Factors Affecting Consumer Choice of Mobile Phones: Two

Factors Affecting Consumer Choiceof Mobile Phones:

Two Studies from Finland

Heikki KarjaluotoJari KarvonenManne Kesti

Timo KoivumäkiMarjukka Manninen

Jukka PakolaAnnu Ristola

Jari Salo

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 andcast light on the factors that finally determine consumer choices betweendifferent mobile phone brands. On this basis, this article deals with con-sumers’ choice criteria in mobile phone markets by studying factors that

Heikki Karjaluoto is Research Professor in Marketing; Jari Karvonen is Researcherin Marketing; Manne Kesti is Researcher in Marketing; Timo Koivumäki is Profes-sor in Marketing; Marjukka Manninen is Researcher in Economics; Jukka Pakolais Researcher in Economics; Annu Ristola is Researcher in Marketing; and Jari Salo isResearcher in Marketing, all at the University of Oulu, Faculty of Economics and Busi-ness Administration, Finland.

Address correspondence to: Heikki Karjaluoto, Faculty of Economics and BusinessAdministration, Department of Marketing, P.O. Box 4600, FIN-90014 University ofOulu, Finland (E-mail: [email protected]).

The financial support of the National Technology Agency of Finland is gratefullyacknowledged. The authors also wish to thank all the study participants.

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2005 by The Haworth Press, Inc. All rights reserved.Digital Object Identifier: 10.1300/J037v14n03_04 59

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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 ofa series of focus group interviews (Study 1) with 79 graduate studentsfollowed 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 twostudies show that while technical problems are the basic reason tochange mobile phone among students; price, brand, interface, and prop-erties are the most influential factors affecting the actual choice betweenbrands. [Article copies available for a fee from The Haworth Document Deliv-ery Service: 1-800-HAWORTH. E-mail address: <[email protected]> Website: <http://www.HaworthPress.com> © 2005 by The HaworthPress, 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 per-sonal communication across the globe during the past ten years, con-sumer research has devoted little specific attention to motives andchoice underlying the mobile phone buying decision process. There arenumerous complex factors that need to be taken into account when ex-ploring mobile phone buying decision process, including both macro-and microeconomic conditions that affect the evolution of mobilephone market in general and individual consumer’s motives and deci-sion making in particular. Moreover, it is important to distinguish be-tween buying behavior referring to the choice between different mobilephone models and brands and change aspects referring to reasons thataffect change. As the mobile phone market is a typical technology pushdriven market where products are created ahead of the recognition ofexisting recognized consumer needs (e.g., Gerstheimer and Lupp, 2004),mobile phone development is based on consumers’ possible futureneeds and thus companies that best hunch the technologies and servicesof future will be the leaders in the discipline (for discussion of technol-ogy push see, e.g., Brown, 1991; Hamel and Prahalad, 1991; Kumar,1997; Nagel, 2003).

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The telecommunications sector has been struggling over the pastyears, not only due to high prices companies paid for UMTS licensesbut also due to the global economic downturn. Although the mobilephone handset market is growing five to ten percent per year and opera-tor subscriber bases are growing, average revenue per user (ARPU) isfalling and price competition is heating up (Hansen, 2003). We are cur-rently experiencing a shift from the second generation (2G) to the thirdgeneration (3G) mobile phones, which is expected to change the waypeople use their mobile phones. The rise of the 3G network and its con-sumer acceptance is said to be one of the toughest marketing challengesin recent history (Benady, 2002). In general terms, the success of 3G de-pends primary on how the real benefits of the technology are marketedto consumers on one hand and on pricing policy of the services on theother (e.g., Benady, 2002). If we look beyond the hype around 3G it isobvious that we are not experiencing a revolution in mobile phone mar-kets, rather an evolution where consumers are able to do the same thingsthey could with 2G and 2.5G (e.g., GPRS and EDGE technology), butonly better and faster in terms of download times (cf. Drucker, 2004;Sehovic, 2004). The mobile phone industry is currently using manystandards (e.g., Japanese PDC, European GSM, American CDMA),which has made it difficult for users traveling to utilize their phones ex-tensively. The evolution of 3G is expected to simplify this as only twostandards are competing, the WCDMA (Wide-Code Division MultipleAccess) that will become the European UMTS (Universal Mobile Tele-communications System), CDMA2000 (Code Division Multiple Ac-cess), and the Chinese TD-SCDMA (Time Division-Synchronous CodeDivision Multiple Access). The WCDMA standard is said to dominatethe global market for the next five years (Sehovic, 2003).

