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Factors Affecting Consumers' Switching Intentions

Article  in  European Journal of Social Sciences · January 2011

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European Journal of Social Sciences – Volume 19, Number 1 (2011)

Factors Affecting Consumers’ Switching Intentions

Ayesha Saeed
Department of Management Sciences
Army Public College of Management Sciences Rawalpindi
E-mail: ashsaeed@hotmail.com

Nazia Hussain
Department of Management Sciences
Army Public College of Management Sciences Rawalpindi

Adnan Riaz
Lecturer, Department of Business Administration
Allama Iqbal Open University Islamabad
E-mail: adnan_riaz@aiou.edu.pk

Abstract
This research study has gone through a detailed analysis of a questionnaire survey by
involving all types of people particularly the youth. 171 responses were collected randomly
to know the switching intentions of different mobile users with the help of four predictors
i.e. outcome quality, perceived commitment, price and anger incident. Findings of the study
showed that beside all other factors have influence on the customers’ switching intentions
but the overriding factor remained the cost effectiveness. The critical role of this factor is
because of the different socio / economic conditions of a developing country like Pakistan
where buying power of a common man is low as compared to rich and developed countries.
But generally it holds true as concluded by other research studies.

Keywords: Outcome Quality, Perceived Commitment, Price, Anger Incident, Consumers’

Switching Intention

1. Introduction
The growing competition in the global market is showing that it is becoming increasingly important for
companies to retain their existing customers. Gaining knowledge about customers' switching behavior
is substantively important which can only be examined by analyzing the role of various factors
affecting switching processes.
This study is based on the responses from youngsters who are also termed as innovators in
marketing literature being dynamic and risk taker. Youngsters always need change in their life and
normally observed adaptive about new and advance offerings. They like creativity and innovation and
move from one product to another. Therefore, preferring new and innovative product is the core
attribute associated with youngsters (Stanton et al., (1994). For example, considering cell phone
industry when a company offers better packages, it entices youngsters to switch to new cellular service
provider irrespective of what advantages existing company is offering. Switching process results in
relationship dissolution. Duck (1982) described relationship dissolution as the permanent dismember
ship. It is the process of the breaking up of relationships by the voluntary activity of at least one side
(Duck and Rollie, 2010). Research in relationship marketing has for some reasons argued that creating
and developing relationships contributes to the success of firms. Some authors are of the view that
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firms can even use relationship marketing as a competitive advantage. Analyzing the dissolution
process is very important in industrial markets for the long-term survival. Moreover, firms must also
frequently consider terminating inefficient relationships because of their implicit costs (Anto´n et al.,
2007).
When firms lose a customer they are not only losing future earnings but also incurring the cost
of finding new customers. Over time loyal customers become less price-sensitive therefore, Losing
loyal customer means giving up high margins. Considering the technological advancements and its
easy access to every individual, customers are becoming intolerant and they can dissolve the
relationship as soon as any problem arises. This is the reason; customer retention is the core concern of
each organization. These notions laid to the foundation of this study as to determine the most important
factors impinging upon customer-vender relationship dissolution. In this research study, the author
tried to specify the best results about switching behavior of innovators who constitute the 3% of the
whole population (Stanton et al., 1994).

