factors affecting consumer choice of mobile phones two3991

Factors Affecting Consumer Choice of Mobile TwoPhones: Studies from FinlandHeikki Karjaluoto Jari Karvonen Manne Kesti Timo Koivumki Marjukka Manninen Jukka Pakola Annu Ristola Jari Salo

ABSTRACT. Mobile phone markets are one of the most turbulent market environments today due to increased competition and change. Thus, growing concern to look at consumer buying decision process it is of and light on the factors that finally determine consumer choices cast between mobile phone brands. On this basis, this article deals with different consumers choice criteria in mobile phone markets by studying factors thatHeikki Karjaluoto is Research Professor in Marketing; Jari Karvonen is Researcher in Marketing; Manne Kesti is Researcher in Marketing; Timo Koivumki is Profes- Marketing; Marjukka Manninen is Researcher in Economics; Jukka sor in Pakola is Researcher in Economics; Annu Ristola is Researcher in Marketing; and Jari Salo is Researcher in Marketing, all at the University of Oulu, Faculty of Economics and Business Administration, Finland. Address correspondence to: Heikki Karjaluoto, Faculty of Economics and Business Administration, Department of Marketing, P.O. Box 4600, FIN-90014 University of Oulu, Finland (E-mail: [email protected]). of the National Technology Agency of Finland is The financial support gratefully acknowledged. The authors also wish to thank all the study participants. Journal of Euromarketing, Vol. 14(3) 2005 http://www.haworthpress.com/web/JE 2005 Mby The Haworth Press, Inc. All rights reserved. Digital Object Identifier: 10.1300/J037v14n03_04

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60 JOURNAL OF EUROMARKETING

influence intention to acquire new mobile phones on one hand and fac- that influence on mobile phone change on the other. With the use tors of series of focus group interviews (Study 1) with 79 graduate a students by a survey (Study 2) of 196 respondents, it was found that followed although the choice of a mobile phone is a subjective choice situation, some general factors that seem to guide the choices. The there are two studies show that while technical problems are the basic reason to change mobile phone among students; price, brand, interface, and prop- are the most influential factors affecting the actual choice erties between [Article copies available for a fee from The Haworth Document Delivbrands.ery Service: 1-800-HAWORTH. E-mail address: Website: 2005 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Buying decision process, consumer choice, mobile phones, mobile services, 3G, Finland

INTRODUCTION Although mobile phones have become a fundamental part of sonal communication across the globe during the past ten years, persumer con- research has devoted little specific attention to motives choice underlying the mobile phone buying decision process. There and numerous complex factors that need to be taken into account when are ploring mobile phone buying decision process, including both exand microeconomic conditions that affect the evolution of macrophone mobile market in general and individual consumers motives and sion deci- making in particular. Moreover, it is important to distinguish tween buying behavior referring to the choice between different bephone mobilemodels and brands and change aspects referring to reasons that affect change. As the mobile phone market is a typical technology driven push market where products are created ahead of the recognition existing recognized consumer needs (e.g., Gerstheimer and Lupp, of mobile 2004), phone development is based on consumers possible needs and thus companies that best hunch the technologies and future of future services will be the leaders in the discipline (for discussion of ogy push technol- see, e.g., Brown, 1991; Hamel and Prahalad, 1991; 1997; Nagel, Kumar, 2003).

Karjaluoto et al. 61

The telecommunications sector has been struggling over the years, not only due to high prices companies paid for UMTS past but also licenses due to the global economic downturn. Although the phone mobile handset market is growing five to ten percent per year and tor subscriber bases are growing, average revenue per user (ARPU) operafalling and price competition is heating up (Hansen, 2003). We are is rently experiencing a shift from the second generation (2G) to the curgeneration (3G) mobile phones, which is expected to change the third people way use their mobile phones. The rise of the 3G network and its sumer con- acceptance is said to be one of the toughest marketing challenges in recent history (Benady, 2002). In general terms, the success of 3G pends primary on how the real benefits of the technology are deto consumers on one hand and on pricing policy of the services on marketed other the (e.g., Benady, 2002). If we look beyond the hype around 3G it obvious that we are not experiencing a revolution in mobile phone is kets, mar- rather an evolution where consumers are able to do the same they could with 2G and 2.5G (e.g., GPRS and EDGE technology), things only but better and faster in terms of download times (cf. Drucker, Sehovic, 2004). The mobile phone industry is currently using 2004; standards (e.g., Japanese PDC, European GSM, American many which has CDMA), made it difficult for users traveling to utilize their phones tensively. The evolution of 3G is expected to simplify this as only exstandards are competing, the WCDMA (Wide-Code Division two Access) Multiple that will become the European UMTS (Universal Mobile communications System), CDMA2000 (Code Division Multiple Telecess), and the Chinese TD-SCDMA (Time Division-Synchronous AcDivision Multiple Access). The WCDMA standard is said to Code the global dominate market for the next five years (Sehovic, Consumer shift from 2G to 3G means that in order to be able to 2003). theuse services offered by the faster network consumers need to new mobile handsets equipped with Internet access and new acquire such as possibility to receive and send multimedia messages. features recent news Although indicates a strong demand for new mobile phones equipped with color displays and built-in camera, there still is plenty of cism skepti-in the media, as well as in the market itself, towards the cal technologiThe development of mobile phones is leading the market into a development. tion where the basic need, communication, is actually broadened to situameans new of interaction and personal digital assistance. In fact, phone mobile evolution will eventually lead to the convergence of phones mobile and digital personal assistants (PDAs). Thus, communication is