Consumer shift from 2G to 3G means that in order to be able to usethe services offered by the faster network consumers need to acquirenew mobile handsets equipped with Internet access and new featuressuch as possibility to receive and send multimedia messages. Althoughrecent news indicates a strong demand for new mobile phones equippedwith color displays and built-in camera, there still is plenty of skepti-cism in the media, as well as in the market itself, towards the technologi-cal development.

The development of mobile phones is leading the market into a situa-tion where the basic need, communication, is actually broadened to newmeans of interaction and personal digital assistance. In fact, mobilephone evolution will eventually lead to the convergence of mobilephones and digital personal assistants (PDAs). Thus, communication is

Karjaluoto et al. 61

not the only need mobile phones fulfill. Beyond voice, three main trendsshaping the so-called mobile culture have been identified: (1) commu-nication services such as voice, text and pictures, (2) wireless Internetservices 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 servicessuch as multimedia messaging service (MMS) as a new way of enhanc-ing one-to-one and one-to-many communicating. According to a freshstudy conducted in the UK, close to 40 percent of the youth market is us-ing MMS (Enpocket, 2004). The research also found that MMS areused more and more in connection to television programs. However, thediffusion of MMS technology has been slow, mostly due to technicalconstraints 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 networksand smart phones are expected to affect the evolution of the mobilephone 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 purchasedare low-cost handsets without the latest technological features. Whereascolor displays have become common, with sales of over fifty percent in2003 in some countries, e.g., in Finland (Poropudas, 2003), phones witha built-in camera reached globally below 15 percent of the total sales inthe last quarter in 2003 (Gartner Dataquest, 2004; Strategy Analytics,2003). However, more and more users are acquiring camera phones andlearning how to take, send and print photos. The sales of built-in cameraphones have contributed to an increase in mobile data usage and also en-


2000 2001 2002 2003 2004 2005

Text, ringsSimple bitmapsSMS Push/PullSimple Web ClippingLegacy phones

Color bitmapsSimple animationsEMSSMS Push/PullWAP pullSmart phones,PDAsGPRS trialsJ2ME, MIDPSimple location-based services

MMSxHTMLReal smart phonesReal GPRSP2PM-Commerce3G trialsMicro movies

Mobile video/audioLocationintegrationVoice recognitionReal wirelessPDAsBroadband access3G networksHybrid WLAN/3GPAN

FIGURE 1. The Beginning of the Smart Phone Era

hanced device sales (O’Keefe, 2004). Research institutes forecast thatstep by step properties like built-in cameras and calendar will become astandard inclusion within mobile phones (e.g., Slawsby and Chute,2003). In terms of technology, the mobile multimedia market will re-main in its infancy during 2004, but companies and analytics expect thatthe demand will continue to develop for mobile imaging, games, musicand other media services as users become more aware and familiar withthe services and their different purposes of use (see, e.g., GartnerDataquest, 2004; Nokia, 2004; Strategy Analytics, 2003). But as theInternet finally finds its way to mobile phones the basic need to acquirea mobile phone might expand from communication to gaining Internetaccess. This in turn is expected to bring mobile phones one step closer topersonal computers.

The primary objective of this paper is to examine the importance ofdifferent factors affecting consumer’s motives related to mobile phonepurchasing and to investigate the main reasons to change mobile phone.Although consumer motives underlying mobile phone acquisition aresomething one could call general knowledge, relatively little is knownon the buying decision making process in relation to new mobile phonemodels packet with different properties (i.e., smart phones) allowingusers to communicate in fresh ways.

The next sections review previous research on motives and choicebehavior in mobile phone markets. The results of the focus group inter-views provide the basis for Study 2. The article concludes with a discus-sion of both theoretical and managerial implications for mobile phonechoice.

LITERATURE REVIEW:CONSUMER CHOICE BEHAVIOR

From marketing perspective, consumer choice behavior can be stud-ied through the classical five-step (need–information search–evaluationof alternatives–purchase–post-purchase evaluation) problem solvingparadigm or through the progression of consumer choice from a productclass to brand choice (Dorsch, Grove, and Darden, 2000). The five-stepmodel is usually suitable for decision making that assumes rationalproblem solving behavior and, in most cases, complex decision making.The acquisition of a new mobile phone follows this traditional view ofbuying process, but is in many situations also affected by symbolic val-ues related to brands.


