2.024 29.609 .000
a

Table 5.1
Coefficients
a. Dependent Variable: Customer Loyalty.
In table 5 the value Ior Adjusted R Square (0.290) shows that the independent variables
(customer relationship satisIaction and relationship improvement) clariIy 29 oI variance in
Customer Loyalty. In the same way the Beta values Ior both Relationship Improvement
(0.370) and Customer Relationship SatisIaction (0.249) are signiIicant at 0.000 and 0.004
levels. This shows that the variable Customer Relationship which is signiIicant at 0.000 level
has most inIluence over the variance in customer loyalty.
FINDINGS AND MANAGERIAL IMPLICATIONS
The effect of customer loyalty towards relationship improvement:
This Iindings show that there is a positive and signiIicant eIIect oI customer loyalty toward
relationship improvement. In the division oI genders, male respondents are more satisIied
with the improvement in relations as compared to Iemale and loyalty Iactors is more Iound in
Iemale respondents. In the division oI age oI respondents, the respondents belonging to 20-22
years are more satisIied with the improvement in their relations as compared to respondents
belonging to 17-19 years. Mobile network operators should introduce new packages Ior
young generation to overcome this problem.
In the division oI mobile network operator, Warid has better improvement in relations as
compared to other mobile network operators and Mobilink has greater contribution toward
loyalty but Telenor has signiIicant low loyalty Iactor and Telenor should pay attention
towards improving service quality and reorganize its marketing strategy. Hence mobile
network operators can enhance their customer loyalty by Iocusing on relationship
improvement.
The effect of customer loyalty toward customer relationship satisfaction:
Statistical analysis show that there is a positive and signiIicant eIIect oI customer loyalty
toward customer relationship satisIaction. In the division oI gender male respondents are
more satisIied as compared to Iemale respondents. In division oI age oI respondents
belonging to more than 20 year old are more satisIied as compared to Iresh blood. ThereIore
Unstandardized
Coefficients
Standardize
Coefficients

B Std. error Beta t Sig.
(constant)
Relationship improvement
Customer relationship satisfaction
1.161
.345
.314

.333
.079
.108

.370
.249
3.483
4.336
2.911
.001
.000
.004
mobile network operators should take keen interest in developing, maintaining, and attaining
customer satisIaction. In division oI mobile network operator customers oI Telenor are not
satisIied with their service quality as compared to other network operators. Telenor should
take keen interest towards improvement in service quality.
LIMITATIONS
There are numerous boundaries oI current research that ought to address in near Iuture. The
data were collected only Irom University oI Sargodha, 'Sargodha and outsiders i.e. people
beyond the boundary oI university were ignored. This research is restricted to cellular service
provided the other areas and companies in Pakistan. The area oI research should be enhanced
toward other companies like banking and industrial sector. This research has been conducted
in Sargodha, so that educational and cultural conIlicts may manipulate apparent advantages to
the research Iield. In this research the customer loyalty is measured through relationship
satisIaction and relationship improvement, by using relationship marketing as a tool thereIore
other variables can also be used to measure the loyalty oI the customers. Relationship
marketing can also enhance brand equity, and provide guidance towards implementing
diIIerent marketing strategies which could not been discussed in the research.

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