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The Impact of Advertising on Customer Satisfaction Essay

Introduction:

Mobile technology introduced in 1957 after introduction of first fully automatic mobile phone. Prince Philip was the first consumer to use mobile phone in his car in 1957.He uses that phone to talk with Queen while he was away on the road. Those days mobile technology has considered high end luxury even Dukes not allowed to use mobile, but now trends has changed completely , mobile phone considered as necessity of life. It is now using to communicate and keep in touch. (UK Telephone History 2010)

In Sri lanka Luxembourg based Millicom International cellular was first company to introduce and launch its services in Early 1990s called Celltel, later in 2007 its rebranded as Tigo .Current Etisalat is exist after acquisition of Tigo by Etisalat UAE in 2010.Those days mobiles was used by higher market segment , only Business executives and well paid employees afford to talk using mobiles. Later in 1993 introduction of digital based mobile system by Dialog (Axiata Telecom) Malaysian based mobile phone company ,which provides more secured and clear services than previous analog mobile phones with Sms ( Short Message service) under GSM technology using 2G and 2.5G. In 2004 Mobitel (Subsidiary of Sri lanka telecom)was launched and later introduced first ever 3G services not only in Sri lanka in whole south Asia which ranks Sri lanka first country to launch 3G services, Study Back Ground:

Mobile Phone technology in Sri Lanka has grown tremendously during last few years. currently in 2013 all five operators providing 3G coverage almost in every main district with claiming of 70 percent area covered with 3G.Mobile technology in Sri Lanka provides wireless voice and data service at very affordable price. It eases day to day business and personal contact around the Island, with 5 operators and thousands of communication towers, now communication can be done easily from any remote village of Sri lankasuch as Batticolla or Metropolitan city such as Colombo and Galle. Now everyday millions of people making billions of calls and using tons of data service by using telecom operators multimillion dollar infrastructure and giving out revenue to operators in return.( International telecommunication union ITU, 2013)

Due to high competition from five operators and heavy tax imposed on imported mobile phones, GSM subscribers market in Sri lanka is highly saturated. Mobile market in Sri Lanka was running with less growth rate during last few years, In 2012 mobile penetration rate reached 91% with Dailog Axiata sharing the large slice of 7 million customers around 40 percent of total mobile subscribers followed by Etisalat Sri Lanka and Mobitel with 20 percent of market share each operator with more than 4 million subscribers and than Comes Hutch Sri Lanka and Airtel with less than 15 percent of market share with less customer satisfaction and poor coverage.( International telecommunication union ITU, 2013) Each mobile operator looking for more subscribers and increase market share claims best coverage with huge advertisement on mass media. Customer satisfaction is the main target for these operators and by personalized paid advertising and PR they are on the way to create more customer satisfaction.

Table 1- Number of Sri Lankan Mobile Subscribers in Millions

Figure 1, Fixed lines and mobile market Growth in Sri lanka
Study Area:
Hutch Telecom:

Hutch Sri Lanka is a mobile operator in Sri Lanka under subsidiary of Hutchison Hong Kong Based Mobile operator. Hutchison telecom not only mobile service provider in Sri lanka they are also providing voice and data 3G services and operating currently around 10 countries worldwide including far east countries Indonesia and Australia , in Europe they are in Italy, Sewden, Denmark, Austria, Ireland and United Kingdom.It was launched in 2004 with the mission of Island wide coverage in a near future. Now Hutch cover more than 70 % Island wide coverage approximately, It claims first operator in Sri Lanka who offers most district covers all around Sri Lanka under 3G coverage. Hutch Sri Lanka provide voice and data service to 1 Million Subscribers around the Island (Hutch.lk). After its launch hutch Sri lanka spends up to 71 million Hong Kong dollars in network expansion and advertising including improving infrastructure and increase number of communication towers for best coverage, apart from that huge amount also spend on media promotion and advertising including TV commercials and billboards on streets.(Hutch lose its Customer 2008)

Figure 1: Hutch Advertising Claim about 3G coverage

Figure2 : Hutch Voice And 3G Coverage

Hutch Sri Lanka advertisement:

