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Editorial Board A Refereed Monthly International Journal of Management
Prof. B. P. Sharma
(Editor in Chief)
Prof. Mahima Birla
(Editor)
Prof. Harshita Shrimali
(Consultative Editor)
Dr. Khushbu Agarwal
(Additional Editor)
Ms. Asha Galundia
(Circulation Manager)

 Editorial Team

Dr. Devendra Shrimali
Dr. Dharmesh Motwani
Mr. Jinendra Vyas
 

Analysis of gaps in customer services – A study of select telecom service providers in NCR

Dr. Meera Arora

Associate Professor (Marketing)

DAVIM, Faridabad

meera_arora @rediffmail.com

Abstract:

With liberalization and subsequent de-monopolization in the telecom service segment in India, the development of the telecom sector has experienced a major process of transformation in terms of its growth, technological content, and market structure in the last decade. The momentum of these changes is expected to continue, and at a much faster pace. As the market scenario changed from that of single-player to multi-players, the level of expectations of the users has also increased, since in a competitive environment, the consumers not only have luxuries of choice but also have enough freedom to exert their preferences and thus enjoy a higher bargaining power.

To match the expectations of the consumers, the Indian telecom service providers, have become more sensitive and responsive to the customers’ needs and choices and endeavor to give them greater satisfaction by providing them with a plethora of value additions, apart from the basic service offerings

The study aims to analyze that whether with the increase in competition in telecom services, higher levels of consumer satisfaction with affordable prices and improved quality of services is achieved by telecom service providers or not.

KEYWORDS: Customer Relationship Management,Customer satisfaction, Telecom Service Providers, Customer Focus, Customer Service Quality, Knowledge Management and Relationship Building.

INTRODUCTION

Telecommunication is one of the major support services needed for rapid growth of any developing economy and is one of the fastest developing sectors in India.

Telecommunication sector in India can be divided into two segments: Fixed service providers and Cellular service providers. Fixed line services consist of basic services like national or domestic long distance and international long distance services. Cellular services can be further divided into two categories: global system for mobile communication (GSM) and Code division multiple access (CDMA). The GSM sector is dominated by Airtel, Vodafone and Idea Cellular, while CDMA sector is dominated by Reliance and Tata.

After opening of the telecom sector for competition, through liberalization, disinvestments, privatization and de-monopolization initiatives adopted by the government of India, the industry, especially the mobile segment is experiencing a tremendous growth and today we are the second largest telecom market in the world. The industry has witnessed significant expansion in subscriber base over the last decade, with increasing network coverage and a competition-induced decline in tariffs acting as catalysts for the growth in subscriber base. The number of telephone connections were 1,002.05 million at the end of May 2015, as compared to 41 million at the end of December 2001.The overall tele-density in India has reached 79.69 per cent, the urban tele-density is 148.60 per cent and rural tele-density is 48.60 per cent. (Source: TRAI Press release no 31/3/2015).The composition of the telecom sector too has witnessed a structural change, with the private sector accounting more than 90 per cent of the total connections.

CURRENT SCENARIO: CHALLENGES AND OPPORTUNITIES

Despite several hiccups along the way, the glory of Indian telecom is unprecedented. Extraordinary growth, exemplary innovation in technology as well as services offered, constantly dropping prices of services, and a booming subscriber base are some of the characteristics that define dynamics of this market today.

The Indian telecom sector offers unprecedented opportunities in various areas, such as rural telephony, 3G, 4G, virtual private network, value-added services, etc. The industry is expected to continue to record good subscriber growth as a result of low penetration levels, heightened competition; a sustained fall in minimum subscription cost and tariff that increase affordability for lower-income rural users, expansion of coverage area by mobile operators, and government support through schemes such as the rural infrastructure roll out funded by subsidies from the Universal Service Obligation (USO) Fund. Despite this promising growth, it is facing several challenges. The tele-density in India still remains at a very low level compared with international standards and thus providing tremendous opportunity for future growth. Nonetheless, the lack of telecom infrastructure in rural areas and falling ARPU of telecom service providers could inhibit the future growth of the industry.

The operation of private players along with the public sector has intensified the competition in the segment, which has resulted in players resorting various means like price cuts and providing competitive value added services (VAS) in order to capture the market. The beneficiaries of competition being customers, the players are worried about sustainability and are required to deploy customer centric strategies not only to grab a share in the market but to sustain in the long run.

