Chapter - 3 Literature Review

3.1 Indian Telecom Sector Study

3.2 Brands and Image
3.2.1 Benefits of Strong Brand Image
3.2.2 Benefits to the Customer
3.2.3 Factors Influencing Brand Image
3.3 Brand Image and Company Performance
3.4 Consumer Perception QoS Study
3.4.1 Service Concept
3.4.2 Customer Expectation and Perception towards Service
3.4.3 Basics of Mobile Services
3.4.4 Cellular Mobile Services
3.4.4.1 First Generation: 1G
3.4.4.2 Second Generation: 2G
3.4.4.3 Third generation: 3G
3.4.4.4 GSM & CDMA technology
3.4.5 Service Quality Concept & Quality Parameters
3.4.5.1 Service Quality
3.4.5.2 Measuring the Service Quality
3.4.5.3 Factors & Parameters affecting the quality of Cellular
Mobile Services
3.4.6 Service Quality & Customer Satisfaction
3.4.7 Quality Metrics
3.5 Brand Image & Service Quality
3.6 Perceived Service Quality
3.7 Company Performance Study
3.7.1 ARPU & Market Share (Subscribers)
3.7.1.1 ARPU
3.7.1.2 Subscription Rates in Different Regions
3.7.1.3 Stage of the Subscription
3.8 References

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3.1 Indian Telecom Sector Study

Telecommunications has been recognized the world-over as an important tool for
socio-economic development for a nation. It is one of the prime support services
needed for rapid growth and modernization of various sectors of the economy. It
has become especially important in recent years because of enormous growth of
information technology and its significant potential for the impact on the rest of
the economy. The Telecom Sector, which has the multiplier effect on the
economy, has a vital role to play in economy by way of contributing to the
increased efficiency. The available studies suggest that income of business
entities and households increases by the use of telecom services.

National Telecom Policy (1999) the introduction of the New Telecom Policy in
1999, Indian telecom industry has witnessed exponential growth, especially in
the wireless segment. The industry has evolved as a basic infrastructure on
the similar lines of electricity, roads, water etc.
The overall tele-density has increased from 4.3 in March 2002 to 78.1 in February
2012, wherein the rural areas registered an increase from 1.2 in March 2002 to 38.5
in February 2012, according to a report titled Telecom Sector in India: A Decadal
Profile prepared by the Telecom Regulatory Authority of India (TRAI). Also, the share
of telecommunication services (excluding postal and miscellaneous services), as a
per cent of the total gross domestic product (GDP), has increased from 0.96 in 200001 to 3.78 in 2009 -10. The Government has given estimates that every 10 per cent
increase in access of broadband connectivity boosts the GDP by 1.38 per cent.
International comparisons (among 222 countries) in the same report show that India
has the second largest number of telephone subscribers in the world accounting for
12 per cent of the worlds total telephone subscribers.
Videsh Sanchar Nigam Limited (VSNL) 16th Annual Report (2002) India like many
other countries has adopted a gradual approach to telecom sector reform through
selective privatization and managed competition in different segments of the telecom
sector. India introduced private competition in value-added services in 1992 followed
by opening up of cellular and basic services for local area to competition. Competition

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was also introduced in National Long Distance (NLD) and International Long
Distance (ILD) at the start of the current decade.
World Telecommunication Development Report (2002) explains that network
expression in India was accompanied by an increase in productivity of telecom staff
measured in terms of ratio of number of main lines in operation to total no. of staff.

Indian Telecommunication Statistics (2002) in its study showed the long run
trend in supply and demand of Direct Exchange Lines (DEL). Potential
demand for telecom services is much more than its supply. In eventful decade
of sector reforms, there has been significant growth in supply of DEL.
Economic Survey, Government of India (2002-2003) has mentioned two very
important goals of telecom sector as delivering low-cost telephony to the
largest number of individuals and delivering low cost high speed computer
networking to the largest number of firms.
Adam Braff, Passmore and Simpson (2003) state that telecom service providers
even in United States face a sea of troubles. The outlook for US wireless carriers
is challenging. They can no longer grow by acquiring new customers; in fact, their
new customers are likely to be migrated from other carriers. Indeed, churning
may account for as much as 80% of new customers in 2005.

Dutt and Sundaram (2004) studied that in order to boost communication for
business, new modes of communication are now being introduced in various
cities of the country. Cellular Mobile Phones, Radio Paging, E-mail, Voicemail, Video, Text and Video-Conferencing now operational in many cities, are
a boon to business and industry. Value- added hi-tech services, access to
Internet and Introduction of Integrated Service Digital Network are being
introduced in various places in the country.
A study by Jeanette Carless on and Salvador Arias (2004) wireless substitution is
producing significant traffic migration from wire line to wireless and helping to fuel
fierce price competition, resulting in margin squeezes for both wire line voice tariffs

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in organization for Economic Co-operation and Development Countries have

fallen by an average of three percent per year between 1999 and 2003.
T. V. Ramachandran (2005) analyzed performance of Indian Telecom Industry which is
based on volumes rather than margins. The Indian consumer is extremely price sensitive.
Various socio-demographic factors - high GDP growth, rising income levels, booming
knowledge sector and growing urbanization have contributed towards tremendous growth
of this sector. The instrument that will tie these things together and deliver the mobile
rd

revolution to the masses will be 3 Generation (3G) services.

Rajan Bharti Mittal (2005) explains the paradigm shift in the way people
communicate. There are over 1.5 billion mobile phone users in the world today, more
than three times the number of PCOs. India today has the sixth largest telecom
network in the world up from 14th in 1995, and second largest among the emerging
economies. It is also the worlds 12th biggest market with a large pie of $ 6.4 billion.
The telecom revolution is propelling the growth of India as an economic powerhouse
while bridging the developed and the developing economics.

ASEAN India Synergy Sectors (2005) point out that high quality of
telecommunication infrastructure is the pillar of growth for information
technology (IT) and IT enabled services. Keeping this in view, the focus of
telecom policy is vision of world class telecommunication services at
reasonable rates. Provision of telecom services in rural areas would be
another thrust area to attain the goal of accelerated economic development
and social change. Convergence of services is a major new emerging area.
In overview in Indian infrastructure Report (2005) explains Indias rapidly expanding
telecom sector is continuing to witness stiff competition. This has resulted in lower tariffs
and better quality of services. Various telecom services-basic, mobile, internet, national
long distance and international long distance have seen tremendous growth in year 2005
and this growth trend promises to continue electronics and home appliances businesses
each of which are expected to be $ 2.5 bn in revenues by that year. So, driving forces for
manufacturing of handsets by giants in India include-sheer size of

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India market, its frantic growth rates and above all the fact that its conforms in
global standards.
Marine and Blanchard (2005) identifies the reasons for the unexpected boom in
mobile networks. According to them, cell phones, based on Global System for
Mobile Communication (GSM) standard require less investment as compared to
fixed lines. Besides this, a wireless infrastructure has more mobility, sharing of
usage, rapid profitability. Besides this, usage of prepaid cards is the extent of
90% simplifies management of customer base. Moreover, it is suitable to peoples
way of life-rural, urban, and sub-urban subscribers.
Illustrating the lead achieved by Gujarat. According to Business and Economy
(2005) the catalyst for Indian mobile operators in the future will undoubtedly be
increased marketing and advertisement expenditure, along with better deals for
mobile phone users like the previously mentioned full talk time Rs. 10 recharge
card, will go a long way in not only retaining customers but also acquiring the vast
market of lowered customers who are extremely sticky about value for money
and have extremely low loyalties and almost non-existent switching costs.

