There are four major mobile operators in Sweden. They are TeliaSonera, Tele 2, Telenor and Hi3g and others ( Pts 2014).)
TeliaSonera is a 10 years old in the Swedish market young company with a long history for its former entity. When it was founded, it was a merger of two former european companies. It has a majority-owned operations in Nordic countries and they are the leading service provider in the Swedish telecommunication market . Their service is under the brands of Telia, Halebop, Skanova and Cygate. (Teliasonera.com, 2014)
In 1993, Jan Stenbeck founded Tele 2 and in the beginning their development was always with government monopolies and existing competitors. (Tele2, 2014)
In 1997, tele2 started to launch its first prepaid calling card.10 years later, in 2007, Tele 2 started to focus on the mobile operations which their first revolution is to focus on the most potential markets without expansion because of the regulatory conditions. (Tele2, 2014)
Telenor owns its whole operation in Sweden as Telenor AB and it is the third largest mobile operator in Sweden.
It is the 4th of the total Swedish mobile subscription market player .But according to the official statistics of the Swedish Mobile licensing organization, 3 is growing their market share concerning the period from June 2012 to June 2013. And the market share rate changed from 10.3% to 11.1%. (The Swedish Telecommunications Market First Half-year 2013, 2014)
Mobile subscriptions also has been an important driver in the profit gaining process for mobile surfing.(Mobithinking.com, 2014)
Consumers can been divided to individuals and group customers. In this paper, we are going to investigate on university students in Sweden for their purchasing behaviour for mobile subscription.
1)Motivation is one of the basic concepts in consumer behavior and it refers to the processes that lead consumers to behave what they want to. (Solomon, 2013,p.142)
The driving force of motivation is produced by a state of tension which moves the consumers from an unfulfilled status to a new psychological equilibrium or can be said as homeostasis. (Evans and Jamal et al., 2009,p.6-7) Each individual has the same structure of need but they have different specific needs concerning different individual at various points in time and according to different cultural and social environment. (Evans and Jamal et al., 2009,p.7) In the category of motivation can be seen as positive and negative motivation. Positive motivation is the approach for people to look for something and negative motivation is the avoidance for people to escape from something negative situations ,discomfort or to remove problems. (Evans and Jamal et al., 2009,p.10)
2)MASLOW’S HIERARCHY OF NEEDS
In this theory ,for each individual ,their need are fulfilled from the bottom to the top stage after stage.The basic needs must be met first but when the psychological needs have been satisfied, people turn to more advanced level of fulfillment.The last level is self-actualization, other psychologists say it as self-realization. In this stage, people tends to invest in all levels in order for them to find things meaningful and develop themselves. (Evans and Jamal et al., 2009,p.11-12) . Psychologist Abraham Maslow wants to develop the hierarchy of needs to know how people attained spiritual* peak performance*. Marketers translated his theory to the market concept afterwards.(Solomon, 2013,p.151)
The Physiological needs is the basic biological needs. After the physiological needs is the safety needs .The safety needs are mostly for children because they always display the signs of insecurity. For the adults they only think of the safety needs when they feel intense of something.After the second basic need comes to the need of love, belongingness and accepting and these key feelings can merge.After be satisfied for the previous three stages , self esteem can become dominant in the fourth stage of need. People will need to feel be respected a lot in this stage and without this kind of feeling , they will feel sad , weak and helpless. The highest need is the self-actualization stage. In this stage, people need to do something they want to do.(Simons and Irwin et al., 1987)
2.Cognitive Learning Theory
1)Definition-The Cognitive Learning Theory approaches the importance of internal mental process. This view refers to that people are problem solvers which receive the information from the outside world actively to master their environment. This view highly look upon people’s creativity and insight during the learning process.(Solomon, 2013,p116)
2)Marketing Applications of Cognitive Learning Theory
For the application of this theory, marketers don’t really need to do something to reward or punish customers, they just need to tell the customers what will happen if they use the product or service or not compared to the competitors. Then the customers will most of the time copy this image to action after a period of time. Consumers will also imitate the models for the models’ attractiveness. The attractiveness can come from different components,including physical appearance ,expertise and so on.(Solomon, 2013,p116)
Solomon, M. R. 2013. Consumer behavior. Boston: Pearson.P 116.