2. Literature Review
Contemporary marketing literature reveals keen focus of experts and researchers on customer retention.
Because retaining customers is a core factor for the economic success of a firm in long-run (Wan-Ling
and Hwang, 2006). To retain customers, organizations have to satisfy them particularly in service
industry (Oyeniyi and Abiodun, 2010). If customers are satisfied with the service, this not only
enhances repurchase intentions (Hellier et al., 2003) but also addresses the switching intentions
(Fernandes and Santos, 2007). Switching and switching intentions are considered as the most important
variable in service sector. Organizations are now deeply concerned with the factors which impetus
switching intentions. Understanding switching intentions may help in retaining customers and to avoid
the adverse effects that may result due to switching (Wan-Ling and Hwang, 2006). Service switching is
defined as the act of replacing and exchanging the current service provider with another that is
available to the consumer in the market (Bansal, 1997). Normally customer satisfaction is found to be
the most common factor impinging upon switching intentions (Fernandes and Santos, 2007). As
concluded by Wen-Hua et al., (2010) if customers are satisfied with call quality, mobile device and
customer complement then it negatively affect switching intentions.
But contemporary researches show different attempts of the researchers in explaining the
causes of switching and switching intentions. For example, the study of West (2000) showed that
network externalities, switching costs and psychological involvement are the key factors to predict
switching while according to Gupta et al., (2004) price-search intentions, channel-risk perceptions,
waiting time and evaluation effort have a significant impact on consumer switching. Wen-Hua et al.,
(2010) claimed switching costs and attractiveness of alternatives as dominant factor affecting switching
intention. Jones et al., (2003) made a different attempt by evaluating the impact of instructional manual
understanding on switching intentions. Customers who understand instructions given at handbook
usually face less difficulty in using the service, have higher levels of satisfaction and recommend it to
others therefore have less switching intentions.
A different approach was applied by Bansal (1997) by incorporating some measures of theory
of planned behavior (TPB) in predicting switching intentions. TPB posits a link between attitudes and
behavior. In combination, perceived behavioral control, subjective norm and attitude toward the
behavior lead towards “behavioral intention” (Ajzen, 1991). Bansal (1997) measured the impact of
one's attitude towards switching behavior, perceived behavior control (termed as perceived switching
costs) and satisfaction with the service provider, with intentions to switch. Results confirmed the
significant influence of all three variables on switching intentions.
Keeping in view the different culture, social norms and perceptions of people in Pakistan. This
research focused on price, perceived commitment, outcome quality and anger incident as predicting
variable to explain switching intentions. Previously, Anto´n et al., (2007) analyzed the predicting

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qualities of these variables in Spanish environment and found that poor quality, a perception of low
organization commitment or interest, perceived unfair price and an anger incident can help in
explaining the consumers’ intention to switch.

3. Hypothesis
H1: Poor quality is positively associated with switching intentions.
H2: Perceived commitment is negatively associated with switching intentions.
H3: Outcome quality is negatively associated with switching intentions.
H4: Anger incident is positively associated with switching intentions.

4. Methodology
4.1. Research Model

4.2. Participants/Subjects
Students of the main universities within twin cities (Islamabad and Rawalpindi) of Pakistan were
treated as the population of this study. However, an attempt was made to collect responses from mobile
users with GSM connections only. Since it was a random survey therefore; students of four main
institutes like APCOMS, Foundation University, Fatima Jinnah and SZABIST were approached for
data collection.

4.3. Procedure
It was decided to collect at least 50 questionnaires from each of the institute for equal representation
therefore, a total of 100 questionnaires were floated in each institute using non-probability convenience
(accidental / haphazard) sampling method. Initially self-administered approach was used to float the
questionnaires. Surveys were completed anonymously and returned back.

4.4. Measures
The instrument used in this research was adopted from the study of Antón et al., (2007). Questionnaire
was slightly modified in view of respondents’ approach. It had two sections, one for demographical
information and the other to measure customer switching intention. The responses for questions made
use of different methods like tick-boxes, circling answers and inserting their own comments and
suggestions. Demographic section was based on tick-boxes and consisting of seven questions on age,
gender, highest level of education, occupation, income level, tenure of employment and type of
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network. To measure switching intention, it had two sub-sections to determine score of independent
variables. The respondents were asked to encircle the appropriate number against each statement, that
best suit their feelings. to measure customer switching intention, total of 3 items were given, for
satisfaction of customers only 1 item was given and outcome quality it was two, for interaction quality
3 items were given physical environment quality 2 items were selected, perceived commitment five
items were selected, price 2 items and anger incident 1 item was given and all the items were measured
based on five point likert scale ranging from 1. strongly disagree, through to 5. strongly agree,
developed by Renis Likert to enable respondents to answer questions according to the intensity of their
attitude. the questionnaire also contained brief background information about the purpose of the study
and measures for confidentiality. Initially, 11 questionnaires were distributed as pilot testing, to check
the authenticity of the instrument and then it was distributed to target group of respondents.

