rmm proj final (2)
TRANSCRIPT
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Broadband customer
satisfaction affects loyalty
towards the Company
Spring 2010
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Broadband Service Research ProjectUniversity of Central Punjab
ACKNOWLEDGEMENTS
We are very thankful to Allah Almightywho has given us the power and ability to
think and judge the matters and then to
make use of the blessed abilities. Our
most respectable teacher Mis Khansa is
the source who directed us to apply ourabilities in the correct direction. Special
gratitude to our Professors, Parents and
Friends for their encouragement and
support.
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Abstract
The purpose of this research was todetermine if a relationship existed betweendifferent levels of customer satisfaction inBroadband Internet services and Customer
loyalty towards a service provider. Previousresearch on this relationship has provided
mixed results. Our research shows amoderate positive relationship exist
between the level of customer satisfactionin Broadband Internet services and
Customer loyalty towards a serviceprovider. While there could be severalreasons for this relationship, these resultssuggest that there is a difference in loyaltylevel of customer as the level of satisfactionvaries. In this study our purpose was just tofind whether a satisfied customer result as aloyal customer of any particular company or
not.
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Table of Content:-
Research Methodology 4
CHAPTE
R
TITLE PAGE NO
1 Introduction 6Background 6Objective 7Significance 8
2 Review of literature 93 Theoretical framework 104 Hypothesis and Operationalization of Variables 125 Research Design 16
Survey Research 16Population 16Sampling Design 16Tools of data collection 17Data Processing 18Data Analysis 18
Score Index 19Bivariate table 19
General Findings 216 Presentation of findings 20
Testing Hypothesis 20Discussion 21
7 Summary, Conclusions and Recommendations 22Summary 22Conclusion 22Recommendation 23
References 24Appendix 25
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List of tables:-
Table Title Page
No1.1 Level of Broadband customers satisfaction is
positively associated with level of loyalty
20
List of Figures:-
Figures Title Page
No1.1 Schematic diagram 11
1.2 Linear positive relationship 21
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Introduction:-
Background:Consider a person who does not feel any sense of loyalty towards
his broadband Internet Service Provider, and is always in search of any
better alternates available in the market. Such a customer as soon as hefinds any second option, he switches towards it, without even analyzing
that may be the benefits extracted from the switch are marginal. However
in such a scenario the customer is no faulty, but the Internet service
provider can be accused to buildup this kind of situation in which
customer was forced to be in a state of indifference. This state of
indifference is in a result of low level of satisfaction of the customer
towards the service he is using.
Customer Loyalty with a company is very important for the successof any business system. For service-oriented businesses like the
broadband Internet segment of Pakistans Internet industry, one of the
key challenges is how to raise the level of loyalty of customers towards a
particular company. As Pakistan ranks 4th in broadband Internet growth
(World Broadband Statistics, 2008), customer loyalty is gaining increasing
attention since loyal customers are seen as essential components to
organizational success. So companies want to retain their customers,
since such retention will lead the company to a greater number of loyal
customers, more profits and increased market share can be gained. Whilemuch research literature has focused on Customer Loyalty and
Satisfaction and describing its determinants but not much work has been
done to determine exactly what affects customer loyalty in the broadband
internet industry. However identifying the exact drivers that have the
largest impact on customer loyalty in this sector, are still not fully
understood.
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Objective:This research intended to make an explanatory study into the aspects/
attributes that force customers while deciding whether to continue with
the current Broadband Internet service provider or to switch to an
alternative provider (in other words customer retention). However, the
customer decision making process is not the same for individual
customers and the corporate customers; however we focus on individual
customers more in our research. The main objective of this research is to
ascertain the relative importance of characteristics that affect the
satisfaction and loyalty of customers in Broadband segment. We also
intend to measure the kind and direction of the relationship that exist
between Customer Satisfaction and Customer Loyalty in Broadband
industry.
