A Hidden Markov model-based approach in brandswitching (A case study of the Nigerian telecommunication sector)

Abstract

In this work, we considered a Hidden Markov Model for the Telecommunication Industry in Nigeria. There are five major mobile service providers presently in Nigeria: MTN, AIRTEL, GLOBACOM, ETISALAT and NITEL. We proposed a model for decision making in this sector by examining the rationale behind customers’ brand switching. Our sample comprises of 512 respondents from a total population of 37,083 persons in the University of Benin, which consists of academic staff, non-academic staff and students; using proportional allocation to size in the stratified random sampling. As part of the decision making using the proposed model, we observed a set of marketing strategies and then applied our model to project the mobile service providers that stand a chance of relevance in the sector. Our result suggests that, if subscribers of different networks decide to switch from their current network based on these rationales [Price, Service Quality, Brand loyalty, Price and Trust] in a consecutive period of five years, the best marketing strategies for the mobile service provider [GLOBACOM] in the first three years are Price, Service Quality and Brand loyalty respectively. While the mobile service provider [MTN], should invest in the Pricing System and increase the level of Trust existing between them and their subscribers in the fourth and fifth year respectively.

Keywords: Hidden Markov Models; Brand switching; Telecommunication Sector