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SUBMITTED IN THE PARTIAL FULFILLMENT TOWARDS THE AWARD OF
MASTERS OF BUSINESS ADMINISTRATION 2008-2010
UNDER THE SUPERVISION OF:
Therefore. the consumer may value the cell phone usage differently. a rational consumer needs to predict the usage when choosing a plan. the prediction is rarely accurate and the chosen plan might not be optimal ex-post. In most cases. the consumer may not be completely clear about her own preference (utility function). Since the final payment is based on the number of minutes used and the chosen plan. This is particularly true if cell phone is a relatively new product in the market. it is a two-stage decision problem with uncertainty. Our model explicitly accounts for this difference by separating the total usage into two parts. Emergency calls could be of much higher value than regular chatting. under different situations. The need for high-value usage is random and exogenously driven and the consumer uses exactly the number of high-value minutes that she needs. Second. The consumer’s preference over the low-value minutes is indexed by two key parameters in the utility function.Introduction: The major purpose of this paper is to empirically analyze the demand and consumers’ learning behavior in the cell phone market. at the same consumption level. the high-value part and the low-value (normal-value) part. In this paper. We assume the following scenario. one of which is assumed to be uncertain. the marginal utility derived from each additional minute could differ due to the different purpose of calling. This is similar to the health (and other) insurance market. using a panel data set from a large provider in Asia. On the other hand. Cell phone consumption is special for two important reasons. At the 2 . we develop a structural model that accounts for the sequential decision and both sources of uncertainty. However. the consumer has to choose a fee schedule and then decides how many minutes to call. First.
which motivates our structural model. Two recent articles are closely related to our research. Our approach builds upon previous research mainly from two lines. et al 2004). Park. et al 1987. but that paper does not consider the consumers’ learning behavior and the utility function is assumed to be deterministic. she receives a signal on her preference and updates her belief. and Clay. Then. Ackerberg 2003. Kling and Ploeg 1991. Miravete 2002a. the need for high-value usage is realized for that period and the consumer updates her prediction of the next period high-value usage. both following the Bayer’s rule.first stage. The posterior belief of the preference is used in the utility maximization. The current paper contributes primarily to the understanding of the consumer side in the emerging cell phone market. and Sung and Lee 2002). the consumer chooses a plan based on her prediction of the need for high value usage and her prior belief of the preference over low-value usage. This procedure repeats in each period. . beginning with the updated prediction and belief from the previous period. using a data set from the 1986 Kentucky experiment. this paper is the first empirical analysis of cell phone demand with consumer learning. and that of consumer learning (McFadden and Train 1996. The time dimension of the panel data has enabled us to examine the learning empirically. After the plan is chosen. We observe a significant level of learning behavior in the data. et al 1991. The dynamic learning behavior is captured by the two updating structures. Telang (2004) uses the same data set to estimate a demand model. Miravete (2003) models consumers’ learning in the traditional land line phone service. which leads to the demand for low-value usage. To our knowledge. the literature of telecommunication demand modeling (Train.
In Telang (2004). Due to the lack of information on the major competitors in that region. but it is far from being a monopoly in the market. Although our model focuses on the consumer’s learning about preferences and exogenous shock. More generally. it can be extended to accommodate learning about product quality. we hope this paper would add new empirical knowledge to the telecommunication separation of demand and consumer learning. Besides. as compared to the results from the previous research on land line phone services. The data are collected from a large cell phone service provider in Asia. . the author reports a much higher level of price elasticity for the cell phone users. We ask the question whether the demand for cell phone is still highly elastic under the learning model and compare our results to the benchmarks from the previous literature. the high-value and low value usage in the utility function seems to be a new treatment in the literature. The company certainly has some market power. we do not consider strategic pricing behavior of the firm and thus ignore the question of optimal tariff design and its possible interaction with the consumers.
LITERATURE REVIEW Mobile phones have been instrumental in connecting people all over the world in a matter of minutes. a 1. a remote control system and an EDGE platform as well! Today's mobile user wants a lot more than just a phone. at a very affordable price. This sleek mobile has a trendy touch screen and a superb user interface. followed by the empirical specification and estimation in section 4. Other interesting features of this mobile are the Network Dual Band 900/1800MHz. He wants the whole world in the palm of his hand. Besides being a necessity. they have also become a fad among teenagers and college students. mp3 and AAC ring tones. This enables one to connect to and surf the net from any location. TV out. Simply log on to the internet. it will be able to deliver a world class internet experience on this new cell phone. The final section discusses the results and concludes the paper. all . But students usually cannot afford high end feature packed models of mobile phones. brands. To buy this mobile you don't have to go hunting at every handset shop. They love having a cool phone with great features to flaunt. It can load pages at the speed of a desktop PC and compresses data by over 90% before delivering it to the handset.8" 65K color QVGA display. a 3 megapixel auto focus camera. read customer reviews.The next section discusses the data and the motivation for our model. Section 3 explains the details of the demand model. it also includes a motion sensor. India's leading handset provider has come out with a power packed phone which is easy on the pocket! Latest mobiles to hit the stores. This is why Micromax. Equipped with the Opera Mini browser. What's more. it also includes GPRS and Bluetooth capabilities! Its lithium ion battery has a standby time of 200 hrs and a talk time of 3 hours. memory space of up to 500 phonebook entries and an expandable memory of up to 2 GB! What's more. By combining technology and a great platform has been able to create a world class handset. visit a good internet shopping portal and browse the latest mobiles on offer! It is so easy to shop online! You can compare prices. The best part of the mobile phone is its Opera Mini browser.
The study is mainly based on the primary data generated The secondary data: Secondary data was obtained through company profile. onida mobile. nokia mobile. 3.under one roof! Customer care executives are also available to guide you if you get stuck during a purchase Monty Alexander has written many articles on many mobile handsets . Identify the potential market share in Mathura. Assessments of market share of local manufacturers. 2. Determine the specification of Various Local Players in cellular phones To know the Customer Behavior OBJECTIVES OF STUDY 1. RESEARCH METHODOLOGY SOURCES OF THE DATA The study is based on both primary and secondary data. information available in textbooks magazines of related to the topic & previous reports in college library. htc mobile etc NEED / RATIONALE OF STUDY • • • • It is the part of our partial fulfillment of MBA curriculum. Primary data: The questionnaires were administered to respondents in various parts of Mathura city region in India. . To enhance the knowledge. Comparative analysis of Market share of various mobile hand set manufacturers.micromax mobile.
According to the time limit of our project we can cover only the some areas of Mathura. Nature of Research Sample Size Sampling Criteria Research instrument Data collection - - Descriptive 100 Simple random Sampling Questionnaires Primary and Secondary Limitations of study When the buyers are busy we can’t get accurate data from them. During survey some respondents may not give answer in a proper manner. PROPOSED PLANS: My proposed plan is to carried out the research in Mathura Region through Questionnaire to find out the consumption pattern of Mobile users in city. .
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