UNIVERSITY OF GHANA SERVICE QUALITY AND CUSTOMER SATISFACTION IN THE TELE COMMUNICATION INDUSTRY. A CASE OF MILLICOM GHANA LIMITED (TIGO) BY MAGDALINE ODAME DANKWAH (10363684) THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF MPHIL MARKETING DEGREE JULY, 2013 University of Ghana http://ugspace.ug.edu.gh i DECLARATION I hereby declare that this is the result of my own research and has not been presented by anyone for any academic award in this or any other university. All references used in the work have been fully acknowledged. I bear sole responsibility for any shortcomings. ………………………………… …………………….. MAGDALING ODAME DANKWAH DATE STUDENT University of Ghana http://ugspace.ug.edu.gh ii CERTIFICATION I hereby certify that this thesis was supervised in accordance with procedures laid down by the University of Ghana. ………………………………….. …………………… DR ADELAIDE KASTNER Date (SUPERVISOR) ………………………………….. …………………… DR BEDMAN NARTEH Date (CO- SUPERVISOR) University of Ghana http://ugspace.ug.edu.gh iii DEDICATION To my dear husband; I dedicate this piece of academic work to Mr. Saforo Obeng who has been my source of support and inspiration in life. Mr. Edward Odame Boye and Mrs. Ellen Odame my wonderful parents cannot in anyway be left out. To you all I say a very big thank you for your support and prayers, without which it would have been impossible for me to complete this work. I am very proud of you all. University of Ghana http://ugspace.ug.edu.gh iv ACKNOWLEDGEMENTS I would begin by sincerely thanking my supervisors, Dr. Adelaide Kastner and Dr. Nartey for the unyielding supports they gave to me in order to produce this write-up. I appreciate their efforts because they offered me all the necessary guidelines I needed in order to achieve this academic task. Also, I deeply thank my families and friends for all the encouragements they gave to me during this study. Special thanks to all my respondents for giving me answers to my questionnaires and those who gave extra support in making my work have a better quality. Above all, I thank the Almighty Lord for the strength and knowledge He gave me to carry out the academic work. University of Ghana http://ugspace.ug.edu.gh v TABLE OF CONTENTS Content Page DECLARATION ................................................................................................................... i CERTIFICATION ................................................................................................................ ii DEDICATION .................................................................................................................... iii ACKNOWLEDGEMENTS ................................................................................................. iv TABLE OF CONTENTS ...................................................................................................... v LIST OF TABLES ............................................................................................................... ix LIST OF FIGURES .............................................................................................................. x LIST OF ABBREVIATION ................................................................................................ xi ABSTRACT ........................................................................................................................ xii CHAPTER ONE ................................................................................................................... 1 INTRODUCTION ................................................................................................................ 1 1.0 Background to the Study ................................................................................................. 1 1.1 Statement of Problem ...................................................................................................... 3 1.2 Objectives of the Study ................................................................................................... 5 1.3 Research Questions ......................................................................................................... 5 1.4 Significance of the Study ................................................................................................ 6 1.5 Delimitation of study ...................................................................................................... 7 1.6 Disposition of thesis ........................................................................................................ 8 CHAPTER TWO ................................................................................................................ 10 LITERATURE REVIEW.................................................................................................... 10 2.0 Introduction ................................................................................................................... 10 2.1 Service Concept ............................................................................................................ 10 University of Ghana http://ugspace.ug.edu.gh vi 2.2 Understanding the Concept of Quality .......................................................................... 12 2.3 Service Quality .............................................................................................................. 16 2.4 Customers‟ Expectations compared to Perceptions ...................................................... 21 2.5 Customer Satisfaction ................................................................................................... 23 2.6 Relationship between Service Quality and Customer Satisfaction ............................... 29 2.7 Conceptual Framework ................................................................................................. 32 CHAPTER THREE ............................................................................................................. 37 CONTEXT OF THE STUDY ............................................................................................. 37 3.0 Introduction ................................................................................................................... 37 3.1History of Telecommunication ...................................................................................... 37 3.2 Overview of the Global Telecommunications Industry ................................................ 38 3.3 Historical Development and Structure of Ghana‟s Telecommunication Industry ........ 39 3.4 Brief Background of Milicom Ghana Limited .............................................................. 42 3.5 Structure of the Telecommunication Market in Ghana ................................................. 43 3.6 Policy and Regulatory Frameworks for the Telecommunication Industry in Ghana.... 47 CHAPTER FOUR ............................................................................................................... 51 METHODOLOGY .............................................................................................................. 51 4.0 Introduction ................................................................................................................... 51 4.1 Choice of Study ............................................................................................................. 51 4.2 Research Design ............................................................................................................ 53 4.3 Population ..................................................................................................................... 54 4.4 Data Collection.............................................................................................................. 54 4.5 Data Gathering Instruments .......................................................................................... 55 University of Ghana http://ugspace.ug.edu.gh vii 4.6 Sample and Sampling Technique .................................................................................. 57 4.7 Data Collection Procedure ............................................................................................ 58 4.8 Data Handling ............................................................................................................... 59 4.9 Data Analysis method ................................................................................................... 60 4.10 Limitations of the Study .............................................................................................. 61 CHAPTER FIVE ................................................................................................................. 62 RESULTS AND ANALYSIS ............................................................................................. 62 5.0 INTRODUCTION ........................................................................................................ 62 5.1 Analysis of Customer Data ........................................................................................... 62 5.2 Number of Years Respondents have been Customers of TIGO ................................... 63 5.3 Data analysis ................................................................................................................. 64 5.4 Suggestions on How to Improve Service Quality ......................................................... 67 5.5 Products and Services of TIGO that customers like and Dislike .................................. 68 5.6 Ways by which Customers will Remain Customers of TIGO ...................................... 68 5.7 Discussion of findings ................................................................................................... 69 5.8 Discussion In Relation To Objectives ........................................................................... 71 CHAPTER SIX ................................................................................................................... 73 SUMMARY, CONCLUSION AND RECOMMENDATION ........................................... 73 6.0 Introduction ................................................................................................................... 73 6.1 Summary ....................................................................................................................... 73 6.2 Conclusion .................................................................................................................... 74 6.3 Recommendations ......................................................................................................... 75 6.4 Recommendations for Further Research ....................................................................... 78 University of Ghana http://ugspace.ug.edu.gh viii REFERENCES .................................................................................................................... 79 APPENDIX: QUESTIONNAIRE ....................................................................................... 91 University of Ghana http://ugspace.ug.edu.gh ix LIST OF TABLES Table 1: Gender Disposition of Respondents…………………………..…………. 62 Table 2: Number of Years Respondents have been Customers of TIGO………… 63 Table 3: Probit Regression Results……………………………………………….. 