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A model for analyzing churn effect in saturated markets

Sang‐Gun Lee (Department of Management Information, School of Business Administration, Ajou University, Suwon, Republic of Korea)
Ming Yu (Department of Industrial Engineering, School of Mechanical Engineering, Tsinghua University, Beijing, China)
Changgyu Yang (Department of Management Information, School of Business Administration, Ajou University, Suwon, Republic of Korea)
Changsoo Kim (Department of Management Information, School of Business Administration, Ajou University, Suwon, Republic of Korea)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 23 August 2011

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‐adopter's 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.

Keywords

Citation

Lee, S., Yu, M., Yang, C. and Kim, C. (2011), "A model for analyzing churn effect in saturated markets", Industrial Management & Data Systems, Vol. 111 No. 7, pp. 1024-1038. https://doi.org/10.1108/02635571111161271

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited