Market frictions and competitive positions: lessons from the mobile telecommunications market

This study explores how multi-segment and single-segment competitive positions within an industry are affected by changes in market frictions. A multi-segment position can create value for customers in the form of flexibility to change between service configurations without the need to switch providers. Customers can start with the basic version of a service, then switch to a more advanced version as their preferences evolve. Such a value creation mechanism is effective only in the presence of high costs of switching from one provider to another. Thus, when switching costs fall, multi-segment firms will experience a larger penalty than single-segment ones."