CRM: THE NEED OF THE HOUR

The need-of-the-hour is relation-based differentiation. Thus Customer relationship management (CRM) is emerging as a critical strategy, since relationships are coming to the forefront of competitive battlefield. Thomson (2004) propose that successful CRM is about competing on the relationship dimension-not as an alternate of having a competitive product or reasonable price- but as a differentiator. It a business strategy to acquire, grow and retain profitable customer relationships, with the goal of creating a sustainable competitive advantage. CRM aims at narrowing the gap between the company and its customers, thus enabling companies to identify the changing behavior pattern of customers so that proactive strategies can be formulated.

Companies have started believing that an existing is customer is worth a crore than a new customer. Blattberg and Deighton (1996) and Filiatrault and Lapierre (1997) put forward that the cost of acquiring a customer is six times more than the cost of retaining them. Losing an existing customer is like losing a fortune. Dyche (2007) iterate thattreating customers like cattle is the antithesis of CRM, the goal of which is to recognize and treat each customer as an individual. In competitive markets, where customers have a choice between similar products and pricing, “seventy percent decision making is based on how customers are treated. Thus the embattled companies have now realized that without customers products won’t sell and revenues won’t materialize and are thus becoming smarter about selling which means smarter about who’s buying.

Shanthi (2005) emphasizes thatwith telecom industry nearing maturity and showing saturated growth, efficient CRM substitute is essential, since customer attrition is high due to presence of close substitutes, near-zero switching costs and service providers trying to attract customers from competitors by giving attractive offers. All this is making the switch-over process happen at the speed of thought. The reasons for this switch over can be many. Many customers shift due to brand image. Beyond the brand image, switch over is generally attributed to various factors like numerous tariff options available to customers, billing disputes with a particular vendor, quality of service provided etc. The problem of switchover is very high in prepaid segment, which accounts for the vast majority of Indian cellular users. The key to prevent such shifts is to adjust to the ever-changing customer needs, his behaviour and certain other issues that could indicate a potential defection, for example: change of address, cancelled direct debits (automated bill settlement), complaints made, and usage of volume declines.

Customer relationship management (CRM) is thus evolving as an important tool not only to sustain the market share, build relationships but also to retain it. Successful implementation of CRM requires a strategic approach which involves developing customer centric processes, selecting and implementing technology solution, customer information and knowledge generation capabilities to differentiate them and ability to learn from best practices.

REVIEW OF LITERATURE

Globalization and deregulation, combined with advances in information technology, have radically changed the managerial context of service industries. Though the origin of customer relationship management was initially in the industrial context, the service industry is also focused on maintaining and enhancing customer relationships. Services are produced and delivered by the same institutions. Success of a service provider is dependent on long term relationships that develop between the provider and customer. Service industry depends on continuous cycle of repurchase so retention of customers requires hard efforts by organizations Anderson et al., (1994)

Berry (1983) stresses that the attraction of new customers should be viewed only as a intermediate step in the marketing process. Rather solidifying the relationship, transforming indifferent customers into loyal ones and serving customers as clients should also be considered as marketing. He has outlined five strategy elements for practicing customer relationship management: developing a core service around which to build a customer relationship, customizing the relationship to the individual customer, augmenting the core service with extra benefits, pricing services to encourage customer loyalty and marketing to employees so that they, in turn, will perform well for customers.

Agrawal (2001) emphasizes that service marketers need to build up long-term relationship with their customers by understanding the cause behind their problem and recovering them fast to build deeper and long term relationships. Further he strengthened the marketing principle, focusing on the repeat customers, which cost less in comparison to attract new ones. He studied the change in customer’s attitude after solving their complaints.

Meltzer (2006) states that in this electronic era, the need to manage customer relations for profit is a marketing dilemma that many telecommunication companies face. This concern stems from the ever rising cost of acquiring new customers, whilst the increasing churn that continues to erode the customer base. However with a greater customer focus, greater emphasis on relationship marketing and effective retention plans, marketers may discover greater profitability within existing customer base. CRM revolves around customer knowledge and solid execution and requires long term commitment to be truly effective.