3.Decision making process
Consumer decision making is a central part of consumer behavior.
1)Decision making stages
The image above is just the simplest demonstration of the process.In the real world, the process could be more complicated because today we have so many choices than before especially we have internet shopping so the choosing channels are more now. (Solomon, 2013,p 320)
As customers, they are all problem solvers and they need to have a problem solving process. But in the process, it is not always rational , sometimes it is irrational. (Solomon, 2013,p 321)
3)Types of Consumer Decisions
There are two kinds of problem solving process–Limited Problem Solving , Extended Problem Solving and Habitual Decision making . (Solomon, 2013,p 323)
The extended problem solving is related to the traditional decision making process perspectives.
And the limited problem solving is more straightforward and simple. Consumers in this case are not motivated enough. And psychologically ,this process is be seen as cognitive shortcuts. (Solomon, 2013,p 324)
The habitual decision making are the choices the consumers made with little to no conscious effort. (Solomon, 2013,p 325)
In today market environment, competitions, product and service are becoming homogenous, corporate need to differentiate them self by the use of their image, by corporate image customer will be able to differentiate company by their image. It will be easy for them to attract and retain customer. Corporate Image it’s a general evaluation of the product, service and the company name. Due to difficult of making evaluation of the services provider , company use corporate image, image plays a vital role of helping customers evaluates and make personal judgment about a particular company (Tor & Bodil, 1998). Corporate image will be like a distiller in customer mind and give them perception about the service provided by the company, because of the image customer will be able to give fair judgment by buying and remain or be loyal to a company for a longer time, customer be ambassador and advocate on behalf of the company, customer will advocate for the customer by spreading word of mouth. Because of perceived value, quality and price offered by the company, customer will perceive it as of the high quality with the hope that meet it will meet their needs and get satisfaction out of it (Tor & Bodil, 1998). To attract and retain customer, Tor and Bodil(1998) say the perceived quality should much and exceeds expected quality, should be enhanced by communication, corporate image, and service offered to meet customer needs. The service or product offered will be useful for the customer if its technical and functional quality will be able to fulfill the intended purpose, which will make customer to enjoy the experience of quality service. Communication in the market place will help company and customer. Customer will be able to recognize company image and be aware of it. Because they already developed good attitude to word the company, and trust will be developed on company, corporate image will help customers to make personal judgments, and decides where to purchase the product (Tor & Bodil, 1998). According to Edmund and john (1998) they says corporate image is picture or sign assimilated in consumers mind about the company, consumer will visualize it when they see the logo, and when they hear a word about company anywhere.
When the same product or service offered in the market place or from a particular supplier, customer will be able to make differentiation between service and product offered by different company. Company brand helps the consumer to deferential product or service offered by different companies, and makes them to gain confidence and eliminates the risk which they thinks might associates with products and service offered in the market, corporate image help to eliminate competition among competitors it act as a barrier. Brand helps to reduce the duplicates from different competitors; it also helps the company by building a barrier of entry in a particular market (Tapeci Mustafa, 1999). Brand is the way company tries to differentiate its product or service from other competitors, because of the of technical similarities of the product and service, by the help of corporate image it become easier for customers to distinguish each product and service from different producers in the market, customers do associates with a particular brand, because they believes in it, by purchasing a product from the company known to them, trust will reduce the risks associated with the product purchased, will gain confidence in making a purchase decision (Jobber & Fahy, 2009).
Service quality is the degree of perfection on how the service offered meet and exceeds needs customer beyond customer expectations (Tor &bodil, 1998). Customer make judgment of service quality by comparing the different between performance and expectation. And perceived quality is what customer expect to get from a service provider, when company delivers a high level of the perceived quality customer will get satisfaction, current performance will have an influence on the perceived service quality (Joseph& Steven, 1992). Perceived quality is the personal opinion or judgment of the customer, customer will rank the service received according order on how the service was and if a customer is satisfied with it they will be loyal to the company ( Parasuraman, Zeithaml & Berry, 1988).
