How to Promote Customer Loyalty__ of Chinese Mobile Telecom Operator Case Study of China Mobile

8/12/2019 How to Promote Customer Loyalty__ of Chinese Mobile Telecom Operator Case Study of China Mobile

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How to Promote Customer Loyalty of Chinese Mobile

Telecom Operator: Case Study of China Mobile

Master Thesis of Business Administration

Yi Hao Xiao in Yuan! "ei in# $han#

S%P&'()SO'

*ritt +ronsson

Ronneby

June 2009


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+bstract

Customer loyalty has been investigated in years, and its importance tocorporate is understood by managers. The purpose of this paper is to find out

what kinds of specific and concrete operational factors have an importantimpact on Chinese mobile telecom customer loyalty. Firstly, a model wasestablished to represent the relationship between customer loyalty and itsinfluencing factors (customer satisfaction, perceived quality, customer value,switching cost and corporate image). specific and concrete operationalfactors were found according to Chinese mobile telecom industry which werenever been studied by the pre!researchers. "econdly, a survey ofquestionnaire has been conducted which help to found out that the # factors(call quality, coverage of area, "$" quality, the convenience and reliability of%nquiring phone fee system, service quality of service center and hotline,

rating price of given quality, customer&s worry of troubles after change cellphone number, social responsibility, advertisements about corporate image)have an important impact on customer loyalty on Chinese mobile telecomindustry. Thirdly, separating these # factors into ' groups through investigatethe performance of customer loyalty in China $obile. t last, somerecommendations were given to China $obile

,ey words customer loyalty* customer satisfaction* perceived quality*

customer value* switching cost* corporate image* Chinese mobile telecomindustry, China $obile

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CO-T&-TS

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Chapter . )ntroduction

./. *ac0#round of the research+ith the increasing competition in the market, customer loyalty has become a

decisive factor in the long!term business profits. igh customer loyalty is thehigh enter! barriers for the competitor to enter the market. Customer loyaltycontributes to reduce marketing costs. The companies have to invest quitemuch time and money when they attract new customers, this process alwaysgo through a long time period associated with uncertainty risks.

The number of loyal customers as a sign of market share is more meaningfuland significant than the number of customers. $ore loyal customers meanhigh profits. -oyal customers will continue to purchase or receive the productor service from the same enterprises, and willing to pay the higher prices for

the quality products and first!class services, thereby increasing sales revenueand total. "o at this point many enterprise managers focus on marketingmanagement aspects to improve customer loyalty in order to gain thecompetitive advantage in the fierce competition. The importance of thecustomer loyalty has been identified by many researchers and academician inpast years. "o does in the mobile telecommunication industry in China. Thecustomer loyalty is also important and essential.

owadays as the mobile telecommunication market is being saturated, thegrowth rate won/t be higher than some time ago. The situation makes mobiletelecommunication companies not only to promote their service quality, butalso change their marketing core strategy to holding their e0isting customersby enhancing and optimi1ing the customer loyalty. (-ong!2i -in* 3en!ChunChien,4556)

Telecommunication industry is a very typical industry, customer/s importanceto enterprises, and how to attract, develop and maintain customers hasbecame more and more important in the sharp internationali1e mobiletelecommunication competitions. The competition in mobile communication

industry is becoming more and more fiercely. The issue how to improvecustomer loyalty is a very important issue for mobile communicationoperators. ereby, the customer loyalty is playing a significant role in thetelecommunication market competition.

%t is +orld Telecommunication 7ay (+T7) to +orld %nformation "ociety 7ay(+%"7) today. Customer loyalty is something that is vital to telecom operators,or any other businesses fighting for their survival.

8esearch has shown the importance of loyal customers in telecom sector.The typical company gets 9:; of its business from its e0isting customers.

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%t costs : times more to find a new customer than to keep an e0istingcustomer happy.%t takes 4 good service e0periences to overcome a single bad one.< out of 5 customers who switch to the competition do so because of

poor service# ; of unhappy customers won&t but again from the company thatdispleased them

nd unhappy customers will not only defect, they will grumble to # of theirfriends.

Customer loyalty is one of the most dominated factors which drive the profitsincoming of the operators in the telecom industry (8amneck kaur, =reety$enon, 455#).

./1 The research problem discussion+hat kind of factors that have an impact on customer loyalty have beenresearched by other countries such as "outh >orea, ?ermany, and Franceand so on. ?erpott (455 ) considers the network quality, which is reflected ine0cellent indoor and outdoor coverage and in the clarity of voice reproductionwithout any connection break!downs* the price paid for obtaining access toand using the network* the quality of the e0change of information betweencustomer and supplier ( ) in response to customer (telephone) enquiries and(4) in the course of interactive activities initiated by the network operator (e.g.,presentation of an invoice) have an important impact on customer loyalty in?ermany market. -ee (455 ) thinks pricing, area coverage, clarity of sound,access to provider, precision of billing service and perceived difficulty toswitch are the main factors which have important impact on customer loyaltyin France. hn (4559) considers that call drop rate (percentage of abnormallyterminated calls), the number of complaints, monthly billed amounts andcustomers with a non!use or suspended status are positively associated withthe probability of customer churn in "outh >orea mobile telecom industry.

From the above literature review, we find that different countries have different

factors that affect their customer loyalty in the mobile telecom market.Comparing with the other mobile telecom market situation, Chinese market isa different market.

./1/. The characteristics of Chinese mobile telecom mar0etThe largest and profitable market

Chinese mobile telecom industry is a large and profitable industry. There aremore than 955 million mobile subscribers in China. %n 455@ the total revenueof telecommunication industry is @55 billion 8$A , total revenue of $obilesector is 66@.: billion 8$A and revenue per subscriber is


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(+ang 455#)

o foreign!owned operators in Chinese mobile telecom industry.Chinese telecommunication is a national priority sector, wholly foreign!owned

operators are not allowed to invest in this industry in China but equipmentvendors are allowed to invest. lcatel!-ucent, Cisco, ortel and "iemens arethe main international network equipment providers. Foreign investors, from

" , "weden, Finland, France, 3apan, >orea, Canada, > and so on avoidthe banning regulation by form Doint venture with the local operators to accessinto this big market. (+ang 455#)

$obile number portability ($ =) does not e0ist in Chinese market.$obile number portability ($ =) is the ability that enables mobile telephoneusers to retain their mobile telephone numbers when changing operators.

$any countries are $ = countries for e0ample, " , "weden, 7enmark,?ermany, >orea, >, Turkey etc. Aut till now in the national wide, China doesnot have $ =, so if a subscriber wants to change from one operator toanother, he or she has to worry about a plenty of trouble after using a new cellphone number, like to inform every contact, miss a lot of phone calls and soon.

$aDority consumers buy handsets by themselves.Aefore '?, ?lobal "ystem for $obile Communications (?"$) and Code7ivision $ultiple ccess (C7$ ) are the two main network technologies. TheC7$ operators require proprietary handsets that are linked to one carrieronly. Aut for ?"$, "ubscriber %dentity $odule ("%$) card itself is tied to thenetwork of an operator, rather than an actual phone. "o operators, who useC7$ , always sell mobile service together with a handset while businessmodel of operators who use ?"$ is to sell "%$ card to their customers. ThemaDority subscribers in China were using ?"$, that is to say, operators onlysell "%$ card to their customers and their customers buy cell phoneseparately. "o the willing of switching cell phone would not be an issue thatmakes customers change operators as long as they are in ?"$ network.

Chinese mobile telecom market is different market which has a huge numberof subscribers and all the mobile operators are state!owned companies. -ikewe said before different countries have different factors affect their country&scustomer loyalty in the mobile telecom market. China as a large and differentcountry has different factors affect the customer loyalty.