Consumer choice behavior has some important prevailing conditionsthat must be taken into account while studying choice. In the light of theclassical problem solving buying behavior, consumers engage in infor-mation search before making the actual choice. Consumer decisionmaking process is usually guided by already formed preferences for aparticular alternative. This means that consumers are likely to make thechoice between alternatives based on limited information search activ-ity (Beatty and Smith, 1987; Moorthy, Ratchford and Talukdar, 1997)and without detailed evaluation of the other alternatives (Alba andHutchinson, 2000; Chernev, 2003; Coupey, Irwin and Payne, 1998;Slovic, 1995). In close relation to information search, evaluation of al-ternatives has also gained a momentum in recent research (Laroche,Kim and Matsui, 2003). Their study on consumer’s use of fiveheuristics (conjunctive, disjunctive, lexicographic, linear additive, andgeometric compensatory) in the consideration set formation found thatconjunctive heuristics is the most often used decision model in the con-sideration set formation for two product classes in the study (beerbrands and fast food outlets). Conjunctive heuristics means that a con-sumer selects a brand only if it meets acceptable standards, the so-calledcutoff point on each key attribute consumer regards as important(Assael, 1995, p. 249; Solomon, 2001, p. 280). In this non-compensa-tory method of evaluation, a consumer would eliminate a brand thatdoes not fulfill the standards on one or two of the most important attri-butes, even it is positive on all other attributes.

We limit our analysis in this paper to consumer choice that can rangefrom choice oriented referring to a decision on which alternative to pur-chase from a set of alternatives, whether or not to purchase, or whetherto purchase now or later to value oriented choice (Shuv and Huber,2000). The latter refers to an evaluation setting, in which each alterna-tive is evaluated on different value criteria.

Furthermore, consumer choice behavior can either be approached byutilizing different choice models (see, e.g., Chintagunta, 1999; Bocken-holt and Dillon, 2000; Swait and Adamowicz, 2001) or neural networksto model selection decisions (e.g., Papatla, Zahedi and Zekic-Susac,2002). Papatla et al. (2002) examined empirically brand choice andstore choice in regard to margarine, detergent and tissue. The researchfound that while neural networks have higher probability of resulting ina better performance, hybrid models guaranteed equal or better resultsthan stand-alone models. It has also been pointed that many decisionstrategies used by consumers can change due to person-, context-, andtask-specific factors (Dhar, Nowlis and Sherman, 2000; Swait and


Adamowicz, 2001). Therefore, mathematical modeling has its limita-tions in regard to the fact that consumers tend to utilize different ap-proaches to make choices. Thereby, researchers should pay moreattention to factors like task complexity and context in modeling choicebehavior (cf. Swait and Adamowicz, 2001). Moreover, Coupey, Irwinand Payne (1998) found that the influence of task and context factorsmight be greater in situations in which consumer has little prior knowl-edge and experience.

It is widely accepted that the traditional problem solving approach in-volving rational decision making to the study of consumer choice maynot be suitable for all situations, or is at least incomplete to understandchoice behavior. Limited information search and evaluation of alterna-tives led to a situation in which consumer choice is also driven byhedonic considerations (e.g., Dhar and Wertenbroch, 2000). In general,a common distinction to be made is that while the utilitarian goods usu-ally are primary instrumental and functional, hedonic goods providefun, pleasure and excitement. It has been noted that many choices haveboth utilitarian and hedonic features (Batra and Ahtola, 1990), and thusit can also be proposed that the choice between mobile phones has bothutilitarian (e.g., communication, time planning) and hedonic (e.g., games,camera) features. The younger the consumer the more hedonistic fea-tures consumers tend to value in mobile phones (Wilska, 2003).

Quite similarly, consumer choice can also be approached from theperspective of conscious and nonconscious choice (e.g., Fitzsimons etal., 2002). Quite many choice situations occur outside of consciousawareness and with limited information search (Kivetz and Simonson,2000) and it can be stated that many choices have both conscious andnonconscious motives. Fitzsimons et al. (2002) found that in manycases nonconscious influences affect choice much more than is tradi-tionally believed by researchers.

MOBILE PHONE CHOICE

Previous literature on mobile phone choice is sparse. Couple ofacademic articles have dealt with mobile phone usage and graspedthe consumer decision making process. To begin with, Riquelme (2001)examined how much self knowledge consumers have when choosingbetween different mobile phone brands. The study was built upon sixkey attributes (telephone features, connection fee, access cost, mo-bile-to-mobile phone rates, call rates and free calls) related to mobile


phone purchasing respondents had to importance rate. The researchshowed that consumers with prior experience about a product can pre-dict their choices relatively well, although respondents tended to over-estimate the importance of features, call rates and free calls andunderestimate the importance of a monthly access fee, mobile-to-mo-bile phones rates and the connection fee.

