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Factors behind brand Switching in telecom sector of Pakistan

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IBT Journal of Business Studies (Formerly Journal of Management & Social Sciences)
Vol. 11, No. 2, (Fall2015) 29-40

FACTORS BEHIND BRAND SWITCHING IN

TELECOMMUNICATION INDUSTRY OF
PAKISTAN
Sobia Shujaat1
Assistant Professor at Bahria University Karachi

Dr. Nadeem A. Syed2

Associate Professor at SZABIST Karachi

Usama Ahmed3
Research scholar at the Bahria University Karachi

ABSTRACT
Purpose:- The purpose of this research is to analyze thefactors which
encouragebrand switching among customers in telecommunication sector.
Due to the low switching cost, the consumers easily shift from one network
to another making it essential to study those factors and analyze the
consumer switching behavior in telecommunication sector. Hence, this
research aims to explore the brand switching behavior of consumer in
telecommunication sector.
Methodology:- The data for this research was gathered through use of a
structured questionnaire which was duly filled by 500 participants. The
participants were students from various universities in Karachi. The
Regression analysis, ANOVA and Correlation tests were applied in order
to test research hypothesis.
Findings:- The findings reveal that price, brand image, network quality,
value added services and promotional activities directly influence consumer
switching behavior among youngsters.
Practical implications:- The outcomes of the research can help
telecommunication companies in deciding what factors are more important
to keep customers loyal and to discourage brand switching.

Keywords : value added services, promotional offers, brand image, network quality

Jel Classification: D920, E220, F210

* The material presented by the author does not necessarily portray the viewpoint of the editors
and the management of the Institute of Business & Technology (IBT)
* Sobia Shujaat : [email protected]
* Dr. Nadeem A. Syed : [email protected]
* Usama Ahmed :
© IBTJBS is published by the Institute of Business and Technology (IBT).
Main Ibrahim Hydri Road, Korangi Creek, Karachi-75190, Pakistan.
 Sobia Shujaat, Dr. Nadeem A. Syed, Usama Ahmed

1. INTRODUCTION
Advancement in communication due to technology has benefited almost all of the
industries and resulted in economic growth (Wiehenbrauk, 2010). The telecommunication
industry has also gained from it and is one of the fastest growing sector in Pakistan,
which contributes around 30% of the GDP. According to the study shared by Pakistan
telecommunication authority, it has been noted that there are around 120.96 million-
telecom users who are availing the services of various mobile networks (Malik et al.,
2012).

Brand switching also known as brand jumping refers to the processin which a customer
changes from buying one brand of a product to buying another brand(Keller, 2008).
In telecommunication sector, the brand switching cost is relatively low, so consumers
easily switch to another network, which offers competitive prices and quality. The
factor behind consumer brand switching includes negative experience of consumer due
to poor product quality or service (Sultana, 2012).

The negative experience gained from product may result in brand switching because
the consumer does not prefer to re-buy the product which does not satisfy his need
fully.
Moreover, the prices offer by brand and the availability of the brand also result in brand
switching. For instance, the consumer prefers to purchase those products, which are
available at low prices and high quality (Dodson et al., 1978). However, majority of
consumer who are loyal towards their brand do not believe in brand switching. These
consumers are committed due to superior quality and services provide by the brand
(Colombo and Morrison, 2001).

1.1 Industry Overview

Paktel and Insta phone were recognized as the pioneer mobile networks in Pakistan
during the year 1990s. Afterwards, with the increase in competition they joined Mobilink
thatwas previously owned by Motorolla. Pakistan Telecommunication Authority(PTA)
shared that the mobile networking companies are penetrating rapidly in the market;hence
there is an increase in the ratio of new customers (Malik et al., 2012). The competition
among companies is increasing due to the various packages and offers, which also
results in switching cost. The major mobile companies that operate under Pakistan
telecommunication industry includeUfone, Warid, Mobilink, Zong, and Telenor.

1.2 Problem Statement

In telecommunication sector, the mobile network companies use effective ways to retain
their customers, as the customer may shift if not satisfied with their existing network.
Hence, the mobile network companies focus towards market research to understand
the consumers sated and underlying needs. Therefore to retain consumers, gain consumer
loyalty and to reduce the threat of brand switching companies are offering attractive
packages.This study is hence important to explore the factors that make the consumer
switch towards other cellular network brands.Based on the aim the objectives designed
for this research are given below:

Vol. 11, No. 2, (Fall2015) 30

FACTORS BEHIND BRAND SWITCHING IN TELECOMMUNICATION INDUSTRY OF PAKISTAN

To analyze the factors that prevent form brand switching in the telecommunication
sector
To investigate factors that lead consumers towards switching cellular network
brand
To recommend strategies through which cellular networking companies can
create customer loyalty and can discourage brand switching.

