consumerlab UNLOCKING CONSUMER VALUE Identifying the needs of today s smartphone and mobile internet users

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1 consumerlab UNLOCKING CONSUMER VALUE Identifying the needs of today s smartphone and mobile internet users An Ericsson Consumer Insight Summary Report May 2013

2 contents DIVIDE AND CONQUER 3 KEY FACTORS 4 PERFORMANCE SEEKERS 5 DEVICERS 6 VIPs 7 COST CUTTERS 8 CURIOUS NOVICES 9 CONTROL SEEKERS 10 Summary 11 METHODOLOGY This report identifies six target groups who all use mobile internet in different ways and prioritize different services. These groups have been defined based on the results of qualitative fieldwork in Sweden, US, UK and Italy. Each group places a unique emphasis on specific areas of the mobile internet experience. In-depth interviews were conducted to ensure qualitative results were achieved. The defined target groups are based on attitudes and what matters to them, not usage of specific services. These attitudes become more stable over time, allowing operators to better personalize their services and offers, and even apply the findings to consumers that are about to start using mobile internet. Ericsson consumerlab the voice of the consumer Ericsson ConsumerLab has more than 15 years experience of studying people s behaviors and values, including the way they act and think about ICT products and services. Ericsson ConsumerLab provides unique insights on market and consumer trends. Ericsson ConsumerLab gains its knowledge through a global consumer research program based on interviews with 100,000 individuals each year, in more than 40 countries and 15 megacities statistically representing the views of 1.1 billion people. Both quantitative and qualitative methods are used, and hundreds of hours are spent with consumers from different cultures. To be close to the market and consumers, Ericsson ConsumerLab has analysts in all regions where Ericsson is present, which gives a thorough global understanding of the ICT market and business models. All ConsumerLab reports can be found at: 2 ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE

3 DIVIDE and conquer The rapid uptake of smartphones and other connected devices has transformed the mobile broadband landscape shaping and broadening the way users work, play and communicate. When the uptake of smartphones begins to accelerate in a particular market, it is vital to differentiate between consumers based on what they prioritize in an offering, whether that s unwavering performance or cost control and data usage. This report outlines Ericsson ConsumerLab s findings and details six different mobile internet target groups. It can be used to help operators and developers better understand what is important to their users. This information can enhance overall consumer experience and loyalty by creating more value through relevant services and offerings. Key findings > The online experience is increasingly important The connected society is becoming ever more demanding, and as the smartphone becomes integrated into all aspects of life, operators need to move swiftly in order to match the needs and expectations of new and current users. > Target groups value different mobile internet features As technology matures, new types of users with different needs are entering the scene. It is vital to address and treat users differently in order to provide the best individual experience and make them feel valued. > Four factors affecting consumers Examining smartphone users shows that there are four different key factors that affect the overall mobile internet experience and relationship with the operator. These factors are: performance, price, interaction and device. > Operators should promote areas other than price Price is something mobile internet users can easily compare between operators, but comparing important areas such as network performance presents a more challenging task. Highlighting the importance of this, and making those other areas a part of the initial purchase decision is vital to building lasting relationships with consumers. Six different mobile internet target groups PERformance seekers COST CUTTERs DEVICERS curious novices VIPs CONTROL SEEKERS ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE 3

4 key factors Consumers select operators based on a number of key factors ranging from performance of the network, to value for money. Target groups place emphasis on specific areas of mobile internet, considering one or more of the following aspects: Today, the quality of network performance is one of the most important factors affecting customer loyalty to the operator. Therefore ensuring network speed and reliability is fundamental to a trusting, long-term relationship. PRICE Value for money is a deciding factor for most when considering a smartphone package. Being trapped in an unsuitable price plan can impact negatively on the relationship and lead to churn, but a transparent, fair plan that is flexible can positively impact the user experience. INTERACTION The relationship between operator and consumer is currently distant and a little unfamiliar. Most users don t experience an overly negative relationship, but the personal touch is somewhat lacking, and the relationship is often peripheral rather than focal. The relationship could be vastly improved through offering loyalty rewards or personalized prices, which could effectively re-engage the consumer and ensure improved satisfaction. DEVICE The devices that operators offer can be extremely important for certain consumers. In particular, it s important that operators carry the very latest and sought-after models. Although the device does not directly improve the relationship between the operator and consumer, it can be used to build on the relationship through device-related communications, such as offering upgrades. 4 ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE

5 seekers My operator s coverage in Chicago is really good. You can even be on a train and you still have a signal. Samir, Seeker Most important factors for Seekers Price Interaction Device The best possible experience to support connected lifestyles The reliability and performance of a service is important for a successful operator-user relationship. But for Seekers, it s absolutely fundamental. Members of this target group live and breathe technology, and their device touches every part of what they do and how they do it. Therefore providing a network experience that is good, reliable and efficient could be the difference between user satisfaction and churn. They realize that everything can be achieved through their connected devices, and therefore look for operators who can deliver fast and reliable mobile internet services. RELIABLE SERVICE The fundamental satisfaction driver for Seekers ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE 5

6 devicers A phone is more than just a phone it s a statement For Devicers, a handset is far more than a means to communicate. Their choice of smartphone expresses their style of living, while the brands and products they consume are directly linked to an aspired social status. Deciding which mobile phone operator and subscription to have is not as important as the device itself. The choice of provider can also be a direct result of the device with Devicers choosing the operator that provides the right device for them. Most important factors for Devicers Price Interaction Device I really need to get the new iphone as soon as it s available, it is so cool! Emilia, Devicer upgrade Having the perfect device drives loyalty for this group 6 ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE

7 vips special treatment VIPs expect acknowledgement and special rewards Feeling valued is paramount VIPs expect a level of service and performance that is second to none, even if they might not always fully utilize it. The relationship between the operator and the user is vital for this group, and they demand superior treatment at all times. VIPs are prepared to pay for a service that has the right service level and doesn t limit their experience in any way. They need to feel like a premium consumer and want all the perks that come with that whether it s jumping queues or receiving personalized promotions. Their mobile internet usage is rich and extensive, making use of all types of apps and features throughout everyday life. The use of mobile internet is not seen as a luxury to VIPs, but more a necessity to maintain a level of consumption that is in line with their lifestyle. Most important factors for VIPs Price Interaction Device I ve been with my operator for years and I must say that I like them very much. Maybe my operator could acknowledge me somehow, that I am a loyal customer. Monica, VIP ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE 7

8 cost cutters I don t see why I should have to pay anything extra for my subscription. Internet is supposed to be included. Irene, Cost Cutter Always searching for the cheapest possible alternative Cost Cutters prioritize one thing price. They look for simple, low cost plans from honest operators who will not surprise them with additional charges in the small print. They are naturally skeptical and constantly on guard, not really trusting their operator. The device and the service they use must fulfill basic operations and cover basic needs, but must meet their specific expectations, allowing them to still do the things they want. Many of them are fine with using an older phone model or device, as long as it doesn t hamper the experience too much. Cost Cutters use mobile internet in very different ways, depending on their priorities and needs. Usage can be as rich and frequent as any other user group. This group appreciates other factors such as reliable and good network performance, but they are not willing to pay extra in order to improve them price is still the primary focus. Most important factors for Cost Cutters Price low prices Cost overrules quality of service for this group Interaction Device 8 ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE

9 curious novices OPERATOR SUPPORT An important factor for Curious Novices as they enter the communications evolution Exploring recommendations and appreciating support Curious Novices are popping up everywhere, finding their feet on digital platforms and discovering the potential of connected devices. Curious Novices want to become part of the media and communications evolution but are unsure and uninformed about their options. They look for devices that perform well and are easy to use. They need to feel supported in the technical side of things, so they appreciate friendly help and advice. The relationship with the operator should be a trusting, open and caring one. Mobile internet usage varies greatly in this group. Curious Novices consume data on a daily basis, but some more freely than others. They use mobile devices every day and expect everything to work seamlessly, so a reliable service is fundamental to how they consume mobile internet services, and impacts how they will consume data in the future. Most important factors for Curious Novices Price Interaction Device It s very frustrating when it takes four times the usual time to do things on the ipad. Massimiliano, Curious Novice ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE 9