5. Data Analysis
Data was analyzed to determine how the units covered in the research project respond to the items
under investigation. Descriptive statistics, Pearson product moment correlation and multiple regression
methods were used in view of hypothesis and research objectives. Figures obtained from SPSS-15.0
statistical part were interpreted to come at conclusion and implications.

Table 1: Demographic Characteristics of Respondents:

Measures Items Percentage

20 or below 26%
21-25 45%
26-30 16%
Age
31-35 6%
36-40 5%
41 or Above 2%
Male 54%
Gender
Female 46%
Bachelors 53%
Masters 33%
Highest Level of Education
MS/M.Phil 9%
P.H.D 5%
Student 72%
Self-Employed 10%
Occupation
Employed 16%
Others… 2%
Below 10,000 23%
11,000-20,000 26%
21,000-30,000 21%
Income Level
31,000-40,000 12%
41,000-50,000 10%
Above 50,000 8%
Less than 1 year 19%
1-5 yrs. 47%
Tenure of Employment
6-10 yrs. 33%
10 or above 1%
Mobilink 12%
Ufone 28%
Telenor 28%
Network
Warid 14%
Zong 18%
Other Nil

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First section of the questionnaire was helped to explain the demography of respondents with the
help of six (6) items. Majority of youngsters were male which is about 54% while 46% were females.
Pakistan is male dominated society therefore this was an encouraging aspect. Most of the respondents
had completed education up to bachelor’s level (53%). We also come to know that 28% youngsters
were using Ufone and Telenor respectively whereas subscribers of the other networks were lower than
this figure. The outcome of survey further showed that 72% of youngsters were students and only 16%
were employed.

Figure 1: Aggregate Mean Values

Anger incident 2.71

Price 3.26

Perceived commitment 3.25

Outcome quality 3.19

Switching intention 2.8

1 2 3 4 5

Descriptive statistics were used to describe the main features of collected data quantitatively.
Since all the items were measured using five point likert scale starting from “strongly disagree” to
“strongly agree” therefore mean values greater than 3.00 for three independent variables (outcome
quality perceived commitment price ) are showing positive trend. Switching intention has 2.80 mean
value while analysis shows 2.71 mean value for anger incident. Standard deviation varies from 0.89 to
1.31 for different variables showing that most observations cluster around the mean for all variables.
Correlation analysis determines the association as well as the extent of association between
variables. Results of correlation analysis show that fair tariff/price is found significantly correlated
with switching intentions. Correlation value between switching intentions is found as -0.51. Second
highest correlation value is calculated as -0.43 between perceived commitment and switching
intentions explaining slightly low relationship as compared to fair tariff and switching intentions but
still significantly high. Correlation value between outcome quality and switching intentions remained
as -0.42 which is also found significantly related.

Table 2: Correlation Matrix

Std. Switching Outcome Perceived Anger

Mean Price
Deviation intention quality commitment incident
Switching intention 2.80 0.89 1
Outcome quality 3.19 1.09 -0.42 1
Perceived commitment 3.25 1.11 -0.43 0.86 1
Price 3.26 1.26 -0.51 0.79 0.79 1
Anger incident 2.71 1.31 -0.3 0.31 0.32 0.43 1
**Correlation is significant at the 0.01 level (2-tailed).