Marketing Whitebook (2005) explains with support of detailed data that bigger
players are close to 20% of the market each. In CDMA market, it is Reliance
Infocom and Tata Teleservices are dominating the scene whereas Airtel is lead
in GSM operators. Between 2003 and 2004, the total subscriber base of the
private GSM operators doubled. It rose from 12.6 million subscribers at the
end of March 2003 to 26.1 million by the end of March 2004. And yet that
100% growth rate notwithstanding, total industry revenue for 2003-04 was
around Rs. 8308 crores. Compared to Rs. 6400 crores that industry grossed
in 2002-2003, that is an increase of 30%.
According Economic Times (2005) Indian mobile phone market is set to surge
ahead since urban India has a teledensity of 30 whereas rural India has a
teledensity of 1.74. It indicates that the market is on ascent, with more than
85000 villages yet is to come under tele-connectivity.
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According to a paper released by the Associated Chambers of Commerce and

Industry of India (2005), it is stated that 30% of the new mobile subscribers added by
the operators worldwide will come from India by 2009. The 10% of the third
generation (3G) subscribers will be from India by 2011, Indian handset segment
could be between US $ 13 billion and US $ 15 billion by 2016.It offers a great
opportunity for equipment vendors to make India a manufacturing hub. Indian
infrastructure capital expenditure on cellular equipment will be between 10 to 20% of
the investment that will be made by international operators by 2015. The other
proposals included setting up of hardware manufacturing cluster parks, conforming to
global standards and fiscal incentives for telecom manufacturing among others.
Virat Bahri (2006) explains the viewpoint of Sam Pitroda the Chairman of Worldtel
that identifies opportunities for investments in telecommunications. He analyses that
there is an increasing role for telecom in e-governance in India. According to him,
technology can be leveraged to take Indias development to next level.

Narinder K Chhiber ( 2008) the mobile telecommunication technology is evolving

rapidly in the world as more people demand mobile services with longer
bandwidth and new innovative services like connectivity anywhere, anytime for
feature like T.V., Multimedia, Interoperability and seamless connectivity with all
types of protocols and standards, while the 3G services are yet to fully come up.
Serious discussion on 4G has started .WLAN hot spot have made inroads along
with 3G to offer an alternative form of mobile access.
Uehara (1990); King (1990); Glynn (1992); Mutoh (1994) emphasized that technological
changes in the telecom and computers have radically changed the business scenario. In
turn, the new demands of business have spurred many telecom based technological
innovations. In order to exploit these innovations for competing in global markets,
business community has been putting pressures on governments to revise the policy,
regulation and structure of the telecom sector. Several countries across the world have
responded by restructuring the state controlled telecom provider, increasing private
participation and deregulating service provisions.

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Business Today (1992) pointed out that due to lack of technical and financial
resources especially foreign exchange, the DOT generally lagged behind in its
level of technology. India indigenization program in the switching segment carried
out by C-DOT was successful in the introduction of rural exchanges designed
especially for Indian conditions characterized by dust, heat and humidity.
According to Economic Commission for Europe (2000) this transition of the
telecommunication area is mainly technology driven. The borderline between
computers and electronics, on the one hand, and telecommunications, on the other,
is disappearing. This convergence of technologies has led to the acceleration of the
innovation process, which is constantly bringing forward new products and services.
Besides expanding the market potential, this innovation process has also given rise
to major changes in industry and the institutional structure.
E Pedersen and Methlie (2002) studied the technology aspect and explained a
comparative view. According to them, a comparison of the slow adoption of WAP services
in Europe with the successful adoption of comparable I-mode services in Japan and
technologically simple SMS based services in Scandinavian suggest that aggregate and
technology based models are insufficient to explain the mobile service. Thus,
technological models of the supply side need to be supplemented with the views and
impact of perceptions from the demand side of the mobile commerce end user.
World

Telecommunication

Development

Report

(2002)

technologies

of

mobile

telecommunications and internet are going to set the contours of further technological
progress in the current decade. The most recently initiatives aims at convergence of
voice and data received from multiple sources both web based and real time video
streams in mobile handsets and calling cards have virtual presence possible almost
everywhere overcoming the barriers of distance, topography and remoteness.

Prithipal Singh (2004) with the convergence of technologies, data services are
expected to grow exponentially in the years to come. Broadband is likely to take a
lead in the development of Indian Telecom Sector. Broadband is growing market and
offers immense possibilities for investment. In Broadband policy, India has envisaged

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a target of 40 million Internet subscribers and 20 million broadband

subscribers by 2010.
P.S. Saran (2004) the telecom technology in India has transformed from manual and
electro-mechanical systems to the digital systems. India has stepped into new
millennium by having 100% electronic switching system. The technological changes
have made way for new services and economics in the provision of telecom services.

Motto (1990) researched the need of separate policy, regulation and operation
which require changes in legislation - for example restructuring the Japanese
Nippon Telegraph and Telephone Public Corporation and Kokusai Denshin
Dewwa was preceded by appropriate changes in legal framework.
Melody (1990) points out that the Indian Government had not addressed the basic
requirement necessary for reform and there was no pre-planned sequence of structural
changes which are basic determinants of reform. Therefore, the government, investors
and subscribes could expect only marginal benefits from the reform process.

MTNL Report (1991) explains that international bodies had supplemented

government resources and funded expansion and technology up gradation
programmes.
Jain and Chhokar (1993) points out the limitations of capital and manpower as key
constraints. The Athreya Committee report may be viewed as an initiation of a
process of examining organizational options. Management incentives which would
allow these organizations to increase profitability and the structural mechanisms
which would allow then to raise capital from markets had been sketchily outlined.

Melody (1994) points out various concerns for the telecom sector covering
competition as important one. Competition is considered more important
factor than ownership in introducing efficiency.
Donaldson(1994), Jussawala (1992); Jain, (1995); Wellenius (1995) recognize that
developing countries feel the important role a responsive, business oriented, and

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technologically advanced telecom sector plays in the growth of the economy.

Many developing countries accept the limitations of a monolith state monopoly
in responding to the twin challenges of spurring internal growth and competing
in global economy.
Shyamal Ghosh (2003) mentions that the most significant development since
1999 has been the progressive reduction in tariffs which has been facilitated by
competition through multi operator environment. The most dramatic reduction in
tariff has been from very high Rs. 16 per minute to Rs. 2 per minute.

N. M. Shanthi (2005) throws light on the factors that contributed to the growth
of telecom sectors. There are various initiatives taken by government in lien of
liberalization, privatization and de-monopolization initiatives. The trend is
expected to continue in the segment as prices are falling as a result of
competition in the segments. The beneficiaries of the competition are the
consumers who are given a wide variety of services.
Kushan Mitra (2005) analyses various factors contributing to competition to
Indian Telecom Industry. Besides lowering of prices, increased efficiency, greater
innovation, high tech industry and better quality services are some of the reasons
which are boosting competition amongst various telecom service providers.

