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To cite this article: Peter W. Turnbull , Sheena Leek & Grace Ying (2000) Customer Confusion:
The Mobile Phone Market, Journal of Marketing Management, 16:1-3, 143-163, DOI:
10.1362/026725700785100523
Introduction
Consumer search and choice behaviour has been central to the study of
consumer behaviour for many years. It is therefore surprising that so little
research has addressed the specific issue of consumer confusion and its effects
on search and choice behaviour. The authors contend that the increasing rate of
change of technology, together with socia-economic, political and competitive
factors will tend to produce high levels of confusion. There are two challenges
arising from this; firstly, the need for more and better research to enhance our
understanding of the nature, causes and outcomes of consumer confusion and
secondly, the challenge to marketing managers to reduce consumer confusion.
The market for mobile phones is probably the most dynamic of any in the
world. The degree and rate of change in technology, market adoption and
product innovation is staggering and the UK market is no exception. During the
past 10 years, market penetration has increased to 20% and the mobile phone
has changed from being a luxury to a mass consumer market A wide array of
value-added services, such as call-divert and mail box facilities are now becoming
standard. These changes have been accompanied by rapidly changing price
strategies, as mobile phone operators jockey for position and competitive
advantage.
It is not surprising therefore that consumers are confused about products,
services, prices and the service profiles of different operators. Both Mintel (1998)
and Keynote (1997) market research reports have identified significant levels of
confusion among consumers in the UK market, caused by the complexity of
networks, air-time tariffs and contracts. Network operators introduce different
tariffs to compete with other competitors, and these tariffs are further
complicated by variations in the tariffs created by service providers. The
complexity of the resulting tariffs makes it extremely difficult for consumers to
understand the tariff systems. Therefore, consumers find it hard to make
comparisons between different networks, and select the best value tariff for their
personal needs. According to the 1998 Mintel report, the percentage of non-
mobile phone users who are confused about mobile phone products and services
is highest among women (16%) and older people of 55 or above (17%). This
indicates that more effort should be placed on simplifying the network, especially
in educating these highly confused, potential consumers. The resulting consumer
confusion may have an adverse effect on industry growth, as research (Marketing
30th October 1997) has shown that three out of four people are deterred from
buying a mobile phone because they are worried about finding the right package.
Therefore, the findings indicate that consumer confusion may lead consumers to
resort to inaction rather than choice, as they face an ever wider and increasingly
complex array of options in services, supplies and equipment
In order to reduce the level of consumer confusion and to gain market share
in such a competitive market, retailers and operators are now trying to simplify
their tariffs system to make it easier for customers to understand and to
compare. Orange's emphasis towards customer orientation by simplifying their
tariffs system, may help customers to make a better choice. Further
understanding of the factors affecting consumer confusion and how the
phenomenon affects the consumer information searching behaviour are
therefore very important areas for future marketing strategy planning.
According to Marketing Week (26th March 1998), there was only a 3% growth
rate of new buyers joining the mobile phone market in 1997. In 1998, the same
survey indicated that 4% of non-buyers intend to purchase a mobile phone in the
next 12 months. All indicators show a relatively slow growth rate compared to
previous years.
This paper begins with an analysis of consumer perceptions of the mobile
phone market and discusses whether consumer confusion is a phenomenon in
Customer Confusion: The Mobile Phone Market 145
the market This is followed by examining if and how this phenomenon affects
the consumer decision making process regarding choice of different network
operators by looking at information searching behaviour and the ranking of
different information searching methods. It is hoped that the paper can provide a
general understanding of consumer perceptions towards marketing stimuli. As a
result, implications may be drawn to improve marketing strategies for both
network operators and retailers.
gambling simulations (Einhorn and Hogarth, 1986) and therefore may not be
applicable to situations such as "real" consumer behaviour. In a gambling
situation exact probabilities can be assigned to outcomes whereas in consumer
research, the outcomes of decisions made under ambiguity, involve probabilities
that cannot be specified exactly. In addition, empirical evidence does not
support the predictions of the SEU model, which states that the presence of
ambiguity should not affect how consumers make decisions. Research has shown
that consumers do make decisions differently if there is ambiguity (Becker and
Brownson, 1964; Yates and Zukowski, 1976; Gardenfors and Sahlin, 1982;
Curley and Yates, 1985, Kahn and Sarin, 1988; Einhorn and Hogarth, 1986).