Mobile phone choice and use has also been found to be related toprior consumption styles. According to a fresh survey of Finnish youngpeople aged 16-20, it was found that mobile phone choice and espe-cially usage is consistent with respondents’ general consumption styles(Wilska, 2003). The research showed that addictive use was commonamong females and was related to trendy and impulsive consumptionstyles. Instead, males were found to have more technology enthusiasmand trend-consciousness. These attributes were then linked to impulsiveconsumption. The study concluded that genders are becoming morealike in mobile phone choice. Because individual differences in con-sumption patterns are obviously identifiable, we hypothesize that back-ground variables especially have an influence on mobile phone choice.

H1: Demographic factors have an influence on the evaluations ofdifferent attributes related to mobile phone choice. Specifically,gender and social class will impact on the evaluations of the at-tributes as men belonging to higher social class seem to be moretechnology savvy.

Consumers value in smart phones features that enhance their per-sonal time planning (e.g., Jones, 2002). These high-rated features in-clude calendar and e-mail services. It is interesting to note thataccording to Jones the so-called killer services such as gaming, gam-bling and music downloads are not seen that important in the diffusionof smart phones. However, there is little support to this argument. How-ever, while synchronization of calendar and e-mail services to PCs hasbecome easy and fast, the importance of time planning in mobile phonesbecomes more and more important. Thus, the following hypothesis isproposed:

H2: Consumers value personal time planning properties in the choiceof new mobile phones.

Another important aspect that has risen from different studies is thatconsumers purchase new phones due to the fact that their existing one’s


capacity is not appropriate referring to the idea that new technology fea-tures such as built-in cameras, better memory, radio, more developedmessaging 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:

H3: New technical properties increase consumer willingness to ac-quire new phone models.

In addition, it seems that size and brand play to some extent an impor-tant role in decision making. Liu (2002) for instance surveyed Asianmobile phone users and found that size of the phone had no impact onmobile phone choice, but this finding might be due to the fact that allcompeting brands have quite similar sized phones that are small enough.Liu continues that the trend will actually be not towards smaller phonesbut towards phones with better capability and larger screens. Whilecompanies 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 atthe cutting edge of technology and shows what will be available in thevery near future. The sales of new phones will then be driven by re-placement rather than adoption. Thus, it is hypothesized that size andbrand are related to mobile phone choice at some extent:

H4a: When choosing between different mobile phone models, con-sumers value larger screen size but the whole phone should besmall enough and light to carry in pocket.

H4b:When choosing between different mobile phone models, con-sumers value familiar brands.

Price of the phone has been identified as a critical factor in thechoice of the mobile phone model, especially among younger people(Karjaluoto et al., 2003a; Karjaluoto et al., 2003b). By the use of a sur-vey (n = 397), they found that besides new technological advancesprice was the most influential factor affecting the choice of a new mo-bile phone model. Price of the mobile phone is a very different issue inother EU countries compared to Finland where price is not linked tothe operator contract. Therefore, while in other EU countries (exceptItaly and Benelux countries), the acquisition of a mobile phone is bun-


dled with the operator contract, phones are, generally speaking, free ofcharge, whereas in Finland consumers pay relatively high prices fortheir phones. In Finland, that kind of linked transactions are regulatedby 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 shouldbe noted that price of the phone plays an important role in Finland andthus, we hypothesize that:

H5: When choosing between different mobile phone models, espe-cially lower income consumers have a price limit that restrictsthe choice to fewer models.

To summarize, consumer choice behavior can be studied throughvarious frameworks such as the problem solving paradigm and throughconsumer choice from product class through brand choice. A summaryof the literature review is presented in Table 1.

METHODOLOGY

Study 1 examines consumers’ preferences about mobile phone pur-chasing in a focus group setting. Focus group method was chosen be-cause of the fresh nature of the phenomenon and to serve as a startingpoint to the survey (study 2). Focus groups produce data that are alwaysbiased by other respondents but also provide important data based ongroup interaction and give insights that are less accessible with other in-terviewing methods (Morgan, 1990; Threlfall, 1999).

A total of four focus group interviews were conducted during autumn2002 among graduate students. The number of participants in each groupranged from 15 to 19, and most of the students were aged 21-25. Withthese groups two important criteria considered as important in focusgroup interviewing (Malhorta, 2002; Morgan, 1996) were achieved: notonly was each group homogenous in terms of demographic and socioeco-nomic characteristics but also shared a relatively common base of experi-ence with the issue being discussed. Although the number of participantsin each focus group was reasonably higher compared to the ideal number(8-12) suggested in marketing research literature (McDaniel and Gates,2001; Morgan, 1996), the discussion among the participants and be-tween the moderator was smooth.