Arindham Mukherjee (March, 2006) takes out various case studies like
Vodafone, Maxis, Telekopm Malaysia, Tatatele etc. to study the rising interest
of foreigners for investment in Indian telecom industry. Various reasons of
stemming growth can be rising subscriber base, rising teledensity, rising
handset requirements, saturated telecom markets of other countries, stiff
competition, requirement of huge capital, high growth curve on telecom,
changing regulatory environment, conducive FDI limits in telecom sector.
Bickert (1992) another narrow yet relevant viewpoint is to consider CRM only
as customer retention in which a variety of after marketing tactics is used for
customer bonding or staying in touch after the sale is made.
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Vavra (1992) a more popular approach with recent application of information

technology is to focus on individual or one-to-one relationship with customers
that integrate database knowledge with a long-term customer retention and
growth strategy
Jackson (1985) applies the individual account concept in industrial markets to
suggest CRM to mean, Marketing oriented toward strong lasting relationships
with individual accounts.
McKenna (1991) professes a more strategic view by putting the customer first and
shifting the role of marketing from manipulating the customer (telling and selling) to
genuine customer involvement (communicating and sharing the knowledge).
Berry (1995) in somewhat broader terms also has a strategic viewpoint about CRM.
He stresses that attracting new customers should be viewed only as an intermediate
step in the marketing process. Developing closer relationship with these customers
and turning them into loyal ones are equally important aspects of marketing. Thus, he
proposed relationship marketing as attracting, maintaining, and in multi-service
organizations enhancing customer relationships.

Gronroos (1990), Gummesson (1987) and Levitt (1981) although each of

them is espousing the value of interactions in marketing and its consequent
impact on customer relationships, Gronroos and Gummesson take a broader
perspective and advocate that customer relationships ought to be the focus
and dominant paradigm of marketing. For Gronroos (1990) states: Marketing
is to establish, maintain and enhance relationships with customers and other
partners, at a profit, so that the objectives of the parties involved are met. This
is achieved by a mutual exchange and fulfillment of promises.
The core theme of all CRM and relationship marketing perspectives is its focus on
cooperative and collaborative relationship between the firm and its customers, and/or
other marketing actors. Dwyer, Schurr, and Oh (1987) have characterized such
cooperative relationships as being interdependent and long-term oriented rather than
being concerned with short-term discrete transactions. The long-term orientation is

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often emphasized because it is believed that marketing actors will not engage in
opportunistic behavior if they have a long-term orientation and that such
relationships will be anchored on mutual gains and cooperation (Ganesan, 1994).
Another important facet of CRM is Customer selectivity. As several research studies
have shown not al customers are equally profitable for an individual company
(Storbacka, 2000). The company therefore must be selective in tailors its program
and marketing efforts by segmenting and selecting appropriate customers for
individual marketing programs. In some cases, it could even lead to outsourcing of
some customers so that a company better utilize its resources on those customers it
can serve better and create mutual value. However, the objective of a company is not
to really prune its customer base but to identify appropriate programs and methods
that would be profitable and create value for the firm and the customer.

The telecom subscriber base stood at 944.81 million in July 2012, according
to data released by TRAI.
Another report by CAG has revealed that telecom users in rural India have increased
at a faster pace as against urban users. Moreover, the capital investment in the
sector increased from Rs 240711 crore (US$ 43.63 billion) in 2006-07 to Rs 479278
crore (US$ 86.88 billion) in 2010-11, while the capital employed grew to Rs 337683
crore (US$ 61.2 billion) from Rs 198011 crore (US$ 36 billion) in the same period,
indicating a tremendous growth in investment in the telecom sector.

Furthermore, mobile data traffic in India has increased by 54 per cent between
December 2011 and June 2012, according to a report by Nokia Siemens
Networks. The statistics reveal that data traffic generated by 3G services has
increased by 78 per cent while that of 2G services has increased by 47 per cent
during the period. While 2G users in India are consuming three-fourth of the total
mobile data traffic on average, 3G users consume four times more data than 2G
users. Considering such a tremendous growth, Nokia Siemens Networks expects
the countrys mobile data consumption to double by June 2013.
Owing to banking-on-the-go initiatives taken by banks such as SBI and ICICI, the
value of mobile banking transactions increased five-fold to Rs 1140.6 crore (US$

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206.75 million) between January and May 2012 as against the same period a
year ago. Service providers like Airtel have promoted mobiles as medium for
bill payments and fund transfers in a big way, due to which the volume of
transactions also rose significantly (from 0.5 crore in January-May 2011 to 1.5
crore mobile transactions in January-Many 2012).
In terms of subscriber base, Bharti Airtel made the lead in the month of July
2012 with 188.8 million subscribers followed by Vodafone with 154.9 million.
Idea Cellular added 4,55,912 subscribers to have 117.6 users and State-run
Bharat Sanchar Nigam Ltd (BSNL) added 4,71,552 users to have 98.75
million subscribers. Tata Teleservices has a total number of 77.8 million
subscribers, while Uninor has 44.5 million.
With regards to the handsets market, mobile phone sales increased 9.1 per cent
(crossing the 50-million-mark) in January-March 2012 quarter as against the same
quarter in 2011, according to the latest data released by Cybermedia Research India.
Smartphones accounted for 5.3 per cent of the handsets sold and about a quarter of
the handset revenues in the country. Multi-SIM handsets captured two-thirds of the
total sales, while 3G handsets accounted for less than 10 per cent of it.

Finnish handset maker Nokia maintained its leadership position with 23 per
cent of the handset market share, followed by Samsung with 14.1 per cent
and Indian brand Micromax at third position with 5.8 per cent of the pie, in
terms of sales (unit shipments) during the January-March 2012 quarter.
China-based telecom equipment maker Huawei has planned to invest US$
150 million in its research and development (R&D) centre in Bengaluru. The
new facility will acknowledge Huaweis enterprise, telecom operators and
cellphone business segments.
Thiruvananthapuram-based provider of real-time closed-loop mobile marketing solutions
Flytxt, has bagged two deals with African telecom companies Warid Uganda and Warid
Congo B wherein the firm will provide its campaign management solution to the latter.
The technology collects and integrates subscriber insights based

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on service consumption trends and helps cellular service providers to

customize service offerings.
The Government of India is focusing on improving rural tele-density and broadband
connectivity, effective expansion of the networks with efficient utilization of scarce
spectrum and ensuring equal sharing of highly capital intensive infrastructure.

TRAI, the telecom sector regulator, intends to create standards to ensure quality
of service for mobile phone companies which deliver mobile data services to the
users. Considering the fact that roll out of 3G and 4G high-speed data access
services across the country will lead to quantum jump in the number of mobile
internet users, the authority is seeking comments from stakeholders in the sector.
According to the draft regulations issued, TRAI has created nine parameters
benchmarks including service activation clause (that the service would be
activated within three hours with a 95 per cent success rate), drop rate (or the
network's inability to upload or download, should be below 2 per cent) etc.

Telecom service providers would be required to collect and maintain

compliance records of each of the nine parameters and submit them to TRAI
within 60 days of notification of these new rules.
Time-Division long-Term evolution (TD-LTE) market in India is at a nascent
stage and expected to pick up in the next couple of years. Analysts predict
that TD-LTE subscribers in India would reach 5 million in 2013, with the focus
on mobile broadband. Further, smartphone launches by companies such as
Nokia, Samsung and Apple will spur significant surge in data consumption.
TD-LTE, also called as Long-Term Evolution Time-Division Duplex (LTE TDD), is
a 4G mobile telecommunication technology which was developed in China.

