The influence of quality and price of service on

customer switching intention in Bosnia and

Herzegovina telecommunication market
Harun Ku, dipl. ing. el.

Mr. Sci. Adnan Ku

Dr. Sci. Omer pirtovi

BH Telecom d.d. Sarajevo,

Zenica, Bosnia and Herzegovina
harun.kuc@bhtelecom.ba

BH Telecom d.d. Sarajevo,

Zenica, Bosnia and Herzegovina
adnan.kuc@bhtelecom.ba

Dravni univerzitet
Novi Pazar, Serbia
ospirtovic@np.ac.rs

AbstractBefore 2013 in Bosnia and Herzegovina

customers have to give up his\her previous mobile number
for using another telecom operator services in case of
dissatisfaction. But due to introduction of MNP the
customer now do not have to change his\her mobile number.
Hence, mobile number portability (MNP) requires mobile
carriers to allow customers to keep their mobile numbers
when switching from one carrier to another. Therefore, the
adoption of MNP by consumers will have important
implications for telecom marketing theory and practice in
consumer behaviour areas such as switching behaviour. The
paper proposes a model that helps to explain consumer
behaviour towards Mobile Number Portability (MNP)
policy and the influence of factors quality of service, price of
service and customer satisfaction on consumer switching
intention process in the telecommunication industry. In this
paper we present the results of research of the influence of
quality and price of service on customer switching intention.
We tested hypotheses about how the quality, price and
customer satisfaction affect customer switching intention.
Keywords quality of service, price, customer switching
intention;

I.

INTRODUCING

In the telecommunication industry, especially mobile

industry, has seen a lot of innovations in recent years.
Among the innovations, the mobile number portability
(MNP) policy adoption and implementation appears to be
the latest of them. Therefore, the adoption of MNP by
consumers will have important implications for telecom
marketing theory and practice in consumer behaviour
areas such as switching behaviour. The MNP innovation
allows mobile subscribers to retain their mobile phone
numbers while changing to use other service telecom
providers. The possibility of choosing telecom operators
practically starts real competition on the market of
telecommunications. MNP facility is intended to enable
effective service delivery and provide consumers
considerable freedom to switch between and among
telecom providers in an attempt to increase consumer
empowerment [21], [22], [23] .

In Bosnia and Herzegovina, the service MNP in

mobile telephony market has started with the beginning
2013th year. This an important step in the liberalization
of the market, so far delayed due to the unwillingness of
all telecom operators to provide these services. However,
the Communications Regulatory Agency (CRA)
announced recently that the technical conditions are
created for all those who want to change the mobile
operator can do that, and at the same time keep the
existing mobile phone number. This option could
significantly affect the change in the balance of forces in
the mobile telephony market in Bosnia and Herzegovina,
because there are no longer any reasons that people do
not choose a mobile operator that gives them the most
favorable and the highest quality service. It is a good
signal for potential users of telephone services, which
will certainly be the gains because reinforcement of
competition means decrease in the price of mobile
services.
II.

PREVIOUS RESEARCH

The quality of service is a key factor for customer

satisfaction according to a study [18]. Although it is not
the only factor in these previous studies have shown that
customer satisfaction has a positive and a great influence
on customer loyalty. Previous studies [16] have shown
that customer satisfaction has a significant impact in
building long-term and profitable relationships with their
customers. User satisfaction can be defined as "the
difference between expectations and actual perceptions of
service" and is considered the most important factor
leading to competitive advantage and success and that is
what makes customers loyal to the mobile operator [4].
The quality of services has an impact on satisfaction
and customer loyalty [4] [5] and is a prerequisite for
customer satisfaction [6]. Many researchers have proven
that price has an impact on customer satisfaction [11]
[12]. Also, in previous studies [15] it was observed that
the price significantly affect the level of satisfaction of
clients, than any other factor. Price plays an important

role in the telecommunications market, particularly for

mobile operators [14]. Price positive impact on
satisfaction and customer loyalty [9]. Based on previous
research [1] [13], service quality and price are the factors
that people use when choosing a mobile operator.
Perceived price by the user is a belief that the quality of
services remained at the same level. Accordingly, we can
conclude that there is a correlation between factors:
service quality and price [13].
Many previous studies have investigated the
relationship between customer satisfaction and customer
loyalty [24], [25], the relationship between customer
satisfaction and call qualities [26], [27], [28], and the
relationship between switching demand and MNP [29].
Based on previous research, higher the satisfaction will
leads to higher retention, so operators should be
satisfying the customers in order to retain them [19].
III.

