Determinants of Customer Satisfaction in the Telecommunication Industry of Afghanistan

Ajmal Haidari

Volume | 005 Bochum/Kabul |2017 www.afghaneconomicsociety.org

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Determinants of Customer Satisfaction in the Telecommunication Industry of Afghanistan

Ajmal Haidari

Keyword List

Customer satisfaction, structure equation modelling, telecommunication industry, university

students

Abstract

In a competitive market, companies determine strategies to boost service quality for the purpose

of attracting and retaining customers. This helps them to develop market share and satisfy

customers. Customers are satisfied when their expectations are fulfilled when using a service.

In this study, the determinants of customer satisfaction in the telecommunication of Afghanistan

are assessed. The study was conducted at the northeastern universities of Badakhshan, Takhar,

Kunduz,and Baghlan and the target population was the students. The primary data were obtained

via questionnaires distributed to randomly selected customers. For the purpose of analysis,

structure equation modeling was applied using Amos 22 and SPSS. The research found attractive

offers, sales promotion, internet service, price fairness and being friendly to be the key

determinants of customer satisfaction in the telecommunication of Afghanistan. Furthermore this

research revealed marketing offers satisfied customers most while there was no evidence that

customers were influenced by technical variables such as coverage area, service quality and

customer care.

Description of Data

This research is quantitative and exploratory, and relies on primary data gathered through

questionnaires. The questionnaire was designed based on literature review. The main focus of

the research is the satisfaction level of subscribers to telecommunication services in Afghanistan.

The target population is the university students of the north-eastern provinces. A hundred

respondents were sampled from each university and a total of 400 questionnaires were distributed

among private and public universities in Badakhshan, Takhar, Kunduz and Baghlan on a random

basis. The respondents selected were those who had used one of the telecommunication

companies’ SIM cards for at least for a year, because it would be impossible to measure any level

of satisfaction over a shorter period of time. The questionnaire consisted of two parts. The first

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was demographic variables that asked respondents about their personal characteristics. The

second part included both the dependent variable of customer satisfaction and independent

variables of (service quality, price fairness, promotion, customer care service, coverage area,

attractive offer, retailer shops, being friendly and internet services). Demographic variables of

education, telecom service provider, and marital statues were measured using coding and the

variables of age and gender measured on a binary basis. Each variable was described via latent

variables, and in total the questionnaire was comprised 20 measurement items.

To analyse the data and find out the determinants of customer satisfaction from the group of

independent variables, a five point Likert scale ranging from 1 (strongly dissatisfied) to 5 (strongly

satisfied) was designed.

From a total of 400 questionnaires distributed at the four mentioned provincial universities 386

were retrieved and were usable, whilst the rest were either incorrectly completed or not returned.

In order to evaluate the causal relationship between latent variables and observed variables, the

hypothesis proposed was tested and the factors influencing customer satisfaction in the

telecommunications industry were determined using SEM (Structure Equation Modelling)

supporting AMOS version 22.

Research Question/Theoretical contextualization

The telecommunication industry is the fastest growing sector in Afghanistan. From its first

inception in 2001 it is has become the industry that generates employment opportunities and has

a huge role in increasing GDP through tax receipts. In the first phase more than 580000 cell

phones were distributed all over the country, meanwhile internet net cafes were established in

five major cities. By 2008 it was estimated that the number of subscribers has increased to 3.2

million (Congress, 2008). However, while this sector is young in Afghanistan it is considered to

be the sector that is operating almost in accordance with international standard. Despite on-going

conflict the telecoms industry has turned into a highly competitive market with 25 million

subscribers out of population 35 million, which represents a penetration of 88% in Afghanistan

(Harpur, 2017).

In a highly competitive market seven telecommunication companies are currently offering wireless

and internet services, which represents an incredible change in a short period for the region. The

key investors in the Afghan telecommunication industry are both national and international

companies operating in almost 34 provinces of the country (Jamali, June 2016). The provision of

service quality and level of customer satisfaction in particular become a key determinant of

success in a competitive market. Customer satisfaction is part of the strategic plan of companies.

Unless they consider customers ‘wishes or not deliver value to them through products/services.

It is hard for firms to retain current market share, which is why companies are nowadays more

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customer-centre. Companies are successful if they list customers’ satisfaction as their priority,

while the long term profitability of a firm is directly linked to the level of customer satisfaction. A

customer is satisfied if his or her evaluation of what they receive exceeds expectations. According

to Oliver’s definition satisfaction is the post-consumption state when customers evaluate whether

the service or product accurately fulfilled the proposed function (L.Oliver, 1999).

