Author: because of aggressive marketing strategies of the

 

Author: Fatima Sahi

 

ABSTRACT: Mobile network
services are one of the most turbulent markets today due to intense competition
and well-informed consumers. Moving towards customization quick fluctuations
are observed in consumer preferences. Thus it is growing concern to find out
what factors determine consumers’ preferences for particular service providers.
On the basis of that, this research study deals with examination of different
factors affecting consumer motives related to mobile network, service selection
and consumer motives behind switching from one service provider to other. The
data collection technique used to carry out this research is survey via
Questionnaire.

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The results of descriptive research show that price and attractive
packages are the most influential and primary factors whereas coverage and
internet service are secondary factors. The results show that 68.1% of the
respondents choose particular mobile service due to low price whereas this study
could not find any relation of consumer preference with demographics. This has
been identified through different aspects of demographics like age, income
location etc. This study concludes that preferences of consumer for service
provider are associated with low price and attractive packages.

 

1.    INTRODUCTION.

Rapid
expansion of telecom sector has enormous social and economic impact on Pakistan’s
economy, in terms of productivity, increment, intangible profits, upgrading
access to health, instructive services. The big companies working for the
provision of cellular phone services to the customers are Mobilink, Ufone,
Telenor, Warid and now China Mobile also. Mobilink has about to 39.2% of the
total market share with 31 million subscribers; Ufone stands at second with
20.9% and 16 million subscribers, Warid having 17% and Telenor is at third with
19.5% and 15 million subscribers but China Mobile holds only 3% of total market
share with 2.3 million subscribers in January 2008 whereas the share in
September 2004 were somewhat like 62% Mobilink, 21% Ufone, 9% Interphone and 8%
Paktel.

 

Currently
China Mobile Pakistan
has highest growth rate of about to 130 percent whereas Telenor and Warid have
growth rate of 43.44% and 26% respectively. Mobilink and Ufone are unsuccessful
in sustaining their growth rates standing at 16.71% and 17.33% respectively
because of aggressive marketing strategies of the new coming cellular service
providers. Only Instaphone have negative growth rates of -3.86%; this is
because of her obsolete technology and accessibility of new enhanced ones with
easy reach of the customers. The Paktel is purchased by China Mobile with
amount of US$460 this is the reason behind their progress. But the two old and
leading companies i.e. Mobilink and Ufone lagged behind in growth rate than two
new comers Warid and Telenor. Why all of this happened?

 

In
this dynamic environment costumers are well aware about products; competition is
becoming fierce day by day. In order to capture market share, mobile service
companies have engaged themselves in cost effective and attractive services
keeping in view consumer preferences at top priority.

 

So the
preference of consumer for the selection of service is very important; which is
not influenced by single factor. Before preferring and buying any service
consumer looks at price of using that service, the quality which that service
provides such as coverage, and other the features which are useful to him such
as packages and internet service etc.

 

The
first part of this paper introduces the subject matter and. The second part of
this paper deals with the literature review – the work done so far about
consumer preferences. Third part explains the methodology. Findings are given
in fourth part. Fifth part concludes the paper with recommendations

 

2.  LITERATURE
REVIEW.

 

Consumer behavior can be studied from one of the earliest theories
based on economics, which states consumer behavior as a discipline and defines
as consumers in order to maximize their satisfaction rationally by purchasing
goods and services (SCHIFFMAN,
L. G. & KANUK, L. L., 2000). Being successful
marketer and to gain edge over competitors a better understanding of consumer
preferences can be a major contributing factor, if companies use consumer
preferences in their strategic and operational marketing (Umar M. &
Tahir M., 2007).

 

Karjaluoto
et. al (2005)
explains that consumer preferences can also be studied from five step classical
model or through series of consumer choice from preferring one product class to
brand choice. Beatty et. al in 1987; states that consumer preferences regarding new mobile phone usually
followed by traditional buying process of five step model which is suitable for
rational problem solving behavior and almost in complex decision making.
Studying consumer preferences according to classical problem solving buying
behavior, it must be kept in mind limited search of information without
evaluation of alternatives regarding preference of any product or service.

 

Karjaluoto
et. al
(2005) finds that symbolic values related to brand also affect the decision in
many situations. Whereas second study states that in preferring one
product over other decision is usually based on prior experience of purchasing
one product. Consumer behavior regarding purchase of any new mobile is based on
heuristic, hardly a consumer would like to go and search for information
regarding new mobile phones, they decide mainly on what information is easily
available to them. From another perspective of their
research, mobile phones set selection is important because of its useful
features such as communication and entertainment like games and camera
incorporated in option. The younger the user the more they prefer entertaining
features in his/her phone set.