./1/1 The situation of current Chinese mobile telecom industry/There are three mobile operators in Chinese mobile telecom industry* they areChina $obile, China nicom and China Telecom. These operators not onlysupply the basic mobile voice services but also value!added services such as

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data, %= telephone and multimedia.China $obile %t was published in 4555 and now, it is Chinese largestmobile operator which has about 6:5 million mobile users. China $obileonly operates ?"$ 4 network.

China nicom %t was published in ##6, and now it has '' million ?"$subscribers in Chinese mobile telecom market,

China Telecom %t is a new mobile telecom operator in Chinese marketwhich mainly focuses on fi0ed!line communication and %nternet before455@. %t has 4.@ million C7$ ' subscribers in Chinese mobile telecommarket which was bought from China nicom.

En 3an. < th 455#, Chinese government issued three '? issues to ' operators.

China $obile got T7!"C7$ 6 (Time 7ivision ! "ynchronous C7$ ), Chinanicom got +C7$ : (+ideband C7$ ), and China Telecom got

C7$ 4555 9 (C7$ $ulti!Carrier). Chinese telecom industry came into the'? era.

ll the three operators are government funded and are regulated by the$inistry of %nformation %ndustry ($%%), but being controlled by the samedepartment does not mean monopolistic . The competition between the threeis serious.

./1/2 The situation of China MobileChina $obile dominated the $obile telecom industry* it was officiallyestablished on pril 45th, 4555 and its registered capital is : .@ billion 8$A

2 ?"$ (?lobal "ystem for $obile communications) is the most popular standard formobile phones in the world. There is @5; of the global mobile market uses the standard.

3 C7$ (Code division multiple access) is a channel access method utili1ed by variousradio communication technologies

4 T7!"C7$ (Time 7ivision!"ynchronous Code 7ivision $ultiple ccess) is a channelaccess method that utili1es synchronous spread spectrum across multiple time slots . %twas 8 7 by Chinese government.

5 +!C7$ (+ideband Code 7ivision $ultiple ccess) is an air interface found in '?mobile telecommunications networks. +!C7$ is the higher speed transmission protocolused in the 3apanese FE$ system and in the $T" system, a third generation follow!on to the 4? ?"$ networks deployed worldwide. "7= ( igh!"peed 7ownlink =acket

ccess) is an evolution and improvement on +!C7$

9 C7$ 4555 is a hybrid 4.:? G'? technology of mobile telecommunications standards that use C7$ , a multiple access scheme for digital radio , to send voice, data, andsignalling data (such as a dialed telephone number) between mobile phones and cell

sites . C7$ 4555 08TT, C7$ 4555 HI!7E are approved radio interfaces ofC7$ 4555 standards. C7$ 4555 is considered a 4.:? technology in 08TT and a '? technology in HI7E.

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http://en.wikipedia.org/wiki/Ministry_of_Information_Industryhttp://en.wikipedia.org/wiki/Ministry_of_Information_Industryhttp://en.wikipedia.org/wiki/Monopolistichttp://en.wikipedia.org/wiki/Monopolistichttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Channel_access_methodhttp://en.wikipedia.org/wiki/Channel_access_methodhttp://en.wikipedia.org/wiki/Channel_access_methodhttp://en.wikipedia.org/wiki/S-CDMAhttp://en.wikipedia.org/wiki/Time_slothttp://en.wikipedia.org/wiki/Freedom_of_Mobile_Multimedia_Accesshttp://en.wikipedia.org/wiki/Universal_Mobile_Telecommunications_Systemhttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/2nd_generationhttp://en.wikipedia.org/wiki/Global_System_for_Mobile_Communicationshttp://en.wikipedia.org/wiki/2.5Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/Telecommunicationshttp://en.wikipedia.org/wiki/Standardizationhttp://en.wikipedia.org/wiki/CDMAhttp://en.wikipedia.org/wiki/CDMAhttp://en.wikipedia.org/wiki/Digital_radiohttp://en.wikipedia.org/wiki/Signalling_(telecommunication)http://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Cell_sitehttp://en.wikipedia.org/wiki/Cell_sitehttp://en.wikipedia.org/wiki/2.5Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Channel_access_methodhttp://en.wikipedia.org/wiki/Channel_access_methodhttp://en.wikipedia.org/wiki/Channel_access_methodhttp://en.wikipedia.org/wiki/S-CDMAhttp://en.wikipedia.org/wiki/Time_slothttp://en.wikipedia.org/wiki/Freedom_of_Mobile_Multimedia_Accesshttp://en.wikipedia.org/wiki/Universal_Mobile_Telecommunications_Systemhttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/2nd_generationhttp://en.wikipedia.org/wiki/Global_System_for_Mobile_Communicationshttp://en.wikipedia.org/wiki/2.5Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/Telecommunicationshttp://en.wikipedia.org/wiki/Standardizationhttp://en.wikipedia.org/wiki/CDMAhttp://en.wikipedia.org/wiki/Digital_radiohttp://en.wikipedia.org/wiki/Signalling_(telecommunication)http://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Cell_sitehttp://en.wikipedia.org/wiki/Cell_sitehttp://en.wikipedia.org/wiki/2.5Ghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/Ministry_of_Information_Industryhttp://en.wikipedia.org/wiki/Monopolistic


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yuan and assets of over @55 billion 8$A yuan. %t fully holds the equity ofChina $obile ( >) ?roup -imited. China $obile -imited, of which China$obile ( >) ?roup -imited is the maDor shareholder, set wholly!ownedsubsidiaries in ' provinces (autonomous regions and municipalities directly

under the central government) in China and went public in ong >ong andew 2ork "tock H0changes. Currently, in terms of its market value, China$obile -imited is the largest among all the overseas listed Chinesecompanies and among all the telecom carriers in sia.

China $obile operates not only basic mobile voice services but also value!added services such as data, %= telephone and multimedia. %t has the right tooperate %nternet services and the international gateways, reputed for itsbrands like ?ETEne, Hasy!own and $!Jone. Aut after the recombination, thesituation seems to be changed. China $obile is gradually losing his

advantages.

The advantages of China $obile are that it has the largest number ofsubscriber and is the most profitable mobile operators in China.

fter the recombination, China $obile has largest number of mobile users inChinese mobile telecom industry. ccording to the companies& performancedata on 455


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China $obile as the largest (the largest number of users) and most profitablymobile operator in Chinese mobile telecom industry will take a young and stillimmature '? technology in the telecom new era. ow to keep the customers

and get loyal customers are especially important for China $obile. "o wechoose China $obile as our study case.

./2 'esearch purposeThe purpose of this thesis is to find out what kinds of specific and concreteoperational factors have an important impact on Chinese mobile telecomcustomer loyalty.

./3 Limitation

./3/. 4initeness of inter5iewees

%n our study we only choose China $obile&s customers as our interviewees.Aecause we think firstly China Telecom only have 4.@ million subscriberswhich is much lesser than China nicom ( '' million) and China $obile (6:5million). "o its customers will not have a great impact on Chinese mobileindustry customers& loyalty. "econdly China $obile and China nicom havethe same customer groups, so there is no difference between them. Thirdly,we take China $obile as our study case, a survey of their performance from #perspectives which have important impact on customer loyalty has beenconducted. "o we decide to interviewing China $obile&s customers is mucheasier for our study. Aut it may have some difference among these threeoperators& subscribers. $ost of our interviewees are from young generation(less than ': years old)* their opinion is a little different with the elders (morethan ': years old subscribers).

./3/1 4initeness of sample s we said before, China has more than 955 million mobile users, it&s reallyneed a large sample to test which factors really have important impact oncustomer loyalty in mobile industry. 7ue to the limitation of time and energy,we only get ## valid answers which cannot really find out the influential factors

in Chinese mobile telecom industry.

