Switching Behavior and Customer Satisfaction in Mobile Services ...

Computers in Human Behavior 49 (2015) 532–540

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Computers in Human Behavior journal homepage: www.elsevier.com/locate/comphumbeh

Switching behavior and customer satisfaction in mobile services: Analyzing virtual and traditional operators Cristina Calvo-Porral a,⇑, Jean-Pierre Lévy-Mangin b a b

University of A Coruña, Economic Analysis and Business Administration Department, Campus Elviña, s/n, La Coruña 15004, Spain University of Quebec in Outaouais, Marketing Department, Pavillon Lucient Beault, 101 Rue Saint Jean Bosco, Gatineau, Canada

a r t i c l e

i n f o

Article history:

Keywords: Mobile services Customer satisfaction Switching behavior Loyalty

a b s t r a c t The present study analyses the creation of customer satisfaction and loyalty, along with the influence of switching costs in the mobile services’ market by comparing network – the so-called traditional – and virtual mobile services, in order to empirically and conceptually investigate the difference between these mobile services’ operators. For this purpose we tested a conceptual model by developing structural equation modeling, in the context of a mature market– Spain– gathering a sample of 406 mobile phone users. The analysis highlights that both service value and corporate image exert the strongest influence on customer satisfaction and loyalty both for traditional and virtual mobile services, despite some relevant differences were found regarding switching costs. Since our findings show low switching costs, mobile service providers should focus their marketing efforts toward attracting new customers and increasing the primary demand, rather than retaining their existing customers. Ó 2015 Elsevier Ltd. All rights reserved.

1. Introduction Mobile communication services are an overwhelming phenomenon, as mobile devices become more and more pervasive in our everyday life and their capabilities resemble more of the desktop computers (Al-Debei & Al-Lozi, 2014; Kim, Park, & Jeong, 2004; Mazzoni, Castaldi, & Addeo, 2007), while opening up great opportunities to mobile operators (Corrocher & Lasio, 2013). In this context, virtual mobile services have emerged in the last decade, gaining a foothold in many markets, and especially in Europe; since the 65 per cent of mobile virtual network operators operate in Western European countries (Garrido & Whalley, 2013). However, the entrance of virtual mobile services – most of them competing in low prices – created a new scenario, changing the competition within the mobile services’ industry, by the increase in the segments and market niches served; and still showing a great potential for further expansion. Furthermore, mobile virtual services often enter in mature saturated markets, attracting customers who are willing to change operator (Corrocher and Lasio, 2013); thus, highlighting the importance of switching costs and causing mobile services companies to be constantly under pressure in order to retain customers (Baker, Sciglimpaglia, & Saghafi, 2010). ⇑ Corresponding author. Tel.: +34 609 794 316. E-mail addresses: [email protected] (C. Calvo-Porral), jean-pierre.levy-mangin@ uqo.ca (J.-P. Lévy-Mangin). http://dx.doi.org/10.1016/j.chb.2015.03.057 0747-5632/Ó 2015 Elsevier Ltd. All rights reserved.

So, given that one of the main objectives of mobile services companies is to increase customer retention rates, understanding the relationship between customer satisfaction, loyalty and switching costs will provide useful insights. However, in explaining the link between customer satisfaction and loyalty, only few studies have examined the influence of switching costs in mobile services (Vazquez-Carrasco & Foxall, 2006). In this scenario, the present research seeks to provide a more indepth understanding of the variables influencing customer satisfaction and loyalty, as well as an examination of switching costs, by comparing two type of mobile communication services – traditional operators or mobile network operators and the socalled virtual operators – in order to determine the main differences. This paper examines whether customer satisfaction is related to variables such as the service value or the corporate image, along with the influence of switching costs, by providing empirical evidence of the relationship among these variables, customer satisfaction, loyalty and switching intention. For this purpose, the present study proposes a conceptual model incorporating both antecedents and consequences of customer satisfaction toward mobile services companies, and carry out a multiple group analysis through structural equation modeling. Our, results show the lack of switching costs for traditional operators, along with the significant influence of corporate image and perceived value in customer satisfaction for both types of mobile operators. Moreover, our findings highlight the creation of

C. Calvo-Porral, J.-P. Lévy-Mangin / Computers in Human Behavior 49 (2015) 532–540

customer loyalty as a consequence. The contribution of the study is that provides empirical support for the differences on the sources of customer satisfaction and switching costs for mobile communication traditional versus virtual mobile services. More specifically, the present paper develops and empirically tests a conceptual model, incorporating both factors of satisfaction and switching costs to examine the creation of customer satisfaction in the mobile services market. This paper is structured as follows. In the first section we develop a conceptual framework based on the intangible attributes of store brands. This is followed by the description of the methodology adopted and the fieldwork. Subsequently, results are presented and discussed. Finally, major conclusions and some managerial implications are provided.

