Research Paper-Literature Review
Research Paper-Literature Review
Research Paper-Literature Review
Market
Introduction:
68% of the customers are lost due to pure neglect. (Sumit Khanna, 2016).To company brand image and to
boost profitability customer satisfaction is considered to be an important element. To retain the customer
in context of relationship marketing, customer satisfaction should be point of focus for those companies
who deal with customers, in particular. (Klee, 1997) This paper will focus on the customer satisfaction
resulting in retention with reference to Sri Lankan Telecommunication market. This paper will investigate
the key elements that will contribute to customer satisfaction and development of more comprehensive
customer’s loyalty perception.
Satisfaction is a term that is associated with total purchase and consumption of a targeted product or
service expended by customer. It also includes the repurchase expectation overtime. (Rasanayagam2,
2013). As per Zeithnal and Bitner(1996), factors likes pricing , product quality, brand image and leads to
customer loyalty. Ultimately, customer will buy services not the goods that are sold to them. Market sell
and buy thousands of products but customer will exchange their hard earn money to those that will come
up with “Good feelings and secondly solution to the problem”.(Sumit Khana, 2016) The purpose of this
topic is to reveal all those customer retention and satisfaction factors that are contribution to growth of
SLT industry, what are the areas that still need improvement?
Telecommunication sector no longer depends upon Information technology and product innovation. In
global competitive environment where customer choice and priorities are changing, telecommunication
sector has to be on the best side to build “Customer Satisfaction and Retain previous customers”. In
today’s world where organizations need to focus on customer satisfaction, business who are failed to do
so will not able to build devoted customers. It is also observed that organizations and staff towards client
devotion don’t have enough chemistry which will result in breakdown of customer relationship
management process. (Bashir, 2017)
Mobile operators (MNO’s) from Sri Lanka and Bangladesh have made it clear that customer satisfaction
is critical to profitability of this sector because: (Gunaratne, December 2013).How customer satisfaction
can be achieved.
This paper will help to identify the key factors that are affecting customer behavior in satisfaction and
retention:
Problems to identify
This paper will not only identify the factors that contribute in building customer loyalty but Sri Lanka
being the developing nation still have some problems in that sector that will be identified during research
of that paper. What are the problems, this industry has the potential to overcome those constraints?
Privatization gives advantage to this industry because there was more focus on customer satisfaction and
retention. Privatization brings lot of players in the market and ultimately it gave advantage to customers.
To competitor in the market and increase profitability, it was important for the players in the telecom
sector to focus more on customer services than technology, price or payment terms. Bringing value to
delivery, having adequate and quick solution to customer’s problems and finally delivering with high
quality were those contents and characteristics that will result in customer satisfaction. It will bring new
customers and high customer satisfaction will result in retention as well (Dewasiri, 2014).
Literature Review
SLT was privatized in year 1991, since then the investment in that sector shown a steady progress.
According to World Bank Collection of Development indicator, current investment in telecom sector
reported at 13650000 USD for the year 2014. (Economics, 2014)
Customer Satisfaction
Every industry whether manufacturing or services, needs customer satisfaction for momentous growth.
This CS needs to turn into loyalty, customer retention. With numerous factors contributing to customer
relationship management but this study will focus on loyalty, commitment and payment equity. (Verhoef,
2003). There is a significant relationship between customer satisfaction and customer loyalty. Customer
satisfaction may be referred as a mental condition in which the brand is able to fulfil the desire of
customers. (Daikh, 2015). Successful service provider relationship with customer strengthens the
satisfaction level. (Pannda, 2003) Organizational superiority is subject to and influenced by service
quality. In modern business environment success to growth main factor is the Customer satisfaction.
