Journal of Marketing Management

ISSN: 0267-257X (Print) 1472-1376 (Online) Journal homepage: http://www.tandfonline.com/loi/rjmm20

Customer Confusion: The Mobile Phone Market

Peter W. Turnbull , Sheena Leek & Grace Ying

To cite this article: Peter W. Turnbull , Sheena Leek & Grace Ying (2000) Customer Confusion:
The Mobile Phone Market, Journal of Marketing Management, 16:1-3, 143-163, DOI:
10.1362/026725700785100523

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Published online: 01 Feb 2010.

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Journal of Marketing Management 2000, 16, 143-163

Peter W. Turnbull 1·,

Customer Co nfusion: The Mobile
Sheena Leek· and
Phone Markel
Grace Ying#
• University of Binningham
# Euro Search (Asia) Ltd.
Co., Hong Kong.
The consumer confusion phenomenon is
associated with highly turbulent industries, which
are characterised by rapid, technological change
and evolving competition. These factors impede
consumers' understanding of such markets and
consequently effect their decision making process.
This research focuses on the effect of confusion
on infonnation search behaviour which is part of
the decision making process in the mobile phone
market Understanding search behaviour is of
great importance to marketers, especially in
designing marketing strategy and tactics.
The findings reveal that although consumer
confusion exists in the mobile phone market it
does not have a detrimental effect on the market
In addition, the findings also suggest that
suppliers should build up a strong brand image
and be aware of the importance of word of mouth
sources since both of these are considered to be
very significant reference points for consumers.
Finally, further reductions in call charges, the
maintenance of good quality service and customer
care are essential for customer retention.

Introduction

Consumer search and choice behaviour has been central to the study of
consumer behaviour for many years. It is therefore surprising that so little
research has addressed the specific issue of consumer confusion and its effects
on search and choice behaviour. The authors contend that the increasing rate of
change of technology, together with socia-economic, political and competitive
factors will tend to produce high levels of confusion. There are two challenges
arising from this; firstly, the need for more and better research to enhance our
understanding of the nature, causes and outcomes of consumer confusion and
secondly, the challenge to marketing managers to reduce consumer confusion.

I Correspondence: Professor Peter W. Turnbull, Department of Commerce, University of

Birmingham, Edgbaston, Birmingham B15 2'IT. Tel: 0121 414 7097; fax: 0121 414
7791; e-mail: p.w.Turnbull@bham.ac.uk

ISSN0267-257X/2000/010143+20 $12.00/0 ©Westbum Publishers Ltd.

144 Peter W. Turnbull, Sheena Leek and Grace Ying

The market for mobile phones is probably the most dynamic of any in the
world. The degree and rate of change in technology, market adoption and
product innovation is staggering and the UK market is no exception. During the
past 10 years, market penetration has increased to 20% and the mobile phone
has changed from being a luxury to a mass consumer market A wide array of
value-added services, such as call-divert and mail box facilities are now becoming
standard. These changes have been accompanied by rapidly changing price
strategies, as mobile phone operators jockey for position and competitive
advantage.
It is not surprising therefore that consumers are confused about products,
services, prices and the service profiles of different operators. Both Mintel (1998)
and Keynote (1997) market research reports have identified significant levels of
confusion among consumers in the UK market, caused by the complexity of
networks, air-time tariffs and contracts. Network operators introduce different
tariffs to compete with other competitors, and these tariffs are further
complicated by variations in the tariffs created by service providers. The
complexity of the resulting tariffs makes it extremely difficult for consumers to
understand the tariff systems. Therefore, consumers find it hard to make
comparisons between different networks, and select the best value tariff for their
personal needs. According to the 1998 Mintel report, the percentage of non-
mobile phone users who are confused about mobile phone products and services
is highest among women (16%) and older people of 55 or above (17%). This
indicates that more effort should be placed on simplifying the network, especially
in educating these highly confused, potential consumers. The resulting consumer
confusion may have an adverse effect on industry growth, as research (Marketing
30th October 1997) has shown that three out of four people are deterred from
buying a mobile phone because they are worried about finding the right package.
Therefore, the findings indicate that consumer confusion may lead consumers to
resort to inaction rather than choice, as they face an ever wider and increasingly
complex array of options in services, supplies and equipment
In order to reduce the level of consumer confusion and to gain market share
in such a competitive market, retailers and operators are now trying to simplify
their tariffs system to make it easier for customers to understand and to
compare. Orange's emphasis towards customer orientation by simplifying their
tariffs system, may help customers to make a better choice. Further
understanding of the factors affecting consumer confusion and how the
phenomenon affects the consumer information searching behaviour are
therefore very important areas for future marketing strategy planning.
According to Marketing Week (26th March 1998), there was only a 3% growth
rate of new buyers joining the mobile phone market in 1997. In 1998, the same
survey indicated that 4% of non-buyers intend to purchase a mobile phone in the
next 12 months. All indicators show a relatively slow growth rate compared to
previous years.
This paper begins with an analysis of consumer perceptions of the mobile
phone market and discusses whether consumer confusion is a phenomenon in
 Customer Confusion: The Mobile Phone Market 145

the market This is followed by examining if and how this phenomenon affects
the consumer decision making process regarding choice of different network
operators by looking at information searching behaviour and the ranking of
different information searching methods. It is hoped that the paper can provide a
general understanding of consumer perceptions towards marketing stimuli. As a
result, implications may be drawn to improve marketing strategies for both
network operators and retailers.