2. Conceptual framework 2.1. Traditional and virtual operators Mobile communication services’ companies could be divided according to the networks used for production; thus distinguishing between mobile network operators – traditional mobile services – which use their own communication networks; and the so-called virtual operators, which rent other mobile companies’ networks (Gerpott, Rams, & Schindler, 2001). There is no single definition of mobile virtual operators. The Ofcom report (2006) defines virtual operators as companies that offer mobile communication services to customers by reselling wholesale minutes that they have purchased from an existing infrastructure owner. According to Corrocher and Lasio (2013) a virtual mobile service operator is a company that provides mobile communication services without owning a licensed frequency allocation of radio spectrum and the tower infrastructure, generally leasing these assets from a traditional communication operator. So, a mobile virtual operator offers mobile communication services despite not having their own radio frequency (Shin, 2010). According to Jaspers, Hulsink, and Theeuwes (2007) different types of virtual mobile services could be distinguished, based on the extent that they depend on their network suppliers and control the resources required to operate. On one hand, some virtual mobile service operators purchase calling time from network operators and sell it to customers, while offering billing and customer support, despite engaging in any network activity. And on the other hand, other virtual operators hire network capacity, maintaining a home location register (Jaspers et al., 2007). Consequently, virtual mobile services have lower costs than traditional ones, given that they do not have to pay license fees, are subject to limited infrastructure, distribution and commercial costs (Jaspers et al., 2007). And therefore, virtual operators enjoy a higher level of freedom regarding pricing or service development. The virtual mobile services’ competitive strategy mainly implies the delivery of mobile communication services at lower prices; while obtaining lower profit margins and being dependent on the contracts negotiated with the mobile traditional operators (Corrocher & Lasio, 2013). So, the need to compete with traditional operators, the market price competition and the high potential for increasing customer retention, are important drivers for virtual mobile services. Consequently, most of them offer basic mobile communication services with single tariff plans and low-cost tariffs; that is, easy and cheap tariffs, bundled in basic devices (Corrocher & Lasio, 2013). However, from the customers’ standpoint, the virtual mobile services may be virtually indistinguishable from those services provided by traditional mobile services (Banerjee & Dippon, 2009).

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2.2. The Spanish mobile services market With the rapid development of the mobile communication technologies, conventional internet services have been introduced to mobile communication devices, which are present in everyday life (Song, 2014). Subsequently, mobile services have been widely adopted and implemented in Spain. The choice of the Spanish market is motivated by the fact that it represents a mature market, being the sixth largest European country in terms of number of virtual operators in year 2010. The national resolution of year 2002 allowed the provision of mobile services by virtual operators; however, the mobile network operators were reluctant to host operators on their networks, since they were regarded as competitors. In year 2006, the European Commission highlighted the unsatisfactory competitive level on the mobile market, justifying the intervention in order to encourage the entry of virtual operators (European Commission, 2006). This meant that traditional operators should open up their networks to virtual operators that had obtained a license (Garrido & Whalley, 2013). Consequently, virtual operators began to provide mobile services from year 2006 onwards. So, in year 2012 there were 37 virtual operators providing services (Garrido & Whalley, 2013), leading to a total amount exceeding 3.5 million customers, and accounting for the 5% of the mobile contracts, showing on the highest growth rates in market share. The process of market liberalization and the increasingly intense competition has improved customers’ welfare, since they benefited from competition between traditional and virtual mobile services operators in terms of prices and service offerings (Corrocher & Lasio, 2013). However, most of the mobile virtual mobile services enter the market targeting the low-cost segment, while offering internet access at low prices. Moreover, the UE regulation released mobile numbers’ portability in year 2003, enforcing phone numbers’ portability between operators. Consequently, the number portability does not longer act as a switching cost; thus, not preventing customers from terminating contracts with their current service providers. Since the introduction of mobile number portability, the Spanish market has gone through a significant transformation, driving companies to compete fiercely to gain new customers, by means of promotions and price deals in order to lock-in customers. Finally, it was a common practice in the Spanish market to subsidize the purchase of mobile devices; that is, give customers mobile devices for free or with a low price, when they sign a contract with a mobile services company. By this practice, the companies clearly tried to lower the switching costs for new customers (Gerpott et al., 2001). As a result, after the required contractual period, a great number of customers terminated their contract, in order to obtain new subsidized devices again. However, the discontinuing of subsidies from year 2012, caused a reduction in the increase rate of new customers, revealing that the market may have reached maturity (Garrido & Whalley, 2013).

2.3. Research hypotheses development The present study aims to analyze how customers evaluate mobile communication operators, along with the creation of customer satisfaction and the role of switching costs, comparing virtual and mobile network operators in the marketplace. More specifically, we have three major research questions. First Research Question is: ‘‘What are the main variables influencing mobile services’ customer satisfaction?’’. Our second research question is the following: ‘‘What are the main switching costs in mobile services?’’. Finally, Research Question 3 is ‘‘What are the main differences regarding customer satisfaction and switching costs between traditional and virtual mobile services?’’.