not the only need mobile phones fulfill. Beyond voice, three main shaping trends the so-called mobile culture have been identified: (1) nication commu- services such as voice, text and pictures, (2) wireless services Internet such as browsing, corporate access and e-mail, and (3) different media services such as motion pictures, games and music 2003). (Hansen, For example, telecommunications companies promote new such as multimedia messaging service (MMS) as a new way of services ing one-to-one and one-to-many communicating. According to a enhancstudy fresh conducted in the UK, close to 40 percent of the youth market is ing us- MMS (Enpocket, 2004). The research also found that MMS used are more and more in connection to television programs. However, diffusion of MMS technology has been slow, mostly due to the constraints and pricing technical Mobile policies. phone development has been rapid and new models are duced to the markets almost on a weekly basis. Especially 3G introand smart networks phones are expected to affect the evolution of the phone mobile market in the short future (e.g., Slawsby, Leibovitch and 2003) as shown in Figure Giusto, 1. However, at present the majority of new mobile phones arepurchasedhandsets without the latest technological features. Whereas low-cost color displays have become common, with sales of over fifty percent 2003 in some countries, e.g., in Finland (Poropudas, 2003), phones in a built-in camera reached globally below 15 percent of the total sales with the in last quarter in 2003 (Gartner Dataquest, 2004; Strategy 2003). However, more and more users are acquiring camera phones Analytics, learning how to take, send and print photos. The sales of built-in and phones camera have contributed to an increase in mobile data usage and also enFIGURE 1. The Beginning of the Smart Phone Era2000 2001 2002 2003 2004 2005 Text, rings Simple bitmaps SMS Push/Pull Simple Web Clipping Legacy phones Color bitmaps Simple animations EMS SMS Push/Pull WAP pull phones, Smart PDAs GPRS trials J2ME, MIDP Simple locationbased services MMS xHTML Real smart phones Real GPRS P2P M-Commerce 3G trials Micro movies Mobile video/audio Location integration Voice recognition Real wireless PDAs Broadband access 3G networks HybridWLAN/3G PAN


hanced device sales (OKeefe, 2004). Research institutes forecast that step by step properties like built-in cameras and calendar will become s atandard inclusion within mobile phones (e.g., Slawsby and 2003). Chute, In terms of technology, the mobile multimedia market will main re- in its infancy during 2004, but companies and analytics expect the that demand will continue to develop for mobile imaging, games, and other media services as users become more aware and familiar music the with services and their different purposes of use (see, e.g., Dataquest, 2004; Nokia, 2004; Strategy Analytics, 2003). But as Gartner Internet finally finds its way to mobile phones the basic need to the a mobile acquire phone might expand from communication to gaining access. Internet This in turn is expected to bring mobile phones one step closer personal computers. to The primary objective of this paper is to examine the importance different factors affecting consumers motives related to mobile of purchasing and to investigate the main reasons to change mobile phone Although consumer motives underlying mobile phone acquisition phone. something one could call general knowledge, relatively little is are on the buying decision making process in relation to new mobile known models phone packet with different properties (i.e., smart phones) users to allowing communicate in fresh The ways. next sections review previous research on motives and behavior in mobile phone markets. The results of the focus group choice views inter- provide the basis for Study 2. The article concludes with a sion of discus- both theoretical and managerial implications for mobile choice. phone LITERATURE REVIEW: CONSUMER CHOICE BEHAVIOR From marketing perspective, consumer choice behavior can be iedstudthrough the classical five-step (needinformation search of alternativespurchasepost-purchase evaluation) problem evaluation paradigm solving or through the progression of consumer choice from a class to product brand choice (Dorsch, Grove, and Darden, 2000). The fivemodel is usually suitable for decision making that assumes step problem solving behavior and, in most cases, complex decision rational The acquisition of a new mobile phone follows this traditional view making. buying process, but is in many situations also affected by symbolic of ues val- related to brands.


Consumer choice behavior has some important prevailing that must be taken into account while studying choice. In the light of conditions classical problem solving buying behavior, consumers engage in the mation infor- search before making the actual choice. Consumer making decisionprocess is usually guided by already formed preferences for a particular alternative. This means that consumers are likely to make choice between alternatives based on limited information search the ity (Beatty and Smith, 1987; Moorthy, Ratchford and Talukdar, activand without detailed evaluation of the other alternatives (Alba 1997) Hutchinson, 2000; Chernev, 2003; Coupey, Irwin and Payne, and Slovic, 1998; 1995). In close relation to information search, evaluation of ternatives has also gained a momentum in recent research alKim and Matsui, 2003). Their study on consumers use of (Laroche, heuristics (conjunctive, disjunctive, lexicographic, linear additive, five geometric compensatory) in the consideration set formation found and conjunctive heuristics is the most often used decision model in the that sideration set formation for two product classes in the study conbrands (beer and fast food outlets). Conjunctive heuristics means that a sumer selects a brand only if it meets acceptable standards, the so-called concutoff point on each key attribute consumer regards as (Assael, important1995, p. 249; Solomon, 2001, p. 280). In this nontory method compensa- of evaluation, a consumer would eliminate a brand does that not fulfill the standards on one or two of the m ost important butes, attri- even it is positive on all other We limit attributes. our analysis in this paper to consumer choice that can from choice oriented referring to a decision on which alternative to range chase pur- from a set of alternatives, whether or not to purchase, or to purchase now or later to value oriented choice (Shuv and whether 2000). Huber, The latter refers to an evaluation setting, in which each tive is alterna- evaluated on different value Furthermore, consumer choice behavior can either be approached criteria. utilizing different choice models (see, e.g., Chintagunta, 1999; by holt and Bocken- Dillon, 2000; Swait and Adamowicz, 2001) or neural to model networks selection decisions (e.g., Papatla, Zahedi and Zekic-Susac, 2002). Papatla et al. (2002) examined empirically brand choice store and choice in regard to margarine, detergent and tissue. The research found that while neural networks have higher probability of resulting a better performance, hybrid models guaranteed equal or better in than stand-alone models. It has also been pointed that many results strategies decision used by consumers can change due to person-, context-, and task-specific factors (Dhar, Nowlis and Sherman, 2000; Swait and


