CENTRAL UNIVERSITY COLLEGE

THE IMPACT OF BRANDING ON CONSUMER DECISION MAKING IN THE GHANAIAN TELECOMMUNICATION INDUSTRY. (A CASE OF ESPRESSO )

SELOM KPIKPI

DECEMBER 2011

CHAPTER 1 INTRODUCTION Most recent surveys show key changes in the marketing strategies employed by companies seeking to sustain competitive advantage. The financial wellness of modern companies substantially now depends on the amount of information that its marketing and customer service collect in regards to consumer purchasing habit. (Keller 2002, Lasser , Yoo & Donthun 2001,) Most firms have resorted to the adaptation of behavioral and sociological studies in order to collect this pertinent data and to further the corporate understanding of consumer purchasing patterns which they inculcate into their brands (Assael, H. 1998, Gerrard & Cunningham, 2000). The study of these fields are an attempt to establish a correlation between consumer spending and the key factor involved in consumer preference in terms of attitudes, cognition perception and learning (Kotler 2001). Current market trends show that the homogeneity of product has increased, meaning that few functional differences between key competitors currently exist in most highly competitive markets (Levitt, 1983). This decrease in product differentiation is considered to be the direct result of high levels of competition that exist within todays market, as well as the technological advancements of production and distribution methods. Because these advances have diminished the ability of technological innovation to offer sustainable competitive advantage and have made product differentiation extremely difficult (Levit, 1983; Kotler, 2000) As a direct consequence, branding has emerged as a significant feature of contemporary marketing strategies and is now considered a key organizational asset (Kotler, 2000). The
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symbolic values associated with brand names have become the basis for product differentiation, with leading strategies attempting to emulate key factors that are conductive to key behaviors associated with consumer purchasing patterns (Aaker, 1991). An example of the impact branding has on the consumer purchasing decision process, is how branding is applied to the mobile telephony industry (Hutch, M.J. & Shultz 2002). Five (5) mobile operators working on the same platform, offering similar packages for both mobile voice and data services. It is a highly competitive industry that is still expanding at a furious pace. With over 23 million subscribers sort after by these operators offering virtually the same services and the recent emergence of number compatibility (www.nca.org.gh ) With the intense competition and increasing integration of the Technology, building customer loyalty has become a critical strategy for most mobile operators. Time has come for the Telecom industry to develop strong relationships with their customers in through brand loyalty in order to compete successfully in the competitive mobile operator service environment (Mobileworld Issue 29, 2012). Numerous studies have shown that operators profitability is closely associated with customer retention (Garland, 2002; Anderson, Fornell & Lehmann, 1994; Reichheld & Sasser, 1990). Telecommunication Industry in Ghana The evolution of the telecom industry over the past several years has yielded a wide array of dramatic changes in the technology of human communication, and the role that advance electronic telecom play in all aspects of society and the economy (Res, A & Trout J 1993). Among the most important developments aside from technology innovation and newness, has been the transformation of the global and domestic telecom industry from a largely monopolized,
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state-owned model to a broadly competitive, private, and open market model (Hutch, M.J. & Shultz 2002) The development of the telecommunication in Ghana is based upon the principles of open markets and fair competition. To the greatest extent possible, the government shall encourage telecommunication growth through the initiative and innovation of the private, competitive marketplace at all levels, with particular emphasis on promoting local entrepreneurship and socially responsible investment. (Ministry of Communication 2005)

Competitive Policy The objective of competition is the establishment if a fair, transparent and non-discriminatory telecom market environment. This section describes the general framework for the functions and responsibilities of the NCA, and of licensed operators, in achieving effective competition. Based on this policy framework, the NCA has the authority to define specific procedures, rules, regulations and administrative structure to ensure that competition policy is effective. The first principle of this policy is to ensure an open provision and access to bottlenecks network resources through a competitive interconnection and equal access regime that will guarantee access to all service providers and end users. The second principle is the determination of significant market power (SMP) that will form the basis for competition regulation to ensure that operators with SMP provide non-discriminatory interconnection to bottleneck and scarce resources and that NCA has the jurisdiction and authority to mediate, resolve disputes and arbitrate as required.