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2.3.1. Antecedents of customer satisfaction Customer satisfaction is an experience-based assessment made by the customers, of how far their own expectations about characteristics of the overall functionality of services obtained from a provider have been fulfilled (Gerpott et al., 2001). Thus, customer satisfaction is higher or lower compared to the extent to which what was actually provided by the service supplier exceeds or falls short of what was expected (Gerpott et al., 2001), being an effective variable in predicting consumers’ post-purchase behavior (Netemeyer et al., 2004). The current research adopts the conceptualization proposed by Johnson and Fornell (1991), referring to customer satisfaction as the consumer overall evaluations based on their purchase experiences. 2.3.1.1. Service value. According to Zeithaml (1988) perceived value could be defined as the consumers’ overall assessment of the benefits of a product or service, based on perceptions about what is being received. Customers’ perception of service value is the main factor influencing and predicting customer satisfaction (Sweeney & Soutar, 2001; Zeithaml, Berry, & Parasuraman, 1996). Additionally, previous research confirmed that a higher level of service value was related to a greater level of customer satisfaction (Cronin, Brady, & Hult, 2000). In the mobile communications sector, the service perceived value could be defined as the evaluation of the benefits of a service by customers, based on their advance sacrifices and ex-post perceived performance when they use mobile services (Kuo, Wu, & Deng, 2009). This way, customers integrate their perceptions of what they get and what they give up in order to obtain mobile communication services. Previous research highlights three variables as the main drivers of services’ perceived value – network quality, good value for money and customer service (Gerpott et al., 2001), stressing the service value and customer satisfaction as the key variables in mobile companies’ success (Wang, Ye, Zhang, & Nguyen, 2005; Yang & Peterson, 2004). More specifically, previous studies in the mobile communication industry have demonstrated that perceived value positively influences customer satisfaction and loyalty (Lin & Wang, 2006). So, when customers perceive that the value they are obtaining from a mobile services’ company is high, they will assess more positive evaluations and will be more willing to engage with the company (Deng, Lu, Wei, & Zhang, 2010). So, considering the explained above, the present paper proposes that a higher perceived service value, will increase consumer satisfaction; which in turn leads to a greater customer loyalty. Thus, the following hypothesis is presented: H0. The service value is positively related to customer satisfaction.

2.3.1.2. Corporate image. The corporate image is another important factor in the overall service evaluation. According to Grönross (1988) and Keller (1993) the corporate image is the perception of an organization held in consumers’ memory, which works as a type of filter influencing the perception of how the company operates. So, the corporate image reflects the consumer’s overall impression of the company. Considering the previous conceptualization, this study understands that the corporate image stems from all of the consumers’ experiences, influencing customers’ satisfaction. Following Gerpott et al. (2001) consumers’ willingness to continue a contractual relationship with a mobile services’ company is strongly influenced by the extent to which they have a positive image. Additionally, consumers’ perceptions of the mobile services company, such as integrity, reliability or experience are crucial, since customers evaluate corporate attributes before they subscribe (Methlie & Nysveen, 1999). More specifically, when

customers perceive that a mobile services company is reliable, trustworthy and with wide experience, they will be more satisfied (Deng et al., 2010). Consequently, we propose that corporate image is an important driver of customer satisfaction, presenting the following hypothesis: H1. The corporate image is positively related to customer satisfaction. 2.3.2. Customer switching costs Switching costs could be defined as the costs of switching from one supplier’s product to another one (Porter, 1980), comprising costs that can be measured in monetary terms, the psychological costs of facing a new company and the time and effort involved in using a new provider or service (Kim et al., 2004). Switching costs have been considered as a relevant factor influencing customers’ intention to remain in the relationship with a service provider (Vazquez-Carrasco & Foxall, 2006); meaning a barrier to changing service providers (Deng et al., 2010). Thus, high switching costs discourage changing from the current provider, and are applied in the present study, defined as the costs consumers incur by changing one service provider to another. In the mobile communications sector, the switching costs refer to the difficulty in switching to another mobile communication provider (Kim et al., 2004). So, the contract or subscription with a mobile services company may be maintained involuntarily because a customer is prevented by switching costs from changing provider (Gerpott et al., 2001). That is, even though some customers are not satisfied with their mobile communication providers, they do not wish to terminate the contractual relationship due to switching costs, becoming captive customers (Gerpott et al., 2001). Therefore, the higher the switching costs, the more customers are forced to remain with their current mobile services’ providers; and on the contrary, satisfied customers may switch to another mobile company for the low switching costs (Lam, Shankar, Erramilli, & Murthy, 2004), such as low search costs or the wide array of attractive alternatives. Finally, high switching costs may influence customer satisfaction, since consumers will perceive high switching costs as negative, and reducing their flexibility to switch providers (Bigné, Sanchez-García, & Currás-Perez, 2011; Methlie & Nysveen, 1999). 2.3.2.1. The attractiveness of alternatives. The attractiveness of alternatives means the image, reputation and service quality of the replacing services’ companies, which are expected to offer more suitable or superior services than those of the current company (Kim et al., 2004). According to Vazquez-Carrasco and Foxall (2006) we conceptualize this switching cost as the customers’ perceptions regarding to the extent to which competing alternatives are available in the marketplace; thus, when viable alternatives are lacking, the probability of terminating an existing relationship decreases. Customers’ perception of the risk in switching to other providers, along with the difficulty in finding an alternative service or the lack of attractive alternatives, will increase the likelihood that the customer will continue with the current mobile service provider (Lam et al., 2004). That is, in the present study we consider that customers’ perception of the availability of attractive alternatives in the marketplace may have a negative impact on their satisfaction. In addition, customers are probably dissatisfied when it is difficult to find service alternatives and, thus, having limited flexibility imposed on them. Therefore, we predict a negative relationship between the presence of attractive alternatives in the marketplace and customer satisfaction (Deng et al., 2010). Thus, we propose the following research hypothesis:

