CRM I N MOBI LE TELECOM SERVICES:A STUDY ON THE I MPACT OF SERVI CEQUALI TY, SERVICE LOYALTY AND LOYALTYI NDI CES ON THE PERFORMANCE OFSERVI CE PROVI DERSA THESI SSubmitted byVANIHARI DASANin Partial Fulfillment of the Requirementsfor the Degree ofDOCTOR OF PHILOSOPHYSCHOOL OF MANAGEMENTFACULTY OF ENGI NEERI NG AND TECHNOLOGYSRM UNI VERSI TY, KATTANKULATHUR- 603 203SEPTEMBER 2012iiDECLARATI ONI hereby declare that the dissertation entitledCRM I N MOBI LETELECOMSERVI CES:ASTUDYONTHEI MPACTOFSERVI CEQUALI TY, SERVI CE LOYALTY AND LOYALTY I NDI CES ON THEPERFORMANCE OF SERVI CE PROVI DERS submitted for the DegreeofDoctorofPhilosophyismyoriginalworkandthedissertationhasnotformedthebasisfortheawardofanydegree,diploma,associateshiporfellowshipofsimilarothertitles.IthasnotbeensubmittedtoanyotherUniversity or Institution for the award of any degree or diploma.Place:Date: VANIHARI DASANiiiSRM UNIVERSITY, KATTANKULATHUR603 203BONAFI DE CERTI FI CATECertified that this thesis titled CRM I N MOBI LE TELECOMSERVI CES:ASTUDYONTHEI MPACTOFSERVI CEQUALI TY, SERVI CE LOYALTY AND LOYALTY I NDI CES ONTHEPERFORMANCEOFSERVICEPROVI DERSisthebonafideworkof Ms.VANI HARI DASANwhocarriedouttheresearch under my supervision. Certified further, that to the best of myknowledgetheworkreportedherein doesnotformpartofanyotherthesisordissertationonthebasisofwhichadegreeorawardwasconferred on an earlier occasion for this or any other candidate.Dr. SHANTHIVENKATESHSUPERVISORAssistant Professor (SG) - MarketingSRM B School, VadapalaniSRM UniversityChennai 600026.ivACKNOWLEDGEMENTThis thesis work has received support, sacrifice and blessings of severalwell-wishers.Theforemostamongthemismyresearchguide, Dr.ShanthiVenkatesh (ShanthiMaam). From the day Ijoined to this day, ShanthiMaam hasbeen a great, constant and reliable source of advice and guidance. In fact more than aguide she has ever been a very good mentor. It had been a great learning experienceworking with a person whose academic and research standards are exceedingly hightomatch.My overwhelming thanks aredue toShanthi Maam,forhelpingmeincountless number of ways during the course of the research program. Iam lost ofwordstodescribeherpatienceincorrectingmythesisandherhighlevelofcommitment toperfection. I profusely thank her for believingin my abilities andeducating me in the art of coherent writing.I thank Prof. J ayashree Suresh, Dean, School of Management, forherconstant support throughout my research program.Her boundless enthusiasm andcommitment to research is an inspiration to me. I thank her for her critical evaluationofmywork,herinvaluablecommentsonmyresearchtopicthathelpedmeinimproving the quality of the thesis.I thankherfor theinterestshe evincedin mywork and grateful to her for her timely help and assistance.IthankmyDoctoralCommitteemembers, Prof.P.T.Srinivasan,Prof. M. JXavier, Prof. V. JSiva Kumar and Prof. U. Srinivasa Raghavan forvtheiradvice,helpandsuggestions.Theywereverykeentoprovidemewithconstructive suggestions to enhance the quality of my thesis.Iam very gratefulto the Management ofSSN Institutions,who havekindlysponsoredmeformyresearchatSRMUniversity.Iam gratefultoProf.B.Srinivasan,Director,SSNSchoolofManagement&ComputerApplications, Prof.R.Balasubramanian,Head ofDepartment,MBAand myfellowcolleaguesforprovidingmewithaconduciveenvironmentforpursuingresearch in my workplace.I express thanks to the enumerators who collected the data to validate myhypothesis. I also thank the respondents for their cooperation and patience in fillingthe questionnaire.Thegreatestgratitudeisdueformyfamilythatcannotbeadequatelyexpressedin words. I wouldnot have attempted this doctoral study (with tons ofcommitment at home) but for their love, support and infinite patience.Above all, I thank God for his supreme grace and presence.VANIHARI DASANviABSTRACTThe Indian Telecom Industry has come a long way in achieving its dreamofprovidingaffordableandeffectivecommunicationservicestoitscustomers.Faced with a growing market and increasing competition, companies in the telecombusiness are adopting to the new technological imperatives in order to out-performtheir competitors. One such approach in the adoption of an information technology(IT) to move towards customers is the Customer Relationship Management (CRM).CRM efforts aim at improving service quality and service quality is foundto be having a definite impact on customer loyalty. This study aims at understandingthebehavioral aspects thatplay agreaterroleinunderstandingcustomerloyalty,improvingservicequalityandtherebyenhancingCRM.Datacollectedfromtheresidential users of mobile services from Chennai is used for the study.Inordertosustaininthecompetitiveenvironment,thisstudy providesinsightstothepractitionersonthepathsthatleadtocustomerloyalty.Thepathmodel uses three constructs, namely the Extended SERVQUAL Scale with sevendimensions, SERVLOYAL Scale with seven dimensions and Loyalty Indices with 3dimensions. Using Data EnvelopmentAnalysis (DEA), the study uses the insightsfrom path model to provide a method to evaluate the effectiveness of CRM practicesofthe mobile service providers so that they can refine their strategies to improveloyal customer base.viiAlthoughZeithamletal.(1996)reportastrongassociationbetweenoverall service quality and service loyalty across multiple companies, the findings ofthis study clearly portray the quality-loyalty relationship with reference to the IndianMobile segment. This underlines the importance of a multidimensional approach toservice loyalty. The path models confirm the relationship between service quality,serviceloyaltyadloyaltyindices.Thisstudyfurtherstrengthens(Bloemeretal,1999) with a clear focus on linking perceived service quality and service loyaltyas a multi-dimensional perspective.The insight from this study can be used in other service sectors to measureservice quality and service loyalty and develop robust CRM systems that can mapand predict customer loyalty levels.viiiTABLE OF CONTENTSCHAPTER NO. TI TLE PAGE NO.ABSTRACT viLI ST OF TABLES xviLI ST OF FI GURES xixLI ST OF SYMBOLS AND ABBREVI ATI ONS xx1 I NTRODUCTI ON1.1STATEMENT OF THE PROBLEM 71.2OBJECTIVES 91.3HYPOTHESES 91.4DELIVERABLES OF THE STUDY 101.5SCOPE AND LIMITATIONS OF THE STUDY111.6CHAPTERISATION 111.7SUMMARY 132LI TERATURE REVI EW2.1INDIAN TELECOM INDUSTRY 142.2CUSTOMER RELATIONSHIPMANAGEMENT 152.3SERVICE QUALITY 172.3.1Service Quality Definition based onFunctional Quality 172.3.2Positive Relationship between servicequality with customer satisfaction 18ixCHAPTER NO. TI TLE PAGE NO.2.3.3Positive Relationship between servicequality with customer loyalty and retention202.3.4Positive Relationship between servicequality with profitability 202.3.5SERVQUAL in Telecom 202.3.6Service Quality Measurement and Models212.3.7Service Quality Dimensions 242.4SERVICE LOYALTY 252.4.1Defining Service Loyalty 252.4.2Dimensions of Service Loyalty 272.5LOYALTY INDICES 282.6LITERATURE RELATING TO LINKAGEOF SERVICE QUALITY, SATISFACTIONAND LOYALTY 302.7INSIGHTS AND INADEQUACIES 322.8SUMMARY 343 RESEARCH METHODOLOGY3.1INTRODUCTION 353.2RESEARCH DESIGN 353.2.1Area of the Study 363.2.2Instrument Development 363.2.2.1 Variables considered for the Study363.2.2.2Demographic Variables 363.2.2.3Extended Service QualityDimensions 37xCHAPTER NO. TI TLE PAGE NO.3.2.2.4Service Loyalty Dimensions 393.2.2.5Loyalty Indices 423.2.3Sampling Method 433.3PROPOSED CONCEPTUAL MODEL 443.4PRE-TEST 453.5DATA COLLECTION 453.6SUMMARY OF RESEARCH METHODS 453.7DATA EDITING, CATEGORISINGAND CODING 463.8DATA ANALYSIS PROCEDURES 463.8.1Structural Equation Modeling 463.8.1.1Measurement Model 493.8.1.2 Structural Model 493.8.1.3 Models Goodness-of-Fit Assessment 493.8.1.4 AMOS 523.8.2Multiple Regression 533.8.2.1Measurement of Variables 543.8.2.2Coefficient of MultipleDetermination (R2) 553.8.2.3Interpretation of RegressionVariate 563.8.3Data Envelopment Analysis 563.9PROCESS OF ANALYSIS 613.10SUMMARY 61xiCHAPTER NO. TI TLE PAGE NO.4 THE I NDI AN TELECOM I NDUSTRY:STATUS ANALYSI S4.1INDIAN TELECOM INDUSTRY AN OVERVIEW 624.1.1Basic Service Providers 624.1.2Value added Service Providers 634.2THE INDIAN TELECOM INDUSTRY:HISTORICAL PERSPECTIVE 644.3GROWTH OF THE INDIAN TELECOMSECTOR 664.3.1Indian Telecom Industry Pre privatization 664.3.2Indian Telecom Industry Post Privatization 674.4INDIAN TELECOM INDUSTRY:A COMPETITIVE ANALYSIS 734.4.1PEST Analysis 744.4.2Michael Porters Five Forces Model 804.5INDIAN MOBILE SECTOR 844.6KEY TRENDS IN INDIAN TELECOM 864.7DETAILS OF MOBILE SERVICEPROVIDERS CONSIDERED FOR THE STUDY 884.7.1Bharthi Airtel 884.7.2Aircel 894.7.3Idea Cellular 904.7.4Vodafone 90xiiCHAPTER NO. TI TLE PAGE NO.4.7.5BSNL 914.7.6Reliance 914.8SUMMARY 925 DATA ANALYSI S5.1INTRODUCTION 935.2PROFILE OF THE RESPONDENTS 945.2.1Classification based on Service Provider 955.2.2Classification based on Plan 955.2.3Classification based on Age 965.2.4Classification based on Length of Use 975.2.5Classification based on Monthly Expenditure975.2.6Classification based on Education 985.2.7Classification based on Occupation 985.3DESCRIPTIVE STATISTICS 995.3.1Mean and Standard Deviation 995.3.2Normality 1045.4TEST OF RELIABILITY 1045.4.1Service Quality Dimensions 1055.4.2Service Loyalty Dimensions 1075.4.3Loyalty Indices 1085.5FACTOR ANALYSIS 1095.6HYPOTHESES TESTING 1185.6.1ANOVA 1185.6.2Linear Regression 1255.7PATH MODEL 135xiiiCHAPTER NO. TI TLE PAGE NO.5.7.1Relationship between Service Qualityand Service Loyalty 1355.7.2Relationship between Service Qualityand Loyalty Indices 1385.7.3Relationship between Service Loyaltyand Loyalty Indices 1405.8ASSESSING THE EFFECTIVENESS OF CRMPRACTICES USING DATA ENVELOPMENTANALYSIS 1415.8.1Effectiveness of Service Quality onService Loyalty 1425.8.1.1Behavioural Loyalty 1435.8.1.2Attitudinal Loyalty 1495.8.1.3Cognitive Loyalty 1515.8.1.4Conative Loyalty 1525.8.1.5Affective Loyalty 1535.8.1.6Trust Loyalty 1555.8.1.7Commitment Loyalty 1565.8.2Effectiveness of Service Quality onLoyalty Indices 1575.8.2.1 Advocacy Loyalty Index (ALI)1575.8.2.2Purchase Loyalty Index (PLI) 1595.8.2.3Defection Loyalty Index (DLI)1605.8.3Effectiveness of Service Loyalty onLoyalty Indices 1615.8.3.1 Advocacy Loyalty Index (ALI)161xivCHAPTER NO. TI TLE PAGE NO.5.8.3.2Purchase Loyalty Index (PLI) 1635.8.3.3Defection Loyalty Index (DLI)1645.8.4Summary of Data Envelopment Analysis1655.9SUMMARY 1656 FI NDI NGS6.1FINDINGS FROM DESCRIPTIVESTATISTICS 1676.2FINDINGS FROM ANOVA 1676.2.1Demographics on Service Quality 1676.2.2Demographics on Service Loyalty 1686.2.3Demographics on Loyalty Indices 1686.3FINDINGS FROM LINEAR REGRESSION1696.3.1Relationship between Demographicsand Service Quality 1696.3.2Relationship between Demographicsand Service Loyalty 1706.3.3Relationship between Demographicsand Loyalty Indices 1706.3.4Relationship between Service Qualityand Service Loyalty 1706.3.5Relationship between Service Qualityand Loyalty Indices 1716.3.6Relationship between Service Loyaltyand Loyalty Indices 171xvCHAPTER NO. TI TLE PAGE NO.6.4FINDINGS FROM THE PATH MODEL 1726.5FINDINGS FROM DATA ENVELOPMENTANALYSIS 1726.5.1Effectiveness of Service Quality onService Loyalty 1726.5.2Effectiveness of Service Quality onLoyalty Indices 