Managing and modeling the price reduction effect in mobile telecommunications traffic

As needs for telecommunications services diversify, an increasingly wide range of services is becoming available in the market. Service price reduction is one strategy used by service providers to retain existing subscribers. A price reduction for one service, however, can affect the individual-level usage for other services. Price reductions can also be imposed on a service provider by regulation. For these reasons, understanding how price reductions affect service usage is of growing importance to the telecommunications industry for purposes of pricing and tariff development. In this paper, an individual-level usage model for telecommunications services is developed and the effects on usage of a price reduction are analyzed. The model is applied to age-stratified aggregate traffic data for a Korean mobile telecommunication service provider. Finally, a 0-1 integer programming model is proposed for choosing which market segment should be targeted with a price reduction to minimize revenue loss. These models can be applied to market segmentation and price reduction strategy. (c) 2008 Elsevier Ltd. All rights reserved.
Publisher
ELSEVIER SCI LTD
Issue Date
2008-08
Language
English
Keywords

INTERNATIONAL TELECOMMUNICATIONS; CUSTOMER LOYALTY; DEMAND; ELASTICITIES; SERVICES; DETERMINANTS; INDUSTRY; MARKET; KOREA; CHURN

Citation

TELECOMMUNICATIONS POLICY, v.32, no.7, pp.468 - 479

ISSN
0308-5961
DOI
10.1016/j.telpol.2008.04.005
URI
http://hdl.handle.net/10203/8799
Appears in Collection
MT-Journal Papers(저널논문)
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