Adamowicz, 2001). Therefore, mathematical modeling has its tions in limita- regard to the fact that consumers tend to utilize different proaches to make choices. Thereby, researchers should pay more apattention to factors like task complexity and context in modeling behavior choice (cf. Swait and Adamowicz, 2001). Moreover, Coupey, and IrwinPayne (1998) found that the influence of task and context might be greater in situations in which consumer has little prior factors edge and knowl- experience. It is widely accepted that the traditional problem solving approach volving rational decision making to the study of consumer choice innot may be suitable for all situations, or is at least incomplete to choice behavior. Limited information search and evaluation of understand tives led to a situation in which consumer choice is also driven alternahedonic considerations (e.g., Dhar and Wertenbroch, 2000). In by a common distinction to be made is that while the utilitarian goods general, ally usu- are primary instrumental and functional, hedonic goods fun, pleasure and excitement. It has been noted that many choices provide both have utilitarian and hedonic features (Batra and Ahtola, 1990), and it can also be proposed that the choice between mobile phones has thus utilitarian (e.g., communication, time planning) and hedonic (e.g., both camera) games, features. The younger the consumer the more hedonistic tures fea- consumers tend to value in mobile phones (Wilska, Quite 2003). similarly, consumer choice can also be approached from perspective of conscious and nonconscious choice (e.g., Fitzsimons et the al., 2002). Quite many choice situations occur outside of awareness and with limited information search (Kivetz and conscious 2000) and Simonson, it can be stated that many choices have both conscious nonconscious motives. Fitzsimons et al. (2002) found that in and cases many nonconscious influences affect choice much more than is traditionally believed by researchers. MOBILE PHONE CHOICE Previous literature on mobile phone choice is sparse. Couple academic articles have dealt with mobile phone usage and grasped of the consume r decision making process. To begin with, Riquelme examined how much self knowledge consumers have when (2001) between choosing different mobile phone brands. The study was built upon key six attributes (telephone features, connection fee, access cost, mobile-to-mobile phone rates, call rates and free calls) related to mobile


phone purchasing respondents had to importance rate. The showed researchthat consumers with prior experience about a product can predict their choices relatively well, although respondents tended to estimate over- the importance of features, call rates and free calls and underestimate the importance of a monthly access fee, mobile-tobile mo- phones rates and the connection Mobile phone choice and use has also been found to be related to fee. prior consumption styles. According to a fresh survey of Finnish people young aged 16-20, it was found that mobile phone choice and especially usage is consistent with respondents general consumption (Wilska, 2003). The research showed that addictive use was styles among common females and was related to trendy and impulsive styles. Instead, males were found to have more technology consumption and trend-consciousness. These attributes were then linked to enthusiasm consumption. The study concluded that genders are becoming impulsive alike more in mobile phone choice. Because individual differences in sumption patterns are obviously identifiable, we hypothesize that conground back- variables especially have an influence on mobile phone choice. H1: Demographic factors have an influence on the evaluations of different attributes related to mobile phone choice. gender and social class will impact on the evaluations of the atSpecifically, tributes as men belonging to higher social class seem to be technology more savvy. Consumers value in smart phones features that enhance their sonal time planning (e.g., Jones, 2002). These high-rated features perclude in- calendar and e-mail services. It is interesting to note according to Jones the so-called killer services such as gaming, gamthat bling and music downloads are not seen that important in the of smart diffusion phones. However, there is little support to this argument. ever, while synchronization of calendar and e-mail services to PCs Howbecome easy and fast, the importance of time planning in mobile has becomes phones more and more important. Thus, the following hypothesis proposed: is H2: Consumers value personal time planning properties in the o new mobile choice f phones. Another important aspect that has risen from different studies is consumers purchase new phones due to the fact that their existing that ones