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3.2 Brands and image

The values which make up a brand exist because they are perceived. They
are also evaluated positively or negatively by customers and potential
customers. These evaluations come together to form the brand's image.
The first thing to accept about image is that it is a perception and need not
necessarily be fact. Buyers cannot know in a factual sense all there is to know
about a company. What they do not know they may assume or expect without
any objective evidence; in simple terms they will hold an opinion. But these
perceptions are to the buyer, just as real as those based on harder evidence
and almost certainly will influence the purchasing decision.
Companies have touch points with their market which create these perceptions.
For example there is the company representative. Let's assume that he or she is
smart and drives a new car and always makes a good impression. He calls on
companies who, without any further knowledge, think well of the supplier because
he projects a positive image and this is extended to his company. The company
benefits from the halo of the representative. All other points of contact with the
customer will produce a reaction of some sort or another in the buyer. Some of
the other touch points will also influence the relationship. The speed, courtesy
and friendliness of the switchboard will have an impact. The appearance of the emails or the letterhead, literature and promotions will influence the image. Once
the relationship between a supplier and customer gets deeper, then many other
opportunities will arise in which the image can be affected, including the chance
to demonstrate the company's performance on substantial issues such as the
product quality, reliability of deliveries, after sales service and so on.
A positive image is one which will continue to work for a company, even when things
start to go wrong. A company with an excellent reputation can suffer an occasional
slippage in one area or another and the customer will be forgiving. In contrast, a
company with a poor image will be castigated for any default and there will be no
exoneration. The strength of the Perrier brand pulled it through after a disastrous

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contamination of the product by benzene required the complete recall of all its
stock of bottles in warehouses, shops and homes. Mercedes were more
defensive when its new A class failed the "moose test", blaming the driving
skills of the Swedish journalists rather than the design of the car's suspension.
Cadbury were slow to admit to and recall products that were infected with
salmonella and this undoubtedly cost them heavily in lost sales.
Image is something which can be taken in the round. This overall image is the
pooling of the all the perceptions and feelings which people hold on a company.
When we enter the ballot box to place our cross against a politician, it is the
overall package we vote for. There will be some things about the politician we
dislike but these seem to be outweighed by the virtues. The juggling of the pros
and cons are distilled into just one decision - one box, one cross.
So it is with brands; perceptions - image - are translated into a purchase decision.
A company will be chosen as a supplier if it is at least acceptable on all the
essentials (price, delivery, quality) and seen positively for most of the nice to have
(innovative, good warranty, easy to do business with). It can even have a
negative image in some areas as long as they are not ones critical to the
decision. Companies with excellent products which are reasonably priced may
get away with long delivery dates. They may even make a feature of their waiting
lists by suggesting that they are an indicator of their popularity.
Buyers act on perceptions as if they were facts. What else have they got to go on?
They cannot be all knowledgeable. They cannot know every nook and cranny of the
products they are buying. They cannot be qualified, nor expected to know all about
the guts of a machine they are considering buying. The guts of a machine may make
it reliable but it is the appearance of the outer casing, the ergonomics of the design
and the favorable (or otherwise) comments from service engineers which guide
buying judgments. The composition of a cleaning fluid may be a mystery to a buyer
but it is bought because it smells powerful, it looks thick and powerful, and on the
pack it says that it is used for cleaning components in the aerospace industry where
specifications are known to be amongst the highest.

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Images are therefore based on less than complete knowledge but still shape action in
relation to a supplier even if in only a negative way. A company may not be used as a
supplier because of a negative (and in an objective sense, erroneous) image. It is
often not understood that potential customers who have never had any dealings with
a supplier may hold a strong image of that company. Far from being determined by
purchasing experience, image may decide whether a supplier is used at all.
The achievement of a positive image, on core values - the really important issues and any other values which differentiate it should be of the highest priority to any
company. However, a very dangerous ploy is to try to alter a company's image
without materially improving the underlying defects. In the 70s and 80s Alfa Romeo
cars offered heart throbbing design and sparkling performance tinged with a variable
reputation for reliability. Twenty years later, when the problems have long been
solved, many motorists consider reliability to be a weakness of Alfa cars.

3.2.1 Benefits of Strong Brand Image

High levels of brand awareness and a positive image increase the probability of a
product being chosen and decrease the vulnerability to competitive forces. Here
are nine specific benefits which a company will obtain from a strong brand image.

1 Premium prices can be obtained. A brand with a positive image will

command larger margins and be less susceptible to competitive forces.
There will be less pressure to sell at low prices or offer discounts.

2 The product will be demanded. A brand which people think is

good will be asked for specifically. People will search out a
brand they really want.
3 Competitive brands will be rejected. A strong brand will act as a
barrier to people switching to competitors products. A brand is a
defense which is permanently erected.

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1 Communications will be more readily accepted. Positive feelings

about a product will result in people being able to accept new
claims on its performance and they will warm them up so that
they can be more easily persuaded to buy more.
2 The brand can be built on. A brand which is well known and well
regarded becomes a platform for adding new products as some
aspects of the positive imagery will cross over and help in the
launch of new products.
3 Customer satisfaction will be improved. A positive image will
give customers enhanced satisfaction when they use the
product. They will feel more confident about buying it.
4 The product will be pulled through the distribution network. A
brand which people ask for can more easily be sold into
wholesalers and distributors who are extremely responsive to
what their customers want.
5 Licensing opportunities can be opened up. A strong brand may
support joint venture deals or allow the brand to be licensed for
use in new applications or in other countries.
6 The company will be worth more when it is sold. A company with
a good brand name will obtain a higher premium for the
goodwill, if and when it is sold.
Not only are there considerable benefits for industrial companies in building
strong brands, there are serious penalties for those who do not. The alternative is
to rely on price cutting, discounts and cost-reduction programmes. Customers will
find no reason to buy other than on strongly functional factors which, no doubt,
they can find to profusion in any number of suppliers.

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3.2.2 Benefits to the Customer

We should not close this chapter with the impression that the gains from strong
branding are all on the part of the supplier and at the expense of the customer.
The customer too obtains benefits. There are three important reasons why
customers benefit from products and services with strong brands:

1 A strong brand is a summary of all the values associated with it.

Making industrial buying decisions is complicated by the need to
weigh up all the details of a product's performance, its price, the
delivery, the guarantee etc. A brand with a strong image is a synthesis
to the buyer of everything that a supplier stands for and offers.

2 A strong brand makes customers feel confident in their choice.

People shop at Marks & Spencer often without comparing
products from elsewhere because they trust the brand. Strong
industrial branding gives customers the same comforts.
3 A strong brand makes customers feel more satisfied with their
purchase. The quality perceptions translate to a feel good factor'
which makes customers happier than if the product had come
from an unknown supplier.