(Lymperopo c. Chaniotakis, 2006). CS will not only result in increasing brand loyalty but also building
sales profit and market share. (Caruana, 2002). Many authors have come up with different definitions
related with customer satisfaction. The most valuable to relate with telecommunication market,
satisfaction is status of pleasure or disappointment because of product or service performance as
compared to expectation of targeted customers. (Anderson, 2000).it’s an attitude like judgment that
customer will make when buying and using a product or services, interacting with that product (Bansal,
2001).its important to configure here that, the response the customer will build , will be on post purchase
evaluation, after consuming or retaining that product effective response will be filled with overall product
service experience (Haddrell, 1996). Another definition with same conclusion; it is experience based
assessment of customer about expectation of the product and service; expectation may turn into positive
or negative perception based on service provided by the industry. (Oliver R. S., 1989) (Oliver, 1997)
Customer Retention
Customer satisfaction may be subject to one time consumption only, for companies it is important to build
customer satisfaction but also to retain that customer. Customer retention is however another important
and cohesive plus for the companies. Retention will result in loyalty and constructive addition to
company reputation. (Keller, 2006) (Kotler, 2000).but Parasuraman, Zeithaml and Berry gave five
different perception and ideology on customer retention. Which should be considered by industries while
marketing product in market; 1- when consumer will use any product and it will result in pure
satisfaction, he or she may recommend it to other person to use. (Parasuraman, 1988)2- From people from
near circle will make inquiries about the product , it may be recommended to them.3- give the audience
enough margin or perception about product to use them. 4-besides of not using in one time the second
thing that will ultimately result in actual profit making aspect of company is to regularly use the services
and not to switch their priority. 5- Satisfaction level should be so high or it should be built in that way,
people should prefer whenever they want to use it, priority on first base. Griffin also put practical
explanation to (Hokanson, 1995)retention; 1- consistency, no switching to other brands in the market,
product and services should be at that level, customer is ready to make regular purchase.2-
Telecommunication sector have to make changes in their product to meet the market demand, so whatever
that is offered to the market, customer is ready to purchase if offered in variety of services as well.3-
potential and the capacity of the product, create the loyalty and brand image. 4- Service industry need to
adopt quickly, need to be proactive, to compete and build the portfolio, quite immune to the changes
launched by other marketing campaigns of other companies.
(OWIYE, 2010) Emily mentioned three behaviors that will contribute to the loyalty; 1-both consumer
and service should made circumstances where no hesitation to purchase again, willingness to do so 2-
what is the primary behavior? Number of times, frequencies and quantities in use of customer 3-
secondary behavior, is that product or service is recommended to other?
Telecom sector in Sri Lanka is mature enough as compare to neighbor countries like Bangladesh and
Pakistan. The progress has been study in recent years due to emergence and dominance of mobile market.
The penetration dropped to the level of 16.3% to 11.3% in 2017. Due to mobile market domination,
internet and broadband is also affected. Due to low in demand the services and coverage of data network
is under observation and sophistication is low. (Budde.com, 2018) Below is the detailed analysis of the
SLT industry. (TRCSL, 2018). SLTC is established under the act no 27 , 1996 as the national regulatory
agency for telecommunication. This report is based on the analysis of the mobile and telecommunication
industry progress and operators working in this industry.
Overall revenue in year 2017 in fixed access operators are 29% of total revenue. There are other operators
in that sector that are providing services in International Telecommunication Services, Direct to Home
Satellite Broadcasting Services and Cable Television Services. Total Twenty five operators are in that
sectors that are contributing with total revenue of 4%. There are three major players in fixed access
telephone operators with investment of 58,963 million in this sector. Investment from last year has
dropped in year 2017 as compared to year 2016; the investment figure was 32,865 million in year 2017 to
year 2016 where stats are 56.6 million. As per TRC report the revenue is also increased in the year 2017
as compare to 2016 but on slow pace, at rate of 8.8% only. Revenue in the year 2017 is 59 million
whereas in year 2016, numbers were 55 million (Report, 2016). License is issued to three players
according to section 17, SLT Act 25 of 1991 as amended; Dialog Broadband Network (PVT) LTD, Lanka
Bell LTD and Sri Lanka Telecom PLC. Dialog is on the top of the list that is providing most of the
services not only to general customer but also to corporate sector of Sri Lanka, services include; Internet,
Managed services, Internet Data center facility, Corporate Data network, residential and business value
added services. (Dialog).
