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Introduction
Some estimates predict that developing countries constitute about 67 percent of the worldwide mobile subscriptions. In Egypt, the telecommunications industry is one of the fast growing sectors in the economy which in less than a decade has grown from nearly non-existence with no official ministry to one of Egypt’s fastest growing sectors and largest ministries (Egypt Country Monitor, 2011). Currently, Egypt is one of Africa’s most developed telecommunications markets and is characterized by a young population that has large uptake and demand for new technologies. It is estimated that overall telecommunications revenues will reach $11.22 billion by 2018. Total mobile growth was 16.5 percent in 2012 and total subscribers approximately 83 million with mobile penetration over 100 percent. Prepaid and voice subscriptions are predominately the major earners but users switch to benefit from promotions. The market growth is expected to be from low-income subscribers and thus pricing is a major concern (Global Telecoms Business, 2013).
While mobile phone subscribers have skyrocketed, new customer acquisition rate are slower with market maturity. Given the case of today’s competitive marketplace, and as the mobile telecommunication market is reaching its maturity, customer retention has become a crucial issue in the success of the mobile telecommunications business. The challenge of retaining existing customers will be higher and the effect of mobile number portability (MNP) on the customer switching behavior will be significant. One of the key challenges of mobile telecommunications providers in the coming period is how to retain their customers.
The extraordinary sector growth and the growing importance of customer retention due to the intense competition and rivalry in this market, slower acquisitions and market maturity highlight the need to explore the underlying factors affecting customer loyalty in Egypt. The study endeavors to evaluate a framework for customer loyalty in the telecommunications industry in Egypt.
Literature review
Customer satisfaction, customer loyalty and customer retention
Customer satisfaction generally means customer reaction to the state of fulfillment, and customer judgment of the fulfilled state (Oliver, 1997). Churchill and Surprenant (1982) defined customer satisfaction as an output resulting from the customer’s pre-purchase comparison of expected performance with perceived actual performance and incurred cost. Customer satisfaction is also influenced by service quality, product quality and price (Parasuraman et al., 1994).
The...