Consumer Confusion and Buyer Behaviour

Confusion and Ambiguity

There has been little research into the area of customer confusion and
consequently there is no generally accepted definition or model of consumer
confusion. An exception is Papavassiliou (1995) who defined confusion as a
consequence of information processing errors caused by overload of information.
The information processing errors occurred as a result of poor communication
between the consumer and the various external sources of information within
the choice environment (Papavassiliou, 1995). He suggests that confusion arises
from stimulus overload, stimulus similarity and conflicting, misleading,
ambiguous or inadequate information. Ambiguity, an aspect of consumer
confusion, has been more widely researched. It is defined by Einhorn and
Hogarth (1986) as an intermediate state between ignorance and risk. Similarly,
Ellsberg (1961) believed the term ambiguity referred to poor understanding of
the causal process generating outcomes. Soloman (1996) stated that the concept
of confusion could be generalised as "the consequence of imperfect information
processing, causing interpretation error"... "Interpretation refers to the meaning
that people assign to sensory stimuli. Just as people differ in terms of the stimuli
that they perceive, the eventual assignment of meanings to these stimuli varies."
He also cited that "Stimulus ambiguity occurs when a stimulus is not clearly
perceived or when it conveys a number of meanings." Although the
"interpretation" Solomon refers to concerns specifically advertising stimuli, his
argument points out that confusion is the result of the ambiguous perceptions of
consumers. In addition, since interpretation may vary among individuals, levels of
confusion are varied as well. For this research, consumer confusion is defined as
consumer failure to develop a correct interpretation of various facets of a
product/service, during the information processing procedure. As a result this
creates misunderstanding or misinterpretation of the market
There are a variety of conceptual models explaining the consumer decision
making process (choice behaviour) under uncertainty or ambiguity. Two of the
most popular models are; von Neumann and Morgenstern's (I947) expected
utility model and Savage's (I954) subjective expected utility model (SED). The
aim of these models is to estimate the probabilities of decision outcomes and the
subjective utility of each consequence by each individual, and as a result
maximise the utility level of each individual (Lee, 1971; Savage, 1954). However,
both of these utility theories are limited in that they are based on the results of
146 Peter W. Turnbull, Sheena Leek and Grace Ying

gambling simulations (Einhorn and Hogarth, 1986) and therefore may not be
applicable to situations such as "real" consumer behaviour. In a gambling
situation exact probabilities can be assigned to outcomes whereas in consumer
research, the outcomes of decisions made under ambiguity, involve probabilities
that cannot be specified exactly. In addition, empirical evidence does not
support the predictions of the SEU model, which states that the presence of
ambiguity should not affect how consumers make decisions. Research has shown
that consumers do make decisions differently if there is ambiguity (Becker and
Brownson, 1964; Yates and Zukowski, 1976; Gardenfors and Sahlin, 1982;
Curley and Yates, 1985, Kahn and Sarin, 1988; Einhorn and Hogarth, 1986).
Kahn and Sarin (1988) found consumers not only consider ambiguity in
making decisions under uncertainty, but that they are willing to pay to avoid it
This relates directly to consumers' perception of risk associated with the
purchase. Perceived risk is usually described as a function of two factors (Cox,
1967). The first is the uncertainty felt about the probability of a negative
outcome, which is itself, a function of the amount and nature of the information
available. The second factor is the possible consequence of purchase. Products
with a greater potential post purchase negative outcome will be perceived as
riskier than products which have few post purchase negative consequences.
Consumers search for information prior to purchase to reduce their
uncertainty (risk) about the decision to tolerable levels (Hansen, 1972 and Cox
1967). Generally, uncertainty has a positive relationship with information
searching but this may not be always the case. Urbany et al (1989) determined
that there are two general types of uncertainty: knowledge uncertainty, which
refers to uncertainty regarding information about alternatives and choice
uncertainty, uncertainty about which alternative to choose respectively. The
results of his research indicate that the two kinds of uncertainty had different
effects on information searching. Choice uncertainty (CU) appeared to increase
search behaviour i.e. people gathered more information to enable them to make
a choice. Knowledge uncertainty (KU) has a weaker and negative effect on search
i.e. people who were not experts gathered less information due to the high costs
of doing a thorough information search. Consumers with high KU and low CU
will therefore search the least
Using economic theory, Moorthy et al (1997) suggest that the optimality of a
consumer's search strategy is reflected in his/her trade-off between the perceived
benefit and cost of the search. In this cost and benefit search strategy, the
consumer will stop searching when the cost of the search is equal to the benefit
of the search.
From a different perspective, research has been developed to examine the
degree of strength in the relationship between marketplace-related beliefs and
pre-purchase external information search behaviour (Duncan and Olshavsky,
1982). An example of a marketplace-related belief is when consumers believe
that 'competition among mobile phone networks tends to keep tariffs of different
brands about the same.' Consumers with such a belief may search less due to a
lower perception of risk of financial loss.
 Customer Confusion: The Mobile Phone Market 147