1736.5.3Effectiveness of Service Loyalty onLoyalty Indices 1746.6SUMMARY 1747.DI SCUSSI ON7.1INSIGHTS FROM LITERATURE AND GAPS1757.2ATTEMPTS BY THIS STUDY TOFILL THE GAPS 1767.3RESEARCH IMPLICATIONS 1797.4MANAGERIAL IMPLICATIONS 1807.5CONCLUSION 181REFERENCES 183APPENDI X I QUESTI ONNAI RE 199PUBLI CATI ONS BASED ON THI S RESEARCH 203CURRI CULUM VI TAE 204xviLI ST OF TABLESTABLE NO. TI TLE PAGE NO.4.1 Important dates and events in the IndianTelecom Industry 654.2Status of the Indian Telecom Industry in 1993-94 665.1Classification based on Service Providers 955.2Classification based on Plan 965.3Classification based on Age 965.4Classification based on Length of Use 975.5Classification based on Monthly Expenditure 975.6Classification based on Education 985.7Classification based on Occupation 995.8Descriptive Statistics of the Interval Scaled Variables1005.9Cronbachs Alpha for Service Quality dimensions 1065.10Cronbachs Alpha of Service Loyalty dimensions 1075.11Cronbachs Alpha of Loyalty Indices 1085.12KMO and Bartlett's Test Service Quality 1095.13Factor Analysis Service Quality Dimensions 1105.14KMO and Bartlett's Test Service Loyalty 1115.15Factor Analysis Service Loyalty Dimensions 1115.16KMO and Bartlett's Test Loyalty Indices 1125.17Factor Analysis Loyalty Indices 1125.18Confirmatory Factor Analysis Service Quality 1145.19Confirmatory Factor Analysis Service Loyalty 114xviiTABLE NO. TI TLE PAGE NO.5.20Confirmatory Factor Analysis Loyalty Indices 1145.21One-Way ANOVA Demographic Variableson Service Quality 1195.22One-Way ANOVA Demographic Variableson Service Loyalty 1225.23One-Way ANOVA Demographic Variableson Loyalty Indices 1245.24Relationship between Demographic Variablesand SERVQUAL Dimensions 1255.25Relationship between Demographic Variablesand SERVLOYAL Dimensions 1275.26Relationship between Demographic Variableson Loyalty Indices 1295.27Relationship between SERVQUAL and SERVLOYAL1305.28Relationship between SERVQUAL and Loyalty Indices1325.29Relationship between SERVLOYAL and Loyalty Indices 1345.30Service Provider Details 1425.31Input and Output Parameters Behavioural Loyalty1435.32Ratios for Efficiency 1445.33Relative Efficiency on Behavioural Loyalty 1495.34Input and Output Parameters Attitudinal Loyalty 1505.35Relative Efficiency on Attitudinal Loyalty 1505.36Input and Output Parameters Cognitive Loyalty 1515.37Relative Efficiency on Cognitive Loyalty 1525.38Input and Output Parameters Conative Loyalty 1535.39Relative Efficiency on Conative Loyalty 154xviiiTABLE NO. TI TLE PAGE NO.5.40Input and Output Parameters Affective Loyalty 1545.41Relative Efficiency on Affective Loyalty 1555.42Input and Output Parameters Trust Loyalty 1555.43Relative Efficiency on Trust Loyalty 1555.44Input and Output Parameters Commitment Loyalty 1565.45Relative Efficiency on Commitment Loyalty 1575.46Input and Output Parameters Advocacy Loyalty Index1585.47Relative Efficiency on Advocacy Loyalty 1585.48Input and Output Parameters Purchase Loyalty Index1595.49Relative Efficiency on Purchase Loyalty 1595.50Input and Output Parameters Defection Loyalty Index1605.51Relative Efficiency on Defection Loyalty 1615.52Input and Output Parameters Advocacy Loyalty Index1625.53Relative Efficiency on Advocacy Loyalty 1625.54Input and Output Parameters Purchase Loyalty Index1635.55Relative Efficiency on Purchase Loyalty 1635.56Input and Output Parameters Defection Loyalty Index1645.57Relative Efficiency on Defection Loyalty 1645.58Details of Best Performer on various Dimensionsusing Data Envelopment Analysis 165xixLI ST OF FI GURESFI GURE NO. TI TLE PAGE NO.3.1Conceptual Framework for the Study 444.1Porters Five Forces Model 825.1CFA Service Quality 1155.2CFA Service Loyalty 1165.3CFA Loyalty Indices 1175.4Path Diagram of Service Quality on Service Loyalty1365.5Path Diagram of Service Quality on Loyalty Indices1385.6Path Diagram of Service Loyalty on Loyalty Indices1407.1Conceptual Framework 1767.2Model from Observations 178xxLI ST OF ABBREVI ATI ONSTRAI Telecom Regulatory Authority of IndiaDoT Department of TelecommunicationsMoC Ministry of CommunicationsNTP National Telecom PolicyMTNL Mahanagar Telephone Nigam LimitedVSNL Videsh Sanchar Nigam LimitedGSM Global System for Mobile CommunicationsCDMA Code Division Multiple AccessWLL Wireless Local LoopARPU Average Revenue Per UnitMoU Minutes of UsageMVAS Mobile Value Added ServicesCRM Customer Relationship ManagementSERVQUAL Service QualitySERVPERF Service PerformanceSERVLOYAL Service LoyaltyALI Advocacy Loyalty IndexPLI Purchase Loyalty IndexDLI Defection Loyalty IndexSEM Structural Equation ModelCFA Confirmatory Factor AnalysisRMSEA Root Mean Square Error of ApproximationRMSR Root Mean Square ResidualGFI Goodness of Fit IndexxxiCFI Comparative Fit IndexAMOS Analysis of Moment StructuresDEA Data Envelopment AnalysisDMU Decision Making UnitPEST Political, Economical, Social andTechnological1CHAPTER 1I NTRODUCTI ONTelecommunications is one of the prime support services needed for therapid growth of any developing country. India has emerged as one of the youngestand fastest growing economies in the world today. One of the sectors that has shownthe signs of profitability andcontributed significantly to the country's economy isthe telecom industry. In fact, the Indian telecom market has gained recognition asoneofthemostlucrativemarketsglobally.Thevastruralmarketholdsahugepotentialtodrivethefuturegrowthofthetelecomcompanies.Further,theGovernment's initiatives forincreasing the telecom connectivity in rural areas arealso likelyto aid the telecom service providers to extend theirservices in theunconnected rural areas.Telecommunicationscompaniesrecognizethatbecomingcustomercentric is very important to their long term competitive advantage, as many playersoffer similar features. Customer centricity depends on having a single view of thecustomer data that gives clear insight into the customer segments, their behavior andpurchasingpatterns.Telecomorganizationsneedaccesstodatathatisaccurate,reusable, and productive, so that they can create a holistic, real-time view of theircustomers.The history of the Indian Telecom sector goes way back to 1851, whenthe first operational landlines were laid by the then British Government in Calcutta.After India became an independent country in 1947, all foreign telecommunicationcompanieswerenationalizedandamonopolyorganizationwasformedbytheGovernment of India, incorporating Post, Telephone and Telegraphs.2Originally, the telecom sector, like most other infrastructure sectors wasownedandcontrolledbytheGovernmentofIndia.TheDepartmentofTelecommunications (DoT),reporting to the Ministry ofCommunications (MoC)became the key body for policy issues and regulation, apartfrom being the basicserviceproviderfortheentirecountry.ByanactofParliament,theTelecomRegulatory Authority ofIndia (TRAI) was formed to be the regulatory agency, tomonitor the activities of the telecom body.The Telecom Commission was set up with administrative and financialpowersoftheGovernmentofIndiatodealwithvariousaspectsofTelecommunications in the year 1989. The multi-pronged strategies followed by theTelecom Commission have not only transformed the very structure of this sector buthave also motivated all the partners to contribute in accelerating the growth of thesector.Indiais the secondlargestcountry in population and seventh largestinterms of area. Despite the government making several concentrated efforts throughthe Five-year Plans, to provide efficient communication system to the people of thecountry, due to increasing population, non-accessibility to remote and village areasand non-availability of adequate resources, the national tele-density was only 1.1 inthe pre-liberalization period (till 1990), which was far low when compared to theglobal average of 12 for the same period.The world began to witness the changing phase of the telecom industryof India since 1994, when the Indian Government initiated the New Telecom Policy(NTP),withabroadobjectivetoenableavailabilityofaffordablemeansofcommunication for the citizens of the country. The prime focus of the objectives ofNTPwastoincreasethetele-density of thecountry by 15in2010.Forthisthecountry required an additional investment of Rs.5000 billion. In order to meet theinvestment requirements and to realize the broad objectives of the telecom policy ina phased manner, it became necessary that the government allowed private playerstooperateintheindustry.Thegovernmentalsosensedtheprivateparticipationimperatives for achieving the same in an efficient manner. Hence it was decided to3open the sectorforprivate participation,simultaneously inboth basic andmobileservice segments.TheotherobjectivesofNTP1994include,creatingamodernandefficienttelecommunicationsinfrastructureandtransformingthetelecommunicationssector to a greater competitive environment in both urban and rural areas. Further,the NTP 1994 aimed at providing equal opportunities for all players, including theprivateplayers.Thusbreakingthebarrierstoentry,theprivatesectorprovidersforayedintothehithertomonopolytelecomsectorofIndia,byfirstenteringtheCellularSegmentin1994.But,thebasictelecomservicenamelytheFixed-lineSegment was at the hands of the government monopoly service provider DoT, till1998. The very first private player to begin operations in the fixed-line segment wasBharti Telecom. The company was given license in 1998 and subsequently began itsoperations in the segment in 2002.Theentireprocessofreform gainedfurthermomentum withtheannouncementofthe New NationalTelecom Policy of1999 (NTP1999).Thegovernmentstartedtoissuelicensestomultipleplayerstooperateinallthesegmentsoftheindustry.Italsomadeprovisionstodiscriminatetheserviceproviding functions and the regulatory functions of DoT, so that exclusive serviceproviders are created to cater to the specific requirements of different segments ofthe population. The most noteworthy achievements of NTP 1999 were as follows:Creation of the Public Sector Telecom Service ProvidersOne of the important objectives of NTP 1999, was to separate the serviceproviding and regulatory functions of DoT. Subsequently, exclusive telecom serviceproviders were floated to deploy the restructuring strategies in the sector, complyingwiththeobjectiveslaiddownbyNTP-1999.Thepolicyseparatedtheserviceproviding function and policymaking and licensing function of the DoT. A brief noteon the public sector telecom service providers is as follows:4 The Bharat Sanchar Nigam Limited (BSNL) was floated to functionas the government owned corporate entity to provide telecom servicesto the entire country For the metro cities of Delhi and Mumbai, the Mahanagar TelephoneNigam Limited (MTNL) became the service provider. Meanwhile, the international telecom services were entrusted with theVideshSancharNigamLimited(VSNL).Asaresultofthedisinvestment policy adopted by the Government of India, in the late1990s the company was sold to a private enterprise Panatone A Tata Group Company.Entry of Private PlayersSubsequenttotheannouncementmadeinNTP1999,thegovernmentstarted issuing licenses to multiple private service providers to provide services ineach telecom circle. Consequently,the private service providers kick-started