The NCA will have the authority to determine the human and financial resources required in the effective application of this competition policy Data from the National Communication Authority (NCA) May 2012 report, show that the total number of subscribers has increased from 10.4 million in August 2008 to 22.5 million in May 2012. MTN had a marginal decrease but maintained its position as the market leader with a subscriber base of 10,644,804 representing 47% of the total market share Vodafones subscriber base of 4,671,999 represents 21% of the total market share. Tigo had a marginal decrease in its subscriber base, It closed at 3,457,427 represents 15% of the market while Airtels increased its subscriber base to 3,015,499 representing 14% of the total market share.

GLO had 468,508 subscribers base representing 2% of the total market share. Expresso experienced a further decline from 258,967 which represented 1.4% market share in 2010 to 195,670 representing 1% of the total market share.

Profile of Espresso Its Ghana operation has been in existence since 1995, operating under the name of Celltel; it was the second mobile operator in the country at the time. In 1998, Hutchison Telecom then acquired 80% of the company, improving the analogue infrastructure that was in place at that time. In January 2003, the company was re-branded to Kasapa Telecom, the only locally branded telecoms operator in the country, with 9,000 subscribers.
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Kasapa experienced significant growth and in September 2005, the company made a switch from an analogue network to a CDMA network to further strengthen its market position. In July 2008, Expresso Telecom acquired 100% of the company. After the acquisition, the company has been working on many strategic initiatives and, more recently, an operational transformation project and network expansion programme has seen the company increase its coverage from 40% to nationwide coverage. Following on from the network expansion and upgrade, in November 2010 the company successfully re-branded into Expresso, now providing unrivalled high-quality voice and data services to customers across various market segments. Our aim is to attract the people of Ghana to our network and significantly increase our market share by providing the best products and services, and exceptional customer service. Their strategy We believe that long-term business sustainability, competitive edge and financial profitability depend on one key principle: building strong partnerships with all of our stakeholders. This includes our customers and their communities, our people, our investors, our vendors, and of course government and regulatory bodies. The Group is committed to building a sustainable business in all of our markets by being a trusted partner. We will do this by implementing and upholding high standards of corporate governance, social and environment responsibility, and caring about our people. Sustaining growth is both a challenge and an opportunity. At Expresso, we are now concentrating on building a platform for growth for the next five years. We have ambitious
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plans but were confident that our focused and disciplined approach will accelerate our growth. Our customers desire for solutions is central to our corporate strategy and action plans. Tanvir Haque, Chief Business Development Officer. (www.myjoyonline.com)
A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless. (Aaker, 1991)

Modern times reflect key changes in the marketing strategies employed by companies seeking to sustain competitive advantage (Duncan & Moriarty 1997). The financial health of these companies is now dependent on the amount of information that is collected in regards to consumer purchasing habits. These companies have resorted to the adoption of behavioral and sociological studies in order to collect this pertinent data and to further the corporate understanding of consumer purchasing patterns Duncan & Moriarty (1997). The study of these fields are an attempt to establish a correlation between consumer spending and the key factors involved in consumer preferences in terms of attitudes, cognition, perception and learning. Many researchers (Aaker 2000, Keller 2002, Lasser , Yoo & Donthun 2001, Prasad & Dev. 2000 etc) have been interested in the concept and measurement of brand equity because of the necessity in todays marketplace to develop, maintain and use product branding to acquire a certain level of competitive advantage. According to Ailawadi et al., (2003, p. 1), this has led to various points of view on brand equity dimensions, the factors that affect it, the perspective from which it should be studied as well as how to measure it. Consumers behaviour has change dramatically in the past decade (Schiffman &Kanuk 2009). They defined consumer behaviour as the behaviour that consumers display in searching,

purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. According to them, consumer behavior focuses on how individual makes decision to spend their resources (time, money and effort) on consumption related items this include what they buy, when, where, how often etc. how they evaluate it after the purchase, the impact of such evaluations on future purchases and how they dispose the product. In order to succeed in any business and especially in todays dynamic and rapidly evolving marketplace, marketers need to know everything they can about consumers; what they want, what they think; how they spend. They need to understand the personal and group influence that affects consumer decisions and how these decisions are made. The three drivers of successful relationship between marketers and customers are customer value, high level of customer satisfaction and building a structure that ensures customer retention (schiffman & kanuk 2009). Current markets trends show that the homogeneity of product has increased, meaning that few functional differences between key competitors currently exists in most highly competitive markets (Baskin (2003). This decrease in product differentiation is considered to be the direct result of high levels of competition that exists within todays market, as well as the technological advance of production and distribution methods. Because these advances have diminished, the ability of technology innovations to offer sustainable competitive advantage and product differentiation has been extremely difficult (Levitt, 1983; Kotler, 2000). As a direct consequence, branding has emerged as a significant feature of contemporary marketing strategies and is now considered a key asset (Kotler, 2000). The symbolic values associated with brand names have become the basis for product differentiation, with leading

