Modeling market dynamics in competitive communication consumer markets

Emergence of converged multimedia services has led operators to seek clear tactical and strategic advantages in developing differentiated service offerings. Effectiveness of the offer strategies is influenced by factors such as service delivery investment, operations cost, market segment preferences, competitive multimedia offers, service pricing, and consumer price sensitivities. Differentiation in any of these factors in a competitive environment has a direct influence on market share and profitability of communication service providers. This paper describes a modeling approach that explicitly considers the factors mentioned. The model can be used to quantify the impact of operator's offer and the pricing strategies amid market share acquisition, churn reduction, and profitability. This paper presents the application of the model to various converged operator scenarios such as voice convergence, triple- and quadruple-play, and xVNO operators that may utilize services such as "targeted advertising" to subsidize telephony services. The study presented in this paper can be contrasted with the significant number of studies (in marketing literature, primarily) dedicated to the understanding of the market behavior of consumers, and of their reactions to price, features, or marketing campaigns.