capacity is not appropriate referring to the idea that new technology tures fea- such as built-in cameras, better memory, radio, more messaging developed services, and color displays are influencing consumer decisions to acquire new models (In-Stat/MDR, 2002; Liu, 2002; 2004). Thus it can be expected that new features will influence the OKeefe, tention to acquire new mobile phones, and therefore the following inpothesis was developed: hyH3: New technical properties increase consumer willingness to new phone acquire models. In addition, it seems that size and brand play to some extent an tant role in decision making. Liu (2002) for instance surveyed impormobile Asian phone users and found that size of the phone had no impact mobile phone choice, but this finding might be due to the fact that on competing brands have quite similar sized phones that are small all Liu continues that the trend will actually be not towards smaller enough. but towards phones with better capability and larger screens. phones companies are advertising new models and services that do not yet While ist, ex- it according to the paper signals to the market that the company is the at cutting edge of technology and shows what will be available in very the near future. The sales of new phones will then be driven by placement rather than adoption. Thus, it is hypothesized that size rebrand and are related to mobile phone choice at some extent: H4a: When choosing between different mobile phone models, consumers value larger screen size but the whole phone should be small enough and light to carry in pocket. H4b:When choosing between different mobile phone models, value familiar consumers brands. Price of the phone has been identified as a critical factor in choice of the mobile phone model, especially among younger the (Karjaluoto et al., 2003a; Karjaluoto et al., 2003b). By the use of a people vey sur- (n = 397), they found that besides new technological price was advances the most influential factor affecting the choice of a new bile phone model. Price of the mobile phone is a very different issue moother EU countries compared to Finland where price is not linked in the to operator contract. Therefore, while in other EU countries Italy and (except Benelux countries), the acquisition of a mobile phone is bun-


dled with the operator contract, phones are, generally speaking, free charge, whereas in Finland consumers pay relatively high prices of for phones. In Finland, that kind of linked transactions are their by law and regulated currently illegal. In Finland, this kind of regulation has resulted in a situation where people change their operator quite often, and mostly on the basis of price (Alkio, 2004). On this basis, it should that price of the phone plays an important role in Finland be noted thus, we hypothesize and that: H5: When choosing between different mobile phone models, especially lower income consumers have a price limit that the choice restricts to fewer models. To summarize, consumer choice behavior can be studied various frameworks such as the problem solving paradigm and through through consumer choice from product class through brand choice. A of the literature review is presented in Table summary 1. METHODOLOGY Study 1 examines consumers preferences about mobile phone purchasing in a focus group setting. Focus group method was chosen because of the fresh nature of the phenomenon and to serve as a starting the survey (study 2). Focus groups produce data that are always point to biased by other respondents but also provide important data based on group interaction and give insights that are less accessible with other terviewing methods (Morgan, 1990; Threlfall, inA 1999).total of four focus group interviews were conducted during 2002 among graduate students. The number of participants in each autumn group from 15 to 19, and most of the students were aged 21-25. ranged these With groups two important criteria considered as important in focus interviewing (Malhorta, 2002; Morgan, 1996) were achieved: group only not was each group homogenous in terms of demographic and socioeconomic characteristics but also shared a relatively common base of ence with the issue being discussed. Although the number of experiparticipants in each focus group was reasonably higher compared to the ideal (8-12) number suggested in marketing research literature (McDaniel and 2001; Gates, Morgan, 1996), the discussion among the participants and between the moderator was smooth.

Karjaluoto et al. 69 TABLE 1. Summary of Literature on Consumer Choice Behavior and MobileChoice PhoneCo n t ri b u to r D at a Co n tr i b u ti o n t o o u r stu d y Do rsc h, Gro ve a n d Ga rd en (2 00 0) Su rve y (n = 2 2 3) Su gg es ts t h a t t w o d ist i nct f ra me wo rks c an be us ed to st ud y co ns um er c ho ice be h av io r: t h e cl a ssic pro b le msol vi ng pa ra di gm an d t h e p rog re ssi on of co ns um er cho ic e f ro m p rod u ct c la ss t hr ou gh b ran d c ho ic e.

Be at t y a nd Sco t t (1 9 87 ) Su rve y (n = 3 5 1) Co ns um er s ma ke c ho ice s b et w ee n al te rn at i ve s ba se d on lim it e d i nf o rma t io n se a rch a n d p ro ces sin g . Mo or th y, R at ch f ord an d T al uk da r (1 99 7) Al ba an d H u tc hi nso n (2 00 0) Su rve y (n = 1 1 7) Sim il ar t o B ea t t y an d S co tt (1 99 7 ).

L it e rat u re re vi ew Ch oi ce is m ad e w it h ou t de t ai le d e va lu at i on of al t ern a ti ve s. Sim il ar t o A lb a a n d H ut ch in so n (2 0 00 ). In ad d it io n , cho ic es m ad e f ro m l ar ge ass ort m en t s ca n le a d t o we ak er p re f ere n ces . Sim il ar t o A lb a a n d H ut ch in so n (2 0 00 ). Mo reo ve r, pro d uct f am il ia rit y i nf l ue nc es p re f ere n ce co n st ru ct io n. Pre f ere n ces a re of t e n la b il e d ue to li mi te d e va lu a ti on of al te rn at i ve s. Su gg es ti ng t ha t con ju n ct ive he u ris ti c is t h e m ost o f te n use d d e cis io n m od el in t h e c on si de ra ti on se t f o rma t io n.

Ch e rne v (2 0 03 ) F o ur e xp eri me n ts (n = 8 8)

Co u pe y, I rwi n a n d Pa yn e (1 99 8)

T h ree st u di es (n = 4 8; n = 6 6; n = 28 )

La ro ch e, Ki m an d M a ts ui (2 00 3) Sw ai t a n d Ad a mo vic z (20 0 1), se e a lso Dh a r, N o wl is a n d Sh erm a n (2 00 0 )

T w o su rve ys ( n = 2 34 ; n = 23 5)

Su rve y (n = 2 8 0) Co ns um er d e cis io n ma ki ng st ra te g ie s ca n ch a ng e d ue to pe rso n -, c on t ex t- , a nd t as k-sp ec if ic f a ct or s.

