Eldon Phukuile (2015) Customer value creation in the South African mobile telecommunications industry (Masters dissertation)

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Customer value creation in the South African mobile
telecommunications industry
by
ELDON PHUKUILE
A dissertation submitted in fulfilment for the Degree
of
Magister Philosophiae
in
Business Management
Faculty of Management
UNIVERSITY OF JOHANNESBURG
Supervisor: Prof G Goldman
Co-Supervisor: Prof M Roberts-Lombard
2015

ii

DECLARATION
I certify that the dissertation submitted by me for the degree Magister Philosophiae
(Business Management) at the University of Johannesburg is my independent work
and has not been submitted by me for a degree at another university.
________________________
Eldon Phukuile

iii

DEDICATION
To Jordan, Nicole, Joseph, Donavine, Irwin, Zelia and Angeline – thank you for the
love, support and patience.
For what you all have meant throughout, this endeavour is dedicated to you.

iv

ACKNOWLEDGEMENTS
Primary acknowledgement is to the most important people in my life, my family.
Jordan, Nicole, Donavine and Joseph – my dad, thank you for the love, support and
patience.
To my Supervisor, Professor G Goldman and Co-Supervisor, Professor M Roberts-
Lombard at the University of Johannesburg for the guidance, direction and input that
were coupled with long hours of work.
Elsabeth Marnitz performed academic editing. We are extremely obliged to you for
the distinction with which this task was performed.
To supportive friends, Andrew and Sam in particular, who played a role in inspiring
me to focus on the bigger vision. There is now a mantra in the head: “Just get it
done.” This piece of advice-cum-instruction was annoying, necessary, helpful and at
times, incriminating.
To colleagues within the Mobile Telecommunications and Consulting industries, as
well as the research participants who contributed to the study.
Appreciation goes out to the anonymous academic reviewers for their role in shaping
the final product.
Thank you very much for the help, support, encouragement, inspiration and the
prayers. At times it felt as if the resilience was failing, perhaps that the stretch of road
ahead was too far. Glad that there was a realisation that these were not unique
challenges. Now the journey is complete, and new opportunities arise.
In life, it seems that things, events happen for a reason, and that everything happens
at the right time. This has been a challenging, albeit rewarding journey.

v

ABSTRACT
The purpose of the research was to explicate business competitive challenges
through increasing scientific knowledge relating to the effect of Value Chain on the
Customer Experience within the South African Mobile Telecommunications industry.
Operators display a tendency of commoditised competition, offering little
differentiation that Customers value. The qualitative and time bound study analysed
the perspective of sixteen interviewees, representing the full Value Chain from
respective operators. Following the aim to understand the participants’ perception of
how the Value Chain impacts Customer Experience, the Content Analysis method of
analysis was utilised for the gathering of insights. Findings reflect a lack of maturity
in the understanding of Customer Experience and Value Chain, and a resulting
incapability to maximise the effect of the Value Chain on the Customer Experience.
Notwithstanding, there exists an opportunity to apply a Value Chain perspective in
order to improve the Customer Experience and enhance mutual value.

vi

TABLE OF CONTENTS
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
TABLE OF CONTENTS vi
EXECUTIVE SUMMARY xiii
CHAPTER 1: INTRODUCTION AND BACKGROUND 1
1.1 Introduction 1
1.2 Orientation of the main concepts under analysis 2
1.2.1 The Mobile Telecommunications Industry in South Africa 3
1.2.2 Value Chain 3
1.2.3 Customer Experience 5
1.3 Rationale and problem investigated 7
1.4 Research objectives 10
1.5 Significance of the research 10
1.6 Theoretical framework 12
1.7 Research methodology 13
1.8 Overview of chapters 15
1.9 Conclusion 16
CHAPTER 2: LITERATURE REVIEW 18
2.1 Introduction 18
2.2 Delimitation 19
2.3 Overview of the world under research scrutiny 19
2.4 Introducing the Value Chain concept 20
2.4.1 Definitions of the Value Chain 20
2.4.2 Generic elements of the Value Chain 23
2.4.3 A historical perspective on the Value Chain framework 25
2.4.4 The significance of the Value Chain 26
2.4.5 The Value Chain as a delivery mechanism for Customer
Value
27
2.4.6 Emerging trends in the Value Chain framework 30
2.4.7 The Value Chain and its linkage to Customer Experience 31
2.5 Introducing the concept of Customer Experience 32
2.5.1 Definitions of the concept “Customer Experience” 33
2.5.2 Generic elements of the concept “Customer Experience” 35
2.5.3 The evolution of Customer Experience 40
2.5.4 Customer Experience touchpoints 42
2.5.5 The significance of Customer Experience 43

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2.5.6 Different approaches of Customer Experience 45
2.5.7 Emerging trends in Customer Experience 50
2.5.8 Customer Experience as a differentiator 52
2.6 Introducing Mobile Telecommunications 53
2.6.1 Definitions of Mobile Telecommunications 54
2.6.2 Generic elements of Mobile Telecommunications 56
2.6.3 The evolution of Telecommunications 57
2.6.4 The significance of Mobile Telecommunications 58
2.7 Customer Value in the South African Mobile
Telecommunications Industry
59
2.8 Significant events in the Mobile Telecommunications
Industry in South Africa
63
2.9 Conclusion 66
CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY 68
3.1 Introduction 68
3.2 Overview of the research process 69
3.3 Research objective 70
3.4 Research metatheory 71
3.4.1 The Positivist tradition 72
3.4.2 The Interpretive tradition 73
3.4.3 The Critical Theory tradition 74
3.4.4 The choice of the metatheory tradition for the research study 75
3.5 The research approach 75
3.5.1 Qualitative research approach 76
3.5.2 Justification of a qualitative research approach for the study 78
3.6 Research design 78
3.6.1 Types of research design 80
3.6.2 Choice and justification of research design 81
3.7 Sampling 82
3.7.1 Stages in the sampling process 83
3.7.2 Target research population and sampling frame 84
3.7.3 Sampling method 84
3.7.3.1 Probability sampling 84
3.7.3.2 Non-probability sampling 85
3.7.3.3 The choice and execution of the sampling technique 85
3.8 Participant selection 86
3.9 Fieldwork and data collection method 87
3.9.1 The choice and justification of the data collection method 88
3.10 Data analysis 88
3.10.1 The choice of data analysis technique 90
3.11 Important interview decisions to support the research 91
3.12 Research ethics statement 92

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3.13 Qualitative research trustworthiness 92
3.14 Discussion on the research process 93
3.15 Reflections 97
3.15.1 The challenges with understanding of the research process 97
3.15.2 The challenge with stakeholder approval of the planned
research
98
3.15.3 The challenge to obtain suitable research subjects 98
3.15.4 The time taken to execute the research project 99
3.15.5 The challenge to select the evidence for the research report 100
3.15.6 The challenge of the snowball effect 100
3.15.7 The challenge of the research tools 101
3.16 Conclusion 102
CHAPTER 4: RESEARCH REPORT AND DISCUSSION 104
4.1 Introduction 104
4.2 Relating the findings to the research objectives 105
4.3 Steps in conducting the research and compiling the findings 106
4.4 Summary of the research codes 107
4.5 Research findings on the Telecommunications industry
perceptions, growth and products
108
4.5.1 How the industry has played out 109
4.5.2 Whether operators are doing the right things in response 110
4.5.3 Recommendations for changes in the industry 111
4.5.4 Leading / directing the change 112
4.5.5 What the industry will look like in 10 years 113
4.5.6 Growth 114
4.5.6.1 Elements that will grow the company 114
4.5.6.2 Elements that will grow the Customer Experience 115
4.5.6.3 What the metrics are to measure growth 117
4.5.7 Products 117
4.5.7.1 What the core product is 117
4.5.7.2 Elements that attract a Customer to a provider 118
4.5.7.3 Elements that drive the creation of products 119
4.6 Research findings on the Value Chain and the impact
thereof
120
4.6.1 Definition of Value Chain 120
4.6.2 Description of the Value Chain for my company 121
4.6.3 How the Value Chain impacts the Customer Experience 122
4.6.4 Whether the Value Chain adds value to the Customer 123
4.6.5 How the Value Chain adds value to the Customer 124
4.6.6 Areas of the Value Chain that add the most value to
Customers
126
4.6.7 Areas of the Value Chain that add the least value to 127

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Customers
4.6.8 Theoretical frameworks are great. Application may need to
be different
128
4.7 Research findings on Customer Experience and the status
quo
129
4.7.1 How Customers view company functions 129
4.7.2 The view of a company for the value that it adds to the life of
Customers
130
4.7.3 Description of Customer Experience 131
4.7.4 Different approaches used by firms to measure Customer
Experience
132
4.7.5 Approaches used by Customers to alert operators about
their Customer Experience
133
4.7.6 Recommendations for changes to the manner in which the
firm is managed
134
4.7.7 Assessment of a link between the Value Chain and
Customer Experience
135
4.7.8 Definition of the link between the Value Chain and Customer
Experience
136
4.7.9 Functional areas where there is a Customer Experience 137
4.7.10 How the market views service from operators 138
4.7.11 Where Customer Experience starts and ends 139
4.8 Research findings on the structure of business units 140
4.9 Research findings on strategy 141
4.9.1 Assessment of strategic initiatives that are in
implementation
142
4.9.2 Link between strategic initiatives and company strategy 143
4.9.3 Link between strategic initiatives and Value Chain 144
4.9.4 The understanding that Customers have of strategy 145
4.10 Research findings on the interplay between the Value
Chain, Customer Experience and strategy
145
4.11 Research findings on brand engagement and a personal
Customer philosophy
146
4.11.1 Where brand engagement starts and ends 147
4.11.2 My personal philosophy in dealing with Customers 147
4.12 Conclusion 148
CHAPTER 5: DISCUSSION EMERGENT FROM THE STUDY 150
5.2 Telecommunications industry 151
5.2.1 Congruence between scientific literature and research
findings of the Telecommunications Industry
151
5.2.2 Divergence between scientific literature and research 153