Significance:In today's competitive environment gaining and maintaining customer
loyalty is becoming more and more of a challenge. Companies can no
longer afford to become complacent in their marketing efforts directed at
existing customers, particularly with the cost of new customer acquisition
increasing. An essential way to hold your ground against the competition
is by keeping existing customers happy and continuing to increase sales
to this group.
Marketing activities and new promotions directed at your existing
customers are essential to keeping in the forefront of their minds. This
also allows you to keep them apprised of new product offering and specialevents. When the marketing to existing customers is neglected, typically
you will see an "out of sight, out of mind" result. In simple words an
indifferent customer who is finding better alternatives to switch. If your
customers are then targeted by your competition attempting to acquire
their own new customers they feel no sense of loyalty to you or your
company.
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Every company, even the best ones, loose customers. It's for given. To
stay at the status quo, or even grow the business you need a steadysupply of new customers to replace the old ones. Now, if your business
isn't good at customer retention, which is the ability to keep customers
loyal to the company, your company is losing a lot of business. So you
need to replace them with a lot of new customers, this is bad for business
for two reasons:
On average, it costs 5 times as much to get a new customer than to
keep an existing one.
Customers, who have bought from you before, are much more likely
to buy from you again.
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Review of Literature:-
Customer loyalty is viewed as the strength of the relationship
between an individuals relative attitude and repeat patronage. The
relationship is seen as mediated by social norms and situational factors.
Cognitive, affective, and co native antecedents of relative attitude are
identified as contributing to loyalty, along with motivational, perceptual,
and behavioural consequences (Dick and Basu , 1994). In the customer
centred business, survival remains to the degree that customer
satisfaction is met and switching barriers are increased. Previous research
studies have shows that the repurchase intent was the main benefit ofcustomer loyalty. However, some had identified multiple benefits like
repurchase intent, price tolerance, willingness to recommend etc. In
reaching loyalty, vendors should manage satisfaction and switching
barriers (Naranyandas, 1998). Loyalty too has a pyramid effect that
suggests of having hierarchy in loyalty levels between customer and
vendor. Change in loyalty level will manifest itself in the presence of
specific attitude and behaviour (Aaker, 1991).
Customer satisfaction and higher switching barriers are integral part
of customer Loyalty process. Customer Retention is also primary measure
of loyalty. There is a positive relationship between changes in satisfaction
and share of wallet. In particular, the initial satisfaction level and the
conditional percentage of change in satisfaction significantly correspond
to changes in share of wallet. Income and length of the relationship
negatively moderate this relationship (Cooil et al., 2007). Loyalty and
retention although positively moderate with share of wallet it is necessary
to examine the cost of maintaining the particular customer. It is not
guaranteed that every customer loyalty generates contribution. Therefore
the concept of Customer lifetime Value (CLV) plays an important role. Increating loyalty and thereby CLV, it would be prudent to explore qualities
of loyalty. Two types of primary loyalty qualities had been identified in the
previous researches, i.e. Attitudinal Loyalty and Behavioural Loyalty, out
of which attitudinal loyalty could be the most important dimension for
marketers to monitor perceived switching barriers (Rundel Thiele, 2005).
While research literature has focused customer loyalty and describing its
determinants but not much work has been done to determine exactly
what affects customer loyalty in the Internet industry especially the
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broadband segment and identifying which drivers have the largest impact
on customer loyalty in this sector, are not fully understood.
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Theoretical Framework:-
A theoretical framework guides your research, determining what
things you will measure, and what statistical relationships you will look
for. Customer satisfaction in Broadband Internet service will lead to
customer loyalty towards the particular service provider; as a result there
will be an increase in the profitability of the organization. So from thefollowing we can conclude that the involved dependant variable (customer
loyalty) is positively associated with (customer satisfaction) which is
our independent variable.
