CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Consumers are not just willing to buy products, but are ready to experience them and some will go so far that they will help companies build them. Therefore, experience is a central element of the life of today’s consumer (Schmitt, 2003). Experience occurs as a result of encountering through things and thus, experience is the stimulation of a single event, for example, marketing before and after purchasing (McLuhan, 2008). Experience includes the whole living element, and usually is caused by directly observing or participating in events, no matter if the events were real, dream-like or virtual. Experience usually is not unprompted but induced.
Experiential marketing is the operator standing on consumer's point of view of consumers to experience the concept of the purchase, process of the purchase, thoughts of purchase and driving force of the purchase, that is, from a consumer's senses, feelings, thinking, actions and connections these five aspects define and design the way of thinking about marketing (Schmitt, 2001). It advocates the experience, enables customers to experience and become directly involved as the main body, creating a kind a feeling that satisfy their needs mentally to the greatest extent in order to win customer trust and loyalty so that to promote product sales (Liu, 2006).
Therefore, a well designed experience engages the consumer, becomes memorable and allows for a free interpretation as it is non-partisan (McLuhan, 2008). McLuhan, (2008) attests that the growth of quality, intensity, meaning and value are outcomes of an experience. Positive experiences need to become institutionalized within the system so that all touch points deliver the brand essence (Shaw and Ivens, 2005). This ensures that there is no gap between the brand promise and the brand delivery and attempts to connect consumers with brands in personally relevant and memorable ways and also gives customers an opportunity to engage and interact with brands, products, and services in sensory ways (Ponsonby-Mccabe and Boyle, 2006).
Personal experiences seem to help people connect with a brand and make intelligent and informed purchasing decisions. When done right, it is the most powerful tool to win customer loyalty (Smith and Wheeler, 2002). Kotler and Keller, (2006) stated that emotion, based on consumption, impacts a consumer’s satisfaction judgment. In essence, an outstanding customer experience will certainly lead to customer satisfaction which normally will result in building brand loyalty. Intuitively, brand loyal consumers may be willing to pay more for brand because they perceive some unique value in the brand that no alternative can provide (Xiao, 2004).
In 1992, the Federal Government of Nigeria established the Nigeria Communications Commission (NCC) by decree 75 to regulate the activities of telecommunications services in the country. The need for the establishment of this commission was partly due to the poor performance of NITEL, the nation’s telephone service provider and partly to open up the telecommunications sector and attract private investors. The poor performance had resulted in the low tele density of 0.04 in Nigeria up till 1999, a situation that was considered one of the lowest in sub-Sahara Africa. With the coming into existence of the commission, there was the liberalization of the telecommunication sector which allows private sector participation leading to the licensing of Global System of Mobile Communication (GSM) operations in 2001. Through this policy, the nation moved from a monopolistic telecommunication market towards a fully liberalized one which allows competition.
The GSM revolution started in Nigeria in August 2001, with the licensing of three mobile operators, MTEL, Econet (now Airtel) and MTN by NCC, and since then the face of information and communications technology in Nigeria has been transformed. Globacom and Etisalat were later licensed to operate thereby making the GSM operators to be five (5). Since the GSM launch, mobile telephony has rapidly become the most popular method of voice communication in Nigeria, relegating CDMA (Code Division Multiple Access), a much earlier introduced telecommunication platform, to the background. Nigeria has maintained its lead as Africa’s largest telecom market with active subscribers of 92,006,608 by the end of February, 2012 (Nigerian Communication Commission, 2012), relegating South Africa to second place with 60 million subscribers. This represents a tele-density of 68.68% up from tele-density of 0.73% in 2001.
The explosive growth rate in the market has thrown up intense rivalry among the GSM operators and necessitated the need to engage in marketing activities that would enable them to retain a large chunk of their customers and make them loyal. This is more so as the market has become saturated and with little opportunity to attract new customers. The resultant competition has led to the reduction in tariff, introduction of new and innovative products, advertising blitz, rising sales promotion, and innovative customer service (care). All of these are aimed at both attracting new customers and retaining the existing customers. The high growth of subscribers resulting in impressive financial performance of the GSM providers has necessitated the need to examine the factors that influence customer loyalty in the market. Therefore, this study examines the effect of experiential marketing on customer loyalty in the Nigerian telecommunication sector.
1.2 Statement of the Problem
The astronomical growth in the subscriber base of the GSM has led to intense and cut-throat competition in the GSM market of Nigeria. The competition is exacerbated by the lower switching costs among the subscribers of the various networks, which manifest in the frequency with which they (subscribers) freely enter and leave the networks. In terms of financial outlay it costs subscribers as low as N100 to acquire SIM (Subscribers Identification Module) and this makes it cheaper for subscribers to traverse from one network to another. The negative effect of this is the inability of the operators to retain and elicit existing customers loyal. With the competition becoming tough, service providers realized that retaining one’s existing customer base is important as much as the acquiring of a new customer.
There is also a problem of the declining growth in the GSM subscriber base in Nigeria making it more difficult to attract new subscribers and necessitating again the need to retain the acquired customers. The situation, according to makes mobile telecommunication companies not only to promote their service quality, but also change their marketing core strategy to holding their existing customers by enhancing and optimizing the customer loyalty. In the light of this intense competition, the major challenge confronting all the mobile operators in Nigeria, therefore is the determination and execution of various marketing initiatives that would lead to attraction of new subscribers, but also retention of the existing ones who would then become loyal customers. There are overwhelming arguments supporting that it is more expensive to win new customers than to keep existing ones.
