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EJM
39,7/8 The analysis of antecedents of
customer loyalty in the Turkish
mobile telecommunication
910
market
Received March 2004
Revised July 2004
Serkan Aydin and Gokhan Ozer
Gebze Institute of Technology, Cayirova Kampusu, Gebze Kocaeli, Turkey

Abstract
Purpose Corporate image, perceived service quality, trust and customer switching costs are the
major antecedents of customer loyalty, and loyal customers may buy more, accept higher prices and
have a positive word-of-mouth effect. Also we know that the cost of selling to new customers is much
higher than the cost of selling to existing customers. Although this fact is apparent to everyone, many
companies are still losing customers at a formidable rate. In this context the main aim of this paper is
to examine the relationships between these factors and customer loyalty, and the relationships among
these factors in the Turkish GSM sector.
Design/methodology/approach Data was obtained from 1,662 mobile phone users in Turkey via
questionnaire. The data was analyzed by structural equation modeling (SEM) in order to test all the
relationships between variables in the model.
Findings The findings supported the proposed hypotheses, which are consistent with the
theoretical framework. Analysis results showed that perceived service quality is a necessary but not
sufficient condition for customer loyalty.
Research limitations/implications In order to generalize the findings from the paper, the model
should be studied in different sectors. The contribution of this paper is to model all the relationships
between customer loyalty and its antecedents, and to test these relationships simultaneously.
Practical implications In order to better understand customer loyalty, as well as perceived
service quality, corporate image, perceived switching costs and trust should be taken into
consideration. Lately, technological change has shifted competition in the GSM sector from price and
core service to value-added services. Therefore, operators should differentiate their services and
guarantee their services quality because of this shift in competition.
Originality/value In this paper, the effects of all the factors on customer loyalty are analyzed
simultaneously via SEM.
Keywords Customer loyalty, Telecommunications, Customer services quality, Corporate image, Trust,
Turkey
Paper type Research paper

European Journal of Marketing
Vol. 39 No. 7/8, 2005
pp. 910-925
q Emerald Group Publishing Limited
0309-0566
DOI 10.1108/03090560510601833
Introduction
A critical issue for the continued success of a firm is its capability to retain its current
customers and make them loyal to its brands (Dekimpe et al., 1997, p. 405). Loyal
customers build businesses by buying more, paying premium prices, and providing
new referrals through positive word of mouth over time (Ganesh et al., 2000, p. 65). In
fact, companies in telecommunications are losing 2-4 percent of their customers
monthly; disloyal customers can amount to millions of lost revenue and profit. For
example:
 20% of customers of the mobile phone operator Orange defect each year and, on average it Antecedents of
cost Orange 256 in 1996 to recruit each new customer, reflecting the cost of introductory
offers, subsidized phones and advertising. With almost a million customers, therefore, customer loyalty
reducing the churn rate from 20% to 10% would bring about annual savings of over 25
million (Palmer, 1998, p. 117).
In the same way, studies conducted in the financial services industry show that
increasing customer retention (or customer loyalty) by 5 percent could lead to 25-75 911
percent profit growth (Chan et al., 2001, p. 5):
Especially in telecommunications services, it is frequently pointed out that once customers
have been acquired and connected to the telecommunications network of a particular
operator; their long-term relations with the focal operator are of greater importance to the
success of the company in competitive markets than they are in other industry sectors
(Gerpott et al., 2001, p. 249).
Oliver (1997, p. 392) defines customer loyalty as:
. . . a deeply held commitment to rebuy or repatronize a preferred product/service
consistently in the future, thereby causing repetitive same-brand or same brand-set
purchasing, despite situational influences and marketing efforts having the potential to
cause switching behavior.
Although there are so many different definitions about customer loyalty, there seems
to be two basic approaches stochastic and deterministic loyalty (Odin et al., 2001).
The stochastic approach assumes customer loyalty as a behavior (Ehrenberg, 1988).
In this approach it is considered that the preference structure of the customer is
reflected in the customers behavior. Some of the operational measures of this approach
are shares of purchase, purchasing frequency, etc. On the other hand, the deterministic
approach assumes customer loyalty as an attitude (Fournier and Yao, 1997). It is
considered that merely describing the actual behavior of the customer does not suffice,
but a proper analysis and description are clearly required for underlying attitudes
structure of the customer. Some of the operational measures in deterministic approach
are preference, buying intention, supplier prioritization and recommendation
willingness.
Jacoby and Kyner (1973, p. 2) express customer loyalty by a set of six necessary and
collectively sufficient conditions by integrating two approaches:
[T]hese conditions express that brand loyalty is (1) the biased (i.e., random), (2) behavioral
response (i.e., purchase), (3) expressed over time, (4) by some decision-making unit, (5) with
respect to one or more alternative brands out of a set of such brands, and (6) is a function of
psychological (decision making, evaluative) process.
Although there are many antecedent factors affecting brand loyalty, it is impossible to
find a study that has examined the effects of all factors simultaneously and jointly.
Therefore, the main objective of this study is to determine the potential antecedents of
customer loyalty and to test the relationships among these factors.
It is known that corporate image (Nguyen and Leblanc, 2001), customer switching
costs (Jones et al., 2002), trust (Lau and Lee, 1999) and service quality (Bolton and Drew,
1991) have significant effects on customer loyalty. In this context, the relations among
customer loyalty, trust, customer switching costs and service quality are analyzed by
using structural equation modeling.
EJM This study designed is as follows. First we present an overview of all of the
antecedent factors of customer loyalty and the relationships. Second, the hypotheses
39,7/8 and the structural model are proposed. Then the research methodology is described,
and finally the findings are discussed from the point of view of theoretical and
managerial implications and future research.