F it zsi mo n s et al . (20 0 2) L it e rat u re re vi ew Co ns um er c ho ic e o ft e n o ccu rs o ut si de co ns cio u s aw ar en es s. No n con sc io us i nf l ue nc es a f f ect ch oi ce mu ch m ore t ha n m an y re se arc he rs b el ie ve . Mo b i l e p h o n e c h o i ce Wil ska (20 0 3) Su rve y (n = 6 3 7) Ch oi ce s ar e o ft e n d ri ven by h e do n ist i c con si de ra t io ns (se e a lso Dh a r an d We rt e rbr och , 20 0 0; Ba tr a a nd Ah to la , 19 90 ). Sp ec if ic al ly, t he yo un g er t h e co ns um er th e m or e h ed on i st ic f e at u res c on su me rs t en d t o va lu e in mo bi le ph on e s. M ob i le p h on e c ho ice an d usa g e is con sis te n t t o g e ne ra l co ns um pt io n st yle s. Ri qu e lm e (2 00 1 ) Su rve y (n = 9 4 ) Su gg es ti ng t ha t pri or e xp er ie nc e o f m ob il e p ho n e cho ic e a f fe ct s f u tu re cho ic e. Jo ne s (2 00 2 ) Su rve y (n = 5 0 0) Co ns um er s val u e p ers on al ti me pl an n in g f e at u res i n mo bi le ph on e s. I n-S ta t / MD R (2 0 02 ); O'Ke e fe (2 00 4) F o rec as ts a n d su rve ys Su gg es ti ng t ha t ne w t e ch no lo gy fe a tu re s ar e d rivi n g con su me rs t o a cq ui re ne w m ob il e p ho n es .

Li u (2 0 02 ) Su rve y (n = 8 0 0) Sim il ar t o I n -St a t /M D R (2 00 2 ) an d O' Kee f e (2 0 04 ). Ad di ti on a ll y, s ize an d b ra nd o f t h e p ho ne ar e a ff e ct in g cho ic e. Ka rja lu o to et a l. (20 0 3a ; 20 0 3b ) Su rve y (n = 3 9 7) Pri ce o f t h e m ob il e p ho n e a ff e ct s ch o ice in c ou n tr ie s wh er e mo b il e p ho ne s a re n o t l in ke d t o t h e o pe ra to r co ntr act .


The four group interviews were led by an experienced researcher special attention was given to provide a relaxed atmosphere and and making thereby discussion nondirective and spontaneous. It has been stated only that by allowing spontaneous informal interaction focus groups valuable qualitative technique in exploring unconscious needs and are tives mo- (e.g., Spier, 1996; Thomas, 1998) and moreover often perceived more exciting and arousing by participants than surveys or one-onas interviewing (Bristol and Edward, one The 1996). focus group interviews lasted from 45 minutes to 90 and were audio-recorded. The moderator had a list of keywords that minutes were used in directing the discussion to motives affecting the ing process. This list of motives was based on previous studies and prior purchasknowledge, but as one could have expected the interviewing also new revealed motives that were not previously discovered by the group. research Study 2 is built on the basis of the focus group interviews. Study surveyed 196 voluntary respondents who filled in the questionnaire 2 September 2003. The questionnaire was developed on the basis of in focus group interview and tested with 50 students before distributed the wards. Questions inquiring mobile phone choice were implemented onseven-point Likert scales (1 = not at all important to 7 = extremely on portant) inquiring perceptions of various attributes related to imphone mobilepurchasing. Most of the survey respondents were aged 20-30 and were male (63.8 percent). The respondents educational varied a backgroundslot as also their levels of employment. RESULTS Study 1 In total four focus group (labeled A, B, C, D) interviews were ducted. Table 2 illustrates the number of participants as well as sexes conthe of members of the four focus In all groups. groups, most of the mobile phones owned by the were Nokia phones. This share is quite similar to that in Finland in participants eral, gen- where over 80 percent of the phones are Nokia phones 2002). Many of the participants who had owned more than four (Nyknen, phones mobile always had the same brand but different model. Although Finland the price of a new mobile phone is even higher than in other in countries due to the fact that telephone operators cannot offer free EU or

Karjaluoto et al. 71 TABLE 2. InterviewsF oc us g ro up A B C D Ma le 4 84 6 F em al e 12 1 1 11 1 0 T ot a l 16 1 9 15 1 6

Focus

Group

heavily discounted mobile phones to customers, close to half of the spondents reported acquiring a new mobile phone every year and retimes the changing cycle is even faster. The most explicit reason somechanging was that the old one was broken or did not work properly. for This for the participants that the mobile phone did not work, the meant were calls interrupted, for example due to weak audibility, battery was the screen was out of order or keypad was so consumed that the numweak, bers were invisible. While mobile phones were also acquired due to features including color display and polyphonic ring tones, some new spondents bought new phones in order to get an innovator and/or reion opin-leader status. Fundamentally, respondents agreed that price, and size of the phone were the main factors affecting their choice of brand, the new The model. importance of price might be related to the student sample. groups reported having a maximum price they are willing to pay for All n a ew mobile phone. The price range varied between 10 to 150 indicates which that students are buying low-priced phones. The groups regarded new technological features as too expensive to use, an in fact groups B and D felt new features as totally needless. On the other groups A and C considered new features such as multimedia messaging hand, service (MMS) handy but too expensive to use at present. Participants were also skeptical about the quality of the pictures and video clips. general view seemed to be that mobile phones are still seen as A devices, talking and new properties were not commonly used. Other such as servicescalendar, games or radio were not used by the participants. E-mailing was a service that might be used if it was very cheap or Although color display was after a little discussion regarded as a good free. improvement, students were not ready to pay the high price just for ting get- fancier color menus for their phones. Most felt that they never buy newest model because mobile phone manufacturers are wellthe for their known pricing strategy in which new models while launched to market cost much more than after a couple of months when the price the gins be- to fall. Quite interestingly, relatively many were unaware of the