1.3 Research Hypothesis

The hypotheses designed for this research are given below:
H1: Price has a significant impact on brand switching in the telecom industry
H2: Network Quality has a significant impact on brand switching in the telecom industry
H3: Brand Image has a significant impact on brand switching in the telecom industry
H4: Value Added Services have a significant impact on brand switching in the telecom
industry
H5: Sales promotions have a significant impact on brand switching in the telecom
industry

1.4 Research Limitation

The limitation of research helps in keeping the research focuses towards the topic and
specific industry or company. It also helps in limiting the data collection methods and
techniques so that study can be completed on given time-frame.The study implies
quantitative data. However, this research can also provide qualitativeperspective through
approaching managerial views, but because of less time the mixed method was not
used.

2. LITERATURE REVIEW
The telecommunication sectorcontributesa huge amount inthe national economy.
Communication and mobile network is now considered to be the basic need of today’s
world. Almost 90% of people are using mobile phones in order to communicate. In
cellular networking industry the consumer are of all types from low to middle to high
status. Throughunderstanding the market demand and its potential the cellular
networkingbrands are gainingadvantagebased on the benefits they are offering.

According to Chaarlas et al. (2012), the ultimate objective of any company is to gain
customer satisfaction in order to retain them for long run. Consumer post
purchasingbehavior shows that if the product fulfills the consumer need then he will
stay loyal will continue buying. However if the product is unable to fulfill his needs,he
will be dissatisfied and can switch to other brands by terminating his relationship with
existing service provider. In telecommunication industry the switching rates is higherthan
in any other industry (Gautam and Chandhok, 2011). This is due to the intense
competitionamong cellular networkproviders. The consumerswitch their network service
provides due to one of the most importantreason, which is extra benefits and value,
added services (Kouser, et al., 2012).

31 IBT Journal of Business Studies (Formerly Journal of Management & Social Sciences)
 Sobia Shujaat, Dr. Nadeem A. Syed, Usama Ahmed

The brand switching is usually effected by in-store display, availability, quality, reliability,
price, promotions, responsiveness, empathy, assurance, tangibility etc(Chaarlas et
al.,2012). The service quality provide by cellular companyinfluenceconsumerre-
purchasing decision. Kouser et al. (2012) emphasized that quality services spreads
positive word of mouth which eventually results in higher market share for cellular
companies. In the telecommunication sector the quality of services is identified through
innovation, communication and value added services.(Makwana et al., 2014).The
markets use various tactics in order to encourage brand switching such as heavy
advertising. Prices are also one of the major factors, which convinceconsumers towards
switching their cellularnetwork.

The most tricky situationis to identify the challenges that are faced by decision makers
to understand theirmarket environment. The primary occurrence of brand switching is
due to stochastic reason, utility maximization, and expectationdisconfirmation. The
stochastic reason shows that the switchingbehavior of a consumer is not in the control
of the service provider. When the consumer moves from one place to another, hechoosethe
financial service provider which is near from his area. In this way, the stochastic reason
of individual will not change the purchasing probability of previous brand (Lees et al.,
2005).

According to Zeithaml (2000) as cited by Lees et al., (2005) reasons for

expectationdisconfirmation include brand switching. In this aspect, the consumer
evaluates the overall product or service consumptionexperiences. Based on the satisfaction
and perceived performance the consumer make further decisions.; for instance if any
cellular brand is unable to provide quality services and the consumer might suffer from
poor signal, so due to ineffective performance and poor experience the customer might
switch towards another network service provider. In telecommunication industry the
value added services is most commonly used practice and it is known as non-core
services. Previously in cellular networking industry the technology such as mms, SMS,
data access was recognized as value-added services but with the passage of time these
services become primary services (Lees et al., 2005).

Afzal et al., (2013) shared that in consumer purchasing and repurchasingbehaviorthe

brandswitchingbehavior plays a significant role because in daily life the consumerswitch
brand more frequently based on the perceivedexperiences. Sathish et al., (2011) explained
that price is the most important factor, whichinfluence consumer purchasing decision.The
service provider needs to enhanceconsumer brand loyalty through offering fair prices
and services. (Sathish et al., 2011).Ashraf et al., (2013) explained the importance of
network quality, service quality, coverage and voice claritybeing most important to
consumers. However company image is very critical to network provider and is built
through proper brand management and the strategies used by companies in order
tomaintain the brand position in the market (Baohong et al., 2003).
In the telecommunication industry of Pakistan the cellular networking companies are
using various sale promotion offers in order to attract customers.Sales promotions
includepremiumprizes, coupons, etc. In consumer brand-switching behavior the
promotionalcampaignsaids attracting new customers. Those cellular networking
Vol. 11, No. 2, (Fall2015) 32
FACTORS BEHIND BRAND SWITCHING IN TELECOMMUNICATION INDUSTRY OF PAKISTAN

companies who are using promotional tools more often are able to gain higher market
shared and customers (Islam and Rima, 2013).

