Relationship Commitment of Prepaid and Post-paid Subscribers of a Private

This study intends to investigate the relationships of communication effectiveness, trust, technical quality, functional quality, and relationship commitment in the context of the prepaid and post-post subscribers of a major private telecommunication company of Bangladesh. It presents a critical appraisal of some important antecedents of subscribers’ relationship commitment to the respective mobile service provider. Data were collected from 103 prepaid subscribers and 107 post-paid by using self-administered questionnaires. For prepaid subscribers, stepwise regression has showed that technical quality, communication effectiveness, and functional quality have statistically significant relationship with relationship commitment. However, stepwise regression for post-paid subscribers has showed that trust and technical quality have statistically significant relationship with relationship commitment. A clear understanding of important precursors of subscribers' relationship commitment might induce the service provider(s) to germinate and strengthen subscribers' relationship commitment to create a loyal customer base __________________ *Mohammad Muzahid Akbar obtained his MBA from Lahore University of Management Science (LUMS) and Master of Commerce (Accounting) from University of Dhaka, Dhaka. He is currently working as a Senior Lecturer (Marketing and Management) in the School of Business in the Independent University, Bangladesh. Senior Lecturer, Independent University, Bangladesh. INTRODUCTION In the past three decades, due to significant liberalization and privatization, the entire telecommunications industry has become a dynamic environment with huge growth potential subject to new opportunities as well as threats. (Graack, 1996). In recent years, in some Asian countries the number of mobile subscribers even passed the number of fixed-line subscribers (Fink, Matto, & Rathindran, 2001). Hence, lately the strategic behavior of telecommunications companies has attracted so much attention, both in the academic literature and in the popular press. In Bangladesh the scenario is not much different. At present the socioeconomic profile of Bangladesh provides a great opportunity for the mobile industry to expand as the regulation in the mobile services is becoming more relaxed. Although the number of mobile operators is still limited to a few (four private mobile operators and one state-owned operator), aggressive competition has forced the incumbent telecommunications companies or mobile operators to reconfigure their strategy and business to sustain or improve their competitive advantage. ABAC Journal Vol. 27, No. 3 (September-December, 2007, pp. 29-39) 29 Currently the mobile companies offer two types of service provider-customer relationships: prepaid and post-paid. Although in the early years the mobile services were primarily targeted to the post-paid subscribers, prepaid services have become more and more popular in recent years. By the end of 2003 the proportion of prepaid subscribers became more than 50% of the install base worldwide (Lonergan, Swain, Guy, Yunus, Jackson, Mallinson, Barrabee, Minoru, Hatton, Entner, Putcha, Hoffman, & Quigley, 2004). Prepaid subscribers pay in advance for a limited amount of services and if they want to consume more airtime, they just refill their scratch cards by paying service providers or their channel merchants. However, post-paid subscribers usually have long term contractual relationships with the service provider and pay on a monthly basis according to the usage of services in the previous billing period (Turel & Serenko, 2004). Understanding the behavior of both types of subscribers is strategically important to mobile service providers for long term success. Increasing competition among the major private telecommunication companies in Bangladesh is pushing them to undertake various strategic and tactical measures to attract new customers while retaining the existing customers. In this emerging market both prepaid and post-paid subscribers are not exhibiting strong loyalty or commitment to any particular service provider as they have options of switching to other service provider(s) for more convenient and suitable service offerings. Hence, the major private telecommunication companies have a stake high enough to consider how to create a loyal customer base that will not be eroded even in the face of fierce competition. Therefore, the major private telecommunication companies must realize the emergence of studying and understanding various antecedents (viz. service quality, switching cost, trust, and customer satisfaction) of the subscribers' relationship commitment to figure out ways to create a loyal customer base. Prepaid subscribers and post-paid subscribers tend to develop different type of relationships with their service provider because of dissimilar contractual obligation. According to Turel and Serenko (2004) prepaid subscribers have low commitment relationship, whereas post-paid subscribers have high commitment relationship with the service provider. Moreover, average switching likelihood of prepaid subscribers is usually higher than that of post-paid subscribers; which ultimately shapes the subscribers' relationship commitment (Turel & Serenko, 2004). Therefore, it is important to understand how various antecedents of relationship commitment vary between these two groups of subscribers. For service oriented companies the essence of marketing is developing long-term, and value leaden relationship with customers (Berry, 1983; Palmer & Bejou, 998). In relationship marketing relationship commitment is considered essential for successful long-term relationship with customers (Anderson & Weitz, 1992; Kumar, Scheer, & Steenkamp, 1995). Sharma and Patterson (1999) reported that effectiveness of communication between customers and service providers can play a vital role to engender customer relationship commitment. Mukherjee and Nath (2003) have identified trust as a major precursor of customer relationship commitment. Two fundamental components of service quality-namely, technical quality and functional quality are considered to be the prerequisites of lasting customer relationship with the service provider (Grönroos, 1983). REVIEW OF LITERATURE Communication Effectiveness According to Sharma and Patterson (1999), communications effectiveness refers to both formal and informal sharing of information in a meaningful and timely fashion between a subscriber/ customer and a service provider with genuine Mohammad Muzahid Akbar