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segmentation level differentiates residential (consumer) from business customers.
Residential customers are further divided into two, postpaid and prepaid:
•
Postpaid - contractual customers:
Customers with mobile phone contracts.
Usually these customers comprise the majority of the customer base. They have
a contract and a long-term billing arrangement with the network operator for
the services received. They are billed on a monthly basis and according to the
traffic of the past month, hence they have unlimited credit.
•
Prepaid customers:
These customers do not have a contract-based relation-
ship with the operator and buy credit in advance. They do not have ongoing
billing and they pay for the services before actually using them.
Additionally, business customers are further differentiated according to their
size into Large Business - Corporate, SME (Small and Medium Enterprise), and
SOHO (Small Office, Home Office) customers.
The typical core segments in mobile telephony are depicted in Figure 7.1.
The objective of the marketers was to enrich the core segmentation scheme
with refined sub-segments. Therefore they decided to focus their initial segmen-
tation attempts exclusively on residential postpaid customers. Prepaid customers
need a special approach in which attributes like the intensity and frequency of top-
ups (recharging of their credits) should be taken into account. Business customers
also need a different handling since they comprise a completely different market. It
is much safer to analyze these customers separately, with segmentation approaches
like the ones (value based, size based, industry based, etc.) presented in Chapter 5.
Moreover, only MSISDNs (telephone numbers) with current status active or
in suspension (due to payment delays) were included in the analysis. Churned
(voluntary and involuntary churners) MSISDNs have been excluded from the
Figure 7.1
Core segments in mobile telephony.
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