Consumer Decision-Making And Brand Switching Behavior: Case Study Of Telstra

Nature of industry/ Market and buyer decision making behaviour

Consumer buyer behaviour analyses is the process of understanding the buying pattern of the final customer of a firm (Kengtho, 2011). A firm needs to understand buyer behaviour in order to create a marketing strategy to target the customer in a particular way. Telecommunication and mobile phone industry is rapidly growing and major players need to understand determinants of buyer behaviour to increase their market share and to generate greater demand for their product.

Major tool through which marketers identify consumer behaviour is through the consumer decision making process (Ammi, 2013) . As per consumer behaviour theory, consumer first identifies a need. Then he seeks information. Further, various alternatives are evaluated, then the purchase is made. This is followed by post purchase assessment of the product.

Telecommunication and mobile phone industry is a growing industry in Australia. (ACCC report, 2018) Telecommunication has become a basis need of business and public throughout the world. Therefore, this sector has seen unprecedented growth in the last decade due to huge consumer need identification.

Revenues from the Telecom industry were reported to be around $43 Billion in 2017 (IBIS, 2018) . The telecom operators are growing at a rate of 1% and are expected to grow steadily over the next five years. Industry operates in price-based competition with maximum players offering additional value-added services over capped plans (IBIS, 2018).

Telstra is the market leader with 50% market share in local market (IBIS, 2018). However, the market is homogenous in nature where there is not much difference in the service provided by all operators (IBIS, 2018). Additionally, high technology cost poses as an entry barrier making the industry oligopolistic in nature (IBIS, 2018). Therefore, there is very high competition between a few firms like Telstra, Vodafone and Optus.

Consumer decision making process in service industries is determine by service quality, service delivery speed, price, offers and peer group preferences (Altinay, 2015).As per studies conducted on the telecommunication sector of Australia, the major factors which decides buying patterns are service quality, data speed and price. Customers also focus on offers while purchasing telecom products (Bhatti, Abareshi, & Pittayachawan, 2016) Additionally, peer group pressures cause brand switching. This happens mostly among students’ group where new offer on a product may cause the customers to switch to another brand (Islam, D’Alessandro, & Furner, 2016). Therefore, to create sustained customer choice in its favour, Telstra needs to focus on service quality and offers.

Telstra is one of the most important and largest telecom services operators in Australia. The firm offers telecommunication products like voice, internet access, pay televisions etc. (Telstra, 2018).Telstra has created a huge market presence through acquisition of smaller providers and enjoys 50% market share in the country (IBIS, 2018). The firm has well developed infrastructure like telecommunication servers, towers operational facilities etc (Telstra, 2018).

The company has been heavily investing in new technologies like fibre to the node network, LTE 4G and mobile broadband to induce increased service quality so that customers continue to choose its services (Telstra, 2018). The market for high speed mobile technology is on the rise; hence, Telstra has an opportunity to get consumers of its competitors to switch brands Nature of product in this market is homogenous (Altinay, 2015). That is, basic product offered by various brands is similar. Hence, the firm needs to give increased attention to service quality to continue to influence consumer decision making process in a positive way.

The target market for Telstra includes all the people who like to use cellular technologies. It includes students, young professionals, business houses, housewives, working women and people from all walks of life (Telstra, 2018). Therefore, the firm can use segmentation strategies to pinpoint its target market.

Segmentation is dividing the market into smaller groups based on similar attributes (Ferrel, 2012). The firm can use demographic segmentation and include different cellular and data plans for college students and young professionals (Ferrel, 2012). For students the firm can have offers on night time data and for young professionals the firm can give corporate packages for employees including high speed data. Similarly, the firm can have different data plans as per neds for urban and semi urban areas in tune with geographical segmentation.

To identify various situational issues in consumer behaviour for telecom users, a survey was conducted during this research. 100 respondents were chosen as a sample for this research by using convenience sampling method (Brown, 2013). These respondents were between 20-50 years of age. 50 of them were students while 50 were professionals of both genders. The questionnaire of this survey and the data analysis is attached in the appendix. Following were the major findings of this survey

• Cellular technology and cellular services are considered to be very important aspect of life by customers. Hence, the market is expected to grow further.
• Telstra is the most frequently used service provider. However, propel think that there is enough choice in the market for cellular services.
• Service quality is considered as the most important feature of a cellular service. 40% people thought service quality to be very important deciding factor while purchasing a cellular service. On the other hand, 30% considered brand name followed by price which was chosen by 20% people. Peer group influences was found to have least impact on consumers decision process.
• If the current situation continues 70% people said they would not like to switch brands. However, a whopping 70% said that if competitor gave better service quality, they would change their service operator. However, only 30% said they will change their service provider if the competitor gave lower prices. Peer group was the least influential method of inducing brand switching.
• People got most impressed by television advertising while selecting a service provider

Telstra is the current market leader and the most trusted brand in the Austinian market (ACCC report, 2018). However, the customer is very conscious about service quality and considers it as the most important decision-making factor. Additionally, customer can switch from competitor’s brand if Telstra gives better service quality. Therefore, the firm should focus on innovation and technology to improve service quality. This will help it in increasing its customer base and influencing customer decision making process. Emphasis on service quality will help in inducing brand switching among rival firm’s customer which will in turn help in formulating a sustainable marketing strategy.

References

ACCC report. (2018, December 2). ACCC telecommunications report | ACCC. Retrieved from ACCC: https://www.accc.gov.au/publications/accc-telecommunications-report

Altinay, L. (2015). Enhancing Customer Experience in the Service Industry: A Global Perspective. Cambridge: Cambridge Scholars Publishing.

Ammi, C. (2013). Global Consumer Behavior. New Jersey: John Wiley & Sons,.

Bhatti, H. S., Abareshi, A., & Pittayachawan, S. (2016). An Empirical Examination of Customer Retention in Mobile Telecommunication Services in Australia. ICE-B, 72-77.

Brown, T. J. (2013). Basic Marketing Research. New York: Cengage Learning,.

Ferrel, O. (2012). Marketing Strategy. New York: Cengage Learning.

IBIS. (2018, Dec 3). Telecommunications Services – Australia Market Research Report. Retrieved from IBISworld: https://www.ibisworld.com.au/industry-trends/market-research-reports/information-media-telecommunications/services/telecommunications-services.html

Islam, M. Z., D’Alessandro, S., & Furner, M. (2016). Brand switching pattern discovery by data mining techniques for the telecommunication industry in Australia. Australasian Journal of Information Systems, 20, 20-25.

Kengtho, W. (2011). Consumer Buying Behaviour. Berlin: GRIN Verlag.

Telstra. (2018, Dec 3). About Us. Retrieved from Telstra: https://www.telstra.com.au/