Service Quality, Customer Satisfaction and Customer Loyalty of Mobile Communication Industry in China

Abstract Previous studies have shown that the most important factor affecting customer loyalty in the service industry is service quality. However, on the subject of whether service quality has a direct or indirect effect on customer loyalty, scholars' views apparently vary. Some studies suggest that service quality has a direct and fundamental influence on customer loyalty (Bai and Liu, 2002). However, others have shown that service quality not only directly affects customer loyalty, it also has an indirect impact on customer loyalty by influencing customer satisfaction and perceived value (Cronin, Brady, and Hult, 2000). Currently, there are few domestic articles that specifically address the relationship between service quality and customer loyalty in the mobile communication industry. Moreover, research has studied customer loyalty as a whole variable, rather than breaking it down further into multiple dimensions. Based on this analysis, this paper summarizes previous study results, establishes an effect mechanism model among service quality, customer satisfaction, and customer loyalty in the mobile communication industry, and presents a statistical test on model assumptions by using customer investigation data from Heilongjiang Mobile Company. It provides theoretical guidance for mobile service management based on the discussion of the hypothesis test results. For data collection, the sample comprised mobile users in Harbin city, and the survey was taken by random sampling. Out of a total of 300 questionnaires, 276 (92.9%) were recovered. After excluding invalid questionnaires, 249 remained, for an effective rate of 82.6 percent for the study. Cronbach's a coefficient was adapted to assess the scale reliability, and validity testing was conducted on the questionnaire from three aspects: content validity, construct validity, and convergent validity. The study tested for goodness of fit mainly from the absolute and relative fit indexes. From the hypothesis testing results, overall, four assumptions have not been supported. The ultimate affective relationship of service quality, customer satisfaction, and customer loyalty is demonstrated in Figure 2. On the whole, the service quality of the communication industry not only has a direct positive significant effect on customer loyalty, it also has an indirect positive significant effect on customer loyalty through service quality; the affective mechanism and extent of customer loyalty are different, and are influenced by each dimension of service quality. This study used the questionnaires of existing literature from home and abroad and tested them in empirical research, with all questions adapted to seven-point Likert scales. With the SERVQUAL scale of Parasuraman, Zeithaml, and Berry (1988), or PZB, as a reference point, service quality was divided into five dimensions-tangibility, reliability, responsiveness, assurance, and empathy-and the questions were simplified down to nineteen. The measurement of customer satisfaction was based mainly on Fornell (1992) and Wang and Han (2003), ending up with four questions. Based on the study's three indicators of price tolerance, first choice, and complaint reaction were used to measure attitudinal loyalty, while repurchase intention, recommendation, and reputation measured behavioral loyalty. The collection and collation of literature data produced a model of the relationship among service quality, customer satisfaction, and customer loyalty in mobile communications, and China Mobile in the city of Harbin in Heilongjiang province was used for conducting an empirical test of the model and obtaining some useful conclusions. First, service quality in mobile communication is formed by the five factors mentioned earlier: tangibility, reliability, responsiveness, assurance, and empathy. On the basis of PZB SERVQUAL, the study designed a measurement scale of service quality for the mobile communications industry, and obtained these five factors through exploratory factor analysis. The factors fit basically with the five elements, indicating the concept of five elements of service quality for the mobile communications industry. Second, service quality in mobile communications has both direct and indirect positive effects on attitudinal loyalty, with the indirect effect being produced through the intermediary variable, customer satisfaction. There are also both direct and indirect positive effects on behavioral loyalty, with the indirect effect produced through two intermediary variables: customer satisfaction and attitudinal loyally. This shows that better service quality and higher customer satisfaction will activate the attitudinal to service providers more active and show loyalty to service providers much easier. In addition, the effect mechanism of all dimensions of service quality on all dimensions of customer loyalty is different. Third, customer satisfaction plays a significant intermediary role among service quality and attitudinal and behavioral loyalty, indicating that improving service quality can boost customer satisfaction and make it easier for satisfied customers to become loyal customers. Moreover, attitudinal loyalty plays a significant intermediary role between service quality and behavioral loyalty, indicating that only attitudinally and behaviorally loyal customers are truly loyal customers. The research conclusions have some indications for Chinese telecom operators and others to upgrade their service quality. Two limitations to the study are also mentioned. First, all data were collected in the Heilongjiang area, so there might be a common method bias that skews the results. Second, the discussion addresses the relationship between service quality and customer loyalty, setting customer satisfaction as mediator, but does not consider other factors, like customer value and consumer features, This research will be continued in the future.