CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Telecommunications in Cameroon dates back to the colonial era when the system was established by the British and French administration for one basic purpose, to facilitate, control and exploitation of the colony (Allotey and Akorli, 1999; Noam 1999). The form of state-run monopoly systems, focused mainly in areas of economic activity, thus, established the basis for the structure of telecommunications after independence.

This structure persisted in Cameroon until the early 1990s when it was caught up in a wave of restructurings, deregulations and privatizations sweeping the continent (Sarbib, 1997). The liberalization process was motivated by a combination of pressure from international finance agencies, WIO commitments, inefficiency in the existing system, the governments need for revenue and a desire to promote universal service. (Addy-Nayo, 2001; Bennell, 1996; Frempong and Henten, 2004; Noam, 1999; and Noll and Shirley, 2002).

The survival or success of companies is now depending on the amount of information that is carefully gathered by the former with regards to the purchasing habits displayed by consumers. In order to survive in the market, companies are interested in developing strong brands that leads to long term and customer relationships. Companies inject heavy resources and time into the study of consumer perception and sociological factors in order to gain much insight and to understand consumer purchasing patterns (Hess, Story and Danes, 2011).

In today’s market place where consumers have an enormous amount of information with regards to products and services at their disposal, yelling louder is not a solution to making you heard or recognized in the market place instead creating an outstanding product and service that appeal to consumers and gives them a positive perception is the ideal solution. (Boone and Kurtz, 2005).

Much attention has to be paid on consumer perception of telecommunication products because informed consumers are prepared to choose between competing suppliers which is necessary to stimulate firms to innovate, improve on quality and compete in terms of prices. Indeed, in making well informed choices between suppliers, consumers not only benefit from completion but they exert the sustained pressure for providers to compete for their customers.

Conversely, where consumers have poor perception (too little information), poor quality information or mis-information), they may end up misled and confused by the choices on offer, may pay too much or may buy the service which does not meet their needs. This may, in turn, inhibit and dampen the competitive process. Moreover, if suppliers can exploit consumers, this could at some point lead to “reputational damage” and disillusionment with the competitive process as a whole. (Kotler and Keller, 2009).

Nextel Cameroon S.A being a new comer in the highly competitive telecommunication industry in Cameroon belongs to a class of stakeholders in the business of telecom regulation. Apart from obtaining their operational licenses with certain obligations attached to them, the operator also expect certain obligations from the government. They expect a non-partial regulator to protect their huge investments.

They want the regulatory commission to ensure that no other entity interferes with their network resources such as frequency spectrum or base stations. They expect a regulator that will not be arbitrary in decision making and one that will regulate by the rules as contained in the license agreement and provisions of the laws and regulations. With all these put in place, the company is expected to give a good perception of her products to her customers. (Boone and Kurtz, 2005).

To survive and succeed under the current competitive telecom market, Nextel must know their customers, their needs and wants and satisfy them efficiently and effectively. To this end, Nextel has to embrace the concept of relationship marketing and position themselves in a business-like manner if they maintain a favourable position in Cameroon.

Customer satisfaction is a key ingredient to the success of any business. It is the most important factor that creates loyal customers. If customers are satisfied with goods or services, an organization offers, chances are that they will patronize more of your product which will increase sales, revenue and profitability.

Accordingly, an improvement of service quality leads to customer satisfaction and loyalty as well as enhancement of corporate image. This in the long run impacts on how the organization can effectively compete and succeed in this increasingly competitive environment. (Cronin and Taylor, 1992).

This work therefore aims to understand consumer perception on the decision making process of NEXTEL products and services in Buea, Cameroon. The report seeks to identify specific measures for consumer protection and empowerment in the telecommunication markets.

The report has a particular focus on the products and regulations of the telecommunications sector but also considers other measures for enhancing consumer empowerment and consumer protection that do not necessarily involve regulation. The report also examines the numerous products available, the evidence that is available about actual consumer decision-making and perception in telecommunication markets. The report concludes with an examination of the implications of the analysis for consumer policy and regulation. (Kotler and Andreason, 1991).

Regulations in the telecommunication sector in Cameroon has focused mainly on the supply side of the market, including, for example, market entry and licensing access to and use of networks, interconnection, control over retail and/or wholesale pricing. Even the regulation of universal service has to a large extent emphasized the supply side through such requirements as the need to build-out networks with numerous products and make access available at a reasonable price setting.

As competition has developed in telecommunication markets over the past years and users have a wider choice of service providers and products, there has been increased attention by some regulators on the demand side.

Such attention to the consumer demand side is timely because informed consumers are prepared to choose between competing suppliers and the best affordable products. This has stimulated most telecommunication firms to innovate, improve on quality and compete in terms of prices. Indeed, in making well informed choices between suppliers, consumers not only benefit from competition but they exert the sustained pressure for providers to compete for their customers.

Conversely, where consumers have too little information, poor quality information or mis-information that may end up misled and confused by the choices on offer, the consumer may pay too much or may buy the service which does not meet their needs.

This emphasis on the supply side was appropriate because the task was to install effectively competing alternative suppliers in monopoly telecommunication markets. As competition has developed in telecommunication markets and users have a wider choice of service providers, there has been increased attention by some regulators on the demand side.

Policy and regulation in the telecommunication sector has long been concerned with the consumer interest (including consumer protection and empowerment). Legislation, policy and regulatory statements repeatedly stress that the welfare of consumers is a, if not the primary objective of policy and regulation.

In many countries including Cameroon, policy and regulation for telecommunication has been pro-competitive in recent years since competition is viewed as having wide economic benefits and benefiting consumers. Rivalry among suppliers to attract and retain consumers means that suppliers who serve consumers well will prosper and those that serve them badly will not.

Pro-competition policies have included ex-ante sector-specific regulation and ex post competition policy based on general competition law to foster competition and restrict anti-competitive conduct. Sector specific ex-ante regulation of telecommunications services has covered a range of areas. (Rindell and Kotler, 2000).

1.2 Problem Statement

A lot of concerns have been expressed in recent times on the relatively poor consumer perception and policy regulations of telecommunication providers in the country. This has greatly dealt with the corporate image of the Cameroon telecommunication services of which many consumers cannot be loyal to any particular telecom provider due to low perception, poor regulatory policy, inadequate consumer care and satisfaction. (Rindell and Kotler, 2000).

Though many companies are able to have better products and yet are sometimes unable to compete in the market and give the consumers a good perception of the products due to poor information and quality of services offered. Information on quality of products and services offered by a company have the potential to generate long term and loyal customers which would eventually lead to an increase in sales in the future (Hess, Story and Danes, 2011).

1.3 Research Questions

This work aims to understand the theoretical and practical impact of consumer perception on the decision making process of NEXTEL Cameroon S.A products and services in Buea, Cameroon. The following research questions guided the researcher in collecting and analyzing data. The research will answer the following key research question.

1.3.1 The main research question is:

How does consumer perception and policy regulation exploit the consumers of Nextel?

1.3.2 The specific questions are:

1. What influence does consumer perception and policy regulation has on Nextel Cameroon S.A.’s consumers?
2. What role does consumer perception and policy regulation play on the consumers of Nextel Cameroon S.A?
3. What is the effect of consumer perception and policy regulation on Nextel Cameroon S.A.’s consumers?

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