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H2. The attractiveness of alternatives is inversely related to customer satisfaction.

2.3.2.2. Search costs. The customers’ search effort is an important aspect of the switching costs (Fornell, 1992) Mobile services consumers found significant cost in switching from one service provider to another one, because doing so would mean a great search effort and a loss of time getting informed about other companies’ services (Bigné et al., 2011). This implies that high search effort leads to a poor customer satisfaction and to high customer loyalty. However, previous research shows that search costs are reduced when customers move from the traditional markets to electronic markets (Methlie & Nysveen, 1999). Consequently, mobile services market reduces search costs related to searching for services information, being less costly for customers to find alternative providers (Methlie & Nysveen, 1999). Therefore, the present research assumes that the relationship between search effort and customer satisfaction is an inverse relationship, as for switching costs. Consequently, we pose the following hypotheses: H3. The search effort is inversely related to customer satisfaction. 2.3.3. Consequences of customer satisfaction 2.3.3.1. Customer loyalty. Following Oliver (1997) we can define loyalty as the consumers’ repurchase of a certain product or service. In the mobile services context, loyalty is conceptualized as a favorable attitude toward a specific service provider, which leads to a repurchase likelihood of additional services from the same provider and to a lower price sensitivity (Turel & Serenko, 2006). The present study conceptualizes customer loyalty as the customer intention to repurchase from the same company, considering customer satisfaction an important antecedent of customer loyalty. Previous research suggest that customer loyalty is achieved through the enhancement of satisfaction (Turel & Serenko, 2006). Customer satisfaction is considered as an key determinant of loyalty, that positively influences customer loyalty and customer retention (Choi, Seol, Lee, Cho, & Park, 2008; Eggert & Ulaga, 2002; Gerpott et al., 2001), while negatively affects customer switching intention (Walsh, Dinnie, & Wiedmann, 2006). However, customer satisfaction is not a sufficient condition for customer loyalty (Kim et al., 2004; Lee & Cunningham, 2001); and thus it is necessary to analyze other influencing factors, such as switching costs (Jones, Mothersbaugh, & Beatty, 2000). That is, customer loyalty may be due to satisfaction or it may be due to dissatisfaction in a service with high switching costs, which increase

Service Value

the difficulty in changing providers (Lee & Cunningham, 2001). Consequently, customer disloyalty can be due to dissatisfaction or to low switching costs, which make it easy to shift service providers. So, considering previous research that assumed that a high level of satisfaction is strongly correlated with increased customer loyalty (Lee & Cunningham, 2001), we propose the following research hypothesis: H4. Customer loyalty is positively related to customer satisfaction. 2.3.3.2. Switching intention. Customer switching intention could be defined as the exit or the customer decision to terminate the contract with a particular service company (Stewart, 1998). In the mobile services’ market, customer retention is a crucial issue, given that mobile services’ contract represents a continuous transaction carried out over a long period of time, while customers cannot be certain that the mobile services will we always provided with the promised quality (Deng et al., 2010; Gerpott et al., 2001). Thus, customer retention is concerned with maintaining the contractual relationship established between the mobile company and the customer (Wang et al., 2005). Satisfaction and loyalty have emerged as the main variables influencing customer retention, that is, whether a customer continues to a contract with a service provider (Eshghi, Haughton, & Topi, 2007). Following Vazquez-Carrasco and Foxall (2006) and Deng et al. (2010), customer satisfaction is a direct determining factor in customer retention and switching intention. Once a customer is dissatisfied with a service provider, he will be much more likely to change to another one (Deng et al., 2010). So, according Walsh et al. (2006) and Choi et al. (2008) the present study proposes that customer satisfaction negatively affects customer switching intention. Accordingly, the following research hypotheses are posed: H5. Customer switching intention is inversely related to satisfaction. H6. Customer loyalty is inversely related to switching intention. (Fig. 1).

3. Methodology 3.1. Data collection To test the research hypotheses, the information was captured through a structured on-line questionnaire, and fieldwork was

H (+) 0 Loyalty

Corporate Image

Aracveness of alternaves

H1 (+) H4 (+)

H2 (-)

H3 (-) Search effort

H6 (-) Sasfacon

H5 (+)

Switching costs Fig. 1. Proposed research hypotheses.

Switching intenon

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Table 1 Variables and indicators. Construct

Indicators

Service value Kuo et al. (2009) and Bigné et al. (2011)

SV1: My company is cheap and affordable SV2: My company offers good value for money SV3: This company offers me many benefits

Corporate image

IM1: This company has a good image among consumers IM2: I have a good image about my company IM3: This company has a good image, compared to other competing companies

Bigné et al. (2011) Attractiveness of alternatives Jones et al. (2000) and Bigné et al. (2011)

ATR1: Probably, I would be also satisfied with another company ATR2: If I had contracted with another company, I would be equally satisfied

Search costs

SC1: I used several information sources to collect information before I selected my company SC2: I spent a lot of time searching for information about other companies before I selected my operator

Bigné et al. (2011)

Customer satisfaction

Burnham et al. (2003) and Kuo et al. (2009)

Loyalty Yoo et al. (2000) Switching intention Jones et al. (2000) and Bansal et al. (2005)

SAT1: The decision to contract with this company was wise SAT2: I am very satisfied this company SAT3: My company gives me what I expect from a mobile services company SAT4: So far, my company has satisfied my expectations LOY1: If I had to contract again, I would chose the same company LOY2: I consider myself loyal to my mobile services’ company SW1: I have the intention of switching my smartphone services’ company SW2: I regret to have subscribed contract with this company

carried out in March 2013. We proceeded with a random sampling among consumers residing in Spain, sending them a online invitation to participate in the research study, together with information about the questionnaire. More specifically, we invited them to complete an online questionnaire, asking them about their specific mobile service company, in order to gather information regarding the company they have consumer experience. Consequently, the qualified respondents were Spanish users of mobile services, and the present study aimed at their satisfaction and switching intention. The data collection process lasted four weeks. This procedure yielded 432 completed questionnaires, obtaining a total amount of 406 valid responses (Traditional = 282, Virtual = 124). The sampling error was 5.53%, with a confidence level of 95% under the hypothesis p = q = 0.50. The collected questionnaires were adequate enough to conduct the structural equation modeling (SEM), exceeding the absolute minimum sample size (Hair, Anderson, Tatham, & Black, 1998). The last part of the questionnaire contained several socio-demographic questions. Regarding the sample profile, a 64% of the respondents are between the ages of 31 and 50, while the 24% were between the ages of 21 and 30. A total of 52.57% of the questionnaire respondents were female. In terms of education level more than 38% of the participants have secondary studies. The data also indicated that all of the respondents were frequent users of mobile communication services, since they indicate using their mobile phones everyday (92%).

(Table 1). The service quality is measured by three items adopted from Kuo et al. (2009) and Bigné et al. (2011), in order to assess customers’ perception of the service value. Secondly, we used three items to measure the corporate image, adopted from Bigné et al. (2011), based on customers’ image and perceptions. The attractiveness of alternatives is measured on a 3-item scale, comprising items proposed by Jones et al. (2000) and Bigné et al. (2011). The customers’ search costs are measured on the scale proposed by Bigné et al. (2011) which evaluates the customer’s overall search effort. Regarding the variable consumer satisfaction, we considered four items proposed by Burnham, Frels, and Mahajan (2003) and Kuo et al. (2009). In order to measure customers’ loyalty, we adopted three items from previous research (Yoo, Donthu, & Lee, 2000). Finally, switching intention is measured on a 2-item scale, including items adopted from Jones et al. (2000) and Bansal, Taylor, and James (2005). 4. Results 4.1. Measurement model Structural equation modeling was carried out in order to analyze the proposed model with Amos, providing a confirmatory factor analysis and showing a clear factorial structure for constructs considered (Table 2). Confirmatory factor analyses were employed to address the issues of dimensionality, convergent and discriminant validity (Anderson & Gerbing, 1988). Our confirmatory factorial analysis shows that all standardized loadings are significant, with a reliability level of 95% and reach values up to 0.5, with the exception of SC2 for virtual operators. Deleting this item would result in a higher AVE value, but a decision was made to retain it in further analysis due to its content validity. These results reveal the strong convergent validity (Diamantopoulos & Siguaw, 2006; Fornell & Larcker, 1981; Steenkamp & Van Trijp, 1991). In relation with the internal consistency and reliability, Cronbach Alpha, composite reliability coefficients and analysis of the extracted variance exceeded were calculated. We obtained cronbach alpha values from 0.636 to 0.930, thus being acceptable as suggested Anderson and Gerbing (1988) and Hair et al. (1998). The composite reliability exceeded the value of 0.50, satisfying the criteria (Hair et al., 1998). The average variance extracted varied from 0.504 to 0.870, thus confirming convergent validity, given that it should have close values to 0.5 (Hair et al., 1998). 4.2. Structural model Structural equation modeling was developed to assess the statistical significance of the research proposed relationships (Table 3). Model fit criteria suggested by Hu and Bentler (1999) were used for both the measurement and the structural model: X2/df, goodness of fit (GFI), adjusted goodness of fit (AGFI), comparative fit index (CFI), root mean square residual (RMR) and root mean square error of approximation (RMSEA). Acceptable models should have X2/df 6 3, AGFI P 0.80, RMR 6 .1, RMSEA 6 1.0 and GFI and CFI higher than 0.90. All of the obtained fit measures indicated that the structural model was acceptable (X2/df = 1.777; p < .000): RMSEA = 0.044; RMR = 0.068; GFI = 0.895; AGFI = 0.835; CFI = 0.95). 4.3. Discussion