According to sector analysis report of STL , change in taste of customer is quite evident as there is more
trend of mobile subscribers. Because internet facility is becoming more and more compatible for mobile
users, So with passage of time , broadband services is shaping into a limited scope , especially in general
customer market. Subscriber base shown a positive result in year 2017 with increase of 2% only, the
change is nominal but in comparison to last year where fixed access subscriber base was in negative range
of -2%. Telecommunication levy is also collected from operated under telecommunication levy act no 21
of 2011 amended. Amount collected for Rs.29.1 billion. This tax will be charged from every person
receiving telecommunication services. (ACT, 2018). Sri Lanka law has given clear instruction about the
tax levy. This imposition on telecom sector is criticized by masses but law how so ever is using these
services have to pay it. On the value of internet supply the rate is 10%. In case of telecommunication
services other than internet, rate will be 20%. Other than tax levy, international telecommunication
operators levy is also collected from international operators. This tax was imposed on telecommunication
development charges and out-going local access charges. TDC and OLAC were dropped in the year 2017
where the collection was Rs.6.20 billion as compare to year 2016 , in 2016 collection from international
operators were Rs. 8.69 billion. Sector wise analysis gives comprehensive detail on telecommunication
development in Sri Lanka.
These rules are made telecommunication act 25 of 1991, all the operators that are authorized to any
interconnected telecommunication system have to follow these rules. Other than rules there is strict
compliance policy for the operators. TRC has given regulatory compliance details under “Surveillance
“and Quality of services area. Tariff plans; there are approved tariff plans from three major fixed line
operators.
According to sectorial analysis, Mobile market in Sri Lanka has major share in revenue of
telecommunication market. More than 70% users in Sri Lanka are mobile subscribers. The reason for rise
is due to end of three decade war in the north and east of the country with mobile users is from 16 to 35
year old. Due to this evident growth from mobile sector fixed access revenue has dropped down in last
couple of years. Total revenue generated but this sector in last five years has shown unprecedented
growth. Revenue in 2011 was Rs 83 billion that increased with amount of Rs 60 billion. In year 2017,
revenue amount of Rs. 140.30 billion. Subscriber base in mobile sector is showing increasing trend. Total
number of users has sworn to 28.20 million as compared to last year 2016 where total numbers of users
were 26.23 million. This trend will continue to dominate the communication sector. There are total five
major mobile operators in Sri Lanka; 1-Bhartia Airtel Lanka (PVT)LTD 2- Dialog Axiata PLC 3- Etisalat
Lanka (Pvt) LTD 4- Hutchison Telecommunication Lanka (Pvt) LTD.5- Mobitel (PVT)LTD. These are
all international telecommunication operators. Dialog is again in the lead with 7 million subscribers and
Mobitel is second in list with 4.2 million subscribers. (Landed). Both mobile and fixed
telecommunication sector are making continuous investment to attract users with latest technologies.
Mobile sector and fixed operators are making investment in regular pace with investment of RS 26 billion
in year 2016 and this value increased in year 2017 with investment amount of Rs.36.1 billion in year
2017. Below are the stats on internet users as per the population of Sri Lanka.
Source: http://www.internetlivestats.com/internet-users/sri-lanka
Above stats are clearly depicting the increased usage of internet technology .During the year 2016 ,
number of mobile users and connections surged to 1.5 million with 300,000 broad band and dial-up
connections. This effected the internet penetration to level of 30% and total internet users jumped to 6.1
million.
Source: http://www.digitalmarketer.lk/internet-usage-statistics-in-sri-lanka-2016-updated.html
Although main objective of most of operators is to give best services to users but it’s the
difference in customer services that makes the approach different from other players in market.
Sri Lanka Telecom is the fixed wired broadband provider that also provides DSL and WiMAX
broad band services. Lanka bell is also fixed broadband internet service provider. Moreover
Mobitel and Airtel also provide 3G and HSPA mobile broadband internet connectivity services
Share of world internet is only .2%, therefore Sri Lanka government is on urge to improve internet
services for educational, recreation and occupational reasons. Government has removed 15% value added
services on telecommunication sector to attract investment and give more relief to mobile and fixed
access users.
Dimensions of Expect
Service Quality Perceived Quality
Reliability Expectation
Responsive Perceived
Exceeds
ness Expectation
Assurance Met
Empathy Expectation
Tangibles not Met
Zeithman and Bitner 1996 also explained the customer satisfaction: quality of service is
connected with customer satisfaction, result of excellence and superior delivery process that will
meet the customer satisfaction. One point of focus here is the customer expectation with all
reliability, assurance and responsiveness that will result in perceived service quality.
