Challenges in the Era of Globalization - iaabd

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Proceedings of the 12th Annual Conference © 2011 IAABD Abstract Service quality and customer retention in the mobile telecommunication industry in Ghana Kofi Poku, kofi_poku1@yahoo.com Wilberforce Owusu-Ansah, woansah@gmail.com Department of Marketing and Corporate Strategy, KNUST School of Business, KNUST, Ghana. The worldwide trend towards service quality has become a distinct and important aspect of product service offering. Its close conceptual link to customer retention has turned it into the core marketing instrument, making it one of the most researched areas in services marketing. The focus of the study was on customer perceptions of service quality of Mobile Telecommunication Network (MTN) in Ghana using the SERVQUAL model. Through structured survey questionnaire and interviews of customers randomly selected from five leading Customer Care Centres in the Ghanaian capital, Accra, data was gathered for the study. The findings from the study revealed that MTN’s customers are predominantly the youth (age 18-35) and perceive the company’s services to be unreliable. However, the study also revealed that empathy and responsiveness are the service quality variables which impact positively on customer retention. The study recommends that for MTN to be able to retain its customers, more emphasis should be placed on being responsive and empathetic in their service delivery. Introduction The telecommunication, as one of the most essential elements of modern business world, is most volatile and plagued by regulatory discord and economic uncertainties the world over. These notwithstanding, telecommunication carriers have struggled to maintain sound footing and a competitive edge, all the while endeavouring to provide crucial, uninterrupted service to their customers. Factors such as globalization and technological innovation, increasing customer demand for choices, lower price and improved service quality, as well as customer care, offer further challenges to telecommunication operations. This requires the industry to become more and more competitive through improved quality customer service in order to gain and sustain competitive advantage in a global marketplace (Zhang et al., 2004; Wang and Archer, 2007). Ghana’s telecommunications industry has witnessed phenomenal growth as a result of the country achieving a teledensity of about 20 percent in June 2006, six years ahead of the target of 2012 (Atafori, 2006). This is attributed to the tremendous growth and competition in the mobile telecommunication sector. At the end of 2010, there were six telecom companies in Ghana with the following respective market share: Mobile Telecommunication Network (MTN) 54%, TiGO 23%, Vodafone 13%, Airtel 7% and Expresso 3% (NCA, 2010). The MTN Group Limited is a multinational telecommunications group that began operations in South Africa in 1994. Since then, MTN has expanded beyond Africa into emerging markets in 10 African countries and Iran. In May 2006, MTN announced a landmark deal to create the pre-eminent mobile operator in the emerging markets of Africa and the Middle East that will operate mobile networks in 21 countries and serve nearly 30 million subscribers. In Ghana, MTN became owners of Scancom, operators of Areeba, after its acquisition in 2006. Upon the acquisition, Scancom had over 52% of the telephone market in Ghana, with its network operating in all the ten regions of the country, pledging to change the face of the telecom industry in Ghana. The company promised to bring world-class telecommunications into Ghana and understand the needs of its customers. However, these promises are yet to be realized. Subscribers of MTN complain about poor reception throughout the country and poor inter-connectivity. Simply put, some MTN subscribers feel they are not receiving value for their money. How MTN can retain its customers in the face of all these complaints remains to be seen. Other questions include whether MTN knows the needs and wants of her customers; whether the company is aware of the perceptions of her customers towards the quality of service she renders, etc. 620
The study seeks to: • examine types of services that MTN offer its clients; • examine customer perceptions of MTNs’ service quality; • investigate trends in MTN’s customer retention; • investigate how MTN’s service quality relates to its customer retention. Literature review Challenges in the Era of Globalization Edited by Emmanuel Obuah Service quality is a concept that has aroused considerable interest and debate in the research literature due to absence of consensus on definition and measurement (Wisniewski, 2001). Whereas service quality has been defined as the extent to which a service meets customers’ needs or expectations (Asubonteng et. al., 1996), others have defined from the focus of the customer (Payne, 1993). Others suggest that service quality can be inferred from Zeithaml and Bitner (2000) model where service quality differs from quality of goods because of its intangibility. The absence of a universal definition presents a challenge in communicating services to customers for easy assessment because customers characterise services as being intangible, perishable, produced and consumed, simultaneously and heterogeneous. Schneider and Bowen (1995) clarified that the focus of all the procedures, processes and contexts such as fancy facilities, modern equipment, stylish uniforms and terrific signs as a substitution of the “core service” can never countervail bad or mediocre food, poor financial advice and an appropriate joke. Service quality is amply demonstrated by practice such as delivery on time, giving customer’s variety to choose from, pay attention to customer’s complaints and demands and having competent and knowledgeable staff. Literature therefore summarizes that service quality can thus be defined as the difference between customer expectations of service and perceived service (Payne, 1993). If expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs (Lewis and Mitchell, 1990). One major challenge for companies is to deliver service quality consistently. Dimensions of Service Quality Whereas service quality is known to be based on multiple dimensions (Grönroos, 1990), there is no general agreement as to the nature or content of the dimensions (Brady and Cronin, 2001). A review of contemporary discussions on the dimensions of service quality portrays service quality in terms of physical quality, interactive quality and corporate (image) quality (Lehtinen and Lehtinen, 1982); technical aspect (“what” service is provided) and the functional aspect (“how” the service is provided) (Grönroos (1982). Furthermore, service quality has been evaluated in terms of the SERVQUAL instrument – “tangibility”, “reliability”, “responsiveness”, “assurance” and “empathy” (Parasuraman et. al., 1985; Brown et al., 1993; Zeithaml et al., 1996); Other dimensions are in terms of “what” category (i.e. service evaluated after performance), “how” category (i.e. service evaluated during performance) (Swartz and Brown, 1989); the customer-employee interaction (i.e. functional or process quality), the service environment, and work outcome (i.e. technical quality) (Rust and Oliver (1994). However, while research supports the contention that the service environment affects service quality perceptions (Spangenberg et al., 1996), it is conceptually difficult to distinguish the notion of service environment from the concept of functional quality that has been suggested in the literature since the difference between what customers expected and what they perceived was delivered could have a gap (Luk and Layton, 2002). Thus, as Robinson (1999) concludes; “It is apparent that there is little consensus of opinion and much disagreement about how to measure service quality”. SERVQUAL Model for Measurement of Service Quality Following the introduction of the SERVQUAL instrument (Parasuraman et al., 1985), many scholars have attempted to replicate and refuted its structure and conceptualization (Carman, 1990; Cronin and Taylor, 1992; Teas, 1993). Much of the research to date has focused on measuring service quality using 621
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Table of Contents Challenges in the
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