Kotler (2009) explained that in preventing consumer from brand switching, the company
needs to adopt strategies such as competitive pricing and differentiation.
Thecompetitivestrategies used by cellular network brand do influence consumer post
purchase behavior and makes them stay with the existing network.

3. RESEARCH METHODOLOGY
This studyis descriptive and quantitative in nature and is based on positivism philosophy.
Itimplies deductive strategy and the data includes facts, which are shared by research
respondents.

Hypotheses were designed and tested further.Primary sources were used in order to
gather research data. As the research aims to explore consumer perspective towards
brand switching, hence the respondents comprised of five major cellular network brands
users in Pakistan.The questionnaire was based on close-ended questions, which were
analyzed on a five point likert scale ranging from strongly agree to strongly disagree.
The sampling technique chosen for the study was non-probabilistic sampling among
which convenience-sampling technique was selected.Hence, based on availability and
convenience the research participants were approached.

The sample size comprisedof 500 respondents including both male and female students
from three reputable business schools of Karachi. The data collection is limited to
consumers that belong from Karachi. Furthermore, the questionnaires were distributed
through the help of personal survey and email. social networking sites were also used
for data collection.The descriptive analysis was carried out in order to present the views
of participants in detailed manner.Moreover, in order to test hypothesis, linear regression
analysis and Pearson correlation test was performed. Furthermore, reliability analysis
was also performed which aims to study the Cronbach Alpha value.

4. DATA ANALYSIS AND FINDINGS

The data in this section is gathered through the help of quantitative method.Furthermore,
in order to test research hypothesis regression and correlation test are applied so that
dependency among variables can be proved.

4.1 Reliability Analysis

From table 1, it is interpreted that the value of Cronbach’s Alpha is 0.790, which is
greater than .75 showing the inter item consistency among the constructs in the
questionnaire.

4.2 Multiple Regression Analysis

The model summary table illustrates linear regression analysis conducted for testing
the hypothesis. The dependent variable was brand switching in the telecommunication
33 IBT Journal of Business Studies (Formerly Journal of Management & Social Sciences)
 Sobia Shujaat, Dr. Nadeem A. Syed, Usama Ahmed

industry and independent variable included prices, netwo rk quality, value added services,
brand image and promotional offers. Table 2 reveals the R square value, which is 0.868.
The value depicts that the relationship among variable is 86.8%, which proves that the
model is strong.

The above table reveals the F distribution value, which is 166.007, that is greater than
4. This depicts that the hypothesis were all accepted. Furthermore, the sig value is .000,
which is lesser than 0.05. The significant value proves that price, network quality, value
added services, brand image and promotional offers by network provider all play
significant role on consumer brand switching behavior.

The coefficient table proves the further validation of research hypothesis through
studying ß value. The above table shows ß value of 0.751, which shows positive
relationship between price and brand switching. Similarly the value of t is 11.508 which
is greater than 1.96 with significant value of 0.000 Therefore, it is proved that the
hypothesis is accepted.

ß value of -0.075, which shows negative relationship between network quality and
brand switching. Similarly the value of t is -57.018 which is lesser than 1.96 with
significant value of 0.005 Therefore, it is proved that the hypothesis is accepted.

ß value of 0.134, which shows positive relationship between brand image and brand
switching. The value of t is 11.419 which is greater than 1.96 with significant value
of 0.009. Hence the hypothesis is accepted.

ß value of 0.071, which shows positive relationship between value addition services
and brand switching. The value of t is 45.751 which is greater than 1.96 with significant
value of 0.012. Hence the hypothesis is accepted.
ß value of -0.029, which shows negative relationship between promotional offers and
brand switching. The value of t is -23.335 which greater than 1.96 with significant
value of 0.023 is. Hence the hypothesis is accepted.
The two-tailed test was conducted which is further interpreted in table 5.