3.2.3 Factors Influencing Brand Image

One of the fundamental tenets of marketing is that brand images are an important
determinant of buying behavior (Aaker, 1991; Fischer et al., 2004). The construct of
brand image can be understood as the associations external target groups have in their
minds about brands. These associations can be further divided into those concerning the
functional attributes of a brand and those concerning the symbolic attributes of a brand
(Burmann and Meffert, 2005). Due to the importance of brand images for the behavior of
various target groups, considerable attention has been paid to factors that possibly
influence brand images. These influencing factors can be divided into three

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groups: (1) determinants that originate directly from the internal brand identity and
can thus be directly influenced by brand management (Burmann, and Meffert, 2005),

(2) personal / individual determinants, for example, the motives and experiences
of those who perceive the brand (Fopp, 1975 ; Williams and Mofitt, 1997), and (3)
external factors, that is determinants that affect the brand image from outside and
which cannot be directly influenced by brand management, for example industry
image (Blinda, 2003 ; Dowling, 1993, 2001).
Buyers respond to branding by purchasing the same products or brands or by
showing preference toward a particular brand, bringing firms higher market share,
higher profits, or share value. Keller (1993), Aaker (1996), Helman, de Chernatony,
Drury, and Segal-Horn (1999), and de Chernatony, Drury, and Segal-Horn (2003)
have been focusing on how to build, create, popularize, and manage strong brands.
Academic researchers observed that manufacturers can establish a strong brand
image and rule the dealers' perception by offering a number of extra benefits. It has
been claimed that manufacturer support programs are related positively, so when a
manufacturer provides many support programs, dealers may have some incentive to
join and remain in the channel system. Boundary personnel (salespeople) had a
significant positive effect on relative dealer satisfaction with the relationship. This link
is a key factor in effective communication (Gassenheimer, 1996).

According to Kahn et al. (2004), communication and cooperation will promote

sales

distribution

effectiveness.

Marketers

must

carefully

consider

characteristics of middleman's marketing behavior in order to avoid the risk of

linking incapable distributors (Luk, 1998). Managers at all level in the channel
have a wealth of information. This diffusion of information technology into
channels is having a profound effect on how managers look at the problem of
managing channels and the resultant channel relations (Mentzer, 1993).
If we move toward further studies to advance our understanding on this
phenomenon and to identify the gaps between mobile operator and dealer
relationship, a long term profitable belief system in the channel can be
established by assessing dealers' need and align objectives, by motivating
them to attain the agreed -upon goals and provide appropriate support.
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3.3 Brand Image and Company Performance

Research on brand equity and brand image management (e.g. Aaker and Keller,
1990; Keller, 1993; Park, Jaworski, and MacInnis, 1986; Park, Milber, and Lawson,
1991; Roth, 1992, 1995) suggests that marketers should develop brand image
strategies before focusing on tactical marketing mix issues. In general, when the
name of a brand is mentioned, the first idea that comes to the consumer's mind is the
corporate image associated with it. Thus, a brand image not only implies an actual
brand meaning, which is set up in the beginning, and managed over time, but also is
reflected by a consumer's perception of the producing company reputation.
Therefore, the image of a brand is mainly determined by corporate reputation, which
means that corporate reputation can influence the performance of a branded product.
Therefore, this study will investigate instances where brand image strategy and
performance are moderated by corporate reputation.

At the same time, many researchers have investigated on strategic-performance

relationship. The literature on strategic-performance dates back to the beginning
of the 1970s. For many years, marketing and advertising managers and
researchers have wrestled with the issue of brand image strategy applications.
However, significant differences between consumers, corporate cultures, and
market structures, probably justify some additional problems over brand image
strategy (Park, Jaworski, and Maclnnis, 1986; Roth, 1995).
As stated above, brand image in consumer's mind reflects a series association of the
corporation it belongs to. Thus it is important to discover brand image concepts in this
study. Brand image has been acknowledged as an important area of research. This is
because companies can increase their market share and growth rates by establishing a
strong brand image in the minds of their customers (Roth, 1995). In this way, a good
brand image can increase brand loyalty. Brand image is defined as perceptions about a
brand as reflected by the brand's associations held in the consumer's memory (Herzog,
1963; Newman, 1957); it is constituted by a series of pictures and ideas in people's
minds that sum up their knowledge of a brand (Levy, 1978), that, taken together, imply
certain expectations of the customers (Gensch, 1978). However, Park,

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Jaworski, and Maclnnis (1986) propose brand image as a strategic device for helping the
brand concept to be implemented by means of an exercise in brand management.
In most previous studies, performance has usually been seen as a direct and objective
phenomenon (Matsuno and Mentzer, 2000; Smith and Wright, 2004; Roberts and
Dowling, 2002) that can be assessed by simply measuring the outcome of a company's
revenue and sales volume. It can be divided into two parts: financial and non-financial.
Financial performance is usually used as a general measure of a firm's overall financial
health over a given period of time, and can be used to compare similar firms across the
same industry or in order to compare industries or sectors in aggregation. Non-financial
performances are those such as 'value', 'success', and 'significance' (Amir and Lev,
1996). As stated by Roth (1995), the success of brand image strategies is contingent on
their 'fit' with local market conditions.

Corporate reputation has been tested as an influential factor of a company's financial

performance (Dunbar and Schwalbach, 2000; Roberts and Dowling, 2002). It is a
representation of corporate history and serves as a means of conveying strategic
information about the quality of a firm's products or services in comparison with those
of its competitors (Yoon et al., 1993). Herbig and Milewicz (1993) defined it as the
totality of a firm's consistent attributes over a period of time. Similarly, Wartick (1992)
argued that corporate reputation is the summation of a single stockholder's
impression of corporate performance. As mentioned previously, there is evidence that
similarly constructed aggregated measures of reputation speak most directly of a
firm's reputation as an investment.

The review of existing literature indicates that these disciplines have been
addressed as distinct areas in the study and are independent of one another.
Consequently, very little is known regarding the relationship that brings these
concepts together. Therefore, it is apparent that there is insufficient research
in this area of study. As such, this study attempts to bridge this gap by
bringing branding issues into the strategic-performance literature.

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3.4 Consumer Perception QoS Study

Twenty first century has spread a technological revolutionary wave in India. With
upcoming wireless communication technologies people are becoming more &
more mobile addict. The booming revolution in Information Technology sector has
pushed the India's telecom market significantly. Since past few years consumers
prefer wireless mode of telephone services to wire line services. Mobility has
become an integral part of customer's life. India has shown tremendous growth in
past few years in terms of cellular services. As per the survey report conducted
by Voice & Data by the end of Feb 2008 the mobile subscribers number has
reached to 246.6 mn compared to wire line services, which is only 40 mn in
numbers. Invention of Cell phones is a major improvement over the
telecommunications technology of the past, and it has now become an essential
commodity in today's busy life. Cell phones have become the necessity in today's
competitive environment to meet the emerging global economy.

3.4.1 Service Concept

Service is a patch up activity to fulfill some one's need in the market. Service is some
thing, which can be experienced but cannot be touched or seen. Services offered by
service providers cannot be seen & touched, as they are intangible activities.

Some of basic definitions of service as defined by Management Gurus are:

"A service is any activity or benefit that one party can offer to another which is
essentially intangible and does not result in the ownership of anything."
(Kotler, Armstrong, Saunders and Wong)
"Services are economic activities that create value and provide benefits for
customers at specific times and places as a result of bringing about a desired
change in or on behalf of the recipient of the service."
(Christopher Lovelock)

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"Services are the production of essentially intangible benefits and experience,

either alone or as part of a tangible product through some form of exchange, with
the intention of satisfying the needs, wants and desires of the consumers."

