Transcript of "Factors Affecting Consumer Choice of Mobile Phones: Two ..."
Factors Affecting Consumer Choice
of Mobile Phones:
Two Studies from Finland
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
Heikki Karjaluoto is Research Professor in Marketing; Jari Karvonen is Researcher
in Marketing; Manne Kesti is Researcher in Marketing; Timo Koivumäki is Profes-
sor in Marketing; Marjukka Manninen is Researcher in Economics; Jukka Pakola
is Researcher in Economics; Annu Ristola is Researcher in Marketing; and Jari Salo is
Researcher 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 Business
Administration, Department of Marketing, P.O. Box 4600, FIN-90014 University of
Oulu, Finland (E-mail: firstname.lastname@example.org).
The financial support of the National Technology Agency of Finland is gratefully
acknowledged. The authors also wish to thank all the study participants.
Journal of Euromarketing, Vol. 14(3) 2005
2005 by The Haworth Press, Inc. All rights reserved.
Digital Object Identifier: 10.1300/J037v14n03_04 59
Karjaluoto et al. 61
The telecommunications sector has been struggling over the past
years, not only due to high prices companies paid for UMTS licenses
but also due to the global economic downturn. Although the mobile
phone handset market is growing five to ten percent per year and opera-
tor subscriber bases are growing, average revenue per user (ARPU) is
falling and price competition is heating up (Hansen, 2003). We are cur-
rently experiencing a shift from the second generation (2G) to the third
generation (3G) mobile phones, which is expected to change the way
people use their mobile phones. The rise of the 3G network and its con-
sumer acceptance is said to be one of the toughest marketing challenges
in recent history (Benady, 2002). In general terms, the success of 3G de-
pends primary on how the real benefits of the technology are marketed
to consumers on one hand and on pricing policy of the services on the
other (e.g., Benady, 2002). If we look beyond the hype around 3G it is
obvious that we are not experiencing a revolution in mobile phone mar-
kets, rather an evolution where consumers are able to do the same things
they could with 2G and 2.5G (e.g., GPRS and EDGE technology), but
only better and faster in terms of download times (cf. Drucker, 2004;
Sehovic, 2004). The mobile phone industry is currently using many
standards (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 two
standards are competing, the WCDMA (Wide-Code Division Multiple
Access) 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 Code
Division Multiple Access). The WCDMA standard is said to dominate
the global market for the next five years (Sehovic, 2003).
Consumer shift from 2G to 3G means that in order to be able to use
the services offered by the faster network consumers need to acquire
new mobile handsets equipped with Internet access and new features
such as possibility to receive and send multimedia messages. Although
recent news indicates a strong demand for new mobile phones equipped
with 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-
The development of mobile phones is leading the market into a situa-
tion where the basic need, communication, is actually broadened to new
means of interaction and personal digital assistance. In fact, mobile
phone evolution will eventually lead to the convergence of mobile
phones and digital personal assistants (PDAs). Thus, communication is
62 JOURNAL OF EUROMARKETING
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,
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-
FIGURE 1. The Beginning of the Smart Phone Era
2000 2001 2002 2003 2004 2005
Text, rings Color bitmaps MMS Mobile video/audio
Simple bitmaps Simple animations xHTML Location
SMS Push/Pull EMS Real smart phones integration
Simple Web Clipping SMS Push/Pull Real GPRS Voice recognition
Legacy phones WAP pull P2P Real wireless
Smart phones, M-Commerce PDAs
PDAs 3G trials Broadband access
GPRS trials Micro movies 3G networks
J2ME, MIDP Hybrid WLAN/3G
Simple location- PAN
Karjaluoto et al. 63
hanced device sales (O’Keefe, 2004). Research institutes forecast that
step by step properties like built-in cameras and calendar will become a
standard 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 that
the demand will continue to develop for mobile imaging, games, music
and other media services as users become more aware and familiar with
the services and their different purposes of use (see, e.g., Gartner
Dataquest, 2004; Nokia, 2004; Strategy Analytics, 2003). But as the
Internet finally finds its way to mobile phones the basic need to acquire
a mobile phone might expand from communication to gaining Internet
access. This in turn is expected to bring mobile phones one step closer to
The primary objective of this paper is to examine the importance of
different factors affecting consumer’s motives related to mobile phone
purchasing and to investigate the main reasons to change mobile phone.
Although consumer motives underlying mobile phone acquisition are
something one could call general knowledge, relatively little is known
on the buying decision making process in relation to new mobile phone
models packet with different properties (i.e., smart phones) allowing
users to communicate in fresh ways.
