“Customer Service as a ‘Differentiator’– A Cross-Sectional Study of the Mobile Market of Bangladesh”
Background of the Study:
‘Differentiation’, as opposed to price-focus, is a feature-based strategy to outperform one’s competitors. This approach primarily focuses on creating a separate or unique identity of the company or products to the eyes of customers. Whereby, price-based competition emphasizes price cutting (cost cutting) and other methods of aggressive pricing, differentiation focuses on a quality perspective by adding new or unique features to the offerings. In Bangladesh, mobile operators have been unable to create any differentiated positioning in customer perception, leading to price-based competition, fragmentation and lower profitability. This paper strives to prove this hypothesis and offer new insight in mobile service differentiation.
Differentiation strategy is an integrated set of action designed to produce or deliver goods or services that customers perceive as being different in ways that are important to them. It calls for to sell non-standardized products to customers with unique needs. (Prof. Ferhat Anwar, Undated)
Differentiation can be (a) the target market , (b) the brand, (c)a character or a personality, (d) Positioning, (e) product benefits – More Value-Added (MVA), (f) a single, key persuasive sentence, and / or (g) integration across communication. The factors can be summed up in five ways – Identity, Personify, Create a new generic, Change the name, and Reposition the category
Strategies of Differentiation:
Getting into the mind with a new idea or product or benefit is an enormous advantage. An attribute is a characteristic, peculiarity, or distinctive feature of a person of thing. Leadership is the most powerful way to differentiate a brand. The reason is that it’s most direct way to establish the credentials of a brand. And credentials are the collateral you put up to guarantee the performance of your brand.
Positioning Strategy: Position is that one thing, that one descriptive sentence or slogan the company is known for; that one specific idea that first comes to mind about the product; and that one characteristic that sets the service apart from competitors. (Prof. Ferhat Anwar, Undated)
Dimensions of Customer Service:
- Availability of product or service (to what extent products & services of a company are available)
- Lead time (difference between time of placing the order and delivery-time) variability
- System recovery (if something goes wrong, how quickly system can recover)
- Presence of ‘shadow’ system [ability to cater to the specialized needs of favored customers]
- Availability of system information [includes, information availability, quickness, accuracy and completeness]
- Post sale support system [accessories, maintenance, follow-up etc.]
(Prof. Nurur Rahman, Undated)
Findings of qualitative study
The big question:
Is it possible to differentiate (a service offering) based on pre- & post- sales customer services?
Rationale of the study
Over the last 2 years, Grameenphone Ltd. has invested heavily in developing a aide network customer service. Value-added services were introduced and specially, access to customer service has been made available for the wider population. In this backdrop, the Grameenphone management now wants to find out whether these investments have made inroad to the customer heart and any position of differentiation has been created in terms of retaining the customers.
Objectives of the Research
Broad Objectives of the Research: To find out whether quality in customer service retains customers.
Specific Objectives of the Research:
- To find out whether (pre & post sale-) customer service can make an operator ‘different’ (better or worse in customer perception) from its competitors –
- To identify the effect of product / service availability on customers’ perception
- To identify the effect of lead time variability on customers reaction toward an operator
- To identify the effect of ‘system recovery time’ on customers’ level of satisfaction
- To find whether having a shadow system makes customers satisfied
- To identify the effect of system information availability on customers’ perception toward an operator
- To identify effect of post-sale support system on customer perception
Hypothesis
Ho¹: Quality of Pre- & Post-sale ‘customer service’ has direct relationship with the retention rate of customers.
Methodology:
Scope:
The primary scope is to find the answers to the specific objectives as described above
The research will reflect the perception of mobile phone subscribers of Bangladesh
The report will reflect the opinion of the respondents, and findings will be based on those sampled opinion
The mobile subscribes living within Dhaka city have been taken as the sample frame of the study; however, the background of the study encompasses the whole mobile industry of Bangladesh.
Only the subscribers of five operators (GP, Aktel, CityCell, BanglaLink and Tele Talk) have been considered for the study. Subscribers of any other fringe operators were not considered.
Limitations:
- Sample sizes for Tele Talk and City Cell subscribers are short of the planned number (30); so any deductions based on these samples regarding Tele Talk and City Cell might not be statistically correct
- Many of the findings & concepts from the qualitative study could not be accommodated. Some of them (as following) were dropped from quantitative survey:-
- Development of new features in mobile packages
- Role of pricing in customer perception etc.
- Customer service (a comprehensive construct) was replaced by 6 parameters – product/service availability, lead time variability, availability of shadow system, system recovery time, availability of system information, and availability of post sales support service.
- Respondents of the quantitative survey have shown a tendency to over state the time for which they are using the current operator
Sampling type:
Quota sampling method was employed, where sample units represent the proportional distribution of the population. Sample elements are individual subscribers of different mobile operators (Grameenphone, Aktel, BanglaLink, CityCell, and Tele Talk). Sample frame is all the mobile phone subscribers of Bangladesh. Sample elements were selected based on convenience.