Risk Reduction and Infonnation Search

In order to reduce the degree of perceived risk and the probability of negative
consequences occurring, consumers will search for information (Mitchell, 1992).
Word of mouth sources of information are perceived to be more reliable, credible
and less biased by consumers (Edgett and Parkinson, 1993, Murray, 1991).
Edgett and Parkinson (1993) found that consumers tend to seek out family and
friends advice more often when purchasing a service because of the lack of
tangible evidence to help them to evaluate the purchasing decision. Generally,
word of mouth is regarded as independent, flexible, relatively more trustworthy
and as incorporating both a positive and negative perspective. Given these
criteria, a salesperson is generally not considered to be a word of mouth source
of information as consumers do not perceive him/her to be an independent and
a non-commercial agent
Duncan and Olshavsky (1982) found that consumers sometimes simplify the
search and evaluation process by focusing on brands. stores, labels or seller's
market share. Consumers use these variables as an indication of quality. In
addition, they discovered that consumers may associate product/service quality
with the advertising budget a company has spent George and Berry (1981)
emphasised the importance of advertising continuity, especially for a service firm.
The continual use in advertising of certain distinctive symbols, formats and
themes, builds and reinforces the desired image and makes the service provided
by the firm more tangible to the consumers. Good advertising targets opinion
leaders and it persuades them to let others know of their experiences, i.e. they
pass on the information available to non-customers. If advertising can build up
consumer confidence in a product and reduce the perceived risk, as a
consequence the amount of information search will be reduced. Various authors
such as Bitner (1992) and Lewis (1991) have emphasised the role of the retail
environment from where the service is purchased, in creating the brand image of
the service which consumers use to reduce consumer perceived risk.
In a high risk, high involvement, purchasing situation an extensive search,
induding communicating with store personnel, is common. Levitt (1981) found a
good salesman's presentation to be a crucial variable in obtaining favourable
buyer reactions, regardless of the technical or purchasing competence of the
audience. It was also an essential quality for obtaining a favourable first hearing
for a new product In the long term, he suggested that a good sales presentation
has greater durability than a good company reputation.
The three elements discussed in this section, consumer confusion, perceived
risk and risk reduction strategies are inextricably linked. In Figure 2.1 we attempt
a simple model of the relationships and the decision making process which
provides the conceptual framework of the research. It is our contention that in
the consumer market for mobile phones, perceived risk is inevitably high due to
the rapid development of telecommunication technology, changing government
regulation and the marketing behaviour of the operatives. Knowledge and choice
uncertainty is high, affecting both information and search behaviour. An objective
of the research reported here is to aIf1alysethe phenomena of consumer
148 Peter W. Turnbull, Sheena Leek and Grace Ying

confusion in the mobile phone market and the nature of consumers' information
searching process.

Figure 2.1: Consumer Confusion and Perceived Risk in Buying Behaviour.

Promotion Tariffs and

activities billings

Technology Services
Number of
Operators

Perceived Risk

INFORMATION SEARCH RISK REDUCTION

STRATEGIES
word-of-mouth
advertising!
INFORMATION PROCESSING brand image
- evaluation of alternatives sales person
advice

PURCHASE DECISION

POSTPURCHASEBEHA~OUR

The UK Mobile Phone Market

Definitions of mobile phones and the network system

The Mintel report (1998), defines the mobile phone market as one that covers
both telephone hardware and service providers. "Mobile phones are defined as
those telephones that are fully portable and not attached to a base unit,
operating on dedicated mobile phone networks," where revenue is generated by
all voice and data transmissions originating from such mobile phones. In the UK,
there are two network systems; analogue and digital. Although the analogue
system has a longer history than the digital system, due to the better quality,
 Customer Confusion: The Mobile Phone Market 149

faster speed, and lower cost of digital technology, the analogue system is
scheduled to be phased out completely by the end of 2005, in order to release
the analogue frequencies for other uses.

Supply Market Structure

There are four mobile phone network operators in the UK, where entry into
the industry is highly restricted by government regulation. Each operator, by law,
has to obtain a license before setting up business, resulting in a typically
oligopolistic market structure. The four network operators are Vodafone, Cellnet,
One-2-0ne and Orange and the overall market share of each of the operators is
shown in Table 3.1.

Table 3.1: Overall Market Share of Each of the Mobile Phone Operators
(1999).

Percent Share Number of users (millions)

Vodafone 37.5% 4.87
Cellnet 31.1 % 4.04
Orange 16.6% 2.16
One20ne 14.8% 1.92
Total 100% 12.99
Source: Financial Times 5th Jan 1999.

