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Factors Affecting Consumer Choice of Mobile Phones: Two Studies from Finland
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ABSTRACT. Mobile phone markets are one of the most turbulent mar-
ket environments today due to increased competition and change. Thus,
it is of growing concern to look at consumer buying decision process and
cast light on the factors that finally determine consumer choices between
different mobile phone brands. On this basis, this article deals with con-
sumers’ choice criteria in mobile phone markets by studying factors that
influence intention to acquire new mobile phones on one hand and fac-
tors that influence on mobile phone change on the other. With the use of
a series of focus group interviews (Study 1) with 79 graduate students
followed by a survey (Study 2) of 196 respondents, it was found that al-
though the choice of a mobile phone is a subjective choice situation,
there are some general factors that seem to guide the choices. The two
studies show that while technical problems are the basic reason to
change mobile phone among students; price, brand, interface, and prop-
erties are the most influential factors affecting the actual choice between
brands. [Article copies available for a fee from The Haworth Document Deliv-
ery Service: 1-800-HAWORTH. E-mail address: <docdelivery@haworthpress.
com> Website: <http://www.HaworthPress.com> © 2005 by The Haworth
Press, Inc. All rights reserved.]
INTRODUCTION
not the only need mobile phones fulfill. Beyond voice, three main trends
shaping the so-called mobile culture have been identified: (1) commu-
nication services such as voice, text and pictures, (2) wireless Internet
services such as browsing, corporate access and e-mail, and (3) differ-
ent media services such as motion pictures, games and music (Hansen,
2003).
For example, telecommunications companies promote new services
such as multimedia messaging service (MMS) as a new way of enhanc-
ing one-to-one and one-to-many communicating. According to a fresh
study conducted in the UK, close to 40 percent of the youth market is us-
ing MMS (Enpocket, 2004). The research also found that MMS are
used more and more in connection to television programs. However, the
diffusion of MMS technology has been slow, mostly due to technical
constraints and pricing policies.
Mobile phone development has been rapid and new models are intro-
duced to the markets almost on a weekly basis. Especially 3G networks
and smart phones are expected to affect the evolution of the mobile
phone market in the short future (e.g., Slawsby, Leibovitch and Giusto,
2003) as shown in Figure 1.
However, at present the majority of new mobile phones purchased
are low-cost handsets without the latest technological features. Whereas
color displays have become common, with sales of over fifty percent in
2003 in some countries, e.g., in Finland (Poropudas, 2003), phones with
a built-in camera reached globally below 15 percent of the total sales in
the last quarter in 2003 (Gartner Dataquest, 2004; Strategy Analytics,
2003). However, more and more users are acquiring camera phones and
learning how to take, send and print photos. The sales of built-in camera
phones have contributed to an increase in mobile data usage and also en-
LITERATURE REVIEW:
CONSUMER CHOICE BEHAVIOR
Another important aspect that has risen from different studies is that
consumers purchase new phones due to the fact that their existing one’s
Karjaluoto et al. 67
capacity is not appropriate referring to the idea that new technology fea-
tures such as built-in cameras, better memory, radio, more developed
messaging services, and color displays are influencing consumer deci-
sions to acquire new models (In-Stat/MDR, 2002; Liu, 2002; O’Keefe,
2004). Thus it can be expected that new features will influence the in-
tention to acquire new mobile phones, and therefore the following hy-
pothesis was developed:
In addition, it seems that size and brand play to some extent an impor-
tant role in decision making. Liu (2002) for instance surveyed Asian
mobile phone users and found that size of the phone had no impact on
mobile phone choice, but this finding might be due to the fact that all
competing brands have quite similar sized phones that are small enough.
Liu continues that the trend will actually be not towards smaller phones
but towards phones with better capability and larger screens. While
companies are advertising new models and services that do not yet ex-
ist, it according to the paper signals to the market that the company is at
the cutting edge of technology and shows what will be available in the
very near future. The sales of new phones will then be driven by re-
placement rather than adoption. Thus, it is hypothesized that size and
brand are related to mobile phone choice at some extent:
dled with the operator contract, phones are, generally speaking, free of
charge, whereas in Finland consumers pay relatively high prices for
their phones. In Finland, that kind of linked transactions are regulated
by law and currently illegal. In Finland, this kind of regulation has re-
sulted in a situation where people change their operator quite often,
and mostly on the basis of price (Alkio, 2004). On this basis, it should
be noted that price of the phone plays an important role in Finland and
thus, we hypothesize that:
METHODOLOGY
Dorsch, Grove and Garden Survey (n = 223) Suggests that two distinct frameworks can be used to
(2000) study consumer choice behavior: the classic problem-
solving paradigm and the progression of consumer
choice from product class through brand choice.