properties new phones have. For instance, GPRS and WAP were known for many. This was quite a surprising finding because the uninter- can be considered as more aware of technical things viewed average Finnish people of their age. Only around one out of ten than knew clearlywhat GPRS is and for what purposes it might be used. After the moderator told the groups about the new services (e.g., that GPRS be canused to get Internet access), students, after little consideration, seemed to form a more positive attitude towards the new features. The group D summarized the discussion by saying that companies should then cate edu- consumers to use the new services. Besides price and new features, brand was also found important, not only among Finnish students but also among exchange students. It was interesting to find out that even though Nokias brand was by the Finns appreciated and by some of the foreign students as well, a couple of dents reported that Nokias brand has suffered in Germany from stuquality problems, and thus the brand was not seen any better than brands. Nokias brand was valued above all because of easy-to-use incompeting terface, but also among Finnish students by its domestic origin. It was mentioned that students rarely change their mobile phone brand to the owing fact that it is much easier to stay with the same brand with user-interface and menus regardless of the model. familiar Size of the phone was found to have some importance. Although many had changed their phones in order to get a smaller model, asserted some that the phone should not be too small. Students felt that phone should be small enough to match into a pocket but still the allowing convenient usage. In relation to size, fancy outlook was relatively discussed. The groups felt that outlook and colored covers are for small also children and had very little influence on their choice of the Other model. peoples influence was found to have slight impact on intention to buy a new model. The groups highlighted the importance of ents by saying that in many Finnish families, parents get free parphones from their employers and thus get used to one brand. Friends was two-handed. On one hand, through word-of-mouth it has an influence on the impactchoice whereas on the other groups reported knowing people who want to have a different brand than their During the discussion some other factors arose from the friends. such as salesmans recommendation. However, for the majority discussion mans sales- recommendation was found unimportant. This might relate to the that quite many stores only sell one brand and limited amount fact models, thus allowing easier choice. of


In conclusion, the focus group interviews revealed that among dents, mobile phones are mostly purchased and used for talking stuposes, pur- not as personal assistants helping, for instance, in time and information scheduling. On this basis we propose a preliminary (Figure model 2) of the factors and their relative weights, which affect bile mo- phone choice and reasons to change mobile phone among dents. stuStudy 2 On the basis of the findings obtained from study 1 and previous literature, a questionnaire was prepared. Of the 196 usable questionnaires, 71 were from female respondents and 125 from male respondents. respondents had different had different educational The ranging from matriculation (21.0 percent) to university degree backgrounds percent) and also quite different levels of employment ranging (26.2 student status (42.6 percent) to white-collar workers (24.6 from Most of percent).the respondents belonged to the age category 18-34 (77.4 percent). The respondents used their mobile phones mainly for calling, other but services were also popular. The most popular service was sending text messages (64 percent used daily), followed by downloadingFIGURE 2. Factors Affecting Mobile Phone Change and Choice Behavior

T ech ni ca l* ** p ro bl em s

Pri ce *** - M ax. 1 50

I nt e rf ac e** * - F am i lia r it y

Ne w f ea t ur es* *

Re aso n t o C HAN GE mo b il e p ho n e

F ac t or s af f ec t in g mo b il e p ho n e CHO I CE

Si ze* * - M a tch i nt o pocke t

In n ov at o rs st at u s*

Bra nd ** - Gl oba l - Cust om e r l oyalt y

O t her f act or s* - Sa le sma n

Pr op er t ie s* - N ew f eat ur e s

No t e : * so m e in f l u en c e , ** m e d iu m in f l u e n ce , * ** st r o n g i n f lu e n c e.


logos and/or ring tones (49 percent used 1-2 times per month), own services such as radio, calculator, calendar and games (49 percent phones used daily), and value added SMS-services (39 percent used 1-2 times per month). Thus, although the respondents can be considered as users lead of mobile phones and mobile services, the sample represents tively rela- well the actual mobile phone usage in Finland among this group. age We used 24 questions in order to analyze consumer motives in bile phone purchase. The correlation matrix and Bartletts test mospherity showed highly significant correlations between variables of porting the use of factor analysis. In factor analysis we used supcomponent principal analysis with varimax rotation. The number of factors selected based on the scree-plot. The estimated seven factors (Innovawas tive services, multimedia, design, brand and basic properties, influence, price, and reliability) explain about 70 percent of the outside variance (Table 3). The correlation is considered to be significant if total absolute value is 0.4 or its The higher. first factor, innovative services, exhibits heavy loadings seven variables pertaining to the importance of new innovative for mobile servicesphones nowadays have. Factor 2 accounts for 13.2 percent of variability of the individual items and is defined by two items relating the multimedia properties with loadings higher than 0.7. The third factor to defined by three variables relating to design. This factor accounts is 7.7 for percent of the total variance. Factor 4 appears to be a mix of that items reflect importance of brand and properties such as SMS-options and better memory capacity. This factor accounts for advanced percent of the total variability of the items. The fifth factor can be 5.9 outside called influence because the items loading at this factor refer to the portance of friends, salespersons and employers imFactor 6 is defined by two items referring to price. The seventh recommendation. explains factor 4.2 percent of the total variance and is called reliability, as items comprising the factor refer to reliability and usability of the phone. In sum, the factor analysis suggests that of the variables the to the analysis, Factor 1 (innovative services) and 2 (multimedia) selected seen are as the most important innovative services as they explain over 40 together percent of the total variance of the In items. Study 2, we also examined how the importance of the varies between genders and different occupational groups. Only variables variables with statistical differences are reported. The results in Table the s 4how the means, standard deviations and the statistical significance the of mean differences. Based on the results, there are quite a few statisti-

