New handsets can bridge the generation gap

An Apple iPhone or BlackBerry on the O2 network is a teenager’s most desired mobile combination, according to research seen exclusively by Marketing Week. By Michael Barnett

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Teenagers are a crucial market for all technology brands, and the mobile phone sector is no exception. According to a new index that ranks operators and handset makers according to their “brand substance”, O2 and Apple have surged ahead of their competitors when it comes to winning the esteem of this valuable demographic.

Research company Dubit, which specialises in gauging the opinions of young people, has developed a system that judges brands on seven criteria, then ranks the companies by weighting the criteria according to the importance young consumers place on them (see About this survey, page 27). With a weighted overall average score of 4.1 out of 5, Apple’s iPhone is the clear leader, beating Research in Motion’s BlackBerry (3.8) in the top tier of nine named handset brands. O2 (3.8) and Orange (3.6), are the top scorers out of seven network providers, according to the online research that was conducted with a regionally representative sample of 850 UK consumers aged 13 to 19.

Dubit head of youth media Dave Gibbs points out: “The originators of the handsets – the Nokias and the Motorolas – have been superseded by technology brands or computer companies like Research in Motion and Apple.”

He suggests this is a result of consumers using their mobiles as media players, and to access the internet and email. Apple and RiM appear to have stolen a march in the area by developing smartphones that have this functionality.

Google does not benefit from this trend, having not yet made its presence felt particularly strongly among a teenage audience. With a weighted overall average score of 3.3, it registers joint-fifth of the nine handset brands, though it ranks above LG (3.0) and last-placed Motorola (2.6).

It may come as somewhat of a surprise that the BlackBerry range of handsets engenders such positive attitudes among the teenagers. David Hilton, marketing director for the UK and Ireland at Sony Ericsson, says RiM has reaped the rewards of concentrating its marketing efforts on text message capabilities (see Frontline, right).

Dubit’s Gibbs adds that this phone is no longer considered a phone just for professional adults. He says: “BlackBerry is almost being hijacked by this teenage generation because they see the added value.”

Indeed, value is joint-first alongside quality among the brand attributes that are most important to young consumers when purchasing a handset, with both criteria scoring 4.3 on average out of a possible 5.

Given its premium pricing and market positioning, Apple’s iPhone scores remarkably well on the value measure. Although its average of 3.5 out of 5 is the lowest of its scores across all brand attributes, it is joint-first on value among handset brands alongside BlackBerry and Nokia. According to Gibbs, this suggests that young consumers tend to interpret value as being more complicated than “the cheapest wins”.

He adds: “Young people are probably prepared to pay more for something if they perceive that it is giving them something extra. It is about what they get out of it, not just the price they paid.”

No operator or handset maker registers an average score higher than O2’s 3.6 on value, however. In comparison, the highest average score on any attribute across the study is the iPhone’s 4.4 for peer approval; the lowest is Tesco Mobile’s 2.1 for relevance.

When it comes to network providers, value is again the most important factor in young people’s buying decisions. Value scores an average of 4.5 – well ahead of past experience, quality and relevance, which all come joint-second with an average of 4.2. The rankings of the remaining factors are peer approval, followed by wow factor, then differentiation.

O2 is the top-rated operator overall, and scores particularly well on peer approval, quality and past experience. It ranks either first or joint-top on every one of the seven brand attributes measured by Dubit. Orange, Vodafone and T-Mobile follow, all having an overall weighted average of 3.0 or above.

Rival network Three is noticeably absent from the top four, with Gibbs putting this down to young people’s “past experience” score for the operator. There is a comparatively negative feeling towards the brand, reflected in several low scores across the seven brand attributes measured in the study. Tesco comes bottom of the operators’ table, with an overall weighted average score of 2.6, though it is particularly competitive on value and past experience.