Hutch Sri Lanka like other players invest millions of Sri Lankan rupees in advertising , in which they play jingles to attract its customers and increase their satisfaction in brand. Among other ads Kiyanaa Kiyanna ( say it) was the first TV commercial of Hutch Sri Lanka , which get much attention due to story of interest in 30 second paid commercial. Famous Sri Lankan cricketer Kumar Sangakkara also earlier attached with Hutch Sri Lanka as a brand ambassador to Hutch for three consecutive years from “2005 to 2008” in which he quotes about Hutch “Between July 2005 and August 2008 I had a contract with Hutch only. I enjoyed my three years working with Hutch and the relationship was mutually beneficial”. (Island Cricket 2005)

Public Relation activities:

Hutch Sri Lanka also besides paid advertising also involves in PR Public Relation activities to satisfy its consumers and create positive image among its consumers in which employee blood donation get much media attention. In this campaign hutch employees donate their blood to Sri Lanka National Blood Transfusion Service (NBTS) and mention about advantages of blood donation in society in which Hutch Sri Lanka encourage others to donate their blood often to saves life.( Hutch saves life 2010)

Least Customer Satisfaction:

Hutch telecom Sri Lanka still didn’t achieve its target of 1 million subscribers, currently it comprises last number in customer satisfaction ranking with little subscribers.In 2010 after launch of Etisalat Lanka and Airtel bharti limited .Hutch current ranking comes at number 5 in last among its competitors operators. Hutch Sri Lanka has better infrastructure and quality of service but lack of marketing personals and wrong choice of advertisement media its reputation is going down day by day. Sri Lankan consumers not willing to use its services due to less number of subscribers which force them to pay levy in order to call their family and friends through Hutch Sri Lana to other operators or non hutch numbers.

SWOT ANALYSIS OF HUTCH SRI LANKA:

Strength:
It’s communication tower coverage almost throughout all Sri Lanka. Fast Internet speed through 3G technology with maximum coverage area covered with 3G compared with competitors, such as Jaffna first covered by 3G by Hutch Sri Lanka.

Weakness:

Less brand exposure among its consumers
Low or weak signal coverage in remote areas.

Opportunities:
Hutch couple sim, which allow call between two numbers at very cheap rate, unique service by hutch Sri Lanka Lowest IDD call rates which attract new customers

Threat:
Declining in number of subscribers due to poor coverage
Mobile market is saturated due to five competitors in Market.

Research Objectives and Research Questions:

The topic under consideration is “The impact of Advertising on customer Satisfaction with special reference to Hutch Sri Lanka”. Research Objectives:
The objective of this research is to critically analyze least customer satisfaction issue facing by hutch Sri Lanka which pushes back Hutch Sri Lanka at last position in subscribers ranking. Hutch telecom has a potential to get more subscribers through correct advertising with correct selection of advertising media.

The following are the main objectives of the research:
1-To study the concept of advertising
2-To Study the concept of Customer Satisfaction
3-To analyze the Relationship between Advertising and customer Satisfaction

Research Question:
1-What is advertising?
2-What is the customer satisfaction?
3-What is the relation between Advertising and Customer Satisfaction?

Literature Review:
Advertising:

Advertising is the non personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media” (Bovee/Arens, 1992, p7).(Deborah F. Spake M Joseph 2009)advertising is one most fast growing industry in USA and direct to consumer effective advertising has change the way of advertising industry in USA, where consumers demand is monitor before placing of advertisement, this type of advertising is mostly done by pharmaceutical companies.

(P Nelson 1974) Advertising delivers the information of product attribute plus message to the target audience on selected media. Advertiser’s priority is to create sales through his message. Often more sales can be achieved by heavy bombardment of seller’s message through traditional and mass media. Any trustworthy and honest information deliver to consumer generate more sales and brand equity.(Julie A. Edell M Chapman 1987) Consumers feeling about any paid advertising create a lot of affect on sales. If advertiser convey the message which create positive feeling in consumer mindset than convincing potential consumer becomes easy else negative feeling creates negative effect. (Charles H Patti 1997)

