Determinants of Customer Choice of Global System for Mobile (GSM) service

provider among GSM Users in Kano Metropolitan, Kano State-Nigeria

By

Bello Ado, PhD

Bayero University, Kano

Adobello222@gmail.com
Background to the study

Customer choice is a concept that deals with consumer behaviour. The term
consumer behaviour is defined as the characteristics that consumers display in
searching for, purchasing, using, evaluating, and disposing of products and
services that they expect will satisfy their needs (Schiffman and Kanuk, 2007).
Consumer behaviour focuses on how individuals make decisions to spend their
available resources (time, money, effort) on consumption related items. People
make product choice based on the cues they receive from the environment and
their accumulated experience about the product. Purchase intentions and
product choice are influenced by the behaviour displayed by consumers in their
need recognition, search for and evaluation of alternatives available for satisfying
needs. The company that really understands how consumers will respond to
different product features, prices and advertising appeals has a great advantage
over its competitors (Kotler and Armstrong, 2001). It is therefore important for
every company to study consumers and establish what determines the choices of
products they make.

In recent time cellular phone has become part of people’ life. You can hardly
mention any sector of the economy that does not require the contribution of
telecommunication services, be it education, commerce and industry, agriculture,
health to mention few. The sector has facilitated communication between people
who are living far distance from each other, besides it contributions in
dissemination of information and research. The market of cellular phone is
expanding every day
 The license of three mobile operators in Nigeria, MTN, MTEL and ECONOT in
2001 opened a new era as far as the operation of telecommunication is
concerned in the country. This came nine years after the establishment of
Nigerian Communication Commission (NCC). The Nigerian government saw the
need to establish this commission due to poor performance of NITEL which was
the only telecommunication service provider then in the country. There was, also,
the need to attract both domestic and foreign investors in the sector. This
inefficiency and poor performance of NITEL had resulted in the low teledensity of
0.04 per cent in the country which was considered one of lowest in African Sub-
Sahara ( Adeleke and Abiodun, 2012)(GSM 1) . It is believed that the development
of telecommunication infrastructure will significantly boost economic growth and
development, this evidence that the sector contributed (N 1.549 trillion) to the
Nigerian Gross Domestic Product (GDP) in the second quarter of 2017
representing 6.68% increase from the first quarter of the year (NGN1.452 trillion)
as disclosed in September 2017 [2].(gsm 43/42)

NCC(2006) reported that the Nigerian GSM market is one of the fastest growing
markets in the world, with rapid increase in growth, the sector is characterized by
intense competition among few GSM mobile operators who struggle to get more
market share. In the present competitive market, it is very important for the
service provider to understand precisely needs, wants, demands, trends, fashion
etc. of the consumers. In the light of above mentioned factors, service providers
need to know about the perceptions of consumers towards price, service quality,
product, promotion, and other related factors which are playing important role in
the selection of mobile telecommunication player for them.

The objectives of this study were to investigate the factors that determine
customer choice of GSM service provider in kano metropolitan, Kano state and to
find out the relative importance of each factor in influencing customer choice in
the study area. This paper was divided into five parts; background to study,
literature review, methodology of the study, analysis and then conclusion and
recommendations.
Literature Review

Related empirical literature reviewed in and outside the country give

emphasis to factors like price/call rate, network coverage, customer service care,
sale promotion and sale advertisement as some of the factors that determine
customer loyalty.

Beginning with foreign literature, Ofwona (2007) conducted a study titled

“Factors which Determine Individual Consumer Choice of Mobile Telephone
Service Providers in Nairobi, Kenya” in which he used simple percentage in his
methodology. His finding showed that 59% of the respondents found costs of
services offered to be the most important factor while 30% stated that country
wide network coverage was the most important factor. Other factors were other
people’s (family members, work mates and friends) choice of service providers
(3.7%), clarity of communication (2.8%) and courtesy of the customer care
personal (1%). Gautam and Kumar (2011) used exploratory analysis and structural
equation modeling methods in their research “An Empirical Investigation of
Factors Determining the Consumer’s Choice of Mobile Service Provider in India”.
The findings revealed that price was found to be the most important factor
followed by product quality, service quality and promotion. Similar result was
found by Rahman et al. (2010) who conducted a similar study in Malaysia. Keelson
and Takoradi (2012), also, studied factors affecting consumer choice of multiple
mobile services in Ghana. The findings revealed that the basic reasons for
changing phone services are reliability and cost savings. The authors also found
that reference group influence, social reputation and regular contact with others
were also influential factors. Zahid, Javaid and Iqra (2015) studied factors behind
brand switching in Pakistan using regression analysis. The result showed that
lower call rate and SMS rate, service quality, value added services, special offers,
network coverage and service reliability significantly affect the switching
behaviors of the respondents. Also, Awan et al (2016) carried out a study on
determinants of brand switching in mobile service providers in southern Punjab,
Pakistan. Logistic regression analysis was used to analyze the result. The result
showed that customer satisfaction, customer services, price, service failure and
inconvenience (independent variables) have positive significant impact on brand
switching (dependent variable). Customer satisfaction and customer services have
negative but significant relationship with brand switching. Lastly, Kaur and
Sambyal (2016) in their study titled Exploring Predictive Switching Factors for
Mobile number portability in India used regression analysis in their methodology.
The result showed that factors such as quality, rational quality (i.e satisfaction,
trust and commitment), price, reputation and image, attitude towards switching,
perceived ease of use and usefulness and switching cost significantly affect
consumer’s switching intention.

