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SZTC: Customer-Preferred to Customer-Centric

CASE STUDY, MARKETING MANAGEMENT
ET Cases, 8 Pages
AUTHOR(S) : Kishore Gangwani (Doctoral Student, IIM Bangalore), Sidh Kumar(Doctoral Student, IIM Calcutta) and Garima Singh (MBA Student, FMS, Delhi)

Case Preview

SZTC: Customer-Preferred to Customer-Centric

 

Mr. Phillips, CEO of Sunder-Zealand Telecom Corporation (SZTC), a Government-owned Telecom Service Operator in Sunder-Zealand, was in a dilemma as the revenue and profit were plummeting continuously. SZTC provides telecom services for example, basic telephone, mobile services, etc., catering to retail and corporate customers all over the country. Customers were not satisfied with its services which resulted in declining market share, revenue and profit. SZTC registered loss for the first time and lost its No.1 position. Mr. Phillips called for a meeting of the Board of Directors and informed that the Minister of Telecom Affairs, Government of Sunder- Zealand had called to caution that in case SZTC fails to regain business within two years, it would be sold and the Minister had also insisted on a revival roadmap at the earliest.

Mr. Phillips sought advice from the Directors on how to go ahead. One of the Directors suggested that SZTC should hire a reputed consultancy and seek advice. Few others were against the idea and demanded an internal assessment through brainstorming and discussions at various levels while focusing attention and resources to enterprises and retail customers separately, with emphasis on marketing particularly to corporate customer segment. After long deliberations on both the ideas it was finally decided that SZTC would hire Anantya Consultancy.

Anantya Consultancy conducted an exploratory research on the telecom industry and SZTC as the first step in the direction and then sought data on the number of complaints against SZTC and its competitors. They examined how SZTC handled complaints and customer feedback forms. Additionally, researchers from Anantya Consultancy interviewed industry experts, competitors and randomly selected SZTC customers to have extensive information on SZTC and to identify the loopholes in SZTC’s services..................

Sunder-Zealand Telecom Corporation (SZTC) Company Background

Based in Sunder-Zealand, one of the fastest growing emerging economies, SZTC is a government-owned Telecom Company with its product portfolio consisting of fixed line services, mobility solutions and broadband services, with fixed line services being the largest contributor to revenues and profits till 2000 (Exhibit I). However, because of technological advancements and increasing usage of telecom services, mobility solutions were increasing at a faster pace, whereas fixed line services were on a decline in urban markets...........

The Business of Telecom Services

In the last decade, the Government-owned SZTC and other private players had not only fuelled the growth of the telecom sector but also significantly contributed to socio-economic development of the country.

Increased technological capabilities and shifting consumers’ preferences, from wired to wireless technology, resulted in a huge user base. Number of telecom subscribers (fixed as well as mobile) and users of value-added services increased from nearly zero in 1980 to about 15 million in 2012...............

Looking Inward: A Compulsion of Changing Sectoral Dynamics

The changing economy had its impact on Sunder-Zealand’s economy too. Although the growth of the telecom sector in the past decade had been phenomenal, the slow growth witnessed globally in the past two years affected the sector. Telecom, although in service segment, did show some resilience to the external economy factors; and thus, emerged as one of the key players showing better performance..............

Anantya Consultancy

Mr. Chi zeroed in on Anantya Consultancy to suggest possible solutions for increasing customer retention, which may lead to corresponding increase in SZTC’s profits. The research team from Anantya Consultancy was trying to assess the concern. Is it useful if efforts were put in to retaining all the customers or............

Assessing and Conceptualizing the Need of Service Delivery

While researching for the reasons Anantya Consultancy collected many reviews from customers.

One of the dissatisfied customers of SZTC shared “I was charged for the services, I never used. When I requested the CSR (Customer Service Representative), I was assured of the proper action, but nothing happened and finally I gave up after repeated requests. No one bothered to see what action was taken to my complaint”...............

Segmentation of Telecom Market

Research team from Anantya Consultancy was looking at different customers of SZTC and wondering how SZTC does separates the sheep from the goat? They quizzed the Marketing Manager who responded that, “We have gone way beyond traditional segmentation based only on standard market criteria, such as prepaid vs postpaid, consumer vs business and rural vs urban.............

Competition for SZTC

The telecom market in Sunder-Zealand is a highly competitive market driven by regulatory challenges and issues. SZTC, which was the market leader in the early 90s was struggling to regain the position as the market leader.............

The Road Ahead for SZTC

After an extensive research of 3 months Anantya Consultancy was to present findings to SZTC and recommend possible solutions for better service delivery. The research team was confident that to be successful in increasing customer retention rate, the mind set of SZTC employees had to be geared towards considering the fact that customer was the king...........