TABLE 1. Summary of Literature on Consumer Choice Behavior and MobilePhone Choice

Contributor Data Contribution to our study

Dorsch, Grove and Garden(2000)

Survey (n = 223) Suggests that two distinct frameworks can be used tostudy consumer choice behavior: the classic problem-solving paradigm and the progression of consumerchoice from product class through brand choice.

Beatty and Scott (1987) Survey (n = 351) Consumers make choices between alternatives basedon limited information search and processing.

Moorthy, Ratchford andTalukdar (1997)

Survey (n = 117) Similar to Beatty and Scott (1997).

Alba and Hutchinson(2000)

Literature review Choice is made without detailed evaluation of alterna-tives.

Chernev (2003) Four experiments(n = 88)

Similar to Alba and Hutchinson (2000). In addition,choices made from large assortments can lead toweaker preferences.

Coupey, Irwin and Payne(1998)

Three studies (n =48; n = 66; n = 28)

Similar to Alba and Hutchinson (2000). Moreover, prod-uct familiarity influences preference construction. Pref-erences are often labile due to limited evaluation ofalternatives.

Laroche, Kim and Matsui(2003)

Two surveys (n =234; n = 235)

Suggesting that conjunctive heuristic is the most oftenused decision model in the consideration set formation.

Swait and Adamovicz (2001),see also Dhar, Nowlis andSherman (2000)

Survey (n = 280) Consumer decision making strategies can change dueto person-, context-, and task-specific factors.

Fitzsimons et al. (2002) Literature review Consumer choice often occurs outside consciousawareness. Nonconscious influences affect choicemuch more than many researchers believe.

Mobile phone choice

Wilska (2003) Survey (n = 637) Choices are often driven by hedonistic considerations(see also Dhar and Werterbroch, 2000; Batra andAhtola, 1990). Specifically, the younger the consumerthe more hedonistic features consumers tend to value inmobile phones. Mobile phone choice and usage is con-sistent to general consumption styles.

Riquelme (2001) Survey (n = 94) Suggesting that prior experience of mobile phonechoice affects future choice.

Jones (2002) Survey (n = 500) Consumers value personal time planning features inmobile phones.

In-Stat/MDR (2002); O'Keefe(2004)

Forecasts and sur-veys

Suggesting that new technology features are drivingconsumers 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 affectingchoice.

Karjaluoto et al. (2003a;2003b)

Survey (n = 397) Price of the mobile phone affects choice in countrieswhere mobile phones are not linked to the operator con-tract.

The four group interviews were led by an experienced researcher andspecial attention was given to provide a relaxed atmosphere and therebymaking discussion nondirective and spontaneous. It has been stated thatonly by allowing spontaneous informal interaction focus groups arevaluable qualitative technique in exploring unconscious needs and mo-tives (e.g., Spier, 1996; Thomas, 1998) and moreover often perceived asmore exciting and arousing by participants than surveys or one-on-oneinterviewing (Bristol and Edward, 1996).

The focus group interviews lasted from 45 minutes to 90 minutesand were audio-recorded. The moderator had a list of keywords thatwere used in directing the discussion to motives affecting the purchas-ing process. This list of motives was based on previous studies and priorknowledge, but as one could have expected the interviewing revealedalso new motives that were not previously discovered by the researchgroup.

Study 2 is built on the basis of the focus group interviews. Study 2surveyed 196 voluntary respondents who filled in the questionnaire inSeptember 2003. The questionnaire was developed on the basis of thefocus group interview and tested with 50 students before distributed on-wards. Questions inquiring mobile phone choice were implemented onseven-point Likert scales (1 = not at all important to 7 = extremely im-portant) inquiring perceptions of various attributes related to mobilephone purchasing. Most of the survey respondents were aged 20-30 andwere male (63.8 percent). The respondents’ educational backgroundsvaried a lot as also their levels of employment.

RESULTS

Study 1

In total four focus group (labeled A, B, C, D) interviews were con-ducted. Table 2 illustrates the number of participants as well as sexes ofthe members of the four focus groups.

In all groups, most of the mobile phones owned by the participantswere Nokia phones. This share is quite similar to that in Finland in gen-eral, where over 80 percent of the phones are Nokia phones (Nykänen,2002). Many of the participants who had owned more than four mobilephones always had the same brand but different model. Although inFinland the price of a new mobile phone is even higher than in other EUcountries due to the fact that telephone operators cannot offer free or


heavily discounted mobile phones to customers, close to half of the re-spondents reported acquiring a new mobile phone every year and some-times the changing cycle is even faster. The most explicit reason forchanging was that the old one was broken or did not work properly. Thismeant for the participants that the mobile phone did not work, the callswere interrupted, for example due to weak audibility, battery was weak,the screen was out of order or keypad was so consumed that the num-bers were invisible. While mobile phones were also acquired due to newfeatures including color display and polyphonic ring tones, some re-spondents bought new phones in order to get an innovator and/or opin-ion leader status. Fundamentally, respondents agreed that price, brand,and size of the phone were the main factors affecting their choice of thenew model.