Organizations need to focus on continuous improvement to achieve their strategic goals. In the
above model there are two factors that will impact the service quality delivered; that is customer
perception and customer expectation, the goal is to meet the expectation level with the perceived
level. Services can be combination of tangible and intangible properties, when customer will
perceive service, it will result in three conditions.1-this is the ideal condition where the level of
service will meet the expectation level, it is ideal point for promoter, making things evident that
all efforts are made to meet mind of peace of customer2- Second condition is the equal level,
where the expectation and perceive service are at equal point. It’s like a win win situation for
both users and provider. This point might be a signal for operators to improve their service and
product. 3- The third level is not what an organization might be expecting with the users but that
can be faced ultimately, it is the point where the expectations will be lower than perceive
services, expectations are not meet. This is the poor quality that resulted in lower expectation
level. These milestones are not being considered as cost but it is the investment that will result in
long term profitability of product and organization itself.
Branding
Brand satisfaction is another term that is related with customer satisfaction. It is the subjective
evaluation of a product where the expectation of exceeds than limit. Branding in other words is
the brief introduction of a company now. Customer are not following the company or increasing
its market they are actually following the brand, the product that is satisfying their expectation
level. Brand defines the company level, a specific value that will specify the company to market.
Brand can be a name, a symbol of combination of both. When a customer will name a product,
brand image will pop up in his mind. This what a company aims to build in customer mind.
Different strategies are identified for brand research strategy. (smith)
Branding is also connected with customer loyalty. There are different factors that will result in
customer loyalty that are; courteous employees, knowledgeable employees, competitive price,
friendly employees, quick service, building clarity and good value. There are plenty of factors
that are essential to branding. Branding can’t be achieved over night it is the process of
continuous effort. According to Kotler (2009) and Fe and Ikova(2004), comparing the
expectation with perceived quality is ultimate experience provided by service provider.
Measuring Customer Satisfaction
Oh and Parks(1997) come up with nine methods for measuring the customer satisfaction which
are; expectancy(what customer expect) disconfirmation(not meeting the level ) , assimilation,
comparison level with other competitors in market, assimilation contrast, equity of brand and
organization itself, product attribute that needs to be unique to gain market advantage,
comparison level , negativity that will build when expectations will be lower and value-
perception. Although all these factors are based on cognitive psychology but in most of research
the CS is also measured and subject to behaviorist approach as well.
Limitations faced by the companies and the industry as a whole
As already discussed in this report that the biggest competition that is faced by fixed access
network in Sri Lanka is growing mobile market; growth is at rate of 73% and resulting in
monopoly of that sector. Growth in telecommunication is evident as compare to other peers but
their some challenges as well as limitations faced by telecommunication sector in Sri Lanka.
(Rauniyar & Soumya Samuel)
Non-Accessibility to Rural Areas, as compare to urban areas of Sri Lanka, the rural areas have
fewer access to telephone and internet services. This facility needs major improvement because
half of country population is living in that area. Operators are mainly focusing on capital city that
constitute 5% population of whole country. Operators are reluctant to introduce their services in
that area due to cost and benefit of establishment in rural areas.
Policies of government, competitors are unable to handle political pressure, corruption and
waste those results in losing their customer. As part from that, this industry is also facing
regulatory issues like; barrier to entry and exit that will result in anti-competitive strategic
behavior. (Jayasuriya, 2000). SLTL has monopoly in fixed wireless lines that result in restriction
in telephone calls. More licenses should be issued to other players to boost investment and
improve fixed lines accessibility in country. Moreover there was intense competition in market
in 2000 due to entrance of new players but due to regulatory intervention competition has eased
off, Market is facing problems due to unprofitable nature of small players so if there will be any
new entry in market it will worsen the condition. Moreover, SLT is facing difficulties in getting
clearance from government authorities in setting up public Wi-fi zones and need proper
backbone network to facilitate public and offload many of traffic to macro 3G and 4G layer.
(Journal, 2016)
Technological advancement and brain Darin, Sri Lanka is ahead of South Asian countries but
still behind the South East Asian countries like Malaysia, Thailand in terms of mobile and
internet penetration. According to Certified Manager professional journal (Managment, 2016),
Chairman of SLT and Mobitel has admitted that lack of technological advancement and brain
Darin especially in area of technical filed is a major concern for telecom sector and there is need
to retain the best in Sri Lanka industry.
