Determinants of Customer Loyalty: Evidence from the Egyptian Mobile Market

Determinants of Customer Loyalty: Evidence from the Egyptian Mobile Market

Rania Hussein (The American University, Cairo, Egypt), Amr Kais (The American University, Cairo, Egypt) and Hamed M. Shamma (The American University, Cairo, Egypt)
DOI: 10.4018/ijcrmm.2014100101
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Abstract

This study aims to explore the factors that determine customer loyalty in the telecom industry. The mobile market in Egypt will be used as the particular context of study. A sample of 600 mobile subscribers was drawn from the cell phone users in Egypt. A distinctive model is developed drawing on the results of previous empirical work on customer loyalty. The model proposes that customer loyalty in a service industry like the telecom industry is a combination of a number of factors namely; perceived service quality, corporate image, trust, switching cost and customer satisfaction with the service. Data was analyzed via multiple regression technique. Findings indicate that perceived service quality, trust and satisfaction with the service are the significant determinants of customer loyalty. The study provides marketing insights and implications of these findings.
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Introduction

In today’s globalized and interconnected world where all companies are finding it more and more challenging to compete, nothing is more important to businesses than it is to attract and retain customers by delivering superior value to them to guarantee their satisfaction and loyalty. Thus, the customer is the center and main focus of all business efforts and the reason behind businesses’ survival and growth. Achieving customer loyalty is a popular concept in marketing because of the benefits reaped by companies from continued patronage to repeat purchase to positive word of mouth (Hur et al., 2010). Acquiring a new customer is more expensive than retaining a currently existing customer happy. Loyal customers build and grow businesses by buying more, paying premium prices and providing new customers through positive word of mouth over time (Ganesh et al., 2000).Achieving customer loyalty is even more challenging when considering the service sector as compared to physical products’ companies. This is due to the very nature of services being intangible, perishable, inseparable and variable which makes marketing them a more complex task. This calls for working on different dimensions of the service provided such as perceived quality, corporate image and trust, among others in order to successfully market the service and supersede customers’ expectations. Thus consistently providing high standards and distinct quality service are important for achieving customer loyalty.

One of the important service sectors in any economy is the telecommunications industry. Through telecommunications daily transactions and activities are undertaken. Telecom aids decision making, organizing, influencing, activating, providing feedback, promoting interpersonal and business relationships as well as sharing information (Boohene and Agyopong, 2011). All sort of activities such as social, economic, political, cultural, trade and commercial of a given country are undertaken using telecommunication. The nature and level of development of a country’s telecommunication industry affects its pace of commercial and domestic activities (Boohene and Agyopong, 2011). Therefore, the importance of the telecom industry to any economy thus cannot be underestimated. In Egypt the telecommunications industry is controlled by three big companies namely; Mobinil, Vodafone and Etisalat. Mobinil is an Egyptian company and it was the first in the Egyptian market. Both Vodafone and Etisalat are international companies that opened in the last decade and all three companies now fiercely compete for increasing the number of subscribers they have and for maintaining satisfied and loyal customers.

Various researches to date have been conducted to explore the possible determinants of customer loyalty. Many studies have been conducted in developed countries on the effect of perceived service quality, satisfaction and trust on customer loyalty (Ndubusi et al, 2007; Khatibi et al., 2002; Uncles et al 2003). Despite the various efforts to study customer loyalty determinants, the factors developed are generally fragmented and studied individually or in pairs but not all taken together. Additionally, only few studies have focused on less developed countries like Egypt and particularly the telecom industry. This research provides a comprehensive array of variables as determinants of customer loyalty and develops a model that is empirically tested in a developing country context and in an important industry which is the telecom industry. To the researchers’ best knowledge, this research is the first to cover a comprehensive list of factors and to study their effect taken together on customer loyalty in a service context and also in the Middle East. In doing that, this research fills an important gap in literature.

This paper begins with a brief overview of the concept of customer loyalty and the determinants of customer loyalty that have been studied in literature to establish the current theoretical context for work in this area. The conceptual framework is then presented. Following that the quantitative methodology employed is reviewed and the results discussed. The paper concludes with a discussion of the implications of the findings and directions for future research.

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