Kahn and Sarin (1988) found consumers not only consider ambiguity in
making decisions under uncertainty, but that they are willing to pay to avoid it
This relates directly to consumers' perception of risk associated with the
purchase. Perceived risk is usually described as a function of two factors (Cox,
1967). The first is the uncertainty felt about the probability of a negative
outcome, which is itself, a function of the amount and nature of the information
available. The second factor is the possible consequence of purchase. Products
with a greater potential post purchase negative outcome will be perceived as
riskier than products which have few post purchase negative consequences.
Consumers search for information prior to purchase to reduce their
uncertainty (risk) about the decision to tolerable levels (Hansen, 1972 and Cox
1967). Generally, uncertainty has a positive relationship with information
searching but this may not be always the case. Urbany et al (1989) determined
that there are two general types of uncertainty: knowledge uncertainty, which
refers to uncertainty regarding information about alternatives and choice
uncertainty, uncertainty about which alternative to choose respectively. The
results of his research indicate that the two kinds of uncertainty had different
effects on information searching. Choice uncertainty (CU) appeared to increase
search behaviour i.e. people gathered more information to enable them to make
a choice. Knowledge uncertainty (KU) has a weaker and negative effect on search
i.e. people who were not experts gathered less information due to the high costs
of doing a thorough information search. Consumers with high KU and low CU
will therefore search the least
Using economic theory, Moorthy et al (1997) suggest that the optimality of a
consumer's search strategy is reflected in his/her trade-off between the perceived
benefit and cost of the search. In this cost and benefit search strategy, the
consumer will stop searching when the cost of the search is equal to the benefit
of the search.
From a different perspective, research has been developed to examine the
degree of strength in the relationship between marketplace-related beliefs and
pre-purchase external information search behaviour (Duncan and Olshavsky,
1982). An example of a marketplace-related belief is when consumers believe
that 'competition among mobile phone networks tends to keep tariffs of different
brands about the same.' Consumers with such a belief may search less due to a
lower perception of risk of financial loss.
Customer Confusion: The Mobile Phone Market 147
confusion in the mobile phone market and the nature of consumers' information
searching process.
Technology Services
Number of
Operators
Perceived Risk
PURCHASE DECISION
POSTPURCHASEBEHA~OUR
faster speed, and lower cost of digital technology, the analogue system is
scheduled to be phased out completely by the end of 2005, in order to release
the analogue frequencies for other uses.
Table 3.1: Overall Market Share of Each of the Mobile Phone Operators
(1999).
countries. The Mintel report (1998) shows that there were 15 cellular subscribers
for every 100 inhabitants of UK at the end of 1997. Compared to 5 years ago,
with less than 4% penetration rate, the results present an impressive 300%
increase in the number of mobile phone users.
NETWORK OPERATORS
Vodaphone Cellnet Orange One20ne
SERVICE PROVIDERS
Vodaphone Group PLC. Hutchinson Telecoms Ltd.
Cellnet Group Ltd. Call Connection Ltd. Martin Dawes Ltd.
RETAIL OUTLETS
Carphone Warehouse Phone Direct Vodaphone Orange
CONSUMER MARKET
The market continued to be quite volatile throughout 1998 and new "pre-paid
air time" deals lead to a massive surge in sales in the last part of the year; over
2.5 million new subscribers entered the market in the last quarter (Financial
Times, 5th Jan. 1999). Forecasts of future growth throughout the world continue
to be buoyant despite the economic problem in the Asia Pacific region and a
world market of 1 billion cellular users is predicted for the millennium (Financial
Times, 18th Nov.l998).
The large scale of infrastructure investment is a peculiarity of the mobile
phone market In order to survive in the competitive market it is necessary for
an operator to upgrade the cellular system continuously, to make sure the system
is working efficiently and to provide a high quality service to its customers. Due
to the high running costs in the mobile phone business, high market penetration
is needed by operators to be competitive. Aggressive promotions and even
Customer Confusion: The Mobile Phone Market 151
handset subsidising are some of the tactics adopted to increase market share
and fully utilise the extended networks. The 'low cost of consumer entry' strategy,
by offering highly subsidised handsets and providing an extensive range of free
offers, has driven up the market growth rate extensively. However, customers
soon realise they are suffering from high line rental costs and call charges, which
leads to a high chum rate between operators i.e. the number of subscribers
changing or leaving networks and this continues to be a considerable problem in
the mobile phone industry.
The volatile nature of the mobile phone industry has been strongly affected by
its advanced technological development in which the mobile phone companies
emphasise extensive invesbnent on product research, in order to meet
demanding customer needs and also to maintain their competitiveness in the
industry. In spite of the heavy expenditure on technological improvement they
also pay a lot attention to advertising and promotion campaigns. One reason
may be due to the service characteristic of the industry, which lacks tangibility.