The quality of the service will be evaluated by the consumer according to the expectation and the performance of the product, and evaluation will be done after the consumption, the performance will also depends on the technicality of the product and its functionality of the product or the service, technical side of the product is like when someone want to travel he have to take a car or rent a taxi, and the function of the taxi is to offer transport service to the customer. The function quality is what customer is interested on, and that’s it’s the service he is looking for. Customer expects company perform of the service provider he has to receive. Customer also involve in the co-creation of the service provided (Gr??nroos,1984). Because of the characteristic of the service, it’s difficult to separates the service provider with consumer, the production and consumption happens simultaneously ‘inseparability’ service is not performed is not the same in all the market, performance differs ‘heterogeneous’., it’s also intangible, his tangibility occurs because it’s not possible to quantify it and measure it, and difficult to verify before the purchase (Parasuraman, Zeithaml &Berry 1985).
For a company to offer quality service to customers customers expect company to perform in all these areas; the service has to be reliable and ‘reliability’ means the service has to be consistence and be performed right from the start, it has to be of zero defect. The service has to be credible, the company has to install the trust to the consumer’s, by fulfilling what they promise customers. The staff has to show and act fast when their service failure, the communication between company and customer must be accurate and well explained to customers so that they be aware of what they will get from the company, the services cape play very important role to the customer, this in the tangible evidence customers will rely on, service company has to understand what are the expectation of customers (Parasuraman, Zeithaml &Berry 1985).
Customer satisfaction is the process of the evaluating of the product/ service received and its performance as compared with what customer expect from product/service before the service and product are being bought or used ‘Any discrepancy leads to disconfirmation; i.e. positive disconfirmation increases or maintains satisfaction and negative disconfirmation creates dissatisfaction’ (Tor & bodil, 1998). When customer is satisfied by time they become loyal to the company. Loyalty is built when customers are satisfied, satisfaction occurs when customers get perceived value , perceived value are measured in form of monetary value, time spent on searching information about service and cost associated to get the product or service from the company. Customer satisfaction occur when customer believes that service or product offered by the company is more superior and of higher quality, and he will not be able to get it in a other company, and relationship is a process, and its in dynamic state, moving from one state to another state, company should built relationships with customer. By communication, trust and commitment will be achieved, company has to build trust and commit himself on what they promises to deliver to customer, so that the customer will trust on company. Satisfaction triggers purchase, and build on post purchase evaluation after customer consumed the service, satisfaction has influence on loyalty on customer, satisfaction, repurchase and patronage of word of mouth among the peer or friends because customer has gain trust and is loyal to the company. Customer gets satisfied because the perceived value exceeds customer expectation, and perceived value is the value of core product and its price. If the perceived is below the customer expectations that means customer are not satisfied and loyalty will disappears (Roger, 1996).
And according to Torsten, Wolfgang & Andreas, (2000) the say customer satisfaction is based on experience, when customer got the product or service and service exceeds what customer expect from the product or service he will be satisfied. Due to satisfaction, customer will have confidence and trust on the company, because he believes his need will be met beyond his expectation. Customer become satisfied when service they get from company is of high quality, reasonable price, with a good communication from the company, good customers care will also enhance customer satisfaction (Torsten, Wolfgang & Andreas, 2000).
Loyalty can be defines as attitude and behavioral. Attitude loyalty is a feeling a customer create and attached its feeling with a product or a service of a particular brand of the company and its cognitive degree of loyalty. Behavioral loyalty is a continuous and repeated purchase of product or service from a single company, and customer has belief in the company’s product they will make some recommendation to other customers (Rogger,1996).
Customer brand loyalty means the customer is committed to purchase the product of a certain company repeated without defecting to another company, it’s where the customer is committed to buy only one brand of the products repeatedly (Yuping & Leona, 2013).
It’s a repeated purchase pattern of consumer to a particular service or product from one company over time, ‘biased behavioral response expressed over time by some decision-making unit with respect to one or more alternative brand out of a set of such brands’ (Susan & Julie, 1997).
Customers will positive attitudes about the company even the level of the services is low, they have believes that the company will improves the service quality, they will remain with a company because they have deep trust on the company and some consumer may be loyal because the situation force them to remain with company, this occurs when there is high switching cost (Torsten, Wolfgang & Andreas, 2000).