 

Umar M. and Tahir M. (2007) states that culture is an important
factor influencing impulsive buying behavior which can help to understand
consumer thinking, perception and its preference of any product. We are social animals influenced by
family; friends etc, so it can also help to understand psychology of consumers
how it is influenced by its social network.

 

Individualism
and collectivism are two important dimensions of culture. It is assumed that
belong to individualism possess stronger impulsive buying behavior than
collectivism. Man being a social animal and its behavior regarding preference
of any product can be affected by many social factors like family, friends, and
groups so a consumer behavior can be influenced and depend on all these
factors.

 

In his
study, Rook, D. W., (1987) found the relationship between gender and income.
Man and woman based on their respective gender possess different material
possession, woman prefer essential value items whereas men prefer monetary
items. Woman preference depends on their psychology of emotions and relations,
while men preference based on logical reason, Man prefer goods for personal
identity whereas woman prefer for social identity.

 

 

Karjaluoto
H et. al (2005) discovers that addictive
use of mobiles was more common among females than males related to trendy and
impulsive consumption styles. Males were found against that they are more trend
oriented and technology conscious than females. The study concluded that males
and females having their different preferences influenced by their gender and
there are also many other factors, which influence them. One of the major
factors which are influencing the consumer behavior is the income regardless of
their status; status conscious people try to prefer more expensive products.
They never even prefer low quality or service products and never put down their
status just because of income. Annu Ristola states that consumer preference
have taken three different dimensions based on their consciousness of role and
status, these are: 1) Characteristics of individuals 2) Characteristics of the
mobile service and 3) Characteristics of implementation. Karjaluoto H et. al (2005) discovers age as an
important factor, which plays an important role while preferring the different
products; consumption patterns of different age group people are different at
their relative ages.

 

Bhutto R. A. & A. Maqsood, (2007) observes that
consumers which have awareness are more sharp customers. They want high
quality, fully featured products at reasonable prices. As consequences they
demand services along with customized products and personal attention.
Deregulation of services, growing competition, fluctuations in demand and fast
changing technology provides many challenges to the service company. That’s why
prices or rates of service have been identified as an important factor in the
choice of the mobile service provider, especially among younger people. Price
was the most influential factor affecting the choice of mobile service provider
(Karjaluoto H et. al, 2005).

 

Asma Mahmood states that people switch from one brand to
another for various reasons. According to Graham Hankinson, two different types
of brand switcher exist. First one is promiscuous switchers who switch because
of certain reasons like price and conveniences. And other is constrained
switchers who have limited selection of brands from which they select. That
selection depends upon some occasion or circumstance. Many people switch from
their previous brands purely because of variety seeking.  

 

3.    METHODOLOGY

 

The
target population of this research is mobile service subscribers from Sindh.
The size of population of mobile service subscribers is 1.5 million people and
sample size drawn from it is 400 respondents. The distribution of
questionnaires in different cities is based on percentage of cities in overall
population.

 

Cluster
sampling technique has been used in order to get information from variety of
people covering different geographic, cultural and societal dimensions. For
that first clusters are made on the basis of location like one city from east
of Sindh other from west, and north in order to cover people having different
preference.

 

This
study has used descriptive analysis to portray accurate profile of customers’
preference for mobile service. The data collection method used to carry out
this research is survey via questionnaire. Survey strategy is used in
descriptive research to answer who and what questions. And as our purpose is to
find who lead and how? And what factors affect the consumers’ preference? So
for this, descriptive research is used in general and questionnaires in
particular. To approach the research results, questionnaire as a tool to
collect the results have been chosen. 400 questionnaires with 35 simple
questions related to demographics, service type, preferred service, and reason
for preference, satisfaction of customer with that service and their
probability to change the service are distributed. The measurement instrument
used to carry out this research was a questionnaire containing closed ended,
structured questions. With the cooperation of respondent 87.5% response
obtained. For analyzing the response given by 350 respondents’ standard way to
get accurate results have been used.

 

Research
Objectives: The
research objectives of this study are: “To examine the importance of different
factors affecting consumers’ motives related to mobile phone services
selection.