Therefore, brand image is essential. In order to maintain the company's
competitiveness and to increase its market share, marketing tactics change
frequently among the four network operators. The intense competition among
the four operators has also driven them to focus on customer service and
customer retention, which is evidenced by the launch of the recent customer
loyalty programme by Vodafone and Orange. Another impact of the fierce
competition has prompted the constantly changing call charges (tariffs), which
may be a tactic to retain operator's market competitiveness, especially when
consumers are price orientated. However, the unstable tariff system, combined
with a complicated billing system, calise a very complex and confusing
environment in the market
Therefore, this research intends to explore the potential market by trying to
understand the perceptions of consumer infonnation searching behaviour and
the effect of confusion in the market One reason for the recent slow growth in
the mobile phone market is due to the lack of female participation. A survey
conducted by the Marketing Week research group (26th March 1998) showed
that men make up 60% of the main users, and also represent three quarters of
all non-users who intend to purchase a mobile phone in the next year. This
indicates the market's progress towards saturation point in its existing market
profile. In order to extend the existing market profile, greater attention needs to
be paid to female consumers. Thus, out of necessity, the understanding of female
consumers will playa significant role in the stimulation of any future market
growth. On the other hand, in stimulating the market's growth rate,
understanding the consumer, as a whole, is in itself vital. In order to understand
the consumer, it is necessary to understand their decision making process, in
relation to information, criteria, sources of infonnation, and attitudes. It is also
important to consider which types of communication methods they use to seek
infonnation when purchasing a mobile phone. This issue is also addressed in
this paper.
152 Peter W. Turnbull, Sheena Leek and Grace Ying
The Research
Restricted by time and resources a sample size of 167 was obtained and used for
the study.
SPSS was used to analyse the quantitative data in the questionnaire and
frequency tables are used to show the percentages of different categories in order
to provide a general background of the findings. Before analysing the data,
reliability tests were used to verify that each dimension had attained an
acceptable level. Various statistical tests such as t-tests, chi squared tests, one
way ANOVAs and correlations were used to analyse different types of data,
nominal, interval and ordinal.
The Sample
In total 167 individual interviews were carried out Due to the methodology and
constraints, the sample was not representative of the general population and
therefore general conclusions drawn from the data must be treated with caution.
35
31
29
30
25
Il)
bll
S 20
c
Il)
~ 15
Il)
j:I.,
10 mobile phone user I
10
0
aged 15- aged 25-34 aged 35-44 aged 45-54 aged 55+
24
Figure 5.2 shows the distribution of users between the four networks which
generally reflects the UK market, with the exception that in this sample,
One20ne holds as great a proportion of the market as Cellnet
154 Peter W. Turnbull, Sheena Leek and Grace Ying
35 2.4
30
23.5 23.5
1;h 25
til
E 20
Il)
u 15 network
"-
Il) respondents are
0- 10
connected to (%)
S
0
Vodafone Cellnet One20ne Orange
Consumer Confusion
In general, nearly half of respondents (45%) agree that "the mobile phone
network is very complex and they are not sure what is going on". However, 36%
of the respondents do not think the network is complex and consider themselves
to have a good degree of knowledge about the mobile phone market Sixty one
percent of the respondents agree that they feel confused about the variety of
brands and services offered. These results clearly confirm that there is a
confusion problem.
Older age groups were expected to perceive a greater degree of complexity in
the network and be more confused about the brands and services available,
however there are no statistically significant differences between age groups. In
terms of gender, although there is no difference on the perception of the
complexity of the mobile phone network, confusion about brands and services
do show significant difference (p=.037), with slightly more females agreeing that
they are confused than males. Surprisingly, there is no difference between users
and non-users on the perception of complexity and confusion of brands and
Customer Confusion: The Mobile Phone Market 155
services.
Factual questions were used to assess the respondents' actual level of
knowledge. In response to how many network operators there are in the UK, 33%
of the respondents answered correctly, 35% answered 'don't know' and 32%
answered incorrectly. Thus, two-thirds of the respondents lack knowledge about
the networks. The next question asked respondents to name the four mobile
phone network operators. Only 21 % of respondents were able to name all four
operators correctly and half of the respondents could not name any of the
operators. Among the four operators, Orange has the highest brand recognition,
despite having the second lowest market share, followed by Cellnet, Vodafone,
and the least recognised brand of One20ne (See Figure 5.3 below).