PROPOSED RESEARCH MODEL OF MEASUREMENT

Based on previous research and assuming that the

quality and price of service directly affect customer
satisfaction, and satisfaction to customer loyalty and
satisfaction affect indirectly on switching intention of the
mobile network subscriber [1], [13], [19], it was proposed
a model for measuring satisfaction, customer loyalty and
customer switching intention in mobile network, which
is shown in Figure 1, where labels QS1-QS5, SI1-SI3,
P1-P5, CS1-CS4 and CL1-CL6 are related to a series of
questions that correspond to the factors in the
questionnaire, given in Table I. (Appendix A)

on customer switching intention.

H3: Price of service has a direct impact on customer
satisfaction.
H4: Customer satisfaction has positive and direct impact
on customer loyalty.
IV.

POPULATION SAMPLE AND RESEARCH

INSTRUMENT

This study was conducted on a sample of 739

randomly selected users of telecom services. Data were
collected through a questionnaire (working classical
survey interceptions) on the territory municipality of
Zenica. Respondents completed a questionnaire in which
they were required to by Likert scale (from 1-strongly
disagree to 5-strongly agree) to assess degree of
agreement with 24 questions in which they outlined
assumptions that telecom operators must provide in order
to create conditions for customer switching intention.
Respondents characteristics of population sample is given
in Table II.
TABLE II.
Variable
Gender
Age

Period of time
using the services
of telecom
operators
Telecom operator

RESPONDENTS CHARACTERISTICS OF
POPULATION SAMPLE
Category
Male
Female
Less than 20 years
From 20 to 24 years
From 25 to 34 years
More than 34 years
Less than 6 months
From 7 to 12 months
From 13 to 24 months
From 25 to 36 months
More then 36 months
Eronet
BH Telecom
M:tel

Frequency
472
267
110
294
259
76
10
77
224
289
139
122
357
260

%
63,9
36.1
14,9
39,8
35,0
10,3
1,4
10,4
30,3
39,1
18,8
16,5
48,3
35,2

Fig 1. The proposed model for measuring the influence of service

quality and price of service on customer switching intention

From the above, we can define the following

hypotheses about the relationship between service quality
, price of service, customer satisfaction, customer loyalty
and customer switching intention:
H1: Quality of service has positive and direct impact on
customer satisfaction.
H2: Customer satisfaction has positive and direct impact

Fig 2. Graphical representation of respondents characteristics of

population sample

For the characteristics of the respondents, in terms of

gender, 63.9% of the respondents were males and 36.1%
were females. 14.9% of the respondents were below 20
years, 39.8% of them were within the ages of 20 to 24
years, 35.0% were between 25 and 34 years, and 10.3%

were above 34 years. In term of period of time using the

services of telecom operators, 1.4% of the respondents
were below 6 months, 10.4% of them were from 7 to 12
months, 30.3% of them were from 13 to 24 months,
39.1% of them were from 25 to 36 months, and 18.8%
were above 36 months. In term of the telecom operator,
16.5% of them were from Eronet, 48.3% of them were
from BH Telecom, and 35.2% of them were from M:tel.
V.

RESULTS OF RESEARCH

The collected data were analyzed by the statistical

program SPSS (Statistical Package for the Social
Sciences) and AMOS. As a prerequisite for assessing the
suitability of the proposed model it is necessary to meet
highly demanding conditions relating to the validity and
reliability of the measuring instrument and consists in
checking unidimensionality measuring scales, ie. ability
of the measuring instrument that by using it we get
consistent results.
A. Testing the reliability of the measuring scale
Measuring scale for research purposes should be
trusted. Reliability can be viewed from several aspects.
One of the major issues relating to the internal consent of
the scale, that is, the degree of similarity of the statements
from which the scales. Do they all measure the same
factor or construct? Among the most commonly used
indicators of internal approval is Cronbach alpha
coefficient. Ideally, this ratio should be greater than 0.7.
However, this values are very sensitive to the number of
statements on a scale. On observed data from our sample
testing of internal approvals of each subscales was
conducted in accordance with the statements relating to
the appropriate construct, by means of a measuring
instrument. Thus, on responses of service users analyze
the similarity of certain testimony whether they measure
the appropriate construct [8].
In Table III. it was given an overview of the
value of Cronbach alpha coefficients corresponding
variables related to individual construct price, quality of
service, customer satisfaction and customer switching
intention.
TABLE III.

