Research in action – three mobile

Published by: Jimmy Larsen


Since the dawn of marketing, one of the biggest conundrums for manufacturers and marketers worldwide has been how to design and develop products or services with a combination of features that have high appeal among consumers, while satisfying return on investment targets. Whether the product in question is car insurance, savings accounts, cheddar cheese or bottled beer, it is vital that the combination of product features has high appeal to the target market.

Unfortunately, we cannot give consumers everything they want! Most of us would love a five star dining experience for McDonald’s prices or comprehensive car insurance with breakdown assistance for just €100. While scoring high on customer satisfaction, this restaurant or insurance company wouldn’t be in business for long!

The secret to success is to understand how consumers trade off different product features.

For example, should our cheese manufacturer invest in a robust zipper bag for the cheddar cheese, in other words, would this package improvement have enough consumer value to justify a slightly higher price (to offset higher production costs)? Or would a higher interest rate on deposits justify the absence of physical branches for an online bank? Or are we happy to wait an hour for our food in the restaurant if the food is world class at reasonable prices?

In conjunction with Three, RED C conducted a comprehensive survey of the trade-off’s made by consumers in one of the more complex consumer markets; the market for postpay (contract) mobile phone communication. A wide range of factors influence our choice of mobile phone provider and which specific postpay plan we sign up for. For example, some of us are willing to commit to a 24 month contract for a cheaper iPhone while others won’t. Some stay loyal to the brand they know while others take a chance with a different provider for a lower monthly price. For some having the latest handset is everything while others are happy with a less well known handset but more free minutes and texts.

When exploring consumer trade-off’s, we often see significant differences between what consumers think is important and actual choices made by the same consumers. A classic example is taken from the airline industry, where consumers would say that safety is extremely important, yet flight safety is hardly ever an influence when choosing between Aer Lingus and Ryanair. In a mobile phone context, we have often been told in qualitative focus groups that consumers are unwilling to commit to long contracts, yet 18 and 24 month contracts are popular sellers in the mobile phone market (driven by a lower price for the mobile phone).

Therefore, it was vital that the survey was designed to measure actual consumer choice rather than simply consumer perceptions of what is important! A conjoint approach was the solution. This approach allowed us to show a number of different scenarios to the respondents in our online sample of postpay customers. In each scenario, the respondent was asked to choose their preferred plan from a set of three different postpay plans. These plans were described in full detail, i.e. brand, mobile phone, price of mobile phone, voice/text/data allowances, contract length and monthly commitment.

By asking respondents to make real-life simulated consumer choices for a wide range of scenarios, we could establish the relative importance of each product feature. For example, how important is getting the best smartphone available in the market compared to getting a low monthly price or shorter contract duration? Or how much can we charge extra per month if we give consumers unlimited internet or talk on their phone?

The ultimate output from the survey was an innovative tool in Excel which could be used to predict the preference share of existing and proposed products in a competitive context. This Excel tool was populated with existing Three and competitive products. By making changes to current products or by introducing new products, the tool calculated the potential business impact of these changes for Three. The tool can also be used to calculate the impact of anticipated changes in products by competitors.

Finally, the tool is very powerful in optimising product range as we can calculate not only how much share a new product would take from competitors, but also how much share this new product would take from existing Three products.