x

findings of the Telecommunications Industry
5.2.3 Insights and interpretation regarding the
154
5.3 Value Chain 156
findings of Value Chain
156
5.3.2 Divergence between scientific literature and research
findings of Value Chain
159
5.3.3 Insights and interpretation regarding Value Chain 162
5.4 Customer Experience 164
findings of Customer Experience
164
5.4.2 Divergence between scientific literature and research
findings of Customer Experience
167
5.4.3 Insights and interpretation regarding Customer Experience 171
5.5 Conclusion 172
CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS 174
6.2 Overview of the study 175
6.3 Satisfying the research objectives 177
6.4 Findings of the research 179
6.4.1 The dynamics within the South African Mobile
179
6.4.2 The interplay between Value Chain and Customer
Experience
180
6.4.3 The maturity of the South African Mobile
Telecommunications Industry in employing the Value Chain
to deliver on Customer Experience outcomes
182
6.5 Principal conclusion resultant from the study 183
6.6 Principal recommendation resultant from the study 183
6.7 Discussion on conclusions emanating from the study 183
6.7.1 The Mobile Telecommunications Industry 183
6.7.1.1 Mobile Telecommunications Industry implications 184
6.7.2 Value Chain 184
6.7.2.1 Value Chain Implications 185
6.7.3 Customer Experience 186
6.7.3.1 Customer Experience implications 186
6.8 Discussion on recommendations emanating from the study 187
6.8.1 Recommendations in terms of literature 187
6.8.1.1 Challenges found in contemporary literature 188
6.8.1.2 Recommendations to address gaps identified in literature 188
6.8.2 Recommendations in terms of research approach 189

xi

6.8.3 Practical recommendations 190
6.8.3.1 Practical Recommendation 1: Establish Value Chain clarity 190
6.8.3.2 Practical Recommendation 2: Implement smart
segmentation and business development
191
6.8.3.3 Practical Recommendation 3: Build deep understanding of
the big picture and the role that each member plays
191
6.8.3.4 Practical Recommendation 4: Deliver the drivers of loyalty 192
6.8.3.5 Practical Recommendation 5: Measure the right things that
the Customers value
193
6.8.3.6 Practical Recommendation 6: Implement a customer-led
operating model
193
6.8.3.7 Practical Recommendation 7: Blend and integrate
technology into the Customers’ life in an enabling way
194
6.8.3.8 Practical Recommendation 8: Develop high service
standards and expert knowledge
195
6.8.3.9 Practical Recommendation 9: Involve the Customer in
decision-making
195
6.8.3.10 Practical Recommendation 10: Reduce barriers to entry and
use
196
6.8.3.11 Practical Recommendation 11: Accentuate the message
around operator uniqueness
196
6.9 Evolved model for delivery of Customer Value 197
6.10 Graphical summary of the research study 199
6.11 Limitations of the study 201
6.12 Proposed future research 202
6.13 Conclusion 203
REFERENCES 204
ANNEXURES 222
Annexure A Glossary of terms 222
Annexure B List of abbreviations 225
Annexure C Interview schedule 226
Annexure D Categories and codes extracted from the data 227
Annexure E Sample interview invitation letter 229
Annexure F Planned interview questions 231
Annexure G Planned interview transcript template 234
LIST OF FIGURES
Figure 1.1 The Generic Value Chain 4
Figure 1.2 Graphic depiction of the scope and boundary of the
research study
12,
197
Figure 2.1 The Customer Experience Value Chain 32
Figure 2.2 The full Customer Journey (Telecommunications) 36
Figure 2.3 The Customer Experience Journey 37

xii

Figure 2.4 Customer Journey map 1 49
Figure 2.5 Customer Journey map 2 49
Figure 3.1 Steps to execute the research project 69
Figure 3.2 The relationship between meta-theories, methodological
approaches, and the real world
76
Figure 3.3 The design process: signposting the outcomes 79
Figure 3.4 A classification of research design types 80
Figure 3.5 Stages in selection of a sample 83
Figure 6.1 Organisational Levers to improve and deliver Customer
Value
198
Figure 6.2 Graphic depiction linking objectives, findings and
conclusions of the research study
200
LIST OF TABLES
Table 2.1 Definitions and explanations of Value Chain 20
Table 2.2 Definitions and explanations of Customer Experience 32
Table 2.3 Definitions and explanations of Mobile Telecommunications 54
Table 3.1 Tools employed during the research process 101
Table 4.1 Research themes and indicators resultant from the study 108

xiii

EXECUTIVE SUMMARY
Mobile Telecommunications in South Africa has been a fascinating case study as it
fundamentally impacts culture and practices for business and consumer Customers
respectively. There have been regular, behavioural shifts within the industry from
regulatory, technology and market perspectives. Notwithstanding, there is a lack of
understanding of the industry’s drivers of Customer Value.
This research study evaluated the strength of the Value Chain perspective in
impacting the Customer Experience as one of the strategic differentiators for the
industry. Customer Experience creates a platform for the outcome of Customer
Value, and underpins sustainable organisational profitability by influencing Customer
loyalty.
The Value Chain framework from Michael Porter is a strategic tool to analyse the
competitive strengths of an organisation and establish pockets of strength and
competitive advantage. This research study has identified a lack of maturity in the
understanding and implementation of a Value Chain perspective in order to deliver
Customer Value within the Mobile Telecommunications Industry in South Africa.
Mobile Telecommunications launched in South Africa in 1994 and speedily became a
successful industry that quickly and repetitively surpassed growth projections. As a
result, it is sometimes said that the industry is ‘printing money’. This reality has,
however shifted with the recent events that highlight competitive and financial
pressures, a higher Customer Experience expectation from Customers and a
realignment of business models and strategies for future survival for the operators.
Historically, the industry has practised ‘gifting’ of products and solutions to
Customers. This was based more on the internal capability of the organisation, and
less on the Customer need. This approach reflects a lack of maturity, or a lack of will
to use the Value Chain as a delivery mechanism for Customer Value.

xiv

This research study employed a qualitative research approach through in-depth
interviews to investigate the degree to which the activities of the Value Chain affect
the Customer Experience. Qualitative research exhibits loose control of variables but
richness in the insights that explain social interactions. The ‘insider’ perspective
allows the researcher to engage with the research world as a counterpart, seen
through the purposive selection of interviewees. This approach and accompanying
methods were selected to fulfil the research aims in the most suitable manner.
A content analysis technique for data analysis provided an interrogative approach to
engage with the research responses. Meaning and theory were deduced through
textual coding. Findings and insights shared were used to form the basis of new
theory, as a process of analysis of responses was performed against academic
literature. What emanated from this process were insights that showed congruency,
divergences and significant insights about the concepts under research scrutiny.
The outcome of the data analysis and discussion process confirmed the following:
• The Mobile Telecommunications Industry is dynamic and reconfiguring for a new
reality. What Customers value is contextual, and therefore evolving.
• Value Chain is the delivery mechanism to deliver Customer Value.
Notwithstanding, this needs to be implemented in a customer-focused manner.
• Contemporary business and competitive approaches result in weak strategic
differentiation and inadequate delivery of emotional Customer Experience
connection. This results in weak loyalty and less than ideal sustainable
profitability.
The study concludes with specific recommendations for academic theory and
literature, as well as methodological research practice recommendations. However,
the pinnacle of this research is the practical recommendations for operators to adopt,
and the supporting models reflecting the multidimensional levers to deliver Customer
Value.

1

CHAPTER 1
INTRODUCTION AND BACKGROUND
1.1 INTRODUCTION
This research study endeavours to increase the scientific understanding of the Value
Chain impacts on the Customer Experience – within the Mobile Telecommunications
Industry, and within South Africa. The study will analyse the interplay between
activities of the Value Chain and assess their respective impacts on the Customer
Experience. The rationale is to evaluate the relevance of a periodic assessment of
the Value Chain. This may enable industry operators to measure and make
proactive, strategic adjustments. This can enhance the realisation of industry
objectives, improve the Customer Experience, and derive value.
Chapter 1 will provide an overview of the Mobile Telecommunications Industry in
South Africa that is characterised by a dynamic operating environment, coupled with
a need to protect market position by creating loyalty within their Customers.
Telecommunications infrastructure is an important variable for conduciveness of
growth and it is cheap to acquire (Lee, Levendis & Gutierrez, 2012:469).
Emphasis is placed on the history, growth, success and changes within the industry.
Additionally, the discussion highlights that the level of Customer Experience could be
poised as the next big differentiator to provide competitive advantage within the
industry.
Chapter 1 will also introduce the Value Chain framework. This model describes how
a firm or industry can perform analysis of its structure, as well as determine areas of
strength that provide the firm with a platform to produce Customer Value and achieve
its business objectives (Mascarenhas, Kesavan & Bernacchi, 2004:486). This is
because the Value Chain design reflects the strategic direction of the firm, whilst the
effectiveness of execution provides value to Customers. A Value Chain creates links

2

that originate with upstream suppliers and connects to Customers through the
products and services that are delivered (Gereffi & Fernandez-Stark, 2011:2).
The chapter will also introduce Customer Experience as a business strategy
(Reimann et al., 2009:3), and simultaneously as an outcome. As stated by Maklan
and Klaus (2011:4), “the link between customer satisfaction and favourable business
outcomes is well established”. Customer Experience is the emotion within a
Customer (Temkin, 2014; Hinshaw, 2014) after interactions with an organisation.
This is a fairly new business topic for which maturity of understanding is still
developing (Klaus & Maklan, 2011:1). This is because of the need to view service
and interactions from the Customer’s perspective, and not from the perspective of the
organisation. When understood maturely, and when implemented effectively,
Customer Experience Management delivers benefits that Customers value, and
resultant business value (Shaw, 2008:4; Foreman, 2013:96).
Chapter 1 will further denote the rationale for the research. The research problem
statement is identified by deductively analysing the dynamic interplay between the
perception of the Value Chain and the objective of Customer Experience
improvement within the South African Mobile Telecommunications Industry. Linkages
are established between the research problem statement, the research objectives,
and the supportive theoretical framework / research methodology to realise the
research objectives.
1.2 ORIENTATION OF THE MAIN CONCEPTS UNDER
ANALYSIS
This section will briefly describe the pillars of the research study. This will establish
the context, which is the physical business environment wherein the study is
performed.
The discussion commences with the Mobile Telecommunications Industry in South
Africa. Secondly, the Value Chain framework is introduced, described by its ability to