The importance of price might be related to the student sample. Allgroups reported having a maximum price they are willing to pay for anew mobile phone. The price range varied between 10 to 150 whichindicates that students are buying low-priced phones. The groups re-garded new technological features as too expensive to use, an in factgroups B and D felt new features as totally needless. On the other hand,groups A and C considered new features such as multimedia messagingservice (MMS) handy but too expensive to use at present. Participantswere also skeptical about the quality of the pictures and video clips. Ageneral view seemed to be that mobile phones are still seen as talkingdevices, and new properties were not commonly used. Other servicessuch as calendar, games or radio were not used by the participants.E-mailing was a service that might be used if it was very cheap or free.Although color display was after a little discussion regarded as a goodimprovement, students were not ready to pay the high price just for get-ting fancier color menus for their phones. Most felt that they never buythe newest model because mobile phone manufacturers are well-knownfor their pricing strategy in which new models while launched to themarket cost much more than after a couple of months when the price be-gins to fall. Quite interestingly, relatively many were unaware of the


TABLE 2. Focus Group Interviews

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 thanaverage Finnish people of their age. Only around one out of ten clearlyknew what GPRS is and for what purposes it might be used. After themoderator told the groups about the new services (e.g., that GPRS canbe used to get Internet access), students, after little consideration, seemedto form a more positive attitude towards the new features. The group Dthen 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, notonly among Finnish students but also among exchange students. It wasinteresting to find out that even though Nokia’s brand was appreciatedby 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 qualityproblems, and thus the brand was not seen any better than competingbrands. Nokia’s brand was valued above all because of easy-to-use in-terface, but also among Finnish students by its domestic origin. It wasmentioned that students rarely change their mobile phone brand owingto the fact that it is much easier to stay with the same brand with familiaruser-interface and menus regardless of the model.

Size of the phone was found to have some importance. Althoughmany had changed their phones in order to get a smaller model, someasserted that the phone should not be too small. Students felt that thephone should be small enough to match into a pocket but still allowingrelatively convenient usage. In relation to size, fancy outlook was alsodiscussed. The groups felt that outlook and colored covers are for smallchildren 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 phonesfrom their employers and thus get used to one brand. Friend’s influencewas two-handed. On one hand, through word-of-mouth it has an impacton the choice whereas on the other groups reported knowing peoplewho want to have a different brand than their friends.

During the discussion some other factors arose from the discussionsuch as salesman’s recommendation. However, for the majority sales-man’s recommendation was found unimportant. This might relate to thefact that quite many stores only sell one brand and limited amount ofmodels, thus allowing easier choice.


In conclusion, the focus group interviews revealed that among stu-dents, mobile phones are mostly purchased and used for talking pur-poses, not as personal assistants helping, for instance, in time andinformation scheduling. On this basis we propose a preliminary model(Figure 2) of the factors and their relative weights, which affect mo-bile phone choice and reasons to change mobile phone among stu-dents.

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. Therespondents had different had different educational backgroundsranging from matriculation (21.0 percent) to university degree (26.2percent) and also quite different levels of employment ranging fromstudent 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, butother services were also popular. The most popular service was send-ing text messages (64 percent used daily), followed by downloading


Technical***problems

Newfeatures**

Innovator’sstatus*

Reason toCHANGE

mobile phone

Price***-Max. 150

Factors affectingmobile phone

CHOICE

Other factors*-Salesman

Interface***-Familiarity

Size**-Match into pocket

Brand**-Global-Customer loyalty

Properties*-New features

FIGURE 2. Factors Affecting Mobile Phone Change and Choice Behavior

Note: *some influence, **medium influence, ***strong influence.

logos and/or ring tones (49 percent used 1-2 times per month), phone’sown services such as radio, calculator, calendar and games (49 percentused daily), and value added SMS-services (39 percent used 1-2 timesper month). Thus, although the respondents can be considered as leadusers of mobile phones and mobile services, the sample represents rela-tively well the actual mobile phone usage in Finland among this agegroup.

We used 24 questions in order to analyze consumer motives in mo-bile phone purchase. The correlation matrix and Bartlett’s test ofspherity showed highly significant correlations between variables sup-porting the use of factor analysis. In factor analysis we used principalcomponent analysis with varimax rotation. The number of factors wasselected based on the scree-plot. The estimated seven factors (Innova-tive services, multimedia, design, brand and basic properties, outsideinfluence, price, and reliability) explain about 70 percent of the totalvariance (Table 3). The correlation is considered to be significant if itsabsolute value is 0.4 or higher.