Some similar studies conducted in Nigeria, like the foreign ones, give emphasis
to factors like price/call rate, network coverage, customer service care, sale
promotion and sale advertisement. Olatekun and Nwonne (2006) conducted a
study titled “Determinants of User’s choice of Mobile Service Providers in the
Nigerian Tele Communication Market”. Regression analysis and Chi-square
methods of analysis were used in the methodology. The result showed that call
rate, service quality, service availability were more significant in the user’s choice
than promotion and brand image. Ikechuku et al. (2012) used Spearman rank
correlation and multiple regression methods of analysis in their research titled
“Antecedents of Intention-to-use a Particular Mobile Service among South-South
University Lecturers in Nigeria”. The objective was to unveil some antecedent
factors that make university lecturers in the South-South zone in Nigeria have
intention-to-use service of a particular mobile service provider. The result
revealed that social affinity, switching cost, and customer service affect intention-
to-use a mobile phone service among these university lecturers. Finally, Okeke
(2014) conducted a study on major factors influencing the choice of GSM network
among oil and gas workers in Port Harcourt, Nigeria. The finding showed that the
following factors influence GSM choice with the following percentages, network
coverage (97.7%), network quality (94.4%), tariff/call cost (76.6%), customer care
service (72.2%) and promotion (25.5%).

This research differs from previous similar researches in terms of the area where
the study was conducted. To the best of the researcher knowledge there has not
been any similar study conducted in Kano state. By estimation, 95% of the people
of Kano state are Hausa and Muslim by religion. The way they behave and react to
certain business activities may be different from people in places like Benue,
Plateau, Kaduna, etc. Therefore, factors that determine customer loyalty among
GSM users in Kano state may be different with the ones found in either
Northwestern Nigeria or in Nigeria in general.

Historical Background of Telecoms Industry in Nigeria

Nigeria’s telecommunication history started from the colonial era in 1886, when
telegraphic submarine cable lines were laid by the British firm, Cable & Wireless
Ltd, connecting Lagos to London. This led to the installation of phone lines,
connecting the famed commercial hub to Jebba, Ilorin, Calabar, Ibadan and other
parts of the country. The Nigeria Telecommunication Limited (known as NITEL)
was established in 1985. NITEL was owned by Government and given monopoly
status in the communication sector. The firm was formed through the welding
together of two government entities- the telecoms arm of the Posts and
Telecommunications (P&T) department under the Ministry of Communications
and Nigerian External Communications (NET). NITEL was run with analogue
infrastructure and needed a wave of digital transformation. Also, the lines were
congested, the billing system was inefficient and the call completion rate for long
distance calls was below 50%. Generally NITEL was plagued by a list of complaints,
so reforms for better communication service began.

The deregulation of the sector heralded the establishment of the Nigerian

Communication Commission (NCC) as prescribed by Decree 75 of 1992. The
decree establishing the NCC helped to liberalize terminal ends equipment, and
gave room for competition and private sector participation

Nigeria telecommunications received great boost with the coming of

the Global System for Communication (GSM) in 2001. Econet (now Airtel has been
said to the first communication service to lunch its services in Nigeria on August 8,
2001, going head-to-head with MTN which also began operation in August of the
same year. MTN which kept innovating at that time brought about the SIM
(Subscriber Identity Module) which helped to enhance call rates. Registering a line
was as costly as having a phone. Line registration was pegged at N40,000 to
N50,000, however phone billing rates were charged on the minute basis (N50 per
minute)

Globacom established by Mike Adenuga brought per second billing as its unique
offering.

The entry of MTN, GLO and Airtel helped the evolution of Nigeria
telecommunication and created better services for Nigeria. Competitions among
GSM service providers have brought down the price of call rate and other GSM
services to the extent that SIM card is sold at the price of N100.

As at June,2018, there were four GSM service providers in Nigeria with

number of subscribers and market shares as shown in table 1

Table 1: Number of Subscribers and Market Share by GSM operators in Nigeria

Airtel 9mobil Globalcom MTN

No. of 39,898,448 15,811,684 40,108,508 66,488,706
Subscribers
Percentage (%) 24.00% 10.00% 25.00% 41.00%
Source:

Methodology

This section contains population of the study, sample size, sampling techniques,
research instrument and model specification.

Population

The population of the study involves all the users of GSM mobile phones in Kano
metropolitan. Kano metropolitan consists of eight local governments- Municipal,
Dala, Gwale, Tarauni, Nasarawa, Fagge, Kumbotso and Ungwaggo. Kano
metropolitan is the heart of Kano state in terms of population, economic as well
as educational activities. Because of these feature it possesses, it has become a
center of attraction to almost all the business firms and industries not only ones
located in the state, but in the country at large.
Sample Size and Sampling Techniques

The study used Smith (2013) sample size formula to determine the total sample
size. The formula is given as:
2
n = ( Z−score ) xstand . Dev . ( 1−stand . Dev . ) /¿. Where

n = sample size

stand. Dev. = standard deviation

Smith suggested this formula when the population size is large or unknown. He
also suggested the use of .5 for unknown standard deviation. Taking 95 %
confidence level and 5% margin error, we can calculate sample size as:
2
n=( 1.96 ) x 0.5(1−0.5) n =384.16
¿¿

However, for the purpose of data collection for this study, 768 questionnaires
were distributed instead of the predetermined sample number of 384 to avoid
the problem of the non-response rate. According to Watson (2001), since it is not
every selected sample that will likely respond, there is a need for the researcher
to increase the sample size to avoid non-response bias. Watson (1998) argued
that at least a 50 percent rate of response is necessary for reporting and analysis.

Multi-stage sampling technique was used in the study. The study area
contains eight local governments and each local government contains some
wards. In the first stage cluster sampling technique was used to select three
wards from each local government and then in the second stage 32 GSM mobile
users were systematically selected from each of the selected wards making a total
of 768 GSM users.

Source of Data
 Service Quality

Price
Customer Satisfaction Customer Loyalty

Customer Service

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