912 Theoretical background

Service quality
Even though there is no consensus about conceptualizing and measuring service
quality (Carman, 1990), in this study we assume service quality to be the consumers
judgment about the overall excellence or superiority of a service (Zeithaml, 1988). In
order to have a better understanding about service quality, we should understand
general attributes of services first. The attributes reveal that:
.
services are intangible;
.
services are heterogeneous, meaning that their performance often varies with
respect to the provider and the customer;
.
services cannot be placed in a time capsule and thus be tested and re-tested over
time; and
.
the production of services is likely to be inseparable from their consumption
(Gronroos, 1990).
Because of the attributes of services, the evaluation of service quality is more difficult
than the evaluation of product quality. Also, the evaluation may be connected with the
service delivery process, along with output (Cody and Hope, 1999).
In general, service quality is seen as a critical factor for profitability, and thereby a
firms success. Two underlying processes generally explain the contribution of service
quality to profitability. First, service quality is regarded as one of the few means for
service differentiation and competitive advantage that attracts new customers and
contributes to the market share (Venetis and Ghauri, 2000, p. 215).
Second, service quality enhances customers inclination to buy again, to buy more,
to buy other services, to become less price-sensitive and to tell others about their
favorable experiences (Venetis and Ghauri, 2000, p. 215). For example, Bloemer et al.
(1998) and Jones et al. (2002), among others, have pointed out that there is a positive
relationship between service quality and repurchase intention, recommendation, and
resistance to better alternatives. All these repurchase intention, recommendation
and resistance to better alternatives are behavioral intentions and constitute
customer loyalty. Therefore, it is proposed that service quality has a positive effect on
customer loyalty.