Karjaluoto et al. 75 TABLE 3. Factors Explaining the Choice of a Mobile PhoneF ac to r s V ar i ab l e (1 ) s er v ic e s (2 ) I n n o va ti v e Mu l ti m ed i a (3) De s ig n ( 4) b a si c p ro p e rti e s B ro ws in g WWW .8 4 3 E -ma il .7 7 5 U M T S .7 4 3 J av a .7 0 9 W AP-s erv ice s .6 8 2 N e w f e at u re s .6 1 9 C o lo r scre e n .5 0 3 M u lt im ed ia . 8 00 B ui lt -i n ca me ra . 7 37 A pp e ara n ce . 8 15 S t yli ng . 8 11 S ma ll size . 7 27 K no w n b ra nd . 67 6 D o me st ic p ro du ct . 62 0 A dv an ce d sm s . 59 4 L a rg er m em ory c ap a cit y N e w p ro du ct . 41 0 S al e spe rso n sec om me nd at i on r F r ie nd s r ec om me nd at i on E mp lo ye rs om me nd at i on r ec S pe ci al of f er M o de l a t re d uce d p ri ce R e li ab il it y U sa b il it y % o f v ari an ce e xp la in e d 2 8 .5 0 8 1 3. 2 49 7. 7 26 5 . 87 7 5. 4 53 4 .6 8 2 4 . 2 34 . 8 10 . 53 8 (5 ) i n fl u en c e (6) Pri c e ( 7) R el i a bi l i ty

B r an d a n d Ou ts i d e

. 7 28

. 6 77

.8 8 0 .8 4 8

. 7 12 . 5 95

Not e: On ly th e loa din gs abo ve 0. 4 ar e pr e sen te d in t he com p one nt m a tr i x.

76 JOURNAL OF EUROMARKETING TABLE GenderF am il ia r bra n d Ma l e 5 . 06 1. 6 59 . 01 0 ** F e ma le 5 . 67 1. 2 19 Ne w fe a tu re s, su ch a s GPR S Ma l e 4 . 90 1. 6 86 . 00 0 ** F e ma le 3 . 90 1. 9 07 F e ma le 3 . 90 1. 8 08 WWW-b ro ws er Ma l e 4 . 57 1. 8 91 . 00 0 ** F e ma le 3 . 25 1. 8 47 Co lo r d isp la y Ma l e 5 . 03 1. 7 53 . 00 0 ** F e ma le 3 . 94 1. 8 89 La rg e m em ory Ma l e 5 . 31 1. 7 63 . 00 9 ** F e ma le 4 . 57 1. 7 79 UM T S Ma l e 4 . 15 2. 0 76 . 00 0 ** F e ma le 2 . 76 1. 6 26 Ja va e n ab le d Ma l e 4 . 63 1. 8 99 . 00 0 ** F e ma le 2 . 96 1. 9 49 Not e: *Sig nif ica nt a t t he 0. 05 l evel . * *Sig nif ica nt a t t he 0. 01 l evel .

4.

Results

by

Ge nd e r Me an St d. D evi at i on t -t es t p -va lu e

E-m ai l Ma l e 5 . 07 1. 7 66 . 00 0 **

cally significant differences in the importance of the decision between men and women. When buying a mobile phone, women variables place value on brand familiarity than men, whereas men seem to more more enhanced data processing, networking and navigational value It thus seems that women use mainly voice services and therefore features. sider con- the brand of the phone as the main decision variable, and very place little value to data processing and networking features. Men, on the hand, seem to utilize various enhanced features and network other vices ser- such as e-mail, and therefore, these variables play an role in important their decision In the making. analysis of the importance of the decision variables different occupations, we divided the respondents into three aggregate between occupational groups: white-collar workers, blue-collar workers and students. White-collar group includes various professions in middle or management of various companies. Blue-collar group includes top ees that employ- perform tasks that on the operational level in manufacturing service industries. Students group includes undergraduate and graduate or students. Again, only the variables with statistical differences are ported. The results are presented in Table re5.

Karjaluoto et al. 77 TABLE 5. ProfessionD es ig n St ud e nt s 5 .3 8 1. 4 71 . 0 31 * Blu e -co lla r 4 .6 5 1. 6 64 Whi t e-c ol la r 5 .5 5 1. 0 92 N ew f ea t ure s, su ch a s GP RS St ud e nt s 4 .3 3 1. 7 29 . 00 0 ** Blu e -co lla r 4 .0 6 1. 8 25 Whi t e-c ol la r 6 .0 0 1. 0 78 E-m a il St ud e nt s 4 .4 9 1. 9 39 . 0 10 ** Blu e -co lla r 4 .4 8 1. 8 77 Whi t e-c ol la r 5 .6 8 1. 1 66 WAP ser vic es St ud e nt s 3 .1 2 1. 9 58 . 02 9 * Blu e -co lla r 2 .7 4 1. 6 12 Whi t e-c ol la r 4 .0 0 1. 9 32 U MT S St ud e nt s 3 .6 9 2. 1 37 . 0 13 * Blu e -co lla r 2 .9 2 1. 7 54 Whi t e-c ol la r 4 .5 9 1. 9 55 No te : *Si gni fi cant at t he 0 .0 5 leve l. ** Sign if ican t at th e 0. 01 le vel.

