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The aim of the thesis is to determine what influences customer loyalty with Dutch mobile phone subscribers. The reason I choose for this subject is that I work at a Vodafone retail shop in Kerkrade. I enjoy working at the retail shop, because I immediately get in contact with the customer. The thing that that makes me enthusiastic is that I see the same customers coming back every 1 or 2 years to renew their contract and other loyal customers disappear. Because of this I wanted to conduct a research about the reasons of this phenomenon and learn to understand why these customers stay loyal.

The data was collected using Qualtrics and SPSS was used to analyse the data by using a multiple linear regression.

The results of this research may help Vodafone and me in the future. This includes attracting new customers and to keep the current customers loyal. Mobile phone providers could use this information to better understand which attributes influence customer loyalty. Hereby they could adapt their strategy to the more important attributes.

This thesis consists of five chapters, each of which is dealing with different aspects of the master thesis. The first chapter will introduce the subject and an overview of the problem statement, research objectives and sub questions. Chapter two consists of the literature review. Firstly, the basic model of Hafeez and Hasnu with its attributes is introduced and explained in detail. Secondly, the extended model will be given and be explained in detail. Chapter three is about the Methodology that is used. It consists of which kind of research has been used, how the data was collected, which sampling technique has been used and how the questionnaire was designed. Chapter four is about the data analysis. Hereby the results of the analysed data will be presented including the descriptive, statistical and regression data. The statistical and regression data have been done in SPSS. Chapter five consists of the conclusion, recommendation and limitations of this master thesis.

The aim of the thesis is to determine what influences customer loyalty with Dutch mobile phone subscribers. Based on the extended model of Hafeez and Hasnu 8 hypotheses were developed and tested.

Only 2 of the 8 hypotheses were not supported. Research revealed that customer satisfaction has the most influence on customer loyalty in the Dutch mobile phone industry. Perceived uniqueness and corporate image were also supported to have impact on customer satisfaction. Furthermore, price and perceived quality have influence on Customer satisfaction. Therefore, price and perceived quality have influence on customer loyalty through customer satisfaction.

Of the extended attributes (convenience of stores, perceived uniqueness, switching barriers), only perceived uniqueness was statistically supported to have effect on customer loyalty.  

This master thesis can help mobile phone providers to understand which attributes influences customer loyalty. Hereby the provider can focus on these attributes

PREFACE

This master thesis is the final deliverable for the Master of Management (International Marketing Strategy) program at the University of Hasselt.

The reason I choose for the subject ‘what influences customer loyalty with Dutch mobile phone subscribers ‘is that I work at a Vodafone retail shop in Kerkrade. I enjoy working at the retail shop, because I immediately get in contact with the customer. My job includes advising customers, consult clients, drawing up and negotiating offers and contract and handling complaints. The thing that that makes me enthusiastic is that I see the same customers coming back every 1 or 2 years to renew their contract and other loyal customers disappear. Because of this I wanted to do a research about the reasons of this phenomenon and learn to understand why do these customers keep loyal.

The results of this research may help Vodafone and me in the future. This includes attracting new customers and to keep the current customers loyal. Mobile phone providers could use this information to better understand which attributes influence customer loyalty. Hereby they could adapt their strategy to the more important attributes.

Furthermore, I would like to thank my supervisor Prof. Dr. Sandra Streukens. Since the beginning of the writing process she helped me with her supervision, support and knowledge. Thanks to her knowledge of customer loyalty and computer programs, she always gave me remarks and recommendations about what could be improved. Thanks to her, I was able to finish this thesis

Also, I would like to thank my girlfriend. She supported me since the beginning of the writing process and was always making sure I did my homework. She gave me feedback and a pep talk when it was needed.

I would like to thank all the people who helped me finish my thesis. Especially my respondent, because they also put time and effort in this thesis. Without them, it wouldn't have been possible to finish this thesis