Trust
Anderson and Narus (1990) emphasize that trust occurs when one party believes that
the other partys actions would result in positive outcomes for itself. Consequently, in
order to trust a brand, customers should perceive quality as being positive.
Trust has been recognized as an important role in affecting relationship
commitment (Morgan and Hunt, 1994) and so customer loyalty (Gundlach and
Murphy, 1993). It appears that if one party trusts another, it is likely to develop some
form of positive behavioral intention towards the other party. Accordingly, when a
customer trusts a brand, this means that he is also likely to form a positive buying Antecedents of
intention towards the brand (Lau and Lee, 1999). customer loyalty
In this context, trust works at preserving relationship investments by cooperating
with exchange partners, resists attractive short-term alternatives in favor of the
expected long-term benefits of staying with existing partners, and views potentially
high-risk actions as being prudent because of the belief that their partners will not act
opportunistically (Morgan and Hunt, 1994). Hence, it is claimed that there is a positive 913
relationship between trust in a firm and customer loyalty, consistent with the past
research (e.g. Chaudhuri and Holbrook, 2001; Lau and Lee, 1999).
Doney and Cannon (1997) suggest that the construction of trust involves a
calculative process based on the ability of a party to continue to meet its obligations
and on an estimation of the costs versus rewards of staying in the relationship.
Therefore, to trust a brand, customers should not only perceive positive outcomes but
also believe that these positive outcomes will continue in the future. Consequently,
service quality should positively affect trust in the operator.
Trust also reflects credibility (Ganesan, 1994, p. 3), and credibility affects the
long-term orientation of a customer by reducing the perception of risk associated with
opportunistic behaviors by the firm (Erdem et al., 2002; Ganesan, 1994). Specifically,
trust reduces uncertainty in an environment in which consumers feel vulnerable, since
they know that they can rely on the trusted brand (Chaudhuri and Holbrook, 2001,
p. 82). That the customer trusts the operator in the GSM sector reduces uncertainty
associated with services which were delivered previously or which are yet to be
delivered. Reducing the uncertainty associated with the operator increases relatively
the uncertainty of alternatives and thereby the perceived switching cost.

Corporate image
Corporate image is described as the overall impression made on the minds of the public
about a firm (Barich and Kotler, 1991). Nguyen and Leblanc (2001, p. 228) claim that
corporate image is related to the physical and behavioral attributes of the firm, such as
business name, architecture, variety of products/services, and to the impression of
quality communicated by each person interacting with the firms clients.
Corporate image is the result of a process (MacInnis and Price, 1987). The process
stems from ideas, feelings and consumption experiences with a firm that are retrieved
from memory and transformed into mental images (Yuille and Catchpole, 1977).
Therefore, corporate image is the result of an evaluation process. Although a customer
may not have enough information about a firm, information obtained from different
sources such as advertisements and word of mouth will influence the process of
forming the corporate image.
Fishbein and Ajzen (1975) argue that attitudes are functionally related to behavioral
intentions, which predict behavior. Consequently, corporate image as an attitude must
affect behavioral intentions such as customer loyalty (Johnson et al., 2001, p. 224).
Nguyen and Leblanc (2001) demonstrate that corporate image relates positively with
customer loyalty in three sectors (telecommunication, retailing and education). The
same relationship is demonstrated by Kristensen et al. (2000) for Danish postal
services, and by Juhl et al. (2002) for the Danish food retailing sector.
As pointed out above, corporate image stems from all of a consumers consumption
experiences, and service quality is a function of these consumption experiences. Hence,
EJM customer perception about service quality directly affects the perception of corporate
39,7/8 image.