3.2. Variables and measurement scales All measures are adapted from or developed based on prior research, and were measured using the classic Likert-type 1–5 scale, indicating the level of agreement or disagreement

The results obtained report that corporate image is the variable with higher influence on customer satisfaction for both type of mobile operators (bT25 = 0.526⁄⁄; bV25 = 0.480⁄⁄). Hence, in terms of the effect size, the corporate image seems to contribute the most

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C. Calvo-Porral, J.-P. Lévy-Mangin / Computers in Human Behavior 49 (2015) 532–540 Table 2 Factor loadings and indicators of internal consistency and reliability. Construct

Items

Cronbach alpha

Traditional

Virtual

Lambda

CR

AVE

Lambda

CR

AVE

Service value

SV1 SV2 SV3

0.878

0.760 0.886 0.718

0.832

0.626

0.800 0.925 0.834

0.890

0.730

Corporate image

IM1 IM2 IM3

0.870

0.692 0.827 0.911

0.854

0.663

0.657 0.829 0.949

0.713

0.673

Attractiveness of alternatives

ATR1 ATR2

0.617

0.944 0.272

0.517

0.502

0.724 0.761

0.711

0.551

Search costs

SC1 SC2

0.806

0.846 0.798

0.807

0.676

0.841 0.457

0.528

0.503

Satisfaction

ST1 ST2 ST3 ST4

0.922

0.844 0.877 0.787 0.803

0.897

0.687

0.837 0.918 0.833 0.768

0.906

0.707

Loyalty

LOY1 LOY2

0.905

0.863 0.928

0.891

0.862

0.848 0.881

0.856

0.748

Switching intention

SW1 SW2

0.721

0.756 0.683

0.682

0.519

0.570 0.677

0.561

0.511

Table 3 Structural modeling adjustment indexes. Structural Model

Absolute fit measures

Incremental fit measures

Parsimony measures

Chi-square

df

p

GFI

RMSEA

RMR

AGFI

NFI

IFI

TLI

CFI

Normed Chi-square

622.079

350

0.000

0.895

0.044

0.068

0.835

0.901

0.954

0.944

0.954

1.777

Table 4 Results of the structural model. Causal relationships Standarized coefficients

Traditional (n = 281)

Hypotheses test

Virtual (n = 118)

Hypotheses test

Service value ? Satisfaction Corporate image ? Satisfaction Alternatives’ attractiveness ? satisfaction Search costs ? satisfaction Satisfaction ? loyalty Satisfaction ? switching intention Loyalty ? switching intention ns = no significative ⁄⁄ Significative (p < 0.05)

bT15 = 0.382⁄⁄ bT25 = 0.526⁄⁄ bT35 = 0.077ns bT45 = 0.005ns bT56 = 0.933⁄⁄ bT57 = 0.520⁄⁄ bT67 = 0.377⁄ R2Satisfaction = 0.796 R2Loyalty = 0.781 R2Switch intention = 0.778

H0: Supported H1: Supported H2 No Supported H3: No Supported H4: No Supported H5: Supported H6: Supported

bV15 = 0.262⁄⁄ bV25 = 0.480⁄⁄ bV35 = 0.266⁄⁄ bV45 = 0.055ns bV56 = 0.987⁄⁄ bV57 = 0.017ns bV67 = 0.047ns R2Satisfaction = 0.743 R2Loyalty = 0.974 R2Switch intention = 0.857

H0: Supported H1: Supported H2 Supported H3: No Supported H4: No Supported H5: No Supported H6: No Supported

to customers’ satisfaction, followed by service perceived value (bT15 = 0.382⁄⁄; bV15 = 0.262⁄⁄). That is, we found empirical evidence to propose a significant relationship among corporate image and service perceived value as sources of customer satisfaction. On the other hand, regarding the influence of switching costs on customer satisfaction it should be highlighted that for traditional mobile operators, the attractiveness of alternatives (bT35 = 0.077ns) and the search costs (bT45 = 0.005ns) showed not statistical significance on customer satisfaction. That is, the proposed relationships were in the expected direction, but failed to reach statistical significance for both variables. The reason may be that switching costs are regarded as insignificant by customers or that they do not have the feeling of being retained by traditional operators; and moreover it can be explained by the nature of mobile communication services, commonly available on-line today. Nevertheless, the attractiveness of alternatives showed a slight statistical negative influence on customer satisfaction for mobile virtual operators (bV35 = 0.266⁄⁄). Moreover, the relationship of customer satisfaction on mobile company loyalty (is