TABLE OF CONTENTS

Summary i

Preface iii

List of Figures vii

List of Tables vii

Chapter 1 introduction 1

1.1Introduction to paper 1

1.2 Profile of The Dutch mobile phone industry 3

1.3 Problem statement 5

1.4 research objectives 5

1.5 Sub questions 6

Chapter 2 Literature revieuw 7

2.1 Introduction 7

2.2 Customer Loyalty 7

2.3 Attributes determining customer loyalty 9

2.3.1 Corporate image 11

2.3.2 Customer Satisfaction 12

2.3.3 Pricing 13

2.3.4 Perceived quality 14

2.3.5 Extension of Hafeez and Hasnu model 16

2.3.6 Convenience of Stores 16

2.3.7 Perceived uniqueness 17

2.3.8 Switching Barriers in the Mobile Services Industry 19

2.4 Conceptual Model 20

Chapter 3 Methodology 23

3.1 Introduction 23

3.2 Quantitative Research 23

3.3 Data collection 23

3.4 Sampling technique 24

3.5 Questionnaire design 24

3.6 Research Measurements 25

3.6.1 Customer Loyalty 25

3.6.2 Corporate Image 26

3.6.3 Customer satisfaction 26

3.6.4 Price 27

3.6.5 Perceived quality 28

3.6.6 Convenience of stores 29

3.6.7 Perceived uniqueness 29

3.6.8 Switching Barriers 30

Chapter 4 Data Analysis 31

4.1 Introduction 31

4.2 Number of respondents 31

4.3 Descriptive analyses 32

4.3.1 Gender 32

4.3.2 Age 32

4.3.3 Education 33

4.3.4 Provider 33

4.3.5 Retail shops 34

4.4 Statistical data 35

4.4.1 Descriptive statistics 35

4.4.2 Regression data 36

Chapter 5 conclusion, recommendations and Limitations 43

5.1 Conclusion 43

5.2 Recommendation 44

5.3 limitations 45

Bibliography 46

Appendices 53

Appendix A Copy of questionnaire 53

LIST OF FIGURES

Figure 1.1 Market share of Dutch mobile phone providers 3

Figure 2.1 Original model of Hafeez and Hasnu 10

Figure 2.2 Conceptual model 21

LIST OF TABLES

Table 3.1 Scale used to measure customer loyalty 25

Table 3.2 Scale used to measure corporate image 26

Table 3.3 Scale used to measure customer satisfaction 26

Table 3.4 Scale used to measure price 27

Table 3.5 Scale used to measure perceived quality 28

Table 3.6 Scale used to measure convenience of stores 29

Table 3.7 Scale used to measure perceived uniqueness 29

Table 3.8 Scale used to measure switching barriers 30

Table 4.1 Summary of the questionnaire 31

Table 4.2 Gender distribution 32

Table 4.3 Age distribution 32

Table 4.4 Education distribution 33

Table 4.5 Provider distribution 33

Table 4.6 Retail shop distribution 34

Table 4.7 Descriptive statistic 35

Table 4.8 Regression data customer loyalty 37

Table 4.9 Regression data customer satisfaction 39

Table 4.10 Regression data corporate image 40

CHAPTER 1 INTRODUCTION

1.1 Introduction to paper

Customer loyalty can be defined as the behaviour portrayed by consumers through their consistency which is as a result of positive psychological experiences and physical satisfaction from value achieved, with an influence on future behavioural patterns and trends (Nam, Ekinci, & Whyatt, 2011). According to Oliver (2014), it determines buying decisions on specific products and services, given the level of contentedness that a consumer associates with purchasing form a given company or brand. Multiple aspects come into play when customers are building on loyalty and firms should be relentless towards achieving high levels of customer loyalty, which has a long-term effect on organizational performance and company value. Some of the most successful organizations globally have a loyal customer base that can be relied on towards goal achievement and sustainability, both in the short run and in the long term (Liu, Guo, & Lee, 2011).

Customer loyalty is a complex concept as different customers have diverse tastes and preferences. This means that for it to be developed, firms must engage in individual customer oriented approaches with multiple options for customers to choose from (Solomon, Russell-Bennett, & Previte, 2012).

The relationship between customers and an organization is significantly critical if organizational goals are to be achieved, both in the short run and in the long run. According to Oliver (2014) loyal customers are satisfied customers and are more profitable than any other customers. The reason that loyal customers make return purchases is the level of satisfaction gained from the experience. Loyal customers are likely to influence buying decisions exhibited by those close to them in a bid to achieve similar satisfaction levels. In this regard, loyal customers make the best form of advertising through word of mouth referrals (Romaniuk & Nenycz-Thiel, 2013). Loyal customers form the best brand ambassadors and can aid organizations to build their brands. Unlike other promotional strategies, loyal consumers give their genuine views and experiences, which is significantly important for brand promotion and growth. According to Nam, Ekinci, & Whyatt (2011), most revenues generated by organizations come from a small percentage which is between 20% and 30% of all consumers. This shows the significance of loyal customer to any organization.

In the era of heightened organizational competition, mobile network subscription companies in the Netherlands and elsewhere in the world are seeking innovative strategies to attract new consumers and retain the existing ones. Gaining market share and maintaining it has been identified as one of the surest ways of countering the ever-rising competitions in different industries and organizations (Liu, Guo, & Lee, 2011).  With services in the mobile subscription being extensively similar, maintaining loyal customers is complex due to constant price wars.  On the other hand, a loyal consumer base is one of the most valuable assets that an organization can have (Schiffman, O\'Cass, Paladino, & Carlson, 2013). Competition in the mobile phone services industry is intense with players employing extra measures to appeal to consumers.  Service quality in this industry is significantly important to consumers and determines to a large extent of loyalty levels. Different mobile phone providers have their loyal customers who are motivated by diverse and unique aspects associated with each provider. Companies in this industry have found it significantly challenging to increase their market share. Understanding the dynamics of customer loyalty in the industry can help in solving this issue.