The first factor, innovative services, exhibits heavy loadings forseven variables pertaining to the importance of new innovative servicesmobile phones nowadays have. Factor 2 accounts for 13.2 percent of thevariability of the individual items and is defined by two items relating tomultimedia properties with loadings higher than 0.7. The third factor isdefined by three variables relating to design. This factor accounts for7.7 percent of the total variance. Factor 4 appears to be a mix of itemsthat reflect importance of brand and properties such as advancedSMS-options and better memory capacity. This factor accounts for 5.9percent of the total variability of the items. The fifth factor can be calledoutside 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 factorexplains 4.2 percent of the total variance and is called reliability, as theitems comprising the factor refer to reliability and usability of thephone. In sum, the factor analysis suggests that of the variables selectedto the analysis, Factor 1 (innovative services) and 2 (multimedia) areseen as the most important innovative services as they explain togetherover 40 percent of the total variance of the items.

In Study 2, we also examined how the importance of the variablesvaries between genders and different occupational groups. Only thevariables with statistical differences are reported. The results in Table 4show the means, standard deviations and the statistical significance ofthe mean differences. Based on the results, there are quite a few statisti-



TABLE 3. Factors Explaining the Choice of a Mobile Phone

Factors

Variable (1)Innovativeservices

(2)Multimedia

(3)Design

(4)Brand and

basicproperties

(5)Outside

influence

(6)Price

(7)Reliability

Browsing WWW .843

E-mail .775

UMTS .743

Java .709

WAP-services .682

New features .619

Color screen .503

Multimedia .800

Built-in camera .737

Appearance .815

Styling .811

Small size .727

Known brand .676

Domestic product .620

Advanced sms .594

Larger memorycapacity

.538

New product .410

Salesperson’srecommendation

.810

Friends’recommendation

.728

Employer’srecommendation

.677

Special offer .880

Model at reducedprice

.848

Reliability .712

Usability .595

% of varianceexplained

28.508 13.249 7.726 5.877 5.453 4.682 4.234

Note: Only the loadings above 0.4 are presented in the component matrix.

cally significant differences in the importance of the decision variablesbetween men and women. When buying a mobile phone, women placemore value on brand familiarity than men, whereas men seem to valuemore enhanced data processing, networking and navigational features.It thus seems that women use mainly voice services and therefore con-sider the brand of the phone as the main decision variable, and placevery little value to data processing and networking features. Men, on theother hand, seem to utilize various enhanced features and network ser-vices such as e-mail, and therefore, these variables play an importantrole in their decision making.

In the analysis of the importance of the decision variables betweendifferent occupations, we divided the respondents into three aggregateoccupational groups: white-collar workers, blue-collar workers and stu-dents. White-collar group includes various professions in middle or topmanagement of various companies. Blue-collar group includes employ-ees that perform tasks that on the operational level in manufacturing orservice industries. Students group includes undergraduate and graduatestudents. Again, only the variables with statistical differences are re-ported. The results are presented in Table 5.


TABLE 4. Results by Gender

Gender Mean Std. Deviation t-test p-value

Familiar brand Male 5.06 1.659 .010**

Female 5.67 1.219

New features, such as GPRS Male 4.90 1.686 .000**

Female 3.90 1.907

E-mail Male 5.07 1.766 .000**

Female 3.90 1.808

WWW-browser Male 4.57 1.891 .000**

Female 3.25 1.847

Color display Male 5.03 1.753 .000**

Female 3.94 1.889

Large memory Male 5.31 1.763 .009**

Female 4.57 1.779

UMTS Male 4.15 2.076 .000**

Female 2.76 1.626

Java enabled Male 4.63 1.899 .000**

Female 2.96 1.949

Note: *Significant at the 0.05 level.**Significant at the 0.01 level.

The statistics reported are the means, standard deviations and the sta-tistical significance of the mean differences. The results show thatwhite-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 betweenwhite-collar workers and students. This result seems quite reasonable,as it can be expected that white-collar workers can utilize these featuresbetter in their work than blue-collar workers. The fact that the impor-tance of networking features, such as e-mail or WAP services, is notmore valued by student is somewhat surprising.