strategies attempting to emulate key factors that are conducive to key behaviours associated with consumer purchasing patterns. An example of the impact branding has on the consumer purchasing decision process, is how branding is applied in the telecommunication industry in Ghana. In todays telecommunication industry, mobile telephony companies need to set up effective branding strategies in order to be competitive. Depending on the structure of the company and the products offered, mobile telephony companies have used different strategies to influence the consumer decision making. However a brand is more about emotional and psychological feelings that enable a person to relate to the brand (Johns 2004). A brand increases the value of a product or a service by differentiating them from the competition and creates positive associations and forms emotional relationship with the customer. Brands provide businesses with the means to free themselves from for example constant price competition, to increase the value of their services and reduce their marketing cost. Philip Kotler has said that if you are not a brand, you are a commodity. Then price is everything and the low cost producer is the only winner (Greenwood 2006). Due to rapid changes in the global market and the increased competition experienced between firms, Brand Management has become more important (Reynolds, 2002). Good brand management brings about clear differentiation between products, ensures consumer loyalty and preferences and may lead to a greater market share. The mobile telecom industry today is different than before since there has been a strong growth in mobile phone subscription and cellular service. The products/services that the mobile telephony companies provide are similar and that makes branding and positioning difficult, as
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customers may understand mobile telephony companies to be similar overall. Rapid changes are ongoing in the telecom industry and there have been many acquisitions in the Ghanaian mobile telecom industry recently. When companies merge or are acquired, brand issues are a focal point since they must mix their values and also create a new image that appeals to their existing and potential customers. The best way to build brand value and stop product and service commoditization is through continuous attempt to build brand equity (Kotler 2001). Strong brands are established by creating an emotional attachment with customers, seeking differentiation in communication and performing the service. Kotler (2001) emphasis that branding makes clear a companys reason for existence and inspires its employees to get used to the brand thereby building it for customers

Problem Statement The Telecommunication industry is fast growing in homogeneity. Technology and innovation is becoming a standard Brands and branding are getting more and more important. Branding is today an important marketing tool for manufacturers (Motameni and Shahrokhi, 1998). The values of a brand and the perceptions of it control purchasing patterns of products and services (Kotler et al. 2001). The competition between corporate organizations is high and it continues to grow. In order to keep up with the markets ongoing pace, awareness is an important factor. Being in control of a strong brand is a competitive advantage and opens windows of opportunities in order to maintain it as well as strengthen the competitive position.

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Furthermore, building sustained brand loyalty establishes a relationship with the customer which is essential. It can determine whether a company will be successful or not. Having a good customer relationship and being keen to the needs and demands of the customer is of great importance for the firm. Developing a reliable relationship through brand loyalty with customers is a corner stone in order to establish a long term growth and higher sales to the company (Reynolds, 2002). When a customer purchases a branded product, the purchase is carried out with the intention that the product and the brand shall reflect the buyers image and lifestyle (Baskin, 2003). This becomes a way to communicate ones personality. It can especially be observed within in the telecom industry where individuals subscription with a particular network reflects parts of his/her image. Due to the fierce competition within this industry, the barriers of entry are high. When building a brand it is central to create visibility, build associations and create differentiation in order to develop a deep customer relationship (Aaker & Joachimschaler, 2000). Creating a corporate brand is a long and complicated process and due to that many companies get it wrong. It is almost as bad when a company simply develops a new logotype and put it on every product, hoping it will create the vision of a corporate brand (Hutch & Schults 2002). Ries and Trout (1993) say that to succeed in an over communicated society a company must create a position in the receivers mind and that is a position that takes into consideration, not only strengths and weaknesses for the company itself, but those of the competitors as well. They are also arguing that positioning of a brand about creating a place in the market and the customers mind.