Krishna & Khatri (2008) in their study analyze the antecedents of customer relationships in the telecommunication sector and suggest that mobile industry is witnessing exceptional growth rates and amidst growing competition it would be tough for mobile operators to survive, unless they provide value added services and understand what will lead customers to enter into a long-term relationship with them. The results of the survey show Seven Desired Value Added Services (7DVAS), viz,: variety of service, price, advertisements, employee behavior, Customer service, accuracy in billing and timely information

Shanthi (2005) emphasize thatfalling prices, hyper competition and increasing attrition rates have led to near-saturation in the segment with telecom service providers exploring the possibilities of implementing scientific methods to retain customers. Deploying proactive strategies through predictive churn modeling is gaining its acceptability as an effective tool to reduce churn. The basic prerequisite of a good churn model is a focused and customized CRM system backed by a powerful database management system .The system should be evolved through, a continuous learning process and constantly updated so as to measure and analyse the churn properly.

Chadha & Kapoor (2009) in their study explore the effect of switching cost, service quality and customer satisfaction on customer loyalty of cellular service providers in Indian market and find a positive relationship between the switching cost and customer perceived service quality, customer satisfaction and customer loyalty. It has been revealed that the customer satisfaction is the most significant predictor of the customer loyalty. Switching cost and service quality also affect the customer intention to stay with particular service provider. Thus service providers should maximize service quality and customer satisfaction by concentrating their efforts on improving network quality, pricing and value added services.

Daadlani et al. (2010) propose that CRM focuses on automating and improving the business processes associated with managing customer relationships within the areas of sales, marketing, customer care and support. CRM applications not only facilitate the coordination of multiple business functions but also coordinate multiple channels of communication with customers-face to face, call centre and the web- so that organizations can accommodate their preferred channels of interaction. A rich customer relationship fuels effective acquisition, nurturing and retention of customers.CRM aims to provide organizational effectiveness by reducing sales cycles and selling costs, identifying markets and channels for expansion, and improving customer value, satisfaction, profitability and retention.

Nguyen & Papadopoulos (2011) explore the potential benefits of introduction of a CRM system in the telecom industry. The results show that customer centric strategy is an essential part of the business strategy and CRM system plays an important role to achieve business objectives. Many parts of the company expect to get benefit from the implementation of the CRM system and it seems that the company needs to implement a CRM solution with full functions to support all relevant departments. However, the CRM system is not simply software which just only needs to be installed and used. It is a combination of many factors such as information, processes, technologies and people in an excellent way in a customer-oriented direction.

Pezeshki et al. (2009) investigate the asymmetric relationship between performance of service attributes and customer satisfaction, and through a case study in the mobile telecommunication industry, attempt to prove that the importance of a service attribute is a function of the performance of that attribute. The results indicate that there is a dynamic relationship between service attributes and overall customer satisfaction. Also this research concludes that the major weaknesses in the Mobile Telecommunication industry that cause the highest customer dissatisfaction are the range of phones, the accuracy of billing and payment, and the service plans, whereas the major strengths as a source of customer satisfaction are customer service quality, value for money and network performance.

Ling and Run (2009) in their study examine the factors that influence customer satisfaction and customer loyalty in telecommunication services. The findings of the study indicate that factors with significant impact on customer satisfaction are: promotion, cost efficient plans, free services, technology factors, line quality, convenience and handiness, while factors affecting customer loyalty are service quality, subscription status, promotion and inconvenience in switching phone number.

Roos & Gustafsson (2007) emphasize that, given the growing competition in the global market, it is becoming increasingly important for companies to retain their existing customers, that is, to preempt frequent switching. A fruitful way of gaining knowledge about customers’ switching behavior is to examine the role of various factors in their switching processes. The findings of this study suggest that a customer’s frequent switching is closely related to the potentially prejudiced state of his or her relationship with the service provider. The findings suggest that actual behavior is the only way in which prejudiced customers can amortize their prejudiced state. In the search for a deeper understanding of prejudice, it would be interesting to study how it relates to the concept of image. The internal image is built up by customers on the basis of their personal experience, whereas the external image develops on the basis of public relations campaigns, direct marketing, and newspaper advertisements. A focus on image could provide new insights into switchers as well as non-switchers.