(C. Bhattachargee)
The basic difference between service & product is that services are intangible
but products are tangible and are required to follow some standardized
procedures. Service user can specify about that particular service satisfaction
only after availing it for some period of time. Some of the common service
areas are: Retailing, Transportation, Cell phones, Education, Health &
hospitality Services, BPO and many more.
3.4.2 Customer Expectation and Perception towards Service
As per the gap model given by Persuraman & Zeithaml there exists a gap
between the customer perception & customer expectation. This gap is called
as the customer gap. Customer Expectation represents the actual expected
service & Customer Perception reveals the actual received service.
Customer expectations are the standards against which the perceived
services are checked in order to assess the quality of a service. This basically
gives what is expected & what is actually received. If any difference exists
between the expected service and actually received service then that
difference is called as a gap, which needs to be reduced.
3.4.3 Basics of Mobile Services
Mobile means something in motion. When it combines with services then it indicates
that availing of the delivered service when in motion. Communication through
telephonic media while roaming is referred as mobile or cell phone service(s).

Mobile services are nothing but Radio-communications services between

ships, aircraft, road vehicles, or hand-held terminal stations for use while in
motion or between such stations and fixed points on land.
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Cellular service is a global radio-based service providing two-way communications by

dividing the serving area into a regular pattern of sub-areas called as cells. Each has
a base station having a low-power transmitter and receiver.

Cellular Mobile service means availing the telecommunication services(s) any

time and any where even if the user is not stationary but roaming somewhere.
According to some specific communication characteristics the entire transmission
range is divided into small areas, which are called as cells. These cells are
responsible for transmitting and receiving the radio frequency signal.

3.4.4 Cellular Mobile Services

Cellular mobile phone is a wireless telecommunication device comes with
inbuilt mobility feature. Mobile communication technology allows mobile users
to avail the roaming facility.
Cell phones / mobile phones are simple hand-held phones with built-in antennas 5.
Sender & receiver transmit their voice, which is converted into sound waves, & then
these waves travel through network to base station, from where it goes to respective
destination. Base Station is a transmitting/ receiving unit responsible for controlling
the transmission of a small geographical area called as a cell.
In December 1947, Douglas H. Ring and W. Rae Young both Bell Labs engineers,
proposed hexagonal cells for mobile phones. The first fully automatic mobile phone
system, called MTA (Mobile Telephone system A), was developed by Ericsson and
was commercially released in Sweden in 1956. One of the first truly successful public
commercial mobile phone networks was the ARP (Autoradiopuhelin, or Car Radio

Phone in English) network in Finland, launched in 1971. ARP is viewed as a

zero generation (0G) cellular network, being slightly above previous
proprietary and limited coverage networks. Different Mobile generations are:
st

1 generation - Analog system

2

nd

generation - TDMA (Time Division Multiple Access) CDMA (Code Division

Multiple Access)
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0

3rd generation - GSM 1800 MHz (Global System for Mobile Communications)
4th generation - UMTs 1900 MHz (Universal Mobile Telephone System)

3.4.4.1 First Generation: 1G

The first commercial cellular telecom was launched by NTT (Nippon Telegraph
and Telephone) in Tokyo Japan in 1979. In 1981 the NMT (Nordic Mobile
Telephone System) system was launched in Denmark, Finland, Norway and
Sweden. This was the first mobile phone technology that allowed international
use of the mobile phone or so-called "roaming". The first handheld mobile
phone in the US market was the Motorola DynaTAC 8000X.
The introduction of "cellular" phones, based on cellular networks with multiple base
stations, started from 1980s. These base stations are located relatively close to each
other, and service automatically "handover" between two cells when a phone moved
from one cell to the other. This generation phones were working on analog system.

3.4.4.2 Second Generation: 2G

In the 1990s, 'Second Generation' (2G) mobile phone system was introduced. This
generation introduced new communication feature by sending text messages through
phone. This service was named as SMS (Short Message Service). The first machinegenerated SMS message was sent in the UK in 1991. The first person-to-person
SMS text message was sent in Finland in 1993. It also introduced some new
additional features like ring tone downloading and game downloading.

3.4.4.3 Third generation: 3G

The third generation mobile phone system (commonly known as 3G) was launched
with the inclusion of standardization process. It was standardized in the International
Mobile Telecommunications - 2000 (IMT-2000) standardization processing. This
process did not standardize on a technology, but focuses on communication

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1

requirements. Based on WCDMA (Wideband Code Division Multiple Access)

technology the third generation phone was launched.

Between 2G & 3G an intermediate system was developed, called as 2.5G system.

This generation mobile phones include some of the features of 3G, not all and so
does not fulfill the promised high data rates or full range of multimedia services.

3.4.4.4 GSM & CDMA technology

Digital cellular networks are the need of wireless extensions to establish the
connection across the globe. For performing the transmission among the
mobile users, it uses the concept of multiple accesses. Multiple access means
simultaneous transmission or access from many sources to one. Multiple
access transmission can be achieved through:

SDMA - Space Division Multiple Access

FDMA - Frequency Division Multiple Access
TDMA - Time Division Multiple Access
CDMA - Code Division Multiple Access
SDMA, FDMA & TDMA technologies are based on fixed assignment like
frequency and time duration. But CDMA is based on different codes to separate
different users in code space & so this technology allows multiple users to access
the network through the shared medium without any interference.

GSM - the Group Special Mobile was founded in 1982 to support the digital
transmissions & now popularly known as Global System for Mobile
Communications. GSM was primarily used to support the transmission to
users in roaming environment. GSM is today's most successful digital
telecommunication system.

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3.4.5 Service Quality Concept & Quality Parameters

Service is an intangible thing, which needs to be experienced before assessing it.
Any thing can be measured by measuring their respective service attributes &
factors. There are certain Service Quality parameters as defined by the professional
bodies in order to measure the service quality of corresponding service sector.

3.4.5.1 Service Quality

Quality is a key requirement in every field. In terms of Industrial growth quality
plays an important role & so should be understood and defined properly.
Different management Guru's in different ways defines quality. But the basic
concept remains same i.e. "Meeting to the Need of Customer".
In most generalized way the Quality term can be defined as "The inclusion of all
specified features and characteristics as defined for product or service and its
ability to satisfy the given needs as per the requirement of user while using it."

"A predictable degree of uniformity & dependability to low cost and suited to
the market" (By Dr. Edward Deming)
"Quality is conformance to requirements." (Philips Crosby)
"Quality is a degree to which a set of inherent characteristics fulfills the
requirements." [ISO 9000]
Customer wants to avail different services offered to them by service
providers. Delivered service will become as the Quality Service if it meets the
customer expectations. But customer expectation depends upon the customer
perception, which may differ from person to person.
As per Parasuraman, Zeithaml & Berry the service quality is defined as:
Service Quality = Perception - Expectation
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Service quality is nothing but the difference between the service expectation &
service actually received by the customer. Customer has certain expectation
about the service. If the customer experience the same service as they expect
then this difference will be zero and we can say that the service quality is very
good. Higher the difference of above equation lower will be the service quality.
The customer perception is influenced by various factors, which may result in
change in service quality as well. Various such factors could be like: Age, gender,
Occupation, Global competition & Technological changes. The perception of
younger generation of service quality could be different from the older one.
Similarly a working corporate professional perception could be different from a
businessperson or from a housemaid. That is why the perception should be taken
into consideration by service providers to meet the customer requirements.