theiroperations in fixed-line segments in theyear 1994 and subsequently, themarketswitnessed private players in mobile segment since 1996.With the entry of private players in the telecom segment, the sector beganto witness the collapse of monopoly on the whole. Thus, the sector that was hithertocharacterizedbymonopolyscenariograduallymovedintocompetitivemarketstructure, with multiple players offering a variety of services.AsaresultofprivatizationoftheIndianTelecomindustry,themostexcited are the consumers. When there was monopoly, the users were left with nochoice but to accept whatever the monopoly service provider gave to them. But inthe presentcompetitivescenario, consumers areable toexerttheir preferences astheyarenowofferedavarietyofoptionstochoosefrom.Thetelecommarketenvironmentiswitnessingbrandnewchallengesbothfromtheperspectivesofservice providers and service users.5Current Trends in Telecom I ndustryAccordingtotheTelecomRegulatory Authorityof India(TRAI),thenumber of telephone subscriber basein the country reached 653.92 million as onMay 31, 2010, an increase of 2.49 per cent from 638.05 million in April 2010. Withthis the overall tele-density (telephones per 100 people) has touched 55.38.According to Business Monitor International, India is currently adding 8-10 million mobile subscribers every month. It is estimated that by mid 2012, aroundhalf the country's population will own a mobile phone. This would translate into 612million mobile subscribers, accounting for a tele-density of around 59 per cent by2012.Moreover, according to a study conducted by Nokia, the communicationssector is expected to emerge as the single largest component of the country's GDPwith 15.4 per cent by 2014. According to the latest figures made available by theVoice & Data study, Samsung posted a growth of 21.7 per cent to register revenuesof Rs 5,720 crore in 2010-11 from India, from Rs. 4,700 crore in the previous fiscal.Nokia on the other handhad aflatgrowth, with revenues of Rs. 12,929 crore in2010-11from IndiacomparedtoRs.12,900in thepreviousfiscal.Accordingtoexperts,homegrown companieslikeMicromax,Karbonn,Lava,Spiceandothermobile handset firms importing from China have eaten into market share of multi-national firms on the back of low-cost dual-SIM feature phones.With the availabilityofthe 3Gspectrum,about275 million Indiansubscribers will use 3G-enabled services, and the number of 3G-enabled handsetswillreachcloseto395millionby2013-end,estimatesthelatestreportbyEvalueserve.AccordingtoaFrost& Sullivanindustry analyst,by2012,fixedlinerevenues are expected to touch US$ 12.2 billion while mobile revenues will reachUS$ 39.8 billion in India. Moreover, in an attempt to boost auction of 3G spectrum,thegovernmenthasallowedprospectivebidderstoraiseshort-termfundsfrom6domestic market, which can be refinanced through external commercial borrowings(ECBs) within 12 months.The Indian Mobile SectorGloballyintermsofmobilesubscriptions,Indiaistheworldssecondlargest wireless marketafter China. Atthe end of March 2011, the total wirelesssubscribers (GSM, CDMA & WLL (F)) base was 812 million. As a result the overalltele-density rose to 71% by end of March 2011 as against 4 % in March 2001. Thisgrowthofthesectorcanbeclearlyattributedtothefavorableandimprovedregulatory structure, declining handset prices and innovative pre paid tariff structure.With increasing competition and the needfor increasing the subscriberbase in rural markets, the call rates are declining. This has led to decrease in ARPU.Therefore,inspiteofunprecedentedgrowthinthemobilesubscriberbase,theoperator margins are declining quarter on quarter.The success of an organization depends on the degree to which they areorientedtowardscustomers.Thisrequiresgainingcustomerinsightinordertounderstand and manage the dynamics of customer expectations which forms a partof the critical success factors of any service provider. In the light of the sharp rise inthe overall tele-density, the growth of this sector is attributed to the favorable andimproved regulatory structure, declining handset prices and innovative pre paid tariffstructure. But with increasing competition and the need for increasing the subscriberbase in rural markets, the call rates are declining. This has led to decrease in ARPU.Though the Minutes of Usage (MoU) is increasing, however the same is being offsetby the lowering tariffs of operations. This can be attributed to the major subscriptiongrowth that is coming from bottom of the pyramid.As ARPU declines, the challenges for operators are to increase revenuesby differentiating their offerings and develop alternative streams by offering morevalue added services to the existing customers. The decrease in average revenue canalso be attributed to the structure of the Indian Mobility Marketwhich islargely7prepaid.Thismeansthatmostofthesubscribersaddedarefromthebottomofpyramid with low usage resulting in low ARPU.In terms of market share, 92 % of the subscriber base in India is on pre-paid connection, with the remaining 8% on post-paid subscriptions. This has alsogivenrisetoopportunitiesforgeneratingincreasedrevenue,throughexploringpotential Mobile Value Added Services (MVAS)like subscription packs of news,alerts etc and more exclusive roaming services tailored to pre-paid subscribers. WiththeassumptionthattodaysValueAddedServicesbecomestomorrowsCoreServices, both these types of services together are referred in this study as Mobileservices.Thusinlaunchinganyofitsservices,thetelecomserviceprovidersshould focus it from the perspective of customer orientation.TodaysIndianconsumeristransformingrapidly.Theconsumerisgrowingricher,younger,aspiringandspecificinhis/herneedsthaneverbefore.Consumersnowvalueconvenienceandchoiceatparalongsideexpectingbettervaluefortheirhard-earnedmoney.Arangeoftelecomserviceprovidersareattempting to serve the needs of this emerging new-gen of Indian consumers. Thelast decade has witnessed a colossal transition in the paradigms with the emergenceof many privateplayersin thetelecom domain,someof whom haveinvestedinIndian operationsbasicallylooking atthe promisingtakeaway from the changinglifestyles of Indian consumers. They have specially tailored their modus operandi tomeet the life-style demands of the upwardly mobile Indian consumers of today. Thebulging purses and liberalized market are making telecom being looked up as thebig thing for India.1.1 STATEMENT OF THE PROBLEMThebeneficiariesofthecompetitionbeingconsumers,thetelecomplayers in todays environment are required to design and deploy customer-centricstrategies not only to grab a share in the market but also to sustain in the market in8the long-run. The players have realized the importance of constant service-qualitydelivery to the customers for long-run sustainability. Customer relationship signifiesidentifying the needs of the customers and stretching out ways and means to satisfythem.Tobeprecise,itmeansachievinghighcustomerprofitabilitycustomerrevenuesoverandabovecustomercosts,whichdemandsmatchingcustomerexpectationswithcustomersatisfaction.Thehighcostofcustomeracquisitionismaking todays businesses understand the importance of retaining the customers forlong-run sustainability.Customer Relationship Management (CRM) aims at narrowing the gapbetween the company and its customers. In Telecom Sector, CRM plays a vital rolein not only bringing the customers close to the company, but also in identifying thechanging behavioral pattern of the customers. In technology-dynamic markets liketelecom, an efficient CRM system is essential, since the customer attrition is highdue to the presence of close substitutes and near-zero switching costs.With satisfied customers becoming retained customers and the retainedcustomersbecomingloyalcustomers,itbecomesinterestingtostudytheeffectivenessofcustomerloyaltythroughCRMimplementationintheIndianMobile sector.This study helps the mobile service providers in determining the servicequality parameters that influence service loyalty parameters which in turn influenceloyaltyindices.Previous studieshaveestablishedtheinfluenceofservicequalityaspectsonthecustomerloyalty.Therearesomestudiesthatreflectbehavioralaspects of the customers and the relationship on loyalty. But any such contemporarymanagementpracticeswhenadoptedbycertainindustrysectorsneedtobeconfirmed for its effectiveness.ThusCRMwhichisbeingwidelyadoptedbythemobileserviceproviders needs to be measured with respect to the degree to which the customersturnadvocates;thedegreetowhichthecustomersreturntothecompanyforrepurchase i.e. in the context of cross selling and up selling and the degree to which9the customers show symptoms of defection. Even though some of these aspects havebeenexploredbypreviousresearcherstoagreatextent,itisfeltthatnotmuchattention has been drawn into measuring the effectiveness of loyalty, particularly forsustainedpresence.Henceitisfeltthatacloserstudyonthisaspectwouldbeworthwhile.Thestudyfurtherprovidesusefulinformationandopensupnewavenues for future research.1.2 OBJ ECTIVESThe study has the following objectives:1. To identify customer perceptions of service quality of mobile servicesused by them.2. Toanalyzetheserviceloyaltydimensionsthatimpacttheloyaltylevels of the customers3. To assess the loyalty indices that provide directives for strengtheningCRM4. Topresentapathmodelforestablishingandconfirmingtherelationship (if any) existing among service quality,service loyaltyand loyalty indices5. To provide suggestions to the service providers tobase their CRMstrategies on the findings of the study.1.3 HYPOTHESESH01:Thereisnosignificantrelationshipbetweendemographicvariables and service quality dimensions.H02:Thereisnosignificantrelationshipbetweendemographicvariables and service loyalty dimensions.H03:Thereisnosignificantrelationshipbetweendemographicvariables and loyalty indices.10H04:There is no significant relationship between service quality andservice loyalty.H05:There is no significant relationship between service quality andloyalty indices.H06:There is no significant relationship between service loyalty andloyalty indices.1.4 DELI VERABLES OF THE STUDYThisstudywoulddeliverananalyticalinsighttothestrategicpolicyoptions to the competing service providers, industry onlookers and others concernedwiththeindustrywhoareinvolvedintheCRMpractices.Totheacademicresearcher, the study would provide a knowledge base to probe further, into newhorizons of research.The specific deliverables are: Thestudywouldprovideinsightontheimpactofdemographicvariables on the service quality, service loyalty and customer loyaltyof the mobile service provider. The confirmatory factor analysis would give a research insight as tothe influence of each of the latent factors in strengthening the CRMpractices,whiletheconfirmatorypathrevealsthecriticalqualityvariable(s) to concentrate on in order to improve service loyalty. The study would suggeststrategies forimprovementto the variousplayers tomatch the expectations and to sustain in the competitiveenvironment.111.5 SCOPE AND LI MI TATI ONS OF THE STUDYThe following are the scope and limitations of the study. Thefindingsofthestudycanbeextendedforfurtherresearchonvaried perspectives and other