significantly positive both for traditional and virtual operators (bT56 = 0.933⁄⁄; bV56 = 0.987⁄⁄). Thus, it can be stated that the higher customer satisfaction, the higher customer loyalty. Finally, and contrary to our expectations, our findings do not find empirical evidence regarding the significant relationship between customer satisfaction (bV57 = 0.017ns) or loyalty (bV67 = 0.047ns) with switching intention, for the virtual mobile operators. This result may be perceived as customers’ satisfaction and loyalty not influencing their switching intention, maybe because virtual operators customers’ switching intention is mainly rooted in other variables, such as affordable and low prices (see Table 4). The conceptual proposed model showed an adequate general fit to the provided data. Regarding mobile traditional operators our results provide strong support for all research hypotheses, except from H2 and H3, thus not supporting the influence of switching costs on customer satisfaction (Fig. 2). In relation with mobile virtual operators, our findings show that four of the seventh initial research hypotheses are supported – H0, H1, H2 and H4 (Fig. 3).

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0.382

Service Value

0.933

Loyalty

-0.377

Sasfacon 0.526

Corporate image

-0.520

Switching intenon

Fig. 2. Final causal relationships for traditional mobile services.

Service Value

Corporate image

0.262

0.480 0.987 Sasfacon

Aracveness of alternaves

Loyalty

-0.266

Switching costs Fig. 3. Final causal relationships for virtual mobile services.

Thus, customer satisfaction was found to be significantly affected by service value, corporate image and the attractiveness of service alternatives in the marketplace. However, it was found that customer satisfaction (H5) and customer loyalty (H6) did not have significant effect on switching intention. (See Fig. 2 and Fig. 3).

5. Conclusions The present study aims to contribute to the existing literature by analyzing the variables influencing customer satisfaction, loyalty and the switching intention in the mobile communication services, and more specifically, by comparing the differences between traditional and virtual mobile services. The present study develops and empirically tests a conceptual model incorporating the sources of customer satisfaction and switching intention, comparing the traditional and the virtual mobile services. This analysis of consumer satisfaction and switching intention, both for traditional and virtual mobile services, provides useful insights academics, practitioners and also for managers attempting to expand their market and retain their current customers. Our findings show that corporate image is found to have the greatest impact on customer satisfaction, followed by service value, both for mobile network operators – traditional – and virtual mobile services; meaning that consumers use both criteria when evaluating satisfaction. However, search costs and the attractiveness of other alternatives have less explanatory power of customer satisfaction. Regarding Research Question 1: ‘‘What are the main variables influencing customer satisfaction in mobile services?’’. The answer is ‘‘corporate image, followed by service perceived value’’, both for traditional and for virtual mobile services. One major finding is that corporate image is the key driver of customer satisfaction, showing the largest effect followed by service value. Consequently, when mobile communication companies reinforce their corporate image, customer satisfaction and loyalty are directly improved and the

switching intention is negatively influenced. So, mobile companies’ corporate image is critical to succeed in today’s increasingly competitive marketplace, being the variable with higher influence on customers’ satisfaction. This result is in line with Martensen, Gronholdt, and Kristensen (2000), who highlighted image as one main driver for customers’ satisfaction in the mobile sector. Hence, corporate image should be considered as a critical factor for companies to build and maintain relationships with customers. On the other hand, the service perceived value influences customer satisfaction, but with a lower influence, being in line with Kuo et al. (2009). So, corporate image and service value are the main determinants of customer satisfaction both for traditional and virtual mobile services. Considering Research Question 2: ‘‘What are the main switching costs in mobile services?’’. The answer is ‘‘attractiveness of alternatives is the main switching cost, but only for virtual mobile services’’; that is, ‘‘switching costs only show a slight influence on virtual mobile services’’. Other relevant finding is the lack of influence of switching costs on customer satisfaction for mobile network – traditional – mobile services. This lack of influence of switching costs for traditional mobile services may also be explained by the fact that switching costs are regarded as insignificant or that customers do not have the feeling of being retained by the mobile traditional mobile services. This can be explained by the nature of mobile communication services, commonly available on-line today and perceived as easy by consumers. Therefore, traditional mobile services should reinforce their corporate image and service value in order to increase customer satisfaction, since customers find no switching costs to shift mobile service providers. Our results are in line with current mobile service companies’ effort to lock-in customers through increasing contractual switching costs. However, we suggest that only loyalty programs well-designed, along with customer satisfaction programs could be effective in increasing customer retention in a context of a lack of switching costs. Finally, we do not recommend the creation or enhancement of


