The Influence of Individual Mobility on Consumer Choice : A Model of Tariff Change

This paper investigates the influence of individual mobility on consumer choice in the mobile phone market. The aim is to understand whether consumer mobility influences the switching of an individual to another tariff within one mobile operator. Data were obtained from 1,154 mobile phone users of one of the largest mobile operators in Russia for the period from November 2011 to November 2012. Customers had limited choices in fast and low-cost switching from one operator to another. Hence, we use data of users switching between tariffs within one operator. The data were analyzed by a mixed logit model which is applied to a discrete choice from a variety of disordered alternatives. This solves the restriction of the standard logit model by allowing for random taste variation. We developed three mobility metrics limiting the drawbacks of established metrics. The results show that mobility does influence consumer choices. Tariff plans differ from each other according to the categories of people that use them. Subscriber mobility is one of the features that separate these categories. There are tariffs preferred by highly mobile people, and those that are preferred by people with low mobility. When the individual’s mobility changes, it is highly likely that she will switch to another tariff plan. Mobile operators should take consumer mobility into account when analyzing consumer behavior to increase retention rates