When same seed is cultivated in two different fields with different production of crops or fertility rate even under same climate , one field with more average fertility rate will always give more crops compare with other field. Same case apply in advertising if quality efforts are applied on two different product in which one is high advertisement opportunities and while other is low than revenue generated and sales will differs from each other. He further elaborated that advertising spend should be high only on those products in which product life cycle stage not reach its maturity state. Advertise product and service should be have some uniqueness among its competitors and there f should be large size of potential consumer in that geographical area where product to be advertised.(Robert J L Gary A 1961)

In changing environment advertising purpose is to create sales , advertisers put their product or service on advertise to create sales in steps, in which in first is just share information about the product information and create awareness of the product after the launch than second step which comes after some period of time is an extreme buy now ad , design to create immediate sales. (Nikolaos K P1989) The current involvement in advertising consumer products is the Attributes of Advertising message has put great impact on consumer in decision making process.

If advertising message firmly designed and expose to mind of consumer than it went to long term memory of target consumer, such as “Jingle song of brand during advertising” which create positive affect to change target customer into prospect customers.Advertising is the main source of marketers to introduce their product and services in any geographical market. Electronic media has much considerable progress to help marketers to advertise their products at reasonable cost. Advertisement message reach millions of potential customers which help organization to grow its business and create more revenue.

Customer Satisfaction:

Any person who spend his income to get good or services through any organization is called as customer or a customer is a person who does the buying of the products and the consumer is the person who ultimately consumes the product (Solomon, 2009, p.34.) Any costumer can be pleased, unhappy or reject the product offered by advertiser, sales person or particular branded organization if its attributes does not match with its requirement and demands. Customer satisfaction definition is defined by (Tse & Wilson , 1998, p 204 ) consumer after purchase decision to judge the quality of product totally depend on consumer choice (Fornell, 1992, p.11) After cash transaction and receiving of product , customer satisfaction can be called as post choice evaluation judgment of the consumer after consume the product at very first time(Oliver,1980)

According to Schiffman & Karun (2004) Any individual consumer feel and look about any particular products or service which he/she judge his expectation after buying the product. Customer satisfaction is also described as the result of human feeling, Marketers in order to measure level of customer satisfaction they have to measure feeling of their customers after buying their product.(Levy,p.6;NBRI,2009). Levy (2009, p.6) mention three type of criteria to measure customer satisfaction 1- Through survey among current consumer of particular product or service in which feedback can be collected to measure customer level of customer satisfaction. 2- Through focus group discussion in which expert moderator can decide the level of costumer satisfaction after discussion with consumers. 3- Reading blogs and direct contact with customers.

Satisfied customer is customer who repeats purchase of the product and also refers helps organization to get more customers by words of mouth. Customer satisfaction increases the business of organization, where dissatisfied customer puts negative effect on company image and brand. Relationship between advertising and Customer Satisfaction:

Marketers spends millions of dollar every year in advertising budget to create favorable image of their brand, satisfy them and drive them to purchase. satisfaction makes advertising more affected as satisfied customers pay more attention in advertising of product whom they satisfies after previous purchase(E W Anderson 1994) Advertising creates a certain type of feeling in consumer mind which leads to consumer satisfaction of that particular brand in consumer mind.(Ew Anderson 1993) .Customer satisfaction are more essential aspect in any trade as at the end , customer is always the king because they create revenue for the organization.

Customer satisfaction or dissatisfaction have direct impact on profit of any organization.(Naresh K Malhotra 2007) 2nd edition Marketing research p 92-107.Advertisers should understand the consumer behavior before start work on any advertising campaign, as advertising only be effective and satisfy its consumer if its design to get attention of target market by touch the internal emotion of consumer.(Gustav puth.P Mostert 1999)) Journal of product and brand management, consumers perception of mentioned product and brand attribute in magazine advertising.)