The next sections review previous research on motives and choice
behavior 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 phone
CONSUMER CHOICE BEHAVIOR
From marketing perspective, consumer choice behavior can be stud-
ied through the classical five-step (need–information search–evaluation
of alternatives–purchase–post-purchase evaluation) problem solving
paradigm or through the progression of consumer choice from a product
class to brand choice (Dorsch, Grove, and Darden, 2000). The five-step
model is usually suitable for decision making that assumes rational
problem solving behavior and, in most cases, complex decision making.
The acquisition of a new mobile phone follows this traditional view of
buying process, but is in many situations also affected by symbolic val-
ues related to brands.
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Consumer choice behavior has some important prevailing conditions
that must be taken into account while studying choice. In the light of the
classical problem solving buying behavior, consumers engage in infor-
mation search before making the actual choice. Consumer decision
making process is usually guided by already formed preferences for a
particular alternative. This means that consumers are likely to make the
choice 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 and
Hutchinson, 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 five
heuristics (conjunctive, disjunctive, lexicographic, linear additive, and
geometric compensatory) in the consideration set formation found that
conjunctive heuristics is the most often used decision model in the con-
sideration set formation for two product classes in the study (beer
brands and fast food outlets). Conjunctive heuristics means that a con-
sumer selects a brand only if it meets acceptable standards, the so-called
cutoff 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 that
does 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 range
from choice oriented referring to a decision on which alternative to pur-
chase from a set of alternatives, whether or not to purchase, or whether
to 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 by
utilizing different choice models (see, e.g., Chintagunta, 1999; Bocken-
holt and Dillon, 2000; Swait and Adamowicz, 2001) or neural networks
to model selection decisions (e.g., Papatla, Zahedi and Zekic-Susac,
2002). Papatla et al. (2002) examined empirically brand choice and
store choice in regard to margarine, detergent and tissue. The research
found that while neural networks have higher probability of resulting in
a better performance, hybrid models guaranteed equal or better results
than stand-alone models. It has also been pointed that many decision
strategies used by consumers can change due to person-, context-, and
task-specific factors (Dhar, Nowlis and Sherman, 2000; Swait and
Karjaluoto et al. 65
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 more
attention to factors like task complexity and context in modeling choice
behavior (cf. Swait and Adamowicz, 2001). Moreover, Coupey, Irwin
and Payne (1998) found that the influence of task and context factors
might 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 may
not be suitable for all situations, or is at least incomplete to understand
choice behavior. Limited information search and evaluation of alterna-
tives led to a situation in which consumer choice is also driven by
hedonic 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 provide
fun, pleasure and excitement. It has been noted that many choices have
both utilitarian and hedonic features (Batra and Ahtola, 1990), and thus
it can also be proposed that the choice between mobile phones has both
utilitarian (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 the
perspective of conscious and nonconscious choice (e.g., Fitzsimons et
al., 2002). Quite many choice situations occur outside of conscious
awareness and with limited information search (Kivetz and Simonson,
2000) and it can be stated that many choices have both conscious and
nonconscious motives. Fitzsimons et al. (2002) found that in many
cases 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 of
academic articles have dealt with mobile phone usage and grasped
the consumer decision making process. To begin with, Riquelme (2001)
examined how much self knowledge consumers have when choosing
between different mobile phone brands. The study was built upon six
key attributes (telephone features, connection fee, access cost, mo-
bile-to-mobile phone rates, call rates and free calls) related to mobile
66 JOURNAL OF EUROMARKETING
phone purchasing respondents had to importance rate. The research
showed 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 and
underestimate 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 to
prior consumption styles. According to a fresh survey of Finnish young
people 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 common
among females and was related to trendy and impulsive consumption
styles. Instead, males were found to have more technology enthusiasm
and trend-consciousness. These attributes were then linked to impulsive
consumption. The study concluded that genders are becoming more
alike 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 of
different 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 more
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 that
according to Jones the so-called killer services such as gaming, gam-
bling and music downloads are not seen that important in the diffusion
of smart phones. However, there is little support to this argument. How-
ever, while synchronization of calendar and e-mail services to PCs has
become easy and fast, the importance of time planning in mobile phones
becomes more and more important. Thus, the following hypothesis is
H2: Consumers value personal time planning properties in the choice
of new mobile phones.
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:
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 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:
H4a: When choosing between different mobile phone models, con-
sumers value larger screen size but the whole phone should be
small 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 the
choice 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 advances
price 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 in
other EU countries compared to Finland where price is not linked to
the operator contract. Therefore, while in other EU countries (except
Italy and Benelux countries), the acquisition of a mobile phone is bun-
68 JOURNAL OF EUROMARKETING
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:
H5: When choosing between different mobile phone models, espe-
cially lower income consumers have a price limit that restricts
the choice to fewer models.