The concept of customer Loyalty is understood as a combination ofcustomers favorable attitude and the behavior of repurchase. Customers
experiencing a high level of satisfaction are likely to remain with their
existing providers and maintain their subscription. According to our
research we have seen that more the customer is satisfied with the
Broadband connection he is using the more he moves up the ladder of
customer loyalty towards the particular service provider. Whereas
customer satisfaction itself consist of different dimensions or features,
which have to be fulfilled to reach loyalty. Measuring loyalty itself is a
complete procedure and is said to prevail depending on the certainattitude of the customer. The propositions can be arranged sequentially
as:-
Level of customer satisfaction increased
Less he is psychologically irritated
Lesser intentions to switch initiate
Less he is in concerned of in hunt of alternatives
Increased chances that he retains
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Customer Customer Loyalty
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Long term relationship develop
Level of Customer Loyalty is increased
Figure 1.1: Schematic Diagram of TheoreticalFramework
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Hypothesis andOperationalization of
Variables
Hypothesis:The Level of Customer satisfaction of Broadband Internet connection is
positively associated to level of customer loyalty with the company.
Logic for hypothesis:
In theoretical framework are discussed the logics for customer
loyalty with a company when the customer satisfaction level toward theInternet connection is increased. It is a sequential effect which is self
explanatory.
Developed Hypothesis Statements:-
Higher Service Quality is associated with higher level of Customer
Satisfaction
Higher Customer Support is associated with higher level of Customer
Satisfaction
Higher Device Functionality is associated with higher level of Customer
Satisfaction
Higher Pricing Structure is associated with higher level of Customer
Satisfaction
Higher Attractiveness of services is associated with higher level of
Customer Satisfaction
Higher Convenience in procedures is associated with higher level ofCustomer Satisfaction
Higher Willingness of Long term relationship is associated with higher
level of Customer Loyalty
Higher Positive Perception is associated with higher level of Customer
Loyalty
Higher Brand likeliness is associated with higher level of Customer
Loyalty
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Higher Value-added Services is associated with higher level of
Customer Loyalty
Higher Economic perception is associated with higher level of
Customer Loyalty
Measurement of variables:We have two variables in our research hypothesis which we measured in
research and surveys.
1. Level of Customer satisfaction
2. Level of customer loyalty
1. Level of Customer satisfaction:-Customer satisfaction is
an independent variable. It has features which are known asdimensions, by the fulfillment of these features the customer
satisfaction level can be attained and improved.
2. Level of customer loyalty:-customer loyalty is a dependentvariable. It has its own dimensions, by the fulfillment of those
dimensions it can be said that the customer loyalty is attained.
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Dimensions and their Elements of Customer
Satisfaction and Loyalty:-
Dimensions of level of Customer satisfaction
o Service Quality
o
Customer Support
o Device Functionality
o Pricing Structure
o Convenience in procedures
o Attractiveness of services
Elements of above Dimensions
o Service Quality
(Connectivity, Speed Variation) (Question 1 and 2 in
appendix)
o Customer Support
(Waiting time, Courteous) (See question no 3 and 4)
o Device Functionality
(Signal reception, Device Suite) (See question no 5 and
6)
o Pricing Structure
(Competitive pricing, Clear rates) (See question no 7
and 8)
o
Convenience in procedures
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(Bill Payment modes, Package conversion) (Question
9and 10)
o Attractiveness of services
(Bandwidth, Technology) (See question no 11 and 12)
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Dimensions of level of Customer Loyalty
o Willingness of Long term relationship
o Positive Perception
o Brand likeliness
o Value-added Services
o Economic perception
Elements of above Dimensions
o Willingness of Long term relationship
(Switching intention, Annual membership) (Question 13
and 14)
o Positive Perception
(You attitude, Emotional attachment) (Question 15 and
16)
o Brand likeliness
(Reference, Will to repurchase) (See question no 17 and
18)
o Value-added Services
(Regular discounts, Prizes) (See question no 19 and 20)
o Economic perception
(Promotional activities, Odd even pricing) (Question 21
and 22)
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Research Design
Survey Research:-The approach we have used to collect primary data is to communicate we
people directly. Therefore we have used Human Interactive Media. We
intend to handover Questionnaire to people to record responses from
them.