References:

Anderson, E.W,& Sulivan m.W (1993) “ The Antecedents and consequences of Customer Satisfaction for firms”, Marketing science 2, 2 ( spring), pp 125-143
Anderson, E.W,Fornell, C, Lehmann, DR (1994) “ Customer Satisfaction Market share and profitability: Findings from Sweden, Journal of Marketing, 58, 53-66 Bovee, C.l and Arens, W.F, (1992), Contemporary advertising, 4th ed,, Richard P,Irwin Inc,, Homewood,IL. Deborah F Spake, Mathew Joseph, R Zachary Finney. (2009). Journal of Medical Marketing “Consumer opinion and effectiveness of direct-to-consumer advertising” 21-28 Dr Charles H Patti 1997, University of Sheffield “Evaluating the role of advertising” 32-35 Fornell,. (1992). “A National Customer Satisfaction barometer: The Swedish Expereience.”Journal of Marketing, 56, 6-21 Julie A and Marian Chapman Burke (1987), “The power of feelings in understanding advertising effects,” Journal of Consumer Research, 14 (December), 412-433 Lavidge, Robert J. and Gary A. Steiner. 1961. A model for predictive measurements of advertising effectiveness. Journal of Marketing. 25(October), 59-62. Micheal.R Solomon (2009).Consumer behaviour, buying having and being, 8th edition, Pearson education, inc Naresh K Malhotra 2007 “ A critical view of marketing research of diffusion of new products” 2nd edition Marketing research 92-107. Nikolaos K. Papavassiliou, (1989) “The Involvement Model in Advertising Consumer Products Abroad”, European Journal of Marketing, 23 ,1 Oliver,Richard L.1980 “A Cognitive model of the antecedents and consequences of Satisfaction Decisions.” Journal of Makreting research 17 (September):p 460-469 Phillip Nelson 1974, Journal of economy University of Chicago “Advertising as Information” 1 , 2-5 Puth, G, Mostert, P, & Ewing, M (1999) Consumer perceptions of mentioned product attributes in magazine advertising. Journal of Product & Brand Management, 8 , – 61-72 Schiffman,L.G and LazarKanuk, L.(2004) Consumer Behaviour. 8th edition. New Jersy Pearson Education Inc, Upper Saddle RiverTitus Tse, David K, &
Petter, C. Wilton. (1998). Models of Consumer satisfaction: An Extension Journal of Marketing Research, 25 .204-212 UK telephone history (2010) British telephone history [online] available from<http://www.britishtelephones.com/histuk.htm> [10th January 2013]

Hutch staff blood Donation (2010) Hutch staff join save a life [online] available From <http://www.ceylontoday.lk/22-19553-news-detail-hutch-staff-joins-save-a-life.htm> [4th January 2013]

International telecommunication union ITU, (2013) Facts and figure Sri Lanka mobile telecom [online] available From <http://www.itu.int/ITU-D/ict/newslog/default.aspx> [6th January 2013]
NBRI (2009) Customer Survey White paper:
[online] available From <http://www.nbrii.com/customer-surveys/Measure_Satisfaction.html> [November 27th, 2012)
Hutch Lose its Customer (2008) Lanka Business Online report [online] available From <http://www.lankabusinessonline.com/fullstory.php?nid=728615133> [5th December2012]

Piet Levy, (2009,),Advertising and Customer Satisfaction [Online] available From <http://web.ebscohost.com/ehost/pdf?vid=5&hid=12&sid=3e223a11-3ffe-4951-b092-735c449be46%40sessionmgr11> [November 5th, 2012)

Island Cricket 2005, Sangakkara Quits Hutch [online] available From <http://www.islandcricket.lk/blogs/hilal/sangakkara-hutch-or-airtel> [November 22th 2012)
Figure 1, Fixed lines and mobile market Growth in Sri lanka
[online] available from< http://www.lankabusinessonline.com/fullstory.php?nid=1160489410> [5th January 2013]
Figure 2, Hutch Voice and Data coverage across Island ,
[Onlimne] Available from <http://srilanka-promotions.com) http://srilanka-promotions.com/telecoms/hutch-sri-lanka-3g-coverage-map-23-may-2012-85/attachment/hutch-23-may-2012/> [2nd January 2013]

Figure 3:, Hutch Advertising Claim about 3G Coverage
[online] Available from <http://www.hutch.lk/aboutus.htm>[ 2nd January 2013] Tables
* Table 1-
* Number of Sri Lankan Mobile Subscribers in Millions


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