1.3 Objectives of the Study
The broad objective of this study is to examine the effect of experiential marketing strategy and customer loyalty in the Nigerian telecommunication industry. Other specific objectives are to:
i) Examine the extent to which experiential perceived value is responsible for purchase frequency in the Nigerian telecommunication industry.
ii) Explore how emotional experience affects repeat purchase behaviour in the Nigerian telecommunication industry.
iii) Ascertain how customer experience management enhances repeat purchase behaviour.
iv) Determine the extent to which customer service quality influences customer retention in the telecommunication industry.
v) Ascertain how customer-brand relationship influences customer loyalty in telecommunication industry.
vi) Determine the impact of brand loyalty on strategic competitive advantage in the Nigerian telecommunication industry.
1.4 Research Questions
This study shall be guided by the following research question.
i) To what extent is experiential perceived value capable of influencing purchase frequency in the Nigerian telecommunication industry?
ii) Does emotional experience affect repeat purchase in the Nigerian telecommunication industry?
iii) To what extent is customer experience management responsible for enhancing repeat purchase behaviour?
iv) To what extent does customer service quality affect customer retention in the telecommunication industry?
v) Does customer-brand relationship influence customer loyalty in a dynamic marketing environment?
vi) Does brand loyalty have any impact on strategic competitive advantage in the telecommunication industry?
1.5 Research Hypotheses
This study is anchored on the e following testable hypotheses:
Ho1: Experiential perceived value has no significant relationship with purchase frequency.
Ho2: Emotional experience has no significant relationship with repeat purchase.
Ho3: There is no significant relationship between customer experience management and customer retention.
Ho4: There is no significant relationship between customer service quality and customer retention.
Ho5: There is no significant relationship between customer-brand relationship and customer loyalty.
Ho6: Brand loyalty has no significant relationship with strategic competitive advantage.
1.6 Significance of the Study
i) The results of the study will be helpful to the management of the companies in Nigerian telecommunication industry to realize the effect of experiential marketing on customer loyalty so as to develop the necessary strategies to strengthen loyalty through relaying emphasis on experiential marketing.
ii) For the academicians, the study will bring out the relationship between experiential marketing, experiential value, and purchase behaviour and customer loyalty. The findings will contribute to the existing pool of knowledge and debate on experiential marketing, customer quality perception, customer satisfaction and loyalty, which in turn will be used as a future reference for other researchers by drawing examples from the Nigerian setting.
iii) For the policy makers such as the Ministry of Information and the Nigerian Communications Commission (NCC), the findings and recommendations will be useful in the development and strengthening of the existing policies and regulations in the telecommunication sector.
iv) The study will identify problems in the telecommunications sector and suggest recommendations on how the telecommunication companies can develop strategies that can enable them overcome the challenges in the sector, and thereby improve on their service delivery.
1.7 Scope of the Study
The study will be confined to the relationship between experiential marketing, and customer loyalty in Nigerian Telecommunication Industry. The study will comprise customers, (Predominately student customers,) in tertiary institutions of the major telecom companies in the telecom industry. It will focus on the three out of the six (6) south-south states of the Niger Delta which are Calabar, Akwa-Ibom, Rivers, Bayelsa, Delta, and Edo State. These are Bayelsa, Delta, and Rivers states.
1.8 Definition of Terms
Experience Marketing: experience marketing is the process of creating emotions by making entertainment for customers, by allowing them to escape from the reality, by educating them and giving them aesthetics objects and places to see (Pine and Gilmore, 1999).
Experiential Marketing: Experiential marketing is the process of identifying and satisfying customer needs and aspirations profitably, engaging them through two-way communications that bring brand personalities to life and add value to the target audience (Smilansky, 2009). It helps to create experiences and emotion to the customer by allowing them to engage and interact with brands, products, and services in sensory ways (You –Ming, 2000).
Customer Loyalty: Customer loyalty is the willingness to stay with a current service provider (Zeithaml, Berry, and Parasuraman, 1996).
Customer Satisfaction: Customer satisfaction is the extent to which customers are happy with the product and services provided by a business (Jamal and Nasser, 2002).
Service Quality: Service quality is a customer’s overall judgment of the excellence of service offering. It is a distinct and important aspect of the product and service offering.
Customer behaviour: Customer behaviour is the study of grouos, individuals, or organizations and the processes they use to select, secure, and dispose of products, servicers, experience or ideas to satisfy needs and the impact that these processes have on customer and society (Farshad, Kwek, and Amir, 2012).
Experiential value: Experiential value is the operator standing on the customer point of view to experience the concept of the purchase, process of the purchase, thoughts of the purchase, driving force of the purchase that is from consumer senses, feelings, thinking, action and connection. (Forlizie and Ford, 2000).
Purchase frequency: Purchase frequency is the number of times that a customer within a given period, purchase a particular product or buys from a particular seller (Kuo-Ming et a;, 2006).
Customer Attitude: Customer attitude is a composite of consumers beliefs, feelings, and behavioral intentions towards some objective, within the context of marketing, usually a brand retail outlets (Siiri and Jorma, 2012).
Brand Loyalty: Brand loyalty is the extent of the faithfulness of consumers to a particular brand, expressed through their repeat purchases, irrespective of the market pressure generated by the competing brands. (Ming-Shing et al, 2012).
Customer Emotional Management (CEM): CEM involves managerial a customer’s experience with a product strategically (Saba, 2014). While customer Relationship management (CRM) focus on measuring transaction, CEM focus on building a relationship with the consumers by focusing on experiences which customers have in course of their interaction with the firm.
Customer-Brand Relationship: Customer-Brand Relationship is a relationship that is developed over a period of time by a customer and the product brand as a result of the customer experience with the brand (Bowden, 2009).