3

act as a structured mechanism to bring value to Customers through strategic
decision-making that balances organisational goals with market needs and internal
capabilities.
Lastly, Customer Experience is positioned as the primary marketing focus in many
organisations today. Improving the Customer Experience is now an important
strategic objective that is employed to gain and retain Customers – beyond
communicating product features and marketing organisational strengths.
1.2.1 THE MOBILE TELECOMMUNICATIONS INDUSTRY IN SOUTH
AFRICA
This industry is technology-driven and fast-paced. In future, Customer delight and
experience will be a key differentiating factor. Some of the strategic objectives for the
three largest Mobile Telecommunications operators within South Africa are to
continue to achieve growth in revenues, maintain market position, as well as to
continuously improve and delight Customers (Cell C, n.d.; MTN, n.d.; Vodacom,
n.d.).
It is of scientific significance within this research study to understand the areas of the
Value Chain that contribute to, or impact on Customer Experience, impact the bottom
line, and have bearing on the stakeholders’ investment. This leads to an
understanding of elements that provide competitive advantage for the industry to
deliver ‘Customer delight.’
1.2.2 VALUE CHAIN
The Value Chain concept by Michael Porter (1985) enhanced earlier theory
pioneered by Adam Smith (Scientific Division of Labour), Frederick Taylor (Scientific
Management), Henry Mintzberg (Strategy) and others – as a framework to analyse
an organisation strategically to determine how Value is added, and how
differentiation is obtained over industry rivals.

4

Michael Porter’s Generic Value Chain framework as illustrated in Figure 1.1, is
documented as follows:
Figure 1.1: The Generic Value Chain
Source: Porter (1985:37)
Theory around Value Chain indicates a shift from a firm-level analysis to industry-
level ecosystems, or global Value networks (Nord, 2005:1; Xie, 2008:6). Mobile
Telecommunications operators are balancing this new reality as technology evolves,
needs evolve, and competition takes on new forms that point to a need to approach
Customer lifetime value and innovation differently. This includes co-creation with
Customers (Helm & Jones, 2010:580). Value Chain design reflects the strategic
direction of a firm, and the better the execution of the Value Chain, the better the
ability of the organisation to deliver the right product, cost, quality and turn-around
time to Customers (Salim, 2012:3).
Value Chain is concerned with the strategy and steps to bring value to Customers by
linking suppliers, production steps and Customers together (Mitchell, 2012:465) and
analysing the handovers for competitive position. Customer Experience is concerned
with the ‘how’ of the Value Chain delivery so that this brings long-term loyalty from
Customers (Helm & Jones, 2010:580), repeat business over a Customer’s lifetime,
and thereby better profitability coupled with lower costs.
Value Chain enables the attainment of strategic direction and differentiation for
competitive advantage by building focus on activities that add value and prioritising

5

those activities. Value is added by solving Customer problems. The ‘vehicle’ to
transfer the Value comprises the products that are created and sold to Customers.
Notwithstanding, attention should be paid to the way the Value Chain is executed as
this creates an emotional outcome for the Customer. Business should aim to deliver
a positive Customer Experience to lower costs and enhance retention and loyalty.
Value Chain is an abstract framework that establishes virtual linkages between
suppliers, production and Customers as a mechanism to coordinate activities. As a
tool to observe interactions and handovers, Value Chain analyses the value and
costs that are contributed by activities. This is a wider definition than Supply Chain
(concerned with manufacturing and may actually limit the Customers’ accessibility to
products), as elements such as demand planning, market definition and
establishment of Customer needs exist within Value Chain.
In summary, Value Chain supports the technical capability to commercialise
products. Products are the vehicles that transfer value by providing a solution to a
Customer’s problem. Good Value Chains incorporate elements of co-creation with
rivals or Customers and thereby better meet expectations. The value delivered exists
as tangible value through products and intangible value through emotions that results
in an emotional response within the Customer. This emotional response is termed
the Customer Experience. Customer Experience, as an important, strategic
differentiator will now be deliberated.
1.2.3 CUSTOMER EXPERIENCE
Customer Experience Management is simultaneously a business strategy (Malviya &
Varma, 2012:4) and an outcome (Chang & Horng, 2010:2401) that produces three
important benefits – retained business, Customer loyalty and differentiation (Drotskie,
2009:143). The outcome perspective of Customer Experience is the emotional
reaction that Customers have as a result of interactions (Shaw & Dobrev, 2012:17)
with an organisation over a period of time.

6

Customer Experience evolved from the Service Quality drives in the 1980s through
the Customer Service focus in the 1990s (Drotskie, 2009:93; Maklan & Klaus,
2011:785). Customer Experience is either delivered deliberately, or ignorantly
through all the touchpoints within a company. Increasingly, Customers are interacting
across different touchpoints as part of their overall steps to interact (Kirkby et al.,
2003:5). Customer Experience Management captures Customer sentiment so that
visible changes can be made (Markey et al., 2009:44; Verint, 2014).
Customer Experience should be seen from the Customers’ perspective, not from the
internal company perspective (Nasution & Mavondo, 2008:204). Analysis of
Customers interactions with organisations has shown that there is an established and
repetitive life cycle. This is referred to as the Customer Journey (KPMG International,
2013:4) – a framework that codifies the flow of the Customer Experience. The
Customer Journey is unique for each Customer, or for Customer segments.
Elements and dimensions of the Customer Journey can be analysed and designed to
deliver a positive emotional outcome and improve the Customer Experience.
Customer Experience initiatives should be designed (Pine & Gilmore, 1998:102) to
reduce the chasm between Customer expectation and the Customer perception as a
result of service received. Measurements are key to these steps, and should be
performed to measure operations and Customer sentiment (Meyer & Schwager,
2007:123). Emphasis must be on measuring what Customers value (Dixon et al.,
2010:7), and improvements must be designed and implemented from the Customers’
perspective.
Mobile Telecommunications operators are not renowned for the delivery of great
Customer Experience (Shaw, 2012). As competition and market dynamics evolve,
this realisation that Customer Experience is a differentiator (Drotskie, 2009:2), is
sinking in. South African operators are showing signs of maturing towards
understanding and implementation of Customer Experience strategies. Over time,
this could produce benefits to Customers by providing them with intangible value.

7

This could translate into loyalty and repeat purchases (Shaw, 2008:12), and in that
way reciprocate value back to the organisation.
1.3 RATIONALE AND PROBLEM INVESTIGATED
Service industries are expanding and transforming, and continue to do so at a rapid
pace. From a Customer perspective, there is commoditisation and modest separation
between the technological capabilities and costs of Mobile Telecommunications
operators. This raises a question about what drives differentiation and a preference
for Customers to choose one provider over another. Chang, Yuan and Hsu
(2010:122) argue that the competitive position of a firm lies in generating impressive
experiences through innovative delivery and co-produced experiences that ‘connect’
with Customers.
Mobile Telecommunications operators have well documented core business
descriptions. “The traditional business model in Telecommunication was a vertically
integrated model where one party owned the network infrastructure, operated the
network, and delivered the services over the network” (Bose, Saha & Huang,
2012:226).
Emphasis is placed on strategic focus areas to grow business, and focus on core
business. Plans are often made to ensure that this fits into the Value Chain.
Networks, such as Indonesia’s PT Indosat have divested of tower assets in order to
fund expansions, explains Bushell-Embling (2010:12) as well as Vodacom’s disposal
of the non-core carrier unit of Gateway Carrier Services that it had acquired only four
years earlier, states Mawson (2012).
Information and Communication Technology (ICT) industry evolution through
legislation, competition, partnerships, saturation and Customer preferences, will
require changes to business models, business strategies and Value Chains to remain
competitive. Glazier (2007:15) believes that South Africa and the region are taking
correct policy / regulatory steps to increase competition, create space for new

8

entrants, and create more opportunities for smaller companies by stating that “our
policy framework and the technology-neutral licensing and regulation are creating an
environment for convergence.”
How does this affect the Customer? Are the impacts on the Customer positive or
negative? How will this impact the overall Customer Experience? Bose et al.
(2012:227) comment “the open access business model allowed consumers to
choose between SPs to meet their individual demands at a lower tariff… there was a
need to change the business model and try to move up the Telecommunication
Value Chain by providing additional services.” There are declining revenues in
traditional Telecommunications services due to competition and Customer
preferences. Business Model changes are required to provide value to the Customer
that he will pay for, and as a worst case, allow the operators to remain in business.
Mobile Telecommunications operators also need to identify the areas that will affect
future revenue streams. Historical Customer trends and past company performance
are no guarantee, or indication of likely future performance. This risk occurs for both
fixed-line and mobile operators. “Telkom recognises business models in the ICT
sector are changing at an increased intensity. This is forcing Telecommunications
operators to develop new business models, says CEO Reuben September…
Customer demand, technology advances and a changing regulatory environment are
driving change in ICT business models. He also noted that mobile operators are
under the same pressure experienced by fixed-line operators” (Senne, 2007:1).
It is the Customer who determines the success or failure of an operator because they
choose to buy its products. The provider must therefore understand the Customer
needs and supply it timeously, and at the right cost. In this way, the operator has an
indirect, yet important influence over its own success. Regardless of the regulatory
climate, only customer-centred convergence suitably filtered down into the new Value
Chain will bring any significant benefits. “With the legacy business model running out

9

of runway, the operators have to rethink their revenue channels and modify their
approach to business innovation” (Savitz & Norton, 2012:57).
Innovation itself needs to be relevant to the needs of the end consumer. Pynnönen,
Hallikas and Ritala (2012:1) describe a customer-driven business model innovation in
order to bring Customer Value. This is because the firm is part of a larger system.
“Lack of understanding of Customer preferences and the value of technologies leads
to the creation of services with no users… The aim of customer-value analysis is to
integrate the Customer into the firm’s R&D processes” (Pynnönen et al., 2012:1).
This will help firms develop solutions that meet Customer needs and eliminate the
tendency to supersede advancing technology above Customer Value.
“Customer insights have value” (Kumar & Bhagwat, 2010:15). Tapping into the
knowledge of Customers improves engagement and experience. Firms who listen to
their Customers can identify needs and gain competitive advantage over rivals.
Bringing Customers into the Value Chain as co-creators to help with the research
and product innovation activity gives a sense of co-ownership.
Value Chain analysis and optimisation play a role in mobile operator re-invention to
ensure Customer loyalty. Vyas (2010:34) discusses the role of back-office systems in
driving Customer Experience by stating that the Operations and Billing Support
systems (OSS and BSS) are being invested in heavily, so that new services are
enabled while simultaneously improving the quality of experience to new levels.
Michael Porter’s Value Chain framework can be used to create strategic
differentiation (Porter, 1985:36), specifically relating to Customer Experience
(Malviya & Varma, 2012:5). The misalignment of stakeholder perceptions regarding
the impact of Value Chain design, and what Customer value potentially impacts the
Customer Experience undesirably. This detracts from the resultant value and
sustainability that the operator will derive.