./6 O5er5iew of the thesis%n chapter 4, we design a model to analy1e the antecedents of customerloyalty. This model is based on HC"% (Huropean Customer "atisfaction %nde0,

###). %n this paper, customer loyalty has been defined from two perspectives( ) re!purchasing the same brand products* (4) positive word of mouth.Customer satisfaction ( mine, ., ##@* Eliver, ###* Autcher et al., 455 * -i-iu, 455@), switching cost and corporate image have an important impact oncustomer loyalty.

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Customer loyalty has been studied both in the academic field and realbusiness world for years. To keep a long!term relation with their customers isone of the most important goals of many companies in the modern businessworld. The cost to keep e0isting customers is much cheaper than obtaining

new customers. 8osenberg and C1epiel indicated that e0pense of keeping ane0isting customer is the less than one si0th of winning a new customer.(8osenberg, -., C1epiel, 3. . #@6) Customer loyalty now is one of the keyfactors can help a company win long!term success ( ndres >uusik 455yner said Lcustomer loyalty is the behavioral outcome of acustomer&s preference for a particular brand from a selection of similarbrands, over a period of time, which, importantly is the result of an evaluativedecision!making processM. These researches are based on that there is notrue definition of customer loyalty. nd they think the data of repeat purchasecan be easier get. Aut does the customer who repurchasing the same brandproducts is a loyal customerO mine ( ##@) thinks the repurchasing under thetwo cases can&t be called loyalty purchasing ( ) consumers& repurchasingmay be due to the consumers& tendency to reduce or avoid search efforts.There is a high probability of interrupting this consistent buying and switchingto another brand at the first opportunity or inducement to do so (price

increasing, new brand launching or brand out of stock). This kind ofrepurchasing can be called inertia purchasing. (4) +hen there is a narrowchoice in a product category, the repeat purchasing improves too. Thisconsistent brand buying may e0press more inertia or constrained repeatedbehavior rather than loyalty with commitment to that brand.

Consumer commitment purchasing (behavior loyalty) of same brand doesn&tmean heGshe is a loyalty consumer.

Attitudinal loyalty+hat is the attitudinal loyaltyO 3acoby and Chestnut ( #


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customer predisposition towards a brand. %t&s a function of psychologicalprocesses. mine ( ##@) considers the commitment toward a brand is theattitudinal loyalty. Aaldinger and 8ubinson (455 ) also believe this kind ofcommitment is a dispositional commitment. %t in terms of some unique value

associated with the brand. +hile how to measure the attitudinal loyalty.Aandyopadhyay et al. (455


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origins.M The second factor is switch cost. "witching cost is related to theintention that customers willing to repurchase. "witching cost is positivelyrelated to customer loyalty and Fornell ( ##4) stated that switching cost haveimpact on the connection between customer loyalty and satisfaction. The third

one is the corporate image. Corporate image and customer satisfaction havemutual effect on each other. nd in turn they both have impact on customerloyalty

1/./2 7oes customer loyalty really wor08There are large numbers of theses research the function of customer loyalty.Aut does customer loyalty really workO 7owling and ncles, $. ( ##


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mobile telecom industry.

1/./3 -ew trend of the customer loyaltyThere are several levels of customers (Cary +. dams dams)

. 7issatisfied customer!!-ooking for someone else to provide product or service.4. "atisfied customer!!!Epen to the ne0t better opportunity.'. -oyal customer!!8eturns despite offers by the competition.

early two decades after loyalty theories radically changed the businessworld, the balance of power has shifted from companies to customer, now themarket is more customer! oriented market, and customer loyalty is becomingmore and more indispensable and important in the real market. ow morethan ever, organi1ations need to understand the mechanisms of customer

loyalty to profit from it. s such, 3ennifer >irkby (455@) provides a trip throughthe history of customer loyalty and shows how we can learn from pastmistakes and current thinking. -oyalty today is not what it wasR

-oyalty is more qualitative and subDective S it is a feeling of connection to, andbelief in, a company and its proposition, created by a Pfeel good& factor frominteractions. (3ennifer >irkby .455@) =roducts with after!sales service nolonger sufficed, the customers wanted better e0periences with suppliers andhad started to use the internet to advise each other on which companies touse three!quarters of consumers would recommend their favorites companyto others. "o the customer loyalty is different between industries. nd it alsohas been added more meaning right now by the development of thetechnology.

Five key loyalty!marketing trends are identified and e0plored in detail, whileyou think about the customer loyalty* you might to take the following fivefactors into your considerations. ($ichael T. Capi11i and 8ick Ferguson, 455:)!!! biquity* H0istence or apparent e0istence everywhere at the same time*omnipresence

!!!Technology enables but imagination wins. The ability to confront and dealwith reality by using the creative power of the mind* resourcefulness

!!!Coalition lite* n alliance of people, factions, parties, or nations. 4. combination into one body* a union.

!!!Customer analytics* 7ivision of a subDect into elemental parts or basicprinciples. 4. sing, or subDecting a subDect to a methodology involvingalgebra or other methods of mathematical analysis. '. =roving a known truthby reasoning from that which is to be proved.

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!!!the +owR Factor wowsed to e0pressing wonder, ama1ement, or great pleasure. This is the

outstanding success.

1/1 Customer satisfaction1/1/. The definition of customer satisfaction

s the key driver of customer loyalty, many researchers increased emphasison customer satisfaction. igh level of customer satisfaction may lead to moreloyal customers which means can bring more profit for enterprise. There aremany kinds of definition of customer satisfaction, but no precise definitionalready been development. 3ust like Eliver said the working of customer mindis like a black bo0. That is an observer can only see what goes in and whatcomes out but not what happened inside. "atisfaction may result from a very

simple or a comple0 process involving e0tensive cognitive, affective and otherundiscovered psychological and physiological dynamics (Eh =arks, ##


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satisfaction. "o here our theoretical framework treats customer satisfaction asoverall satisfaction.

1/1/1 The definition of percei5ed 9uality of products and ser5ice

From the end of last century, companies already reali1ed understanding andmeeting consumer&s need is very important for company. %t can helpcompanies get competitive advantages. "upplying high quality products andservice seems very important. Companies that have goods and services thatare perceived as being of high quality typically have greater market share,higher return on investment, and higher asset turnover than firms which havegoods and services perceived as being of low quality (>im et al., 4556).

For the definition of quality which we will use in our thesis referred toperceived quality. Aecause it was found that the obDective quality concepts are

not identical for managers, customers and researchers (Jeithaml #@@). +eneed a higher level abstract definition to describe the quality. 7efinition ofperceived quality seems suitable under the situation. Jeithaml ( #@@)describes perceived quality like this consumer&s Dudgment about thesuperiority or e0cellence of a product or service. The perceived quality hastwo primary components of consumption e0perience (Fornell ##9) (%)customi1ation, that is, the degree to which the firm/s offering is customi1ed tomeet heterogeneous customer needs, and (4) reliability, that is, the degree towhich the firm/s offering is reliable, standardi1ed, and free from deficiencies.E/-oughlin (4556) thinks that there are two general kind conceptions ofperceived quality product quality ((hardware) and service quality (softwareGhumanware). =erceived product quality is the evaluation of recentconsumption e0perience of products. =erceived service quality is theevaluation of recent consumption e0perience of associated services likecustomer service, conditions of product display, range of services andproducts etc.

1/1/2 The definition of percei5ed Customer 5alueThe market is driven by customers& demand. +ith the development of science

and technology, there is no great difference among the same categoryproducts. $any firms are transforming their focus from looking internally withinthe organi1ation for improvement byway of quality management, downsi1ing,business process reengineering or lean production and agile manufacturing tocustomers (+ang 2onggui, 4556). Customer value which has a significantimpact on behavior intentions of customer has been considered as asuccessful factor for firms.