Switching costs
Porter (1998, p. 10) defines switching costs as one-time costs facing the buyer when
switching from one suppliers product to anothers. In addition to objectively
914 measurable monetary costs, switching costs may also pertain to the time and
psychological effort involved in facing the uncertainty of dealing with a new service
provider (Bloemer et al., 1998, Klemperer, 1987). Hence, switching costs are partly
consumer-specific (Shy, 2002). For this reason, a switching cost can be seen as a cost
that deters customers from demanding a rival firms brand.
Jackson (1985) describes the switching cost as the sum of economic, psychological and
physical costs. The economic or financial switching cost is a sunk cost which appears
when the customer changes his/her brand, for example the costs of closing an account with
one bank and opening another with a competitor, the cost of changing ones long-distance
telephone service (Klemperer, 1987) or the costs of changing ones GSM operator.
Procedural switching costs stem from the process of customers purchase decision
making and their implementation of the decision. The buying process (Etzel et al.,
1997) contains the following phases:
(1) need recognition;
(2) information search;
(3) evaluation of alternatives;
(4) purchase decision; and
(5) post-purchase behavior.
For example, if a consumer wishes to change their operator, they should evaluate
alternative operators with regard to different criteria, such as coverage area, billing,
customer service, value-added service, etc., complete the procedure for purchasing a
new GSM line, and finally inform people of the new GSM number.
Psychological cost is perceived as the cost stemming from social bonds (e.g.
staff-customer relations, etc.) that appear over the course of time and the
uncertainty/risk of the unused brand. The customer perceives high risk regarding a
brand he/she has never used (Sharma and Patterson, 2000). Especially in services,
where customers prefer a rival service provider, risk exists because service quality
cannot be evaluated before purchasing (Sharma et al., 1997).
A customer who has collected information in order to decrease their anxiety about a
wrong purchasing decision will use all previous purchase experience. This is called
post-purchase cognitive dissonance (Etzel et al., 1997). In this process, if the customer
were to switch brand, he/she would compare the switched brand and the previous
brand. Therefore, the better the switched brands performance, the higher the
alternatives uncertainty. Hence, customers who want to decrease cognitive dissonance
prefer brands that they have used before (Klemperer, 1995).
Markets with switching costs are generally characterized by consumer lock-in,
where it is observed that consumers repeatedly purchase the same brand even after
competing brands become cheaper. One important consequence of having consumer
lock-in is the ability of firms to charge prices above marginal costs (Shy, 2002, pp. 71-2).
In the case of a market having switching costs, when customers select from a number Antecedents of
of functionally identical brands, they display brand loyalty and go on buying the same
brand (Klemperer, 1987). In short, ex ante homogeneous products may, after purchase,
customer loyalty
be differentiated ex post by switching costs (Klemperer, 1987). Moreover, if customers
are sensitive to a products attributes, such as quality, uncertainty will decrease price
sensitivity (Erdem et al., 2002): in other words, the customer behaves loyally.
For these reasons, switching costs are a factor that directly influences customers 915
sensitivity to price level, and so influences customer loyalty (Jones et al., 2002; Bloemer
et al., 1998; Burnham et al., 2003; Lee et al., 2001).

Hypotheses and structural model

Based on the results of earlier studies discussed in the previous section, we formulated
the hypotheses detailed below. Figure 1 presents a proposed model, representing all of
the hypotheses. Arrows in Figure 1 indicate causal directions.
H1. There will be a positive relationship between perceived service quality and
customer loyalty.
H2. There will be a positive relationship between perceived service quality and
trust in the operator.
H3. There will be a positive relationship between trust in the operator and
perceived switching cost.
H4. There will be a positive relationship between trust in the operator and
customer loyalty.
H5. There will be a positive relationship between corporate image and customer
loyalty.
H6. There will be a positive relationship between perceived service quality and
corporate image.
H7. There will be a positive relationship between perceived switching cost and
customer loyalty.

Figure 1.
The proposed model
EJM H8. There will be a positive relationship between perceived service quality and
39,7/8 perceived switching cost.

Methodology
Measures
916 All of the constructs in the model were measured using a multiple-item measurement
scale. All measures used a five-point Likert-type response format, with strongly
disagree and strongly agree as the anchors. A list of measurement items was
developed using input from the review of the literature related to our study. All of the
measures were translated from English into Turkish. To ensure content validity, the
measures translated into Turkish were assessed by three academics so that
respondents would understand the questions correctly. Then the measures were
translated into English by a different academic, and the original measures were
compared with these measures. The items can be seen in Table I.
To measure customer loyalty (CL), the five-item scale developed by Narayandas
(1996) was adapted to the Turkish GSM sector. Accordingly, the operational measures
in measuring customer loyalty are:
.
repurchase intention (next-use);
.
resistance to switching to competitors product that is superior to the preferred
vendors product; and
.
willingness to recommend preferred vendors product to friends and associates.
Perceived switching cost (SC) was assessed by seven items adapted from Burnham
et al. (2003), Guiltinan (1989) and Jones et al. (2002). Operational measures used in the
scale are:
. perceived monetary costs;
.
perceived uncertainty costs;
.
perceived evaluation costs;
.
perceived learning costs; and
.
perceived set-up costs.
Regarding the measure of trust (TR), a five-item scale was developed by using different
but complementary definitions. The operational measures used in measuring trust
were:
.
reliability;
.
ethics;
.
service quality; and
.
cumulative process.
In measuring perceived service quality, instead of the 22-item SERVQUAL instrument,
a unidimensional measure (five-item scale) of perceived service quality relating to an
evaluation of all the base services was used for reasons of data collection efficiency
(Bloemer et al., 1998, p. 441). In the GSM sector, the base services are coverage of
calling area, value-added services, customer support services, the suppliers services of
the operator, and services in campaigns.
Construct Item
Antecedents of
customer loyalty
Switching costs: GFI 0:94, Cronbachs a 0:674, Bentler-Bonett NFI 0:83
1. Switching to a new operator causes monetary cost
2. If I switched to a new operator, the service offered by the new operator might not work as
well as expected
3. I am not sure that the billing of a new operator would be better for me 917
4. To switch to a new operator; I should compare all operators (on account of services,
coverage area, billing, etc.)
5. Even if I have enough information, comparing the operators with each other takes a lot of
energy, time and effort
6. If I switched to a new operator, I could not use some services (MMS, GPRS, WAP, etc.),
until I learned to use them
7. I would be concerned about the people who would dial my previous number and could not
reach me