65 Table 4: Marginal Effects after Probit Regression………………………………… 66 University of Ghana http://ugspace.ug.edu.gh x LIST OF FIGURES Figure 1: Relationship between service quality and customer satisfaction……………36 University of Ghana http://ugspace.ug.edu.gh xi LIST OF ABBREVIATION ACSI - American Customer Satisfaction Index ADP - Accelerated Development Programme CPA - Consumer Protection Authority CS - Customer Satisfaction EMEA - European Medicines Evaluation Agency GLO - Global Communication Limited ICT - Information and Communication Technologies ISDN - Integrated Service Digital Network ISO - International Standardization Organization MoC - Ministry of Communications MTN - Mobile Telecommunication Network NCA - National Communications Authority NCS - Network Computer Systems NTP - National Telecommunication Policy SMS - Short Message Sending SPSS - Statistical Package for Service Solutions STD - Subscriber Trunk Dialing University of Ghana http://ugspace.ug.edu.gh xii ABSTRACT This project was undertaken to examine the overall customer satisfaction (CS) with service quality delivered by TIGO Ghana and to also ascertain whether service quality exerts a strong influence on the level of customer satisfaction; the case of customers of TIGO Ghana in the University and its environs. Service quality today has become not only the rhetoric of every business enterprise, but also occupies eminent position in every discourse. No business organization can survive without building its customer satisfaction; likewise no organization can make a healthy living without meeting the needs of its customers. Two types of data were collected; Primary Data and Secondary Data. This was necessary since it helped to add to the findings of the researcher. A simple random sampling and purposive sampling method were used. This ensured that every member of the population had equal chance of being part of the sample. The sample size chosen was 120 customers. It was revealed in the survey carried out that customers of TIGO did not think that TIGO provided a more competitive service in terms of quality. They expressed their dissatisfaction with the services and products of TIGO by stating emphatically that they would not recommend the company to other people. In addition they mentioned some of the problems they have with the company and these included; unresponsive nature of the company‟s call centre, sending across to customers, unsubscribed messages, poor internet services and charging for calls not made amongst others. On their recommendations for improvement in the services and products of TIGO, they indicated that the company must not charge for calls that have not been made, call centre should respond promptly to calls and follow up on customer complaints till they are resolved, reward loyal customers to keep them and stop sending unsubscribed messages to customer and improve on the internet services of the company. University of Ghana http://ugspace.ug.edu.gh 1 CHAPTER ONE INTRODUCTION 1.0 Background to the Study The difference between delivering exceptional customer service and merely providing acceptable service is pronounced. Differentiating on service, especially in service-centric industries such as finance and telecommunications, is how enterprises can retain their customers in today‟s challenging business climate. Keith Pearce, senior director of European Medicines Evaluation Agency (EMEA) Marketing at Genesys, also said that most businesses understand that turning the customer experience into an emotional engagement adds value to their brand and results in consumers who are more loyal and satisfied. With the goal of customer services being to please customers and satisfy their needs, the opportunities for delivering good service to a company‟s customer base are endless. Service experiences are the outcomes of interactions between organizations, related systems/processes, service employees and customers. Considerable research in marketing and management has examined customer satisfaction with service experiences (e.g. Arnold &Price, 1993; Bitner, Booms & Mohr, 1994; Bitner, Booms & Tetreault, 1990 ;). Service quality and customer satisfaction goes hand in hand, when a service is delivered exceptionally, it then follows that the customer will be satisfied and will be loyal to the services rendered. Service quality taps into business, marketing, and psychological research and practices to provide a satisfied customer. Customer service quality also provides a framework for customer service as a process and an outcome. University of Ghana http://ugspace.ug.edu.gh 2 Service quality today has become not only the rhetoric of every business enterprise, but also occupies eminent position in every discourse. No business organisation can survive without building its customer satisfaction and brand loyalty; likewise no organisation can make a healthy living without meeting the needs of its customers. That is what organisations do: they serve people‟s needs. Service quality helps in cementing the relationship between customers and the organisation and it is a two-way flow of value. This means that customer derives real value from the relationship which translates into value for the organisation in the form of enhanced profitability and sustainability over a long period of time. The concept of quality, efficiency, productivity, growth and survival pose a great challenge for the survival and growth of all corporate bodies. These growth and survival demands are further deepened by the need to attract and retain customers, as customers are the main focus of any successful business (Agypong, 2010). The success of a business depends on how the firm understands and meets its client‟s demands. In Ghana, utility provision has always suffered a setback as utility firms have always been criticized for poor quality of services. One of such important utility firms is telecommunication. The telecommunication industry‟s role in an economy cannot be overemphasized. This is because it is the means through which all daily transactions and activities are undertaken. It aids decision making, helps in providing feedback, and promotes interpersonal and business relationships as well as exchange of information. All social, economic, political, cultural, trade and commercial activities are undertaken using telecommunication. The nature of a country‟s telecommunication industry affects its pace of commercial and domestic activities. Due to University of Ghana http://ugspace.ug.edu.gh 3 the poor performance of many of these telecommunication firms, particularly in the developing countries, governments have had to intervene through divestiture and privatization programs (Frempong & Henten, 2004). Also due to privatization and liberalization of policy, the telecommunication sector is experiencing phenomenal global change all over the world (Beard & Hartmann, 1999). Because of this, there is a stiff competition among companies who are trying to capture and maximize their share of the market by providing various services to satisfy and possibly exceed the customer‟s needs and demands. As competition has escalated among the operators, so it is necessary for them to learn about the consumer‟s perception about the service quality, brand image and customers satisfaction. Service quality has been found in the literature to be a competitive tool for many companies. This is even much more pronounced in today‟s highly globalised, industrialized and competitive markets. As has already been mentioned, the growth and survival of companies depend on their customers which the telecommunication industry is no exception. 1.1 Statement of Problem Competition in Ghana‟s Telecommunication Industry has called for telecommunication firms to improve their corporate performance not only in terms of the “teledensity” (the number of subscribers out of every 100 people ), which also is a measure of their market share, but also to be more concerned with the quality of their service delivery. University of Ghana http://ugspace.ug.edu.gh 4 The Ghanaian Telecommunication players however, have come under criticism for a number of reasons. Concerns have been raised about the seemingly unregulated services provided by telecommunication companies and the poor nature of service delivery in the country. Critics have also questioned over subscription to telecommunication services without expansion of the capacity of service providers, high charge rates and the problem of poor interconnectivity among networks. The gravity of the problem was accentuated in October 2007 when the National Communications Authority (NCA) ordered two of Ghana‟s most popular mobile telephone network operators, MTN and Onetouch (now Vodafone Ghana) to halt the activation of new access lines until the networks of the two operators increased their capacity for new subscribers The complains of consumers were also articulated in May 2010 when the Consumer Protection Agency (CPA), an advocacy group in Ghana, called for all cell phone users in the country to switch off their phones for six hours in protest against "poor services" by the cell phone operators. This action was intended to highlight the level of frustration consumers are going through in the use of their cell phones. In 2013, the NCA directed mobile telecom operator MTN to submit a compensation plan for all its subscribers who were affected by their poor service delivery from August 15 th to 20 th . MTN was slapped with over GH¢ 1 million fine for inaccurately charging for incoming international calls. During that week in August, subscribers could not make calls, top up credit or use data bundles, the situation which was described as very frustrating by many. Glo, another telecom operator was slapped with GH¢ 200,000.00 University of Ghana http://ugspace.ug.edu.gh 5 fine for defaulting call set up time, call completion and signally congestion in Central and Western regions during that period as well. Tigo Ghana also paid a GH¢ 50,000.00 fine for defaulting call congestion obligation in the Central region. Cognisances of the above, questions need to be answered as far as Tigo Ghana‟s service quality and satisfaction in Ghana‟s telecommunication industry is concerned. Thus, this study seeks to find answers to the following questions. 1.2 Objectives of the Study In view of the above, this paper seeks to, Find out if customers are satisfied with the service quality delivered by TIGO in Ghana? To also ascertain whether service quality exert a strong influence on the level of customer satisfaction. 1.3 Research Questions Does customer service have a relationship with service quality perception? Does service quality have a relationship with customer satisfaction? How can overall customer satisfaction (CS) with service quality be described in Ghana‟s TIGO with and without respect to customers‟ mobile telecom network? University of Ghana http://ugspace.ug.edu.gh 6 1.4 Significance of the Study The study brings to bear, a balanced discussion on the service quality and customer satisfaction of Tigo Ghana‟s subscribers and also from the viewpoints of the major stakeholders in Ghana‟s telecommunication industry. This will help to develop responsive approaches by way of policy-measures by the Government to address the concerns of customers and service providers. The study also, recognizes that the private sector must play a major role to achieve the policy objectives of Ghana as far as access to telecommunication services and the contribution of the industry to the country‟s development agenda are concerned. It is therefore a contribution to help realize government‟s policy objective of ensuring that every citizen and resident of the country obtains high quality and affordable access to information and communication service and to harness the potential benefits of integrating and growing the wealth of indigenous social and technical knowledge to inform and sustain the socio-economic development of the country (NCA, 2003). To the management of Tigo Ghana, the findings and results that will be reported in this study will provide a more reliable scientific measure and perspective for describing and evaluating the overall customer satisfaction with the services they offer. It will particularly, identify the challenges of the company, exposes its weaknesses and how these affects the quality of service delivery and consumer satisfaction. It will further discuss the importance of service quality and satisfaction to the customers. The paper will also contribute to the body of knowledge in the area customer satisfaction (CS) in the Ghana‟s Mobile Telecom Industry. Management can therefore, based on these University of Ghana http://ugspace.ug.edu.gh 7 and together with the company‟s strength and opportunities develop responsive measures that can well position TIGO to acquire a competitive advantage in Ghana‟s telecommunication industry and to provide satisfactory services to its customers. Finally, the study will come out with suggestions to help improve the use of customer service quality as a competitive tool that stakeholders like investors, shareholders, employees, pressure groups, consumer associations, among others, will use to provide invaluable information that will allow them to provide useful suggestions to the improvement in service delivery of their respective mobile network operators in Ghana. It will also be a contribution to the wide range of literature and scholarly works in the field of studies and research as far as telecommunication is concerned. It therefore provides the framework and sets the stage for further empirical studies to be conducted into the telecommunication industry in Ghana. 