Results

by

Pro fe ss io na l g ro up s Me a n s. d. p -va lu e

The statistics reported are the means, standard deviations and the statistical significance of the mean differences. The results show that white-collar workers value enhanced data and networking features significantly higher than students and blue-collar workers. The only excep- the design, which is considered equally important tion is white-collar workers and students. This result seems quite reasonable, between as it can be expected that white-collar workers can utilize these features better in their work than blue-collar workers. The fact that the impor-of networking features, such as e-mail or WAP services, is tance not more valued by student is somewhat surprising. CONCLUSION The objective of this article was to examine consumer buying iorbehavof mobile phones and to investigate the reasons underlying mobile change. The study found strong evidence that although phone mobile are developing at a rapid pace closer to personal digital assisphones


tants (PDAs), many consumers tend to be unaware of the properties services the new models in the market contain. Most importantly, and cially espe- Study 1 showed that students are not familiar with new properties technical and their purposes of use. Study 1 furthermore showed consumers are aware of the so-called curse of technology markets referthat ring to the fact that new technologies reduce in price over time. This pected price reduction seems to be a factor slowing the diffusion of new exmodels especially among lower income consumers. Study 2 that seven factors characterize mobile phone choice: innovative showed multimedia, design, brand and basic properties, outside influence, services, and reliability. The first factor, innovative services explained most price, the of variability of the variables indicating, together with other analyses conducted, that especially men tend to value new services statistical choosing between mobile phones and intending to change their in mobile current phone to newer The model. theoretical part of the study outlined in total five hypotheses were supported by the empirical studies. Hypothesis 1 argued that that mographic factors have an influence on the evaluations of different detributes related to mobile phone choice. This was verified in Study 2 atwhich we showed that specifically gender and occupation are signifiin cant variables affecting choice. Hypothesis 2 proposed that value personal time planning properties in the choice of new consumers phone mobile models. Although this hypothesis got some support among groups, focus more research is needed to confirm this. Hypothesis 3 that statednew technical properties increase consumer willingness to new models. This got some support among focus groups but was actuacquire ally verified in Study 2, where it was showed that innovative were regarded as important. Hypothesis 4a claimed that size of services phone influences consumer choice of the mobile phone model. This the pothesis got strong support in both studies. Hypotheses 4b stated hywhen choosing between different mobile phone models, that value familiar brands. The hypothesis was verified. Finally, consumers 5 argued that Hypothesis price of the mobile phone plays an important role in choice especially among lower income consumers. This got strong supthe port among focus groups as well as in the survey. From a theoretical viewpoint, this article contributed to the decision making process for mobile phones by looking at consumer buying tives and examining the importance of different attributes affecting moactual choice. In short, on the basis of Study 1 and 2, the following the ments state- can be made. First, although mobile phone choice is affected specific phone attributes, consumers evaluate and rank-order, choice is by


often made without detailed evaluation and understanding of the erties prop- and features new models have. Second, decision making follows mainly a rational decision making process in which different are evaluated, but also has some symbolic nature as brand was regarded attributes as important among many study The most remarkable implication for mobile phone participants. resellers and other value chain members is that advertising of new manufacturers, bile mo- phone models should go beyond highlighting properties to lighting what users can do with all the new technical features. highphone Mobile advertising has long been based on eliciting properties and viations abbre- (e.g., GPRS, EDGE, Bluetooth) that are fully understood by technology savvy consumers. Therefore, more attention should only paid to educative advertising and marketing. The importance of the be seller becomes constantly more important as we are entering the rephone smart erameaning that phones have so many properties and that users features need both hands-on instructions and better post purchase service than before. Furthermore, as Finland has high mobile phone tration pene- and active mobile phone users, the results obtained with consumers might guide other research conducted in other Finnish However, countries. we should bear in mind that many factors, such as and international differences in culture for instance, definitely have legislation impact on an Despite this piece of research provides some insights into the results. that influence the choice of a mobile phone model, the work is still at factors early stage and certain limitations concerning the research an should be noted in order to guide future research of this setting For example, phenomenon. general limitations are raised in regard to the use of groups focus (Study 1) and the interpretation of the results obtained. It be noted should that although four focus group interviews were conducted, results cannot be generalized and might be biased by other the Also, the subjects. fact that we used a student sample limits broader generalizations of the findings. Perhaps the most important limitation Study 2 is concerningthe relatively small sample size, which makes it difficult generalize the to More findings. research is needed to leverage the findings and provide and more in-depth implications for both theory and practice. To better the research presented measured its subjects perceptions of different specify, factors affecting their choice of a mobile phone model at a given point time. In the future with the use of a longitudinal study it might be in ble to possi- get a broader and deeper picture of the phenomenon under scrutiny .


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Submitted: May First2004 Revision: June Second 2004 Revision: September November 2004 Accepted: 2004

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