Customer satisfaction is assumed to be an interfering construct in the field of marketing because

it ultimately motivates customers to re-purchase and be loyal to the product for a long time (K.

Ravichandran, April 2010). Customer satisfaction normally relates to the level of expectation

shaped from past experience of using a service. Due to this, customers experience different

degrees of expectations when purchasing services. When a service performance increases

beyond what customers expect, customers are highly satisfied when using the product. In the

case the performance of a product/service was only able meet customer expectations, customers

are satisfied. Finally customers are unhappy if a product does not meet their expectation and they

will probably switch to other products. This is the worst case for a company and results in the loss

of customer base (Philip Kotler et al, 1999). Oliver defined satisfaction as a “deeply held

commitment to rebuy or patronize a preferred product or service consistently in the future, despite

situational influences and marketing efforts having the potential to cause switching behaviour”

Firms use customer satisfaction as an indicator to reveal how their product is evaluated in the

context of customer preference and then formulate their product quality accordingly (Kiet, 2013).

Perhaps it will be impossible to find a unique definition for satisfaction in literature, because

researchers and scholars have come to accept that satisfaction is a state of mind that differs

among individuals. This is different for different people. In addition if we search for unified

perspective it becomes clear that satisfaction is a matter of comparison between expectations

and perceived values of a product by a customer (policy, 2007). Retaining satisfied customers

further helps companies to build their reputation and, as a consequence increase the cash flow.

Furthermore customer satisfaction assessment enables companies to figure out their strengths

and weak points in comparison with competitors. Companies can only do this through

distinguishing customer’s needs, preferences and take action to maintain these demands sooner

than competitors (Egena, 2013). The term customer satisfaction usually uses a measurement to

determine how satisfied customers are with a product sold by companies, and through this

measurement companies evaluate their competitive edge in the market. Therefore firms consider

customer satisfaction to be a key element in their strategic plan (Wollenberg, 2016).

Afghanistan is located in central Asia, so for the purpose of using supportive evidence

corresponding to the present research, research topics were selected from central and Southeast

Asian countries. The logic behind this approach is the similarity of Afghanistan from economic,

culture, and social perspectives to these neighbouring countries. Meanwhile there is still not any

research background available in the country to use as a viable source. Current research

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investigates the main determinants of customer satisfaction in the telecommunication industry

and, in the view of Anderson price, promotion, and quality control are the main determinants of

customer satisfaction (Anderson, 1973).

Nowadays, evaluating customer satisfaction has become a hot topic for both researchers and

marketing departments. In a research conducted in Pakistan that focused on the determinants of

customer satisfaction using an SEM approach it was established that reasonable price and call

clarity are the strongest determinants of customer satisfaction in Pakistan (Fatima Ali, et al, 2009).

Research based on SEM modelling conducted in Malaysia found responsiveness and brand

image to be the main determinants that influenced customer satisfaction in the Malaysian

telecommunication industry (Suki, 2011). According to a research done in Nigeria product,

promotion and distribution had a high impact on customer satisfaction, and this research revealed

that customers who could trust a provider showed more loyalty (Oghojafor, 2014). In a study by

Saheed and Afshin University students commented their level of satisfaction with cellular services

in the Peshawar region of Pakistan and revealed that price fairness, coverage area and customer

services were the main factors motivating them to maintain their involvement with their respective

service providers. In addition the study found a significant and positive relationship between

customer satisfaction and dependent variables such as, price fairness, sales promotion, coverage

and signal strengths (Afsheen, 2012). Due to three decades of war which has harmed the

infrastructure of Afghanistan and a weak culture of research, it has not been possible to find

previous bodies of knowledge about customer satisfaction. Current research is trying to find the

main determinants of customer satisfaction in the northeast region of Afghanistan. Consequently

this research looks to answer some questions and test some hypotheses. The main target of

current study is to establish the following:

1. Are customers satisfied with national and international companies providing

telecommunication services in Afghanistan?

2. What makes customers continue to purchase of telecoms companies’ services?

3. What are the main determinants of customer satisfaction in the telecommunication

industry of Afghanistan?

For the purpose of acquiring a meaningful result this research has also developed some

hypotheses:

H01: Price fairness significantly affects customer satisfaction.

H02: Coverage area significantly affects customer satisfaction.

H03: Being friendly significantly affects customer satisfaction.

H04: Service quality significantly affects customer satisfaction.