switching barriers in lieu of satisfaction, since it seems destined to failure in the long term (Jones et al., 2000). Our findings also show the slight negative influence of one switching cost – the attractiveness of alternatives – for virtual operators. That is, only the attractiveness of alternatives is a significant switching cost for virtual operators; meaning that the higher the attractiveness of alternatives, the lower customer satisfaction. In this sense, the release of mobiles’ number portability has removed the constraints set up by mobile communication operators, allowing customers to have more options available (Kuo et al., 2009), and thus increasing the attractiveness of other alternatives. Additionally, this result is in line with Shin (2010), who demonstrated that switching costs negatively influence the willingness of consumers to use mobile virtual operators. In fact, mobile virtual operators develop a low-cost strategy, which is weak in terms of differentiation in the marketplace, offering cheap rates, and being clear substitutes among each other, making customers migrate once a competitor lowers its prices. This may be the explanation for the influence of the attractiveness of alternatives as a switching cost. On the other hand, our results do not provide empirical support for the search effort as exerting a significant influence as switching costs for virtual mobile services. The reason may be that the vast majority of mobile communication services’ users are familiar to some extent to mobile devices available and the services offered by companies. Therefore, the cost of searching and learning about other mobile services is low, and customers find providers’ information available easily and in great amount. Other main reason may be that the services offered by mobile virtual mobile services are very similar; so searching for alternative services does not lead to significantly better offers. Finally, regarding Research Question 3 is ‘‘What are the differences regarding customer satisfaction and switching costs between traditional and virtual mobile services?’’, the answer would be ‘‘the lack of switching costs for traditional mobile services’’. More specifically, one important finding is the relevant differences between traditional and virtual mobile services. First difference is that traditional operators are not influenced by switching costs, such as the attractiveness of alternatives or the search effort; since we found empirical support for the attractiveness of alternatives as negatively influencing customer satisfaction in virtual mobile services. Third and finally, we found that switching intention is inversely related to loyalty and customer satisfaction for traditional operators, while there was no empirical support for these relationships in virtual mobile services. Our findings indicate that the link between customer satisfaction and loyalty is significantly positive for both mobile services. The relevant influence of customer satisfaction on loyalty is in line with previous research which highlights the strong relationship between customer satisfaction and customer loyalty (Eshghi et al., 2007); while suggesting that customer loyalty is a key determinant of a mobile operator’s success, especially in mature markets (Turel & Serenko, 2006). Moreover, our results highlight a strong negative relationship between customers’ satisfaction and switching intention for traditional mobile services. Our results showed that customer satisfaction has the most significant impact in customer loyalty, whereas the switching costs – and more specifically the attractiveness of alternatives – had a significant but minor explanatory power.

6. Implications The present study contributes to practice through the test of variables influencing customer satisfaction and switching intention in the communication mobile services. Thus, we propose some useful insights for company managers.

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Our findings identify the corporate image and the service value as the main variables influencing customer satisfaction with the mobile services – both for traditional and virtual operators – indicating the relevance of both the company image as well as the service value dimensions in order to increase and enhance customer satisfaction. Consequently, mobile service companies must focus their efforts on providing a positive and favorable corporate image, as well as high value. In addition, customer loyalty provides the foundation of a company’ sustained competitive advantage, so retaining existing customers appears to be crucial for mobile service providers (Deng et al., 2010; Lee & Cunningham, 2001). The results obtained in this study reveal low switching costs in a mature European market, stressing that consumers do not find high search costs, such as time or effort, when changing from one provider to another one. So, considering that our findings highlight low switching costs, mobile service providers should focus their managerial and marketing efforts toward attracting new customers and increasing the primary demand, rather than retaining their existing customers. However, once the number of mobile services’ subscribers has reached a saturation point, which is a characteristic of the mature markets, obtaining new customers is rather difficult and costly. Consequently, the recent wave of mergers and acquisitions in the European and Spanish mobile services’ market highlights how much value mobile companies put on acquiring new customers. As seen from the results, we suggest that since customer switching costs exert a slight influence, mobile service providers are better off improving and enhancing customer satisfaction to minimize customer defection. That is, managers should direct their efforts to building and improving services’ value in order to retain loyal customers. More specifically, companies should evaluate the core services they currently offer and whether the release of new value-added services could make customers feel the services to be more valuable than costs, increasing their benefits. One recommendation for managers would be to position their mobile services in such a way that could provide consumers with new experiences. That is, companies may improve the services’ perceived value by developing service innovations, enhancing key functionalities and developing personalized services. In fact, mobile services’ value depend on the ability of companies to provide customers with services that meet their preferences (Al-Debei & Al-Lozi, 2014). Given the intangibility of the mobile communication service, there is a need for service customization, which in turn requires a close contact between customers and service providers. Finally, the improvement of the corporate image is also required, since it showed a relevant influence on customer satisfaction. That is, if mobile communication operators aim to induce higher customer satisfaction, the enhancement of corporate image should be prioritized. This research has several limitations, providing possible avenues for further future research. As for the main limitation of this study, first we should notice that the present research was carried out in one specific European market; and thus, provides a limited empirical application. Secondly, this study analyses a number of variables proposed in prior literature, which only represent a small part of all dimensions affecting customer satisfaction with mobile communication services. Accordingly, market scholars and practitioners should consider variables other than those mentioned in our research. Therefore, caution must be exercised in generalizing from these findings and further research is also needed to avoid limitations. References Al-Debei, M. M., & Al-Lozi, E. (2014). Explaining and predicting the adoption intention of mobile data services: A value-based approach. Computers in Human Behavior, 35, 326–338.

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