To summarize, consumer choice behavior can be studied through
various frameworks such as the problem solving paradigm and through
consumer choice from product class through brand choice. A summary
of the literature review is presented in Table 1.
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 starting
point to the survey (study 2). Focus groups produce data that are always
biased by other respondents but also provide important data based on
group 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 autumn
2002 among graduate students. The number of participants in each group
ranged from 15 to 19, and most of the students were aged 21-25. With
these groups two important criteria considered as important in focus
group interviewing (Malhorta, 2002; Morgan, 1996) were achieved: not
only 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 participants
in 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.
Karjaluoto et al. 69
TABLE 1. Summary of Literature on Consumer Choice Behavior and Mobile
Contributor Data Contribution to our study
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).
Alba and Hutchinson Literature review Choice is made without detailed evaluation of alterna-
Chernev (2003) Four experiments Similar to Alba and Hutchinson (2000). In addition,
(n = 88) choices made from large assortments can lead to
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
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.
Fitzsimons et al. (2002) Literature review Consumer choice often occurs outside conscious
awareness. Nonconscious influences affect choice
much 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 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
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
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-
70 JOURNAL OF EUROMARKETING
The four group interviews were led by an experienced researcher and
special attention was given to provide a relaxed atmosphere and thereby
making discussion nondirective and spontaneous. It has been stated that
only by allowing spontaneous informal interaction focus groups are
valuable qualitative technique in exploring unconscious needs and mo-
tives (e.g., Spier, 1996; Thomas, 1998) and moreover often perceived as
more exciting and arousing by participants than surveys or one-on-one
interviewing (Bristol and Edward, 1996).
The focus group interviews lasted from 45 minutes to 90 minutes
and were audio-recorded. The moderator had a list of keywords that
were used in directing the discussion to motives affecting the purchas-
ing process. This list of motives was based on previous studies and prior
knowledge, but as one could have expected the interviewing revealed
also new motives that were not previously discovered by the research
Study 2 is built on the basis of the focus group interviews. Study 2
surveyed 196 voluntary respondents who filled in the questionnaire in
September 2003. The questionnaire was developed on the basis of the
focus group interview and tested with 50 students before distributed on-
wards. Questions inquiring mobile phone choice were implemented on
seven-point Likert scales (1 = not at all important to 7 = extremely im-
portant) inquiring perceptions of various attributes related to mobile
phone purchasing. Most of the survey respondents were aged 20-30 and
were male (63.8 percent). The respondents’ educational backgrounds
varied a lot as also their levels of employment.
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 of
the members of the four focus groups.
In all groups, most of the mobile phones owned by the participants
were 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 mobile
phones always had the same brand but different model. Although in
Finland the price of a new mobile phone is even higher than in other EU
countries due to the fact that telephone operators cannot offer free or
Karjaluoto et al. 71
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
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 for
changing was that the old one was broken or did not work properly. This
meant for the participants that the mobile phone did not work, the calls
were 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 new
features 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 the
The importance of price might be related to the student sample. All
groups reported having a maximum price they are willing to pay for a
new mobile phone. The price range varied between 10 to 150 which
indicates that students are buying low-priced phones. The groups re-
garded new technological features as too expensive to use, an in fact
groups B and D felt new features as totally needless. On the other hand,
groups A and C considered new features such as multimedia messaging
service (MMS) handy but too expensive to use at present. Participants
were also skeptical about the quality of the pictures and video clips. A
general view seemed to be that mobile phones are still seen as talking
devices, and new properties were not commonly used. Other services
such 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 good
improvement, students were not ready to pay the high price just for get-
ting fancier color menus for their phones. Most felt that they never buy
the newest model because mobile phone manufacturers are well-known
for their pricing strategy in which new models while launched to the
market cost much more than after a couple of months when the price be-
gins to fall. Quite interestingly, relatively many were unaware of the
72 JOURNAL OF EUROMARKETING
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
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 and
information 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-
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
FIGURE 2. Factors Affecting Mobile Phone Change and Choice Behavior
New Reason to Factors affecting Size**
features** CHANGE mobile phone -Match into pocket
mobile phone CHOICE
Innovator’s -Customer loyalty
Note: *some influence, **medium influence, ***strong influence.
74 JOURNAL OF EUROMARKETING
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
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
TABLE 3. Factors Explaining the Choice of a Mobile Phone
Variable (1) (2) (3) (4) (5) (6) (7)
Innovative Multimedia Design Brand and Outside Price Reliability
services basic influence
Browsing WWW .843
New features .619
Color screen .503
Built-in camera .737
Small size .727
Known brand .676
Domestic product .620
Advanced sms .594
Larger memory .538
New product .410
Special offer .880
Model at reduced .848
% of variance 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.
