A model for analyzing churn effect in saturated markets

Abstract

Purpose -The purpose of this paper is to propose a model that predicts information communication technology (ICT) adoption in saturated markets, to analyze the shifting behaviors of the subscribers and to present the results. Design/methodology/approach -By developing an expanded Bass model, the authors analyzed post-adopters' switching behaviors in the mobile phone market, using the officially verified time-series data for the number of mobile phone adopters in South Korea. Findings -The results show that: the expanded Bass diffusion model can delineate the stream of post-adopters' switching behaviors in saturated ICT markets; based on innovation value p and imitation value q, the authors conclude that customer immigrations during market saturated period are mainly caused by innovation effect, which is closely related to launching innovative products; and fast mover still has its imitation effect, which is closely related to first mover advantage. Originality/value -The paper provides novel insights for the frame of practical strategies. To survive in a saturated market, late movers should continuously develop new and innovative products. In addition, fast movers should also develop innovative products to prevent customer immigrations, and they also should utilize their first mover advantage more efficiently, even in matured market.

Predicting customer churn in mobile industry using data mining technology

“…Moreover, in 2011, the number of subscribers exceeded the country's population in 105 countries (Lee et al, 2014). Such market saturation has shifted the dynamics of the competitive landscape from attracting new-to-market customers to acquiring competitors' customers (Lee et al, 2011). Accordingly, studies on customer churn have attracted many researchers' attention and have become increasingly important.…”

“…Accordingly, studies on customer churn have attracted many researchers' attention and have become increasingly important. Most of these studies focus on the causes of churning for the purpose of churn management (Ahn et al, 2006;Jahanzeb and Jabeen, 2007;Kaya and Williams, 2005;Lee et al, 2011;Lim et al, 2006). In general, studies on customer churn highlight customer outflows, while those on customer acquisition pay attention to attracting customers.…”

“…Previous studies on customer churn focused on service quality (Ahn et al, 2006;Coussement and Van Den Poel, 2008;Dierkes et al, 2011;Ferreira et al, 2004;Jahanzeb and Jabeen, 2007;Lim et al, 2006;Mozer et al, 2000), demographics of subscribers (Ahn et al, 2006;Burez and Van Den Poel, 2009;Ferreira et al, 2004;Lee et al, 2011;Lemmens and Croux, 2006), customer satisfaction/dissatisfaction (Ahn et al, 2006;Lim et al, 2006), and economic value (Lim et al, 2006). These studies have been built on subscriber data or information gathered via surveys, which emphasized service receivers' individual aspects.…”

The market performance indicator: a macro understanding of service provider switching

“…There has been considerable interest and debate among marketing scholars in studying service provider switching (Bendapudi and Berry, 1997;Bansal and Taylor, 1999;Jones et al, 2000;Singh and Sirdeshmukh, 2000;Colgate and Lang, 2001;Patterson and Smith, 2003;East et al, 2012). Understanding the service provider-switching process also has important commercial implications for industries such as telecommunications and subscription services, where the loss of consumers (churn) can be expensive, and it makes it impossible for marketers to build greater value in customer relationships (Fullerton, 2005;Nakamura, 2010;Grzybowski and Pereira, 2011;Lee et al, 2011). For more contractual and long-term services, such as finance and insurance, consumer switching is also a concern, as it may mean the abandonment by high-network customers and the loss of lifetime value of others (Stewart, 1998a(Stewart, , 1998bBaumann et al, 2007;Lees et al, 2007;Manrai and Manrai, 2007;Winchester et al, 2008).…”

Special Issue on Complex Systems: Editor's Forward

“…Note that the use of simulations in marketing is not new; marketing theory and practice over the last several decades has developed a number of brand choice models or simulations (Dodds, 1973; Grahn, 1969; Labeaga-Azcona et al, 2010; Lee et al, 2011; Winer, 1986). Discrete choice models can also be seen as another type of simulation.…”