5. DISCUSSION
Evaluations of Factors behind brand switching in Telecommunication Industry in Pakistan

5.1 Price
According to the study conducted by (Baohong et al., 2003) it is justified that the
consumers get dissatisfied when the network brands are charging higher than the services
provided by them. The result reveals that such type of actions results in negative reaction
of consumer which not only threat company image but it also results in negative word
of mouth. Hence, based on above justification it is illustrated that the first hypothesis
of research was proven and accepted because in consumer brand switching the prices
plays significant role.

Vol. 11, No. 2, (Fall2015) 34

FACTORS BEHIND BRAND SWITCHING IN TELECOMMUNICATION INDUSTRY OF PAKISTAN

5.2 Network quality

Consumers prefer to use those services which are accurate and good value for money.
The high network quality provided by companies do influence on consumer toward
utilizing the services. Such type of action positively influences consumers and encourage
brand switching. However, if the existing brand is able to maintain the service or
network quality then consumer does become loyal due to the satisfaction level, even
if the prices are high. Literature also justifies that based on network quality and coverage
the cellular networking brand is gaining competitive advantage in Pakistan (Ashraf et
al., 2013).

5.3 Brand Image

It is revealed through literature that positive brand image results in greater brand equity
and consumer preference towards a brand due to its market position and due to the
higher demand of the brand among their social circle. This is because the company is
able to build social image of brand and compete with others. Brandimage also help
companies to attract other network users and prevent consumer switching behavior for
their current customers (Baohong et al., 2003).

5.4 Value added services

Value added services include the extra benefits offered by companies that
attractscustomertowards their brand. Studies indicate that cellular networking brand
of Pakistan are offering value added services such as sports updates, horoscope updates,
music updates, news etc which help customers in keeping themselves updated towards
their interested area. (Sloot andVerhoef, 2008).Furthermore, based on 3G and 4G
technology the cellular networking brand are offering various packages, which includes
additional services too.

5.5 Promotions offers

Promotional offers include various campaigns and discountoffers provided by brands.
In the literature it was studied that cellular networking companies in Pakistan are
offering various promotional offers such as “simlagaooffers”, “Ramadan
packages”etc.These encourages consumer switching to their brands (Islam and Rima,
2013). The findings gathered through the literature also shows that majority of participants
are switching their band due to promotional offers and activities adopted by
cellularnetworkingbrands in Pakistan.

6. CONCLUSION
It is revealed that factors such as price, brand image, service or network quality, value
added services and promotional activities plays significant role in influencing consumers
brand switching behavior in telecommunication industry. The result of this research
proves that with the passage of time and technological advancementnot only society
benefits from the services offered but it also profits businesses in expanding. In this
way, the first objective, which was related to preventing consumer brand switching
behavior proves that the cellular networking companies can upgrade their service level
and network quality in order to make their customer loyal. Hence companies can

35 IBT Journal of Business Studies (Formerly Journal of Management & Social Sciences)
 Sobia Shujaat, Dr. Nadeem A. Syed, Usama Ahmed
maintain long-term relationship with them and prevent their behavior towards switching
their brand.
The second objective of this research is investigation of factors that lead consumer
towards switching their brand. The outcome of this research proves that factors such
as price, quality, brand image, value added services and promotional activities are the
factors that trigger that influence consumers’ behavior. These factors can prevent or
encourage towards brand switching. The analysis shows that if their existing network
company is unable to provide high quality network then the consumer might switch
towards another brand. The companies are also differentiatingthemselvesthrough utilizing
various promotional and value added services.
The research also suggests various strategies that can be utilized by cellular networking
brand in order to retain their customers. Furthermore, all the proposed hypotheses were
accepted with the sig value of 0.00, which shows that the price, quality, brand image,
value added services and promotionalactivitiessignificantly influence consumer brand
switching behavior.
It is revealed that when the consumer is paying money on services/ product then he
expects equal or greater value in return and if his current brand is unable to fulfill his
expectations than he is more like to switch brand. In this way, those companies not
only bear financial loss but it also results in negative word of mouth for their company.
It was further emphasized by the respondents that in cellular networking industry the
customer loyalty is at low level because of more competitive strategies applied by
counter companies in telecommunication industry.