 

Consumers’
preferences related to acquisition of particular mobile service and underlying
factors associated with changing from previous service to the newer one. And to
discover that which factors
either price, service or any other factor have caused rise or fall of market
share of different mobile phone services.

 

 

 

 

 

 

 

 

 

 

4.
FINDINGS.

 

Q#1 Why do you prefer
current network service? 

 

 

Figure 1. shows that 23.3% of
subscribers prefer their mobile service because of price and 31.3% of
subscribers prefer their mobile service because of attractive packages whereas
7.2% of subscribers prefer because of cheaper rate as well as attractive
packages and 19.7% because of coverage whereas 1.8% because of internet
services and 16.7% because of other factors or cumulative of two or three
factors.

 

Q#2 The service type
under use:

 

 

The other way to show subscribers’
preference is to look at the service type i.e. whether people use prepaid
service or postpaid. It is considered that prepaid service is cheap comparative
to postpaid. As per this aspect, 87.2% of the subscribers use prepaid service
as shown in figure 2 whereas 9.9% use postpaid and only 0.9% subscribers use
both prepaid as well as postpaid service.

Q#3 which service you
prefer now?

 

 

 

 

After
analyzing these three questions, we come to know that the preferences of
consumers are highly affected by the prices. 23.30% of people prefer their
respective network services because of cheaper rates and 31.30% prefer
attractive packages. About 83% people prefer prepaid service type which is
considered as less expensive than postpaid.

 

Q#4 Subscribers’ monthly income and
its relation with service preferences.

 

 

PreferencesIncome

0-5000

5001-20000

20001-35000

35001-50000

above 50000

Cheaper rate

9

18

3

5

1

Coverage

3

23

9

9

4

Attractive packages

9

20

4

4

4

Internet services

0

1

1

0

0

Other services

0

1

0

1

2

Others

1

12

5

4

2

 

 

 

 

 

 

 

 

 

 

The
table given below shows that there is no any pattern observed in service
selection owning to mentioned preferences. Some people earning income between
5001 and 20000 prefer service because of cheaper rates whereas some with same
income prefer due to coverage or attractive packages. Even there is no any
pattern observed among other income groups also.

 

 

 

 

 

Q#5 Subscribers Age group and its
association with service selection reasons.

 

 

PreferencesAge

10-20

21-30

31-40

41-50

50+

Total

Cheaper rate

13

51

7

3

4

78

Coverage

5

38

17

4

1

65

Attractive packages

19

72

9

5

1

106

Internet services

1

3

2

0

0

6

Other services

1

1

0

1

1

4

Others

12

56

6

2

0

76

Total

51

221

41

15

7

335

 

 

 

 

 

 

 

 

 

 

 

Like
income, age also doesn’t affect the preferences for service selection. Many
subscribers having age 10 to 20 prefer service due to cheaper rate whereas many
prefer due to attractive packages. Same is the case with age group 21-30. No
any unique pattern is observed in above table.

 

Q#6 Location and its impact on service
reasons preferred.

 

PreferencesLocation

Khi

Hyd

Nwb

Suk

Jcd

Lrk

Shp

Ghk

Khp

Cheaper rate

40

15

1

7

4

3

4

2

2

Coverage

36

12

1

7

7

0

1

1

0

Attractive packages

52

24

10

5

6

7

1

1

0

Internet services

2

3

0

1

0

0

0

0

0

Other services

4

0

0

0

0

0

0

0

0

Others

42

16

0

5

0

6

3

1

3

Total

176

70

12

25

17

16

9

5

5

 

Khi = Karachi                        Hyd = Hyderabad                Nwb = awabshah,

Suk = Sukkur                        Jcd = Jacobabd                   Lrk
= Larkana           

Shp =
Shikarpur       Ghk = Ghotki                         Khp = Khairpur

 

As
per the table, location has no any affect on consumers’ preference on service
selection. As many of the subscribers from Karachi prefer service because of cheaper
rates whereas some prefer because of coverage and attractive packages also. No
any single factor affects their choice of mobile service.

 

 

 

 

 

 

 

 

 

Q#7 Gender and its relation with
service selection

 

 

 

 

 

 

 

 

 

Like
all other demographic factors, gender also has no any affect on selection of
service. As shown in table, there is equal ratio of cheaper rates, coverage and
attractive packages preference for male whereas females also prefer service
because of same preferences. After analyzing questions related to demographics,
no any relation between service selection and any demographic factor is found.