10

The background and rationale discussion leads to the following problem statement:
There is insufficient strategic differentiation between Mobile Telecommunications
operators in South Africa. A tendency of commoditised competition results in
inadequate delivery of Customer Value and customer-centric Experience.
Given the above discussion as well as the problem statement, the research question
therefore is:
How do, and to what extent do the activities of the Value Chain affect the Customer
Experience in the South African Mobile Telecommunications Industry?
1.4 RESEARCH OBJECTIVES
Following on from the problem statement and research question, the primary
research objective of the research project is to:
Analyse the understanding of the Value Chain within the South African Mobile
Telecommunications Industry against the backdrop of industry changes in order to
establish the perception of the degree to which the various areas of the Value Chain
contribute to, or affect the Customer Experience.
The secondary research objectives listed will ensure that the primary objective is
met:
• To analyse the dynamics at play within the South African Mobile
Telecommunications Industry.
• To obtain an understanding of the perceived interplay between the Value Chain
and Customer Experience within the South African Mobile Telecommunications
Industry.
• To assess the maturity of the South African Mobile Telecommunications Industry
in utilising the Value Chain to deliver on overall strategic objectives as well as the
desired Customer Experience outcomes.
1.5 SIGNIFICANCE OF THE RESEARCH
This research study endeavours to increase the level of scientific knowledge relating
to the effect of Value Chain on Customer Experience, specifically within the South
African Mobile Telecommunications Industry.
The contemporary landscape within the Telecommunications sector is rapidly
evolving, becoming more exposed to competition and diversified product offerings

11

from previously unknown competitors. A key differentiating factor for keeping
Customers, maintaining / growing market share and ensuring company growth –
outside of network quality and reliability, or brand – is the total Customer Experience
that the mobile operator provides as an outcome of its Value Chain design.
The South African Mobile Telecommunications voice market is saturated. According
to Bornman (2012:486), South Africa has a 92.67% penetration rate – following the
trend in developed countries where almost every person already has a mobile phone.
Operators have turned to complimentary, evolved and diversified product offerings
such as mobile television, internet, e-mail and fixed-line communications, all bundled
together into “converged” solutions in order to bring, and derive more value.
Theoretically, and from a technology perspective, these may be good solutions for
Customers. However, it may be relevant to establish whether forcing these strategies
to ‘fit into’ the Value Chain pays off for the company, truly satisfies the Customer, and
provides Customer Value.
Does the Customer’s primary, transactional interest lie with technology-driven
products, or in after-sales product support, product training and configuration? What
about services such as hardware repairs? Do the activities of the Value Chain affect
the Customer negatively when constraints are affected to save budget, or achieve
stretched internal targets while delaying customer-centric projects? Is this being done
at the expense of the Customer Experience with the operator?
This research will conduct a qualitative study of the abovementioned critical themes
in order to assess the focus on strategic differentiation and Customer Experience
aspects of business within the evolving ICT industry. The Customer environment
where the Customer is “King” and the provider marketplace is his kingdom. This is an
environment where the Customer feels cherished and willing to spend his valuable
money to consume the benefits offered to him by the operator, because the
Customer Experience is valued.

12

1.6 THEORETICAL FRAMEWORK
The research study interrogates Value Chain and Customer Experience within the
Mobile Telecommunications Industry in South Africa. The theoretical framework that
underpins the study is illustrated by Figure 1.2, and depicts the perspective of the
researcher (as informed by both literature and real-world experience) on how the
“Operator World” and the “Customer World” relate:
Figure 1.2: Graphic depiction of the scope and boundary of the research study
Source: Researcher’s own construct
The Value Chain is a tool used by businesses to uncover competencies and
differentiation over competitors. Competitive advantage can be obtained through the
delivery of a memorable, personalised and contextually relevant Customer

13

Experience. Given that the study interrogates how Value Chain impacts Customer
Experience, Customer Experience is positioned as the focus point of the research.
Mobile Telecommunications operators in South Africa are seeking competitive
advantage. Moreover, the Mobile Telecommunications Industry seeks to attain loyal,
satisfied Customers, and ultimately, sustainable profitability through this loyalty.
Therefore, the South African Mobile Telecommunications Industry is the industrial
paradigm delimiting the research. The objective is to understand Customer
Experience within this theoretical framework and understand the interplay with the
Value Chain. Research study conclusions drawn will be interpreted to highlight
significance and establish recommendations for the industry.
1.7 RESEARCH METHODOLOGY
This is a qualitative research study through which the thoughts, opinions and
understanding of the research participants in the world under research are sought for
scientific understanding and analysis. Simultaneously, the researcher is an “insider /
passive participant” to the research world under scrutiny. This occurs within the
following contexts:
• A consumer / Customer of Mobile Telecommunications services.
• A Customer Experience consultant / practitioner.
• A participant in the Mobile Telecommunications Industry for 12 years, having
worked across the functional business areas of Information Technology,
Customer Relationship Management, Business Process Optimisation and
Customer Experience Management.
• An academic interest in the wider areas of Business Strategy, Customer
Experience as well as the components of Human Psychology and Emotion that
trigger emotional responses.
• Personal thoughts, perceptions and background life experience.
A key intended outcome of the research is to make practical recommendations for
business managers within the Mobile Telecommunications industry to solve business

14

challenges relating to competition and Customer Experience. The theoretical
framework, research approach and methods followed are based on decisions to
support this outcome. This includes the decisions to adopt the phenomenology
research tradition and supporting qualitative research paradigm. The process will
emphasise significance of participant perspective for social meaning over statistical
validity.
Notwithstanding, elements of research trustworthiness are addressed through the
empirical research process and the steps taken to ensure visibility of individual
interview transcripts and various research outputs to the interested academic
community. The research sample was selected conveniently and purposively, but
represents diverse and cross-functional perspectives. Research subjects were fully
informed about the research, and the steps to record and transcribe the research
interviews. Finally, the transcribed text was provided to each interviewee for
completeness and transparency. The interview itself was semi-structured and flexible
– although specific areas of interest were delved into, away from the core interview
structure.
The method used to analyse the research data collected and draw findings and
conclusions, centred on qualitative Content Analysis whereby the raw data was
coded for significant research meaning to emanate from the raw data. This allowed
the raw data / interviewee participants to collectively determine the research theory
base. The research findings are self-defined through the methodological design and
research activities.
Coding was performed using a qualitative research analysis software tool – Weft
QDA. Linking of texts into concepts followed a case-oriented approach to form a view
of the interplay between Value Chain and Customer Experience within the South
African Mobile Telecommunications Industry.
Finally, to complete Chapter 5 as a discussion / analysis of similarities and
differences between academic theory and the empirical research findings, a

15

spreadsheet software programme was used to summarise paragraphs, link and
compare sentiment.
1.8 OVERVIEW OF CHAPTERS
Chapter 1 introduces to the research study. The chapter defines the research scope
and boundaries by introducing and describing the pillars under research analysis –
Value Chain and Customer Experience, while positioning their context within Mobile
Telecommunications. The chapter deductively defines the research problem,
research delimitation, research aim and scope of the research study. The theoretical
framework that underpins the study is graphically depicted as the researcher’s
perspective regarding Strategy and Customer Value.
Chapter 2 documents a theoretical overview of Value Chain, Customer Experience
and the Mobile Telecommunications Industry. It is a detailed theoretical scanning of
the available scientific, authoritative and seminal literature sources. The disciplines
are defined and contextualised through the use of journal articles and relevant
popular press covering Value Chain, Customer Experience and the Mobile
Telecommunications Industry. The theoretical interplay between Value Chain and
Customer Experience is summarised against the backdrop of the South African
Telecommunications industry.
Chapter 3 specifies the Research Methodology as the approach to research study.
Focus is on research design, sampling technique, data collection steps and data
analysis methods. The “Three Worlds Framework” is presented and the research
tradition, research approach and supporting methods are selected and justified as
the methods that will deliver on achieving the aim and objectives of the research
study.
Chapter 4 is the research findings report. The steps taken to perform the research
are documented and the research codes that emanate from the data gathering are
specified. Findings of the research study are summarised, providing direct evidence

16

for the claims reached. The collated research insights are the primary source for
qualitative analysis, and for logically deducing the research findings and conclusions.
Chapter 5 provides a comparison between the research findings and the literature
review to highlight common understanding and divergence of views between the
research subjects and literature. This chapter establishes insights and builds theory,
while forming the basis of arguments presented in the conclusions and
recommendations of Chapter 6. Each research pillar topic is discussed separately to
confirm congruence between Literate Review and research interviewee perspectives.
Thereafter, a discussion takes place to interpret the above and establish the insights.
Chapter 6 delivers research and actionable recommendations that are based on the
findings, the evidence, and the insights that are presented in Chapters 4 and 5.
Conclusions are drawn for each of the respective research pillars. Thereafter,
recommendations are made. These fall into three areas – recommendations for
theory / literature, recommendations for research approaches and methods, as well
as practical recommendations aimed at business managers to solve business
challenges. A final logical linkage of research objectives to research findings and
recommendations is made. Suggestions for possible, complementary future research
areas are proposed.
The report includes a reference list as a record of sources consulted, as well as
appendices containing samples of communications and artefacts used in executing
the research study.
1.9 CONCLUSION
Chapter 1 has set the scene for the research project by introducing the research
problem. Michael Porter’s concept of Value Chain is introduced as a tool for strategic
differentiation that has an impact on the Customer Experience. The Mobile
Telecommunications Industry in South Africa has been introduced as the industrial
paradigm that delimits the study. The Problem Statement, Research Aim and the

17

Significance of the research have been summarised. The researcher’s perspective
on the interplay between Strategy and Customer Value, or the organisational view
and the Customer view is documented to frame the researcher’s understanding of
theory.
Chapter 2 will provide a basis for the understanding of the relevant business
environment, academic context and the boundaries that govern the research. A
discussion of Value Chain, Customer Experience and of Mobile Telecommunications
is presented. These concepts are integrated theoretically, and within the context of
the South African Mobile Telecommunications Industry.