3.4.5.2 Measuring the Service Quality

Measuring could be done qualitatively or quantitatively. Any thing can be
measured by evaluating the related factors & respective attributes.
Considering various related attributes we can monitor the Service quality.
Attribute needs to be measured to get the quality.
Quality measurement is concerned with the observed value for some service
attributes & then by comparing these values against standards, it is possible
to get the quality status of respective product or process.
A number of large companies have introduced the quality metrics for
improving the quality management processes. In general by collecting metrics
on several attributes and defects, the entire Quality Management Process can
be improved because metrics may help to identify the strong & weak
attributes. By improving the weak area(s) companies can improve the quality.

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A metric is a type of measurement, which relates to a system, process or

related documentation. The use of systematic service measurement and
careful monitoring of metric definitely can improve the overall service quality.
In terms of cellular mobile services, various service providers who provide cellular
services are assessed with respect to the process metrics parameters. Service
providers give cellular services like customer care, data transmission, multimedia
service, billing service etc. to their customer. They measure the quality of service
given by them to customer in terms of service parameters. Various general service
parameters are like: reliability, usability, efficiency, portability. Quality Metrics is
designed against such parameters. Specific to cellular mobile services the Quality
Metrics includes following factors & attributes, which affects the service quality.
3.4.5.3 Factors & Parameters affecting the quality of Cellular Mobile Services

Mobility, Connectivity, call drops, Portability, customer-care, Billing service,

Messages Services, fare information, Number of complaints, Activation time,
Voice Quality, faults repairing, Mean Time to Repair (MTTR), Billing Credibility
The technical savvy public now demands for high quality of product as well as
service. As defined in ITU-T (International Telecommunication Union)
Recommendation E.800 the Quality of mobile phones can be measured in
terms of Quality of Service (QoS) performance parameters and Network
Performance parameters. QoS parameter depends upon user perception. And
perceptions are always referred against expectations. Expectations are
dynamic & changes over time, age, gender.
Service Quality Measurement requires the measuring of respective service
quality attributes and factors. The Mobile service quality is measured through
cellular service parameters & factors, which are mentioned above.

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3.4.6 Service Quality & Customer Satisfaction

Service Quality and customer satisfaction are two closely related terms.
Service quality can be assessed in two ways: 1) Is it meeting standard? & 2)
Is it satisfying the customer?
As defined by Oliver
"Satisfaction is the consumer's fulfillment response. It is a judgment that a
product or service feature, or the product or service itself, provides a
pleasurable level of consumption-related fulfillment."
Customer satisfaction is related with the type of service quality, if the quality of
service provided by the service provider is good then this leads to the higher
customer satisfaction. As defined by Parasuraman, Zeithaml & Berry the
service quality depends upon customer perception & customer expectation.
For measuring the service quality, it is necessary that the service provider with
respect to the customer expectation as well as the customer perception
should understand the service quality parameters. This will help in getting the
better service quality and hence higher level of customer satisfaction.
The customer expectation with reference to various service quality parameters differs
from person to person. Such change in perception can affect the customer satisfaction.

Quality is defined, as meeting customer needs. Meeting customer needs

requires that those needs be understood. VOC "Voice of Customer" is one of
the ways for understanding the customers need & so measuring the service
quality. The "voice of the customer" is the term used to describe the stated
and unstated customer needs or requirements.

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3.4.7 Quality Metrics

Quality measurement is concerned with calculating some value for related
service quality attributes. By comparing these values against standards, it is
possible to get the quality status of any process. Quality Metrics are basically
defined for improving the quality management processes. Metrics can be
defined by collecting the observed values of Quality of Service attributes.
Metrics can be classified in two broad categories: the product metrics & the
process Metrics. But as per the basic definition the service quality is associated
with the customer satisfaction. And so quality metrics can be classified as: Mean
Time to Failure, Mean Time to Repair, Customer Complaints & Customer
Satisfaction Metrics. Service Quality Metrics of mobile services can be designed
by observing the experienced service on mobile service parameters.

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3.5 Brand Image & Service Quality

In recent years, brand management and branding have established its
importance strategically for different companies (Post, 2008; Kapferer, 2008;
Keller, 2008). Smith (2004) suggested that in service industry "brand
management requires brand managers to take a holistic view of the brand that
transcends the marketing and service function and makes it a rallying cry for the
firm". Brand has also been described as "the impressions received by consumers
resulting in a distinctive position in their mind's eye based on perceived emotional
and functional benefits" (Shoemaker, Lewis, Yesawich, 2007).

Service quality defined by Gronroos (1984) as "the result of an evaluation

process, which helps consumer compare his expectations with his perception
of the service received; in other words, he places the perceived service and
the expected service opposite one another." Javalgi et al., (2006) claimed that
during the decision making process, customers have very few cues while
buying services while an established brand performed as crucial role in form
of risk reducer and purveyor which makes the decision making process more
easier (Davis, 2007; Kayaman & Arasli, 2007). Forgacs (2003) argued that
hotel industry is heavily used branding strategies because of their success.
Consumers perceive the same service quality in different ways. This difference in
perception is most likely influenced by corporate image. Companies can plan
corporate brand image before implementing marketing communications, and
shape brand image through various marketing strategies. That's why Bailey and
Ball (2006) suggested that "brand management can be improved through more
effective brand differentiation strategies" like their service quality, word-of-mouth
communication, advertising techniques etc.
Brand image is a set of associations with the brand, revealing both association and
image represented perceptions of either objective or subjective reality (Aaker, 1991).
Keller (1993) clarifies the concept, defining it as "perceptions about a brand as
reflected by the brand association held in memory". Brand image management is

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significant in deciding whether or not the employee is connected with the

organization by influencing the strength of an individual's identification, and the
evolving trend of brand image is noted in strategic importance (Dutton, Dukerich,
& Harquail, 1994; Gray & Smeltzer, 1985). Keller, (2003) treated the concept of
brand image the reasoned or emotional perceptions of the customers which they
associate with a particular brand. Therefore, brand image is one of the key
components that enable hotel companies to gain a superior advantage among
others. Some scholars viewed brand image to be "directly related to the product
category within which the brand is marketed" (Martinez, Chernatony, 2004).
On the other hand, Marti'nez and de Chernatony (2004) found out that there was no
agreeable consensus in literature for the empirical measurement of brand image and
the basic reason for this is the multi-dimensionality of the concept. More or less same
were the findings of Dobni and Zinkhan (1990) who claimed that because of the
confusing variety of work on defining the concept of brand image, at first it may result
to ambiguity in selecting the best scale for its measurement. To exemplify its multidimensionality, brand image has also been taken as an element of brand personality
(Hosany, Ekinci, & Uysal, 2006) and there are examples in which literature
significantly relates it to customers' self-concepts (Belk, 1988; Aaker, 1996; de
Chernatony & Dall'Olmo Riley, 1998; Solomon, 1999).