In general, the structure of the mobile phone industry, unlike other

telecommunications industries, can be separated into 4 layers as shown in Figure
3.1. At the top, the network operators build networks and provide transmission
capacity or airtime. The service providers buy airtime wholesale from the
networks and sell it to the retailers or directly to the customers at prices
determined by themselves, providing tariffing, billing and cash collection services.
Dealers and retailers sell phones and provide connections to networks to the
consumer market

Market Growth and Strategy

Wireless telecommunications has been one of the fastest growing industries
during the past 10 years and continued growth is expected. Between, 1994 and
1997 revenues from customers more than doubled and in 1997 mobile phones
had a revenue value of about two-thirds the total revenue of fixed telephones
(Mintel, 1998). The introduction of digital technology in 1992 accelerated
market growth by reducing production costs, increasing capacity and providing
higher standards of service. The rapid changes in advanced technology,
consumer lifestyles and government deregulation, have all contributed to the
increased competition among the network operators. As a result, the intense
competition has led to a sharp fall in prices. Large price reductions have
enhanced the commonality of mobile phone usage, and have lead to the mobile
phone becoming an increasingly common part of everyday life in most developed
150 Peter W. Turnbull, Sheena Leek and Grace Ying

countries. The Mintel report (1998) shows that there were 15 cellular subscribers
for every 100 inhabitants of UK at the end of 1997. Compared to 5 years ago,
with less than 4% penetration rate, the results present an impressive 300%
increase in the number of mobile phone users.

Figure 3.1: The Structure of the UK Mobile Phone Structure.

NETWORK OPERATORS
Vodaphone Cellnet Orange One20ne

SERVICE PROVIDERS
Vodaphone Group PLC. Hutchinson Telecoms Ltd.
Cellnet Group Ltd. Call Connection Ltd. Martin Dawes Ltd.

RETAIL OUTLETS
Carphone Warehouse Phone Direct Vodaphone Orange

CONSUMER MARKET

The market continued to be quite volatile throughout 1998 and new "pre-paid
air time" deals lead to a massive surge in sales in the last part of the year; over
2.5 million new subscribers entered the market in the last quarter (Financial
Times, 5th Jan. 1999). Forecasts of future growth throughout the world continue
to be buoyant despite the economic problem in the Asia Pacific region and a
world market of 1 billion cellular users is predicted for the millennium (Financial
Times, 18th Nov.l998).
The large scale of infrastructure investment is a peculiarity of the mobile
phone market In order to survive in the competitive market it is necessary for
an operator to upgrade the cellular system continuously, to make sure the system
is working efficiently and to provide a high quality service to its customers. Due
to the high running costs in the mobile phone business, high market penetration
is needed by operators to be competitive. Aggressive promotions and even
 Customer Confusion: The Mobile Phone Market 151

handset subsidising are some of the tactics adopted to increase market share
and fully utilise the extended networks. The 'low cost of consumer entry' strategy,
by offering highly subsidised handsets and providing an extensive range of free
offers, has driven up the market growth rate extensively. However, customers
soon realise they are suffering from high line rental costs and call charges, which
leads to a high chum rate between operators i.e. the number of subscribers
changing or leaving networks and this continues to be a considerable problem in
the mobile phone industry.
The volatile nature of the mobile phone industry has been strongly affected by
its advanced technological development in which the mobile phone companies
emphasise extensive invesbnent on product research, in order to meet
demanding customer needs and also to maintain their competitiveness in the
industry. In spite of the heavy expenditure on technological improvement they
also pay a lot attention to advertising and promotion campaigns. One reason
may be due to the service characteristic of the industry, which lacks tangibility.
Therefore, brand image is essential. In order to maintain the company's
competitiveness and to increase its market share, marketing tactics change
frequently among the four network operators. The intense competition among
the four operators has also driven them to focus on customer service and
customer retention, which is evidenced by the launch of the recent customer
loyalty programme by Vodafone and Orange. Another impact of the fierce
competition has prompted the constantly changing call charges (tariffs), which
may be a tactic to retain operator's market competitiveness, especially when
consumers are price orientated. However, the unstable tariff system, combined
with a complicated billing system, calise a very complex and confusing
environment in the market
Therefore, this research intends to explore the potential market by trying to
understand the perceptions of consumer infonnation searching behaviour and
the effect of confusion in the market One reason for the recent slow growth in
the mobile phone market is due to the lack of female participation. A survey
conducted by the Marketing Week research group (26th March 1998) showed
that men make up 60% of the main users, and also represent three quarters of
all non-users who intend to purchase a mobile phone in the next year. This
indicates the market's progress towards saturation point in its existing market
profile. In order to extend the existing market profile, greater attention needs to
be paid to female consumers. Thus, out of necessity, the understanding of female
consumers will playa significant role in the stimulation of any future market
growth. On the other hand, in stimulating the market's growth rate,
understanding the consumer, as a whole, is in itself vital. In order to understand
the consumer, it is necessary to understand their decision making process, in
relation to information, criteria, sources of infonnation, and attitudes. It is also
important to consider which types of communication methods they use to seek
infonnation when purchasing a mobile phone. This issue is also addressed in
this paper.
152 Peter W. Turnbull, Sheena Leek and Grace Ying