18

CHAPTER 2
LITERATURE REVIEW
2.1 INTRODUCTION
Chapter 1 introduced the research project by discussing the research problem within
the Mobile Telecommunications Industry in South Africa. An overview of the Value
Chain as a tool for strategic differentiation was provided. Customer Experience was
described as a business objective, as well as a desirable outcome that leads to
Customer Value and organisational value. Chapter 1 specified the research problem
that flows from the high-level overview of the research pillars, and specified the
research objectives for the research study.
Chapter 2 provides the basis for the understanding of the relevant business
environment, the academic context, the research context, and the boundaries that
govern the research. The chapter will document an overview of the available
authoritative, scientific, and academic literature on the concepts of the Value Chain,
Customer Experience and the Mobile Telecommunications Industry. These pillars will
be defined and contextualised with each other so that the “golden thread” of their
interplay is clarified. This confirms the business / industrial context for the research
study within the South African Mobile Telecommunications Industry.
Each of the three topical pillars of the research is introduced and explained, using
definitions from various sources. This allows the common and consistent elements
between definitions to be highlighted. Furthermore, the history behind the pillars is
explained before the research and business significance of the element is
documented. Emerging and future trends are discussed so that the full evolution of
the discipline can be understood. Importantly, the three pillars are integrated to
provide an understanding of how Customer Value emerges within the Mobile

19

Telecommunications Industry – where the Value Chain and Customer Experience
intersect.
The South African Mobile Telecommunications Industry is dynamic and evolving.
Selective events are unpacked to clarify their impact on the industry, as well as on
the Customer Experience.
2.2 DELIMITATION
The research study focuses on the perceived contribution and impact of Value Chain
activities on Customer Experience within the South African Mobile
Telecommunications Industry. Notwithstanding, the study is limited to the three
largest South African Mobile Telecommunications operators, which account for 80%
of market share.
The literature review of the fundamental, salient academic points is limited to the
following themes:
• Value Chain. (Michael Porter’s Value Chain framework includes a financial
contribution / margin element. Interrogation of margin is excluded from the scope
of the research.)
• Customer Experience.
• Mobile Telecommunications.
2.3 OVERVIEW OF THE WORLD UNDER RESEARCH
SCRUTINY
Mobile Telecommunications in South Africa began operations in 1993. Now, 20 years
on, there are changes in the industry. These changes range from political / legislative
/ regulation changes, to changes in market needs, to technological enhancements, to
new marketplace competitive pressures. Incumbents in the industry need to adapt,
innovate, and look for ways to differentiate themselves in order to stay ahead of the
pack. Michael Porter’s concept of Value Chain provides a framework / method to
evaluate a company strategically.

20

Strategic management is about creating and carrying out resolutions that enable an
organisation to achieve its stated goals. This study will appraise different stakeholder
opinions on the Value Chain of the Mobile Telecommunications operator industry
within South Africa, and deduce the significance of these opinions from the
perspective of Customers and their Customer Experience with their chosen operator.
2.4 INTRODUCING THE VALUE CHAIN CONCEPT
This section will introduce and investigate the management framework, Value Chain.
Michael Porter (1985) introduced the Value Chain concept in the book entitled
“Competitive advantage: creating and sustaining superior performance.” Porter
described the generic Value Chain and described it as a way to break up the
functions of an organisation into strategically relevant activities that allow the analysis
of each activity for its ability to create sustainable competitive advantage.
2.4.1 DEFINITIONS OF THE VALUE CHAIN
Michael Porter’s seminal work on Value Chain was introduced in the 1985 book,
Compete Advantage: Creating and sustaining superior performance. Porter’s
framework serves as the point of departure for the literature review. Beginning with
Porter’s own definition, the following are explanations of the Value Chain.
Table 2.1: Definitions and explanations of Value Chain
DEFINITION SOURCE
Value Chain disaggregates a firm into its strategically relevant
activities in order to understand the behaviour of cost and the
existing and potential sources of differentiation. A firm gains
competitive advantage by performing these strategically important
activities more cheaply or better than its competitors.
A firm’s Value Chain is embedded in a larger stream of activities,
the value system.
Every firm is a collection of activities that are performed to design,
produce, market, deliver and support its product… A firm’s Value
Chain and the way it performs individual activities are a reflection
of its history, its strategy, its approach to implementing its strategy
and the underlying economics of the activities themselves.
Porter
(1985:36)

21

DEFINITION SOURCE
Traditional telecom industry era: Telecom operators mainly
provide basic telecom services, which are voice-based, relatively
simple and also completely dependent on telecom network. All
telecom services are provided by the telecom operator alone, and
all revenues remain with the telecom operator… basic telecom
operators are responsible for building and operating the basic
network, terminal manufacturers are responsible for providing
terminal devices, such as mobile phones and fixed telephones,
Customers are at the end of industry chain and are the end users
of the service.
Post 3G era: Evolution to a mesh structure – Value stream
becomes complex and relationship of telecom industry with
cooperation, strategic alliances, resource sharing and process
connection.
The value centre of the industry chain is transferred – The
contribution to value creation of each link in the telecom industry
chain is redefined, moreover, the value and profit of the industrial
chain are transferred.
The correlation between telecom industry and others is
strengthened, and the industry chain becomes a dynamic opening
– As the telecom service continuously penetrates into all fields of
daily life, business integration between the telecom industry and
other industries becomes deeper and deeper. The trend of
alternatives and the overlap relation among industries are
increasingly obvious.
Value Stream of Telecom Industry Chain in Post-3G era:
Telecom operators are facing the alternative competition from
Internet enterprises on the aspects of business, resources, the
business model… Mobile applications, such as Mobile IM, occupy
Mobile network signalling and data channel for long hours, replace
SMS and voice services, and make telecom operators face the
danger of being “dump pipe”… Overall, the role of the industry
chain is being substituted, and the value in the industry is
decreasing, thus making telecom operators face enormous threats.
Wei, Jianming,
and Yang
(2013:243)
The GVC approach tries to understand how the input of supplies,
production, trade, consumption and disposal of goods and services
are co-ordinated on a global scale in inter-firm relationships as well
as how local firms may engage in different industrial upgrading
strategies in such chains.
Khara and
Lund-Thomsen
(2012:262)
Describes the full range of activities required to bring a product or
service from conception, through the different phases of
Mitchell
(2012:465)

22

DEFINITION SOURCE
production.
The product life cycle. Here the system consists of the individual
processes in the Value Chain… The term ‘Value Chain’ here refers
collectively to the two last systems: the extended Supply Chain and
the product life cycle.
Skaar and Fet
(2012:229)
Value Chain analysis describes the activities that take place in a
business and relates them to an analysis of the competitive
strength of the business. The Value Chain analysis Model by
Michael Porter in 1985 is the initial motivation of this paper.
According to Porter (1985), the Value Chain analysis describes the
activities the organisation performs and links them to the
organisation’s competitive position.
Salim (2012:1)
In a fast-changing competitive environment, the fundamental logic
of value creation is also changing and in a way that makes clear
strategic thinking to survive the global competitive environment.
Every firm occupies a position on a Value Chain. Upstream
suppliers provide inputs. The firm then adds value to these inputs,
before passing them downstream to the next actor in the chain, the
Customer.
Acharyulu and
Shekhar
(2012:91)
Value activities are related by linkages within the Value Chain.
Linkages are relationships between the way one value activity is
performed and the cost or performance of another… linkages can
affect firm performance through optimisation or coordination.
Optimisation refers to potential trade-offs between activities…
Coordination refers to the physical hand-off of products or services
between processes.
Tallon
(2011:13)
Best practice organisations use a process that focuses on function,
cost and quality; one that replaces "want" with "need" and that
encourages objectivity. That best practice is Value Analysis.
Kaczmarek
(2011:72)
They see Value Chain analysis as providing a basis for making
visible the interactions and interdependencies within the activities
of an organisation.
Walker and
Scott (2011:42)
Co-creation also implies that a firm’s internal Value Chain, rather
than being its source, is only one part of a larger system in which
value is created by managing a virtuous cycle of stakeholder
expectations, successful brand delivery, satisfaction and loyalty
that combine to generate sustainable and superior industry returns.
Helm and
Jones
(2010:580)
A value-adding process in which an organisation might engage…
researchers mainly organised the knowledge Value Chain by
arraying different levels, describing the stages of an organisation’s
activities, from acquiring knowledge to using it… knowledge value
increases during its evolution process and the value is greater
when the knowledge is ‘closer’ to the end (target).
Xu and Bernard
(2010:963)