A very interesting study of Pitt, Opoku, Hultman, Abratt, and Spyropoulou (2007)
maintained the notion that even branding is itself is entirely the process of creating
and building a brand image. And according to them, 'creating a brand image means'
an effort that "engages the hearts and minds of customers". Gronroos (1984)
emphasized the extreme importance of brand image for service firms because when
the customers use service, they see the firm and its resources by their judgment of
the interaction between them and their service providers. His findings depicted that
the customers formulate image as they see the components of the firm and develop
their perceptions. The definition by Kurtz and Clow (1998), "the overall or global
opinion customers have of a firm or organization" depicts threat customers show high
tendency of patronizing the firm if they develop high perceptions of its image.

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Service serves as the most salient phenomenon that customers can experience
and perceive. Hence, quality of firm's service mainly builds up the image of that
particular brand. Similarly, Nguyen and LeBlanc (1998) explained that overall
brand image of the company is formed by the combined perceptions of service
quality as a result of frequent service experiences. Many researchers (e.g.
Gummesson and Gronroos, 1988) reported brand image to be the key factor in
the evaluation of overall service quality. Keller (1993) studied brand image as a
perception, held in consumer memory, of an organization which serves as a filter
to influence the perceptions related to operational aspects of the organization. In
his study of airline service, Ostrowski et al. (1993) argued, "positive experience
over time (following several good experiences) will ultimately lead to positive
image". Kim and Kim (2005) observed that "brand image and service quality
perceptions share too many features". Aydin and Ozer (2005) found that
perceived service quality directly determines the perception of brand image.

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3.6 Perceived Service Quality

According to many researchers declared perceived service quality model, it
has appeared that when customers measure service quality, they will
compare their perceptions with real performance from the service provider
with what they believe to be the expectations of service performance in their
experience (Parasuraman et al., 1985; Zeithaml et al., 1988).
Snoj et al. (2004) defined perceived service quality as how well the client's
measurement of the overall of the service. It acts as the mental comparison
between price and quality that is offered by service providers.
The communication method between the service provider and the receiver of
a service is affected by the environment in a specific location where they work
together and operate (Ford et al., 1998; Zineldin, 2004; Robicheaux and ElAnsary, 1975). Thus, perceived service quality of communication can show a
patient's level of overall satisfaction or overall service quality (Ganesan,
1994). Lim and Tang (2000) stated that when customers decide to choose a
hospital, perceptions of service quality is a basic element. The perception of
patients about health care quality is important to health care provider's
success, because it will affect patients' satisfaction and profitability of hospital
(Koska, 1990; Donabedian, 1966; Williams and Calnan, 1991).
Parasuraman et al. (1988) supported that SERVQUAL scale can provide an
instrument for evaluating service quality. There are five dimensions which are
tangible, reliability, responsiveness, assurance, and empathy. SERVQUAL
scale can be applied to fit the characteristics or the requirements of a specific
investigation of a particular organization.

Zineldin (2006) stated that SERVQUAL quality is a classification system concept.

Moreover, the five quality dimensions (5Qs) model is an instrument that insures a
reasonable level of reliability, validity and significance. Zineldin (2000) expanded

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SERVQUAL models into a framework of five quality dimensions: quality of

object, process, infrastructure, interaction and atmosphere.
The atmosphere in a particular environment where the service provider and receiver

co-operate and operate will affect the interaction procedure between both of them

(Ford et al., 1998; Zineldin, 2000; Robicheaux and EL-ansary, 1975).

Zineldin (2006) supported that the environment or atmosphere can influence
the perceived service quality by developing or making it worse.

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3.7 Company Performance Study

3.7.1 ARPU and Market Share (Subscribers)
Average revenue per user (ARPU) and number of new subscribers are the
most commonly used performance metric for telecommunication firms. ARPU
is the average revenue a company generates from a user and gives an
indication of the areas driving revenue growth.
Over the years, telecom companies have relied on these metrics to judge their
performance and track the position of their competitors. Strategies for market entry
and decision to launch new products and services are heavily reliant on ARPU.
Companies generally tie up their business models in a move to increase their ARPU
and on the other hand change them if it reports a lower ARPU. Recently companies
have raised their concerns on declining ARPU in many regions.
Operators are increasingly concentrating on data services and other value added
services (which are considered to be high revenue earning than voice traffic) in order
to increase their ARPU. The tool should be used cautiously for following aspects.

3.7.1.1 ARPU
ARPU is simply calculated as total revenue divided by the total number of subscribers
over a certain period of time. The anomalies arise while measuring total revenue and
number of subscribers to calculate ARPU. First, the time period of the calculation varies
form company to company. Some companies quote the figures yearly, quarterly, half
yearly or on a monthly basis which can be a source of discrepancy when comparing the
results over a certain period of time. As for the number of subscribers, ideally those
subscribers should be taken into account who contributes to the revenue during that
period. But in some cases the number of subscribers at the beginning of the period is
considered while in some the number of subscribers at the end of the period or the
average of the two is considered. Total revenue is the amount received by the operator
which may not be wholly retained. For example, the mobile termination rate is also
included under the total revenue which is not a part of the

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revenue of the firm. It may also include the revenues generated from sources
other than subscribers such as advertising etc. which tends to overestimate
the ARPU figure and give wrong signals for growth synergies.
3.7.1.2 Subscription Rates in Different Regions
ARPU depends on the penetration level of particular region. In a country where the
penetration level is low, ARPU is a good measure since at this stage one connection
generally equates to one subscriber and it is easy to identify the revenue earning areas.
At this stage even subscriber base gives a good indication about the market share. But
as the penetration rate grows the number of 'actual' subscribers may fall behind the
number of connections as individuals use more than one connection. This implies that
the telecom expenditure of one subscriber is divided among two connections leading to a
downward bias in the estimation of performance and unidentified areas of growth.

In addition to this, relative penetration rate in rural and urban areas will have an
impact on the level of ARPU especially in countries like India literacy rate is low
among the rural population. For example, if a company is adding new subscribers
mostly in rural areas, potential to generate revenues through data oriented
services like mobile or internet will be low due to low literacy rates in these areas.
Therefore, in developing countries like India, ARPU will give a better picture of
future revenue potential when segmented between rural and urban.

3.7.1.3 Stage of the Subscription

A commonly held view is that a decreasing ARPU is associated with a declining
profit which actually may not be the case. As penetration rate grows, more and
more low-end subscribers i.e., pre-paid subscribers come into existence that are
regarded as non-revenue earners. But they may generate higher profits since no
additional costs like billing and collection costs, handsets subsidies have to be
incurred as compared to the post-paid subscribers. On the other hand, increased
data services are thought to be high revenue earning which may incur higher
costs (like upgrading the network), putting pressure on the profitability.

13
4

Companies in an effort to bring down the churn rate often give out incentives to
high-end customers in order to retain them and on the other hand leave out the
inactive prepaid accounts who do not contribute much to the revenue. As a result
of this, ARPU may show an increase not because of the additional revenues
generated by the high end customers but only because the total number of
subscribers has gone down. This may give wrong signals to the growth strategies
adopted by the operators. Also the high costs of incentive plans are not taken into
account which may have a negative impact on the profits.
When penetration level reaches the saturation level, companies tend to add customers
who are highly price sensitive and tend to shift to other service providers for very small
decreases in price. Thus ARPU may not be good performance metric when the market is
driven by price wars and is inherently characterized by low ARPU.

13
5

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