European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) DOI: 10.7176/EJBM Vol.11, No.3, 2019 13 The Influence of Deceptive Advertising and Consumer Loyalty in Telecommunication Industry Ammar Hussain 1 Aisha Aslam 2 1. Department of Business Management Karakoram International University Gilgit Pakistan 2. Department of Management Sciences Quaid-i-Azam University Islamabad Pakistan Abstract The purpose of this study is to measure the impact of deceptive advertising on customer loyalty in telecom Sector of Pakistan. Calls Charges, SMS Packages, Internet Charges and Network Coverage & Quality were used to measure the deception in ads. Customer loyalty is measure through the satisfaction, recommendation, and continuity of network usage. 215 respondents were approached to conclude the results. Data was analyzed by using SPSS 17. It has been found that more or less every service provider telecom sector is using deceptive advertising and customers are stick to their current networks because of other more influencing reasons and almost all network / services providers are providing more or less same services and they are using same style of advertising to compete with each other. Keywords: Deceptive advertising, SMS, Customer Loyalty and Network quality. DOI: 10.7176/EJBM/11-3-03 1. INTRODUCTION Developing countries such as Pakistan and Bangladesh constitute sixty seven percent (67%) of world mobile subscription (Ahmad et al., 2015). Since 2002, growth of cellular market has been rated as one of the fastest growing sectors in Pakistan and it is growing with a high growth rate compare to other sectors (Awan and Iqbal, 2014). The future of telecom sector in Pakistan looks promising as considerable percentage of population has an adequate amount of disposable income to be catered by mobile industry (Ahmed et al., 2010). Current scenario is a battlefront for large number of private telecommunication companies where the decision of government to deregulate this sector to make it possible for a number of companies to offer their services (Ishaq, 2012). In Pakistan five players are operating in the telecom sector ranging from local brands to the world largest telecom groups and are competing against each other for providing better service (Jahanzeb et al., 2011). Rapid progress and aggressive competition among service providers in telecom sector has tremendous effect on strategies which they formulate to retain and satisfy their valuable clienteles (Raza and Rehman, 2012). It is challenging for companies to retain their loyal customers and at the same time encouraging competitor’s clients to switch (Saadat and Nas, 2013). Due to the growth and tough competition in telecom sector situation has been changed which has reduced the number of customer who switch from one operator to other (Ahmad et al., 2015). During their initial stage, telecom companies have been focusing only on obtaining new consumers and ignore retaining existing customer (Khan, 2012). Generally, mobile companies find it economical in a dynamic environment to retain their existing customers instead of formulating strategies to acquiring new as by Boohene and Agyapong (2011) identified that satisfied customers are more loyal customer which depicts that the relationship between customer satisfaction and loyalty is appositively significant. According to Sathish et al. (2011), in a highly competitive market segment, it is becoming further challenging to keep their current consumers and attract new clients. In telecom sector it has been repeatedly indicated that once a customer acquire services of a certain service provider, their long lasting relations with the service provider is of larger significance for the success and existence of the business in a competitive market (Gerpott et al., 2001). Telecom companies in Pakistan are using all available means of advertising to create awareness about their products and services, they carry out this through prudently planned advertising activities (Imtiaz et al., 2015). Most of the advertisements do not contain sufficient information for the customer to make a rational decision about the product or service and many exaggerated claims are made by these companies to increase the customer base (Ahmad, 2011). Due to the high rate of competition in telecom sector, the telecom companies constantly strive for market share and everyone is trying to get a bigger piece of the pie, and in this process customers are made to suffer the consequences. According to Khan and Rajput (2014), customers are deceived by misleading ads: without providing them complete information about the service and packages. Misleading and exaggerated claims about network coverage & quality and are being made and usually they provide less than what they claim to attract the customers (Mehmood and Siddiqui, 2013), as a result customer trust and satisfaction is violated. Every company use advertisments to infrom, convince, communicate and to remind their customer about their products and services, therefore, adversiment is believed to increase customer’s response towards services and products being offered by the company (Rao and Wang, 2015). However, deceptive advertising leads the customers to believe that they are getting profit from a purchase and they may think that they are saving money (Chaouachi and Rached, 2012). According to Latour and Latour (2009), deceptive claims develop the negative