1.5 Delimitation of study The researcher has to define the scope of research in order to make things clear. The researcher is focusing the study on the telecommunication industry in Ghana. It will not include all the communication firms except for TIGO. The researcher is interested in evaluating whether consumers are actually satisfied or not. This study is limited to consumers in and around the University of Ghana because the sample was created from those living in there and do have experiences with that particular phone network. In this study, the word consumers‟ will refer to students in and around the University of Ghana who can be considered customers as well. University of Ghana http://ugspace.ug.edu.gh 8 1.6 Disposition of thesis This is an outline of the thesis. This gives a summary of each chapter of the thesis. Chapter 1: Introduction The aim of this chapter is to introduce the topic to the reader. The need for the study is introduced in order to get a clear idea of the study and what it is focused on. Here, the researcher identifies the research gap and thereby setting the research questions and purpose as the road map of the study. The research questions raised are; does customer service have a relationship with service quality perception? Does service quality have a relationship with customer satisfaction? How can overall customer satisfaction (CS) with service quality be described in Ghana‟s TIGO with and without respect to customers‟ mobile telecom network By answering these questions, we will attain our objectives which the researcher is theoretically trying to find and also identify what dimensions of service quality consumers are satisfied with in the telecommunication industry. Hence finding out the overall perceived service quality and customer satisfaction. Chapter 2: Literature review In this chapter, the researcher presents all the concepts that are important to her study. Concepts such are service, quality, service quality, customer satisfaction, customer‟s expectations and perceptions are discussed. Also, a proper explanation of the SERVQUAL model is outlined in this chapter. The various dimensions (tangibles, reliability, responsiveness, assurance, empathy) of the SERVQUAL model are discussed. Models measuring service quality and customer satisfaction are discussed as well. The researcher tries to bring out the relationship between service quality and customer satisfaction. The University of Ghana http://ugspace.ug.edu.gh 9 main reason for covering this chapter is to enhance the understanding of the main theories involved in the study and to answer her research questions. Chapter 3: Context of the study In this chapter, the researcher sheds more light on the telecommunication industry in general, the history behind the industry, how it started in Ghana and where it is now. Chapter 4: Research methods This chapter sheds more light on the methods used for the study. In this chapter, the researcher mainly discusses how she carried out the study, also emphasizes about the measurement of the constructs, the way she coded the data collected. Chapter 5: Empirical results and analysis This chapter discusses the data collected from the field that would enable her answer the research questions. The data collected was mainly based on respondents‟ expectations and perceptions of the various items under the SERVQUAL model. Also, some demographic description of the respondents was collected. A general description of the consumers‟ expectations and perceptions of the various dimensions was done using descriptive statistics. Chapter 6: Conclusions In the final chapter, a summary of the findings are outlined and thereby providing answers to the researchers research questions. She also discusses some theoretical, managerial implications and possible recommendations from the findings. Also some suggestions for further research are mentioned in this chapter. University of Ghana http://ugspace.ug.edu.gh 10 CHAPTER TWO LITERATURE REVIEW 2.0 Introduction In recent times Mobile telecom operators play an important role which enhance social interactions between and among individuals, groups, organizations, and the governments alike and which ultimately create a strong network of global environment. That is why Deutsch (1953) states this trend as “a web of nations”. Today‟s development of communication technology ignores the global border and makes the world as “global village” (McLuhan, 1964). This chapter will review literature relevant to the study on Service Quality and Customer Satisfaction in the Telecommunication Industry in Ghana; a case of Millicom Ghana Limited (TIGO).The study will also look at some of the conceptual framework that will be used in this research. 2.1 Service Concept Service is different from physical products. Compared with physical products, service is thought to be intangible, heterogeneous, produced and consumed simultaneously, unable to be kept in stock, etc. International Standardization Organization (ISO) defines a service as a part of the total production concept. A study carried out by Johns, (1998) points out that the word „service‟ has many meanings which lead to some confusion in the way the concept is defined in management literature, service could mean an industry, a performance, an output or offering or a process. He further argues that services are mostly described as „intangible‟ and their output viewed as an activity rather than a tangible object which is not clear because some service outputs have some substantial tangible components like physical facilities, equipments and personnel. University of Ghana http://ugspace.ug.edu.gh 11 Edvardsson, (1998) thinks that the concept of service should be approached from the customer‟s perspective because it is the customer‟s total perception of the outcome which is the „service‟ and customer outcome is created in a process meaning service is generated through that process. He points out the participation of the customer in the service process since he/she is a co-producer of service and the customer‟s outcome evaluated in terms of value added and quality meaning the customer will prefer service offered to be of high value and quality. Services are often “invisible” and thus difficult for the supplier to explain and for the customer to assess. This places special demands on marketing to prevent wrong, often excessive expectations of the market. The expectations which are created by marketing affect the customer‟s perception of the outcome. I believe that the concept of service should be approached from a customer perspective. It is the customer‟s total perception of the outcome which is “the service”. It forms the perception of quality and determines whether a customer is satisfied or not. According to a study carried out by Johns, (1998), service is viewed differently by both the provider and the consumer; for the provider, service is seen as a process which contains elements of core delivery, service operation, personal attentiveness and interpersonal performance which are managed differently in various industries. While customers views service as a phenomenon, meaning the customer sees it as part of an experience of life which consists of elements of core need, choice, and emotional content which are present in different service outputs and encounters University of Ghana http://ugspace.ug.edu.gh 12 and affect each individual‟s experience differently other customers disagree. However, factors that are common for both parties include; value (benefit at the expense of cost), service quality and interaction. A widely accepted definition of service is proposed by Grönroos (1990) as: “A service is a process consisting of a series of more or less intangible activities that normally, but not necessarily always, take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems” (Grönroos, 2000,). 2.2 Understanding the Concept of Quality The search for a universal definition of quality has yielded inconsistent results. Quality is perceived differently by different people. Yet, everyone understands what is meant by “quality” in their own way. Which means that such a global definition does not exist; rather, different definitions of quality are appropriate under different circumstances. Quality has been described as "the single most important force leading to the economic growth of companies in international markets" (Feigenbaum, 1982:). Quality is also the keyword for survival of organizations in the global economy. Organizations are undergoing a shift from a production-led philosophy to a customer-focused approach. In a manufactured product, the customer as a user recognizes the quality of fit, finish, appearance, function, and performance. The quality of service may be rated based on the degree of satisfaction by the customer receiving the service. The relevant dictionary meaning of quality is “the degree of excellence.” However, this definition is relative in nature. The ultimate test in this evaluation process lies with the consumer. The customer‟s needs must be translated into measurable characteristics in a product or service. Once the University of Ghana http://ugspace.ug.edu.gh 13 specifications are developed, ways to measure and monitor the characteristics need to be found. This provides the basis for continuous improvement in the product or service. The ultimate aim of quality is to ensure that the customer will be satisfied to pay for the product or service. This should result in a reasonable profit for the producer or the service provider. The relationship with a customer is a lasting one. The reliability of a product plays an important role in developing this relationship. The definition of quality varies between manufacturing and services industries and between academicians and practitioners. These variations are caused by the intangible nature of its components since it makes it very difficult to evaluate quality which cannot be assessed physically, implying other ways must be outlined in order to measure this quality. Quality has been considered as being an attribute of an entity (as in property and character), a peculiar and essential character of a product or a person (as in nature and capacity), a degree of excellence (as in grade) and as a social status (as in rank and aristocracy) and in order to control and