 

Four
demographic factors are taken into account i.e. income, age, location and
gender. But there is no any association of any of the demographic factor with
the preferences of subscribers of network service selection.

 

Q#8 why did subscriber change their 1st
mobile service?

 

 

 

46.86% respondents changed their prior
service whereas 52.53% respondent didn’t change their first network service as
shown in figure 5. Out of them 15.28% change their prior service because of
network problem only, 29.93% switch because other service provider provide them
good and attractive packages, 14.64% change their service because of friends
and relatives preference, 5.73% change because newer service is easier to use
than their prior service, 2.5% switch because of low quality of previous
service, only 0.6% change because of advertisement impact and 31.32% because of
other reasons including combination of two or more.

 

 

Q#9 How much probability is there that
subscribers may change their service?

 

 

 

 

 

 

 

 

 

 

Those who didn’t change their prior
service, the probability that they change their service and those who already
change their service but still not satisfied and their probability to change
their service again are shown in table.

 

 

5.
CONCLUSION & RECOMMENDATIONS.

 

After
conducting research on consumer preferences of mobile services it is concluded
that 50% of the people prefer mobile services because of price and cheaper
attractive packages. It can be proved by two ways one knowing reason for
preferring mobile service type they are using.

According to second aspect of research consumer prefer
mobile service because of demographics; it is concluded that there is no any
relation of income, gender while selection mobile services. While there is a
relation between age group with mobile preferences but it’s not sufficient. So
it can be deduced that consumer preferences of mobile service does not
associated with demographics.

 

Third thing
that is concluded is that of change of mobile service and reason behind change.
6.86% has changed prior service while 52.53% did not change their first
service.

 

This study
recommends the following:

 

1.
Companies should not compete on basis of prices alone, but they have to
maintain the same quality standard as well.

2. Companies should
try to retain their customers by offering variety of new innovative services and
packages while enhancing the coverage.

3.
Social factors are most influential on consumer behavior, but companies still
lacking behind in attracting consumers while targeting social factors. They have
to consider these things as well.

4.
Companies should focus on ethical marketing practices, while creating awareness
among costumers for hidden charges and taxes etc.

5. Improve
costumer services while by providing toll free numbers in order to help costumer.

 

 

REFERENCES.

 

Annu
Ristola, Understanding Consumer
Perception of Technology Intensive Services, FIN90014-University of Oulu, Finland,
available at: www.eiasm.org/documents/abstracts/7724.doc

 

Asma
Mahmood, Impact of the Demographics on
the Consumer’s Brand Loyalty. Unpublished Ph.D dissertation, Foundation
University Islamabad, Pakistan.

Available
at: www.researchactivity.com

 

Bhutto
R. A. & A. Maqsood, (2007): Customer
Services: A Case Study of Cellular Phone Companies in Pakistan, Journal of Independent Studies and Research
(JISR) Vol. 5(1).

 

Beatty,
S. E., and Ferrel M. E., (1998): Impulsive Buying: Modeling its Precursors, Journal of Retailing, 74 (2), 169-191.

 

Karjaluoto
H., J. Karvonen, M. Kesti, T. Koivumäki, M. Manninen, J. Pakola, A. Ristola
& J. Salo, (2005), Factors
affecting consumer choice of mobile phones, Journal of Euromarketing, Vol. 14(3). Available at: http://www.oasis.oulu.fi/publications/jem-05-hk.pdf

 

PTA, (2008):
Quarterly Report Of Pakistan
Telecommunication Authority, available at: http://www.pta.gov.pk/index.php?option=com_content&task=view&id=643&Itemid=591

 

PTA,
(2004): Annual Report Pakistan
Telecommunication Authority available at: http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590

 

Rook,
D. W., (1987): The Buying Impulse, Journal
of Consumer Research, 14
September, 1988-89. Available at: http://www.faqs.org/abstracts/Social-sciences/The-buying-impulse-Normative-influences-on-impulsive-buying-behavior.html

 

SCHIFFMAN,
L. G. & KANUK, L. L., (2000): Consumer Behavior, 7th ed., London, Prentice Hall.

Umar
M. & Tahir M., (2007): Boom Of
Telecom sector and its impact on Pakistani Culture, Bachelor thesis in
Business Administration, available at:
http://www.bth.se/fou/cuppsats.nsf/all/e6677b831b87c354c125736300055ce2/$file/thelast.pdf

 

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