-ike other definitions we meet before, there are many different e0pressions ofthe conceptions of perceived value. These definitions are very popular andalready are widely used by many researchers in their research papers

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Ialue is the consumer&s overall assessment of the utility of a product basedon perceptions of what is received and what is given. (Jeithaml #@@)

Auyers& perceptions of value represent a tradeoff between the quality orbenefits they perceive in the product relative to the sacrifice they perceive bypaying the price. ($onroe ##5)

Customer value is market perceived quality adDusted for the relative price ofyour product. (?ale ##6)

Customer value as a customer perceived preference for and evaluation ofthose product attributes, attribute performances, and consequences arisingfrom use that facilitate achieving the customer&s goals and purposes in use

situations. (+oodruff, ##ashyap AoDanic, 4555) %t implies at the same timethat when consumers are able to practically evaluate tradeoffs between priceand quality, perceived overall value may provide the best summary evaluationof the e0perience (>ashyap, 4555). ll the value is based on customerperspective. %n the thesis, we define the customer value as Lthe perceivedlevel of product quality relative to the price paidM (Fornell, ##9).

1/1/3 The relationship amon# percei5ed uality! percei5ed 5alue and customersatisfaction! customer loyalty$any previous studies measure customer satisfaction, perceived quality andcustomer value in a single item, but we think the single item study will lead tomany shortcomings. Aecause all survey variables are believed to bemeasured with certain degree of errors (Fornell et al., ##9), single!itemscales cannot assess or average out the variance due to random errors,

specific items, and method factors (2i, ##5). %n contrast, some studiesemploying multi!item scales to measure perceived quality and consumersatisfaction show that multi!item scales are significantly more reliable than thesingle!item scales (+ang 2onggui, 4556). %n the thesis we treat customersatisfaction, perceived quality and customer value as a whole. s C"%,"C"A informed, the relationship among perceived quality, perceived valueand customer satisfaction, customer loyalty can be concluded like that ( )perceived quality and perceived value have a direct and positive effect oncustomer satisfaction* (4) perceived quality has a positive associationbetween perceived value increases and customer satisfaction. (') perceivedquality and value don&t have a significant effect on customer loyalty.

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1/2 Switchin# cost1/2/. 7efinition and typolo#y"witching cost is defined as the cost involved in changing from one serviceprovider to another (=orter, #@5). e also argued that there are three typesof switching cost ( ) procedural switching costs, primarily involving the loss oftime and effort* (4) financial switching costs, involving the loss of financiallyquantifiable resources* and (') relational switching costs, involvingpsychological or emotional discomfort due to the loss of identity and thebreaking of bonds. Though his research, he proved that all the three types ofswitching cost have influence on consumers& intentions to stay with theircurrent service provider, e0plaining more variance than satisfaction.

3ones, .$others Aaugh, and Aeatty (4554) argued that switching cost isfinancial and psychological risk when a customer changes a provider. Theysupposed si0 dimensions of switching cost ( ) lost performance costs* (4)uncertainty costs* (') pre!switching search and evaluation costs* (6) post!switching behavioral and cognitive costs* (:) setup costs* and (9) sunk costs.-ost performance costs are perceptions of the benefits and privileges lost by

switching. ncertainty costs are perceptions of the likelihood of lowerperformance when switching. =re!switching search and evaluation costs areperceptions of the time and effort of gathering and evaluating information priorto switching. =ost!switching behavioral and cognitive costs are perceptions ofthe time and effort of learning a new service routine subsequent to switching."etup costs are perceptions of the time, effort, and e0pense of relaying needsand information to provider subsequent to switching. "unk costs areperceptions of investments and costs already incurred in establishing andmaintaining relationship. Ay two studies, they proved that every one of the si0dimensions is associated with repurchase intentions and indicates that lostperformance costs and sunk costs are more strongly associated with

Perceived productquality

Perceived servicequality

Perceivedcustomer value

ustomersatis!actio"

ustomerloyalty

4i#ure . The relationship amon# uality! 5alue! satisfaction and loyalty

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repurchase intentions than others. (3ones, .$others Aaugh, Aeatty, 4554)

Aurnham, Frels and $ahaDan (455') defined switching costs as the onetimecosts that customers associate with the process of switching from one

provider to another. They provided eight dimensions of switching costeconomic risk costs, evaluation costs, learning costs, set!up costs, benefitloss costs, monetary loss costs, personal relationship loss costs, and brandrelationship loss costs and then summari1ed these eight dimensions intothree types procedural, financial, and relational switching costs. =roceduralswitching costs consisting of economic risk, evaluation, learning, and setupcosts, this type of switching cost primarily involves the e0penditure of time andeffort. Financial switching costs Consisting of benefits loss and financial!losscosts, this type of switching cost involves the loss of financially quantifiableresources. 8elational switching costs: consisting of personal relationship loss

and brand relationship loss costs, this type of switching cost involvespsychological or emotional discomfort due to the loss of identity and thebreaking of bonds. Ay their studies, they stated that all the three switchingcost types appear to drive consumers& intentions to stay with their currentprovider.

1/2/1 Switchin# cost and customer loyalty ccording to the previous studies, we can come to the conclusion thatswitching cost is the cost occurring when change product or service providers.

o matter how switching cost was classified, in general business world it isrelated to the intention that customers& willing to repurchase. +hen we onlystudy the relationship of switching cost and customers& repurchase intention,these two shows a positive correlation* the higher the switching cost, thehigher the customers& repurchase intention is. s we stated that repurchaseintention is one aspect of attitudinal loyalty, which is one type of customerloyalty so switching cost has a positive correlation with customer loyalty in thegeneral business world. "witching cost also has influence on the relationshipbetween customer satisfaction and customer loyalty. The level of switchingcosts moderates the link between satisfaction and loyalty (3onathan et al.,

455 ) Fornell ( ##4) suggested that switching cost has impact on theconnection between customer loyalty and satisfaction. 3ones and assernoted that the false loyalty increase when switching cost is high.

1/3 Corporate ima#e1/3/. The definition of corporate ima#e$ac%nnis and =rice ( #@otler, ## ). %t is defined as perceptions of an organi1ation

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reflected in the associations held in consumer memory by >eller (>eller, ##')as well. guyen and -eAlanc, ( ##@) defined corporate image as subDectiveknowledge, as an attitude, and as a combination of product characteristicsthat are different from the physical product but are nevertheless identified with

the product.Corporate image is the result of a process ($ac%nnis and =rice, #@andampully also claimed that corporate image is influenced both by servicequality and customer satisfaction, which in turn influences customer loyalty(3ay >andampully, 455


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Source: a study by Cassel, C., Eklof (2001 cited ECSI)4i#ure 1 European customer satisfaction inde (1!!!)

. %n our thesis, we don&t add the factor Le0pectationsM in our model. %n fact,e0pectations have an important role in the definition of customersatisfaction and perceived service quality. +e do not consider the factorLe0pectationsM is based on following reasons( ) s we mentioned before, some researchers define the customer

satisfaction as the difference between the customers& perceived qualitywith e0pectations. There are also some researchers define the servicequality as Lthe outcome of an evaluation process where the consumercompares his e0pectations with the service he perceivedM. That refers

to the difference between e0pected service and perceived service(=arasuraman, #@@* Eh, ., ###* 2uksel , 455 *+ang,2onggui,4556* eltschy, 455


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it&s still easy be confused.(4) Aased on the LgapM definition of service quality, =arasuraman ( #@@)

developed a "H8I - model to measure service quality. This modelincludes : dimensions tangibles (physical facilities and the

appearance of personnel), reliability (ability to perform the promisedservice dependably and accurately), responsiveness (willingness tohelp customers and provide prompt service), assurance (employeeknowledge base which induces customer trust and confidence) andempathy (caring and individuali1ed attention provided to customers bythe service providers). The adaptability of dimensions of "H8I -makes it is widely used in many industries (banking, health care etc.).

owever, there are some researchers (Teas et al., ##4* Arady et al.,4554) who have raised concerns as to its validity, as well as definitionalconcerns related to the construct of e0pectations ( eltschy, 455


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but also has influence on the relationship between customer satisfaction andcustomer loyalty. Corporate image and customer satisfaction have mutualimpact on each other.