1.2 Profile of The Dutch mobile phone industry

The mobile phone industry has considerably similar products in terms voice and message subscriptions, internet and data services, mobile device sales among other products. Given the nature of these products, the manner in which they are presented to consumers determines the eventual market share and the number of loyal customers for each service provider. Additionally, individual organizational strategies determine whether such costumers are retained in the long run or whether they opt to switch to competitors (Overeem, Leijnse, & Uijlenhoet, 2013). The Dutch mobile phone subscription industry has experienced immense growth in the last two decades. The country has kept in touch with current trends in the industry and is at the forefront in acquiring and implementing new innovations in the industry. The industry is technology driven and the Netherlands has been a leader in this front. Customers in the country have a wide range of service providers to choose from (Kasper, Bloemer, & Driessen, 2010).

In the Dutch market the major players are KPN, T-Mobile and Vodafone.

Figure 1.1 Market share of Dutch mobile phone providers

Figure 1.1 shows that KPN is largest market occupant with a market share of approximately 42%. Vodafone follows closely with a market share of 33% and T-Mobile coming in third at 21%. Tele2 which is significantly new in the market has managed to gain a 4% market share in the few years it has been in operation in the Netherlands. The rest of the players in the market share less than 1% (Van de Roer, 2017).

With a dynamic industry, these top service providers experience mixed fortunes with alternating growth and drop in market share periodically.  The mobile service industry in most developed countries is deemed to have reached saturation levels and existing companies must employ strategies to maintain achieved levels of growth and market share. (Steenbruggen, Tranos, & Nijkamp, 2015).

Individual companies have also embarked on infrastructural development to better serve their markets. Unlike in the past, voice and messaging revenues for many mobile service providers have dropped significantly. This has been because of innovative internet based communication channels that are cheaper, flexible and more effective.  In this regard, major mobile operators have shifted to the provision of data related service which has also seen a significant growth. This has also been facilitated by the growth in internet enabled mobile devices which have seen a huge reception in the country.

1.3 Problem statement

Allot of work has already been done to determine customer loyalty in many branches. But to my best knowledge, no research has been done in the past to investigate customer loyalty in the Dutch mobile phone industry.

Hafeez & Hasnu (2010) studied the customer satisfaction in the mobile phone industry in Pakistan. They identified important attributes were Mobile phone providers should focus on to keep their customers loyal.

This study will evaluate these constructs as well as others relevant to the Dutch mobile phone industry.  The results of this study will provide an in-depth understanding of consumer behaviour with regards to the Dutch mobile phone industry. These results can enable mobile phone companies to focus on specific attributes that are of significant concern to consumers. The results can also be used as grounds for decision making for mobile phone companies towards achieving their goals, growing their consumer bases and achieving sustainability in the future

1.4 research objectives

The main aim of this master\'s thesis is to determine what influences customer loyalty with Dutch mobile phone subscribers. Additionally, the importance of the attributes will be examined in more detail. This study focuses on the private mobile phone consumers in The Netherlands.

To get an answer on central research question, I will build on of the model of Hafeez & Hasnu (2010) which examines determinants of customer loyalty in the mobile telephone industry. This model will be explained in detail in chapter 2.3

1.5 Sub questions

In order to address the central research question of this thesis, I will address the following sub questions.

- What is customer loyalty and why is it important?

- Which attributes influence customer loyalty?

In the following chapter, we provide an overview of the state of art literature concerning customer loyalty. Furthermore, we identify several attributes that influence customer loyalty resulting in a research model which will be explained in chapter 3 and subsequently tested in chapter 4.

CHAPTER 2 LITERATURE REVIEUW

2.1 Introduction

In this chapter, we will give an overview of the attributes that influence customer loyalty in the mobile phone industry. Each paragraph will explain each attribute individually and more in detail. Finally, several hypotheses will be created and they will be tested in chapter 3

2.2 Customer Loyalty

The issue of customer loyalty has been widely studied by different scholars and researchers in a bid to understand consumer psychology. In this regard, different definitions and explanations of the concept have been put forward to create better understanding and the dynamics that it is associated with. One aspect that has emerged that customer loyalty is dependent on the type of products and industry under consideration. According to Lai, Griffin & Babin (2010), customer loyalty is ‘' the behaviour of consumers to choose as specific brand or product due to perceived positive satisfaction, high value and product quality ‘'.  