CONCLUSION

The objective of this article was to examine consumer buying behav-ior of mobile phones and to investigate the reasons underlying mobilephone change. The study found strong evidence that although mobilephones are developing at a rapid pace closer to personal digital assis-


TABLE 5. Results by Profession

Professional groups Mean s.d. p-value

Design Students 5.38 1.471 .031*

Blue-collar 4.65 1.664

White-collar 5.55 1.092

New features, such as GPRS Students 4.33 1.729 .000**



E-mail Students 4.49 1.939 .010**



WAP services Students 3.12 1.958 .029*



UMTS Students 3.69 2.137 .013*



Note: *Significant at the 0.05 level.**Significant at the 0.01 level.

tants (PDAs), many consumers tend to be unaware of the properties andservices the new models in the market contain. Most importantly, espe-cially Study 1 showed that students are not familiar with new technicalproperties and their purposes of use. Study 1 furthermore showed thatconsumers are aware of the so-called curse of technology markets refer-ring to the fact that new technologies reduce in price over time. This ex-pected price reduction seems to be a factor slowing the diffusion of newmodels especially among lower income consumers. Study 2 showedthat seven factors characterize mobile phone choice: innovative services,multimedia, design, brand and basic properties, outside influence, price,and reliability. The first factor, innovative services explained most ofthe variability of the variables indicating, together with other statisticalanalyses conducted, that especially men tend to value new services inchoosing between mobile phones and intending to change their currentmobile phone to newer model.

The theoretical part of the study outlined in total five hypotheses thatwere supported by the empirical studies. Hypothesis 1 argued that de-mographic factors have an influence on the evaluations of different at-tributes related to mobile phone choice. This was verified in Study 2 inwhich we showed that specifically gender and occupation are signifi-cant variables affecting choice. Hypothesis 2 proposed that consumersvalue personal time planning properties in the choice of new mobilephone models. Although this hypothesis got some support among focusgroups, more research is needed to confirm this. Hypothesis 3 statedthat new technical properties increase consumer willingness to acquirenew models. This got some support among focus groups but was actu-ally verified in Study 2, where it was showed that innovative serviceswere regarded as important. Hypothesis 4a claimed that size of thephone influences consumer choice of the mobile phone model. This hy-pothesis got strong support in both studies. Hypotheses 4b stated thatwhen choosing between different mobile phone models, consumersvalue familiar brands. The hypothesis was verified. Finally, Hypothesis5 argued that price of the mobile phone plays an important role in thechoice especially among lower income consumers. This got strong sup-port among focus groups as well as in the survey.

From a theoretical viewpoint, this article contributed to the buyingdecision making process for mobile phones by looking at consumer mo-tives and examining the importance of different attributes affecting theactual choice. In short, on the basis of Study 1 and 2, the following state-ments can be made. First, although mobile phone choice is affected byspecific phone attributes, consumers evaluate and rank-order, choice is


often made without detailed evaluation and understanding of the prop-erties and features new models have. Second, decision making mainlyfollows a rational decision making process in which different attributesare evaluated, but also has some symbolic nature as brand was regardedas important among many study participants.

The most remarkable implication for mobile phone manufacturers,resellers and other value chain members is that advertising of new mo-bile phone models should go beyond highlighting properties to high-lighting what users can do with all the new technical features. Mobilephone advertising has long been based on eliciting properties and abbre-viations (e.g., GPRS, EDGE, Bluetooth) that are fully understood onlyby technology savvy consumers. Therefore, more attention should bepaid to educative advertising and marketing. The importance of the re-seller becomes constantly more important as we are entering the smartphone era–meaning that phones have so many properties and featuresthat users need both hands-on instructions and better post purchase ser-vice than before. Furthermore, as Finland has high mobile phone pene-tration and active mobile phone users, the results obtained with Finnishconsumers might guide other research conducted in other countries.However, we should bear in mind that many factors, such as legislationand international differences in culture for instance, definitely have animpact on results.

Despite this piece of research provides some insights into the factorsthat influence the choice of a mobile phone model, the work is still at anearly stage and certain limitations concerning the research settingshould be noted in order to guide future research of this phenomenon.For example, general limitations are raised in regard to the use of focusgroups (Study 1) and the interpretation of the results obtained. It shouldbe noted that although four focus group interviews were conducted, theresults cannot be generalized and might be biased by other subjects.Also, the fact that we used a student sample limits broader generaliza-tions of the findings. Perhaps the most important limitation concerningStudy 2 is the relatively small sample size, which makes it difficult togeneralize the findings.

More research is needed to leverage the findings and provide betterand more in-depth implications for both theory and practice. To specify,the research presented measured its subjects’ perceptions of differentfactors affecting their choice of a mobile phone model at a given point intime. In the future with the use of a longitudinal study it might be possi-ble to get a broader and deeper picture of the phenomenon under scru-tiny.


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Submitted: May 2004First Revision: June 2004

Second Revision: September 2004Accepted: November 2004


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