Sales Promotion and Consumer Loyalty: A Study of Nigerian Tecommunication Industry
Abstract In today’s competitive business world customers are considered to be kings. Customers have several choices to make among alternative products, and they exercise a high level of influence in the market with respect to product size, quality and price. Hence, it is important for producers to meet the needs of customers in order to stay competitive. One of the marketing communication tools that is used in attracting the attention of the customer and build their loyalty is sales promotion. The aim of this paper therefore is to determine the effect of sales promotion on customer loyalty ...view middle of the document...
There are four major telecommunication providers in Nigeria offering Global Systems of Mobile (GSM) services with several mobile fixed wireless companies Code Division Multiple Access (CDMA). Nigeria telecommunication industry is one of the largest in Africa with over seventy (70) million GSM users and still growing with one of the highest fixed line revenue and cumulative revenue of US$14billion as at December, 2009 (NCC, 2010). There are tremendous growth prospects in the Nigerian telecom sector; as such new entrants are attracted. For example, Etisalat was recently in January 2007 licensed to provide telecom services and Airtel Indian largest telecom company in 2010 acquired Zain, the third largest mobile telecom provider in Nigeria this shows the level of attractiveness of the Nigerian telecom market. The telecom industry in Nigeria as at November, 2010 according to NCC had generated more than eight thousand direct first-tier employments (vendors, PR agencies, operators’ call center employees, security etc) and estimated thirty (30) million indirect 2nd-tier employments (NCC, 2010). More im Journal of Competitiveness | Issue 4/2011
portantly, the telecom contribution to national Gross Domestic Product (GDP) has increased from 0.6% in 2001 to 4.2% in 2009. Total private investment in the sector is US$12billion and earning per line according to International Telecommunication Union (2010) in 2001 was US$48.21, US$17.80 in 2005 and US$11.26 in 2008. Tab. 1- Statistics of Nigerian Mobile Connections. Source: Nigerian Communication Commission (accessed 27/12/2010) Market Etisalat GLO Mtel MTN Multilinks Starcomms Visafone Airtel ZOOMmobile Total Technology GSM GSM GSM GSM CDMA CDMA CDMA GSM CDMA Market share (%) 1.66 23.32 0.38 40.14 3.38 2.17 3.68 23.59 1.78 100 Quarterly growth (%) 46.61 4.30 2.58 7.36 29.76 15.16 12.18 7.78 27.15 8.44 Annual Growth (%) 13.17 2.58 49.82 156.87 134.71 353.68 9.98 38.54 Net Additions 365,620 665,695 6,670 190,6018 537,416 197,521 276,793 1,1174695 262,781 5,393,209 Share of Net Addition (%) 6.78 12.34 0.12 35.34 9.96 3.66 5.15 21.78 4.87 100 Connections 1,835,870 16,228,556 258,520 29,740,000 N/A N/A N/A 14,935,770 N/A 71, 998,716
Note: Global Communication Network (GLO); Mobile Telecommunication Network (MTN)
The percentage of the total Nigerian population of about 150 million with active mobile GSM lines is about 47.8%. The number of mobile phone users in Nigeria has grown rapidly in the wake of the industry deregulation of 2001. The tele-density rate grew dramatically from 1.89 in 2002 to 53.23 in 2009 and penetration rate of 1.2% in 2002 to 48.7% in 2009. It is common for an average Nigerian mobile telephone user to have more than one mobile line which helps to increase the penetration rate. As a result of increasing efforts to expand market share and profit level, telecom operators have developed several strategies including “price war”. These had...