Network effects, Customer Satisfaction and Recommendation on the Mobile Phone Market

Thomas Cadet, Sophie Larribeau () and Thierry Pénard
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Thomas Cadet: University of Rennes1 - CREM UMR CNRS 6211, France

Economics Working Paper Archive (University of Rennes & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS

Abstract: On mobile phone markets that have reached the maturity stage, customer recommendation becomes a critical focus for operators to attract subscribers from rival operators. Referral propensity is also an indicator of subscriber satisfaction and loyalty. The aim of this paper is to examine the factors that influence customer recommendation. Precisely, we want to know whether referral propensity is more driven by supply-side effects (i.e. characteristics of mobile services) or demand-side effects (i.e. network effects). We use data from French subscriber surveys. The main findings are that referrals depend primarily on supply-side effects: operators’ brand image, the price and quality of services, and customer relations. Price, however, is considered to be a less significant factor than the quality of service when it comes to recommending an operator. Also, information on services and the variety of offerings available, as well as network effects, do not seem to influence referral propensity.

Keywords: network effect; mobile operator; satisfaction; recommendation; customer referral (search for similar items in EconPapers)
JEL-codes: D12 L96 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-com, nep-ict, nep-mkt and nep-net
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