Consumer preferences in the Telecom Industry:
Understanding the Perception of Youth
Coen Zweers
Master thesis MSc. Marketing Intelligence
Introduction
>
Smartphone market is growing and expected to reach 14.55 million in
2021, whereas it was10.87 million in 2015 (Statista 2016).
>
Telecom market is a rapidly changing environment, very competitive
and companies revenues decline
Research Questions
>
What are the effects of different product and service characteristics for
youth on consumer preferences in the consumer mobile telecom
market?
•
Effects mobile post-paid plans?
•
Preferred combinations?
•
Difference youth versus mass?
Relevance
> Add insights to telecom market by focusing not only on the different effects on consumer
preferences for youth but also the relative importance of attributes for mobile post-paid plans.
> Provides executives with insights between the differences of youth and mass segment
and how to target these specific audiences
> Presents prior segmentation on demographics and latent classes (clusters) based on
Literature
> Brands are intangible assets that are important to measure (Keller 2014).
> Satisfaction of a customer is indirectly influenced through price and directly influenced
by price perception (Malik et al. 2012).
> Price promotions can reach up to -3.63 (Bijmolt et al. 2005).
> Need for additional products can increase by buying the base product (Erat and
Bhaskaran 2012).
Methodology
7 1. Samples customer base 2. CBC Survey 3. Goodness of fit test 4. Estimation of effects 5. Relative importance 6. Prior segmentation 7. Latent class goodness of fit 8. Estimation latent classes 9. ImplicationsSamples
Target Group:
20.000 youth customers of a telecom company (max 24 years old)
20.000 mass customers (older than 24 years old).
Invitations were send via e-mail Online interviews
Target
group Invitations Sample size
Youth 20.000 1039
Mass 20.000 1313
Sample size
Sample source is:
Choice-based conjoint survey
9
Choice A Choice B Choice C
Apple iPhone 7 Samsung Galaxy S7 Sony Xperia XZ
Company B Company A Company C
€ 40,- per month € 50,- per month € 35,- per month
30% discount 20% discount 0% discount
Free music subscription (Spotify)
Free movie subscription (Netflix)
Extra data package 30%
Results
40% 17% 27% 9% 8% 42% 20% 26% 6% 6%Smartphone brand Telecom brand Subscription fee Price promotion Additional services
Relative importance
Youth Mass
Latent classes 1 2 3 4 5
Theoretical implications
> Brand are intangible assets and important to manage(Keller et al 2014). True according to this study. For mobile post-paid plans, smartphone brand is most important
> According to Daud (2013). Brand impact can be of lower importance. True for telecom brands.
> Young people (till 24 years old) have a stronger positive effect towards moderate subscription fee compared to older people (older than 24 years).
> Price promotion have little impact on consumer preferences compared to brand and subscription fee
> Add-ons have very little impact on consumer preferences compared to brand and subscription fees
Managerial implications
> Smartphone brand is most important driver for the consumer preference (youth and
mass) followed by subscription fee, telecom brand, price promotions and add-ons. Availability of premium smartphones is essential.
> Marketing managers can create propositions that match specific segments based on
age, gender, living situation, work situation
> Focus on latent classes and propose offers for: Average customer, Apple fans, Loyal
Limitations and future research
> Specific attributes are used, focus on other attributes (e.g. calling minutes)
> Existing customer base, use non provider specific customer base
> No-choice option, apply no-choice option
> Only consumer market, focus on enterprise market
> Only on mobile post-paid, focus on SIM-only and prepaid
> Only Dutch market, other countries