sectors namely,Insurance and BankingHospitalityHealthcareand other segments where service quality plays an important role in CRM. The study is confined only to the GSM and CDMAmobile usersegment and as such the results derived may not be applicable to theother segments of the industry. The study limits its applicability to Chennai city and can be extendedonly to markets having similar demographic, geographic and socio-economic characteristics. The study applies convenience sampling method of data collection,and the limits that apply to this sampling method of data collectionhold good for this study also.1.6 CHAPTERI SATI ONChapter 1 presents the introductory perspectives and an overview aboutthe Indian Telecom industry. The chapter includes an introduction to the researchproblem,theresearchobjectivesandgivesthescopeandlimitationof thestudyconcepts.12Chapter 2 provides a detailed overview on the literature reviewed by theresearcher in order to have an insight into the research studies undertaken in relatedareas; to identify the research gaps and also to obtain a sound knowledge about themethodological issues.Chapter 3 focuses on the research methodology for the empirical study.The research design is discussed in terms of the scale development, questionnairedesign,datacollection,andparticipantselection,andsamplesizedesign,dataediting, coding and categorizing and analyzing procedures.Chapter 4 presents a comprehensive note on the path of growth trendsand transitions of the Indian Telecommunication industry. It also covers a detailedcompetitive analysis of the Indian Telecom Industry,Chapter5presentstheprocessesandresultsofthepreliminarydataanalysis andhypothesis testing are discussed in detail. Profile of participants andresponserateforthis study aredescribed.Preliminary dataexaminationincludesdescriptive statistics of mean and standard deviation, and normality. Reliability ofthe measurement scales are examined, followed by the testing of hypotheses.Chapter 6 discusses on the findings arising from the research, which willthrowlightonthesignificanceofthepathmodelsandthefindingsontheeffectiveness using Data Envelopment Analysis.Chapter 7 covers the overall conclusions of the dissertation. Conclusionsaredrawnabouttheresearchproblemandtheimplicationsforresearchersandpractitionersarediscussed.Limitationsofthestudyareidentifiedandareasforfurther research are suggested.131.7 SUMMARYThis chapter provides the foundation for the thesis. It provides a contextandjustificationforthestudy.Theresearchproblemandresearchquestionsaddressedinthestudywereintroduced.ThemainpurposeofthisstudyistoinvestigatewaystostrengthenCRMpracticesbytheMobileServiceProviders.Methodologyunderlyingthepurposeofthestudywasbrieflydescribedandjustified. Definitions of the key concepts are also presented. Some delimitations ofthe scope are delineated and a chapter structure was provided for the whole thesis.On these foundations, the thesis proceeds with a detailed description of the researchbeginning with the chapter two - Literature Review.14CHAPTER 2LI TERATURE REVI EWThis chapter covers a detailed overview of the literature reviewed by theresearcherinordertohaveaninsightintothetheoreticalframeworkandmethodologicalissuesrelatedtothestudyundertaken.Forthispurposetheresearcher has reviewed research papers and articles published in both Internationaland National journals and also several popular and focused books which give broadperspectives on the conceptual framework of the study undertaken. The details of theliterature reviewed by the researcher are arranged chronologically in the followingsections.2.1 I NDI AN TELECOM I NDUSTRYRekha J ain (1993) reviewed the policy changes in the Indian TelecomSector during the initialstages ofpost liberalization. The author explained that inresponsetothebusinessneedsoffaster,cheaper,andmorevariedmodesofcommunication,thetelecommunicationsectorinmanycountrieshadundergonerapid technological and structural changes.Athreya(1996)describedaboutthesignificantchangesintheIndianTelecommunicationssectorduringtheNTP1993.Heidentifiedthreephasesofchanges. First, there was a policy vacuum almost up to 1990. Second, there was ashift in telecommunication policy brought about by a paradigm shift in governmenteconomicpolicy.Third,difficultieswereexperiencedinimplementingthenewpolicy.J ain(2001)explainedthatspectrumauctionshadbeenusedwithsignificant success in many developed countries. He analyzed that while India wasone of the early adopters of spectrum auctions, its success in service provision had15been low. The author examined the issues in auction design that contributed to thedelayandreviewedthekeyelementsinthedesignprocessnamelyacoherentregulatoryframework,choiceofserviceareas,flexibilityforserviceareaconsolidation,standardsandtheirrole,convergence,managingpublicserviceregulation and managing defaults.2.2 CUSTOMER RELATI ONSHI P MANAGEMENTShethandParvatiyar(1995)focusedtheirworkonunderstandingthemotivations of consumers to engage in relationships. They emphasized that in ordertodevelopaneffectivetheoryofrelationshipmarketing,itisnecessarytounderstand what motivates consumers to reduce their available market choices andengageinarelationalmarketbehaviorbypatronizingthesamemarketerinsubsequent choice situations.Bakeretal(1998)noticedthatitismoreproductivetoconsiderRelationship Marketing to be a third dimension of the existing Transactional Modelthantodevelopaseparateparadigm.Accordingtotheauthors,two-dimensionalmarketingmodelisdescribedasreflectingthemarketingofproducts(dimension one)tomarketsegments (dimensiontwo),facilitatedby channels andsupportedbypromotionandpricing.Thethirddimension,relationships,isintroduced as a spiraldiagram that elevates the customer above the two planes ofproductsandmarkets,andindoingso,generatesabarriertoentryofpredatorsellers.J oe Peppard (2000) has emphasized that CRM should not be looked fromanarrowperspective.HepresentedaCRMframeworkwhichwasbasedonincorporatinge-business activities,channel management, relationshipmanagementand back office / front-office integration within a customer centric strategy.VeithKrneretal (2000)developedaconceptualmodelforCRMinBusiness Media. They used a case study to conceptualize the CRM practices in afinancial industry.16Russell S. Winer et al (2001), gave a framework for the CRM concepts.They analyzed the needs for CRM as a strategy and explained in detail the intrinsicactivities involved in CRM practices.InjazzandPopovitch(2003)emphasizedthatCustomerRelationshipManagement (CRM)is a combination ofpeople,processes and technology thatseeks to understand a company's customers. It is an integrated approach to managingrelationships by focusing on customer retention and relationship development.Payne and Frow (2005) developed a conceptual framework for customerrelationship management (CRM) that helps broaden the understanding of CRM andits role in enhancing customer value and, as a result, shareholder value. The authorsexploreddefinitionalaspectsofCRM,andtheyidentifiedthreealternativeperspectivesofCRM.Theauthorsemphasizedtheneedforacross-functional,process-oriented approach that positions CRM at a strategic level.KumarandReinartz(2006)explainedthatCustomerRelationshipManagement(CRM)dealswithapplyingdatabasemarketingtechniquesatthecustomer level to develop strong company-to-customer relationship. CRM involvesidentifyingdifferenttypesofcustomersanddevelopingspecificstrategiesforinteracting with each customer. Examples of such strategies are developingbetterrelationships with profitable customers,locatingand enticing with new customersthat will be profitable and finding appropriate strategies for unprofitable customers.ChiekoMinamiaandJohnDawson(2008)focusedontheeffectsofcustomer satisfaction with CRM, customer retention and profit management, and theeffects of CRM technique on performance. CRMis regarded as the integration ofrelationshiptechnology(i.e.dataconsolidatinganddatamining)withloyaltyschemes. In this analysis a direct effect of CRM implementation on return on equity(ROE) was supported; however, a negative impact ofcustomization on ROE wasfound.17Robert Gee (2008), highlighted that organizations must understand whatdrives both value and delight for their customers. Adopting a customer centric visionenablesanorganizationunderstandtheircustomers,delivercustomerdelightanddriveforloyalty.Differentcustomershavedifferentrequirementsandwillbedelighted in different ways. Database segmentation and data analysis are critical ifan organization is to generate loyalty from different customer segments. A win-backstrategyisrecommendedaspreviouscustomersarelesscostlytowin-backcompared to the costs of acquiring of new customers.Hyunchul Ahna et al (2011) points out that as the competition betweenmobiletelecomoperatorsbecomesevere;itbecomescriticalforoperatorstodiversifytheirbusinessareas.Especially,themobileoperatorsareturningfromtraditional voice communication to mobile value-added services (VAS), which arenew services to generate more average revenue per user (ARPU). That means, cross-selling is critical for mobile telecom operators to expand their revenues and profits.In this study, the authors propose a customer classification model, which may beused for facilitating cross-selling in a mobile telecom market. This model uses thecumulated data on the existing customers including their demographic data and thepatterns for using old products or services to find new products and services withhigh sales potential.2.3 SERVI CE QUALI TY2.3.1 Service Quality Definition based on Functional QualityAccordingtoBerryetal (1988),ServiceQualityisdefinedasglobaljudgement or attitude relating to the superiority of the service. Bitner, Booms andTetreauly(1990)definesitasthecustomer'soverallimpressionoftherelativeinferiority /superiority of the organization and its services.Carman (1990) describes the replication and testing of the SERVQUALbattery(A.Parasuramanetal;seerecord1986-10681-001),whichmeasurestheperceived quality of a service situation. The scale was tested in 4 service settingsdifferent from those ofthe originaltest: a dentalschoolpatient clinic, a business18school placement center, a tire store, and an acute care hospital. Six basic questionsofinteresttotheretailerwerediscussed:(1)thenumberof dimensionsandhowgeneric they are, (2) the extent to which item wording can be changed, (3) servicesituationsthatincludemultipleservicefunctions,(4)thevalidityofanalyzingdifferences between expectations and perception, (5) the point at which expectationinformation should be obtained, and (6) the relationshipbetween expectations andimportance.AsubontengandSwan(1996)defineitasthedifferencebetweencustomers expectations for service performance prior to the service encounter andtheir perceptions of the service received.Thesestudiesprimarilyfocusedonfunctionalqualityaspects(i.e., pertaining to service delivery process or how the services are delivered) andinadequatelyaddressedtechnicalqualityaspects(i.e.,issuesconcerningwhatisactuallydelivered).However,researchersincellularmobilecommunicationemphasized that technical quality attributes play an important role in forming servicequality perceptions of customers.2.3.2 