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A good and effective brand identity should be connected to the companys vision and its organizational culture and values. It is used to create buy-ins and understanding throughout the organization (Joachimstahler and Aaker 1999). . Project Aims Objectives As the author as established, the importance of understanding branding and its impact on modern day markets is vital to the health and growth of most industries. The aim of this thesis is to ascertain and determine the impact of branding on consumer decision making in the Ghanaian Telecommunication industry using Espresso as a case study. The objective of the study is: To identify the state of brand management at Espresso Telecom; o Benefits in terms of sales numbers, customer loyalty level, market share and profitability o Challenges faced by the brand. To identify and expand on the effect as well as impact of branding on consumers decision making with relation to Expresso Telecom. Identify and develop the most effective vehicles for branding

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Research Questions The purpose/objective will be reached by addressing the following research questions which will form part of the foundation of the research. What are the factors that influence consumer decision making? What is the impact of consumers attitude towards the brand? How does branding affect the decision making of consumers?

Significance of the Study It is hoped that at the end of this research, it will be possible to know how Ghanaian mobile telecom companies specifically Espresso has impacted consumer decision making with its branding strategy. The research will also answer the research questions as well as help offer suggestion and recommendation for further research. Scope and limitation of the Study The study focused mainly on the telecommunication industry in Ghana and specifically on the Mobile operator Espresso with a time horizon of The research could have taken a particular look at accessing the branding impact on consumer decision making in associated industries in the Information Communication Technology (ICT) usage across the length and breadth of Ghana. The research was limited by time to only mobile telecommunication users. The research was challenged by financial limitation and had to resort to personal income to finance study also there was inadequate data on Ghanaian mobile telecommunication industry with the NCA being

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the only data source of the industry finally this research was conducted in Greater Accra Region. Peoples belief and attitudes can be significantly different across different regions and countries.

Organisation of the Study The thesis consists of five chapters. The first chapter is the opening part of this research and it presents the background study, statement of the problem, objectives and research questions, significance of the study and scope and limitations of research. The second chapter presents the theoretical frame work with theories relevant to the problem area and the literature has been structured in such a way to include consumer behavior, brand, brand equity, Conceptualization of brand equity, brand equity in service industry and the dimensions of brand equity. Chapter three presents the method which explains the research design that has been used, research approach, data collection methods, sources of data, reliability and validity and the limitation of the research. Chapter four presents data analysis and results. Finally chapter five deals with summary of findings, conclusions, recommendations and suggested areas for future research

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Reference Aaker, D. (1991). Managing brand equity : Capitalizing on the value of a brand name.The Free Press, New York. Aaker, D. (1996). Building strong brands. The Free Press, New York. Aaker, D. & Joachimsthaler, E. (2000). Brand leadership. The Free Press, New York Baskin, M. (2003). Brand new brand thinking. London, Great Britain: Kogan Page, Limited. Greenwood (2006). The importance of brand strategy. http://ezinearticles.com Hutch, M. J. & Schultz (2002). Are the strategic stars aligned for your corporate brand. Harvard business review, 128-134 Johns, C. (2004). The importance of brand values. http://aardvarkmedia.co.uk Kotler, P. (2000) Marketing Management, Upper Saddle River, NJ: Prentice Hall International. Levitt, T. (1983) The globalization of markets, Harvard Business Review, May/June, pp.23-26. Kotler, P., Armstrong, G., Saunders, J. & Wong, V. (2001). Principles of marketing, Harlow: Pearson Education Limited. Motameni, R., Shahrokhi, M. (1998). "Brand equity valuation: a global perspective", Journal of product and brand management, Vol. 7 No.4, pp.275-90. Ministry of Communication (2005). National Telecommunication Policy. MOC/POL-TEL-0001 Prasad, k., and Dev, C.S (2000) Managing hotel brand equity: a customer-centric framework for assessing performance. coenell hotel and restaurant administration quartely.41 (3), 22-31.

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Reynolds, J. (2002) Practical guide to CRM : Building more profitable customer relationships. Gilroy, CA, USA: CMP Books Res, A & Trout J. (1993). Positioning -the battle. New York: Warner Boos Inc. www.myjoyonline.com www.ghanaweb.com

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