Biased choice of a mobile telephony tariff type:: Exploring usage boundary perceptions as a cognitive cause in choosing between a use-based or a flat rate plan

Most mobile network operators provide newly acquired or existing customers with the possibility to choose between a monthly flat rate for unlimited voice calls and pay-per-minute price schemes. Consumers who maximize their utility should select the tariff type that leads to the lowest invoice amount given their anticipated service usage volume. However, previous research looking at users of fixed network telephony, broadband Internet access and other services suggests that a significant share of consumers prefers a flat rate to use-dependent price plans even though their invoice will be higher. One cognitive explanation for such biased choices is that consumers consider the ratio of the likelihood of calling enough to justify a flat rate to the probability of not calling enough to save money with a fixed price (= “ratio rule”) when choosing between the two tariff types. In this assessment they overestimate the first likelihood in proportion to the second one. Drawing on a sample of 203 mobile telephony customers in Germany the present study shows that mobile users are biased in favor of a flat rate because they overestimate their future call usage and behave in line with the “ratio rule” when choosing a tariff type. Correlates of cognitively biased tariff choices are explored. With regard to pricing practices it is concluded that managers should not follow the temptation to exploit the overestimation bias in designing pricing and advertising policies pushing customers into fixed price schemes, which do not fit their actual calling patterns.     

Personal characteristics and mobile Internet use intensity of consumers with computer-centric communication devices: An exploratory empirical study of iPad and laptop users in Germany

Prior research on adopters of ubiquitous Internet access via cellular radio infrastructures of mobile network operators (MNO) has primarily focused on consumers equipped with enhanced web-enabled phones. In contrast, this work investigates personal characteristics and mobile Internet (MI) use behaviors of consumers who chose computer-centric appliance types for MI access. Two variants of tablet PCs (Apple’s iPad1 and iPad2) and laptops are distinguished as computer-centric communication device categories. Data on two demographic variables, three MNO relationship characteristics and actual MI use intensity (average monthly volume of mobile IP traffic generated by a subscriber in May and June 2011) of 2001 consumers with a flat MI pricing scheme were extracted from customer files of the German subsidiary of a large international MNO. 1371, 367 and 263 of the sample members used an iPad1, an iPad2 and a laptop, respectively for MI access. Compared to the adult population in Germany, persons aged between 17 and 35 years and males are overrepresented among MI adopters with the three studied device types. MI use intensity is highly positively skewed: in each of the three appliance groups, a small number of users disproportionately contributes to the total MI traffic generated by the subjects. MI use intensity is the main variable discriminating between Apple tablet versus laptop MI subscribers. On average, laptop users generate three times more MI traffic than iPad customers. MI use intensity does not differ significantly between iPad1 and iPad2 customers. Age and length of business relationship with the collaborating MNO are the two only studied personal characteristics, which consistently display a significant (negative) association with MI use intensity across the three appliance groups. Conclusions are drawn for MNO on aligning marketing measures to the peculiarities of users with different types of computer-centric MI devices and for scholarly research seeking to enhance the understanding of the influence of various appliance categories on MI adoption and use behaviors.