improve its dimensions it must first be defined and measured (Ghylin, K.M., Green, B. D., Drury, C. G., Chen, J., Schultz ,J.L., Uggirala, A., Abraham, J.K. & Lawson, T.A. (2006). Quality has been variously defined as value (Abbott, 1955; Feigenbaum, 1951), conformance to specifications (Gilmore, 1974; Levitt, 1972), conformance to requirements (Crosby, 1979), and meeting and/or exceeding customers' expectations (Gronroos, 1983; Parasuraman, Zeithaml, & Berry, 1985). Some definitions of quality pointed out by Hardie & Walsh (1994, p.53) include; “Quality: the totality of features and characteristics of a product that bear on its ability to satisfy stated or implied needs”– International Standards Organization (ISO). University of Ghana http://ugspace.ug.edu.gh 14 “Quality is the degree or grade of excellence etc. possessed by a thing” – (Oxford English Dictionary). Another frequently used definition says Quality is fitness for use. This definition stresses the importance of the customer who will use the product. “Quality is defined as the summation of the affective evaluations by each customer of each attitude object that creates customer satisfaction”- (Wicks & Roethlein, 2009, p.90). A definition attributed to quality by Crosby (1979) states that Quality is conformance to requirements. The preceding definition assumes that the specifications and requirements have already been developed. The next thing to look for is conformance to these requirements. W. Edwards Deming defined quality as follows: Good quality means a predictable degree of uniformity and dependability with a quality standard suited to the customer. The underlying philosophy of all definitions is the same consistency of conformance and performance, and keeping the customer in mind. Another definition that is widely accepted is Quality is the degree to which performance meets expectations. This definition provides a means to assess quality using a relative measure. Quality denotes an excellence in goods and services, especially to the degree they conform to requirements and satisfy customers. This definition assimilates the previous ones and is our definition of choice. Reliability implies dependability; reliability introduces the concept of failure and time to failure: Reliability is the probability that a system or component can perform its intended function for a specified interval under stated conditions. Quality and reliability go hand in hand. The customer expects a product of good quality and is reliably. Ability of features and characteristics in a product or service that bear upon its ability to satisfy needs” (Haider, 2001). University of Ghana http://ugspace.ug.edu.gh 15 The above definitions of quality shed light on the concept and also point out that quality has many views. As concerns this study, quality is seen both in terms of product quality and service quality because the researcher is dealing with the telecommunication industry that provides services and carries out other sales assistance services to customers. Therefore, most of the definitions are relevant to this study because they make mention of both products and services and how customers will like to become satisfied when quality is high. Some definitions focus on the development of a set of categories of quality in multidimensional terms. An example provided by Wicks & Roethlein (2009,) is that of Garvin (1988), who outlined quality into five categories: (1) Transcendent definitions. These definitions are subjective and personal. They are eternal but go beyond measurement and logical description. They are related to concepts such as beauty and love. (2) Product-based definitions. Quality is seen as a measurable variable. The bases for measurement are objective attributes of the product. (3) User-based definitions. Quality is a means for customer satisfaction. This makes these definitions individual and partly subjective. (4) Manufacturing-based definitions. Quality is seen as conformance to requirements and specifications. (5) Value-based definitions. These definitions define quality in relation to costs. Quality is seen as providing good value in relation to cost. In this article, Garvin combines all three approaches (excellence, conformance to specifications, and customer focus) into his five definitions of quality. University of Ghana http://ugspace.ug.edu.gh 16 According to Ghylin et al., (2008) since company managers believe that the power of quality guarantees high profits in business, companies try to understand how to keep the quality level high at every point within production, manufacturing, and even providing services. Thus, they see the product-based, user-based and manufacturing based approaches have been the most popular in reported research. The researcher will apply the user based approach because she is interested in finding out what dimensions of service quality in telecommunication that customers are satisfied with and how they perceive this service quality. 2.3 Service Quality Service quality is a concept that has aroused considerable interest and debate in the research literature because of the difficulties in both defining it and measuring it with no overall consensus emerging on either (Wisniewski, 2001). Service quality was initiated in the 1980s as the worldwide trend when marketers realised that only a quality product could guarantee and maintain competitive advantage (Boshoff & Gray 2004). The definition of quality may vary from person to person and from situation to situation. Parasuraman (1988) define service quality as the degree and direction of discrepancy between the consumer‟s perceptions and expectations, or the extent to which a service meets or exceeds customer expectations. Mevvis & Janiszewski, (2002 as cited in .Bahin & Nantel 2000) states that the quality of a service depends on that service consistently conforming to the customers‟ expectations In service marketing literature, service quality is generally defined as the overall assessment of a service by the customers, (Eshghi, A., Roy, S. K., & Ganguli, S. 2008) or the extent to which a service meets customer‟s needs or expectations, (Asubonteng, P., McCleary, K.J. & Swan, J.E.,1996). Parasuraman, A., Zeithaml, V. A., & Berry, L. L. University of Ghana http://ugspace.ug.edu.gh 17 1985, (1985) define service quality as “The discrepancy between consumers‟ perceptions of services offered by a particular firm and their expectations about firms offering such services”. If what is perceived is below expectation, consumer judges quality as low and if what is perceived meets or exceeds expectation then consumer sees quality to be high. Again service quality is considered as the difference between customer expectations of service and perceived service. If expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs (Parasuraman et al., 1985; Lewis and Mitchell, 1990). Quality of a service is also subjectively perceived by customers during the interactions with a firm (Grönroos, 2000). Parasuraman et al. (1988) again defined service quality as the consumers‟ judgment about a firm‟s overall excellence or superiority. What happens and is perceived by customers in the interaction process will obviously have critical impacts on customers‟ evaluation of service quality (Grönroos, 2000). The definitions of service quality also varies only in wording but typically involve determining whether perceived service delivery meets, exceeds or fails to meet customer expectations (Cronin & Taylor, 1992; Parasuraman, Zeithaml,& Berry 1993). Service quality is commonly noted as a critical prerequisite and determinant of competitiveness for establishing and sustaining satisfying relationships with customers. Previous studies suggest that service quality is an important indicator of customer satisfaction (Spreng & Machoy, 1996). Lewis and Mitchell, 1990; Asubonteng et al., 1996; define service quality as the extent to which a service meets customers‟ needs or expectations. Attention to service quality can make an organisation different from other organisations and gain a University of Ghana http://ugspace.ug.edu.gh 18 lasting competitive advantage (Boshoff & Gray, 2004). It has become a distinct and important aspect of the product and service offering (Caruana, 2002). According to Brady & Robertson (2001) service quality helps to create the necessary competitive advantage by being an effective differentiating factor. Again, according to Parasuraman et al. (1985), service quality can be defined as the consumer‟s comparison between service expectation and service performance. They proposed service quality to be a function of pre-purchase customer expectations, perceived process quality, and perceived output quality. Based on their statement in 1985, they then suggested that service quality is determined by differences between customers‟ expectation of the service and their perceptions of the service experience. Parasuraman et al (1988) define service quality as the degree and direction of discrepancy between the consumer‟s perceptions and expectations, or the extent to which a service meets or exceeds customer expectations. Mevvis & Janiszewski, (2002 as cited in Arnold & Price 1997)states that the quality of a service depends on that service consistently conforming to customers‟ expectations. Parasuraman, Zeithaml,& Berry (1988, 1990) projected a service quality model that identified perceived service quality into five dimensions: tangibility, reliability, responsiveness, assurance, and empathy. There is general agreement that the aforementioned constructs are important aspects of service quality, but many scholars have been skeptical about whether these dimensions are applicable when evaluating service quality in other service industries (Cronin & Taylor, 1992). Firms with high service quality pose a challenge to other firms. According to Douglas & Connor, (2003,), Parasuraman et al., (1985,), and Ladhari, (2009), the intangible elements of a service (inseparability, heterogeneity and perishability) are the critical determinants influencing University of Ghana http://ugspace.ug.edu.gh 19 service quality perceived by a consumer. This means that a service must be well defined by the provider in terms of its characteristics in order to understand how service quality is perceived by consumers. According to Johns, (1999,), a service could mean an industry, a performance, an output, an offering or a process and it is defined differently in various service industries. The differences in service industries are based on the characteristics of service which include; intangibility, heterogeneity, perish ability and inseparability. Intangibility means there is no physical product, nothing to be touched, tasted, smelled or heard before being purchased and this therefore means that it is difficult for consumer to understand the nature of what they receive. An example would be a telecommunication company offering mobile services to consumers; here the consumer makes just calls and does not receive any physical product. Always there exists an important question: why should service quality be measured? Measurement allows for comparison before and after changes, for the location of quality related problems and for the establishment of clear standards for service delivery. Edvardsen et al. (1994 as cited in Johns 1999) state that, in their experience, the starting point in developing quality in services is through analysis and measurement. Service quality can be measured in terms of customer perception, customer expectation, customer satisfaction, and customer attitude (Sachdev & Verma 2004). Ekinci (2003 as cited in Bohia & Nantel 2000) indicates that the evaluation of service quality leads to customer