BACKGROUND
The increasing economic importance of telecommunications companies inspired many researchers, marketers and management scholars to devoted more teaching and research attention to this sector
Since the 1990s, the telecommunications industry has emerged as a vital sector driving economic growth in industrialized nations, fueled by significant technological advancements and a surge in network operators, leading to heightened competition.
As competition intensifies in the market, companies are prioritizing customer satisfaction and retention to maintain their market share With rising costs associated with acquiring new customers, businesses are shifting their strategic focus towards fostering long-term relationships with existing clients, making customer retention a crucial objective for sustained success.
Moreover, technology of mobile telecom evolving to meet high demand from customer, the paradigm of mobile telecommunication services is now shifting from
The mobile telecommunication service market is undergoing a significant transition, driven by the rise of high-speed data communication and multimedia, alongside the growth of wireless internet According to Mohan et al (2012), there were approximately 6 billion mobile subscribers globally, a figure nearly equal to the Earth's population The United Nations telecom agency reported that by the end of 2011, there were about 6 billion subscriptions, equating to roughly 86 subscriptions for every 100 people.
The telecommunications industry is undergoing significant restructuring due to a shift in market dynamics and increased competition among companies Mobile suppliers are recognizing the critical importance of adopting a customer-oriented business strategy to maintain their competitive advantage and ensure profitability, especially as subscriber growth reaches saturation As acquiring new customers becomes increasingly challenging and costly, the focus has shifted towards retaining existing customers by enhancing loyalty and perceived value The presence of switching barriers plays a crucial role in customer satisfaction and retention, as consumers evaluate these barriers when considering a change in service providers In Vietnam, the telecommunications market has transitioned from a monopoly to a competitive landscape, driven by international economic integration To achieve sustainable growth and expand market share, telecommunications companies in Vietnam are prioritizing customer-centric strategies.
In 2012, Vietnam had approximately 120.7 million mobile subscribers, with an average of 1.5 subscriptions per person This high penetration rate makes attracting new mobile customers increasingly challenging Mobile telecommunications providers are in fierce competition to expand their market share, as customers exhibit a tendency to switch providers for better benefits Consequently, customer retention has become a critical objective for mobile service suppliers in Vietnam, as fostering loyalty can lead to increased profits and a stronger market presence.
Numerous studies indicate that customer satisfaction is closely linked to customer retention and repurchase intentions; however, it does not account for all variations in retention due to constraints on customer choice (Cronin & Taylor, 1992; Fornell, 1992; Anderson & Sullivan, 1990; Boulding et al., 1993; Taylor & Baker, 1994; de Ruyter et al., 1996; Zeithamel et al., 1996) Various switching barriers, alongside customer satisfaction, play a crucial role in supplier selection (Bendapudi & Berry, 1997) Despite this, limited empirical research has focused on how these switching barriers impact satisfaction and retention (Jones et al., 2000) In the context of mobile telecom services in Vietnam, it is essential to explore key antecedents that significantly influence customer satisfaction and retention, including switching costs, relationship investments, the appeal of alternative options, and interpersonal relationships.
1.2 Problem definition and Research Questions
The telecom industry is currently grappling with heightened national and international competition, slower growth rates, and mature markets, leading to a challenging environment Consequently, an increasing number of service providers are competing for a limited pool of new customers, intensifying the struggle for market share.
11 of company’s resources must be devoted to the present customer base in order to make them satisfied and retain them
Customer retention is crucial for a company's survival and future growth, especially in mature markets with intense competition When subscription levels saturate, maintaining stable profits becomes essential In such scenarios, implementing a defensive strategy focused on retaining existing customers is more vital than pursuing aggressive tactics aimed at attracting new ones.
High switching barriers force customers to remain with their suppliers, regardless of their satisfaction levels This lack of choice can lead to decreased satisfaction and retention, as suggested by reactance theory Therefore, understanding customer satisfaction and loyalty must include considerations of these switching barriers.
The telecommunications market in Vietnam is transitioning from a monopoly to a competitive landscape, driven by international economic integration As competition intensifies, telecom companies are focusing on customer retention to sustain growth and expand their market share The challenge lies in attracting and retaining customers, as mobile service users exhibit a tendency to switch networks for better benefits Consequently, prioritizing customer loyalty has become crucial for telecom providers in Vietnam, leading to increased profitability and a stronger market presence.
The mobile telecommunications services industry in Vietnam has not been extensively studied, primarily due to its relatively brief history.
Based on the reviewed literature, a model will be developed to examine how switching costs affect customer satisfaction, ultimately influencing customer retention.