The Research

The previous sections have briefly reviewed the importance of consumer

confusion as an element of consumer behaviour and the dynamics of the UK
mobile phone market as a potential cause of consumer confusion among
mobile phone users, both existing and potential. Thus, the overall purpose of
the research reported here is to identify the extent of consumer confusion and
to understand its impact on both the industry and its consumers. The empirical
research was developed within the theoretical framework of consumer
behaviour and in particular that relating to perceived risk, information search
and choice behaviour.
The research methodology combined analysis of secondary data, in depth
qualitative research with retail outlets and a personal interview study of a
convenience sample of consumers. Initially, the four network operators were
approached requesting research assistance. None agreed to help and therefore
company information could only be obtained through indirect sources, in the
form of government reports, company documentation, market research reports
and newspaper articles. However it was possible to carry out a small qualitative
pilot study involving open-ended discussions with the managers of five mobile
phone retail stores. This provided a clearer insight into some of the aspects of
consumer behaviour in the purchase situation and was very useful in designing
the questionnaire for the main research study.
The second phase of the research was based on short personal interviews
with members of the public, carried out in the streets of Central Manchester. The
questionnaire was designed to be simple and quick to complete. It comprised a
mixture of open and closed-ended questions focusing on perceptions of
consumer confusion and information search behaviour. Perceptions of consumer
confusion were addressed by asking respondents whether they agreed or
disagreed with two statements, "The mobile phone network is very complex, I am
not sure what is going on" and "Brands and services provided by networks
operators are very confusing". The degree of confusion in consumers was
investigated via a number of factual questions, "Name the four network
operators" and "Point out four services provided by the operators". The
importance of various information sources was examined by asking respondents
to rank the three most important sources out of a list of nine. Respondents were
also asked for their degree of agreement! disagreement with two statements
about the marketplace, ''Network operators are using the same technology" and
''Network operators are providing similar services" and one statement about their
search effort, "I wouldn't make much effort to search for information if I am
going to choose a mobile phone". Demographic data and data related to mobile
phone usage was also collected. A pre-test was conducted before the final
questionnaire was administered. The questionnaire was piloted using a
convenience sample size of 30. A two-stage sampling procedure was used for
respondent selection. The first stage of the respondent selection procedure
involved identifying respondents on the street in Manchester city centre.
 Customer Confusion: The Mobile Phone Market 153

Restricted by time and resources a sample size of 167 was obtained and used for
the study.
SPSS was used to analyse the quantitative data in the questionnaire and
frequency tables are used to show the percentages of different categories in order
to provide a general background of the findings. Before analysing the data,
reliability tests were used to verify that each dimension had attained an
acceptable level. Various statistical tests such as t-tests, chi squared tests, one
way ANOVAs and correlations were used to analyse different types of data,
nominal, interval and ordinal.

Research Results and Analysis

The Sample
In total 167 individual interviews were carried out Due to the methodology and
constraints, the sample was not representative of the general population and
therefore general conclusions drawn from the data must be treated with caution.

Mobile Phone Usage

1\venty percent of the respondents (n=34) are mobile phone users, a larger
proportion than in the general population, 15% (Mintel, 1998). Men and women
are equally likely to own a mobile phone. An independent sample t-test revealed
that mobile phone users tend to be in the younger age groups (p=O.OOO)(See
Figure 5.1).

Figure 5.1: Percentage of Mobile Phone Users among Age Groups

35
31
29
30

25
Il)
bll
S 20
c
Il)

~ 15
Il)
j:I.,
10 mobile phone user I
10

0
aged 15- aged 25-34 aged 35-44 aged 45-54 aged 55+
24

Figure 5.2 shows the distribution of users between the four networks which
generally reflects the UK market, with the exception that in this sample,
One20ne holds as great a proportion of the market as Cellnet
154 Peter W. Turnbull, Sheena Leek and Grace Ying

Figure 5.2: Percentage of Respondents Patronising each Network

35 2.4
30
23.5 23.5
1;h 25
til
E 20
Il)
u 15 network
"-
Il) respondents are
0- 10
connected to (%)
S
0
Vodafone Cellnet One20ne Orange

A substantial percentage of mobile phone users are still predominantly using

them for business purposes (35%). However due to very large price reductions
and changes in lifestyle, 29% of respondents stated that their main purpose for
using a mobile phone is for social use and another 29% of respondents claimed
ownership for personal security reasons. These figures indicate that the recent
rapid growth of the market is largely because of the extending boundaries of the
market profile. Reasons for purchase vary with gender. The main reason why
men purchase a mobile phone is for business use (57%), whereas women mainly
purchase one for personal security (47%). The difference between gender and
purposes of purchasing gives marketers a good indication of different consumer
needs, thus the findings allow for better design of marketing packages that can
be developed to better meet particular needs.
Fifteen percent of non-users (n=34) are considering purchasing a mobile
phone in the next twelve months. Younger people are more likely to be
considering buying a mobile phone than older people (r=.261, p=O.002) and
therefore still represent a large percentage of future market growth.