satisfaction. Gronroos, (1982), developed the first model to measure service quality. He identified three components of service quality; the technical quality is concerned with what is delivered (outcome), the functional quality deals with the process of service delivery (how it is delivered) and the image quality which is identified as corporate image University of Ghana http://ugspace.ug.edu.gh 20 of company resulting from both technical and functional qualities of service components. The SERVPERF model developed by Cronin & Taylor, (1992), uses the performance approach method which measures service quality based on customer‟s overall feeling towards a service. Teas & Willso (1988) developed the Evaluated Performance model which measures the gap between perceived performance and the ideal amount of a dimension of service quality, rather than the customer‟s expectation. This was to solve some of the criticism of some previous models Gronroos, (1984); Parasuraman et al., (1985, 1988). Parasuraman et al., (1985), also developed a model of service quality after carrying out a study on four service settings: retail banking, credit card services, repair and maintenance of electrical appliances, and long-distance telephone services. The SERVQUAL model represents service quality as the discrepancy between a customer‟s expectations of service offering and the customer‟s perceptions of the service received Parasuraman et al., (1985). In the context of telecommunication industry, the researcher is not only interested in learning more about the factors associated with service quality perceived by customers and how service quality is measured but also provide a direction for improvement of service quality in order to bring customer satisfaction. Organizations can achieve business excellence through quality control in services (Shahin, 2010). Customers are requiring and demanding better services and the goals of all Telecoms must be to make the customers feel special. This will lead to customer‟s perceptions exceeding their expectations and greater customer satisfaction. According to (Saravanan & Rao, 2007), the need for survival and growth in ever increasing competitive markets are the main critical factors in the search for providing University of Ghana http://ugspace.ug.edu.gh 21 superior service quality and achieving customer satisfaction. Researchers have proven that providing good service quality to customers retains them, attracts new ones, enhances corporate image, positive word-of-mouth recommendation and above all guarantees survival and profitability, Negi, (2009); Ladhari, (2009). Organizations that consistently satisfy their customers enjoy higher retention levels and greater profitability due to increased customers‟ loyalty, Wicks & Roethlein, (2009). This is why it is vital to keep consumers satisfied and this can be done in different ways and one way is by trying to know their expectations and perceptions of services offered by service providers. In this way, service quality could be assessed and thereby evaluating customer satisfaction can be done. 2.4 Customers’ Expectations compared to Perceptions Gronroos (1982); Parasuraman et al., (1985) have proposed that customer‟s perception of service quality is based on the comparison of their expectations (what they feel service providers should offer) with their perceptions of the performance of the service provider. Parasuraman et al., (1988,) point out that expectation is viewed differently in both satisfaction literature and service quality literature. In satisfaction literature, expectations are considered as „predictions‟ by customers about what is likely to happen during a particular transaction while in service quality literature, they are viewed as desires or wants of consumers, that is, what they feels a service provider „should‟ offer rather than „would‟ offer. For this study, the researcher will define expectations as desires or wants of customers because this allows her to know exactly what service providers offer and this is based on University of Ghana http://ugspace.ug.edu.gh 22 past experience and information received (Douglas & Connor, 2003,). It is important to understand and measure customer‟s expectations in order to identify any gaps in delivering services with quality that could ensure satisfaction, ( Negi, 2009). Perceptions of customers are based solely on what they receive from the service encounter (Douglas & Connor, 2003,). This study is mainly based on this discrepancy of expected service and perceived service from the customer‟s perspective. This is in order to obtain a better knowledge of how customers perceive service quality in the telecommunication industry. The researcher is not focusing on the 1st four gaps because they are mainly focused on the company‟s perspective even though they have an impact on the way customers perceive service quality in the telecommunication industry and thus help in closing the gap which arises from the difference between customer‟s expectation and perception of service quality dimensions. Parasuraman et al., (1985,) identified 10 determinants used in evaluating service quality; reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding the customer, and tangibles. Most of these determinants of service quality require the consumer to have had some experience in order to evaluate their level of service quality ranging from ideal quality to completely unacceptable quality. They further linked service quality to satisfaction by pointing out that when expected service is greater than perceive service, perceived quality is less than satisfactory and will be totally unacceptable quality; when expected service equals perceived service, perceived quality is satisfactory; when expected service is less than perceived service, perceived quality is more than satisfactory and will tend towards ideal quality (Parasuraman et al., 1985,). University of Ghana http://ugspace.ug.edu.gh 23 2.5 Customer Satisfaction Customer satisfaction (CS) is a term that has received considerable attention and interest among scholars and practitioners perhaps because of its importance as a key element of business strategy, and goal for all business activities especially in today‟s competitive market (Anderson, Fornell, & Lehmann, 1994; Gro¨nroos, 1984; Lovelock & Wirtz, 2007). This is because several researchers have looked at the concept from different perspectives. According to Rust & Oliver (1994 as cited in Negi 2009) suggest that customer satisfaction or dissatisfaction a “cognitive or affective reaction” emerge as a response to a single or prolonged set of service encounters. In the words of Giese & Cote (2000), consumer satisfaction comprises three basic components including the type of response (cognitive, affective or conative); the centre of interest or the subject on which the response is focused; and the moment in time at which the evaluation is made. But Anderson & Fornell (1994) are of the view that the literature is not very clear about the distinction between quality and satisfaction. Satisfaction is a person‟s feeling of pleasure or disappointment resulting from comparing a product‟s performance (outcome) in relation to his or her expectation (Kotler & Keller, 2006). Satisfaction is a „„psychological concept that involves the feeling of wellbeing and pleasure that results from obtaining what one hopes for and expects from an appealing product and/or service‟‟ (WTO, 1985). Satisfaction can be understood as a person‟s approach towards diverse aspects of his or her life – for example, the persons Job (Judge et al., 2001) or a service received from a company(Wilkie, 1990).Satisfaction can be conceptualized as either an emotional or cognitive response. Satisfaction is viewed as a judgment that depends on cognitive frames of references. These frames of references are culturally unique. There is an alternative affective view that holds that satisfaction draws University of Ghana http://ugspace.ug.edu.gh 24 on hedonic experiences. Satisfaction is a psychological term largely understood to define gratification one feels when ones desire, need or expectations are fulfilled. A clear understanding of satisfaction is (a) for conceptualization and comprehension purpose and (b) for the purpose of understanding. Various theorists attempted to clarify the concept of satisfaction. Day (1980) said that "while everyone knows what satisfaction means, it clearly does not mean the same thing to everyone”. Westbrook & Oliver (1991) defined Satisfaction as “a post choice evaluative judgment concerning a specific selection”. Geise & Cote (2000) identified three general components of satisfaction. They opined that 1. Satisfaction is a response (emotional or cognitive); 2. The response pertains to a particular focus (expectations, product, consumption experience, etc.); and 3. The response occurs at a particular time (after consumption, after choice, based on accumulated experience, etc) there is no single concept of satisfaction. There has been a debate on satisfaction, whether satisfaction is a process or an outcome. Several researchers argued that satisfaction is an evaluation process (e.g. Fornell 1992 and Hunt 197). Others considered satisfaction as a response to a process (Howard & Sheth, 1969; Oliver 1981). Howard & Sheth (1969 as cited in Day 1984) considered satisfaction as a Buyers cognitive state while Westbrook & Reilly (1983) referred to it as an emotional response. The state of satisfaction is dependent on both psychological and physical variables. Satisfaction is viewed as a latent construct that is not observed directly and can only be estimated through indicators. Customer satisfaction (CS) is “as an attitude like judgment following a purchase act or a series of consumer product interactions” Yi (1990) cited in Lovelock & Wirtz 2007). University of Ghana http://ugspace.ug.edu.gh 25 Customer satisfaction (CS) is „„a consumer‟s post purchase evaluation and affective response to the overall product or service experience‟‟ (Oliver, 1992). „„Satisfaction is merely the result of things not going wrong; satisfying the needs and desires of consumers.