A model for analyzing churn effect in saturated markets

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.

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.

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.

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.