Customer loyalty: GFI 0:97, Cronbachs a 0:824, Bentler-Bonett NFI 0:97

1. I will go on using this GSM line
2. If I bought a new GSM line, I would prefer this GSM operator
3. I recommend this operator to people
4. I encourage friends who plan to buy a GSM line
5. Even if the other operators billing was cheaper, I would go on using this GSM line

Corporate image: GFI 0:96, Cronbachs a 0:871, Bentler-Bonett NFI 0:97

1. This company is stable and firmly established
2. This company is innovative and forward-looking
3. This company has a social contribution for society
4. This company is a leading firm in the Turkish GSM sector
5. This company has a positive image

Trust: GFI 0:94, Cronbachs a 0:856, Bentler-Bonett NFI 0:95

1. I trust this company
2. I feel that I can rely on this company to serve well
3. I trust the billing system
4. I believe that I can trust this company will not try to cheat me
5. This company is reliable because it is mainly concerned with the customers interests

Service quality: GFI 0:90, Cronbachs a 0:827, Bentler-Bonett NFI 0:89

1. Given the quality of your operators coverage area, how would you rate the coverage area
for your operator?
2. Given the quality of your operators customer services, how would you rate the customer
services for your operator?
3. Given the quality of your operators adding service (GPRS, WAP etc.), how would you rate
the adding service for your operator?
4. Given the quality of your operators vendor, how would you rate the vendor for your Table I.
operator? The items and
5. Given the quality of your operators campaign, how would you rate the campaign for your unidimensionality,
operator? reliability, and
6. When you compare advertisements with services, how would you rate the services for convergent validity
your operator? indices
EJM Corporate image was measured by five items developed by Bayol et al. (2001), which
39,7/8 used the scale in analyzing the customer satisfaction index in GSM sector.

Sample and data

Data was collected from mobile phone users in the biggest cities in Turkey (Istanbul,
Ankara, Izmit and Bursa). A total of 1,950 mobile phone users were contacted over a
918 six-week period via a questionnaire. A number of questionnaires were eliminated by
means of examining control questions in the questionnaire form. For this reason, the
final data set contained 1,662 GSM subscribers.
The samples distribution on GSM operators was consistent with their real market
share:
.
Aria, 10.1 percent;
.
Aycell, 7.8 percent;
.
Telsim, 32.2 percent; and
.
Turkcell, 50.4 percent.
In the same way, consistent with market share, 43.6 percent of subscribers in the
sample used a post-paid line, and 56.4 percent of subscribers used a pre-paid line.
Sample characteristics appear to be representative of mobile phone users in Turkey.
A total of 37 percent of the sample is female, the mean age of the sample is 29 years, the
mean monthly mobile phone bill is 34.8 million Turkish lira, and the respondents
monthly revenue is 884 million Turkish lira.

Non-response bias
To assess the possibility of non-response bias in the collected data set, we performed a
chi-square difference test. To this end, we used the approximate percentages of each GSM
operator in the market and the percentage of each GSM operator in our sample. Whether
two distributions differed from each other was tested by chi-square test. From the result
of the test (x23 0:1652; p , 0:01), we can state that there is no difference between the
two distributions. Accordingly, non-response bias may not be a significant problem.