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Chapter 2 The Hypotheses of Customer Loyalty

2/. Hypothesis of customer percei5ed uality ccording to hn&s (4559) research that in >orea, call drop rate (percentage

of abnormally terminated calls) has a significant impact on the probability ofchurn* however, the call failure rate (the percentage of calls that are notinitiated due to interference or poor coverage) does not. +hile ?erpott (455 )considers the network quality, which is reflected in e0cellent indoor andoutdoor coverage and in the clarity of voice reproduction without anyconnection break!downs, is one of the key drivers of customer satisfaction in?ermany market. -ee (455 ) thinks the quality of core services (coverage ofthe calling area and clarity of sound) is very important on customersatisfaction in France telecom market. There is no relative or similar researchin Chinese Telecom %ndustry, but we think Chinese telecom market is similar

with others. That is the coverage of the area and call quality (clarity of voice)are key drivers of customer satisfaction. Customer satisfaction has a strongrelationship with customer loyalty which already been proved, so do coverageof the area and call quality (clarity of voice) have big importance on customerloyaltyO Thus we make the hypothesis as followsHypothesis 1: call quality has a big importance on customer loyalty.Hypothesis 2: coverage of the area has a big importance on customerloyalty.

"$" play a great important role in Chinese daily life. %t was reported on -os ngeles Times on Ect. ' , 455< that China has 6:: million mobile users, theysend '5 billon "$" every month. +hile @4; merican mobile users neveruse "$", '; users use once every month and :; users send "$" everyone week or more. Comparing with other countries, Chinese prefer to send"$" to communicate and e0press their wishes to their friends and families.The reasons may be have a closely relation with Chinese character and "$"character.

Chinese like use an e0plicit way to communicate with others. mericans or

other Huropeans like to e0press their feeling directly, while Chinese choose ane0plicit way to e0press. For e0ample, Chinese seldom say L% love youM to theirparents, children and lovers. % never say L% love you, 7ad G$umM until now..That doesn&t mean % don&t love my parents, % Dust never e0press it directly. "omore people choose send "$" to e0press their love to others, especially foryoung boys and girls. sually, we will receive G send a lot of "$" during thefestival to get G e0press wishes. The second reason is that te0t has a uniquecharm it can e0press something that the language cannot e0press. The thirdreason is that young people are the main groups of "$". They like send "$"not only because it&s cheaper than the call, but also because they can send itevery time in any places. For e0ample, many students like to send "$" on

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the classes.

Aut usually one "$" only contain


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hours service) and wherever you like. The call is free. (4) %t can handlecomplain. %n our pre!description, we know the importance of loyalty customersfor the firms. %ts central role in maintaining customer loyalty clearly positionscomplaint handling as an important strategic tool for enterprises. Complaints

represent an opportunity to remedy product or service related problems and topositively influence subsequent customer behavior. 7ealing effectively withcomplaints can have a dramatic impact on customers/ evaluations of thee0periences for the encounter service as well as enhance their likelihood ofrepurchase and limit the spread of damaging negative word!of mouth(Alodgett, ##


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perceived quality and perceived price. Comparing quality with price canbalance the difference in income among people. n e0ample can make itclear. bout ten years ago, there were only two mobile operators in Chinesetelecom market China $obile and China nicom. (The situation was broken

from last year.) t that time, China nicom is a small and young company,poor coverage area of network, instability signal and some other e0trinsicreasons making China nicom lose large number of users even through theirprice is lower than China $obile. Hven students who are most sensitive toprice prefer use high price but good quality products and service. Through the

5 years development, their products and service category are similar andthere is no great difference in the quality of their products and service. Theonly difference between them is the monetary price and nonmonetary price."o we hypothesis thatHypothesis &: rating price of given quality has a big importance on customer

loyalty.

2/2 Hypothesis of switchin# cost%n terms of mobile telecommunication, switching cost play an important role inthe customer loyalty. %n telecommunication industry, once customers havebeen acquired and connected to a certain network of an operator, their long!term relations with the operator are more important to the company&s successthan some other industry sectors (?erpott et al. 455 ). %n the mobiletelecommunication sector, procedural switching costs can be embodied astime and effort paying on evaluating alternative operators, getting used to newservice system and informing the contacts the new number (if there is nomobile number portability). Financial switching costs can be embodied as costof new "%$ card, financial loss on bonus and score accumulation, loss onprepayment. 8elational switching costs can be embodied as emotionaldiscomfort when facing to the inconvenience, and loss of former relationshipwith staff and so on. 3ones and "asser ( ##:) noted that when the falseloyalty increase, switching cost is high. They suggest that when the switchingcost is low, there are few false loyalties and satisfaction can easily keepcustomers stay and dissatisfy customers can easily make the decision of

changing a provider. En the contrary, when customers facing to high switchingcost, customer satisfaction&s influence are weaker* even if customersdissatisfy with the products or service, they may still stay.

"erkan , ?okhan , and Emer (455:) stated that switching cost factor directlyaffects loyalty, and has a moderator effect on both customer satisfaction andtrust. Therefore, it plays a crucial role in winning customer loyalty. Thisconclusion is based on the research on the Turkey&s mobile telecom market.

%n addition to obDectively measurable monetary costs, switching costs mayalso pertain to time and psychological effort involved in facing the uncertainty

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of dealing with a new service provider.

>im et al. (4556) argued that factors creating switching costs positively affectcustomer satisfaction this conclusion is based on a survey in the >orea mobile

telecommunication market. The authors embodied switching cost into subfactors. ( ) -oss cost the perception of loss in social status or performance,when cancelling a service contract with an e0isting carrier. (4) daptationcost the perceived cost of adaptation, such as search cost and learning cost.(')$ove!in cost the economic cost involved in switching to a new carrier,such as the purchase of a new device and the subscriber fee. They alsostated that losses involved in removing special customer status or customerbenefit programs, and move!in costs such as changing numbers, could be animportant switching barrier for customers changing to other service providers.

3ia and 2an tested what factors drive customer loyalty in thetelecommunication sector in China by qualitative interview and questionnairesurvey, and their finding is that customer loyalty is driven by customersatisfaction, trust relationship and switching cost synthetically. "witching costhas a stronger influence on customer loyalty than do customer satisfactionand relationship trust in the low stake holding condition. +hich means whencustomers perceive low interests correlated with themselves of the servicefrom a certain provider, switching cost plays a more important role in obtainingcustomer loyalty. nother similar research was made in China by 2onggui+ang et al. They selected randomly '55 mobile telecommunication customersin two cities, TianDin and ohhot, to make questionnaire which focus on whatfactors can impact customer loyalty in the mobile telecom market. Theirfinding is that switching cost plays a moderating role in impacting process ofcustomer loyalty (2onggui et al., 455:).

3onathan et al.(455 ) suggested that, in mobile telecommunication sector,switching cost plays a significant moderating role in the satisfaction!loyalty linkonly for the economy and standard groups in which customers considerquality of core service very much when they choosing operators. They also

suggested that firms should provide consumption!based incentives such asfree hours, added value, services, and lower, weekend pricing, a new handsetwith discounted price, and free value!added services for heavy users.

These researchers suggested that switching cost is an important factor thatcan affect customer loyalty in the mobile telecommunication sector.8esearchers either test the general switching cost or divide switching cost intomutable types and test type by type. Aut the types are only stay in theacademic level, for e0ample, financial switching cost, relational switching etc.

early none of them give us a conclusion that in empirical, or to say, in thereal mobile telecommunication industry, what embodied form of switching cost

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have important influence on the customer loyalty. "ome of the researchersuse questionnaires in their studies* they choose questions related to scoreaccumulation and bonus frequently so we propose a hypothesis thatHypothesis ': Score accumulation an$ bonus have big importance on

customer loyalty in the mobile telecommunication sector.