Desai et al. (2007) state that it although it has been well accepted that CRM is a strategic initiative, however managers cannot rely only on static firm’s resources that they have assembled to take CRM decisions and drive competitive advantage. Drawing from the theoretical argument in strategic management, i.e., dynamic capability approach, this study identifies sources of competitive performance for the process of CRM in dynamic capability. As per the findings of the study, in highly dynamic and competitive Indian telecom industry, the dynamic capability plays the most important role in gaining competitive CRM performance. In the absence of appropriate dynamic capabilities in the CRM process, the use of CRM technology might do more harm than good.

Pathak and Rastogi (2007) state that churn in Indian telecom is among the highest in growing telecom markets. The future churn is dependent on satisfaction level of the customer with the service provider, attitude , and loyalty of the customer.

Kim et al. (2004) found that call quality, value added services and customer support play a significant role in building customer satisfaction for cellular service subscribers and they tend to keep using current service as the level of the customer satisfaction is high that leads to customer loyalty.

Potluri and Mangnale (2010) emphasize that the marketing and maintenance professionals of telecom companies are required to assign due weightage to the areas of dissatisfaction and introduce radical changes in their existing practices for meeting the telecom needs of the customers and make every effort for Total Customer Satisfaction (TCS) by expecting the clear attitudinal changes among the existing customers for retaining them. For this the telecom companies need to review their existing plans, policies, procedures, programs, strategies, and even budgets for offering confident and market expected telecom services to win the hearts of their customers

Iqbal et al. (2008) affirm that satisfied customers of telecom sector have high extent of usage and intentions to repurchase in future. Greater the level of satisfaction of customers greater will be repurchase chances of customers .

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

Indian Telecom is advancing day by day in every aspect. The competition is increasing and many players are ready to grasp the hands of customers by using CRM techniques and solutions to manage relationships across customer interaction points.

The following are the objectives of the present study:

· To study the perceptions of the customers towards CRM initiatives of the service providers.

· To plug the gap in design and implemented CRM strategies.

SAMPLING PROCEDURE AND THE SAMPLE

The study is carried out through random sampling method based on 262 mobile customers of telecom industry. However, by going through this method of sampling it has been ensured that all units of the population are adequately represented.

METHOD OF DATA COLLECTION: RESEARCH INSTRUMENT

The study has been completed mainly with the help of primary data. For the purpose of collecting primary data, a comprehensive questionnaire has been designed and administrated to the sampled customers of the telecom companies. For this purpose four dimensions have been considered: Customer Focus, Customer Service Quality, Knowledge Management and Relationship Building.

RESULTS

Table 2 : Percentage analysis of customer’s responses towards Customer Service Quality

Table 1 presents the summary of percentage analysis of customers’ responses of all telecom service providers on four dimensions namely Service Quality, Knowledge Management, Customer Focus and Relationship Building. The analysis has been done on the basis of overall percentage scores for each dimension.

With growing competition and increasing cost of acquisition of new customers, telecom service providers are continually seeking new ways to acquire, retain and increase their subscriber base and are confronted with the challenges of providing high quality of services in order to attract and maintain their customers. ‘Service Quality’ which is the comparison of customer’s expectations and service providers’ performance has been measured on five dimensions namely: Tangibles, Reliability, Responsiveness, Assurance and Empathy. From the analysis (Table 2) it is inferred that all the service providers have high scores (65.0 per cent to 73.8 per cent) for ‘Tangibles’ which means mostly customers are satisfied with the appearance of the physical facilities, appearance of service personnel, tools and equipment used to provide the service; and the communication materials of the service facility. For ‘Reliability’, Airtel (70.8 per cent) has the maximum score followed by Aircel (67.4 per cent) and Reliance (66.9 per cent) thus pointing out that customers of these service providers believe that their service provider performs the promised service in a dependable and accurate manner. The scores of remaining service providers for this dimension are above the moderate level. Additionally for ‘Responsiveness’ the high scores of Airtel (71.0 per cent), Reliance (70.3 per cent), Aircel (69.3 per cent), and Vodafone (66.8 per cent) affirm that the employees of these service providers are always ready to help customers in providing prompt and timely services while the low scores of MTNL (61.3 per cent) and TATA (61.0 per cent) indicate that these service providers are not very responsive towards their customers. Furthermore for the dimension ‘Assurance’ high scores (68.0 per cent to 77.6 per cent) of majority the service provider highlight that mostly customers have trust and confidence in their service providers and believe that the employees of the service provides are skilled to provide services. MTNL (63.8 per cent) has lowest score for this dimension, suggesting that the employees of the service provider must communicate their competencies and proficiency while dealing with the customers. For the dimension ‘Empathy’ the low scores of MTNL (50.0 per cent), BSNL (57.5 per cent) and Idea (58.1 per cent) point out that customers have expressed discontent towards this issue and are of the opinion that the employees of their service provider do not give individualized attention to them.