Measure validation
Confirmatory factor analysis (CFA) was used for establishing the validity of the
constructs (Ahire et al., 1996). Prior to the reliability analysis, the series mean was
replaced instead of missing values in the data set.
Unidimensionality is a necessary condition for reliability and construct validation
(Mak and Sockel, 2001, p. 271). The unidimensionality of the constructs was analyzed
by specifying a measurement model for each construct. According to Joreskog and
Sorbom (1993), a goodness of fit index (GFI) of 0.90 or above suggests that each of the
constructs is unidimensional. As seen in Table I, the GFI value of the construct is 0.90
or above.
Convergent validity is examined by using the Bentler-Bonett normed fit index (NFI)
(Bentler and Bonett, 1990). All of the constructs, except perceived switching cost and
perceived service quality, have NFI values above 0.90. Perceived service quality has an
NFI value of 0.83 and perceived service quality has an NFI value of 0.89. These values
are close to 0.90. Therefore, convergent validity was achieved for all the constructs in
the study.
 In assessing discriminant validity, CFA was performed on a selected pair of scales, Antecedents of
allowing correlation between two constructs. The analysis was rerun with the customer loyalty
correlation between the two constructs fixed at 1. If the correlation is a free parameter
and not this fixed constant, the x 2 of the initial model (where correlation is free) should
be much smaller than the latter model (where it is fixed at one). In addition, the
difference between the chi-squares of these two models should be significant when
checked against the chi-square test statistic at p , 0:01 with degrees of freedom equal 919
to the difference in degrees of freedom between the two models (Gursoy et al., 2004). All
of the chi-square difference tests [minimumx2dif1 2; 069:55; p , 0:01]
demonstrated that discriminant validity has been achieved.
For reliability, the items were submitted to reliability analysis via Cronbachs alpha.
Reliability analysis of five factors is shown in Table I. The reliability values of all the
factors were either close to or greater than 0.70, the threshold Nunnally (1978)
recommended for research. The reliability and validity analysis results indicate that
the scales for the constructs appear to have satisfactory measurement qualities.

Tests of hypotheses
Structural equation modeling (SEM) was used to test the hypothesized relationships in
the proposed model shown in Figure 1. The structural equation modeling technique
enables the simultaneous estimation of multiple regression equations in a single
framework. Notably, all direct and indirect relationships in the model are estimated
simultaneously, and thus the method allows all the interrelationships among the
variables to be assessed in the same decision context (Oh, 1999, p. 74).
The proposed model was analyzed via the maximum likelihood estimator of
LISREL 8.3 by using the covariance matrix of the measured variables as input. Table II
reports goodness of fit indices, standardized parameter estimates and their t-values for
the structural model. The overall chi-square statistic is significant (x2336 2; 767:69;
p , 0:01), which is expected given the large sample size (Bagozzi and Yi, 1988). All
other goodness of fit indices are within the acceptable ranges (GFI 0:89,
AGFI 0:87, SRMR 0:049, CFI 0:92, RMSEA 0:066). All of the fit indices
indicate that the proposed model exhibits a reasonably good fit to the data.
In accordance with the parameter estimates shown in Table II, perceived service
quality is positively and significantly related to customer loyalty (H1: g1 0:14,
p , 0:01). In the same way, as proposed in H4, trust has a positive and significant
effect on customer loyalty (H4: b2 0:59, p , 0:01), and as proposed in H7, perceived
switching costs positively and significantly affect customer loyalty (H7: b4 0:14,
p , 0:01). However, although corporate image affects positively customer loyalty (H5:
b3 0:07), this effect is not statistically significant. Hence, H5 is rejected.
The analysis results also yield that perceived service quality relates positively and
significantly with trust (H2: g2 0:60, p , 0:01). This finding supports H2. Moreover,
the path from perceived service quality to perceived switching cost is significant (H8:
g4 0:09, p , 0:05).
Referring to Table II, the findings indicate that trust in the operator relates
positively and significantly with perceived switching cost (H3: b1 0:30, p , 0:01).
This result supports H3. In the same way, since the positive relationship between
perceived service quality and corporate image (H6: g6 0:62, p , 0:01) is significant
at p , 0:01, H6 is supported.
EJM Path Hypothesis Estimate t-Value
39,7/8
Perceived service quality ! customer loyalty H1 0.14 5.02*
Perceived service quality ! trust H2 0.60 19.96*
Trust ! perceived switching cost H3 0.30 7.44*
Trust ! customer loyalty H4 0.59 13.87*
Corporate image ! customer loyalty H5 0.07 1.83
920 Perceived service quality ! corporate image H6 0.62 20.64*
Perceived switching cost ! customer loyalty H7 0.14 5.88*
Perceived service quality ! perceived switching cost H8 0.09 2.39**
x2336 2; 767:69
GFI 0:89
AGFI 0:87
SRMR 0:049
CFI 0:92
RMSEA 0:066
SMCcustomer loyalty 0:63
SMCtrust 0:36
SMCcorporate image 0:38
SMCperceived switching cost 0:13
Notes: CFI comparative fit index; GFI goodness of fit index; AGFI adjusted goodness of fit
Table II. index; SRMR standardized root mean square residual; RMSEA root mean square error of
Summary of results approximation; SMC squared multiple correlation; *p , 0:01 (one-tailed test); **p , 0:05