$obile number portability gives subscribers right to keep their phone numberwhen they change service providers. The main purpose of number portabilityadoption is to minimi1e the subscriber inconveniences associated withswitching providers and to lower switching costs. (-ee et al. 4559) owever, inChina number portability was not introduced to the mobile telecommunication,that is to say, when customers change to another operator, they are notallowed to retain their cell phone numbers. This bring big inconvenience afterswitch to another operator because the customers have to inform all their

contacts the new number and people would still call the old number at thebeginning weeks, thus the customers may miss some phone calls whichmaybe vital. +e propose another hypothesisHypothesis (: customer)s !orry of troubles after change cell phone numberhas big importance on customer loyalty in the mobile telecommunicationsector.

2/3 Hypothesis of corporate ima#e%n the sector of $obile telecommunication, researchers also studied theimpact of corporate image. ccording to a survey, which okia took ',#55interviewees, corporate image with network quality, and switching barrierstogether are the factors that can keep current customers stay in the operator.?roholdt et al. (4555) stated that corporate image is an important driver ofcustomer satisfaction and loyalty in the industries of soft drinks, banking andtelecommunications. -i -iu claimed that corporate image has a significantimpression on services quality, customer value, customer satisfaction andcustomer loyalty ( -iu, 455@). This conclusion is based on a study of Chinesetelecommunication marketing. Auilding up image is one of the important tasksto retain customers, and this is according to a study of the Taiwan

telecommunication sector. ( Chen , 4559)

guyen and -eblanc (455 ) stated that corporate image is related to thephysical and behavioral attributes of the firm, such as business name,architecture, variety of productsGservices, and to the impression of qualitycommunicated by each person interacting with the firm&s clients. H0ceptcustomer&s e0perience, corporate image can be built by publicity andadvertisements. Company can use these methods foster a good and healthycompany image for them. ndreasen and 7rumwright argued that socialresponsibility plays an important role in increasing corporate image.( ndreasen and 7rumwright, 455 ) Corporate social responsibility is defined

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as company&s status and activities regarding its responsiveness to itsperceived societal obligations (Arown and 7acin, ##


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4i#ure 3 The model of research hypotheses

Aased on our model, we embody every factor into several concrete formsespecially for mobile telecom sector in China and select eleven of them to testif these sub!factors really have connection with customer loyalty and which ofthem are more important in the mobile sector. Coverage of the area, callquality, "$" quality, and network quality are concrete forms for perceivedproduct quality* convenient and reliable inquiring balance system and theservice quality of service center and hotline are for perceived service quality,rating price of given quality is for perceived customer value* scoreaccumulation and bonus and worry of troubles after change cell phonenumber are for switching cost* last but not least, advertisements of corporateimage and corporate social responsibility are for corporate image. +esuppose that these eleven concrete forms of factors have important influenceon customer loyalty in China mobile communication industry.

ustomerloyalty

' itc)i"$cost

8 9

ustomersatis!actio"

Perceivedproductquality

Perceivedcustomer

value

Perceivedservicequality

4 ' 4 5 6 7

orporateima$e

10 11

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Chapter 3 'esearch 9uestion and Methodolo#y

3/. 'esearch purpose and research uestionThe purpose of this paper is to find out what kind of specific and concrete

operational factors have an important impact on Chinese mobile telecomcustomer loyalty. nd we choose China $obile as our study case in the paper.The research questions of this paper are that

+hich factors ( hypotheses) have an important impact on customerloyalty in Chinese telecom industryO

ow does China $obile performance on these aspectsOow to map out the better way to help China $obile to enhance

customer loyalty in the '? eraO

3/1/ 'esearch Methodolo#y3/1/. 7efinition and measurement of research hypotheses%n order to solve the main research question in our paper step by step. First ofall, the initial approach of this paper is to figure out how many factors reallyaffect the customer loyalty. Through large amount of literature review, we thinkcustomer satisfaction, corporate image, switch cost are the main antecedentsof customer loyalty.

"econd, how do these influencing factors impact on the customer loyalty inChinese mobile telecommunication marketO +e compare Chinese mobilemarket with other countries and find the factors (customer satisfaction,switching cost, and corporate image) will impact customer loyalty from thefollowing aspects. %n order to better dress out how those three main aspectsfunction and affect the customer loyalty in Chinese telecommunication marketby the more specific and concrete operational definitions, we called thoseoperational definitions as research hypotheses in this paper. +e have madereference on many previous studies of customer loyalty and mobiletelecommunication industry, base on them we came up with researchhypotheses to describe these sub!factors within the three areas.

+e consider switching cost from two aspects .M"core accumulation andbonusM ( @) which already been discussed by other scholars. %f thecustomer is in a score accumulation and bonus plan, they will have somepotential losses when they change the mobile operators. "o, scoreaccumulation and bonus plan can help to decrease the customers&willingness to switch to other operators. A. Lcustomer&s worry of troublesafter change cell phone numberM ( #) which only e0ists in Chinese market.%f you want to change the mobile operator you need change your cellphone number. %f you change the number, you usually face a risk that youwill lose some contacts. For the business man G woman, it will be a seriousproblem. "o customer&s worry of troubles after change cell phone number

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will reduce the willingness to change the operator.

Customer satisfaction, perceived quality (products and service), customervalue will be study as an entirety in our thesis. Aased on our preliminary

pilot study and literature review, perceived quality and perceived customervalue have a direct and positive effect on customer satisfaction* perceivedquality has a positive association between perceived value increases andcustomer satisfaction. =erceived quality and perceived value will beevaluated from < aspects call quality( ), coverage of the area ( 4), "$"quality ( '), network quality ( 6), convenient and reliable inquiringbalance system ( :), the service quality of service center and hotline ( 9)and rating price of given quality (


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social responsibility ( )

Table .3/1/1 7ata collection%n this paper we use questionnaires to get the first!hand data. The mainreason we do that is because our theory model is a new model and somefactors which we study in this thesis are not be researched by pre!researchers. +e cannot get the second!hand data to analysis.

The questionnaire was conducted with the totally numbers of 4< (4K 4K ')questions according with our research purpose. Eur questionnaire is separateinto ' parts

( ) The first part is the background information of interviewers. %t consists by

two questions. Ene is the gender female or male* the other is how manyyears have he Gshe been the customer of China $obile. The descriptorsranged from Lless than one yearM, L !4 yearsM, L4!' yearsM, and L'!6 yearM,L6!: yearsM to Lmore than : yearsM.

(4) The second part is testing which factors have an important impact oncustomer loyalty in the Chinese telecom industry while which factors haveno important impact on loyalty. These factors were considered from 'parts customer satisfaction (perceived quality, customer value), switchingcost and corporate image. t the beginning we hypothesi1ed these factors have an important impact on customer loyalty. ow, we use questions (one hypothesis one question) to test that does each factorreally has an important impact on loyalty (see table ). The questionsbased on a four!point scale. The descriptors ranged from Lvery importantM,LimportantM and Lit does not matterM to Lnot importantM.

(') The third part is to see the performance of China mobile on these aspects. This part aims to find out which part (factor) China $obileperformance well which part is not good and need to be improving in the

future. These questions based on a five!point scale. The descriptorsranged from L"atisfy very muchM, L"atisfyM and L%n betweenM, andL nsatisfiedM to L nsatisfied very muchM.

%n our study we only choose China $obile&s customers as our interviewers.The main reason is that

( ) China Telecom only has 4.@ million subscribers which are much lesserthan China nicom and China $obile. "o its customers will not have agreat impact on Chinese mobile industry customers& loyalty.