PositiveRelationshipbetweenServiceQualitywithCustomerSatisfactionDanaher and Gallagher (1997) used the study of an actual hotel servicedelivery process and partitioned into five distinct service encounters; check-in, theroom,therestaurant,thebreakfastandcheck-outandinvestigatedhowqualityfactors were related to their respective encounters and how cumulative satisfactionlevels impact on each other and over time. Average satisfaction levels for each of thefive encounters were found to be significantly different. Moreover, there was a cleartrend in the cumulative satisfaction results. Check-in resultedin high satisfaction,the room was not so satisfying and the restaurant rated the worst. Satisfaction scoresrose after the breakfast experience and rose again after check-out.19Ko de Ruyter et al (1997) argued that there is a conceptual overlap aswellasdistinctionsbetween,theroleofexpectationsandperceptionsandthequestions whether service satisfaction is a super ordinate concept to quality or viceversa. They developed an empirical model which was tested in a health care settingtodeterminethenatureoftherelationshipbetweenservicequalityandservicesatisfaction.Theresultssuggestthatservicequalityshouldbetreatedasanantecedentofservicesatisfaction.Itwasalsofoundthatservicesatisfaction,inaddition to service quality, is a direct function of disconfirmation and perception.Christine and Binks (1999) emphasized that within any service there isscopeforconsiderablevariationinthedegreestowhichbothpartiesbecomeinvolved in the relationship; beyond a certain minimum level, customers and serviceproviders may be more or less participative. However, participative behavior shouldyield benefits. Customers who are more willing to share information and developcloser personal contacts might be expected to benefit in terms of a higher quality ofserviceprovision,becausetheproviderwillbemoreknowledgeableabouttheirneeds and expectations.Leisen and Vance (2001) emphasized that the successful standardizationof service quality in the telecommunication industry across multiple nations demand,asaprecondition,thatthecountriesinquestionexposesimilarservicequalitydimensions and that the importance of these dimensions to overall satisfaction withthe service is also similar. The authors investigated if these conditions were met inthetelephoneservicessectorofthetelecommunicationindustryintheUSAandGermany.Confirmatoryfactoranalysisresultsofvariousalternativedimensionalities provided the best support for a five-dimensional conceptualizationin both countries. However, the two countries differ in their respective importanceevaluationsofparticularservicequalitydimensions,whichmakeitdifficulttoprovide a standardized service quality solution.202.3.3 PositiveRelationshipbetweenServiceQualitywithCustomerLoyalty and RetentionRanaweeraandNeely(2003)presentedaholisticmodelofcustomerretentionincorporatingservicequalityperceptions,priceperceptions,customerindifference and inertia. Data from a large-scale postal survey of telephone users inEngland showed that perceptions of service quality have a direct linear relationshipwithcustomerretentioneveninmassserviceswithlowcustomercontact.Priceperceptions and customer indifference too were found to have a direct linear effecton retention.2.3.4 Positive Relationship between Service Quality with ProfitabilityBloemer et al (1999) et al, argued that the relationship between perceivedservicequalityandserviceloyaltyisanissuewhichrequiresconceptualandempirical elaboration through replication and extension of current knowledge. Theauthors focus on the refinement of a scale for measuring service loyalty dimensionsand the relationships between dimensions of service quality and these service loyaltydimensions. The results of an empirical study of a large sample of customers fromfour different service industries suggest that four dimensions of service loyalty canbe identified: purchase intentions, word-of-mouth communication; price sensitivity;and complaining behaviour.2.3.5 SERVQUAL in TelecomWang and Lo (2002) identified that service quality, customer satisfactionandcustomervaluearethemostimportantfactors of businesssuccessforeithermanufacturersorserviceproviders.Theauthorshavepaidattentiontothemeasurement model of service quality in Chinas mobile phone market based on thewell-known SERVQUAL model, but with modification on the basis of focus groupdiscussionsandexpertopinionstoreflectthespecificindustry attributesandthespecialculture ofChina.Emphasisisthen paid tothe studyofthe dynamicrelationships among service quality, customer value, customer satisfaction and their21influences on future behaviors after the key drivers of customer value and customersatisfaction are identified.J ohnsonetal(2002)providedanoverviewofservicequalityanddiscussed its potential for offering a competitive advantage; to test several researchpropositions concerning service quality in the Thai telecommunications industry; theresults indicated that perceptions and expectations of service quality level showed nosignificantdifference.Aposthocanalysisfoundthatthetelecommunicationindustry received excellent ratings on tangibles, particularly customer service staffsdress,andlowratingsonempathy,particularlyserviceprovidersinterestdifferences. Tangibles are an aspect of service quality that is extremely important tothe Thai telecommunication customer.According to Hannikainen et al, (2002), service quality is capability of anetwork to provide services and to fulfill user's expectations. According to TelecomAuthorityofIndia(2007),servicequalityisanindicatorofperformanceofanetwork and of the degree to which the network conforms to the stipulated norms.2.3.6 Service Quality Measurement and ModelsBerryetal(1990)conductedastudyonimprovingcustomerservicequality. They identifiedfive dimensions that customers use tojudge a company'sservice; discussed the potential causes of service role ambiguity and identified thepossibilities that arise when a customer experiences a service problem. According totheirstudy,theprincipaldimensionsthatcustomersusetojudgeacompanysservice are: Tangibles -Theappearanceofphysicalfacilities,equipment,personnel,andcommunicationmaterials. Reliability -Theabilitytoperformthepromisedservicedependably and accurately.22 Responsiveness -Thewillingnesstohelpcustomersandtoprovide prompt service. Assurance - The knowledge and courtesy of employees andtheir ability to convey trust and confidence. Empathy -Theprovisionofcaring,individualizedattention to customers.Berry and Parasuraman (1992)emphasized thata welldesigned andimplementedservicequalityinformationsystemraisesthepossibilitythatacompanywillinvestserviceimprovementmoneyinwaysthatactuallyimproveservice. The five elements of the service quality information system are; (i) measureserviceexpectations,(ii)emphasizeinformationquality,(iii)capturecustomers'words,(iv)linkserviceperformancetobusinessresults,and(v)reacheveryemployee.Carvalho and Leite (1999) extended the Parasuraman Berry - ZeithamlconjecturetoassessthequalityofpostalservicesinBrazil.Aqualitativestageyieldedalistcomprising39attributeitems.Inthequantitativestagethethree-columnformatofaSERVQUALquestionnairewasemployedtopermitthecomputationofimportanceweightsandtolerancewidthsforeachattributeitem.Therewasaninverseassociationbetweenimportanceandtoleranceofservicequality attributes.Hanjoon Lee et al (2000) explained that service quality is an elusive andabstractconstructtomeasure,andextraeffortisrequiredtoestablishavalidmeasure.Theauthorsinvestigatedthepsychometricpropertiesofthreedifferentmeasurementsofhealth-careservicequalityasassessedbyphysicians.Themultitrait-multimethod approach revealed thatconvergentvalidity was establishedformeasuresbasedon thesingle-item global ratingmethodandmulti-item ratingmethod.Furthermore, discriminant validity for the seven health-care service qualitydimensions measured by the three methods was not well established. The high levelsof inter-dimensional correlations found suggested that the service quality dimensionsmay not be separable in a practical sense.23Michael K Brady et al (2002) described that service quality be measuredusingaperformance-onlyindex(SERVPERF)asopposedtothegap-basedSERVQUALscale.Theintentof theresearchwastoexaminetheabilityof theperformance-onlymeasurementapproachtocapturethevarianceinconsumers'overallperceptionsofservicequality.Theresultsoftheirstudiesindicatethatservice quality is properly modeled as an antecedent of satisfaction.Parasuraman(2005)usedthemeans-endframeworkasatheoreticalfoundationtoconceptualizeconstructsrefines,andtestsamultiple-itemscale(E-S-QUAL)formeasuringtheservicequalitydeliveredbyWebsitesonwhichcustomersshoponline.Usingtwostagesofempiricaldatacollection,thestudyrevealedthattwodifferentscaleswerenecessaryforcapturingelectronicservicequality. The basic E-S-QUAL scale developed in the research is a 22-item scale offourdimensions:efficiency,fulfillment,systemavailability,andprivacy.Thesecondscale,E-RecS-QUAL,issalientonlytocustomerswhohadnonroutineencounters with the sites and contains 11 items in three dimensions: responsiveness,compensation, and contact.Mahapatra andKhan (2006) provided a systematic integrated approachfor modeling customer evaluation of service quality applied to technical education.The authors identified that the quality of service largely relates to human behaviour,the quality dimensions and items under each dimension of the measuring instrumentwidelydifferdependingontheapplicationtothetypeofservicesetting.Thestakeholders in an educational setting range from students to recruiters, with varyinglevels of interaction with the system and expectations from the system. Therefore, itis advisable to identify the minimum numberofservice items thatsuitallthestakeholders before implementing any quality improvement programme. To this end,EduQUAL, a survey-based model, has been specially developed to suit a technicaleducation system.AnitaSethetal(2008)developedavalidandreliableinstrumenttomeasure customer perceived service quality incorporating both service delivery aswell as technical quality aspects. The resultingvalidated instrumentcomprised of24dimensionsincludingreliability,responsiveness,assurance,empathy,tangibles,convenience, and customer perceived network quality.2.3.7 Service Quality DimensionsResearchershavetriedtooperationalizeservicequalityfromdifferentperspectives for different service applications. Based on their conceptual / empiricalstudies, researchers derived and proposed differentservice quality dimensions forvarious service applications.Berryetal(1988),identifiedfivedimensionsnamely,reliability,responsiveness, assurance, empathy and tangibles. The application areas are telecomcompanies, brokerage and insurance companies and banks.LehtinenandLehtinen(1991)identifiedfivedimensionsnamely,physical quality,corporatequality,interactivequality,processquality andoutputquality. The application areas identified are restaurants, disco and pub restaurants.Rosen and Karwan (1994) identified six dimensions namely, reliability,responsiveness,tangibles,access,knowingthecustomerandassurance.Theapplication areas are teaching, restaurant, bookstore and health care.J ohnson et al (1995)identified