H05: Sales promotion significantly affects customer satisfaction

H06: Customer care significantly affects customer satisfaction

H07: Attractive offers significantly affects customer satisfaction

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H08: Internet service significantly affects customer satisfaction

Field research design/ Methods of data gathering

This research attempted to measure the determinants of customer satisfaction in

telecommunication industry of Afghanistan. From administrative perspective Afghanistan is

divided in to five zones. Each zone’s provinces have private and state universities that offer higher

education at Bachelor’s and Master’s degree levels. The current research focused on north-

eastern provinces university students. The rationale was that the majority of subscribers who are

users of cell phones as well as educated would be eligible for interview in a society that suffers

from high rates of illiteracy. Furthermore the university students constitute the largest portion of

customers in the telecoms industry of Afghanistan, because services and packages offered by

companies are mostly in demand among more educated members of Afghan society. This

research tries to add to the body of scientific knowledge and propagate the culture of research in

the Afghan telecoms industry that has a serious shortage of literature sources.

Each university received a hundred questionnaires and four hundred questionnaires were

distributed in total on a random basis in north-eastern province. The data gathering from a society

that has never experienced a survey especially for academic purposes is time consuming. For

the ease of obtaining unbiased data from respondents surveyors gave verbal information about

the aim of the research. A team of two data collectors was deployed in the target province and

after receiving comprehensive training about the whole process, was given one to interview 100

students. After the data collection process the data was sorted and finally 386 of the

questionnaires were found satisfactory for entry. The remaining questionnaires were destroyed.

Demographic variables were measured by using coding and binary approach, whilst dependent

and independent variables were measured using a five-point Likert scale ranging from 1 strongly

dissatisfied to 5 strongly satisfied. The questionnaire items were adapted from literature review,

for instance demographic items were adapted from the research of Yallapragada in the UAE

(Yallapragada, 2017), service quality, price fairness, customer service, customer satisfaction

were taken from the research of Aminu Ahmad (Ahmad, 2008). This research investigates the

major determinants of customer satisfaction in the telecommunication industry of Afghanistan

through Structure Equation Modelling as used by Suki (Suki, 2011), Amos 22 was adapted to

analyse the data. Structure equation modelling is a statistical technic uses to evaluate human

behaviour. The behaviour of humans is not easily measurable and needs a latent construct to

describe observed variables; SEM is a good instrument to assess theoretical constructs. In

marketing research SEM is applied to hypothesize theoretical marketing behaviour and confirm

this statistically. Structure equation modelling includes a package of multivariate factor analyses

such as regression, factor analysis and analysis of variance (Scott MacLean, 1998). Furthermore,

another characteristic of SEM is the combination of factor analysis and regression or path

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analysis. It is usually illustrated via graphical path diagrams. Indeed it is a compound of

multivariate factor analyses that is used for predicting marketing behavior and confirming the

research model fit (Bechger, 2011).

Results

As mentioned above the main purpose of the present research is to find the key determinants of

customer satisfaction in the Afghan telecommunication industry of Afghanistan, and a linear

equation modeling is designed to evaluate the effects of exogenous variables on endogenous

variables. The only dependent variable of the research was customer Satisfaction. Service

quality, coverage area, price fairness, attractive offers, sales promotion, retailer shops, being

friendly and internet services were the independent variables. The dependent and independent

variables measured by 20 latent constructs. In order to specify the respondents’ characteristics

some demographic variables were used like gender, age, education and service provider. Since

the research focus was university students, there was no need to ask respondents about their

level of income. In undeveloped countries like Afghanistan adults have the choice of either

pursuing education or working. As the socio-demographic data in Table 1 show the research

found that 33.2% interview participants were female and 66.2% were male. From age perspective

72.8% of the respondents were in age category 18-22 and 25.6% were in the age category 22-

26. Only 3% of the interviewees were above 27 years old.

Table 1: Demographic characteristic of respondents

Source: Field research Nov-Dec 2017 The reliability of the questionnaire items was tested via Cronbach’s alpha using SPSS. The result

0.818 shows that the reliability of the items was partially satisfactory.

Figure 1 Conceptual model framework of customer satisfaction.

Variables Category Frequency Percent

Gender Male 258 66.8

Female 128 32.2

Age 18-22 281 72.8

22-25 95 24.6

>25 10 2.6

Education Bachelor’s degree 379 98.19

Master’s degree 7 1.81

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To evaluate the hypothesized conceptual model framework, the structure model was tested using

SEM. The goodness-of-fit for the model was tested using Amos 22; and the result that indicates

all criteria were met,

Table 2 Goodness-of-fit test for the structural model

Fit Indices Standard Value Range

Model Values

Chi-Square 336.093

Df( Degree of Freedom) 16

GFI( Goodness of fit Model) >0.9 .947

RMSEA( Root Mean square of Error Approximation) <0.10 .042

AGFI(Adjusted Goodness of Fit Index) >0.8 .911

NFI(Normal Fit Index) >0.9 .875

CFI(Comparative Fit Index) >0.9 .943

IFI(Incremental Fit Index) >0.9 .945

RFI(Relative Fit Index) >0.9 .810

Source: Field research Nov-Dec 2017

As Table 2 depicts, all the indices met the standard criteria values except for NFI and RFI that

were close to accepted values when rounded up. Based on table 2 findings above the structural

model is fit for conducting hypothesis tests.