Table II indicates that the model shows a fairly high level of explanatory power for
four endogeneous constructs, with customer loyalty, trust, corporate image and
perceived switching cost having SMC values of 0.63, 0.36, 0.38 and 0.13, respectively.

Discussion
In this study, the relationship between customer loyalty and perceived service quality,
perceived switching cost, trust and corporate image is investigated. To this end, the
data was analyzed by path analysis. The results of the path analysis show that all of
the factors have positive effects on customer loyalty.
The analysis results reveal that trust is the most important determinant of
customer loyalty. Even though perceived service quality and perceived switching
cost seemed to have the same level of effect on consumer loyalty, the switching
cost should be considered as a more important factor due to its indirect effect.
For example, the indirect effect of perceived service quality on customer loyalty
stems from the positive relations between perceived service quality and such
factors as trust, corporate image and perceived switching cost. Since these factors
directly affect customer loyalty, we found the indirect effect of perceived service
quality to be 0.43. In the same way, the indirect effect of trust on customer loyalty
is based on the direct effect of perceived switching cost, and its indirect effect was
measured as 0.04. As a result, the total effect of trust on customer loyalty is 0.63.
This indirect effect is based on the path from trust to perceived switching cost
and the path from perceived switching cost to customer loyalty. As can be seen in
Figure 1, perceived switching costs and corporate image have no indirect effect on
customer loyalty.
 Although it is not significant, the analysis results indicate that corporate image Antecedents of
affects positively customer loyalty. The general experience of marketing professionals customer loyalty
also verifies that such an effect is valid. The situation can be explained by the general
characteristics of Turkish mobile phone market, since the purchasing power of
subscribers is less than in developed countries, and the indirect tax rate in the GSM
sector is relatively higher in Turkey. Consequently, the most important factor for the
decision making process of subscribers is services provided by operator compared to 921
cost. The operators image has no significant effect on consumer loyalty in the Turkish
GSM sector.
Perceived switching cost is influenced by trust and perceived service quality,
whereas perceived service quality affects both perceived switching cost and trust.
For this reason, perceived service quality relates both directly (0.09) and indirectly
(0.18) to perceived switching cost. As regards trust, it has a direct effect (0.30) on
perceived switching cost. These findings indicate that trust is a more crucial factor
for perceived switching costs than perceived service quality.
Generally, as discussed above, the findings show that perceived service quality is a
necessary but not sufficient condition for customer loyalty to emerge and to exist. In
addition, consistent with prior research, corporate image, perceived switching costs
and especially trust should be taken into consideration in developing strategies for
developing customer loyalty.
Essentially, the SMC value of customer loyalty in this study is higher than that in
prior research (e.g. DeWulf and Odeberken-Schroder, 2003; Bloemer et al., 1998;
Chaudhuri and Holbrook, 2001; Nguyen and Leblanc, 2001; Sharma and Patterson,
2000; Lee et al., 2001, etc.), since our model includes all these factors effects
simultaneously and jointly. Therefore, our proposed model has a great explanatory
power in comparison to prior research.

