Forecasting telecommunication service subscribers in substitutive and competitive environments

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The telecommunications market is expanding rapidly and becoming more substitutive and competitive. In this environment, demand forecasting is very difficult, yet important for both practitioners and researchers. In this paper, we adopt the modeling approach proposed by Jun and Park [Technological Forecasting and Social Change 61 (1999)]. The basic premise is that demand patterns result from choice behavior, where customers choose a product to maximize their utility. We apply a choice-based substitutive diffusion model to the Korean mobile telecommunication service market where digital service has completely replaced analog service. A choice-based competitive diffusion model is also formulated and applied to the case where two digital services compete. In comparison with Bass-type models, these two models provide superior fitting and forecasting performance. Finally, we suggest a new choice-based diffusion model to describe an environment in which substitution and competition occur simultaneously and show the application results. The choice-based model is useful in that it enables the description of such complicated environments and provides the flexibility to include marketing mix variables such as price and advertising in the regression analysis. (C) 2002 International Institute of Forecasters. Published by Elsevier Science B.V. All rights reserved.
Publisher
ELSEVIER SCIENCE BV
Issue Date
2002
Language
English
Article Type
Article
Keywords

SUCCESSIVE GENERATIONS; DIFFUSION; PRODUCTS; STRATEGIES; MODEL

Citation

INTERNATIONAL JOURNAL OF FORECASTING, v.18, no.4, pp.561 - 581

ISSN
0169-2070
URI
http://hdl.handle.net/10203/4101
Appears in Collection
MT-Journal Papers(저널논문)
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