(2* China $obile and China nicom have the same customer groups, so

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there is no difference between them. China $obile has 6 brands like?oTone, Hasy!own, $!Jone and A to A. +hile China nicom also has 6brands !=ower, 8uyi Tong, "hiDie Feng, C Connected. They havedifferent name of the package plan, but their aim the same group

customers, for e0ample?oTone !!! "hiDie Feng this mouthy package plan for businessman Gwoman. The customers can enDoy international roaming, receive emailsand voice mail, browse the %nternet and connect to a mobile secretary.They can even do their banking over the phone with ?oTone ("hiDieFeng).$!Jone !!! !=ower %t is a package plan for young guys. if customershave the monthly package plan they can save a load of cash forcustomers.Hasyown !!! 8uyi Tong its main customers are usual citi1en. %t&s cheap

to call.A4A !!! C Connected %t is suitable for enterprises. %t is very cheap forgroup calls.

(') Thirdly, we take China $obile as our study case, and survey theirperformance on these # perspectives which have important impact oncustomer loyalty. "o interviewing China $obile&s customers is mucheasier for our study.

3/1/2 'eliability 5alidity+e had 5 handouts of the questionnaire, ## were effective questionnairesand only 4 e0cluded.

3/1/2/. 'eliability 8eliability is the consistency of a measurement. Eur questionnaires had beentested inside a small range of company at the early phase, base on thefeedback both from the customers and e0perts. +e re!organi1ed it time bytime* the forth!version was used as our final version of questionnaire whichwas easily to be understood and answered* to make sure all the interviewees

can understand our question without any problems. +e also use Lrepurchaseand willing of recommending the operator to othersM instead of LcustomerloyaltyM, to make sure that all the interviewees can know what the questionsabout, no matter if they understand the phrase Lcustomer loyaltyM or not. +emade a notice that only customers of China $obile should keep taking thequestionnaire in the beginning to make sure that all the interviewees aremobile users and their operator is China $obile.

Eur questionnaire was conducted in the online website called skform,http GGwww.askform.cn, which is a professional statistics company. skformhelp us hand out our questionnaire by $" , E%C , Hmails and so on, and by

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clicking the link everyone can start to take the questionnaire, but if theinterviewees want to submit their answers, they have to make sure that everyanswer meets the requirements. skform helped us to reduce the probabilityof calculation errors. +e do not need to spent time to count how many people

chose the answer , or answer A, for instance. "o, this tool really helped us tomake sure our measure was consistent and reliable.

3/1/2/1 (alidityIalidity means we measure what we suppose to measure.

Internal validity+e did a lot literature review, built a model and then came to our hypotheses,so the sub!factors have to do with customer loyalty at least from formerresearchers& opinions. +e consulted a marketing manager who is working for

China $obile about the factors, and his opinion is that all of them havesome connection with customer loyalty for his company on some level. +etest every hypothesis by a question in the questionnaire to make sure all the

hypotheses can be measured.

External validityThis is an online questionnaire, so all the interviewees are internet users. ndbecause our sample is small, we can not say that we can generali1e ourmeasurement to all the customers of China $obile. Aut our interviewees werefrom both northern and southern part, both eastern and western part of China,both urban and rural China* female and male took nearly half and half, andthey are customers with using e0perience from less than years to more than :years. "o we can say that our measurement is valid enough to indicate thegeneral opinions of China $obile&s customers.

+e can come to the conclusion that our measurement both internal ande0ternal is valid.

3/1/3 Process of data analysis

%n order to analy1e all the data which we collected, we mainly use "="" 9.5for basic statistical analysis, factor analysis, reliability analysis, crosstabanalysis and so on, combining with H0cel to find out the relationship betweenthe customer loyalty and our data. Three steps guided us approach ourresearch.

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4i#ure 6

!!! st step Ay doing the data analysis we e0am and sort the influencinghypotheses. +e used the analysis functions of "="", to firstly verify whether

all research factors are really influencing the customer loyalty of mobiletelecommunication industry or not.

!!4 nd step %n this step, we analy1ed China $obile&s performance on customerloyalty in line with the valid influencing factors which indicated at the first step.

!!' rd step Aased on the first two steps, we classify the factors into groups thatChina $obile should treat them by different ways and different attention.

3/1/6 +naly;in# method discussion8eason of using mean as measurement

st step H0am and sort theinfluencing hypotheses

4 nd step nalysis China $obile&sperformance on customer loyaltywithin those accepted influencingfactors

' rd step Classify the factors to beprepared for recommendations

)i"a telecommu"icatio"i"dustry

)i"a +o ile

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%n our questionnaire, we ask our interviewees do you think this following factorhas important impact on customer loyalty for the factor one by one. +e use6 to represent very important* ' to represent important* 4 to represent it doesnot matter* and to represent not important. The designing of our

questionnaire decide the statistical method we should use. +e calculate themean of the outcome of every question from the ## interviews. These meansrepresent the average attitude of the interviewees to this factor.

=-"!"H$ approach (=artial -east "quares ! structural equation model)$ost of paper (HC"%, C"%, 2onggui, +., 4556, etc.) use =-"!"H$ approachestimating the customer satisfaction and customer loyalty. The advocates of=-"!"H$ are various (E/-oughlin C. Coenders, ?. 4556)

=-"!"H$ is best suited for predictive purposes.=-"!"H$ uses non!parametric inference methods (such as

Dackknifing) and is free of these assumptions.=-"!"H$ performs well in these modeling situations, which havebeen referred to as soft modeling.=-" can estimate "H$ where indicators affect or are affected bythe latent variables.

=-"!"H$ is a widely used method to measure customer loyalty* it&s also acomple0 and has a certain degree of difficulty.

%n our thesis we need to find out which factors ( factors) have an importantimpact on customer loyalty. The aim of this thesis is Dust try to indicate somerelationship between the factors and customer loyalty (not to prove therelationship). +e Dust need to use some simple and easy way to calculate thedata. "o it is no need to use =-"!"H$ to measure the customer loyalty.Firstly, we assume Lvery important B 6M, Limportant B'M, Lit doesn&t matter B 4M,Lnot important B M. +e will use "="" to calculate the inde0 of mean, median,mode std. deviation, range, minimum and ma0imum of the given numbers. %fthe mean is no less than ' we accept the factor if the mean is less than ' wereDect the actor. En the second step we analysis the relationships amongusing e0periences and gender with hypotheses. The third step we Dust to

calculate the percentage of the answers (L"atisfy very muchM, L"atisfyM, L%nbetweenM, L nsatisfiedM and L nsatisfied very muchM).

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Chapter 6 7ata analysis

6/. 4indin#s+e assume Lvery important B 6M, Limportant B'M, Lit doesn&t matter B 4M, Lnotimportant B M. +e use "="" to calculate the inde0 of mean, median, modestd. deviation, range, minimum and ma0imum of the given numbers. Table 4shows all the inde0es.

Mean

+e use mean to evaluate the importance of every factors and then decidewhether the homologous hypothesis should be accepted or not. +e set 6 to

represent very important and to represent not important. "o if the mean is

ypothesi1es $ean $edian $ode "td.

7eviation8ange $inimum $a0i

mum

'.9


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close to 6 it means most of interviewees think the factor plays an importantrole in deciding to repurchase the same product or recommend it to othersand the homologous hypothesis can be accepted* while if the mean is close to

, it means most of interviewees think the factor does not play an important

role in deciding to repurchase the same product or recommend it to othersand the homologous hypothesis can be considered to be reDected. %n ourpaper, we set important B', very important B 6* so we accept the hypothesiswhose mean is more than or equal to ', we reDect the hypothesis whose meanis less than '. Form table 4, we can find out most of our hypothesis&s meanscan reach the standard (equal or more than '), e0cept 6 ( etwork quality),

@ (Troubles after change phone number). That means Lnetwork qualityM andLscore accumulation and bonusM don&t have big importance on customerloyalty in the mobile telecommunication sector. From the remaining #hypothesis we can find that the means of (call quality), 4 (coverage of the

area), < (rating price of given quality), ' ("$" quality), and 9 (the servicequality of service center and hotline) are greater than '.6. "o the homologousfactors of these five hypothesi1es are in the first level which has the mostimportant influence on customer loyalty in Chinese mobile telecom industry.$eans of # (customer&s worry of troubles after change cell phone number),

: (inquiring phone fee system), 5 (advertisements of corporate image),and (corporate social responsibility) are between ' and '.6. Thehomologous factors of these four hypothesi1es are in the second level whichhas secondary importance on customer loyalty in Chinese mobile telecomindustry.