23

DEFINITION SOURCE
Differentiation usually arises from one or more activities in the
Value Chain of the organisation that create a unique value
important to buyers… The focus of Customer Relationship
Management has evolved from Customer Satisfaction to creating
value for the Customer. In a model of value creation, Customers
are viewed as active participants in the Value Chain and not just
recipients of goods and services.
Drotskie
(2009:83, 242)
A Value Chain is made up of a chain of activities… A most simple
case where a product is produced within one organisation. The
product gets some value at each activity along the chain. The
value-adding activities are categorized into primary activities and
support activities… The Value Chain analysis describes those
activities a business organisation performs and relates them to the
company’s competitive position… The Value Chain concept can be
extended beyond individual organisations, as to make up an
industry-wide Value Chain or value network. Organisations are
elements of a value system.
Xie (2008:6)
2.4.2 GENERIC ELEMENTS OF THE VALUE CHAIN
There are salient elements defining the respective descriptions of a Value Chain.
Michael Porter’s definition of the Value Chain mechanism / framework may be used
to identify strategically relevant activities in order to find strategic and sustainable
competitive advantage for the firm - relative to industry rivals.
Value Chains within the Mobile Telecommunications Industry are evolving as
technology evolves and disintermediation occurs. Mobile Telecommunications
operators now grapple with a reconfiguration of the Telecommunications ecosystem,
and need to identify different opportunities for competitive differentiation. These could
play out in cost control in networks and systems, in collaboration with rivals or
partners – working together in new ways, through different value propositions that
reflect Customer understanding and a focus on lifetime value, as well as through
innovation (Rouffaert, Tucker & Bultema, 2012:1; Meier, Friedrich & Blankenstein,
2004:5). These are elements that reflect a firm’s approach or design of the Value
Chain.

24

Porter’s model was essentially a “firm-level” model that described the workings of an
organisation as a “process” model. The design of the Value Chain of a firm reflects
the firm’s strategic objectives and approach to implementation of the strategy (Porter,
1985:46). Nord (2005:27) states that certain activities within an organisation need to
be aligned in order to achieve the organisational strategy. Berndt (2003:1) describes
Value Chain as a tool for a firm to analyse strategically relevant activities for sources
of Customer Value.
Porter’s generic Value Chain describes activities and relationships between activities.
These are specifically related to develop products and deliver value to end-
Customers. Primary activities of the Value Chain are inbound logistics, operations,
outbound logistics, marketing and sales as well as service. Secondary activities
include infrastructure, human resource management, technology development and
procurement. Value Chain Initiative (2004:1) defines Value Chain as: “collaborating
vertically to achieve a more rewarding position in the market.” Importantly, the
connected links are recognised between activities, and value is increased at each
stage.
The better the execution of the Value Chain, the better the competitive capability of
the company to deliver value to the Customer. Value Analysis – if executed
objectively – allows a firm to better match Customer needs. Kalyanaram and
Gurumurthy (2008:5) specify that the holistic Value Chain should create a value-
adding “ecosystem” that provides tangible and intangible benefits to the consumer.
They claim that the ecosystem will enhance the total Customer Experience.
Internal co-creation and bringing Customers closer into Value Chain participation,
enhances the ability to deliver value to Customers. Donaldson, Ishii and Sheppard
(2006:174) argue for the involvement of the Customer as a stakeholder in the
development of products – especially a new product. This builds support for the
fundamental need to understand Customer needs, and elements that are valued.

25

The Global Value Chain incorporates multiple Value Chains across organisations –
respective suppliers or industry-wide / global value networks. Nord (2005:1)
describes the solid wood Value Chain within the Swedish saw milling industry. This is
an industry-level Value Chain that incorporates ‘actors’ in the form of the various
stakeholders from sawmill, to industrial end-user, to retailer, to builders merchant to
end-user. This description incorporates respective ‘independent’ stakeholders who
form a holistic industry Value Chain. This differs from the original Porter model that
focuses on the Value Chain of a firm.
Gurría (2012) remarked that Global Value Chains have emerged as parts of the
Value Chain occur across different countries. This follows the trend of increased
international trade and investment – most notably in emerging economies. This
impacts the strategic approach of firms as well as the policy environments at
government levels. Globalisation has an impact on the Value Chain of an
organisation.
The Value Chain supports this technical capability to commercialise products. “In
many business strategies, the concept of Value Chain management plays a central
role… The Value Chain is composed of activities and a margin, which is achieved by
these activities… Porter differentiates between primary and support activities…
Primary activities are those which are directed at the physical transformation and
handling of the final products which the company delivers to its Customers… Support
activities support these primary activities” (Van Wheele, 2005:9).
2.4.3 A HISTORICAL PERSPECTIVE ON THE VALUE CHAIN
FRAMEWORK
Earlier incarnations for scientific approaches to value creation stem from work by
Adam Smith – in 1776 – primarily his work on the scientific division of labour for
advantage, as well as by Frederick Taylor’s specification of the scientific
management principles. Henry Mintzberg did pioneering work in defining strategy as

26

a process to determine long-term goals and then acquire and align the resources to
reach the goals (Nord, 2005:24).
Michael Porter entered the fray in 1980 with a model on the generic strategies for
differentiation. This was followed later by Porter’s Value Chain mechanism for
viewing the firm from the strategic activities to create value in product creation,
marketing and support (Institute of Management Accountants, 1996:1).
Significant theoretical developments to Value Chain are the emergence of industry-
level Value Network, as well as Global Value Chains. The example by Nord (2005)
has illustrated this. Wei et al. (2013:244) further extended this by developing models
for the Value Stream of the Telecommunications industry as a result of technological
advancement and the disintermediation of the traditional Telecommunications
business model, which continues.
Xie (2008:71) details two distinct waves of migration of value within the Mobile
Telecommunications Industry. Shift one is characterised by emergence of specialist
suppliers to the Mobile Telecommunications operators. This slightly changed the
structure of the industry by reducing the R&D expense for operators. The second
wave of value migration is a greater challenge. This is characterised by the higher
cost of network maintenance, coupled with commoditisation of service and a
Customer demand for exchange of information and value-added services. These are
challenges for the Mobile Telecommunications Industry to deal with – traditional
revenues are falling fast and the traditional Value Chain will need to evolve into a
Value Stream where such Wave Two suppliers are incorporated into the mesh to
deliver on Customer Value.
2.4.4 THE SIGNIFICANCE OF THE VALUE CHAIN
The significance of the Value Chain is described by Berndt (2003:3) as enabling the
firm to indicate the strategic direction and identify components that can deliver a

27

competitive advantage. This encourages a focus on the activities that add value and
prioritise those activities.
Rolland (2002:18) describes the Value Chain as creating products that act as
vehicles for transferring value from producers to consumers. For the Value Chain to
be successful, the supply versus demand dynamic needs to balance. Rolland
(2002:19) further explains that value is derived from solving Customer problems – for
example, Journalism creates value by solving Customers’ information problem.
Drawing a parallel from this example, the Mobile Telecommunication industry creates
value by solving Customers’ communication and connectivity problem.
The Value Chain is significant because it allows a firm, or an industry to focus on
common goals to which they are all connected, and roll out a business strategy for
sustainable, market-focused collaboration. (Value Chain Initiative, 2004:1).
Additionally, Helm and Jones (2010:580) support co-creation with Customers in order
to better solve problems, while at the same time engaging and building lasting
relationships with them. “Co-creation also implies that a firm’s internal Value Chain,
rather than being its source, is only one part of a larger system in which value is
created by managing a virtuous cycle of stakeholder expectations, successful brand
delivery, satisfaction and loyalty that combine to generate sustainable and superior
industry returns.“ Collaboration can thus occur between Supply Chain partners, with
Customers or at an industry level – provided that there is a common goal and value
for all stakeholders.
2.4.5 THE VALUE CHAIN AS A DELIVERY MECHANISM FOR
CUSTOMER VALUE
The Value Chain framework is an abstract that “Describes the full range of activities
required to bring a product or service from conception, through the different phases
of production” (Mitchell, 2012:465). Value Chain is further described as a
combination of primary actors (business functions) that perform functions such as
input supply, production and retail, with secondary actors that perform support

28

functions such as transportation, brokerage and service processing. The functions
transforming products add both value and costs.
Value Chain builds linkages between input suppliers, production and Customers, and
provides a mechanism to coordinate activities in order to keep the Customer happy,
further explains Mitchell (2012:465). Value Chains are intangible and provide a
framework to observe interactions, analyse how these interaction and handovers link,
as well as a mechanism to determine the value and the cost that the activities
contribute. Value Chain can allow a firm to manage its competitive position. “A
business which wishes to outperform its competitors through production innovation
itself through higher quality, will have to perform its Value Chain activities better than
the opposition” (Salim, 2012:3).
Acharyulu and Shekhar (2012:92) describe the difference between Supply Chain and
Value Chain. Supply Chain is the network combining design planning, producing and
delivering services, including process from suppliers’ suppliers to Customers’
Customers. Value Chain is the next step in expanding the Supply Chain to include
demand planning, defining of markets, and establishing Customer needs. The Value
Chain exists to deliver Customer Value.
Kaczmarek (2011:72) argues for deriving value to the bottom line through Value
Analysis of the Supply Chain. Value Analysis is defined as “A process that focuses
on function, cost and quality; one that replaces ‘want’ with ‘need’ and encourages
objectivity.” Kaczmarek highlights a problematic process of certain Supply Chains
that limit the introduction of new products, making it difficult for the Customer to
acquire it unless he really values the product. However, Value Analysis asks some
questions that lead to efficiency and higher quality, lower-cost products:
• What is the need?
• What alternatives adequately fill the need?
• Which one of the alternatives is most cost effective?