76 JOURNAL OF EUROMARKETING
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.
cally significant differences in the importance of the decision variables
between men and women. When buying a mobile phone, women place
more value on brand familiarity than men, whereas men seem to value
more 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 place
very little value to data processing and networking features. Men, on the
other hand, seem to utilize various enhanced features and network ser-
vices such as e-mail, and therefore, these variables play an important
role in their decision making.
In the analysis of the importance of the decision variables between
different occupations, we divided the respondents into three aggregate
occupational groups: white-collar workers, blue-collar workers and stu-
dents. White-collar group includes various professions in middle or top
management of various companies. Blue-collar group includes employ-
ees that perform tasks that on the operational level in manufacturing or
service industries. Students group includes undergraduate and graduate
students. Again, only the variables with statistical differences are re-
ported. The results are presented in Table 5.
Karjaluoto et al. 77
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**
Blue-collar 4.06 1.825
White-collar 6.00 1.078
E-mail Students 4.49 1.939 .010**
Blue-collar 4.48 1.877
White-collar 5.68 1.166
WAP services Students 3.12 1.958 .029*
Blue-collar 2.74 1.612
White-collar 4.00 1.932
UMTS Students 3.69 2.137 .013*
Blue-collar 2.92 1.754
White-collar 4.59 1.955
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 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.
The objective of this article was to examine consumer buying behav-
ior of mobile phones and to investigate the reasons underlying mobile
phone change. The study found strong evidence that although mobile
phones are developing at a rapid pace closer to personal digital assis-
78 JOURNAL OF EUROMARKETING
tants (PDAs), many consumers tend to be unaware of the properties and
services the new models in the market contain. Most importantly, espe-
cially Study 1 showed that students are not familiar with new technical
properties and their purposes of use. Study 1 furthermore showed that
consumers 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 new
models especially among lower income consumers. Study 2 showed
that 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 of
the variability of the variables indicating, together with other statistical
analyses conducted, that especially men tend to value new services in
choosing between mobile phones and intending to change their current
mobile phone to newer model.
The theoretical part of the study outlined in total five hypotheses that
were 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 in
which we showed that specifically gender and occupation are signifi-
cant variables affecting choice. Hypothesis 2 proposed that consumers
value personal time planning properties in the choice of new mobile
phone models. Although this hypothesis got some support among focus
groups, more research is needed to confirm this. Hypothesis 3 stated
that new technical properties increase consumer willingness to acquire
new models. This got some support among focus groups but was actu-
ally verified in Study 2, where it was showed that innovative services
were regarded as important. Hypothesis 4a claimed that size of the
phone influences consumer choice of the mobile phone model. This hy-
pothesis got strong support in both studies. Hypotheses 4b stated that
when choosing between different mobile phone models, consumers
value familiar brands. The hypothesis was verified. Finally, Hypothesis
5 argued that price of the mobile phone plays an important role in the
choice 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 buying
decision making process for mobile phones by looking at consumer mo-
tives and examining the importance of different attributes affecting the
actual 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 by
specific phone attributes, consumers evaluate and rank-order, choice is
Karjaluoto et al. 79
often made without detailed evaluation and understanding of the prop-
erties and features new models have. Second, decision making mainly
follows a rational decision making process in which different attributes
are evaluated, but also has some symbolic nature as brand was regarded
as 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. Mobile
phone advertising has long been based on eliciting properties and abbre-
viations (e.g., GPRS, EDGE, Bluetooth) that are fully understood only
by technology savvy consumers. Therefore, more attention should be
paid to educative advertising and marketing. The importance of the re-
seller becomes constantly more important as we are entering the smart
phone era–meaning that phones have so many properties and features
that 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 Finnish
consumers might guide other research conducted in other countries.
However, we should bear in mind that many factors, such as legislation
and international differences in culture for instance, definitely have an
impact on results.
Despite this piece of research provides some insights into the factors
that influence the choice of a mobile phone model, the work is still at an
early stage and certain limitations concerning the research setting
should be noted in order to guide future research of this phenomenon.
For example, general limitations are raised in regard to the use of focus
groups (Study 1) and the interpretation of the results obtained. It should
be noted that although four focus group interviews were conducted, the
results 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 concerning
Study 2 is the relatively small sample size, which makes it difficult to
generalize the findings.
More research is needed to leverage the findings and provide better
and more in-depth implications for both theory and practice. To specify,
the research presented measured its subjects’ perceptions of different
factors affecting their choice of a mobile phone model at a given point in
time. 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-
80 JOURNAL OF EUROMARKETING
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Submitted: May 2004
First Revision: June 2004
Second Revision: September 2004
Accepted: November 2004