Beatty and Scott (1987) Survey (n = 351) Consumers make choices between alternatives based
on limited information search and processing.
Moorthy, Ratchford and Survey (n = 117) Similar to Beatty and Scott (1997).
Talukdar (1997)
Alba and Hutchinson Literature review Choice is made without detailed evaluation of alterna-
(2000) tives.
Chernev (2003) Four experiments Similar to Alba and Hutchinson (2000). In addition,
(n = 88) choices made from large assortments can lead to
weaker preferences.
Coupey, Irwin and Payne Three studies (n = Similar to Alba and Hutchinson (2000). Moreover, prod-
(1998) 48; n = 66; n = 28) uct familiarity influences preference construction. Pref-
erences are often labile due to limited evaluation of
alternatives.
Laroche, Kim and Matsui Two surveys (n = Suggesting that conjunctive heuristic is the most often
(2003) 234; n = 235) used decision model in the consideration set formation.
Swait and Adamovicz (2001), Survey (n = 280) Consumer decision making strategies can change due
see also Dhar, Nowlis and to person-, context-, and task-specific factors.
Sherman (2000)
Fitzsimons et al. (2002) Literature review Consumer choice often occurs outside conscious
awareness. Nonconscious influences affect choice
much more than many researchers believe.
Wilska (2003) Survey (n = 637) Choices are often driven by hedonistic considerations
(see also Dhar and Werterbroch, 2000; Batra and
Ahtola, 1990). Specifically, the younger the consumer
the more hedonistic features consumers tend to value in
mobile phones. Mobile phone choice and usage is con-
sistent to general consumption styles.
Riquelme (2001) Survey (n = 94) Suggesting that prior experience of mobile phone
choice affects future choice.
Jones (2002) Survey (n = 500) Consumers value personal time planning features in
mobile phones.
In-Stat/MDR (2002); O'Keefe Forecasts and sur- Suggesting that new technology features are driving
(2004) veys consumers to acquire new mobile phones.
Liu (2002) Survey (n = 800) Similar to In-Stat/MDR (2002) and O'Keefe (2004). Ad-
ditionally, size and brand of the phone are affecting
choice.
Karjaluoto et al. (2003a; Survey (n = 397) Price of the mobile phone affects choice in countries
2003b) where mobile phones are not linked to the operator con-
tract.
70 JOURNAL OF EUROMARKETING
RESULTS
Study 1
Focus group A B C D
Male 4 8 4 6
Female 12 11 11 10
Total 16 19 15 16
properties new phones have. For instance, GPRS and WAP were un-
known for many. This was quite a surprising finding because the inter-
viewed can be considered as more aware of technical things than
average Finnish people of their age. Only around one out of ten clearly
knew what GPRS is and for what purposes it might be used. After the
moderator told the groups about the new services (e.g., that GPRS can
be used to get Internet access), students, after little consideration, seemed
to form a more positive attitude towards the new features. The group D
then summarized the discussion by saying that companies should edu-
cate 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 Nokia’s brand was appreciated
by the Finns and by some of the foreign students as well, a couple of stu-
dents reported that Nokia’s brand has suffered in Germany from quality
problems, and thus the brand was not seen any better than competing
brands. Nokia’s brand was valued above all because of easy-to-use in-
terface, but also among Finnish students by its domestic origin. It was
mentioned that students rarely change their mobile phone brand owing
to the fact that it is much easier to stay with the same brand with familiar
user-interface and menus regardless of the model.
Size of the phone was found to have some importance. Although
many had changed their phones in order to get a smaller model, some
asserted that the phone should not be too small. Students felt that the
phone should be small enough to match into a pocket but still allowing
relatively convenient usage. In relation to size, fancy outlook was also
discussed. The groups felt that outlook and colored covers are for small
children and had very little influence on their choice of the model.