‟‟(Besterfield 1994); Customer satisfaction (CS) is „„an experience-based assessment made by the customer of how far his own expectations about the individual characteristics or the overall functionality of the services obtained from the provider have been fulfilled‟‟ (Bruhn, 2003 as cited in Gray 2004). Admittedly, satisfaction is more complex to define to accurately fit every context and measure. In the words of Oliver (1997), “everyone knows what [satisfaction] is until asked to give a definition. Then it seems, nobody knows”. From marketing perspectives, customer satisfaction has multi-dimensionality. The object of customer satisfaction may be varied and can be related to different dimensions of multiple experiences with product/service provider (Surenshchandar et al. 2002 cited in Satari, 2007). Customer satisfaction is also conceptualized as been transaction-specific meaning it is based on the customer‟s experience on a particular service encounter, (Cronin & Taylor, 1992) and also some think customer satisfaction is cumulative based on the overall evaluation of service experience (Jones & Suh, 2000 as cited in Hausknecht 1990). These highlight the fact that customer satisfaction is based on experience with service provider and also the outcome of service. Customer satisfaction is considered an attitude, Yi, (1990). In the case of telecommunication, there is some relationship between the customer and the service provider and customer satisfaction will be based on the evaluation of several interactions between both parties. Therefore the researcher will consider satisfaction as a part of overall customer attitudes towards the service provider that makes up a number of measures (Levesque & McDougall, 1996). University of Ghana http://ugspace.ug.edu.gh 26 Satisfaction is a “post consumption” experience which compares perceived quality with expected quality, whereas service quality refers to a global evaluation of a firm's service delivery system (Anderson & Fornell, 1994; Parasuraman et al., 1985). Giese & Cote, (2000,) clearly state that there is no generic definition of customer satisfaction and after carrying a study on various definitions on satisfaction they came up with the following definition, “customer satisfaction is identified by a response (cognitive or affective) that pertains to a particular focus (i.e. a purchase experience and/or the associated product) and occurs at a certain time (i.e. post-purchase, post consumption)”. From this definition, it is clear that the customer‟s satisfaction is determined from his/her service experience in using the network and this is supported by Cicerone et al., (2009,as cited in Agyapong 2010) and Suresh hander et al., (2002,) who believe customers‟ level of satisfaction is determined by their cumulative experience at all of their point of contact with the industry. According to Besterfield (1994), Barsky (1995) and Kanji and Moura (2002), customer satisfaction is a complex construct as it has been approached differently. Satisfaction can be defined as the extent of the emotional reaction from a service experience (Oliver, 1980). Buchanan (1985) said “the positive feelings of contentment results from the satisfaction of felt or unfelt need of the individual”. It can also be defined as an evaluative summary of (direct) consumption experience, based on the discrepancy between prior expectation and the actual performance perceived after consumption (Yi,1990). Lin and Chen (2006 as cited in Day 1984) explored that product knowledge and product involvement all has a significantly positive effect on consumer‟s purchase decision. Meanwhile product evaluations based on direct experience are strong predictors of behavior (Fazio & Zanna, 1978, 1981). Satisfaction is based on direct past experience; it is likely to be accessible and to affect behavioral intentions independent of other considerations. However, little empirical evidence had shown that customer satisfaction University of Ghana http://ugspace.ug.edu.gh 27 actually translates into loyalty (Jones & Sasser 1995).Oliver (1997, 1999) reviewed satisfaction as pleasurable fulfillment which is sensed by customers in the consumption. It means that “the consumer senses that consumption fulfills some need, desire, goal, or so forth and that this fulfillment is pleasurable” (Oliver, 1999,). In relationship marketing literatures, customer satisfaction has also been thought to be a key performance indicator for evaluating the quality of a relationship between service provider and customers. Customer‟s satisfaction holds the potential for increasing an organization‟s customer base, increase the use of more volatile customer mix and increase the firm‟s reputation (Fornell, 1992, Levesque & McDaugall, 1996). One path to achieving customers‟ satisfaction is through customer service. Customer service varies by product, industry and customer. It however, assume important dimension in service delivery and sales of product. This is because service firm such as Telecommunication firms, have no inventory of finished goods to buffer production from random demand variability (Dutta and Roy, 2006). Nevertheless, it is a demand for a corporation‟s survival, profitability and growth that service firms hold their own in competition. Furthermore satisfaction can be related to attribute-specific and overall performance. It is attribute-specific where it relates to a specific product or service (Cronin & Taylor, 1992). For example, with mobile telecommunication, satisfaction can be related to a specific attribute such as: Multimedia Messaging Service, Mobile TV or Mobile Internet Service or satisfaction with the voice quality, picture quality, speed, and the like. On the other hand, customer satisfaction can be related to the overall performance of a product/service or the overall performance of an organisation‟s products/services (Cronin & Taylor, 1992). According to Wicks & Roethlein, (2009,), customer satisfaction can be formed through an affective evaluation process and this affective evaluation is done following the purchase University of Ghana http://ugspace.ug.edu.gh 28 experience by the consumer. Organisations that consistently satisfy their customers enjoy higher retention levels and greater profitability due to increased customers‟ loyalty, Wicks & Roethlein, (2009,). It has however been identified that human needs, quality of services and products, the user friendly nature of product and services, and comfort assurance (Bailey et al., 1983,); (Karen, 2001,) are some of the important determinants of customer satisfaction. Even though different customers will require different levels and combinations of these variables, they generally are important factors that affect customer satisfaction. Matzler et al., (2002 as cited in Day 1984), went a step forward to classify factors that affect customers‟ satisfaction into three factor structures; 1. Basic factors: these are the minimum requirements that are required in a product to prevent the customer from being dissatisfied. They do not necessarily cause satisfaction but lead to dissatisfaction if absent. These are those factors that lead to the fulfillment of the basic requirement for which the product is produced. These constitute the basic attributes of the product or service. They thus have a low impact on satisfaction even though they are a prerequisite for satisfaction. 2. Performance factors: these are the factors that lead to satisfaction if fulfilled and can lead to dissatisfaction if not fulfilled. These include reliability and friendliness. 3. Excitement factors: these are factors that increase customers‟ satisfaction if fulfilled but does not cause dissatisfaction if not fulfilled which include project management. This is why it is vital to keep consumers satisfied and this can be done in different ways and one way is by trying to know their expectations and perceptions of services offered by service providers. In this way, service quality could be assessed and thereby evaluating customer satisfaction. In this study, I will use customers to evaluate service quality by University of Ghana http://ugspace.ug.edu.gh 29 considering several important quality attributes in the telecommunication industry and I think firms must take improvement actions on the attributes that have a lower satisfaction level. This means customer satisfaction will be considered on specific dimensions of service quality in order to identify which aspects customers are satisfied with. 2.6 Relationship between Service Quality and Customer Satisfaction According to Sureshchandar et al., (2002,), customer satisfaction should be seen as a multi dimensional construct just as service quality meaning it can occur at multi levels in an organisation and that it should be operationalized along the same factors on which service quality is operationalized. Parasuraman et al., (1985) suggested that when perceived service quality is high, then it will lead to increase in customer satisfaction. He supports that fact by stating that service quality leads to customer satisfaction and this is in line with Saravana & Rao, (2007,) and Lee et al., (2000,) who acknowledge that customer satisfaction is based upon the level of service quality provided by the service provider. According to Negi, (2009,), the idea of linking service quality and customer satisfaction has existed for a long time. He carried a study to investigate the relevance of customer- perceived service quality in determining customer overall satisfaction in the context of mobile services (telecommunication) and he found out that reliability and network quality (an additional factor) are the key factors in evaluating overall service quality but also highlighted that tangibles, empathy and assurance should not be neglected when evaluating perceived service quality and customer satisfaction. This study was based only on a specific service industry (mobile service) and i think it is very important to identify and evaluate those factors which contribute significantly to determination of customer- perceived service quality and overall satisfaction. University of Ghana http://ugspace.ug.edu.gh 30 Fen & Lian, (2005,) also found that both service quality and customer satisfaction have a positive effect on customer‟s re-patronage intentions showing that both service quality and customer satisfaction have a crucial role to play in the success and survival of any business in the competitive market. This study proved a close link between service quality and customer satisfaction. Furthermore, Su et al., (2002 as cited in Agyapong 2010,) carried a study to find out the link between service quality and customer satisfaction, from their study, they came up with the conclusion that, there exist a great dependency between both constructs and that an increase in one is likely to lead to an increase in another. Also, they pointed out that service quality is more abstract than customer satisfaction because, customer satisfaction reflects the customer‟s feelings about many encounters and experiences with service firm while service quality may be affected by perceptions of value (benefit relative to cost) or by the experiences of others that may not be as good. A study carried out by Magi & Julander, (2009,), among grocery stores in Sweden showed a positive relationship between perceived service quality, customer satisfaction and customer loyalty. It was proven that customer satisfaction results from high perceived service quality and this makes the customer loyal. But is there a consensus among researchers, as they argue over whether high degree of service quality always brings about satisfaction. The work of Bitner et al (1990) proposed an alternative method and defined service quality as the customer‟s overall impression of the relative inferiority/superiority of a firm and its service offerings. University of Ghana http://ugspace.ug.edu.gh 31 Antreas (1997) found that service provider perceptions about customer satisfaction are a function of perceived service quality. According to Anderson & Sullivan (1993), there are strong linkages between service quality dimensions (e.g. courteous service providers) and overall customer satisfaction. However, little empirical research has examined the importance of service quality dimensions in determining customer satisfaction (Fisk, Brown & Bitner, 1993). While the number of underlying dimensions has been shown to vary with the service setting, it appears reasonable to suggest that the service core and relational dimensions will emerge in nearly all cases as they form the basis for the service. One of the most critical elements in a service market such as the advertising industry is the development of client relationships. The complexity of the products and services and the long-term nature of business relationships in the advertising industry mean that effective and satisfactory business relationships are of the greatest importance in the marketing of advertising services. According to the principles of relationship marketing, successful business relationships enhance client satisfaction and thus enhance the performance of firms. In the past, relationship satisfaction has been conceptualised as a prerequisite for relationship quality. Crosby & Stevens (1987) identified three levels of relationship satisfaction and these