Academic journal article Academy of Marketing Studies Journal

Critical Factors Promoting Customer Loyalty to Smartphone and Mobile Communications Service Providers

Academic journal article Academy of Marketing Studies Journal

Critical Factors Promoting Customer Loyalty to Smartphone and Mobile Communications Service Providers

Article excerpt

INTRODUCTION

For decades, wireless carriers have treated handset manufacturers like serfs, using access to their networks as leverage to dictate the kind of phones to be manufactured, their cost, and the available features. Carriers have largely viewed handsets as cheap, disposable lures that have been massively subsidized to snare subscribers and lock them into using proprietary services. However, the iPhone has upset that balance of power. Carriers are learning that the right phone--even a pricey one--can attract customers and bring in revenue. Now, in pursuit of an Apple-like contract, every manufacturer is racing to create a phone that consumers will love, instead of one of that carriers will approve. Currently, the market for high-end phones like the Apple iPhone is growing. Many people want the Internet, video, and personal digital assistant (PDA) features in one device. The smartphone market will likely continue to expand rapidly in coming years. As a result, more companies are entering the market and increasing competition.

Traditional companies have typically conducted consumer research, characterized customer satisfaction, determined how products are used, identified explicit product-related needs, and then focused on developing product features that meet those needs. But they have not made an effort to uncover the full range of their customers' unspoken needs and unmet wants. Delivering innovative product and service offerings requires personal interactions with customers. These interactions should be designed to let firms listen and carefully observe as customers express their true feelings about their experiences. The rapid advances in information communications technology provide greater opportunities for today's firms to establish, nurture, and sustain more long-term relationships with their customers than ever before. The ultimate goal is to transform these relationships into greater profitability by reducing customer acquisition costs and increasing repeat purchases. Recognizing the mounting importance of customer orientation, firms in all kinds of industries, ranging from manufacturing to information services, are exploring service-led growth as a promising means of differentiation. Service is no longer treated as a stand-alone marketing decision aimed at increasing customer satisfaction.

Telecommunications companies are advancing technology and exploring new product offerings. As a result, the competition within the industry is increasing. The U.S. mobile communications market, one of largest, is especially competitive. How should firms survive in such competitive markets? In the past, customers were provided with financial incentives to sign up or switch service from one provider to another. Over time, with the increased market saturation, companies have come to realize their performance can improve by focusing more on retaining customers than attaining new customers. As the market provides an increasing range of opportunities for customers, how can mobile telecommunications service providers create and maintain customer loyalty? The present paper investigates key drivers that generate and maintain customer loyalty to smartphone and mobile telecommunications service providers. In doing so, this paper examines the relationships between corporate image, price, product quality, product innovation, and customer loyalty.

LITERATURE REVIEW

Although customer loyalty is increasingly seen as a prime determinant of long-term financial performance in competitive markets, there are clear gaps in our knowledge of the antecedents of loyalty. Service quality and customer satisfaction are viewed as key drivers of customer loyalty (Lai, Griffin, & Babin, 2009), and research generally tends to consider the links between key drivers and loyalty (Balabanis, Reynolds, & Simintiras, 2006; Guo, Xiao, & Tang, 2009). A study demonstrated online word-of-mouth has a positive relationship to customer loyalty (Gruen, Osmonbekov, & Czaplewski, 2006). …

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