Population:In our research project our target population was basically
customers of Broadband service providers, more specifically we can say
our focus was only the customers of the companies BrainNet, LinkDotNet,
PTCL Broadband, Wateen Wireless, Wi-Tribe WiMax and WorldCall EVDO
Wireless Broadband. The population is homogeneous because we have
only taken broadband customers. The logic for choosing only these six
companies is that these are the prominent names that come in mind when
we talk about Broadband internet. The other reason for choosing them is
the easiness to approach the customers of these companies. By simply
stepping near any of the Customer Care Centers of these companies wecan easily find our target population. We have chosen Customers of these
Companies due to the reason that they are the best people who can give
perfect answers about their satisfaction and loyalty level.
Sampling Design:We used the probability sampling in our research project. We have
chosen the simple random sampling because it assures that element in
the population have an equal chance of being included in the sample. Init we assigned each member of the sampling frame a number, and then
selected sample units by a random method.
Sampling Frame:
The sampling frame being used is the list of the customers of these six
companies. These companies maintain computerized record of their
customers with the help of databases, thus we have taken some help
from them as well to confirm our sampling frame.
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Sample size:
The sampling frame which we have used was the customers of above
mentioned six broadband service providers and we have taken sample
size of 3000 for our research (500 from each company). In our survey
we have used this sample size to collect data to approve our
hypothesis. The sample size can be of any gender (male or female).
Sampling Unit:
For observing the overall situation we have used the Broadband
customers as a unit of observation and to analyze all the data which we
have collected by doing survey we again used the Broadband
customers as the unit of analysis.
Tools of Data Collection:The success of a researcher depends on the data one has collected. In
order to measure level of satisfaction of broadband customers and level
of loyalty with the company we have used the survey technique. For
this purpose, we have used Questionnaire. We have given the
questionnaire to Broadband customers to collect the relevant data for
our research report.
Logic behind choosing the questionnaire technique:
We have used the questionnaire technique because our target
population was educated due to the reason that we knew that using
internet requires basic education. We do not need to take interviews if
our population is educated because interviews take lots of time and no
one has a time to give us interview.
Data Processing:We have used computerized data processing technique. From manual
Questionnaires we have converted them into Computerized Excel
Sheets.
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Scoring:
As we have shown above the elements on each dimension we also have
number of statements on each element (see on pg no. for
questionnaire). We have used 5 point scale (Lickard scale) in our
questionnaire. There are positive as well as negative statements in our
questionnaire.
Level of
Satisfaction
of
Broadband
Customer
Strongl
y
Disagre
e
1
Disagre
e
2
Neutra
l
3
Agree
4
Strongl
y Agree
5
Data Analysis:-
Score Index:
Score index for level of satisfaction of broadband customers:- There were 12 statements related to the above variable; on each
statement a person could get a score of 1 to 5. Total score for a person
could range from a minimum of (1*12) =12 to a maximum of (5*12)
=60. Lower score will show low satisfaction and high sores will show
high satisfaction for their broadband connection.