According to Tor and bodil (1998) they said that customer will have a voice to the company, by spreading words of mouth to other prospectors’ customer. They will air their view by giving the company feedbacks, so that management will react and be able to take appropriate measures to rectify what went wrong, wherever a customer are not satisfied with the service offered, they will react by talking, airing their views. Even though if there is exit window and switching barrier is low, but they have patronage to company, they still remained with a company and that’s why they will talk and give recommendation to the management to act. Sometimes it happens that switching and exit barrier is high, and if switching and exit barrier is high, they will remain loyal to the company but their loyalty will be of inconveniency because of higher barrier of switching and exiting.
It helps to define the customers’ identity with the brand and the company must give the customer value they expect, customer expects to get the equity they desired for from the company. The company should increase the customers’ equity (Rust, Zeithaml, & Lemon, 2004).
It the continuous maintenance of the commitment established during first encounter between customer and a company when initial business transaction was established, and its continues over a period of time, and its being enhance by continual interactions, with intention that the customer will make future purchase as the time goes. It involves regular and repeated repurchase without switching to other company as alternative (Torsten, Wolfgang & Andreas, 2000
Price is what the customer makes as scarifies to acquire the products or service from a particular firm or from an individual, price can quantify as monetary values which the consumer scarifies to get a service or product, it’s a tradeoff between monetary value and a product or service offered between a customer and a seller (Zeithaml,1988). There is a lot of the price the customer pay than the monetary costs, customer incurs a lot of cost i.e. time cost, search and psychic cost, it involve searching the product in the store, assemble the products all cost time and knowledge customer scarifies to get the products or service .In pricing decision making the company has five alternative price strategies to use at difference time and at difference economic environment (Zeithaml,1988).
When the product is new in the market, company have to charge high price to receives revenue to settle off the cost incurred during product development, it cost included , research and development of the product (R&D), the strategies used here are price skimming, company will charge higher price first and the price will be decreasing as the time goes, they will also adopt price penetration strategy because the product is new and the competition might be stiff in the market, they will use price penetration to make people to be familiar with the product or service. Because the product is new in the market the company will use Experience Curve Pricing, so that the sales volume will be big to the cost of the production (Nobel & Gruca, 1999).
Due to stiff competition in the market, other company will be the leader to initiate the price and other will follow the price initiator becomes price leader, the company who starts the price initiation are call price leader, they use price leadership policy. Some times company use the price parity, in this situation market dictates the price, Low-Price Supplier pricing can be used also , the price in the market remain low (Nobel & Gruca, 1999).
Product line pricing
Here company use Complementary Product Pricing, company price the core products at low price with intention to charger higher price for complementary goods, higher price will be charged in spare parts and accessories..
Price bundling it’s the strategy where a company selling at discount and sell in set of the products or service as a package, other company also offer product and service bundle, Company use price, products and service bundling as strategy to lure customer to buy other product or service which was not on their purchase plan, like in mobile industry, company offers to buy package of mobile phone, which includes, internet connection, free Sms and free calls (Kim, Bojanic & Warnick, 2008). Company use price bundling because its economically cheapest way to sell the product, because different product are combine together and sold as one product, it will help the company to yield economic scope (Kim, Bojanic & Warnick, 2008).
Customer Value Pricing, price is charged according to product specification or product quality, when the product has advance specification the price become higher (Nobel & Gruca, 1999).
Cost based pricing
(Cost-Plus Pricing , is where price is set as margin of mark-up, the company reforecast the margin profits the add total cost to make the price charged (Nobel & Gruca, 1999).
Pricing strategy, all company have different price strategy in the market even if the all have the same channel of distribution, same brand of product and service, because the price decision is independence , even if the product or services are substitutable, because both can’t be price leader, other company will lead and other will be price follower (Lee & Staelin, 1997).
In the dynamic and involving business environment, its suggested the company should use dynamic price approach, because the company will be able to maximized the profit in long run, it will help to optimum the strategy because the market environment is not stable. It also depends on the ability of the management to predict the cost and demand for the whole period, i.e. to know the degree of market change (Bruce & chet, 1975).