100
77.2
80
GJ
OIl
g 56.9 55.1
60
5<J
•.. 40
I Brand recognition I
GJ
~
20
0
Orange Cellnet Vodafone One20ne
Finally consumers were asked what services were provided by the operators. The
results reflect a poor level of recognition of service provisions with only 9% of the
respondents capable of naming 4 services accurately. The message service is the
most commonly recognised. A large percentage of respondents stated the
provision of 'handset equipment'. In fact, the operators do not sell handsets; they
are sold separately by the handset equipment manufactures such as Motorola via
retailers. Due to the nature of the mobile phone industry, the inseparable
product-service combination may be one conbibutor to the resulting confusion
that exists.
Chi square analysis revealed a statistically significant relationship between age
and level of knowledge (p=O.OOO). Younger age groups are more likely to be able
to name the four operators and the four service provisions (See Figure 5.4)
possibly due to their having a greater propensity to pay more attention to new
technology, and take more notice of marketing promotions.
Moreover, there is also a relationship between gender and degree of
knowledge (See Figure 5.5). Thirty seven percent of males can name all four
operators, compared to only 9% of females (p = .OOO).Also, fifteen percent of
males knew all four services, compared to only 5% of females (p=.OOO).
156 Peter W. Turnbull, Sheena Leek and Grace Ying
45
39
40
35
o 30 • named the 4 operators correctly
01)
E 25
o pointed out the 4 services correctly
~ 20
o
Q.. 15
10
5
o
aged aged aged aged aged
15-24 25-34 35-44 45-55 55+
40
• named the 4
o 30 operators correctly
01)
"5'" 20
()
•...
o 9
o pointed out the 4
Q.. 10 services correctly
o
male female
Standard
Ranking Mean
Deviation
1) Family and friends 2.30 1.26
2) Consumer report 3.08 1.15
3) Shop around 3.10 1.01
4) Advertising 3.29 1.14
5) Read guides from independent retail store 3.38 1.02
6) Salesperson advice 3.44 0.96
7) Read leaflets published by operators 0.79
8) Government report 3.89 0.43
9) Others 3.98 0.24
Note: 11= first priority; 2= second priority; 3= third priority; 4= not being chosen}
Respondents were also asked their reasons for selecting each of their ranked
information sources. Nearly half of the respondents (48%) ranked credibility and
reliability as the most fundamental factor. Thus, providing one indicator of why
"family and friends' advice" is so crucial to consumers, a source considered to be
relatively more trustworthy, especially when there is lack of experience and
knowledge regarding the product/service (Edgett and Parkinson, 1993; Murray,
1991).
Based on our review of the literature relating to consumer confusion and the
findings of this research, we propose a model to conceptualise confusion as
shown in Figure 6.1. This diagram identifies factors causing confusion in the
mobile phone market Fundamentally, the nature of the mobile phone market
requires consumers to put extra effort in to information acquisition. In addition
to the market characteristics, the industry environment is also very volatile, which
further complicates the situation. Information about the changing factors and
market factors is obtained via a number of sources of information, apart from
word of mouth, advertising, salesperson advice, there is information from
television programmes, newspapers, magazines, specialist magazines, consumer
groups, health bodies etc. The number of sources examined will vary from
individual to individual. This information is processed in such a way as to
introduce ambiguities, misinterpretations and misunderstandings resulting in
confusion. The complexity, overload and degree of misinterpretation or
misunderstanding of information may also vary according to different individuals'
cognitive ability and other personal factors. As a result, different degrees of
Customer Confusion: The Mobile Phone Market 159
confusion exist If people are aware they are confused they may perceive an
element of risk in making a purchase decision and refer back to their original
sources of information and/or some new ones. Once the confusion and the
perceived risk are eliminated or reduced to a tolerable level then a purchase
decision can be made.
EXTERNAL ENVffiONMENf
CHANGING FACfORS MARKET FACfORS
·· Company
Technological
·· Technology
Service Nature of
Changes Industry
· Government
Regulations
• Supplier structure
/
-
"SOURCES OF INFORMATION
Word of Mouth, Adverts, Salespeople, TV,
Newspapers, Magazines, Consumer Groups,
Health Bodies etc.
