In the maturing mobile telecommunication market, customer retention is more important for the service providers than attracting new customers. Churning behavior of customers depends upon customer satisfaction, word of mouth, and switching cost, which in turn are determined by the quality of service package and the price.
In this thesis, a customer satisfaction and service choice model of mobile customers is developed, in order to analyze the current competitive situation in the Korean mobile telecommunication market. We develop an agent-based simulation model to examine various competitive scenarios, which are also applicable to other service industries. The experiments show that, first of all, the word of mouth has bigger impact than the switching cost to the competitive performance. Second, prior market share plays a significant role, when customers consider quality of service more important than service charge.
Finally as the market is stabilized after initial oscillations, the simulation model could be useful for the service providers to estimate the stabilization time and plan the required investment accordingly.