Managerial implications
In the Turkish GSM market, there are four operator firms. Two of the operators (Aria
and Aycell) are new entrants. On the other hand, it may be concluded from the fall in
the markets growth rate that the GSM market has reached maturity in Turkey.
Acquiring new customers is both costly and difficult in terms of marketing for GSM
operators when the number of subscribers has reached its peak level. Hence, it is
becoming an industry-wide belief that the best core marketing strategy for the future is
to try to retain existing customers by heightening customer loyalty and customer
value (Kim et al., 2004, p. 146). To this end, operators should decrease their
subscribers sensitivity to price. It can be said that factors such as trust, perceived
service quality, perceived switching cost and positive corporate image are very
important for GSM operators to establish a loyal customer base and decrease their
sensitivity to price.
On the other hand:
. . . bolstered by the rapid development of information and communication technologies (ICT)
and high demand from customers, the paradigm of mobile telecommunication services is now
shifting from voice-centered communication to a combination of high-speed data
communication and multimedia (Kim et al., 2004, p. 145).
This change shifts competition in GSM sector from price and core services (coverage of
calling area and clarity of sound) to value-added services. For this, the operators should
EJM differentiate their services and guarantee quality of their services in order to maintain
39,7/8 their market share.
Due to technological changes and differentiation strategies of firms, services
become more and more complex than ever. As the services provided become more
complex, the learning period for service use becomes longer and the evaluation process
becomes more difficult for customers. Differentiation will increase perceived switching
922 cost. Accordingly, despite the attempts of the regulator (Telekomunikasyon Kurumu),
which focus on minimizing the deterrent to switch operator (switching cost), perceived
switching cost may be seen as a crucial factor for customer loyalty. In addition,
differentiating services and the superior quality standards of these services will not
only increase trust in the operator, but also enable the formation of a positive corporate
image in subscribers minds.
In many European countries new users are tied to contracts extending over a certain
period of time, during which the subscriber has to maintain the service and pay a
pre-agreed fixed fee. This contractual bond between the operator and subscribers may
cause switching costs. In Turkey, however, new users are tied to contracts extending
over uncertain periods of time. Therefore, operators in Turkey may offer subscriptions
with definite periods of time in order to increase switching costs.

Limitations and future research directions

This study has some limitations. First, the perceived switching cost was assessed by a
seven-item scale. The switching cost consists of different sub dimensions, such as
psychological, financial and procedural. Therefore, these sub dimensions should be
measured and their effects should be examined. This approach may provide both
empirical and theoretical information.
Second, rival operators attempts to attract new subscribers (such as lower price
level, phone lines without fee, etc.) affect the preference of subscribers. Therefore,
subscribers perceptions about these attempts should be assessed, and the direct and
indirect effect of these perceptions on customer loyalty and on its antecedents should
be studied. Consequently, in order to generalize the findings in the study, mobile
telecommunication services should be compared with other industries.
Finally, Dick and Basu (1994) conceptualize customer loyalty as the strength of the
relationship between customers relative attitude towards an entity (brand, firm, store,
etc.) and repeat patronage (behavior). According to this approach, customers are
divided into four segments using two levels of behavioral loyalty and two levels of
attitude toward the brand. These groups are true loyal (high behavioral loyalty and
high relative attitude), hidden loyal (low behavioral loyalty and high relative attitude),
spurious loyal (high behavioral loyalty and low relative attitude) and no loyal (low
behavioral loyalty and low relative attitude). With respect to this typology, even if
customers may tend to be attitude loyal because of high perceived service quality,
perceived switching cost and trust, they may not behave loyally, or although they have
low relative attitude loyalty because of low perceived service quality, perceived
switching cost and trust, they may behave loyally. Therefore, the effect of perceived
service quality, switching costs, trust, corporate image and other possible situational
factors (e.g. attractiveness of alternatives, lack of rival brands, etc.) on both behavioral
loyalty and attitude loyalty should be studied in future research.
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