Taxes and tariff, there had been criticism in past regarding the tariff imposed by government in
that sector, 10% to 20% tax levy is imposed on mobile and fixed access users which is a concern
because it will put additional cost in price mechanism of operators. Other than tariff and taxes
this industry is also facing currency risk which is putting additional pressure on import expense,
this industry demands latest technology and professionals, major parts are imported from foreign
countries and result in pilling up of import expense on telecom sector. Currently, dollar is at rate
of 161.64 in exchange of 1 Sri Lanka rupees. (Lanka, 2018)
Bibliography
ACT, T. L. (2018, August 30). Retrieved from Laws of Sri Lanka,Black Hall Publishing :
http://srilankalaw.lk/Volume-VIII/telecommunication-levy-act.html
Anderson, H. &. (2000). Creating Loyalty: It's Strategic Importance in Your Customer Strategy. In S. A.
Brown, ed., Customer Relationship Management, . Ontario, John Wiley, 55-67.
Caruana, A. (2002). The effects of service quality and the mediating role of Customer satisfaction.
European Journal of Marketing.
Daikh, J. (2015). The Relationship between Customer Satisfaction and Consumer Loyalty. Johnson &
Wales University Scholars Archive @JWU, 2-3.
Gunaratne, S. Z. (December 2013). Customer Lifecycle Management practices in the telecom sector in Sri
Lanka and Bangladesh: Supply side perspective . LIRNEasia .
Haddrell, D. P. (1996). A comparison of question scales used for measuring customer satisfaction",
International Journal of Service Industry Management,. MCB University Press, 4-26.
Hokanson. (1995). The Importance of Customer Satisfaction in Relation to Customer Loyalty and
Retention. Kuala Lumpur, Malaysia .
Journal, C. (2016). Next Challenges in the Sri Lankan Telecommunication Industry : Thrive and Survive.
Klee, T. H.-T. (1997). The Impact of Customer Satisfaction and Relationship Quality on Customer
Retention: A Critical Reassessment and Model Development. John Wiley & Sons, Inc.
Landed, J. (n.d.). Just Landed, Mobile phones Networks and prices in Sri Lanka. Retrieved from Just
Landed: https://www.justlanded.com/english/Sri-Lanka/Sri-Lanka-Guide/Telephone-
Internet/Mobile-phones
Lanka, C. B. (2018). Exchange rates. Retrieved from Central Bank of Sri Lanka:
https://www.cbsl.gov.lk/en/rates-and-indicators/exchange-rates
LANKA, N. A. (2016). Annual National Accounts Estimates -2016 . DEPARTMENT OF CENSUS AND
STATISTICS MINISTRY OF NATIONAL POLICY AND ECONOMIC AFFAIRS SRI
LANKA .
Lu, C., Celine Berchoux,, & Michael W. Marek,. (2015). Service quality and customer satisfaction:
qualitative research implications for luxury hotels. Emerald Group Publishing Limited.
Lymperopo c. Chaniotakis, I. &. (2006). The importance of service quality in bank selection for mortgage
loans. Managing Service Quality.
Managment, J. I. (2016). Next Challenges in the Sri Lankan Telecommunication Industry : Thrive and
Survive.
Oliver. (1997). "Satisfaction: A Behavior Perspective on the consumer. " New York: McGraw-Hill. .
Oliver, R. S. (1989). Equity and disconfirmation perceptions as influences on customer satisfaction. New
York: McGraw-Hill. .
Pannda, T. K. (2003). Creating customer lifetime value through effective CRM in Financial Services
Industry. Journal of Services Research,.
Parasuraman, A. V. (1988). "SEVQUAL: A Multiple Item Scale for Measuring Consumer Perceptive of
Service Quality. Journal of Retailing, 64.
Rasanayagam2, K. K. (2013). Impact of Customer Satisfaction on Customer Loyalty towards Sri Lanka
Telecom PLC. . Industrial Engineering Letters.
Rauniyar, N., & Soumya Samuel. (n.d.). The Telecommunication Industry of Srilanka.
smith, K. (n.d.). Building a Brand Research Strategy: How to Analyze Your Brand. Retrieved from Barnd
Watch: https://www.brandwatch.com/blog/building-brand-research-strategy/
Wire, B. (2016, september 28). Business Wire. Retrieved 2018, from Business Wire:
https://www.businesswire.com/news/home/20160928006292/en/Sri-Lanka-Telecommunications-
Country-Industry-Analysis-2016
Xia, L., Kent B. Monroe, & Jennifer L. Cox. (2004). The Price Is Unfair! A Conceptual Framework of
Price Fairness Perceptions. Research Gate.