A study on relationship between membership services and customer loyalty in Korean mobile telecommunications market

Abstract

In Korean mobile telecommunications market, the number of total mobile phone subscribers is over 30 million in March 2002. Also the growth rate of subscribers started to hesitate in 1997, and decreased below 10% in 2001. The current Korean mobile telecommunications market was matured and the service carriers would need the new marketing strategy. The service carriers have changed their marketing focus from the acquisition of new customers to the retention of existing customers. As the way of enhancing the customer retention, the service carriers started to provide the new services of the concept of "brand" such as TTL, Na, Khai, and so on, which provided the supplementary services (membership services) and membership charge systems. The membership service is one of the loyalty programs, which gives mobile subscribers many advantages such as discounts in family restaurants, coffee shops, theaters, amusement parks, etc. and then, it enhances customer loyalty. However, although many service carriers have spent much money for membership services, it is not clear that the membership services really create customer loyalty. Because every service carrier has provided similar membership services, therefore, it seems to be difficult to find the differentiation among them. Also, there were few studies that tried to prove the effect of loyalty programs in mobile telephone services. It has been studied that the loyalty program helped customer relationships, but the effect of membership services was unknown. The purpose of this study is to examine the effects of membership services on customer loyalty, in other words, this paper studies following question: Does membership services really create customer loyalty? This paper concentrates on the aspect of customers for membership services, not carriers. This research model is mainly composed of two parts of membership services and customer loyalty. In respect to membership services, this paper considered five measure fac...