Sample size:
Sample size is 182 (calculation of the sample structure is given in the appendix # 2)
Field survey method:
As it is a cross sectional study, survey elements were chosen from the subscribers of five mobile operators. However, individual elements were picked based on convenience. Although the study covers the mobile phone industry of Bangladesh, the fieldwork was conducted only in Dhaka. The researcher acted as interviewer. Sample elements were given the questionnaire on the spot to fill up. The questionnaire was self-administered.
Contribution of research:
Individual: As a student of marketing, I am getting a hands-on learning in the pros & cons of research. Learning to apply the tools & techniques from classroom to the applied world of real-life business problems.
Organizational: findings and learning from the study can be used by the mobile operators of Bangladesh to focus their attention to specific marketing issues like differentiation, competition and customer satisfaction.
Society: Maybe the learning are minute and fraught with mistakes (of an apprentice), however, it will add to the total understanding of mobile service marketing in Bangladesh as very little have been done in areas of differentiation and per se.
Analysis techniques used:
| Sections of the Findings | Analysis Technique used |
| Reliability of data | Cronbach’s Alpha |
| Distribution of sample | Descriptive statistics, graphs |
| Quality of customer service | Regression model and ANOVA table |
| Relationship between customer service & impression about operator | Correlation |
| Test of null hypothesis | Paired sample t-test and descriptive statistics |
| Key components for customer service | Key component factor analysis |
Findings & Recommendations:
Reliability:
The reliability test shows Cronbach’s alpha to be .649 proving the data to be reasonably reliable.
Case Processing Summary
| N | % | ||
| Cases | Valid | 101 | 76.8 |
| Excluded(a) | 31 | 23.2 | |
| Total | 132 | 100.0 | |
A List wise deletion based on all variables in the procedure.
Reliability Statistics
| Cronbach’s Alpha | Cronbach’s Alpha Based on Standardized Items | N of Items |
| .649 | .746 | 17 |
Scale Statistics
| Mean | Variance | Std. Deviation | N of Items |
| 51.3619 | 49.5601 | 7.0399 | 17 |
Distribution of Sample
Interpretation: As the above pie-chart shows, Grameenphone has clearly lead the pack in terms of retaining their customers over the years followed by Aktel. On the other hand, BanglaLink has majority of their subscribers for less than 1 year. This fact is consistent with the core hypothesis, as Grameenphone has been spending heavily on customer service over the years; and currently has more than 600 customer contact points through out Bangladesh, which provides an edge over its competitors.
Interpretation: Both Aktel and BanglaLink have majority of their subscribers coming from the age group of 15-25 year; where as Grameenphone has substantial number of customers who are older than 25 years – this fact can have important implication regarding retention & loyalty as young people are generally more inquisitive and less loyal; and whenever any new offers come along they are the first to jump ship.
What is Quality Customer Service?
Customer Service, to the best of understanding, is a construct, which can mean both pre- & post- sales services. But, when customers talk about quality of service, they usually mean speed, convenience, availability and other related concepts. So, for our analysis, ‘customer service’ has been replaced by the following 8 parameters or concepts:
a) Ease of use and customer friendly, b) Cost effectiveness of customer service, c) Easy & cheap information about products & services, d) Behavior of customer service people, e) Lead time variability, f) Availability & reach of customer service points, g) Readiness to go the extra mile, h) Ease of access to customer service people
The following regression model tries to understand the strength and direction of relationship between these eight parameters (independent variables) and perception about customer service – based on survey results.
Model Summary
| Model | R | R Square | Adjusted R Square | Std. Error of the Estimate | Change Statistics | ||||
| R Square Change | F Change | df1 | df2 | Sig. F Change | |||||
| 1 | .678(a) | .460 | .422 | .729 | .460 | 12.042 | 8 | 113 | .000 |
a Predictors: (Constant), Ease of use and customer friendly, Cost effectiveness of customer service, Easy & cheap information about products & services, Behavior of customer service people, Lead time variability, Availability & reach of customer service points, Readiness to go the extra mile, Ease of access to customer service people
ANOVA(b)
| Model | Sum of Squares | df | Mean Square | F | Sig. | |
| 1 | Regression | 51.228 | 8 | 6.403 | 12.042 | .000(a) |
| Residual | 60.092 | 113 | .532 | |||
| Total | 111.320 | 121 |
a Predictors: (Constant), Ease of use and customer friendly, Cost effectiveness of customer service, Easy & cheap information about products & services, Behavior of customer service people, Lead time variability, Availability & reach of customer service points, Readiness to go the extra mile, Ease of access to customer service people
b Dependent Variable: Overall impression about customer service of current operator
Interpretation: From the above regression model, the ‘R’ score (0.678) and the level of significance imply ‘perception of customer service’ is strongly dependent on eight independent parameters. However, there might be other factors (apart from these 8) to consider as the ANOVA table shows – Residual values constitute a significant portion of the total ‘sum of squares’ value.