three dimensions namely, input quality,process quality and output quality. This study was based on bank customers in theUK.SiuandCheung(2001)identifiedsixdimensionsnamely,personalinteraction,policy,physicalappearance,promises,problemsolvingandconvenience. The study was based on the service quality delivery of a departmentstore chain.Alzola and Robaina (2005) identified five dimensions namely, reliability,design,guarantee,empathyandsecurity.ThisstudywasbasedonElectronicCommerceB2C.Improvementsinservicequalitycanalsoenhance25competitiveness.Several dimensionsof competitivenesshavebecomerelevantinIndia and have been researched across levels.2.4 SERVICE LOYALTY2.4.1 Defining Service LoyaltyServiceloyaltyisthedegreetowhichacustomerexhibitsrepeatpurchasingbehaviorfromaserviceprovider,possessesapositiveattitudinaldisposition toward the provider, and considers using only this provider when a needfor this service arises.Thisdefinitionsuggestsserviceloyaltyisamatterof degree,rangingfrom the completely loyal customer to one who will never consider using a providerin the future. According to this definition, an extremely loyal customer is one who(a) regularly uses a service provider, (b) really likes the organization and thinks veryhighly of it, and (c) does not ever consider using another service provider for thisservice. Conversely, an extremely non-loyal person (a) will never use the provideragain,(b)hasnegativefeelingstowardtheorganization,and(c)welcomessuggestionsaboutotherprovidersandiswillingtotryanyotherprovider.Thisthree-dimensional definition is consistent with Zeithaml, Berry, and Parasuramans(1996)operationalizationoftheloyaltytocompanyfactorintheirbehavioral-intentionsbattery.Thefiveitemsthey use tomeasureloyaltyinclude(1)sayingpositive things about the company, (2) recommending the company to someone whoseeks advice, (3) encouraging friends and relatives to do business with the company,(4) considering the company the firstchoice to buy services, and (5) doingmorebusinesswiththecompanyinthenextfewyears.Thus,ineffect,theirmeasureincludes items from all three dimensions of the proposed service loyalty definitionlisted above.Jacoby et al (1978) have explored the psychological meaning of loyaltyin an effort to distinguish it from behavioral (i.e., repeat purchase) definitions. Theiranalysisconcludesthatconsistentpurchasingasanindicator ofloyaltycouldbeinvalid because of happenstance buying or a preference for convenience and that26inconsistentpurchasingcouldmaskloyaltyifconsumersweremulti-brandloyal.Because of these possibilities, the authors conclude that it would be unwise to inferloyaltyordisloyaltysolelyfromrepetitivepurchasepatternswithoutfurtheranalysis.Czepiel and Gilmore (1987) emphasized that essentially social nature ofservice encounters, a short-run phenomenon, provides the occasions in which buyerandsellernegotiatethetermsoftheirexchangerelationship,along-runphenomenon. Defined as the mutual recognition of special status between exchangepartners,exchangerelationshipsinsureefficacyforthebuyer,astheymitigatemarket volatility for the seller. Understanding how economic exchange is played outagainst a background of social exchange can yield actionable insights.Murray (1991) explored the information needs of service consumers. Inthe purchase decision process, search behavior is motivated in part by perceived riskand the consumer's ability to acquire relevantinformation with which purchaseuncertaintycanbeaddressed.Marketingtheorysuggeststhatconsumersuseinformation sources in a distinctive way to reduce the uncertainty associated withservices.Dicketal(1994)explainedthatCustomerloyaltyisviewedasthestrengthoftherelationshipbetweenanindividual'srelativeattitudeandrepeatpatronage.Therelationshipisseenasmediatedbysocialnormsandsituationalfactors.Cognitive,affective,andconativeantecedentsofrelativeattitudeareidentifiedascontributingtoloyalty,alongwithmotivational,perceptual,andbehavioral consequences.Kandampully (1998) explained the premise of `quality of service as thecompetitive edge in gaining market leadership which has been well recognized bothin academic research and by leading service organizations. However, it has becomeincreasingly important for organizations to find ways, not only to reach the top, butto maintain that leadership in an ever increasing competitive market-place. In orderto protect their long-term interest, service organizations are seeking ways to forge27and to maintain an on-going relationship with their customers. It is argued that long-term superiority of a service firm is dictated by the organizations ability to maintaintheir relationship with the customer by offering `service loyalty: a demonstration ofthe organizations commitment to maintain the service promise. The author arguesthat service loyalty precedes customer loyalty. The author emphasizes how a firmsservice employees develop the emotional connection with customers which leads toexceptional service and the ability to exceed customer expectations.Gustafssonetal (2005)intheirstudy of telecommunicationsservices,examine the effects of customer satisfaction, affective commitment, and calculativecommitmenton retention. Thestudy further examines the potential forsituationaland reactional trigger conditions to moderate the satisfaction-retention relationship.Theresultssupportconsistenteffectsofcustomersatisfaction,calculativecommitment,andpriorchurnonretention.Priorchurnalsomoderatesthesatisfaction-retention relationship.RecentlytoevaluateServiceLoyalty,aServloyalconstructbasedonsevendimensionshasbeenintroducedbySudhaharetal(2006).Theauthorsemphasizethatbesidesthebehaviouralandattitudinaldimensionstherefigurecognitive, conative, affective, trust and commitment dimensions.2.4.2 Dimensions of Service LoyaltyA review of the literature suggests the service loyalty construct consistsof three separate dimensions: behavioral loyalty,attitudinal loyalty, and cognitiveloyalty.BehavioralLoyalty:Earlydefinitionsofloyaltyfocusedalmostexclusively on its behavioral dimension. In particular, loyalty was interpreted as aform of customer behavior (such as repeat purchasing) directed toward a particularbrand over time. Although current thought infers that loyalty includes more than justa behavioraldimension, some researchers continue to measure loyalty exclusivelyon the behavioral dimension.28AttitudinalLoyalty:Scholarshavequestionedtheadequacyofusingbehaviorasthesoleindicatorofloyalty.Day(1969),inparticular,criticizedbehavioralconceptualizationsofloyaltyandarguedbrandloyaltydevelopsasaresult of a conscious effort to evaluate competing brands. Others have suggested thisattitudinal dimension includes consumers preferences or intentions (e.g., Pritchard1991).AfterDayscriticism,attitudegainedincreasingattention asanimportantdimensionofloyalty.Overtime,scholarsbegantoconsidercustomerloyaltyashaving two dimensions: behavioral and attitudinal.CognitiveLoyalty:Inadditionaltothebehavioralandattitudinaldimensions,afewscholarsincludewhathasbeentermedacognitiveform ofloyalty (Lee and Zeiss 1980). Some studies suggest loyalty to a brand or store meansit comes up first in a consumers mind when the need for making a decision as towhattobuyorwhere togoarises,while othersoperationalize loyaltyasacustomersfirstchoiceamongalternatives.Similarly,Dwyer,Schurr,andOh(1987, p. 19) argue that being committed to a relational exchange virtually precludesconsidering other exchange partners)) such customers have not ceased attending toalternatives,butmaintaintheirawarenessofalternativeswithoutconstantandfrenetictesting.Thissuggestsalternativeorganizationsarenotseriouslyconsideredbytrulyloyalcustomerswhensubsequentpurchasesaremade)aviewpointstronglysupportedbyothers.Thatis,acustomerwhoisconsideredextremely loyal does not actively seek out or consider other firms from which topurchase.2.5 LOYALTY INDI CESBob E.Hayes (2007)feltwhilemany objectivemeasuresof customerloyalty exist (e.g., defection rate, number ofreferrals), customer surveys remain afrequentlyusedway toassesscustomerloyalty.Thereareafewreasonsforthepopularityofcustomersurveyuseincustomerexperiencemanagement.First,customer surveys allow companies to quickly and easily gauge levels of customerloyalty. Companies may not have easy access to objective customer loyalty data ormay simply not even gather such data. Second, results from customer surveys can be29moreeasilyusedtochangeorganizationalbusinessprocess.Customersurveyscommonlyincludequestionsaboutcustomerloyaltyaswellasthecustomerexperience(e.g.,product,service,support).Usedjointly,bothbusinessattributeitems and loyalty indices can be used (e.g., driver analysis, segmentation analysis) toidentify reasons why customers are loyal or disloyal. Finally, objective measures ofcustomerloyaltyprovideabackwardslookintocustomerloyaltylevels(e.g.,defection rates, repurchase rates). Customer surveys, however, allow companies toexamine customer loyalty in real-time. Surveys ask about expected levels of loyalty-relatedbehaviorandletscompanieslookintothefutureregardingcustomerloyalty.Customers'ratingsof asetofloyaltyquestionssuggestthattherearethree, very general, loyalty constructs, Advocacy, Purchasing and Defection;Advocacy Loyalty: reflectsthedegreetowhichcustomerswilladvocate of the companyPurchasing Loyalty:reflectsthedegreetowhichcustomerswillincrease their purchasing behaviorDefection Loyalty: reflects the degree to which customers willshowsymptoms of defecting to competitorsThe evidence from previous studies (Bob E. Hayes, 2007) shows that theAdvocacy Loyalty Index (ALI) ,the Purchasing Loyalty Index (PLI) and DefectionLoyaltyindex(DLI)measurethreedifferenttypesofloyalty.Eventhoughthesetypesofloyalty arecorrelated(advocates tendtobepurchasers),therelationshipbetweentheALIandPLIisnotperfect,suggestingthattheseloyaltyindicesmeasure unique constructs. Customer loyalty is not a unidimensional construct, butrather a multidimensional construct that can help reliability measured. When we saya customer group has high vs. low loyalty, we need to clarify to which loyalty weare referring. It is possible that a given customer group can have different levels ofloyalty (e.g.,high advocacy,lowpurchasing).Itisclearthatablanketstatementabout levels of "customer loyalty" can be ambiguous.302.6 LI TERATURERELATI NGTOLI NKAGEOFSERVI CEQUALI TY, SATI SFACTI ON AND LOYALTYTorstenJ.Gerpottetal (2001)havedoneastudy ontherelationshipbetween customer satisfaction (CS), customer retention (CR) and customer loyalty(CL) in the German Mobile Telecom Market. They developed a two-staged model inwhichoverallCShasasignificantimpactonCLwhichinturninfluencesacustomer's intention to terminate/extend the contractual relationship with his mobilecellular network operator (CR). They identified mobile service price and personalservice benefit perceptions as well as (lack of) number portability between variouscellularoperatorsassupply-relatedvariableswhichhasstrongeffectsonCR.Mobile network operators' perceived customer care performance had no significantimpact on CR.Chih-Ping-Wei andI-Tang-Chiu(2002)studiedonchurn predictionintelecom. The authors emphasized that a mobile service provider wishing to retain itssubscribers needs to