This study examines market structure variables closely linked with customer loyalty. Two particular aspects of market structure are studied, namely, alternative attractiveness and switching costs. In understanding customer loyalty, previous research has paid particular attention to customer satisfaction. We extend previous research by developing a conceptual framework of how these two market structure factors and customer satisfaction influence customer loyalty. We also identify customer segments and analyze the heterogeneity in the perceptions regarding satisfaction and market variables among the different segments. We test the framework empirically in the context of mobile phone service industry. Our results indicate that, in addition to customer satisfaction, market factors in the form of alternative attractiveness and switching costs have direct effects on customer loyalty. Alternative attractiveness and switching costs may not be independent, as often is assumed. Specifically, we show that the negative effect of alternative attractiveness on customer loyalty decreases as the level of switching costs increases. Our results also suggest that different customer segments in the market have divergent perceptions regarding satisfaction and market variables. Implications of the results are discussed.