are interactions with personnel, core service and the organisation. In their study of Insurance customers, Crosby & Stevens (1987) found that all three levels contribute to overall satisfaction with the relationship. In a business context, relationship satisfaction has been defined as a positive affective state resulting from a firm‟s appraisal of all aspects of its working relationship with another firm (Anderson & Narus, 1990; Ganesan, 1994; Dwyer et al., 1987). Satisfaction with the relationship is important, but University of Ghana http://ugspace.ug.edu.gh 32 satisfaction per se does not automatically lead to repurchase (Reichheld & Aspinall, 1993). Some studies have investigated the relationship between service quality and consumer satisfaction, and although they have highlighted the antecedent role of consumer satisfaction in perceptions of service quality (Bolton & Drew, 1991; Boulding et al., 1993), most findings actually support a reverse cause-and-effect relationship (Dick & Basu, 1994). Mittal & Lassar (1998) found that there was a relationship between service quality and customer satisfaction. Elnan & Andersen (1999) proved a positive relationship between service quality and customer satisfaction in the bus industry in Norway. A study by Ojo (2010) in the telecommunication industry showed that a positive relationship exists between the service quality dimensions (empathy, reliability, responsiveness, tangibility, assurance) and customer satisfaction. The same relationship is demonstrated by Cook (2008) and Oyeniyi & Abiodun (2008). Fornell et al. (1996) argued that perceived quality, which had been explained as the served market‟s evaluation of recent consumption experienced, would have a direct and positive impact on overall customer satisfaction. In addition, Gallarza & Saura (2006 as cited in Day 1984) confirmed a clear pattern in which satisfaction is the behavioral consequence of quality. 2.7 Conceptual Framework Various models have been developed to measure service quality following these approaches either attitude-based measures or disconfirmation models. According to (Shahin,), it is very important to measure service quality because it allows for comparisons before and after changes, identifies quality related problems, and helps in developing clear standards for service delivery. University of Ghana http://ugspace.ug.edu.gh 33 The SERVPERF model developed by Cronin & Taylor, (1992), uses the performance approach method which measures service quality based on customer‟s overall feeling towards service. This model is good to measure service quality but does not provide information on how customers will prefer service to be in order for service providers to make improvements. Teas, (1993), developed the Evaluated Performance model which measures the gap between perceived performance and the ideal amount of a dimension of service quality, rather than the customer‟s expectation. This was to solve some of the criticism of some previous models Gronroos, (1984); Parasuraman et al., (1985, 1988). Parasuraman et al., (1985), developed a model of service quality after carrying out a study on four service settings: retail banking, credit card services, repair and maintenance of electrical appliances, and long-distance telephone services. The SERVQUAL model represents service quality as the discrepancy between a customer‟s expectations of service offering and the customer‟s perceptions of the service received Parasuraman et al., (1985). This makes it an attitude measure. What this model strives to measure exactly is the consumer perception of the service quality which depends on the size of the gap between expected service and perceived service which in turn, depends on the gaps under the control of the service provider such as delivery of service, marketing, (Parasuraman et al., 1985). This measurement of service quality is based on both on how consumer evaluates the service delivery process and the outcome of the service, (Parasuraman et al., 1985,). Buttle, (1996,) makes mentions of several researchers that have used the SERVQUAL model in various industries (retailing, restaurants, banking, telecommunication industry, airline catering, local government, hotels, hospitals, and education). He further suggests University of Ghana http://ugspace.ug.edu.gh 34 that service quality has become an important topic because of its apparent relationship to costs, profitability, customer satisfaction, customer retention and positive word of mouth and it is widely considered as a driver of corporate marketing and financial performance. A good service quality is also considered as one which meets or exceeds consumer‟s expectation of the service (Parasuraman et al., 1985,).The SERVQUAL model was made of ten dimensions of service quality when created; tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding the customer, and access, Parasuraman et al., (1985,) but later on these dimensions were reduced to five because some dimensions were overlapping (communication, credibility, security, competence, courtesy, understanding customers and access) and they included, Tangibles- physical facilities, equipments, and staff appearance. Reliability- ability to perform the promised service dependably and accurately. Responsiveness- willingness to help customers and provide prompt service. Assurance- knowledge and courtesy of employees and their ability to inspire trust and confidence. Empathy- caring, individual attention the firm provides its customers (Parasuraman et al., 1988,). These dimensions mainly focus on the human aspects of service delivery (responsiveness, reliability, assurance, and empathy) and the tangibles of service. In this study, the researcher is more interested in service quality and customer satisfaction by using the SERVQUAL model to assess these responses in telecommunication industry, TIGO to be precise. The framework for this study is therefore, adopted and from the modified empirical study by Dehghan, (2006 as cited in Agyapong 2010) depicted in Figure 1. The University of Ghana http://ugspace.ug.edu.gh 35 figure illustrates the relationship between service quality and customer satisfaction and the characteristics or variables that determines each of them. According to a study carried out by Ladhari, (2009), it is recommended that the SERVQUAL model is a good scale to use when measuring service quality in various specific industries but that it is appropriate to choose the most important dimensions of this model that fit to that particular service being measured in order to assure reliable and valid results. In this regard, we will use this model because it takes into account customer‟s expectation of a service as well as perceptions of the service which is best way to measure service quality in service sector (Shahin, 2005,). The framework indicates that perceived quality is considered an antecedent of customer satisfaction (Woodside et al., 1989; Reidenbach & Sandifer-Smallwood, 1990; Cronin &Taylor, 1992; Fornell, 1992; Anderson & Sullivan, 1993; Gotlieb et al., 1994; Spreng & Mackoy, 1996). It indicates that the quality of service measured by the SERVQUAL variables may lead to customer satisfaction. A vast number of specific constructs have been used in conceptual discussions and empirical examinations of customer satisfaction, yet they seem to have at least one thing in common (at a very high level of aggregation): they refer to the customer‟s relationship over time toward one specific object (a vendor, a brand, a service supplier, etc.) (Soderlund, 2005). In addition, Mittal & Lassar (1998) found that there was a relationship between service quality and customer satisfaction. Elnan & Andersen (1999) proved a positive relationship between service quality and customer satisfaction in the bus industry in Norway. A recent study by Ojo (2010) in the telecommunication industry showed that a positive relationship University of Ghana http://ugspace.ug.edu.gh 36 exists between service quality and customer satisfaction. The same relationship is demonstrated by Cook (2008) and Oyeniyi & Abiodun (2008). Fornell et al (1996) argued that perceived quality, which had been explained as the served market‟s evaluation of recent consumption experienced, would have a direct and positive impact on overall customer satisfaction. In their development of the American Customer Satisfaction Index (ACSI), they concluded that overall customer satisfaction, especially for ASCI, has three antecedents, which are: perceived service quality, perceived value and customer expectation. Figure 1. Relationship between service quality and customer satisfaction Source: Adopted from Dehghan, (2006) SERVICE QUALITY Tangibility Reliability Empathy Assurance Responsiveness Courtesy Communication Security CUSTOMER SATISFACTION Reluctant to switch Fewer complaints First choice Quick access to service provider University of Ghana http://ugspace.ug.edu.gh 37 CHAPTER THREE CONTEXT OF THE STUDY 3.0 Introduction This chapter reviews articles, magazines as well as internet publications on the Ghanaian telecommunication industry. It begins with a brief historical background to the telecommunication industry. Subsequent sections include background of telecommunication, their services in Ghana, their subscriber base and a brief about Millicom Ghana limited (TIGO) 3.1History of Telecommunication Telecommunication Defined Telecommunication refers to the specific services that support the exchange of information over significant distances by electronic means. It includes the activities of providing telecommunications and related service activities (i.e. transmitting voice, data, text, sound and video). The transmission facilities that carry out these activities may be based on a single technology or a combination of technologies (International Telecommunication Union, 2010). Telecommunication is also communication at a distance by technological means, particularly through electrical signals or electromagnetic waves. The term telecommunications was first used for wired telephony. Today, telecommunications are one of the most important of the contemporary ICTs. They include wired and wireless telephony; different mobile services, such as cellular telephones and paging; voice and data transmission; and Integrated Services Digital Networks (ISDN), which provide a very high quality of voice as well as high data communication rates. Early telecommunication technologies included visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs. University of Ghana http://ugspace.ug.edu.gh http://en.wikipedia.org/wiki/Communication http://en.wikipedia.org/wiki/Beacon http://en.wikipedia.org/wiki/Smoke_signal http://en.wikipedia.org/wiki/Semaphore_line http://en.wikipedia.org/wiki/Signal_flag http://en.wikipedia.org/wiki/Heliograph 38 Other examples of pre-modern telecommunications include audio messages such as coded drumbeats, lung-blown horns, and loud whistles. Electrical and electromagnetic telecommunication technologies include telegraph, telephone, and teleprinter, networks, radio, microwave transmission, fiber optics, communications satellites and the Internet. 