Assignment Questions

I. Inferring from the case facts and SZTC customers feedback, is there a gap between customer’s expectations and perceptions of the service provided? Is there any analogy between the gaps discussed in the case and the Gaps Model of Service Quality1?

II. Why retaining customers is more important for SZTC than acquiring new customers? What are the benefits of retaining exiting customers for SZTC?

III. .................

Exhibits

Exhibit I: Revenue and Profit (in %)

Exhibit II: Percentage of User Base (in 2011-12)

Exhibit III: Year-wise Market Share of Different Companies

Exhibit IV: Value Segmentation using Decile Analysis

Exhibit V: Usage Segmentation (in %)

Teaching Note Preview

SZTC: Customer-Preferred to Customer-Centric

 

Synopsis

This case study is a hypothetical interpretation to explain the concepts of Service Delivery, Service Quality, and Ways of Service Recovery Options. The case study is about a Government-owned telecom company Sunder-Zealand Telecom Company (SZTC), in an emerging market (Sunder-Zealand). SZTC was passing through a tough phase. After being the market leader for a couple of decades, SZTC was losing out to competition on the count of inefficient service delivery. Customers of SZTC were opting out of SZTC services and subscribing to services of competing firms. The predicament with the CEO, Mr. Phillips, was about the process of transforming the organization from a monopolistic environment to a customer centric service oriented company in the present competitive environment.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

  • • Valarie A. Zeithaml, et al., “Chapter 2: Conceptual Framework of the Book: The Gaps Model of Service Quality”, Services Marketing : Integrating Customer Focus Across the Firm, 5th Edition, Tata McGraw Hill, 2011
  • • Valarie A. Zeithaml, et al., “Chapter 8: Service Recovery”, Services Marketing : Integrating Customer Focus Across the Firm, 5th Edition, Tata McGraw Hill, 2011
  • • Philip Kotler, et al., “Chapter 12: Designing and Managing Services”, Marketing Management: A South Asian Perspective, 14th Edition, Pearson Education, 2013

 

Case Positioning and Setting

The case study can be used at the Post Graduate level in Principles of Marketing, Services Marketing and Customer Relationship Management courses. The target audience would typically be management students in their first year who are taking the basic course in Marketing Management or Services Marketing. The case study would also be useful to highlight the Need of Service Orientation and the Need of Retaining Existing Customers for Success in Service  Economies.

Expected Learning Outcomes

  • • Understanding the importance of listening to customers and providing what is promised – This is more important in service contexts, where customer uses the services of the company for a long duration and hence is a continuous source of revenue.
  • • Understand that environmental changes such as changing consumer preferences and increased competition may force firm to differentiate themselves on the basis of service provided – In today’s global economy monopoly hardly exists. In such a situation not paying attention to customer complaints may cost a firm in terms of reducing profits and revenues.
  • • Understand the strategies to retain existing customers and ways to regain lost customers – This case discussion will help students in understanding that not all customers are profitable, but which one to serve is a question to be researched deeply. For a government-owned organization, this aspect is more pronounced, because they may be forced to serve different sections of the society despite of their profitability. SZTC is one such organization, which till early 90s was having the largest market share, but later on lost its market share to new private players on account of better services and customer orientation.

 

Assignment Questions

  • I. Inferring from the case facts and SZTC customers feedback, is there a gap between customer’s expectations and perceptions of the service provided? Is there any analogy between the gaps discussed in the case and the Gaps Model of Service Quality1?
  • II. Why retaining customers is more important for SZTC than acquiring new customers? What are the benefits of retaining exiting customers for SZTC?
  • III. What challenges can be anticipated by SZTC in the process of transforming it into a customer centric service organization?
  • IV. ....................

 

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Abstract


This case study is a hypothetical interpretation to explain the concepts of Service Delivery, Service Quality, and Ways of Service Recovery Options. The case study is about a Government-owned telecom company Sunder-Zealand Telecom Company (SZTC), in an emerging market (Sunder-Zealand). SZTC was passing through a tough phase. After being the market leader for a couple of decades, SZTC was losing out to competition on the count of inefficient service delivery. Customers of SZTC were opting out of SZTC services and subscribing to services of competing firms. The predicament with the CEO, Mr. Phillips, was about the process of transforming the organization from a monopolistic environment to a customer centric service oriented company in the present competitive environment.



Pedagogical Objectives

  • To understand the importance of listening to customers and providing what is promised
  • To understand that environmental changes such as changing consumer preferences and increased competition may force a firm to differentiate themselves on the basis of the service provided
  • To understand the strategies to retain existing customers and ways to regain lost customers

Case Positioning and Setting

The case study can be used at the Post Graduate level in Principles of Marketing, Services Marketing and Customer Relationship Management courses. The target audience would typically be management students in their first year who are taking the basic course in Marketing Management or Services Marketing. The case study would also be useful to highlight the Need of Service Orientation and the Need of Retaining Existing Customers for Success in Service Economies.




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