Managing relationships with customers requires managing knowledge for the customer, knowledge about the customer and knowledge from the customer. ‘Knowledge Management’ plays an important role in CRM by managing the four knowledge aspects: content, competence, collaboration and composition so as to satisfy customer requests. Through superior knowledge about customers, markets and other relevant factors, service providers can accomplish their results faster, cheaper and with higher quality than their competition. Thus for effective implementation of CRM, it is very important for the service providers to identify real knowledge about different types of customers. From the above analysis it is signified that most of the service providers have high scores (62.3 per cent to 68.1 per cent) for this dimension while the scores of MTNL (53.3 per cent) and BSNL (59.7 per cent) are below the moderate level specifying that these service providers need to focus on this dimension to improve their relationship with customers.

Further it is affirmed from the above analysis that for the dimension ‘Customer Focus’ the scores of all the service providers is above the moderate level which means that majority of the customers believe that the service provider thinks about them while planning products, taking decisions, and implementing policies and are making efforts to keep them happy. However Airtel has highest score on this dimension (71.4 per cent) indicating that a large number of customers have rated it high on this dimension. The lowest score of TATA (61.8 per cent) followed by MTNL (63.8 per cent) points out that these service providers need to take time and trouble to understand what customers want and need with the aim of enhancing customer satisfaction.

The executives of telecom industry play a crucial role in the successful implementation of CRM. To measure the effectiveness of CRM implementation, opinion of the executives of the service providers towards CRM related initiatives such as Customer Service Quality, Knowledge Management, Customers Focus, and Relationship Building initiatives undertaken by the service provider has been studied.

Table 3 presents percentage scores of responses of telecom company executives. It is evident from the result that the scores of telecom company executives are higher as compared to customers’ scores on all the dimensions. Also the scores are much above the moderate level for all the dimensions indicating that the telecom executives either agree or strongly agree to the implementation of various CRM initiatives.

On the basis of analysis of responses of customers and executives’ of the service providers, it is affirmed that there exists significant difference between the customer’s opinion and perception of executives of Telecom Company towards various CRM factors.

To analyze the gap between perception of telecom customer’s and telecom company executives, t- test has been applied (Table 4) .It is interpreted from the mean values that telecom executives have higher scores as compared to customer’s responses for all the parameters. Further the positive t- values indicate that there exists significant difference between executives and customers perception. Also it is evident from the p-values that perception of the executives of all the service providers and customers perception has significant difference at 1 percent level of significance.

Note: ** Significant at 1 per cent level of significance

Recommendations:

It is inferred from the above analysis that the gap between the expectation and satisfaction of the customers exists in case of service providers. Therefore it is suggested that the telecom service representatives must provide services as and when promised and should main and provide error-free records. Further the service providers should avoid making exaggerated claims as it can undermine the trust and tolerance level of customers. Also the service providers must provide the services in prompt and timely manner and should act quickly to resolve problems as it is one of the critical factors affecting service quality.

Most of the service providers have been rated low on relationship building dimension. Service providers must understand that any direct contact with the customer is an important opportunity to improve the relationship with customers. Thus there is a strong need to communicate with customers in a personalized way, thus making them feel important and leveraging a strong and valuable relationship with them.

A fundamental principle of CRM is that all customers are not the same. Thus the challenge of achieving a good relationship with customers can be seen as serving each customer in his preferred way, therefore requiring to manage customer -knowledge. The knowledge available to a company is a major success factor and strategic resource for gaining competitive advantage. Therefore it is strongly recommended that to survive in this knowledge economy and to succeed in competitive market place, these service providers must focus on their knowledge management initiatives which is the key to create value from new customer while retaining the existing ones.

To sum up it is recommended that instead of spending billions of dollars on conventional marketing mix elements, companies should strategize on word of mouth, which can be a result oriented approach. Such strategies may include; ensuring high service quality, significantly improving customer care, offering reasonable prices, creating consumer panels as well as incentivising the word of mouth.

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