be able to predict which of them may be at-risk of changingservices and will make those subscribers the focus of customer retention efforts. Inresponsetothelimitationsofexistingchurn-predictionsystemsandtheunavailability of customer demographics in the mobile telecommunications providerinvestigated, they proposed a churn-prediction technique that predicts churning fromsubscribercontractualinformationandcallpatternchangesextractedfromcalldetails.Thetechniqueiscapable of identifyingpotential churnersatthecontractlevel for a specific prediction time-period.Moon-KooKim etal(2004)hadstudiedtheeffectsofcustomersatisfactionandswitchingbarrieroncustomerloyaltyinKoreanmobiletelecommunication services.The study was undertaken when theKorean telecomindustrywasshiftingitsstrategicfocusawayfromattractingnewcustomers,towards retaining existing customers through the promotion of customer loyalty.J ohn Hadden etal (2007)analyzed thata business incursmuch highercharges when attempting to win new customers than to retain existing ones. As a31result,muchresearchhasbeeninvestedintonewwaysofidentifyingthosecustomers whohave ahigh risk of churning. However customer retention effortshave also been costing organisations large amounts of resource. In response to theseissues, the authors suggested that the next generation of churn management shouldfocus on accuracy.Sung Ho (2007) used the customer relationship management perspectivetoinvestigatecustomerbehavior.Theauthorsdifferentiatebetweencustomersthroughcustomersegmentation;trackscustomershiftsfromsegmenttosegmentover time, discovers customer segment knowledge to build an individual transitionpath and a dominant transition path, and then predicts customer segmentbehaviorpatterns.Koustuv Dasgupta et al (2008) examined the communication patterns ofmillions of mobile phone users, to study the underlying social network in a large-scale communication network. The key purpose is to address the role of social ties intheformationandgrowthofgroups,orcommunities,inamobilenetwork.Inparticular, the study focused on the evolution of churners in an operators networkspanning over a period of fourmonths. Based on theirfindings, they proposed aspreading activation-based technique that predicts potential churners by examiningthe current set of churners and their underlying social network. The efficiency of theprediction is expressed as a lift curve, which indicates the fraction ofallchurnersthat can be caught when a certain fraction of subscribers were contacted.Ying-FengKuoetal(2009),studiedtherelationshipsamongservicequality,perceivedvalue,customersatisfaction,andpost-purchaseintentioninmobile value-added services. The main findings are as follows: (1) service qualitypositively influences both perceived value and customer satisfaction; (2) perceivedvaluepositivelyinfluencesonbothcustomersatisfactionandpost-purchaseintention; (3) customer satisfaction positively influences post-purchase intention; (4)service quality has an indirect positive influence on post-purchase intention throughcustomersatisfactionorperceivedvalue;(5)amongthedimensionsofservicequality, customer service and system reliability is most influential on perceived32valueandcustomersatisfaction,andtheinfluenceofcontentqualityrankssecond; (6) the proposedmodel is proven with the effectivenessin explaining therelationshipsamongservicequality,perceivedvalue,customersatisfaction,andpost-purchase intention in mobile added-value services.Fujun et al (2009) proposed and tested an integrative model to examinetherelationshipamongservicequality,value,image,satisfaction,andloyaltyinChina.Theauthorsrevealthatservicequalitydirectlyinfluencesbothperceivedvalueandimageperceptions,thatvalueandimageinfluencesatisfaction,thatcorporate image influences value, and that both customer satisfaction and value aresignificantdeterminantsofloyalty.Thus,valuehasbothadirectandindirect(throughsatisfaction)impactoncustomerloyalty.Othervariablesmediatetheimpact of both service quality and corporate image on customer loyalty.2.7 I NSI GHTS AND I NADEQUACI ESThe review of literature has provided insights on the following areas:1. The impact of privatization of telecom sector on the mobile serviceproviders and the subsequentpenetration into themarkethas givenrise to cut-throat competition among the mobile service providers.2. This rising level of competition in turn has forced the mobile serviceproviders to focus on various customer centric strategies wherein theservice providers concentrate on sustained competitive advantage.3. Customerson the otherhand are welleducated,demanding andwillingtospendforbettervalueformoney.Thisandtheaboveaspects have turned the attention of the service providers to dependonatechnology-drivenstrategieswherethereisaneedtocollect,maintain, manage and analyse customer details and their purchasingbehaviour which would help them to bundle up offers which wouldsatisfy a specific need of a specific segment of customer in a specific33periodoftime.ThisistheCustomerRelationshipManagement,acontemporary management practice.4. ThoughCRMevolvedinaveryshortduration,itsapplicationiswidespread in services which involve huge set of customer base.5. Theimpactof CRMpracticesinvariouscountriesandonvariousindustry verticals gives a positive insight as to the level of maturity ofits practices.6. Whendecidingtochooseatelecommunicationserviceprovider,customers often takeintoaccountthe service quality,servicepriceand customer service. While the first two factors can be controlled bythe telecom company, the last factor seems to be the most influentialand the hardest to get right as well. One outcome of good customerservice,whichdependsontheservicequalityofthetelecomproviders positively results in a certain degree of behavioral attitudewithin the customers which in turn grows into loyalty. Thus a loyalcustomermayturnadvocatetothecompany;purchasemorefrequently,purchasemorequantityorpurchasemorevarietyofservices or if disloyal switch to competitors.Theliteraturereviewedaboveindicatescertaininadequaciesinthefollowingareas:1. While there are individual studies on CRM implementations (Payne&Frow,Finnegan&Willcocks,RobertGee),ServiceQuality(DanaherandMattsson,WangandLo,JohnsonandSirikit,Gale,Rudie and Wansley,Zeithaml & Bitner), Relationship between CRMand Customer Loyalty (Mosad Zineldin, Majumdar, Terblanche andBoshoff, Gustafsson et al) and Loyalty Indices (Bob E. Hayes), it isnoticedthatastudyonthelinkageespeciallywiththechangingdemographic patterns of the customers,if any, arising outof theseconcepts seems to be missing. Hence it is felt that such an existing34gap can befurther exploredand studied and the present attemptistowards such a linkage. Itis also afact that the CRM practicesinIndian Telecom is in the matured stage. Hence such a linkage studyparticularlyinthetelecomindustrywouldbetimelytoprovidemanagerial insights in order to further strengthen the CRM practice inthis highly competitive industry.2. Identifyingtheinfluenceofservicequalitydimensions,serviceloyalty dimensions on each of the loyalty indices, namely advocacyloyalty index, purchase loyalty index and defection loyalty index.3. Even though some of these aspects have been explored by previousresearchers to a great extent, it is felt that not much attention has beendrawnintomeasuringtheeffectivenessofloyalty,particularlyforsustained presence.2.8 SUMMARYThischapterprovidesanoverviewoftheliteraturereviewedbytheresearcher.Thecruxofeachmaterialreviewedbytheresearcherispresentedchronologically. It also includes a section on the insights obtained and inadequaciespresent in the literature review, which the present study is aiming to bridge.35CHAPTER 3RESEARCH METHODOLOGY3.1 I NTRODUCTIONMethodology is the key to finding answers to the question that initiatestheresearchandthereforecomprisesaveryimportantpartofanystudy.Theresearch methodology that is chosen has to enhance the reliability and generalizationofthe results. It should furthermore be cost effective, efficient and versatile. Thisbalance can only be obtained by using the appropriate methodology for gatheringdata.As previous research on strengthening ofCRM practices by the Indianmobile service providers through customer loyalty are limited, the current study canbedefinedasanearlyattemptwiththeaimtodevelopthebodyofknowledgeregarding the existing phenomenon.3.2 RESEARCH DESIGNTheresearchdesignadoptedforthisstudywasdescriptiveinnature.Descriptive research is a type of conclusive research that has its major objective asthe description of something- usually market characteristics or functions (Malhotra,2006).Thecurrentresearchusedaquantitativeapproach.Quantitativeresearchmethodology seeks to quantify the data and typically applies some form of statisticalanalysis (Malhotra, 2006). The benefits of quantitative research are that researchersrely on large samples to show statistical effect and can generalize the findings fromthe sample to the population (Churchill and Iacobucci, 2002).363.2.1 Area of the StudyThedatafortestingtheproposedmodelswerecollectedamongtheresident mobile subscribers in Chennai. Chennai, capital of Tamil Nadu is the fourthmostpopulousmetropolitanareaandthefifthmostpopulouscityinIndia.Thepopulation of Chennai is 4.6 million (2011 census).3.2.2 I nstrument DevelopmentThe instrument was designed using scales from previous related research.Sincethisstudyattemptstoverifytherelationshipsbetweentheconstructs,quantitative research methodology is employed. Instrument is in Appendix I.Scalesfortheindependentandthedependentvariableswereadoptedfromtheextantliteratureduetotheirrelevancetothestudy'scontextandpastmeasurement reliability.3.2.2.1Variables Considered for the StudyIn order to comply with the objectives laid down for the study, certainindependentvariableswereconsideredforanalyzingbehavioralpatternofthemobile subscribers, which are as follows: Demographic Variables Extended Service Quality Parameters Service Loyalty Parameters Loyalty Indices3.2.2.2Demographic VariablesThe Demographic Variables considered for the study are: AgeLength of Use37 Monthly Expenditure Education Occupation3.2.2.3Extended Service Quality DimensionsThe service quality aspects of the mobile service providers were analyzedbased on the following dimensions. These dimensions areidentified based on theSERVQUAL Construct. This extended SERVQUAL (Seth et al, 2008)instrumentdeterminesservicequalitystructurebycombiningbothfunctionalaswellastechnical quality (i.e., network quality in cellular mobile context) attributes.ThustheextendedSERVQUALconstructhasthefollowingsevendimensions:Reliability - refers to the ability toperform the promised service dependably andaccurately. Contact employees perform the service right the first time The service provider provides the service at the promised time The customer is kept well-informed about the progress of their complaints Billing system is accurate and error free Bills are received on time.Responsiveness-refers to willingness to help customers and provide prompt service Contact employees give you prompt service The customers complaints / queries are taken seriously The customers complaints are resolved quickly The service provider is always willing