Minimum score Maximum
score
12
60
To make categories class interval ranges from 12-60
12- 28 Lowest level Lowest Satisfaction29-44 Medium level Medium Satisfaction45-60 High level High Satisfaction
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2. Score index for level of Loyalty of Broadband customers:- There were 10 statements related to the above variable; on each
statement a person could get a score of 1 to 5. Total score for a person
could range from a minimum of (10*1) =10 to a maximum of (10*5)
=50. Lower score will show low Level of loyalty and high scores will
show high Level of loyalty of customers with the company
Minimum score Maximum
score
10 50
To make categories class interval ranges from 10-50
10- 22 Lowest level Lowest Loyalty23-36 Medium level Medium Loyalty37-50 High level High Loyalty
Bivariate table:-
For analyzing our overall survey statistically we used the bivariate tablewhich is shown below:
Table 1.1: Level of Broadband customers satisfaction is
positively associated with level of loyalty
Level Of Customer Satisfaction
Level of
CustomerLoyalty Low % Mediu
m
% High % Total %
High 300 30 150 15 700 70 1150 38
Medium 100 10 550 55 150 15 800 27
Low 600 60 300 30 150 15 1050 35
Total 100
0
100 1000 100 1000 100 3000 100
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Table Analysis:-
According to the above table the shaded % values are of specific
importance in reference to our hypothesis, whereas they are increasing
upwards, thus a upward sloping curve is observed. It means that there
is a linear positive relationship between level of satisfaction and the
level of loyalty of the Broadband customers. Further on inspection we
can see from the table that out of highly satisfied customers 70% of the
respondents feel highly loyal with the company when there is high level
of satisfaction. Whereas out of lower satisfied customers 60% of the
respondents feel lower level of loyalty towards the company when theyhave low level of satisfaction. Whereas we can see that greater % of
medium level satisfied customers are subject to medium level customer
loyalty which is 55%.This relationship can be more precisely explained
by the graph shown below:
Fig 1.2: Linear positive relationship
High
Level of Customers
Satisfaction
Low
Low High
Level of Customers Loyalty
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General Findings:To do a survey, the questionnaire we have designed, includes some data
related to Broadband customers e.g. their gender, name and their
occupation. It was like:-
Name:
Gender:
Occupation:
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Presentation of Findings:-
Testing Hypothesis:After doing all the analysis above, we proved that the level of
satisfaction of customers positively affects the level of customers
loyalty towards the company. We have proved it by doing analysis
through bivariate table (See table no. 1.1 on pg: 13) and by showing the
graph (see fig: 1.2 on pg: 14) which was showing the linear positiverelationship. So at the end we accept the alternative hypothesis:-
The Level of Customer satisfaction of Broadband Internet
connection is positively associated to level of customer loyalty
with the company.
And reject the null hypothesis.
Discussion:-However in the review of literature we did not find much evidenceof the dimensions and elements of customer satisfaction and loyalty but
however people of different countries and institutes have discovered
the strong relationship between customer satisfaction and customer
loyalty. With the passage of time the trend of customer retention has
increased and different researchers in the past had already pointed out
the important variables involved in retaining customers. The debate on
customer satisfaction and customer loyalty has been raised in several
researches and we have continued from the place they have left. Wecontinued by specifying the exact variables which result in increasing
the customer satisfaction towards a service provider and that
eventually results in raising the Customer loyalty with a specific
company.
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Summary, Conclusion andRecommendations
Summary:-The importance of use of internet technology is raising day by day and
with it the increase in competition among service providers are also
increasing. The hot question for every company is how to retain the
customers. Previous studies have guided the companies well about the
variables they have to work on to retain their existing customers. In this
research our intentions were to conduct a basic research on the factors
that affect customer satisfaction of a Broadband Internet connection.
After a detailed review of literature we have tried to emphasis on the
factors which were not discussed in detail before. Through statistical
data analysis and figures we have clearly proved the linear positive
relationship between Broadband Customer satisfaction and loyalty
towards a company. All the date was retrieved by giving Questionnaires
to Broadband customers of six different companies. Out of the whole
population of broadband customers a sample size of 300 customers was
chosen. At the end we have accepted our alternative hypothesis and
rejected the null hypothesis.
Conclusion:-At the end we come towards our conclusion that in this fact moving world
today, when World has turned out to become a global village it is very
important to provide state of the art technology of internet to people so
that they can cope up with the fast pace of life style today. It is not only a
matter of gaining new customers but we have clearly proven above that
the retaining of existing customers is important. Satisfying existingcustomers with best services will increase their loyalty level towards the
company and the retaining of these customers can be made possible.
Recommendations:-On the basis of our research we recommend that customers must be
given importance and their satisfaction must be the first priority of
Broadband service providers for retaining them on long term basis.