7. RECOMMENDATIONS
In order to keep the customer engaged and retain customers, telecommunication
companies needs to focus towards their servicequality, price, customer satisfaction,
marketing and promotional strategies (Heerde, Gupta and Wittink, 2003). The following
strategies can be adopted in order to prevent consumer from brand switching:
The companies should upgrade their network quality and coverage because in
cellular networking industry the consumer’s core concern is towards the quality.
Therefore, in order to value the money spent by customer the companies need to provide
quality services. In this way, regardless of high prices the consumer will stay loyal
towards the network.
The cellular networking companies can retain their customer through various
loyalty programs. These loyalty programs can be in from of membership.
Thecellularcompanies can partner with various clubs, resorts, apparels brand and food
brands by providing promotional offer such as discount offers.
The most important tool to retain customer and prevent their switching behavior
includes the customer relationship management. The companies should manage their
relationship with customers by updating them via email or sums, assisting them in the
best possible manner and by showing empathy towards them.
The cellular networking companies need to build positive brand image so that
it can appeal customers towards remaining loyal with the cellular network provider.
The companies can also assure customers that they will satisfy the need of
customers and maintain trustworthy relationship for long-term. This will build positive
Vol. 11, No. 2, (Fall2015) 36
FACTORS BEHIND BRAND SWITCHING IN TELECOMMUNICATION INDUSTRY OF PAKISTAN

image in customer minds and they will develop feeling that the brand does deliver what
it promises.
The cellular networking companies needs to utilize modern communication
technology and provide greater value for money to create customer delight and gain
long term loyalty.

8. FUTURE RESEARCH
More variables can be studied to find out factors that preventconsumer from brand
switching. Future research can also focus on gathering managerial perspective by
including qualitative research design to present in-depth analysis of consumer brand
switching behavior. This will help them design strategies to attract customers.

ACKNOWLEDGEMENT
First of all with a profound gratitude, we are thankful to Almighty Allah forgiving us
success, knowledge and understanding without which we would not been capable of
completing this research paper.
We are also profoundly grateful to all our family members whose endurance and
understanding have played a significant role in our success by sacrificing the important
family time and supporting us all over the research work.
We are finally thankful to the editor, reviewers and IBT specially who provided us with
the opportunity to publish our research paper in this esteemed journal.

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(2013).
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Determinants of Customer Satisfaction: The Case of Pakistan
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Chaarlas, L.J., Rajkumar, R., Kogila,N. and Noorunnisha, A. (2012). Service Related
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Gautam, P., and Chandhok, A. (2011). Switching Behaviour of Subscribers in India

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Telecom Sector. International Journal of Research in Finance and
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FACTORS BEHIND BRAND SWITCHING IN TELECOMMUNICATION INDUSTRY OF PAKISTAN

APPENDIX

Cronbach's Alpha N of Items

.790 4
Table 1: Reliability Statistics
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .932a .868 .861 .51386
a. Predictors: (Constant), Promotional_Offers, Price, Network_quality,
Value_added_Services, Brand_Image
Table 2: Multiple Regression
ANOVAb
Model Sum of Squares Df Mean Square F Sig.
1 Regression 219.170 5 43.834 166.007 .000a
Residual 130.440 494 .264
Total 349.609 499
a. Predictors: (Constant), Promotional_Offers, Price, Network_quality,
Value_added_Services, Brand_Image
b. Dependent Variable: Brand_switching_in_telecommunication_industry
Table 3: ANOVA
Coefficientsa
Model Unstandardized Coefficients Standardized T Sig.
Coefficients
B Std. Error Beta
1 (Constant) .891 .115 7.729 .000
Price .550 .048 .751 11.508 .000
Network_quality -.067 .066 -.075 -57.018 .005
Brand_Image .154 .108 .134 11.419 .009
Value_added_Services .080 .106 .071 45.751 .012
Promotional_Offers -.033 .100 -.029 -23.335 .023
a. Dependent Variable: Brand_switching_in_telecommunication_industry
Table 4: Coefficient Table

39 IBT Journal of Business Studies (Formerly Journal of Management & Social Sciences)
 Sobia Shujaat, Dr. Nadeem A. Syed, Usama Ahmed

S.No. Hypotheses Pearson’s Relationship Empirical Concluded

Correlation Status Results Interpretation
Value (R)

H1 Price has a significant 0.781 Strong positive 0.000 < Hypothesis

impact on brand relationship 0.050 accepted
switching in the
telecom industry

H2 Network Quality has a -0.721 Strong negative 0.000 < Hypothesis

significant impact relationship 0.050 accepted
on brand switching
in the telecom industry

H3 Brand Image has a 0.535 Moderate positive 0.000 > Hypothesis

significant impact on relationship 0.050 accepted
brand switching in
the telecom industry

H4 Value Added Services 0.541 Moderate positive 0.000 < Hypothesis

have a significant impact relationship 0.050 accepted
on brand switching in
the telecom industry

H5 Sales promotions have -0.508 Moderate negative 0.000 < Hypothesis

a significant impact on relationship 0.050 accepted
brand switching in
the telecom industry

Table 5: Two-Talled Test

Vol. 11, No. 2, (Fall2015) 40