29

Walker and Scott (2011:42) highlight a case of dairy farmers unwittingly using Value
Chain techniques to make strategic operating decisions that bring about cost
efficiencies as well as help achieve strategic goals. There is a strong link to business
strategy and the understanding to provide value to Customers and owners, ensuring
that farmers do not minimise costs, or decrease production in isolation. This may
actually lead to delivering less value.
Value Chain analysis is done in the following manner according to Walker and Scott
(2011:42):
• Identify strategically relevant processes or value activities.
• List the resources and assets for each activity.
• Assign operating costs and revenues to each activity.
• Determine strategic cost drivers that explain the underlying costs of each activity.
• Use the information to develop competitive advantage by controlling strategic cost
drivers or reorganising the Value Chain and improve the product.
Value Chain analysis allows managers to build linkages between suppliers,
operations and Customers. It is a broader analysis than Supply Chain. Value Chain
analysis aims to deliver value, while Supply Chain analysis seeks to meet demand,
yet contain cost.
Emphasis and buying power are shifting in line with consumer emancipation and their
clear understanding of value. Helm and Jones (2010:584) note: “competing for value
in the market-place therefore becomes based on the ability to deliver an experience
that is superior, but by criteria that Customers themselves determine.” This indicates
that firms need to deliver value on the Customer’s terms through having an outward-
in perspective.
South African Mobile Telecommunications operators should work to enhance their
understanding and maturity of the Value Chain execution in order to deliver relevant
value within the highly competitive environment.

30

2.4.6 EMERGING TRENDS IN THE VALUE CHAIN FRAMEWORK
There have not been any significant market changes with regard to Value Chain. It
seems that organisations rarely take a Value Chain approach to conducting and
managing business. Firms within the South African Mobile Telecommunications
Industry focus on the technology vertical – want to roll out LTE, or Fibre to the
Business / Home (FTTx). The firms want to be the first to market with new products.
Each wants to scream the loudest and throw cheap shots at other operators. This
kind of marketplace activity shows an aggressive side of competition, and seems a
little distant from management methods based on a framework to provide value and
sustainable differentiation through products and service to Customers.
The industry has traditionally piggybacked off the advancing technology as a platform
to develop products and services for the market. This method of innovation has been
in the form of “gifting”, where the product is developed based on the technology and
capability – and possibly due to a market opportunity. What the gift model of
innovation does, is take an introspective look at the firm, its resources and
capabilities, and develops something it hopes and expects that the market will
embrace.
What this model of innovation lacks, is the opportunity to deliver real value to
Customers – value that may sit outside of the standard operations of the company,
and value that can drastically shape the lives of Customers through being more in
tune, more enabling of the Customer’s life.
Rather than focusing on the effectiveness and the efficiency of the Value Chain, the
industry should shift focus to how value can be added to the Customer, how life can
be simplified for the Customer. The Customer needs to be understood. The
necessary resources, core competencies and capabilities need to be built. The
necessary and correct leadership and business strategies need to be developed.
This is a better, more sustainable and less risky approach – albeit one that pushes
the industry towards being indispensable, and to being valuable for the Customer.

31

2.4.7 THE VALUE CHAIN AND ITS LINKAGE TO CUSTOMER
EXPERIENCE
There is an Experience impact on the Customer as a result of the design and
execution of the Value Chain. The Value Chain exists to deliver value to Customers.
This happens at each link of the chain. Value is not limited to monetary value alone,
as intangible value is also included (Value Chain Initiative, 2004:15). The way the
Value Chain is executed results in an emotional outcome for the Customer – referred
to as the Customer Experience.
Bassett (2013:1) links Customer Lifetime Value improvement back to improvement in
Customer Experience. This works because the value of a Customer is enhanced
when the length of the business relationship is longer. Improving efficiency and the
Customer Experience lowers acquisition costs, lowers support costs, and lowers
retention costs while increasing loyalty, advocacy and tenure.
Bruce Temkin is a Customer Experience Transformist and one of the world’s leading
authorities on Customer Experience improvement. Temkin (2005:3) identified a
Customer Experience Value Chain – the “organisational culture and process for
consistently delivering superior Customer Experiences.” Importantly, the Customer
Experience Value Chain slightly mimics the Generic Value Chain by Michael Porter in
that there is a set of “primary-like” activities – the Experience Design processes and
a set of “support”-like activities – the customer-centric DNA. Firms can derive more
value by adopting the Customer Experience Value Chain.

32

Figure 2.1: The Customer Experience Value Chain
Source: Temkin (2005:4)
Customer Experience has three important benefits – short-term improvement in
retained business, improvement in Customer loyalty over the longer term, and
creation of competitive differentiation (Kirkby et al., 2003:6). As the Value Chain also
seeks to derive competitive differentiation, the disciplines of Customer Experience
and Value Chain are linked.
Value Chain is concerned primarily with the high level steps to bring value to
Customers. Customer Experience is concerned primarily with the “how” of the Value
Chain delivery as to evoke an emotional response within the Customer, thereby
bringing long-term loyalty and lifetime value.
2.5 INTRODUCING THE CONCEPT OF CUSTOMER
EXPERIENCE
Customer Experience is a business issue that has gained prominence in the last
decade. It is an approach, and an outcome to create loyalty within Customers so that
the likelihood of future purchases can be enhanced. Every interaction that a
Customer has with a firm generates a thought or emotion. Customer Experience is
the consolidated feeling that an individual Customer has towards a company.

33

2.5.1 DEFINITIONS OF THE CONCEPT “CUSTOMER EXPERIENCE”
The following are published definitions or explanations of Customer Experience.
Table 2.2: Definitions and explanations of Customer Experience
DEFINITION SOURCE
Customer Experience improvement should be an enterprise-wide
initiative closely aligned to a service provider’s business goals...
Many CSPs struggle with developing a common organisation-wide
definition of Customer Experience, which is the first step towards
undertaking a Customer Experience improvement program. In the
absence of an organisation-wide definition of Customer
Experience, different departments in a telecom organisation, such
as marketing, network and Customer service, often create their
own definitions based on a blinkered view of organisational goals.
This leads to a lopsided treatment of Customer Experience
improvement initiatives.
Malviya and
Varma (2012:4)
The Customer Experience is by its very nature a personal one that
includes the many ways people communicate with the world
around them. Managing this experience includes how the
operators handle the services Value Chain – from finding a service
to using it and at the end, paying for it. Having a Customer
Experience management framework and its adherent Customer
life cycle helps operators to better understand and meet user
needs at each Customer touchpoint.
Gilstrap
(2011:74)
Customer Experience improvement results in higher Customer
satisfaction and ultimately a higher NPS and Customer loyalty,
leading to top and bottom line financial benefits.
Capgemini
Consulting
(2011:1)
Experience is likely to arise across channels, the cumulative effect
of numerous encounters rather than being driven by a single
episode… Experience is far broader and less bordered than the
concept of product or service quality.
Maklan and
Klaus
(2011:777)
Consumption experiences have become increasingly important for
Customers and are considered as offerings, which can be created
or customized to fulfil Customers’ individual needs… Experience is
the ‘take-away’ impression or perception created during the
process of learning about acquiring, using, maintaining, and
(sometimes) disposing of a product or service.
Chang and
Horng
(2010:2401)
Practitioners have become increasingly aware of the need to
create value for their Customers in the form of experience, and
creating superior Customer Experience has become a strategic
necessity for firms to survive in competitive business
environments… Customers’ experiences result from the
Lywood, Stone
and Ekinci
(2009:208)

34

DEFINITION SOURCE
interaction with a company or use of the company’s product or
service… One dimension is the level of Customer participation
(from passive to active) and the other is the level of connection (or
depth of relationship) between the Customer and the performance.
Exceptional Customer Experience creates, on average, a 5%
increase in Customer loyalty… the physical perception or
knowledge Customers and users of business services can gain
from an interaction with product and service. It is about creating a
consistent and personalized WOW! factor. In this scenario, any
organisational objective becomes a secondary driver in terms of
determining how the organisation responds to the Customer.
Ojiako and
Maguire
(2009:181)
It is critical to understand where the experience is enhancing or
destroying value (in the mind of the Customer), and what
Customers remember after the experience… Customer
Experience is actually influenced by and through the expectations
the organisation creates for its brand, service and products. The
experience the organisation then delivers will be evaluated by the
consumer to determine how closely it matched the expectation.
Hollyoake
(2009:133)
It starts with the Customers and their emotions and behaviours
when interacting with an organisation… Customer Experience
incorporates service quality and Customer service.
Drotskie
(2009:118)
Customer Experience and service have moved from a “nice to
have” category to a “strategic asset.” Firms are now developing
operating models to use Customer Experience as a true
differentiator… This development of a new “dimension” of total
and integrated Customer care, experience, and service for value
creation and delivery has been a true corner stone of several
corporate turnaround stories. The total Customer Experience is
integrative of all the processes, and it should not be piece-meal.
Generally, research, practice and discussion on Customer
Experience thus far have been limited by two aspects. One, the
attention has been more on some narrower measure (e.g. brand
loyalty, market share) of Customer satisfaction than on total
Customer care and experience. Two, the research and practice
have focused on individual activities / events (e.g. post-sales or
product performance), rather than on the total and integrated
Customer Experience… Customer Experience is a function of
parameters that goes beyond direct experience from the core
product…. Customer Experience is impacted by all customer-
contact / touchpoints from pre-sales process to post-sales service
and support… Customer Experience needs to be managed and
enhanced across the entire delivery Value Chain.
Kalyanaram and
Gurumurthy
(2008:1)