Dubit’s report notes those networks that perform well among the 13 to 19 age group have enhanced their brand by offering additional experiences outside the core mobile service. O2 has associated itself with live music, giving its customers priority tickets to events at The O2 arena, for example; while Orange offers two-for-one cinema tickets as part of its long-standing Orange Wednesday promotion. One 17-year-old female respondent to Dubit’s survey even suggests that many customers “are only with the network because of that offer”.

Generating this kind of engagement with young people is essential for brands as these individuals have the potential to become lifetime customers, summarises Gibbs. It is also a group whose interests evolve quickly, however, and mobile brands and operators need to keep an eye on the changing attitudes of this demographic.

Teenage consumers are particularly likely to listen to what brands have to say, Gibbs adds. “They are more susceptible to engagement and communication in certain areas. They are more likely to understand brands.”

As such, grabbing their attention is vital for any marketer – in the mobile sector especially.

4.3/5 Value and quality are the brand attributes most important to young consumers when purchasing a handset, with both criteria scoring 4.3 on average out of a possible 5.

2.6/5 Tesco Mobile comes bottom of the operators’ table, with an overall weighted average score of 2.6 out of 5, though it is particularlycompetitive on value and past experience.

3.0/5 LG comes near the bottom of the handset manufacturers’ table, with an overall weighted average score of 3.0 out of 5

About this survey
Quality, value, past experience, relevance, wow factor, peer approval and differentiation are the values assessed in this study. Their averages are used to weight the scores given to brands by consumers, in order to calculate the overall score for each company.

Dubit plans to repeat the research every six months to track changes in attitudes towards mobile phone brands and operators.

The frontline

We ask marketers on the frontline whether our ’trends’ research matches their experience on the ground

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Sally Cowdry
Marketing director, O2

While we cannot and do not market directly to under-16s, understanding this market is critical to our success. Gaining true insights into the youth demographic gives clear indicators of trends and requirements for the future. But youth is not just an age group, it is a mindset that we need to support and understand – attitudes towards brands, technology, sustainability, community and much more.

What is noticeable about the survey is that the factors the youth market believes are important are shared with other demographics/ value, quality and past experience are universally important. If I had to choose the next most important factor after that, it would be relevance, which is important in any sector but nowhere more so than among this age group.

They are quick to pick up trends, strongly influenced by their peers and very open to new ideas. The key to appealing to them is to stay relevant without slavishly following fads.

To drive emotional loyalty we concentrate on music. O2 has a well-established live music proposition with title sponsorship of The O2 and O2 Academy venues, in partnership with AEG and Live Nation. Crucially, these deals allow O2 to offer customers priority tickets to gigs at these venues and other live events throughout the UK.

In March, our research showed that 46% of adults believe there is a negative view of young people in society. To help counter this perception, we launched Think Big, our social action programme designed to inspire and celebrate young people, investing in them to meet their potential.

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David Hilton
Marketing director (UK and Ireland), Sony Ericsson

We track brand performance on an ongoing basis and we know that we index highly in the youth audience. We have seen it drop off in the past 12 months or so as we have had some stronger competition – BlackBerry has started to penetrate the youth audience a little bit more, as has Apple. BlackBerry has done a lot of marketing around the text messaging side, and I think it is that message that the youth really finds attractive. Sony Ericsson instead offers an entertainment experience.

We have invested over £60m promoting our Walkman proposition over the past three years, but the Walkman sub-brand is a bit less relevant than it was before because people are used to smartphones that do everything. So one of the things we have been doing this year – which is designed to target a youth audience and get them to believe that Sony Ericsson is a strong entertainment brand – is create something called Pocket TV, which is a youth-focused TV show distributed on YouTube and through mobile access.

We have had over 10 million views of Pocket TV. Compared with 2009, in 2010 we have seen a 450% increase in the number of people that have watched the show on a mobile phone. In 2010, there are more entertainment properties that we are going to take to the market.
Most brands like to appeal to a young audience because they are always seen as the next big-paying customers, but there are only a few brands that can legitimately target them or be relevant to them and the research shows that.

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