Rural and Ethnic Young Consumers' Perceptions of Bundled Cellular Telephone Features

Stark, Jerrold, Rumpel, Joan H., Meier, Robert J., Bell, Reginald L., Academy of Marketing Studies Journal

INTRODUCTION

Executives seeking marketing strategies to retain or gain market share in the highly competitive cellular telephone business need to understand young consumers' perceptions of the importance of bundled features on the cellular telephones (phones) they sell. One approach to seek a market advantage is to segment the market to identify segments for which the product may be preferred. For example, a marketer seeking to expand cell phone business among rural and ethnic young consumers might wish to explore the environments where these populations congregate naturally: small-town universities, in particular, Historic Black Colleges and Universities (HBCU) for high concentrations of young ethnic consumer populations. The following questions might be raised: Are demographic variables in any way predictive of the bundled features young consumers perceived important? Does the combination of cellular telephone features make a difference to young consumers in rural or HBCU markets? Can pre-existing phone features present on the phones young consumers already own be used to predict their perceptions of the importance of bundled phone features? This study was conducted at two Midwestern universities, with limitations, in order to answer these and related questions.

A Few Limitations

This paper is a market segmentation study for the cell phone industry. There were limitations. The independent variables (cell phone features and demographic characteristics) cannot be construed as having a causal effect on the dependent variables (perceptions of the importance of cell phone features); meaning, cell phone features are not causative influencers on perceptions of the importance of features. Populations are assumed normally distributed. Only two universities were selected for the study, thus, generalizing results to any aspired population is cautioned against. There are nearly 100 cell phone features available on a number of brands and only ten features were analyzed in this study. These features were identified by a focus group of college students; therefore, a set of ten different features might generate different results if this study were replicated in the future. Another consideration not evaluated was the impact of intensity of competition prevailing in each market area. Despite this study's limitations, young consumers' use of cell phones has been explosive warranting empirical investigation.

The Cell Phone Industry

The explosive growth in the use of cellular telephones is well documented (Anderson and Jonsson, 2006; Joseph and Prakash, 2006). Eighty percent of Americans subscribe to a wireless service; ninety-nine percent of the U.S. population has access to at least one mobile carrier (Albanesius, 2008). McCasland (2005) believes young consumers aged between 18 and 22 are often the architects of change in the US culture. Cellular telephones have changed the US culture, and they have become a ubiquitous commodity. Thus, cellular telephone marketers must continue to change their strategic foci from routine product differentiation strategies (Reiner, Natter, and Spectrum, 2007).

Globally, cellular telephone use is also pervasive (Chintagunta, and Desiraju, 2005; Joseph and Prakash, 2006; Landale, 2006; Miller, 2006). Nokia predicted that by 2010, world-wide usage of mobile phones will reach three billion users (Associated Press, 2005). Cellular telephones have developed beyond basic voice communication. Wireless carriers routinely offer additional features such as instant messaging, video, camera and music players. The CW network has partnered with Sprint to launch a mobile series spin-off from its drama, Smallville, with the aim of reaching their young core audience (Shields, 2007).

Cellular phones have always been used for communication, but they are used for online social networking as well. One of the most popular uses of the computer by college students, other than for class assignments, is accessing MySpace (with over 110 million users) and/or Facebook (with 70 million users). AT&T, Sprint Nextel, and Verizon Wireless have started a service that will allow users to post messages on Facebook's home pages or search for other users' phone numbers and e-mail addresses from a cellular telephone. MySpace has a pact with Hello, a wireless joint venture between SK Telecom and Earthlink, that will allow users to send photos and update their blogs or profiles by cellular telephone (Knowledge@Wharton, 2006). Sprint Nextel internet-accessible phones now have access to MySpace Mobile (MSM), the "first free direct access" to MSM through a U.S. wireless carrier, providing a rich set of features now available on a mobile devise (Kansas City Business Journal, 2008).

In addition to accessing the Internet, watching TV, and sending text messages, cellular phone users can also use their phones for mobile banking. Bank of America allows its customers to access locations of ATM and banking centers using their mobile phone browsers and can receive e-alerts as either an e-mail or text message. Free mobile banking service became available in 2007. Its online banking customers with mobile internet access can use their cellular telephones and smart phones to pay bills, transfer money and check account balances. Currently, more the 85% of cellular telephone subscribers can access mobile Internet (Bank of America, 2007).

In fact, the cellular telephone may one day replace the wallet. Japan is a forerunner in this area. In Japan, E-cash is accepted in stores and restaurants, allowing shoppers to carry nothing but their cellular telephones, which transmit infrared signals. Value is added to phones at automated docking stations where paper money is inserted and credit for E-cash is added to the phones (Failoa, 2005). Japan's top mobile phone operator (NTTDoCoMo) and McDonald's Japan have announced an agreement to jointly promote e-marketing based on e-wallet services through an upcoming joint venture which will include mobile-phone credit cards (Cellular News, 2007). The rapid pace of strategy changes among cell phone competitors is evidenced in the literature.

LITERATURE REVIEW

At the beginning of the twenty-first century, researchers were just beginning to focus on the importance that wireless and 3G technologies would play in business and marketing. Wireless and radio technologies were predicted to be at the heart of many business activities (Manning and Cosier, 2001). Access and usage prices were found to have different relative effects on demand and retention (Danaher, 2002).

By 2005 researchers began to focus on the application of wireless technology. The difference between …

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Publication information: Article title: Rural and Ethnic Young Consumers' Perceptions of Bundled Cellular Telephone Features. Contributors: Stark, Jerrold - Author, Rumpel, Joan H. - Author, Meier, Robert J. - Author, Bell, Reginald L. - Author. Journal title: Academy of Marketing Studies Journal. Volume: 12. Issue: 2 Publication date: July 2008. Page number: 1+. © 2008 The DreamCatchers Group, LLC. COPYRIGHT 2008 Gale Group.

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