VALUE OF CRONBACH ALPHA COEFFICIENTS

Construct
Switching intention
Quality of service
Price
Customer satisfaction

Question
mark
p22 - p24
p16 - p21
p11 - p15
p7 - p10

Cronbach
alpha
0,845
0,915
0,892
0,853

Based on the Cronbach alpha coefficients

obtained by the SPSS program it is possible to conclude
that the applied measurement subscales possess ideal
levels of reliability.

B. SEM Analysis
Structural Equation Modeling (SEM) is a multivariate
statistical technique that is a combination of confirmatory
factor analysis (CFA), path analysis (PA) and regression
analysis and applied in the analysis of hypothetical
relationships between endogenous (variables that can not
be directly measured) and exogenous (variables which can
be directly measured) variables. Using AMOS statistical
software (which is used for the modeling and simulation
of SEM, SEM statistical analysis and data processing as
well as the graphical representation of the results of SEM
analysis) we conducted testing of ours hypothesis [3].
Figure 3. shows the diagram of the model for measuring
customer switching intent through the quality and price of
service with the calculated parameters through AMOS
program, where by labels e1-e24 represent the residual
variance (formed under the influence of uncontrolled
factors) exogenous variables p1-p24, while mark e25, e26
and e27 represent residual variance of endogenous
variables [7]. (Appendix B)
Based on the SEM analysis first sought to ascertain the
degree of appropriateness of the proposed model with
empirical model. In Table IV., it was given an overview of
goodness-of-fit indices that measure the degree of
suitability.
TABLE IV.

GOODNESS-OF-FIT INDICES FOR STRUCTURAL

MODEL

Goodness-of-fit Indices

Benchmark

Value

Absolute goodness of fit measure

Chi-square /degree of freedom (2/df)

2,736

Goodness-of-fit Index (GFI)

.90

0,932

Adjusted Goodness-of-fit Index (AGFI)

.90

0,917

.08

0,025

.05

0,049

Normed Fit Index (NFI)

.90

0,944

Comparative Fit Index (CFI)

.90

0,963

Turker Lewis Index (TLI)

.90

0,959

.50

0,767

.50

0,862

.50

0,845

Absolute badness of fit measure

Root Mean Square Residual (RMR)
Root
mean
Square
Approximation (RMSEA)

Error

of

Incremental fit measure

Parsimony fit measure

Parsimony
Goodness-of-Fit
index
(PGFI)
Parsimony Comparative of Fit index
(PCFI)
Parsimony Normed of Fit index (PNFI)

Indices TLI, CFI, and NFI represent the relative

suitability indicators mounted model with two reference
models: the measurement and the ideal model, while
indices, RMR and RMSEA represent absolute suitability
indicators presented model and the observed data [3].

In this study, as shown in Table IV., all goodness-offit indices are better then their corresponding
recommended values. Values obtained goodness-of-fit
indices indicate that the level of appropriateness defined
model data is satisfactory, ie. there is overlap empirical
and target matrix, and model is acceptable for further
analysis.
In this study, as shown in Table V., correlation
between construct shows that all variables are positively
correlated with each other. Construct switching intention
and customer satisfaction have shown the greatest degree
of correlation 0.812. Construct switching intention and
price have shown the least degree of correlation 0.603.
The resulting correlation coefficients suggest that the
hypothesis H1 to H4 can be considered confirmed. All
correlation coefficients are positive. (Appendix C)
In this study, as shown in Table VI., standardized
structural coefficients that estimate the direct causal
relations between the latent variables specified in the
previously defined structural model. It can be seen that the
p-value for each correlation is less than or equal to 0.001
(*** p < 0.001), which means that there is a statistically
significant difference between these constructs. Also, it
can be seen in Table VI. that the estimated coefficient of
construct satisfaction is 0.928 (has the strongest impact on
coustomer switching intent) and the estimated coefficient
of construct quality of service is 0.480 (has the strongest
impact on customer satisfaction). Estimated coefficient of
construct price is 0.386. This means that construct quality
of service and construct price (indirectly) and construct
satisfaction (directly) have pozitive influence on customer
switching intent. Thus, we can conclude that customer
switching intent can be achieved directly from customer
satisfaction and indirectly from quality of service and
price. (Appendix D)
The resulting standardized structural coefficients
indicate that the hypothesis H1 to H4 can be considered
confirmed. All structural coefficients are statistically
significant and have the expected direction.

