Analyzing Consumer Retention and Brand Switching Behavior in the Mobile Phone Industry Using Markov Chains

Abstract

Consumer loyalty plays a vital role in determining brand sustainability and competitive advantage, particularly in dynamic sectors such as mobile phones. This study applies the principles of Markov chain modeling to estimate and analyze consumer loyalty by examining brand-switching behavior over time. Transition probability matrices were constructed based on survey data collected from a representative sample of consumers. These matrices facilitated the identification of steady-state probabilities, which represent long-term loyalty levels associated with each brand. The analysis reveals significant differences in brand retention rates between the two product categories, highlighting consumer behavior trends and brand-switching tendencies. The findings underscore the effectiveness of Markov chains as a predictive tool in marketing analytics and provide valuable insights for brand managers aiming to enhance customer retention and loyalty strategies.