This definition is by Lai et al (2010), is the most relevant for the mobile phone provider industry as it covers long term issues which consumers consider when exhibiting loyalty to a specific provider.  It covers most aspects that are relevant to the industry of mobile phones and the dynamics that determine multiple attributes.  Furthermore, it puts into consideration how consumers respond to different stimulus that they consider important when acquiring services and products from a specific provider. In the mobile services industry, the definition is relevant to how consumer behave when different attributes and dynamics in the industry change, hence affecting the immediate and long term decision to stay with the providers or to switch to others that meet their expectations. The study by Lai et al (2010), was based on a Chinese survey with regards to mobile communications companies. The study revealed that consumers in this industry consider satisfaction, perceived value and corporate image most important when making loyalty decisions. It is therefore critical for individual organizations to focus on these key concepts and incorporate them effectively in their strategies in the bid to acquire huge loyal customer bases (Cronin, Brady, & Hult, 2000).

Customer loyalty can only be achieved if consumers associate a particular brand with positivity with regards to the three aspects. The three aspects are some of the most significant service evaluation attributes that determine customer loyalty. Quality in this regard touches on the products being acquired as well as the way it is delivered in terms of service quality. These sentiments are also repeated by Cronin et al (2000) where they proposed a model that simultaneously considers satisfaction, value and quality when determining customer loyalty.

In another study by Oliver (1997) customer loyalty is defined as ‘' A deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching barriers''.  This makes it clear that customer loyalty is focused on a positive long term relationship between an organization and its customers (Aydin & Özer, 2005). Organizations are compelled to progressively and aggressively employ strategies that ensure retention and loyalty. Only organizations with effective customer retention programs are likely to survive in the long term. Even as markets continue to grow; they are shared based on individual's organizational strategies employed. This is the reason why some organizations seem to continue growing in terms of market share when others lose to these rivals.

Aydin and Özer (2005), identify two main broad definitions of customer loyalty, based on different markets and industries.  The two broad categories are stochastic loyalty and deterministic loyalty. The stochastic definition of customer loyalty describes the concept as a form of customer behaviour. This is exhibited through behavioural preferences that vary with individual customers or groups of customers. The stochastic approach considers attributes such as purchasing frequency, purchase shares among others. On the other hand, deterministic customer loyalty is considering loyalty as an attitude. This approach disagrees with the behavioural approach and asserts that an analysis of underlying customer attitudes is paramount towards determining loyalty. Consequently, the deterministic approach considers attributes such as consumer preference, willingness to recommend to others, and the intention to buy (Alireza, Ali, & Aram, 2011).  Integrating the two approaches, customer loyalty shows bias towards a specific brand or products at the expense of that provided by rivals. The bias is exhibited in the consumer purchase behaviour or response (Aydin & Özer, 2005). This behaviour is exhibited over a prolonged period where the behaviour is regarded as consistent with regards to the choice or decisions made.

2.3 Attributes determining customer loyalty

In the cotemporary, organizational context customer loyalty continues to be emphasized in as one way of achieving sustainability and long term achievement of goals. However, to achieve this, it is important to understand the applicable issues that are closely linked to the concept and which determine its efficacy in different industries and organizations (Deng, Lu, We, & Zhang, 2010). Attributes that determine consumer loyalty differ with each industry and organization as each has unique attributes that drive consumer to make specific decisions making models in these industries are also different and are guided by volatility and dynamics which differ significantly.

According to Hafeez and Hasnu (2010), mature markets tend to have more consumer loyalty due as products are significantly standardised and available from all providers. However, loyalty is low in developing markets as consumers are fascinated by new organisations that come with improved products and services.  Even with specific attributes that affect determine consumer loyalty there are general parameters and pointers that apply generally for all industries and organizations.

Figure 2.1 Original model of Hafeez and Hasnu

According to the model of Hafeez and Hasnu in figure 2.1, some of the attributes that determine customer loyalty include customer satisfaction, corporate image, price and perceived quality. The degree of determination of consumer loyalty of these attributes is dependent on individual industries. It is up to individual organizations to determine operational dynamics and appropriate timing where these attributes count. This model will be used as the basic model and will extended with some extra attributes.

The model by Hafeez and Hasnu (2010), links consumer loyalty to several attributes which are independent but have respective variable that influence their degree of impact.  These independent attributes are a summary of multiple attributes. Furthermore, the model suggests that customer loyalty is mainly determined by customer satisfaction and corporate image.  These two aspects have direct influence on customer loyalty and are interrelated as well. Customer satisfaction is the largest and most pronounced component of customer loyalty. According to the model, pricing and perceived quality are the main components of customer satisfaction. They determine the level of customer satisfaction and inherently the level of satisfaction. Customer satisfaction on the other hand determines how costumers perceive an organisation with regards to corporate image. In summary, the combination of pricing and perceived product quality determine the level of satisfaction. Satisfaction impacts perceived corporate image while the two then determine overall loyalty.

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