to help you.38Assurance-refers to knowledge and courtesy ofemployees and their ability toinspire trust and confidence Contactemployeesarefriendlyandpolitewhilehandlingyourcomplaints / queries Theyhavetheadequateknowledgeoftariffsandplansofserviceproviders The behaviour of contact employees instils confidence in you You feel safe in your transactions with your service providerEmpathy- refers to caring, individualized attention the firm provides its customers For lodging the complaints service provider is easily accessible They have your best interests in heart Contact employees give you individual attention The employees understand your specific needsTangibles-refers to appearance ofphysicalfacilities,equipment,personalandcommunication materials Service provider's physical facilities are visually appealing Contact employees appear neat Materials associated with the service(such as pamplets etc) are visuallyappealingConvenience-implies flexible and comfortable facilities to suit the customer needs. They have convenient business hours Ease of lodging the complaints / queries Your service provider provides flexibility in the payment of bills Application formalities are simple39Customer Perceived Network Quality - an indicator of network performance interms of voice quality, call drop rate, network coverage and network congestion. Yourserviceproviderprovidessufficientgeographicalcoverage(onhighways, inside the buildings and basement) Youexperienceminimumprematureterminationofcallsduringconversation (ie call drops) You get clear and undisturbed voice Yourcallgetsconnectedtothecalledpersonduringthefirstattemptmost of the time You are able to make calls at peak hours3.2.2.4Service Loyalty DimensionsAccordingto(ChaudhuriandHolbrook,2001;BandhopadhyayandMartell, 2007), Service Loyalty has two dimensions, namely, Behavioural Loyaltyand Attitudinal Loyalty. Recently, to evaluate Service Loyalty, a Servloyal construct(Sudhakar et al, 2006) based on seven dimensions has been introduced. Besides thebehavioural and attitudinal dimensions, there figures cognitive, conative, affective,trust and commitment dimensions.The seven dimensions are explained with the items.BehaviouralLoyalty-referstothecustomerswillingnesstocontinuetherelationship with the provider in the short period. It does not imply a commitment tothe provider, but simply expresses the degree of loyalty in the immediate future. I will transact with this mobile service provider again for future needs I will try new services that are provided by the service provider I will recommend other people to patronize this service provider40 I will say positive things to other people about the services providedby the mobile service operatorAttitudinal Loyalty -refers to the predisposition towards the provider deriving froma psychological process. I will continue to patronize this mobile service provider / service evenif the service charges are increased moderately I have strong preference to this service provider I will continue to use this service provider regardless of changes inthe service I am likely to pay little more for the services when situation arisesCognitiveLoyalty-isthe psychologicalstate ofmind which isbased on theinformationavailabletotheconsumerabouttheserviceperformancewhichindicates that one service provider is preferable to its alternatives. Cognition can bebased on prior or vicarious knowledge or on recent experience-based information.Loyaltyatthisstateofmindisdirectedtowardthebrandbecauseofthis"information" (attribute performance levels). To me, this service provider would rank first among others I would continue this service for a long period of time I will deal exclusively with the service provider The service of the provider reflect a lot about who I amConativeLoyalty-is the phase ofloyalty development which is influenced byrepeatedepisodesofpositiveaffecttowardtheserviceprovider.Conation,bydefinition,impliesabrand-specificcommitmenttorepurchase.Conativeloyalty,then,is aloyaltystate thatcontains what,atfirst,appearstobethedeeplyheldcommitment to buy. In effect, the consumer desires to repurchase, but similar to any"good intention," this desire may be an anticipated but unrealized action.41 I have found this provider better than others Repeatedly, the performance of this provider is superior to that of itscompetitorsAffective Loyalty refers to the state when the customerfeelsinvolved with theservice provider. Affective loyalty is the state of mind that is developed as a result ofalikingorattitudetowardtheserviceprovideronthebasisofcumulativelysatisfying usage occasions. This reflects the pleasure dimension of the satisfactiondefinition and pleasurable fulfillment. The loyalty exhibited is directed at the degreeof affect (liking) for the service provider. I like the terms of the service provider I like the performance and services of the provider I have a positive attitude toward this provider I am satisfied with my decision to stay with this providerTrust loyalty -refers to the state which is developed as a result of the belief on thecompetenceoftheserviceprovider.Iftheserviceproviderhastherequiredexpertise, to perform his/her activities, carry out his/her obligations or accomplisheshis/her promises, the consumer gets a feeling of security about the service provider. The employees of the service provider give individual attention The employees understand my specific needs and go out of their wayto help me The employees respond caringly when I share my problems The personnel at the service provider are filled with professionalismand dedicationCommitmentLoyalty-regards the deepestinvolvementofthe customerin therelationshipwiththeprovider.Thecustomersshowhighdegreeofcontinuedassociation with the service provider.42 I am committed to the service provider Even when I get to hear any negative information about the provider,I would still continue with this service provider I like switching from one service provider to another My continuedassociation with theserviceproviderisimportant tome.3.2.2.5Loyalty I ndicesBob E. Hayes, 2007 identifies key drivers of loyalty for service providersand introduces new customer loyalty metrics designed to help companies increaserevenuethroughnewandexistingcustomers.Theinstrumenttomeasureloyaltyindiceswereusedtounderstandtherespondentsperceptionabouttheirlevelofagreement with respect to questions, each on a five point Likert Scale (1 StronglyDisagree and 5 Strongly Agree). He has identified three loyalty indices namely,AdvocacyLoyaltyI ndex(ALI )-reflects the degree to which customers willbeadvocates of the company. Likelihood to choose the service again Likelihood to recommend Likelihood to pass on positive feeling about the services Likelihood to continue purchasing the same products / servicesPurchasingLoyaltyI ndex(PLI )- reflects the degree to which customers willincrease their purchasing behavior. Likelihood to increase frequency of purchasing Likelihood to purchase different products / services43Defection Loyalty I ndex (DLI ) - reflects the degree to which customers willshowsymptoms of defecting to competitors. Likelihood to continue this only as a supplementary connection Likelihood to switch to a different provider3.2.3 Sampling MethodConveniencesamplingwasusedbecausethesamplingunitswereaccessible,easytomeasureandrequiredtheleasttimeandcostexpenditure(Ko, 1995).. It also takes into account the operational difficulties associated in theprocess of data capturing. However,by going through this method of sampling itwas ensured that all units of population were adequately represented. In determiningthe sample size the following factors were taken into consideration:Dispersion of the population Time taken by the respondents to complete the questionnaire Resources required completing the survey Respondents willingness to part with information.Burns and Bush (1999) believe that sample size affects the accuracy ofresults. Sample size also has a direct impact on the appropriateness of the statisticaltechniques chosen (Hair et al., 1998). The size of the sample for this research wasdesignedinaccordancewiththecriterionforapplyingtheanalyticaltechniquechosen. Since this study used Structural Equation Modeling and regression a largesample was required for this multivariate technique. The sample size was fixed foraround550,asasmallsamplesizemightprovidelessaccurateestimatesof thedegree of relationship among the variables due to unstable correlations (Bordens andAbbott, 1996).All variables in the study were identified through a review of the relevantresearchandliterature.Externalvalidityreferstotheresearchersabilitytogeneralize the results of the study from the sample to the population from which the44sample was drawn (Gay, 1987). One of the threats to external validity occurs if thesampleisnotrepresentativeofthepopulation.Thebestprotectionforequalrepresentationoccurswhenasamplehasbeenrandomlyselected(Fink,1995).Sampling error refers to chance variation among the means (Gay, 1987) due toinfluencesnotunderthecontrolof theresearcher.Samplingerrorsarenormallydistributedandcanbecontrolledifasufficientlylargenumberofsubjectsareselected from the population. Sampling error for this study was controlled throughthe selection of a sample large enough to be representative of the population.Measurementerrorreferstoinconsistenciesinmeasurements.Themeasurementerrorwascontrolledbyemployinginstrumentswhichhavebeenshowntobereliableandvalid.Inordertoaddresspossiblemeasurementerrorreliability tests were employed on the scale items.3.3 PROPOSED CONCEPTUAL MODELIn developing the proposed research model, we examine and confirm therelationship between service quality, service loyalty and loyalty indices which aremultidimensional variables. Also the influence of the demographic variables on eachofservicequality,serviceloyaltyandloyaltyindicesareexamined.ThesemultidimensionalvariablesbecomethelatentfactorsinstrengtheningtheCRMimplementation by the Indian Mobile Service Providers.Figure 3.1 Conceptual Frame Work for the Study453.4 PRE-TESTThe purpose of questionnaire pre-testing is to ensure that item wording,flow of questions, suitability of measurement scales, instructions, and other aspectsof the questionnaire are understandable. Churchill and Iacobucci (2002) stress that;data collection should never begin without an adequate pre-test of the instrument.Therefore, although the items used in this study were taken from the extant studieswhich had established the measurement, this step was still necessary. It was becausethosewordingshavedifferentmeaningsandconnotationsindifferentculturalcontexts(Sekaran,2003).Questionnairepre-testingcanhelptorectifyanyinadequaciesbeforehand(Sekaran,2003).Afterthequestionnairehadbeendeveloped,thesamewaspre-testedusingapilotstudywith50subscribersinChennai. Interviews with respondents indicated that the item wording was clear andeasytounderstand.Inaddition,analysesofdescriptivestatisticsindicatednoskewness or kurtosis. Scale reliability was performed on each measure.3.5 DATA COLLECTIONThe questionnaires including covering letter, were personally distributedtocustomersof mobileservices,duringApril-J une,2011.Conveniencesamplingmethodwasusedtocol