Hypothesizes ccepted -evel Call quality

4 Coverage of the area

< 8ating price of given quality

' "$" quality

9 The service quality of service center and hotline

-evel4 # Troubles after change cell phone number

: %nquiring phone fee system

5 dvertisements of corporate image

Corporate social responsibility

8eDected @ "core accumulation and bonus

6 etwork quality

Table 2

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Median$edian is the average of the central pair and is calculated by arranging all theobservations from lowest to highest and then picking the middle one orcalculating the average of the central pair. $edians of Call quality, 4

Coverage of the area, ' "$" quality, 9 The service quality of servicecenter and hotline, < 8ating price of given quality, # Troubles after changecell phone number, are 6, which means the second half of the 9 series of theobservations are all 6. $ore than :5; of the interviewees think these 9factors are very important.

Mode$ode is the value that occurs most frequently. The $ode of Call quality, 4Coverage of the area, ' "$" quality, : %nquiring phone fee system, 9The service quality of service center and hotline, < 8ating price of given

quality, # Troubles after change cell phone number, 5 advertisements ofcorporate image, are 6. This means the maDority opinion of the importance ofthese factors on customer loyalty is very important.

Std. eviation"td. deviation is a measure of the dispersion of values. low "td. deviationmeans the data points tend to be very close to the mean , and high "td.deviation indicates the data are Lspread outM over a large range of values. llthe "td. deviations of the hypothesi1e are less than , which means thedata in every series are very close to their means. 7ata of Call quality, areclosest to their mean 6 with a "td. deviation of 5.:' 4' and 6 etworkquality& s data are dispersed most among the with a "td. deviation of5.# 4.

!an"e Minimum Maximum8ange is calculated by subtracting minimum value from ma0imum value of thegiven data. %t represents the length of the observation. From the table we canfind out those hypotheses whose range equals 4 all have a "td. deviation lessthan 5.


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What are the most i mportant factors do you thi nk for yourl oyal ty

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"1 "2 "! "4 "5 "6 "7 "8 "9 "1 "11

Chart .

From this chart, the top five factors are homologous factors of , 4, ', 9,and


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6/ 1 %sin# e


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'# 5

# 5

1

1# 5

2

2# 5

!

!# 5

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"1 "2 "! "4 "5 "6 "7 "8 "9 "1 "11

%al e

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&i fference

Chart 2

+e have already stated that there is nearly no correlation between data ofgender and hypothesis, which means female and male interviewees havesimilar opinions on the hypothesis. +e can prove this conclusion by table 9

and chart ' too. They show that there is no obvious difference between thetwo groups& opinions. The greatest difference e0ists in 5 dvertisements ofcorporate image and is only 5.'@.

6/2 7iscussion about the case

%n terms of our case, China $obile, we tested how it performed on the factors. nd based on our findings and the performance, we give someadvises for China $obile to increase its customer loyalty.

6/2/. Performance of China Mobile

) $ale Female 7ifference

'.9@ '.9< 5.54 '.:@ '.9' !5.5:' '.66 '.'< 5.5eep its good performance on quality of phone call, coverage, quality of"$" and pay attention on these three areas because they are in the firstlevel, which means they have great importance on customer loyalty(4) %mprove its performance on customer service, advertisements aboutcorporate image, inquiring phone fee system and corporate socialresponsibility and pay more attention on customer service, because it is in thefirst level.(') %mprove its performance on rating price of given quality significantly andpay great attention on this factor.

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Chapter ? Conclusion and 4urther research

?/. ConclusionThe purpose of this study was to investigate what factors have an importantinfluence on customer loyalty in the Chinese mobile telecommunicationservice sector. +e chose China $obile as the case to study the situation ofthe mobile telecom industry. Aased on the previous researches on customerloyalty, we represented an investigative model of customer loyalty andselected sub factors only from mobile telecom service sector to study theirimportance on customer loyalty. +e also investigated how China $obilepreformed on the factors, and then gave some recommendation to China$obile to increase its customer loyalty.

Firstly, there is the conclusion researched on hypothesi1es. ccording to ourstudy, call quality, coverage of the area, rating price of given quality, "$"

quality, service quality of service center and hotline, troubles after change cellphone number, inquiring phone fee system, advertisements of corporateimage, and corporate social responsibility have important influence oncustomer loyalty in Chinese mobile telecom sector. mong them, call quality,coverage of the area, rating price of given quality, "$" quality, service qualityof service center and hotline constitute the first level, which have a greaterinfluence on customer loyalty than the second level which includes troublesafter change cell phone number, inquiring phone fee system, advertisementsof corporate image, and corporate social responsibility and has secondaryeffect on customer loyalty. +e also find out that gender has low impact onhypothesis but using years has a higher impact on them. Customers, who

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efficiency play an important role in the service quality of China $obileot only be sponsor of recreational and sports activities but be an active

participant of charity events to establish a good corporate image

ot only advertise its product but also advertise itself and it should addcorporate culture into these kind of commercials

?/2/2 )mpro5e its performance si#nificantlyAesides the local phone fee, there are long distance fee and mobile roamingservice charges which are much e0pensive than the local. -ong distance feeis occurred when the phone call is made outside a certain area* roamingcharges occurred when the caller travel outside a certain local area and makephone call. For China $obile, Lthe certain areaM refers to a city, and thatmeans when customers make a phone call outside their own cities or make

phone call in another city, even this city is in the same province, they have topay e0tra money. owadays, people travel a lot, so long distance fee andmobile roaming service charges can make the phone fee much higher andthen make the customers feel the rating price of given quality of China $obileis high. China $obile can consider that firstly e0pand the rage of Lthe certainareaM to a province or decrease the price level.?/2 Limitations and further researchThe results of this study must be interpreted in view of certain limitations. 7ueto the time constrains, we spent a lot of time in the -iterature review andhypothesis questionnaire formulation. +e do not have enough time to gathermore data. $eanwhile, the limitation of our research is number scale ofsample, only gathering the totally ## value incoming data, then by we use allthe data analysis to assume the future, because the changes of the market isso fast, so if we still have chance to perfect our work, we are going to makethe a large scale and quantitative survey.

%n this thesis we only choose China $obile&s customers as our interviewees.Aut it maybe has some difference among these three operators& subscribers."o the further research can interview ' operators& subscribers, and to find out

is there really differences among them. $ost of our interviewees are younggeneration (less than ': years old)* their opinion is a little different with theelders (more than ': years old subscribers). "o it can also be done in thefuture.

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')uai, M., M)e", ., 2008. o to e")a"ce customer loyalty. >i An university$!usiness Management de#artment . &hina* 15 17.

'oderlu"d, +., 1998. ustomer satis!actio" a"d its co"seque"ces o"customer e)avior revisited. International Journal of Service IndustryManagement , 9, 169 188.

eas, B. ., 1993. %&pectatio"s, per!orma"ce evaluatio", a"d co"sumersGperceptio"s o! quality, Journal of Marketing , 57,18 35.

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customer loyalty a"d its @ey drivers a" i"te$rated !rame or@ i" perspective o!customer equity ma"a$eme"t, 'ervices 'ystems a"d 'ervices +a"a$eme"t.Proceedi"$s o! # '''+ G05. .//8 International &onference on , 1, 204 210.

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How to Promote Customer Loyalty__ of Chinese Mobile Telecom Operator Case Study of China Mobile