10 control seekers Cautious users who stay on top of spending Staying in control of mobile internet usage and avoiding bad surprises is something Control Seekers value highly. They are headstrong users who have possibly had bad experiences concerning billing and subscriptions. As a result, they are now cautious in the way they use mobile broadband services. Some users will even use trackers to keep a closer eye on their usage, which helps to avoid financial shocks when the bill arrives, and ensures data usage is paced more effectively. Although they like to keep a close eye on how much data they consume, habits can vary within this group, ranging from high to average usage. Control Seekers restrict the use of certain devices and are more likely to opt for pre-paid services which offer more control over costs. Customized PLANS Vital for those who wish to control their mobile internet usage Most important factors for Control Seekers Price Interaction Device I haven t reached my limit yet, but I m very careful. I pay an extra GBP 5 for 500 megabytes in case I do go over. I try not to watch videos that are too long. Dionne, Control Seeker 10 ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE

11 SUMMARY Using a smartphone is a vital part of many consumers lives all over the world. Their needs and wants continue to evolve, as do the demands for faster, more reliable and flexible mobile networks. Of course, different consumer groups require different things, and operators must handle these expectations with innovative solutions that are tailored to specific target groups, not specific usage habits. In addressing consumer loyalty, operators must build relationships in the areas that are important for multiple target groups be it performance, value, or service. If operators manage to address the areas that are important to the consumer, they will increase value for users and ultimately build stronger relationships. SMARTPHONEs A vital part of consumers lives Inspired business opportunities Understanding the target groups identified in this report can help operators to tailor their offerings and increase uptake in mobile internet services and usage. Whether it s providing better loyalty benefits for those who demand constant attention, or improving data bundles for the user who wants to keep control effectively targeting the right user group presents the operator with a number of opportunities. Below are three of the many suggestions resulting from the study, proposing how operators can address and improve value for some of the identified target groups. How do operators deliver a service Seekers will love? Provide consumers with a better way to evaluate network performance. Allowing consumers to see personalized performance maps based on their commuting habits would provide them with a more individualized and relevant network rating, which is important when choosing an operator. What makes Curious Novices tick? This dependent target group can be helped by having a personal telecom contact who they can turn to whenever they are overwhelmed by technical problems. Having this personal contact will help to build a long-term relationship with their operator. What do Control Seekers look for in an operator? Assurance and the right to return offers that are not living up to expectations are highly valued by Control Seekers. Offering this type of flexible service will greatly improve the trust between operator and subscriber. ERICSSON CONSUMERLAB UNLOCKING CONSUMER VALUE 11

12 Ericsson is a world-leading provider of communications technology and services. We are enabling the Networked Society with efficient real-time solutions that allow us all to study, work and live our lives more freely, in sustainable societies around the world. Our offering comprises services, software and infrastructure within Information and Communications Technology for telecom operators and other industries. Today 40 percent of the world s mobile traffic goes through Ericsson networks and we support customers networks servicing more than 2.5 billion subscriptions. We are more than 110,000 people working with customers in more than 180 countries. Founded in 1876, Ericsson is headquartered in Stockholm, Sweden. In 2012 the company s net sales were SEK billion (USD 33.8 billion). Ericsson is listed on NASDAQ OMX, Stockholm and NASDAQ, New York stock exchanges. The content of this document is subject to revision without notice due to continued progress in methodology, design and manufacturing. Ericsson shall have no liability for any error or damage of any kind resulting from the use of this document. Ericsson SE Stockholm, Sweden Telephone Fax EAB-13: Uen Ericsson AB 2013