This thesis explores the competitive strategies of mobile suppliers in retaining customers within an evolving market landscape It begins with an in-depth analysis of market dynamics and extensive data collection to understand the challenges ahead The primary focus is on innovative retention techniques that mobile providers can implement to thrive in a highly competitive environment.
The research questions that are discussed in this thesis are as below:
What are the main factors of switching barriers affect on customer satisfaction in the mobile telecom industry in Vietnam?
How can these factors and determinants be developed and evaluated in Vietnam?
How can customer satisfaction affect on customer retention in the mobile telecom industry?
From a managerial perspective, maintaining long-term customer relationships is crucial, prompting suppliers to focus on both customer satisfaction and switching barriers Excessively high switching barriers can lead to negative word-of-mouth and customer dissatisfaction, while low barriers may facilitate customer defection Consequently, there has been limited academic research exploring the interplay between switching barriers, customer satisfaction, and retention.
The research objectives that are discussed in this thesis are as below:
Identify the factors of switching barriers that affect the customer satisfaction in mobile telecom industry in Vietnam
Subsequently, to examine the impact of customer satisfaction on customer retention in mobile telecom industry in Vietnam
Determine the degree of the impact of each factor to customer satisfaction
This thesis aims to develop a model for assessing customer satisfaction and retention in Vietnam's mobile telecommunications sector By analyzing market data and theoretical frameworks, the study seeks to identify key factors influencing customer satisfaction and retention The goal is to formulate strategic business solutions that address switching barriers and enhance customer loyalty among existing mobile service providers.
RESEARCH OBJECTIVES
From a managerial perspective, fostering long-term customer relationships is crucial, requiring suppliers to effectively manage both customer satisfaction and switching barriers Excessively high switching barriers can lead to negative word-of-mouth and customer dissatisfaction, while low barriers may facilitate easy customer defection Consequently, there is a notable lack of academic research exploring the interplay between switching barriers, customer satisfaction, and retention.
The research objectives that are discussed in this thesis are as below:
Identify the factors of switching barriers that affect the customer satisfaction in mobile telecom industry in Vietnam
Subsequently, to examine the impact of customer satisfaction on customer retention in mobile telecom industry in Vietnam
Determine the degree of the impact of each factor to customer satisfaction
This thesis presents a model designed to assess customer satisfaction and retention within Vietnam's mobile telecommunication sector By analyzing market data alongside theoretical frameworks, the study aims to identify key influencers that enhance customer satisfaction and retention Additionally, it explores strategic business solutions related to switching barriers that impact customer loyalty among existing mobile service providers.
This study aims to analyze how switching barriers affect customer satisfaction and, in turn, how customer satisfaction influences customer retention It will explore strategies used in Vietnam's mobile telecom sector to enhance customer retention and identify the factors contributing to switching barriers Additionally, the research will empirically test hypotheses concerning the role of these factors within the context of customer satisfaction and retention.
DELIMITATION
This research focuses on four key components—switching costs, investment in relationships, attractiveness of alternatives, and interpersonal relationships—to assess switching barriers that impact customer satisfaction and retention Consequently, other measurements of switching barriers are not included in this study.
Second, this study only focus on Vietnam mobile industry and market, the other sectors in other countries are not involved
This study focuses exclusively on the perspective of customers who utilize mobile telecommunication services, without exploring the viewpoints of service firms on this topic.
OUTLINE OF THE STUDY
This research includes five chapters that the first chapter is already presented
This chapter presents research background of the study, as well as, research problems, research objectives and delimitation
This chapter lays the theoretical foundation for understanding the subsequent parts of the study, starting with an overview of the mobile telecommunication market, particularly in Vietnam, and its relationship with customer satisfaction and retention It emphasizes the significance of customer satisfaction and retention, ultimately proposing a model to assess these factors based on switching barriers, which will be explored in the following chapters.
Chapter one focuses on the research methodology, while chapter two provides a literature review and empirical model This chapter specifically outlines the research design and methodology, detailing the processes involved in conducting the research.
Chapter four: Data analysis and finding
This chapter outlines the data collected from questionnaires and interviews, along with the subsequent analysis conducted on this data It also details the proposed hypotheses and the outcomes of the hypothesis testing.
Chapter five: Conclusions and implications
Chapter 5 presents main conclusions and implications based on the results of the previous chapters, as well as the limitations of this study
This chapter offers essential theoretical insights into the mobile telecommunication market, with a focus on Vietnam, while emphasizing the significance of customer satisfaction and retention It highlights the importance of these factors in the competitive landscape and introduces a model for assessing customer satisfaction and retention based on switching barriers, which will be explored in subsequent chapters.