Consumer Confusion
In general, nearly half of respondents (45%) agree that "the mobile phone
network is very complex and they are not sure what is going on". However, 36%
of the respondents do not think the network is complex and consider themselves
to have a good degree of knowledge about the mobile phone market Sixty one
percent of the respondents agree that they feel confused about the variety of
brands and services offered. These results clearly confirm that there is a
confusion problem.
Older age groups were expected to perceive a greater degree of complexity in
the network and be more confused about the brands and services available,
however there are no statistically significant differences between age groups. In
terms of gender, although there is no difference on the perception of the
complexity of the mobile phone network, confusion about brands and services
do show significant difference (p=.037), with slightly more females agreeing that
they are confused than males. Surprisingly, there is no difference between users
and non-users on the perception of complexity and confusion of brands and
 Customer Confusion: The Mobile Phone Market 155

services.
Factual questions were used to assess the respondents' actual level of
knowledge. In response to how many network operators there are in the UK, 33%
of the respondents answered correctly, 35% answered 'don't know' and 32%
answered incorrectly. Thus, two-thirds of the respondents lack knowledge about
the networks. The next question asked respondents to name the four mobile
phone network operators. Only 21 % of respondents were able to name all four
operators correctly and half of the respondents could not name any of the
operators. Among the four operators, Orange has the highest brand recognition,
despite having the second lowest market share, followed by Cellnet, Vodafone,
and the least recognised brand of One20ne (See Figure 5.3 below).

Figure 5.3: Brand Recognised by Respondents (%)

100
77.2
80
GJ
OIl
g 56.9 55.1
60
5<J
•.. 40
I Brand recognition I
GJ
~
20

0
Orange Cellnet Vodafone One20ne

Finally consumers were asked what services were provided by the operators. The
results reflect a poor level of recognition of service provisions with only 9% of the
respondents capable of naming 4 services accurately. The message service is the
most commonly recognised. A large percentage of respondents stated the
provision of 'handset equipment'. In fact, the operators do not sell handsets; they
are sold separately by the handset equipment manufactures such as Motorola via
retailers. Due to the nature of the mobile phone industry, the inseparable
product-service combination may be one conbibutor to the resulting confusion
that exists.
Chi square analysis revealed a statistically significant relationship between age
and level of knowledge (p=O.OOO). Younger age groups are more likely to be able
to name the four operators and the four service provisions (See Figure 5.4)
possibly due to their having a greater propensity to pay more attention to new
technology, and take more notice of marketing promotions.
Moreover, there is also a relationship between gender and degree of
knowledge (See Figure 5.5). Thirty seven percent of males can name all four
operators, compared to only 9% of females (p = .OOO).Also, fifteen percent of
males knew all four services, compared to only 5% of females (p=.OOO).
156 Peter W. Turnbull, Sheena Leek and Grace Ying

Figure 5.4: Actual Knowledge of Respondents among Age Groups (%)

45
39
40
35
o 30 • named the 4 operators correctly
01)
E 25
o pointed out the 4 services correctly
~ 20
o
Q.. 15
10
5
o
aged aged aged aged aged
15-24 25-34 35-44 45-55 55+

Figure 5.5: Actual Knowledge of the Respondents Based on Gender (%)

40
• named the 4
o 30 operators correctly
01)

"5'" 20
()
•...
o 9
o pointed out the 4
Q.. 10 services correctly

o
male female

Mobile phone users exhibit a statistically significant greater level of knowledge

concerning the names of the operators, than non-users (p=O.OOO).In fact, 41 % of
mobile phone users were able to name all 4 operators, compared to only 16% of
the non-users.
It is likely that confusion may be contributing to the high churn rate so the
respondents who were going to change their phone were asked for their reasons.
Sixteen percent of mobile phone users who intend to change their phone and
20% of people who had previously owned a mobile phone stated high call
charges as an explanation of their behaviour. Confusion may have led them to
pick an unsuitable phone/tariff initially. They may subsequently correctly or
incorrectly think they can obtain a better phone/tariff elsewhere after further
information processing. This suggests that call charges may lead to confusion,
which contributes to a high chum rate. However confusion does not cause
customers to actually cease phone use, but to change to other networks which
offer cheaper pricing packages. Thus, the findings imply that once someone buys
a phone, they tend not to stop using it, but try to find the cheapest possible
charges package with satisfactory quality.
 Customer Confusion: The Mobile Phone Market 157

These results suggest that there is a high degree of consumer confusion in

the mobile phone market in particular amongst women. Overall, "call charges"
was identified as the main factor fuelling the confusion problem.

Consumer Information Searching Behaviour

It is necessary to examine consumers' perceptions of the industry, in order to
understand their searching behaviour. In the UK all four operators are basically
using the same digital network system therefore according to Moorthy et al
(1997), the consumers' search for information on the mobile phone market will
be limited.

Statement 1: Network Operators are Using the Same Technology

A total of 56% respondents agree that mobile phone operators are using the
same technology and only 25% of the respondents perceive that technology is
different among networks. Non-users (61%) were significantly more likely than
users (38%) to agree that mobile phone operators use the same technology
(t=0.018).

Statement 2: Network Operators are Providing Similar Services

More respondents (46.1%) agree that network operators are providing similar
services than disagree with it (32.9%).