INTERNAL ENVffiONMENf
Information Processing
Consumer Confusion
misunderstanding! No
misinterpreting of info
leads to different degrees
of confusion
Yes
Perceived Risk
Volatile pricing structures,
service offers, promotion
strategies
No
The mobile phone market is generally perceived to be confusing, along with the
variety of brands and services offered. These perceptions were reinforced by a
considerable lack of factual knowledge about who the operators are and the
services they are offering. Confusion in this market is a fact Among the four
operators brand recognition is reasonably high, with Orange having the highest
brand recognition (77%).The other three operators' brand recognition was lower,
only half of the sample was able to name them. People are generally aware of the
companies in the market but they may not be familiar with their exact role or
position in the structure of the industry. This is reinforced by store managers
who also mentioned that consumers are confused about the industry's structure
and cannot distinguish between network operators, services providers, retailers
and handset manufacturers. People's knowledge of the services offered by the
operators was very low. Operators may have been concentrating on building their
brand image and failing to inform consumers of the services they offer and also
failing to differentiate themselves from their competitors on their services. These
two areas, the structure of the industry and the services they provide need
clarification in order to eliminate or reduce confusion and perceived risk to a
tolerable level and allow the consumer to make an informed decision. Women
were slightly more confused than men, which may be due to the technical nature
of the industry. Mobile phone users were as likely as non users to perceive the
mobile phone market and the variety of brands and services available as
confusing but mobile phone users were more factually knowledgeable about the
market Users and non-users could be confused about the same things.
Alternatively they could be experiencing differing degrees of confusion about the
mobile phone industry, for example non-users may be confused about the names
of the operators whereas users who are more factually knowledgeable may know
the operators but be confused about the structure of the industry as a whole i.e.
the users' greater depth of knowledge creates more questions leading to
confusion. Research reported in the national press (Marketing 30th Oct 1997),
stated that consumer confusion may have an adverse effect on the industry, as
they found that 3 out of 4 people are deterred from buying a mobile phone,
because they are worried about finding the right package. However, the findings
shown in this research do not support these previous findings.
Regarding the churn rate problem in the mobile phone market, these results
indicate that 16% of the existing users are planning to change their network in
the next 12 months, which showed a relatively lower percentage compared to the
market churn rate of 25%. The research also finds that the reason consumers
change their networks frequently, is mostly due to their dissatisfaction with the
billing systems provided by the service providers. In addition, other reasons are
the rapid price changes and quality improvements among networks. Consumers
tend to switch networks to search for the best package most suitable for their
needs.
With regard to information search behaviour, word-of-mouth is found to be
the most favourable information source. One reason for this according to the
respondents is due to the "credible and reliable" nature of the source. (Edgett
Customer Confusion: The Mobile Phone Market 161
and Parkinson, 1993). The findings also show that salesperson advice is one of
the least favourable information sources, which may be due to consumers' lack of
trust of the salesperson. In addition to word of mouth and advertising, "consumer
reports" and "shop around" are two other favourable sources chosen by the
respondents. In terms of buying criteria, "buy well-known" is considered to be the
most significant factor to reduce consumer buying uncertainty. This finding is
compatible with Duncan and Olshavsky's (1982) argument, where "consumers try
to simplify the search and evaluation process by focusing on branding". If brand
recognition was a determinant of purchasing then Orange theoretically should
have the highest number of users in this study, but in actual fact they have the
second lowest Focusing on branding can also be used to reduce a specific type
of perceived risk (psychological and social risk). Furthermore, "financial cost"
such as tariffs and speCial offers are also ranked at the top of the list indicating
consumers are highly concerned with the cost they have to pay. Finally,
"warranty" is also considered by the respondents, indicating the importance of
back-up service.
The findings indicate a potentially prosperous market growth in the future.
Among the percentage of users, the result finds that users are still inclined to be
younger age groups, with a peak among 25-34-year-olds. In addition, the findings
also found that there are differences in the buying criteria and the usage
amongst consumers (See Table 6.0. This information could be used to produce
specific market strategies for different types of consumers.
Summarising the findings, several key factors can be identified in the confusion
problem. Primarily there is confusion amongst consumers about the structure of
the mobile phone market and the roles of different companies. The confusion
problem may magnify the difficulties for suppliers in building a distinctive brand
image and the resulting brand loyalty. Consumers find tariffs problematic. Due to
a multitude of different tariff packages provided by the four operators, the vast
choice confuses consumers in their decision to choose the most suitable
package. In addition, technology and additional services are also key factors
causing the confusion problem. All in all, the consumer confusion problem is
due to misinterpretation and/or misunderstanding information in a rapidly
changing industry. In general, women are rather more confused than men,
162 Peter W. Turnbull, Sheena Leek and Grace Ying
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Customer Confusion: The Mobile Phone Market 163