2.1 Mobile Telecommunications in the world
The development of radio telephone equipment marked a significant milestone in the radio broadcasting industry and laid the groundwork for mobile communication networks In 1946, the first radio telephone network was tested in St Louis, Missouri, USA Fifty years later, the invention of semiconductors revolutionized mobile telecommunications by addressing several existing limitations and enhancing overall performance.
May 12-1971 given cellular system similar technique, FM, in technology the 850Mhz.Dua the band until 1983, mobile phone networks AMPS (Advanced Mobile Phone Service) The first commercial service in Chicago, United States Then a series of standard information released as: Nordic Mobile Telephone (NTM), Total Access Communication System (TACS) This stage is called cell system similar to the first generation (1G), with a narrow strip floor, all 1G systems using FM frequency modulation for voice, frequency shift key modulation FSK (Frequency Shift Key) to access technical signals and used as FDMA (Frequency Division Multiple Access)
The second generation (2G) of mobile communication technology gained immense popularity in the 1990s, marking a significant shift from analog to digital systems This transition led to a dramatic increase in mobile subscribers globally, revolutionizing the way people communicated.
The evolution of mobile telecommunication systems includes key technologies such as GSM-900MHz, DCS-1800MHz, and PDC-1900MHz, which are built on the foundation of 2G generation standards like IS-54 and IS-95 GSM serves as the precursor to DCS and PDC, utilizing TDMA (Time Division Multiple Access), while IS-95 employs CDMA (Code Division Multiple Access) This second generation of mobile technology enables a variety of services and supports international roaming, allowing subscribers to maintain connectivity while traveling across countries.
The third generation (3G) of mobile systems, established in 1992, utilizes a wide spectrum of 230 MHz within the 2 GHz band, allocating 60 MHz specifically for satellite telecommunications The International Telecommunications Union (ITU) promotes the development of global international mobile systems under the IMT framework.
The IMT-2000 project utilizes frequency bands of 1885-2025 MHz and 2110-2200 MHz, incorporating 3G technologies such as W-CDMA (FDD) and TD-CDMA (TDD) Its primary objective is to facilitate global communication and multimedia services among subscribers, achieving data transfer rates of 144 Kbps in wide areas and up to 2 Mbps in localized settings The rollout of these services commenced between 2001 and 2002.
4G, also known as LTE (Long Term Evolution), represents a significant advancement beyond 3G technology While 3G offers a maximum download speed of 14.4 Mbps, LTE can achieve speeds of up to 100 Mbps, comparable to current optical FTTx technology The 4G mobile network is primarily designed for data transmission rather than voice services Currently, around 17 networks globally have deployed 4G services, focusing mainly on data transfer capabilities.
As of the end of 2011, the global number of mobile subscribers reached approximately 6 billion, nearly matching the Earth's total population According to the Telecommunications Authority of the United Nations, this equates to about 86 subscribers for every 100 individuals worldwide.
The shift in market dynamics is prompting significant restructuring within the mobile industry, intensifying competition among companies Mobile suppliers are increasingly recognizing that a customer-oriented business strategy is essential for maintaining competitive advantage and ensuring profitability, particularly as subscriber growth reaches saturation Acquiring new customers has become both challenging and costly, leading to a growing consensus that the most effective marketing strategy is to focus on retaining existing customers by enhancing loyalty and perceived value Additionally, switching barriers play a crucial role in customer satisfaction and retention, as customers evaluate these barriers to maximize their benefits when considering a switch to different mobile service providers.
The Secretary General of the ITU World Telecommunication Union commended the advancements in Vietnam's telecommunications sector Vietnam has achieved an impressive ranking as the eighth highest in mobile subscriber density globally and has made significant strides in broadband development, earning recognition as a standout performer in the telecommunications industry.
In Vietnam, the first mobile communication network was established in 1992 with about 5,000 subscribers They provide large mobile information services as Mobifone (VMS) was born in 1993 - a joint venture between telecommunications
The Vietnamese telecommunications market has seen significant growth since the establishment of VNPT and the Comvik group in 1996, followed by the entry of various players such as S-Fone, Viettel, Vietnamobile, and Gtelmobile As of June 2012, there were approximately 120.7 million mobile subscribers in Vietnam, indicating an average of 1.5 subscriptions per person This competitive landscape has led to a race among operators to reduce charges and diversify services, making customer retention a critical focus for telecom companies With consumers often switching providers for better benefits, fostering customer loyalty has become essential for increasing profits and market share in this dynamic market.