Respondents who perceive network operators to be using the same technology

tend to agree that networks are providing similar services (r =.40, p=.OOO).There
is a negative relationship between "perceiving same technology" and "searching
effort" (p =.000; r = -.537), i.e. when consumers perceive the same technology to
be used throughout the market, they tend to reduce their searching effort. This
result supports Moorthy's prediction. However, when analysing "searching effort"
in relation to "consumers' confusion perceptions", a combination of statement
one and two, no statistically significant relationship was found (p=0.424) i.e.when
people are confused they do not increase their search efforts.
With regard to the sources of information people refer to, from Table 5.2 it is
clear that word of mouth is the most favourable information source. This finding
supports previous research, which emphasises the importance of word of mouth
advertising in the services industry. Consumer reports and shopping around are
also important sources of information. The results indicate that consumers are
more inclined to choose a neutral information source since these "provide an
excellent source of both positive and negative information" (Cox, 1967). The
finding that "shop around" is a key searching method to reduce consumer
perceived risk supports previous research by Boze (1987). Advertising is ranked
at fourth place which supports the argument of both Thomas (1978), Edgett and
Parkinson, (1993) and Duncan and Olsfhavsky (1982), who found that brand
image is important for making services more tangible. Consumers may simplify
the search by only focusing on brand image, which helps to reduce perceived risk
when purchasing services. The results also reveal that salespersons' advice is not
 158 Peter W. Turnbull, Sheena Leek and Grace Ying

considered an important source of information as consumers' perceive it as

biased (Mitchell and Greatorex, 1993). Government reports are the least popular
source of information, which may be due to the inaccessibility of the material.

Table 5.2: Ranking of Different Information Sources by Respondents

Standard
Ranking Mean
Deviation
1) Family and friends 2.30 1.26
2) Consumer report 3.08 1.15
3) Shop around 3.10 1.01
4) Advertising 3.29 1.14
5) Read guides from independent retail store 3.38 1.02
6) Salesperson advice 3.44 0.96
7) Read leaflets published by operators 0.79
8) Government report 3.89 0.43
9) Others 3.98 0.24
Note: 11= first priority; 2= second priority; 3= third priority; 4= not being chosen}

Respondents were also asked their reasons for selecting each of their ranked
information sources. Nearly half of the respondents (48%) ranked credibility and
reliability as the most fundamental factor. Thus, providing one indicator of why
"family and friends' advice" is so crucial to consumers, a source considered to be
relatively more trustworthy, especially when there is lack of experience and
knowledge regarding the product/service (Edgett and Parkinson, 1993; Murray,
1991).

Conclusion and Implications

Based on our review of the literature relating to consumer confusion and the
findings of this research, we propose a model to conceptualise confusion as
shown in Figure 6.1. This diagram identifies factors causing confusion in the
mobile phone market Fundamentally, the nature of the mobile phone market
requires consumers to put extra effort in to information acquisition. In addition
to the market characteristics, the industry environment is also very volatile, which
further complicates the situation. Information about the changing factors and
market factors is obtained via a number of sources of information, apart from
word of mouth, advertising, salesperson advice, there is information from
television programmes, newspapers, magazines, specialist magazines, consumer
groups, health bodies etc. The number of sources examined will vary from
individual to individual. This information is processed in such a way as to
introduce ambiguities, misinterpretations and misunderstandings resulting in
confusion. The complexity, overload and degree of misinterpretation or
misunderstanding of information may also vary according to different individuals'
cognitive ability and other personal factors. As a result, different degrees of
 Customer Confusion: The Mobile Phone Market 159

confusion exist If people are aware they are confused they may perceive an
element of risk in making a purchase decision and refer back to their original
sources of information and/or some new ones. Once the confusion and the
perceived risk are eliminated or reduced to a tolerable level then a purchase
decision can be made.

Figure 6.1: Confusion Conceptualised in the Mobile Phone Industry

EXTERNAL ENVffiONMENf
CHANGING FACfORS MARKET FACfORS
·· Company
Technological
·· Technology
Service Nature of
Changes Industry
· Government
Regulations
• Supplier structure

/
-
"SOURCES OF INFORMATION
Word of Mouth, Adverts, Salespeople, TV,
Newspapers, Magazines, Consumer Groups,
Health Bodies etc.

INTERNAL ENVffiONMENf
Information Processing
Consumer Confusion
misunderstanding! No
misinterpreting of info
leads to different degrees
of confusion
Yes

Perceived Risk
Volatile pricing structures,
service offers, promotion
strategies
No