3.2 Overview of the Global Telecommunications Industry The Telecommunication industry has gone through some significant and revolutionary changes in the past two decades the world over. The industry used to be regarded as a natural monopoly before 1980s. In telecommunications industry this was mainly due to the exceptionally large infrastructure requirements of delivering the telephone services right into households. The monopolistic nature of the industry also meant that the provider could charge excessive prices and gain monopoly profits. Therefore, the need for price regulation also became apparent. It thus became commonplace, all over the world, to have a monopoly company owned by the state for providing telecommunication services (Bandaranayake, 2005). Due to the problems in state owned enterprises, an essential need was seen to reform them. A combination of restructuring, privatization and establishing regulatory mechanisms were adopted in reforming these public enterprises (Kessides, 2004). The restructuring started in US in 1980s where the monopolist AT&T was dismantled into a number of smaller companies. Competition was introduced into long distance communications and then to local communications. Further, companies were allowed to operate in both broadcast and communications markets simultaneously. The next country to follow was UK with the opening up of their market which was the monopoly of British Telecom. Many countries in the European Union thereafter followed suit (Bressie et al, 2005). University of Ghana http://ugspace.ug.edu.gh http://en.wikipedia.org/wiki/Drum_(communication) http://en.wikipedia.org/wiki/Electrical_telegraph http://en.wikipedia.org/wiki/Telephone http://en.wikipedia.org/wiki/Teleprinter http://en.wikipedia.org/wiki/Telecommunication_network http://en.wikipedia.org/wiki/Radio http://en.wikipedia.org/wiki/Microwave_transmission http://en.wikipedia.org/wiki/Fiber-optic_communication http://en.wikipedia.org/wiki/Communications_satellite http://en.wikipedia.org/wiki/Internet 39 Globally, the Telecommunication industry has become a vital revenue generation sector. For instance, at the end of 2008, worldwide mobile service revenues stood at USD 912.1 billion; outperforming the respective revenues generated by the pharmaceutical, IT hardware and semi-conductor sectors. While software and services generated more revenue than mobile services, mobile surpassed this sector in terms of year-on-year growth, and was the only industry of the aforementioned five to register double digit growth (of 17.4 percent) in terms of overall revenue between 2007 and 2008. It is estimated that by the end of 2008, worldwide mobile subscribers will total 4.6 billion (International Telecommunication Union, 2010). 3.3 Historical Development and Structure of Ghana’s Telecommunication Industry History of the Industry The telecommunications industry in Ghana has been on a very progressive journey and it has covered a great distance in a very short period of time. Allotey and Felix (2000), trace the history of telecommunication in Ghana to the pre-colonial period when the first telegraph line in Ghana, (then the Gold Coast), was a ten mile link installed in 1881 between the castle of the colony‟s then governor in Cape Coast and Elmina. In 1882, the first publics telegraph line, stretching over a distance of 2.5 miles, was erected between Christiansburg and Accra. The extension of telegraph services to the middle and northern parts of Ghana into the territory of the Ashantis was carried out in 1886. In order to improve communications in the southern part of the country, the first manual telephone exchange (70 lines) was installed in Accra in 1892. Twelve years later, in 1904, a second manual exchange consisting of 13 lines was installed in Cape Coast. University of Ghana http://ugspace.ug.edu.gh 40 Ghana‟s telecommunication infrastructure was laid down and expanded by the colonial administration mainly to facilitate the economic, social, and political administration of the colony. Before the beginning of World War I in 1914, 170 telephone subscribers had been served in Ghana. By 1930, the number of telephone exchange lines in Ghana had grown to 1,560, linking the coastal regions with the Central and Northern parts of the country. In 1953, the first automatic telephone exchange with 200 lines was installed in Accra to replace the manual one erected 63 years earlier. Three years later, in 1956, the trunk lines connecting Accra, Kumasi, Takoradi, and Tamale were upgraded through the installation of a 48- and 12-channel VHF network. The attainment of Independence by Ghana in 1957 brought new dynamism to the country's telecommunications development as a second new automatic exchange in Accra in 19 57. By the end of 1963, over 16,000 telephone subscribers and 32,000 rotary-type telephones were in use in Ghana. The management of Ghana‟s telecommunication institutions was also transferred from Public Works Department to the Post Office following the enactment of the Post Office Ordinance in 1886 and later to the Post and Telecommunications Department until the early 1970s. Satellite communication was not an integral part of the Ghanaian communications system until the early 1980s. The construction of a satellite earth station at Kuntunase in the Eastern region of Ghana in 1981, and related communication reforms of the early 1990s marked a dramatic shift towards greater use of satellite communications technology over the next two decades (Boateng, 2000). According to Osiakwan (2003), Ghana was one of the African countries who in the late 1990‟s were in the forefront of the liberalisation of the telecommunications sector to University of Ghana http://ugspace.ug.edu.gh 41 attract investments and improve competition within the communication sector. Not long ago very few people had private telephones that worked. As recently as 1996, the telephone density of Ghana was 0.26% meaning that there were 2.6 telephone lines for every 1,000 people including 35 payphones in the entire country out of which 32 were located in Accra. This was one of the lowest in Africa. Today there is one phone for every four Ghanaians! This tremendous increase in the teledensity has been a result of the establishment of the National Communications Authority (NCA) in 1997 and the subsequent deregulation of the telecom industry, which brought about the growth of wireless telephony as a result of significant investment by operators. For the consumer, being in touch simply means being able to purchase a mobile handset and subscribing to a wireless service. Deregulation also meant opportunities for ambitious entrepreneurs and large telecom companies to establish operations in Ghana and participate in what was to become the biggest boom in Ghana‟s recent economic history The communications sector was deregulated in 1994 when the government initiated the implementation of the Accelerated Development Programme (ADP) a five year programme for the restructuring of the communication industry. The ADP Programme ended in 2000 with the following achievements: teledensity increasing from 0.34 lines for 1000 inhabitants in 1994 to 1.16 lines in 2000; public phones per 1000 inhabitants increasing from 0.001 in 1994 to 0.16 in 2000; creation of the National Communications Authority (NCA) in 1996; liberalization of the communication sector; and the partial privatization of Ghana Telecom with Government maintaining 70% share. These were achieved primarily through the entrance of new telecommunication companies following the deregulation and privatization of the sector University of Ghana http://ugspace.ug.edu.gh 42 3.4 Brief Background of Milicom Ghana Limited Millicom Ghana Ltd Millicom Ghana Limited, operators of TIGO cellular phone network, is a subsidiary of Millicom International Cellular S.A. (“MIC”) UK/Luxembourg, a leading global operator of cellular telephony services with several investments across the world. TIGO cellular network is one (1) of six (6) mobile voice services providers licensed to operate in Ghana. The company started its operations in Ghana in 1991 and was the first cellular network operator in the country. Millicom Ghana uses the ETAC System, and it had over 22 000 subscribers in 1998 with a market share of above 70 per cent of the mobile market. The company expanded and in 2002 Millicom Ghana introduced its GSM service under the brand name MOBITEL/Buzz GSM. Buzz GSM with its trendy lifestyle image offered very exciting services to its numerous clientele. Mobitel has, over the years, been able to maintain a fast rate of subscriber and revenue growth and a very high quality of service, acclaimed by most users as being second to none. In 2006, TIGO was launched in Ghana to replace the old national brand MOBITEL with a new international brand. Currently TIGO network coverage reaches all the ten regions in Ghana and it is fast expanding to rural areas (www.tigo.com.gh). The brand name was launched in 2006 and the company adopted her vision and mission as follows: Our Vision Our objective is to provide people in emerging markets the freedom to access today's world. To make this happen we create 'A world where mobile services are affordable, accessible and available everywhere and to all'. University of Ghana http://ugspace.ug.edu.gh 43 Our Mission We provide services for people who want to stay in touch, to belong to communities and to be informed and entertained, enabling them to express their emotions and enhance their lives. We deliver the 3 A‟s, Affordability, Accessibility and Availability; providing affordable services, good coverage and ease of purchase and use. We focus on consistently meeting and exceeding customer‟s expectations and developing an inspirational brand. 3.5 Structure of the Telecommunication Market in Ghana The main elements of the current and emerging market structure of the telecommunication industry in Ghana as contained in the National Telecommunication Policy can be captured under five major market segments. 3.5a International Telecommunication Segment The international market segment of Ghana consists of telecommunication facilities and services which carry communications signals across the country‟s international borders. These include licensed gateway operators with official authorisation to maintain physical gateway connections to internal destinations. There are two such licensed gateway operators namely, Ghana Telecom (now Vodafone Ghana) and Westel. Others within this segment include SAT-3 access, Private licensed VSAT systems and unlicensed international bypass services. The latter refer to unauthorised service providers utilising new technologies to connect international voice calls to the local public network, bypassing the gateway facilities and charges of licensed international operators. University of Ghana http://ugspace.ug.edu.gh 44 3.5b Domestic Public Telephone Services This segment of Ghana‟s telecommunication market includes all facilities and services that connect to telephone calls between users within Ghana. This segment consists of fixed wireless networks, wireless mobile networks and Public telephone and tele-centers. 3.5c Dedicated Transmission Network The dedicated transmission network segment of the countries telecommunication market includes all forms of point-point transmission networks which connect to two or more dedicated locations. These are used to provide wholesale capacity for use by other public network operators, for private, closed-user-group communication services or for public signal distribution. 3.5d Internet Services This category consists of services that link end users to the internet and its various applications such as e-mail and web. Internet services do not by themselves involve installation of physical telecommunication networks but typically rely on use of other existing networks, through either dial-up or dedicated connections. 3.5e Broadcasting Systems Operators under this segment of the market include public radio and television stations; operated by publicly-owned statutory bodies, commercial radio and television stations and community radio and television stations. A number of telecom value added providers have emerged with the liberalisation of the telecommunication sector. Notable among them are the Mobile Phone Operators most of which w