According to a study [13] there is a correlation between

the construct quality of service and price.
According to a study the quality (indirectly) and
satisfaction (directly) have a positive and profound
influence on customer switching intent. This means that
increasing the quality of services leads to increase
customer satisfaction, and consequently to increase
customer switching intent. This we confirmed with our
research.
Although this research methodology has it's advantages
and disadvantages, in order to give a deeper insight into
causal relationships between variables, it is necessary to
conduct a series of additional research to examine the
impact of other concerns of the general parameters of
service quality on customer satisfaction and customer
switch intent.
For future research it would be interesting to investigate
the impact of mobile number portability on customer
loyalty, as well as the effect of the reward customer
loyalty by mobile operators on user loyalty.
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VI.

CONCLUSION

Based on the results we have shown that the quality of

service and price (indirectly) and satisfaction (directly)
have a huge impact on customer switching intent. In this
study, we confirmed that the quality and price positively
and indirectly affect customer switching intent.
According to a study [20], service quality and price
positive and directly impact on customer switching intent.
Also, we confirmed that the quality and price positive and
direct impact on customer satisfaction, and that there is a
correlation between the construct of quality of service and
price. According to a study [13], service quality and price
positive and directly impact on customer satisfaction.

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APPENDIX A

QS4p19

1. I intend to continue using mobile

services from this operator for a long
time.
2.If I want to use a additional mobile
services, I am willing to continue
selecting this mobile operator.
3. Even if another mobile operator has
lower price, I will continue to use service
from this mobile operator.
4. I am willing to say positive things
about this mobile operator to other people.
5. I will encourage friends and relatives to
use the services offered by this mobile
operator.
6. To me, this mobile operator clearly is
able to provide the best service.
7. I am satisfied with the overall service
quality offered by this mobile operator.
8. I am satisfied with the professional
competence of this mobile operator.
9. I am satisfied with the performance of
the frontline employees of this mobile
operator.
10. I am comfortable about the
relationship with this mobile operator.
11. This mobile operator is reliable
because it is mainly con
cerned with the consumers interests.
12. The billing system of this mobile
operator is trustworthy.
13. The reputation of this mobile operator
is trustworthy.
14. The policies and practices of this
mobile operator are trustworthy.
15. The service process provided by this
mobile operator is secure.
16.This mobile telecom operator follows
up in a timely manner to customer
requests.
17. The frontline employees of this
mobile operator are always willing to help
me.
18. This mobile operator offers
personalized services to meet customers
need.
19. This mobile operator provides timely
information when there are new services.

QS5p20

20. This mobile operator is consistent in

providing good quality service.

QS6p21

21. This mobile operator provides service

voice calls, SMS, MMS and Internet
access services without errors.

CL1p1
CL2p2
CL3p3
CL4p4
CL5p5
CL6p6
CS1p7
CS2p8
CS3p9
CS4p10
P1p11
P2p12
P3p13
P4p14
P5p15
QS1p16
QS2 p17
QS3p18

SI1p22
SI2p23
SI3p24

22.I intend to switch carrier.

23. I would not continue to have service
from my current carrier.
24. Next time I shall need services of
other carrier.

Agree
Strongly Agree

Measurement items

Uncertain

Mark

MEASUREMENTS ITEMS IN SURVEY RELATED TO

PARTICULAR CONSTRUCT IN THE RESEARCH

Disagree

TABLE I.

Strongly disagree

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APPENDIX B

Fig 3. AMOS diagram model for measuring customer switching intent through the quality and price of service with the calculated parameters

APPENDIX C
TABLE V.

Quality of Service
Price
Customer satisfaction
Customer loyalty
Switching intention

Quality
of Service
1,000
,645
,791
,622
,642

CORRELATION BETWEEN CONSTRUCT

Price

Customer
satisfaction

Customer
loyalty

Switching
intention

1,000
,787
,812

1,000
,639

1,000

1,000
,743
,584
,603

APPENDIX D
TABLE VI.
Hypothesis

STANDARDIZED STRUCTURAL COEFFICIENTS

Path

Estimate

S.E.

C.R.

p-value

Result

H3

Customer satisfaction

<---

Price

0,386

0,039

9,913

***

Accepted

H1

Customer satisfaction

<---

Quality of Service

0,480

0,038

12,524

***

Accepted

H4

Customer loyalty

<---

Customer satisfaction

0,818

0,046

17,731

***

Accepted

H2

Switching intention

<---

Customer satisfaction

0,928

0,052

17,788

***

Accepted