Regression analysis was applied to know the interdependence of two variables. Results show
that total 27 % of the variation in switching intentions is explained by the three predicting variables of
this study. The values of coefficient of determinations are found as -0.2949, -0.0619 and -0.0065 for
fair tariff, perceived commitment and outcome quality respectively. While the t values for all the
independent variables remained more than 2.4 showing significant influence and predicting qualities of
the coefficients.
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Table 3: Regression Table

Dependent Variable Independent Variables Adjusted R Square β t Stat P-value

Outcome quality 0.256 0.007 0.05 0.9544
Perceived commitment -0.077 -0.547 0.5836
Switching Intentions
Price -0.416 -3.476 0.0006
Anger incident -0.099 -1.346 0.1789

In nutshell, regression analysis shows that 27% of the switching intentions among customers
depend upon fair tariff, perceived commitment, and anger incident and outcome quality while rest of
77% dependence is unexplained or explained by other variables which are not taken in this study.

6. Discussions
The factors which affect the switching intentions include tariff rates, perceived commitment, outcome
quality and anger incident. The main focus of this research study was price/tariff rates which showed
relatively strong influence in determining switching intentions. This explanation is consistent with
analogous findings that if the tariff rates are fair then less number of customer switch-over to the other
networks.
Descriptive analysis show that respondents do not have any intentions to change their network
if they do then very few of them are intending to switch to another network. Furthermore, they showed
positive attitude towards quality of services offered by the companies. Their respective network
providers strive to maintain a frequent and constant relationship with them and they rarely had any
experience that angered them. More importantly, they are of the view that the price they pay for the
service is fair and it is a good value for money.
Correlation analysis highlighted the fact that increasing tariff rates may increase the customer’s
switching intention. If customers feel that prices they pay for the telecom services are not good value
for money then ultimately it establishes the feeling to renew their mobile network. Secondly, the
correlation results between perceived commitment and switching intention validate the notion that if
company is not committed to them as a customer then customers start searching for other mobile
service providers.
Outcome quality also affects the customer switching intentions to some extent. It is basically
the actual quality of the service provided by the networks. If the outcome quality is below the mark
then the switching intention will be high. This shows that outcome quality has inverse relationship with
the switching intentions. Results further show that anger incident has smaller impact on switching
behavior. If the customer has a bad experience with the representative of network then it may result in
future switching intentions of customers.
Regression analysis expressed that fair prices, prompt customer services, commitment with
customers and anger free services control the switching intentions and customers stay with their
existing service providers for long time.
Results elucidate that customers are more concerned about the money they pay for the service.
They want the good quality of service in return. Minor fluctuations in the price of packages may lead
to switching towards other cost effective network. So the companies should try to make the tariff rates
fair.

7. Conclusion and Implications of the Study

It is an established fact that from the last decade cell phone has taken a deep root in every walk of our
life particularly in the lower middle and poor class of society. Even expensive mobile sets have
become a status symbol for the people. A common observation in telecom industry is that subscribers
keep on changing their mobile sets due to various reasons. Usually people change their mobile sets to
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experience change. Continuous technological advancements add new features in mobile sets which
also tend youngsters to go for new mobile sets. However, this research study was mainly focused on
investigating the factors that cause individuals to change their cellular connections particularly among
youngsters which constitute the major portion of the population. In Pakistan, various companies have
invested in telecom sector in anticipation of long-term growth. They are duly concerned about
retaining old customers in addition to look for new. This study validate and confirm the significant role
of fair prices, prompt customer services, commitment with customers and anger free services in order
to control switching intentions. Although we cant ignore the role of outcome quality and anger incident
but the core factors identified by the customers remained as fair price and perceptual commitment of
mobile service provider with customer. In view of the findings of this study, the organizations can take
following factors into account;
1. It is the prime duty of support staff to address the problems of their subscribers effectively and
efficiently. Especially, their attitude play important role in retaining customers.
2. Tariff rates should be fair enough to retain existing customers and attract new.
3. Mobile service providers should be fully committed to their customers by maintaining a
frequent and constant.
4. Critical incidences may provide a set back to the relationship between customer and a
company. An utmost effort should be made to avoid such incidences in short-term as well as in
long-term.

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