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References:-
Anderson, Eugene W., Mittal, Vikas (2000), "Strengthening theSatisfaction-Profit Chain, Journal of Service Research, 3, 2, 107-120
Gerpott Torsten J., Wolfgang Rams, Andreas Schindler (2001), "Customer
retention, loyalty, and satisfaction in the German mobile cellular
telecommunications market", Telecommunication Policy, 25, 4
(May), 249-269
Hallowell, R. (1996), The relationships of customer satisfaction, customer
loyalty, and profitability: an empirical study, International Journal of
Service Industry Management,7, 4, 27-42
Jia, G., Yan, H., (2005), Empirical analysis on the forming model ofcustomer loyalty: the case study of mobile communication service,
Services Systems and Services Management, Vol. 1, June, 133- 137
Kim, Moon-Koo, Park, Myeong-Cheol, Jeong, Dong-Heon (2004), "The
effects of customer satisfaction and switching barrier on customer
loyalty in Korean mobile telecommunication services",
Telecommunications Policy 28, 145159
Patterson, P.G., Smith, T. (2003), A cross-cultural study of switching
barriers and prosparity to with service providers, Journal of
Retailing, 79, 107-120PTA Annual Reports 2008, Retrieved November 23, 2009, from
http://www.pta.gov.pk/index.php?
option=com_content&task=view&id=361&Itemid=590
Reinartz, W., Kumar , V. (2002), Mismanagement of Customer Loyalty,
Harvard Business Publishing, Jul 01
Wong, Chi-Bo and Mula, Joseph M. (2009), The moderating effect of
switching costs on the customer satisfaction-retention link: retail
internet banking service in Hong Kong, 11th IBIMA Conference:
Innovation and Knowledge Management in Twin Track Economies, 4-6
World Broadband Statistics (2008), Retrieved November 22, 2009, from
http://point-
topic.com/contentDownload/operatorsource/dslreports/world
%20broadband%20statistics%20q4%202008.pdf
Research Methodology 26
http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590http://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdfhttp://point-topic.com/contentDownload/operatorsource/dslreports/world%20broadband%20statistics%20q4%202008.pdf -
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Appendix:-Broadband Survey Questionnaire:-
Dear Sir/Madam, we are a group of final year students from University of
Central Punjab undertaking a research study on Broadband services.
You are invited to participate in our survey only for academic purpose. It
will take few minutes to complete the questionnaire. Your participation in
this study is completely voluntary. It is very important for us to learn youropinions.
1) Age ________
2) Gender
Male
Female
3) Occupation
Student
Professional
Business
Other
4) I am using following broadband services. (More than 1 option can be
selected)
BrainNet / BrainTel
CyberNet /CyberXtreme
LinkDotNet
PTCL DSL Broadband
PTCL EVO Wireless Broadband
Wateen DSL
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Wateen Wireless WiMax
Wi-Tribe WiMax
WorldCall EVDO Wireless Broadband
WorldCall Cable Broadband
Other__________________
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Please mark in the relevant following boxes:
Strongly
Disagree
Disagree
Neut
ral
Agree
Strongly
Agree
1. My broadband service connectivity is good.
2. My broadband service speed is stable.
3. I do not have to wait long to talk to the Customer
Representative.4. The Customer Representatives of the company at are
very polite and courteous.5. I am satisfied with the signal reception of my
broadband device.6. I find my Device Software very easy to install.
7. I do not find much difference in the rates of other
Broadband service providers.8. The tariff schedule of my service provider is clear and
easy to understand.9. I find my payment mode to be easy.
10. I can easily and quickly change my Broadband
package.11. I consider the Bandwidth offerings of other service
providers are same as my provider.
12. The technology used by my provider is the sameas being used by other providers now a day.13. I have intentions to switch my broadband internet
connection as soon as I find a better alternative.14. I will not buy an Annual membership of my
internet connection even if discounted package is
offered.15. My service provider always gives value to my
opinions and wants.16. I feel emotionally attached to the brand of my
service provider.
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17. I refer others to buy connection from my service
provider.18.It I would be needing another connection in future I
would not hesitate to repurchase the same brand.19. I am satisfied with the no of Discounts my service
provider offers annually.20. My service provider conducts lucky draws and
gives away prizes.21. My Broadband service provider claims in
advertisements to be most economical.22. My service provider uses prices like Rs.299 or
Rs.1999.
Thank you for your valuable time!