35

DEFINITION SOURCE
A Customer Experience is an interaction between an organisation
and a Customer. It is a blend of an organisation’s physical
performance, the senses stimulated and emotions evoked, each
intuitively measured against Customer Expectations across all
moments of contact.
Shaw (2008:4)
Customer Experience encompasses every aspect of a company’s
offering – the quality of Customer care, of course, but also
advertising, packaging, product and service features, ease of use,
and reliability… Customer Experience is the internal and
subjective response Customers have to any direct or indirect
contact with a company. Direct contact generally occurs in the
course of purchase, use, and service and is usually initiated by the
Customer. Indirect contact most often involves unplanned
encounters with representations of a company’s products,
services, or brands and takes the form of word-of-mouth
recommendations or criticisms, advertising, news reports and re-
views.
Meyer and
Schwager
(2007:118)
The Customer Experience is the delivery of the brand promise. It
happens at touchpoints – the intersection of the Customer and the
enterprise… The Customer’s experience is filtered through the
Customer’s expectations of the enterprise, which is determined by
the publicized Customer Value proposition and feedback from
other Customers.
Kirkby et al.,
(2003:5)
2.5.2 GENERIC ELEMENTS OF THE CONCEPT “CUSTOMER
EXPERIENCE”
Customer Experience, as a discipline, has evolved through permutations of maturity.
Drotskie (2009:93) describes the evolution from Service Quality in the 1980s, to
Customer Service in the 1990s, to Customer Experience (CEM) from 1999 onwards.
Service Quality is a marketing concept for services that combines characteristics of
the services with quality and marketing during the Customer consumption process. At
the time, companies viewed quality of service as a competitive differentiator.
Meyer and Schwager (2007:120) tabulate the difference between Customer
Relationship Management (CRM) and CEM. CRM captures transactions, with lagging

36

relevance to future performance. CEM captures what Customers feel at touchpoints
and determines that it is more proactive to identify gaps, and improve experience.
Customer Service is seen as the service that a company provides in support of its
core products (Drotskie, 2009:117). Customer Service shifted focus from internal
product or service quality to external Customers. Meyer and Schwager (2007:118)
agree on the quality of Customer care, and include every aspect of the company’s
offering as contributing to Customer Experience.
Customer Experience, as per Drotskie (2009:118), is about the Customer and their
emotions and behaviour in their interactions with an organisation. It is delivered
across distribution channels or touchpoints, and strives to create an emotional
connection by Customers to the provider’s brand. Meyer and Schwager (2007:118)
call it the internal, subjective response within Customers that interact with a brand –
direct (Customer initiated) or indirect through other exposure.
The Customer Experience, described through the way a Customer interacts with a
company, has a decipherable life cycle. Experience is the perception that a Customer
has when interacting with a company to obtain and consume goods and / or services.
“Experience is the ‘take-away’ impression or perception created during the process of
learning about acquiring, using, maintaining, and (sometimes) disposing of a product
or service” (Chang & Horng, 2010:2401). Meyer and Schwager (2007:119) state that
a Customer’s experience begins long before the first use of a product.
Examples of the life cycle of the Customer’s interaction with a provider, have been
documented by KPMG International and Avaya International as follows:
Figure 2:2: The full Customer Journey (Telecommunications)
Source: KPMG International (2013:4)
Shop
for
products

and
oﬀers
Purchase

Get
started
/

acAvate
Use

Recharge
top-‐up

Customer
care
/

support
Migrate
/
churn

37

Figure 2.3: The Customer Experience Journey
Source: Shockley (2013:16)
Customer Experience is a personal and emotional response that Customers have
after a series of planned or unplanned interactions with a brand or its products. It is
important to understand Customers’ evaluation of the experience, state Chang and
Horng (2010:2401). Drotskie (2009:132) states that experience should be enhanced
over time and stay in the Customer’s memory.
Customer Experience is delivered across channels and is less bordered / defined
than products or service quality. There are dimensions of Customer experience that
include physical surroundings, service provider interaction, other Customers’
feedback, and the Customers themselves (Chang & Horng, 2010:2401).
Customer Experience is a strategic tool to create Customer loyalty and thereby,
create financial benefits for the organisation (Lax, 2012:26). Customer Experience
has evolved into a strategic asset with supporting, holistic business model designs
that impact and deliver value across the entire Value Chain. Chang and Horng
(2010:2401) state that consumption experiences are increasingly important to

38

Customers – these meet Customers’ individual needs. Firms can use these for
differentiation and competitive advantage.
Customer Experience improvement programmes should span the entire organisation
to eliminate silos and enhance success. Drotskie (2009:124) alludes to Customer
Experience that is “Total” in its criss-crossing of distribution channels and interaction
points.
Exceptional Customer Experience can be quantified and measured in terms of the
Customer’s emotions, behaviours, loyalty and profitability. Meyer and Schwager
(2007:118) explain that companies measure Customer satisfaction – a collection of
Customer Experiences. This, however, does build understanding of how to achieve
Customer satisfaction.
Customers attach meaning to the experience of their consumption of products. Firms
are increasingly aware of the need to create a deeper level of connection with
Customers. According to Chang and Horng (2010:2403), sensory and emotional
aspects of experience outweigh the physical characteristics of a product.
The Customer evaluates Customer Experience by comparing the expectation of
service to the reality of the service received. Meyer and Schwager (2007:120) explain
that this creates a gap between Customer delight and something less. Managing all
the aspects of Customer Experience appropriately can assist to reduce the chasm
between Customer expectations and Customer perception. The perception is
resultant from the Customer Experience delivered – the “service quality gap.”
Drotskie (2009:125) details the following aspects as important, and comprising the
Customer Experience:
• Strategy – a set of objectives that create a unified vision of Customer Experience.
• Culture – values and a way of doing things that lead to delivery of a high level of
service to Customers.

39

• Customer expectations – the level of service and accompanying emotions that
Customers expect when dealing with a provider.
• Processes – the actions and tasks that take place in order to deliver to a
Customer.
• Channel approach – the ‘place’ where Customers can obtain service benefits.
• Marketing and brand – the clues that an organisation sends to Customers as well
as the attitude that prevails.
• Systems – Information Technology that integrates the Value Chain to align
production with Customer orders and needs and creates efficiency.
• People – personnel perform actions to interact with Customers and provide
service.
The above elements are deemed important for management in the delivery of a Total
Customer Experience.
Kaleka (2011:42) supports service quality by expanding on logistics service quality in
order fulfilment and physical distribution. These elements play a role in adding value
to the Customer perception. Process optimisation efforts utilise numerical measures
to assess performance and improvement of logistical processes factually. Graeml
and Peinado (2011:9) state that logistics has few tools to measure logistics process
performance. Nevertheless, a tool should be used to measure and internalise
performance improvements.
Janiszewski (2010:5) argues for differentiation in consumer experience as a source
of competitive advantage. This needs to be researched in order to extend theory
within the discipline, as well as develop insights into Customer behaviour.
Chakravorti (2011:123) reports that 85% of senior business managers see Customer
Experience management as the next battleground for sustainable competitive
advantage, and references Frederick Reicheld from the 2006 book entitled ‘The
Ultimate Question. Driving Good Profits and True Growth’, stating that extraordinary
positive experiences create a 5% increase in Customer loyalty.

40

Steve Ballmer, former CEO of Microsoft quoted in 2008: “In the competition between
PCs and Macs, we outsell Apple thirty to one. But there is no doubt that Apple is
thriving. Why? Because they are good at providing an experience that is narrow but
complete, while our commitment to choice often comes with some compromises to
the end-to-end experience.” This is recognition of the Customer’s preference for
value on their terms. How firms respond to this is an outcome of strategic Value
Chain analysis.
A report by Dibeehi (2009:1) entitled Customer Experience friendly process explains
the roots of process design in making operations more efficient. While efficiency is
branded as being good for the Customer, it is very often a cost-cutting exercise. It
occurs that Customers do ultimately benefit as a result of streamlined processes. As
firms understand that Customer Experience is the next competitive battle ground, the
understanding will also come that half of Customer Experience is emotional, and that
process design only deals with the rational side of interactions.
Colin Shaw is recognised as one of the top 150 LinkedIn business influencers in the
world (Beyond Philosophy, 2012), and is an international author of four Customer
Experience books. Shaw blogged that in research of over 40 telecoms companies
globally, nobody stood out for delivering a good Customer Experience. This is
because Telecoms companies are inherently inward focused. This does not support
values that claim to ‘put the Customer first.’ “Cost cutting, internal politics, profits and
the need for positive analyst briefing always outweighed the Customer. Senior
managers said they were interested in the Customer but their actions showed they
weren’t” (Shaw, 2012). This attitude spills over into all aspects of operations, as well
as employee behaviour.
2.5.3 THE EVOLUTION OF CUSTOMER EXPERIENCE
Customer Experience is the contemporary marketing practice focus. Over the last 25
years, focus has shifted from creating product brands, to service marketing for
Customer relationships, and now to creating compelling Customer Experiences

41

(Maklan & Klaus, 2011:771). Previous marketing practice methods are not enough to
remain competitive and Customer Experience should be seen as an important
strategic objective.
Maklan and Klaus (2011:785) described an evolution in marketing focus that moved
from product, to service, to experience. Experience is complex because it is broader
and less bounded than service and quality measures. Customer Experience has now
become, and should be seen by managers as an important strategic objective. South
African mobile operators have responded in this way – as reflected in strategy
frameworks and vision statements:
• Cell C: “The possibilities provider that really puts the Customer at the centre of
everything that we do… we are making a tremendous effort to positively transform
the lifestyle and livelihood of our Customers.” (Cell C, n.d.).
• MTN: “Vision – To lead the delivery of a bold, new digital world to our Customers”
and “Mission – To make our Customers’ lives a whole lot brighter.” (MTN, n.d.).
• Vodacom: “Our vision – To make every Customer smile” and “Our purpose –
Connecting YOU, creating possibilities, changing lives” and “Our strategy – Doing
more to improve the Customer Experience.” (Vodacom, n.d.).
Customer Experience has seen two types of evolutions in maturity – the science of
the Customer Experience discipline, as well as the maturity of organisations in their
view thereof. Drotskie (2009:8) describes the evolution of Customer Experience
between the 1980s where Quality was the differentiator to the 1990s where Brand
was a differentiator to the current Customer Experience as the differentiator. This is
the evolution in the scientific discipline. Shaw and Dobrev (2012:7) document the
path of organisational maturity as:
• Naïve – Initial support for Customer Experience. Usually verbal, as a result of
Customer attrition or complaints. There could also be resistance to change, as
well as financial constraints.

Eldon Phukuile (2015) Customer value creation in the South African mobile telecommunications industry (Masters dissertation)

Eldon Phukuile (2015) Customer value creation in the South African mobile telecommunications industry (Masters dissertation)

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