Other people’s influence was found to have slight impact on inten-
tion to buy a new model. The groups highlighted the importance of par-
ents by saying that in many Finnish families, parents get free phones
from their employers and thus get used to one brand. Friend’s influence
was two-handed. On one hand, through word-of-mouth it has an impact
on the choice whereas on the other groups reported knowing people
who want to have a different brand than their friends.
During the discussion some other factors arose from the discussion
such as salesman’s recommendation. However, for the majority sales-
man’s recommendation was found unimportant. This might relate to the
fact that quite many stores only sell one brand and limited amount of
models, thus allowing easier choice.
Karjaluoto et al. 73
Study 2
On the basis of the findings obtained from study 1 and previous liter-
ature, a questionnaire was prepared. Of the 196 usable questionnaires,
71 were from female respondents and 125 from male respondents. The
respondents had different had different educational backgrounds
ranging from matriculation (21.0 percent) to university degree (26.2
percent) and also quite different levels of employment ranging from
student status (42.6 percent) to white-collar workers (24.6 percent).
Most of the respondents belonged to the age category 18-34 (77.4 per-
cent). The respondents used their mobile phones mainly for calling, but
other services were also popular. The most popular service was send-
ing text messages (64 percent used daily), followed by downloading
Price***
Technical*** Interface***
-Max. 150
problems -Familiarity
Brand**
-Global
Innovator’s -Customer loyalty
status*
Properties*
Other factors*
-New features
-Salesman
logos and/or ring tones (49 percent used 1-2 times per month), phone’s
own services such as radio, calculator, calendar and games (49 percent
used daily), and value added SMS-services (39 percent used 1-2 times
per month). Thus, although the respondents can be considered as lead
users of mobile phones and mobile services, the sample represents rela-
tively well the actual mobile phone usage in Finland among this age
group.
We used 24 questions in order to analyze consumer motives in mo-
bile phone purchase. The correlation matrix and Bartlett’s test of
spherity showed highly significant correlations between variables sup-
porting the use of factor analysis. In factor analysis we used principal
component analysis with varimax rotation. The number of factors was
selected based on the scree-plot. The estimated seven factors (Innova-
tive services, multimedia, design, brand and basic properties, outside
influence, price, and reliability) explain about 70 percent of the total
variance (Table 3). The correlation is considered to be significant if its
absolute value is 0.4 or higher.
The first factor, innovative services, exhibits heavy loadings for
seven variables pertaining to the importance of new innovative services
mobile phones nowadays have. Factor 2 accounts for 13.2 percent of the
variability of the individual items and is defined by two items relating to
multimedia properties with loadings higher than 0.7. The third factor is
defined by three variables relating to design. This factor accounts for
7.7 percent of the total variance. Factor 4 appears to be a mix of items
that reflect importance of brand and properties such as advanced
SMS-options and better memory capacity. This factor accounts for 5.9
percent of the total variability of the items. The fifth factor can be called
outside influence because the items loading at this factor refer to the im-
portance of friend’s, salesperson’s and employer’s recommendation.
Factor 6 is defined by two items referring to price. The seventh factor
explains 4.2 percent of the total variance and is called reliability, as the
items comprising the factor refer to reliability and usability of the
phone. In sum, the factor analysis suggests that of the variables selected
to the analysis, Factor 1 (innovative services) and 2 (multimedia) are
seen as the most important innovative services as they explain together
over 40 percent of the total variance of the items.
In Study 2, we also examined how the importance of the variables
varies between genders and different occupational groups. Only the
variables with statistical differences are reported. The results in Table 4
show the means, standard deviations and the statistical significance of
the mean differences. Based on the results, there are quite a few statisti-
Karjaluoto et al. 75
Factors
E-mail .775
UMTS .743
Java .709
WAP-services .682
Multimedia .800
Appearance .815
Styling .811
Salesperson’s .810
recommendation
Friends’ .728
recommendation
Employer’s .677
recommendation
Reliability .712
Usability .595
Note: Only the loadings above 0.4 are presented in the component matrix.
76 JOURNAL OF EUROMARKETING
The statistics reported are the means, standard deviations and the sta-
tistical significance of the mean differences. The results show that
white-collar workers value enhanced data and networking features sig-
nificantly higher than students and blue-collar workers. The only excep-
tion is the design, which is considered equally important between
white-collar workers and students. This result seems quite reasonable,
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-
tance of networking features, such as e-mail or WAP services, is not
more valued by student is somewhat surprising.
CONCLUSION
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