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Table 3 Regression weights and summary of hypothesis tests

Paths (β) S.E C.R P Results

Customer Satisfaction <--- Service Quality .072 .043 1.681 .093 Rejected

Customer Satisfaction <--- Coverage Area .010 .041 .247 .805 Rejected

Customer Satisfaction <--- Customer Care .029 .036 .823 .411 Rejected

Customer Satisfaction <--- Price Fairness .095 .033 2.860 .004 Accepted

Customer Satisfaction <--- Internet Services .113 .039 2.930 .003 Accepted

Customer Satisfaction <--- Retailer Shop .091 .036 2.514 .012 Accepted

Customer Satisfaction <--- Being Friendly .147 .037 3.975 .000 Accepted

Customer Satisfaction <--- Sales Promotion .112 .030 3.695 .000 Accepted

Customer Satisfaction <--- Attractive Offers .212 .037 5.719 .000 Accepted

Source: Field research Nov-Dec 2017

(S.E stands for standard error, C.R for critical value, p for p-value which is 0.05)

To accept the null hypothesis of research, the p-value of the relationship assumed should be

<0.05, hence according to the Table 3 outputs, the hypothesized effects of price fairness, internet

service, retailer shop, being friendly, sales promotion and attractive offers can be accepted

according to the dependent variable of customer satisfaction. The major determinant of customer

satisfaction recognized in this study is attractive offers with a 0.212 coefficient, and the second

determinant is being friendly with 0.147, followed by third internet service 0.113, fourth sales

promotion 0.112, and fifth price fairness 0.095. The interesting finding of this research is that price

fairness has a low coefficient but is a significant determinant among independent variables.

According to the findings above service quality, coverage area and customer care did not satisfied

customers and with low coefficient and p-value higher than 0.05 were rejected.

Discussion & Conclusion

This study investigated the key determinants of customer satisfaction in the telecommunication

industry of Afghanistan. University students in the northeastern region that includes universities

of Badakhshan, Takhar,Baghlan and Kunduz were the target population. For the purpose of

analysis, structure equation modeling was applied to evaluate the impact of nine variables on

customer satisfaction, but based on current research findings only six of them can be accepted

as variables that affect customer satisfaction.

First, attractive offers showed a strong and significant relationship with customer satisfaction. As

with other rapidly growing telecoms industries Afghan telecommunication industry benefits from

the latest development in technology, especially those that facilitate international calls, optical

fiber internet services and low prices to motivate Afghan customers.

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Secondly, being friendly was observed as another factor influencing customer satisfaction.

Cellular companies are participating in the reconstruction and development of a post war society

by building schools, parks, offering entertainment programs, poverty alleviation, and health care

assistance. Afghan customers reward companies for their social, educational and environmental

contributions.

Thirdly, the research revealed a strong relationship between sales promotion and customer

satisfaction. The marketing strategies of Afghan telecoms companies allocate part of their budget

to attracting and retaining customers in competitive markets. The higher the sales promotion the

higher will be customer satisfaction.

Fourthly, price fairness as a determinant of customer satisfaction was found to be a valuable

finding of the research. In a country like Afghanistan with low-level of income it is highly important

for customers to prefer a company based on its service price. Cheap services increase customer

satisfaction and keep them loyal to the company. This finding corresponds to that of Afsheen and

Shahzad’s research in Pakistan (Shahzad Khan, 2012). Finally unlike call service quality

customers are more satisfied with internet services and this is because of internet is a new

phenomenon for Afghan customers. Accessibility to social media means customers focus more

on internet than voice call services. The research found no support for coverage area, service

quality and customer care variables. As a result, Afghan customers are partially satisfied with the

marketing strategy of telecoms companies, while observations indicate that companies are weak

in terms of technical support for customers. In conclusion Afghan customers highly prefer

companies’ that charge low prices and have good sales promotion policies, internet services and

show care for customer welfare. In the newly emerging telecommunication industry of

Afghanistan, this research contribution leaves a literature source for further research as well as

helps companies to understand the strengths and weaknesses of their activities and recognizes

factors that keep customers loyal.

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