A multi-attribute model to optimize the price and composition of prepaid mobile Internet plans

Abstract

Purpose

Prepaid mobile Internet is one of the most profitable services that are composed of multiple attributes. The overall utility of Internet service can be broken down into the sum of the utility of individual attribute levels. Based on the multi-attribute theory, rational consumers choose the service that yields the highest utility from a number of possible alternatives. Determining the optimal attribute levels that satisfy consumers' preferences and maximize the total revenue of the firm is a challenging multi-attribute decision problem for any mobile operator. When designing mobile Internet services, adopting a robust composition of services against different realizations of competitors' strategies can bring advantages for network operators. The purpose of this study is to determine the optimal attribute levels of prepaid mobile Internet packages with the aim of maximizing the total revenue of the firm by considering the paradigms of multi-attribute utility theory about consumer choices and the issue of uncertainty in counterpart services offered by the competitors.

Design/methodology/approach

This paper formulates the problem of multi-attribute pricing and design of mobile Internet plans in a competitive environment by developing deterministic and robust scenario-based mathematical models and considering the paradigms of multi-attribute utility theory about consumer choices. The proposed robust scenario-based models are based on three different paradigms, including maximizing expected revenue, minimizing the negative deviation from expected revenue and minimizing the maximum regret. A comprehensive numerical analysis is conducted to evaluate and compare the efficiency of the proposed models.

Findings

The evaluations reveal that deploying recourse policy can result in higher revenue for the firm when facing uncertainty. By doing sensitivity analysis, this paper shows that consumer preferences for brand attribute and consumers' purchase frequency can influence the revenue of network operators.

Originality/value

This paper develops a novel deterministic multi-attribute product line design (PLD) model to address the problem of determining the price and composition of prepaid mobile Internet plans. Furthermore, the issue of uncertainty in counterpart services offered by the competitors is studied for the first time in the PLD literature.

Citation

Sohrabi, A., Pishvaee, M.S., Hafezalkotob, A. and Bamdad, S. (2020), "A multi-attribute model to optimize the price and composition of prepaid mobile Internet plans", Journal of Enterprise Information Management, Vol. 33 No. 5, pp. 1257-1291. https://doi.org/10.1108/JEIM-09-2019-0279