Relationship between Quality of Customer Service & Impression about Operator
Correlations # 1
Descriptive Statistics
| Mean | Std. Deviation | N | |
| Overall impression about current operator | 3.18 | .846 | 128 |
| Overall impression about customer service of current operator | 3.39 | .968 | 127 |
Correlations
| Overall impression about current operator | Overall impression about customer service of current operator | ||
| Overall impression about current operator | Pearson Correlation | 1 | .591(**) |
| Sig. (2-tailed) | . | .000 | |
| N | 128 | 126 | |
| Overall impression about customer service of current operator | Pearson Correlation | .591(**) | 1 |
| Sig. (2-tailed) | .000 | . | |
| N | 126 | 127 |
** Correlation is significant at the 0.01 level (2-tailed).
Interpretation: As the above correlation table shows, variable ‘overall impression about current operator’ and ‘overall impression about customer service of current operator’ have strong correlation (0.591) and they are both unidirectional. Thus, it can said based on this analysis that quality of ‘customer service’ can help build positive impression about the operator in the perception of the customer.
Interpretation: The following correlation tries to measure the degree of correlation between the variables ‘feel love & pride to do business with current operator’ and ‘overall impression about customer service of current operator’. Result of this test also shows quality of ‘customer service’ can help build loyalty and attachment within the customer (correlation score 0.548). However, this relationship does not hold true if we try to incorporate time-length of subscription in the equation. As the correlation # 3 shows, people who have been longer with a particular operator have shown less favorable attitude about the respective operator (negative correlation).
Correlations # 2
Descriptive Statistics
| Mean | Std. Deviation | N | |
| Feel love & pride to do business with current operator | 3.13 | .956 | 128 |
| Overall impression about customer service of current operator | 3.39 | .968 | 127 |
Correlations
| Feel love & pride to do business with current operator | Overall impression about customer service of current operator | ||
| Feel love & pride to do business with current operator | Pearson Correlation | 1 | .548(**) |
| Sig. (2-tailed) | . | .000 | |
| N | 128 | 123 | |
| Overall impression about customer service of current operator | Pearson Correlation | .548(**) | 1 |
| Sig. (2-tailed) | .000 | . | |
| N | 123 | 127 |
** Correlation is significant at the 0.01 level (2-tailed).
Correlations # 3
Correlations
| Feel love & pride to do business with current operator | Overall impression about current operator | Time with the current operator | ||
| Feel love & pride to do business with current operator | Pearson Correlation | 1 | .491(**) | -.278(**) |
| Sig. (2-tailed) | . | .000 | .001 | |
| N | 128 | 125 | 128 | |
| Overall impression about current operator | Pearson Correlation | .491(**) | 1 | -.033 |
| Sig. (2-tailed) | .000 | . | .710 | |
| N | 125 | 128 | 128 | |
| Time with the current operator | Pearson Correlation | -.278(**) | -.033 | 1 |
| Sig. (2-tailed) | .001 | .710 | . | |
| N | 128 | 128 | 132 |
** Correlation is significant at the 0.01 level (2-tailed).
Quality of Customer Service: Determining the Key Components
Communalities
| Sl | Initial | Extraction | |
| 01 | Lead time variability | 1.000 | .562 |
| 02 | Ease of use and customer friendly | 1.000 | .618 |
| 03 | Behavior of customer service people | 1.000 | .644 |
| 04 | Readiness to go the extra mile | 1.000 | .648 |
| 05 | Availability & reach of customer service points | 1.000 | .737 |
| 06 | Cost effectiveness of customer service | 1.000 | .779 |
| 07 | Easy & cheap information about products & services | 1.000 | .787 |
| 08 | Ease of access to customer service people | 1.000 | .809 |
Extraction Method: Principal Component Analysis.
Interpretation: The principal component analysis identifies the following 06 components to be consistent with the factor analysis (in order the importance):
a) Ease of access to customer service people, b) Easy & cheap information about products & services, c) Cost effectiveness of customer service, d) Availability & reach of customer service points, e) Readiness to go the extra mile, f) Behavior of customer service people.
Thus, we can conclude a model for determining the quality of customer service:
Customer Service = f (Ease of access to customer service people, b) Easy & cheap information about products & services, c) Cost effectiveness of customer service, d) Availability & reach of customer service points, e) Readiness to go the extra mile, f) Behavior of customer service people)
Quality of Customer Service Determines Degree of Customer Retention
Test of Hypothesis-
Ho: Quality of Pre- & Post-sale ‘customer service’ has direct relationship with the retention rate of customers (time with current operator).
Decision rule: If the mean value of the variable “time with current operator” is not significantly different from the mean value of variable ‘overall impression about the current operator’, then there is not sufficient ground to disprove the null hypothesis.
Paired Sample t- Test:
T-Test
Variables compared= “longevity with current operator” and “Overall impression about customer service of current operator”
Paired Samples Statistics
| Mean | N | Std. Deviation | Std. Error Mean | ||
| Pair 1 | Time with the current operator | 3.09 | 127 | 1.414 | .126 |
| Overall impression about customer service of current operator | 3.39 | 127 | .968 | .086 | |
Paired Samples Correlations
| N | Correlation | Sig. | ||
| Pair 1 | Time with the current operator & Overall impression about customer service of current operator | 127 | .022 | .808 |
Paired Samples Test
| Paired Differences | t | df | Sig. (2-tailed) | ||||||
| Mean | Std. Deviation | Std. Error Mean | 95% Confidence Interval of the Difference | ||||||
| Lower | Upper | ||||||||
| Pair 1 | Time with the current operator – Overall impression about customer service of current operator | -.30 | 1.696 | .151 | -.60 | .00 | -1.988 | 126 | .05 |
Interpretation: The level of significance for T-test is low but not lower than the critical point (0.05). The Lower and upper limit of the confidence interval contains ‘zero’ among them. So, there is not enough evidence to disprove the null hypothesis.
So, quality of customer service has reasonable relationship with the retention of customers. However, the correlation value of the paired sample variables show a weak (0.22) relationship among the two variables.
Perceptual position of the four operators (in eyes of the customers):
[Ref: “Differentiation in Mobile Market of Bangladesh”, by this same author]
A significant number of the respondents did not answer this question, while asked to differentiate Aktel from other operators based on a certain factor. This can lead to the conclusion that Aktel has failed to create any clear position in the perception of the customers. Apart from that- low call charge, 10-second pulse and features & facilities offered by the operator (Aktel) has been cited as consistent factors with Aktel. (Fig-3)
Similarly, regarding CityCell most of the respondents struggled to delineate a position for the operator. Most of respondent could only cite the CDMA technology as the major differentiating factor for the operator.
However, when asked with the same question regarding GrameenPhone, most of the respondents talked about the nation-wide coverage and higher quality of network for the operator. (Fig- 5)
Regarding BanglaLink, respondents could not identify any one or two area for differentiation, prompting one to speculate that BanglaLink although vibrant & dynamic had given away to many messages cluttering the perception of the customer; and forcing the customers from forming any clear perception about the company.
Results of the above analysis is presented in the following table:
Table: Perceptual position of the 4 operators (in customer mind)
| GP | Aktel | CityCell | BanglaLink | |
| Area of Focus | Service, Coverage & Net Quality | Low price, 10-secod pulse and Features & facilities | CDMA technology & lower rate | No clear position |
Recommendations:
- Grameenphone should continue in its path to emphasizing customer service as a key differentiator while positioning itself apart from other operators.
- The key components while defining customer service are- a) Ease of access to customer service people, b) Easy & cheap information about products & services, c) Cost effectiveness of customer service, d) Availability & reach of customer service points, e) Readiness to go the extra mile, f) Behavior of customer service people.
- Appeal of a particular service might wear off with the length of time a customer sticks with a particular operator. So, Grameenphone should continue to redefine the 6-factors customer service with new features and facilities.
- On a more general note, the operator instead of concentrating on price based-competition should focus on a qualitative positioning. Otherwise they might soon find their profit base eroding rapidly.
- Grameenphone should identify customer service as a core competence area (in addition to network quality and value-based services) and continue build on that.
Limitations:
Lack of availability of the respondents forced the study to be completed with 132 sample elements rather than the initial 182 (stipulated). However, the researcher tried to meet the 30-sample mark under each category of population. At the end, the sample was more or less representational of the population groups.
Conclusion:
There was not sufficient ground to disprove the hypothesis that “Quality of Pre- & Post-sale ‘customer service’ has direct relationship with the retention rate of customers (time with current operator)”. In other words, customer service can give an edge to a particular operator over its competitors. Grameenphone already has some degree of perceptual positioning distinct from its competitors (in terms of customer service and network quality). However, the problem with any service is competitors can quickly catch up with one’s position and emulate Grameenphone’s current offerings. So, the challenge is to redefine the basic concepts of customer service (a) Ease of access to customer service people, b) Easy & cheap information about products & services, c) Cost effectiveness of customer service, d) Availability & reach of customer service points, e) Readiness to go the extra mile, f) Behavior of customer service people) with innovative offers and facilities. Only, thus, Grameenphone can stay ahead of its competitors and create a differentiated position in terms of retaining its customers.
Appendix:
Appendix- 1: Sample Structure