PURCHASE DECISION +--

160 Peter W. Turnbull, Sheena Leek and Grace Ying

The mobile phone market is generally perceived to be confusing, along with the
variety of brands and services offered. These perceptions were reinforced by a
considerable lack of factual knowledge about who the operators are and the
services they are offering. Confusion in this market is a fact Among the four
operators brand recognition is reasonably high, with Orange having the highest
brand recognition (77%).The other three operators' brand recognition was lower,
only half of the sample was able to name them. People are generally aware of the
companies in the market but they may not be familiar with their exact role or
position in the structure of the industry. This is reinforced by store managers
who also mentioned that consumers are confused about the industry's structure
and cannot distinguish between network operators, services providers, retailers
and handset manufacturers. People's knowledge of the services offered by the
operators was very low. Operators may have been concentrating on building their
brand image and failing to inform consumers of the services they offer and also
failing to differentiate themselves from their competitors on their services. These
two areas, the structure of the industry and the services they provide need
clarification in order to eliminate or reduce confusion and perceived risk to a
tolerable level and allow the consumer to make an informed decision. Women
were slightly more confused than men, which may be due to the technical nature
of the industry. Mobile phone users were as likely as non users to perceive the
mobile phone market and the variety of brands and services available as
confusing but mobile phone users were more factually knowledgeable about the
market Users and non-users could be confused about the same things.
Alternatively they could be experiencing differing degrees of confusion about the
mobile phone industry, for example non-users may be confused about the names
of the operators whereas users who are more factually knowledgeable may know
the operators but be confused about the structure of the industry as a whole i.e.
the users' greater depth of knowledge creates more questions leading to
confusion. Research reported in the national press (Marketing 30th Oct 1997),
stated that consumer confusion may have an adverse effect on the industry, as
they found that 3 out of 4 people are deterred from buying a mobile phone,
because they are worried about finding the right package. However, the findings
shown in this research do not support these previous findings.
Regarding the churn rate problem in the mobile phone market, these results
indicate that 16% of the existing users are planning to change their network in
the next 12 months, which showed a relatively lower percentage compared to the
market churn rate of 25%. The research also finds that the reason consumers
change their networks frequently, is mostly due to their dissatisfaction with the
billing systems provided by the service providers. In addition, other reasons are
the rapid price changes and quality improvements among networks. Consumers
tend to switch networks to search for the best package most suitable for their
needs.
With regard to information search behaviour, word-of-mouth is found to be
the most favourable information source. One reason for this according to the
respondents is due to the "credible and reliable" nature of the source. (Edgett
 Customer Confusion: The Mobile Phone Market 161

and Parkinson, 1993). The findings also show that salesperson advice is one of
the least favourable information sources, which may be due to consumers' lack of
trust of the salesperson. In addition to word of mouth and advertising, "consumer
reports" and "shop around" are two other favourable sources chosen by the
respondents. In terms of buying criteria, "buy well-known" is considered to be the
most significant factor to reduce consumer buying uncertainty. This finding is
compatible with Duncan and Olshavsky's (1982) argument, where "consumers try
to simplify the search and evaluation process by focusing on branding". If brand
recognition was a determinant of purchasing then Orange theoretically should
have the highest number of users in this study, but in actual fact they have the
second lowest Focusing on branding can also be used to reduce a specific type
of perceived risk (psychological and social risk). Furthermore, "financial cost"
such as tariffs and speCial offers are also ranked at the top of the list indicating
consumers are highly concerned with the cost they have to pay. Finally,
"warranty" is also considered by the respondents, indicating the importance of
back-up service.
The findings indicate a potentially prosperous market growth in the future.
Among the percentage of users, the result finds that users are still inclined to be
younger age groups, with a peak among 25-34-year-olds. In addition, the findings
also found that there are differences in the buying criteria and the usage
amongst consumers (See Table 6.0. This information could be used to produce
specific market strategies for different types of consumers.

Table 6.1: Segmentation of Consumers According to Buying Criteria and

Usage.

Type of Consumers Buying Criteria Usage

Younger consumer Trendy/fashionable/brand image Social use
(18-24)

Women Reliability/brand loyalty Emergency use

Businessmen Professional image/quality Business use

Summarising the findings, several key factors can be identified in the confusion
problem. Primarily there is confusion amongst consumers about the structure of
the mobile phone market and the roles of different companies. The confusion
problem may magnify the difficulties for suppliers in building a distinctive brand
image and the resulting brand loyalty. Consumers find tariffs problematic. Due to
a multitude of different tariff packages provided by the four operators, the vast
choice confuses consumers in their decision to choose the most suitable
package. In addition, technology and additional services are also key factors
causing the confusion problem. All in all, the consumer confusion problem is
due to misinterpretation and/or misunderstanding information in a rapidly
changing industry. In general, women are rather more confused than men,
162 Peter W. Turnbull, Sheena Leek and Grace Ying

therefore, special attention should be paid to them by the industry. Although

consumer confusion is proven to exist in the mobile phone industry, the findings
show that such confusion does not affect consumer intention to purchase.
From the retailer's point of view, consumer confusion is, in general,
considered to be an unpleasant situation, because salespersons have to put extra
effort in to explain the details to the confused consumers, and often only further
complicate the situation. However, the retailers also noted that, confused
consumers are relatively more willing to listen to salesperson advice to avoid a
far ranging search procedure, thus, retailers can benefit from a stronger influence
on consumers' decision making.
Finally, from the viewpoint of academic research, we suggest a tentative
framework for explaining consumer confusion, which links the confusion concept
to information searching behaviour. In addition, it further develops the
understanding of consumer preferences towards different information searching
methods. Moreover, the results further support the applicability of past research.
For example, this research again confirmed the importance of word-of-mouth
and brand image as risk reduction strategies in the services industry. Overall, the
findings in this research complement past research, forming a stronger
theoretical framework in this particular field.

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