COURSEWORK 2 – You are asked to complete a 2,000 word CASE STUDY ANALYSIS - T-MOBILE USA Coursework aim: To demonstrate knowledge and understanding of the basic concepts, principles, theories and models of consumer behaviour. Coursework objectives: i.To demonstrate your level of knowledge and understanding of the theoretical concepts pertaining to consumer psychology ii. To analyse key factors which influence the decision-making process. CASE STUDY: T-MOBILE USA The wireless telephone industry is growing at a rapid pace. According to Solomon-Wolff Associates, the strongest user group is the 31-45 age group and the growth trend is expected to peak over the next ten years. Industry analysts have also forecast that the penetration rates from mobile wireless services in the United States will reach 60-70 percent of the population by 2005. In spite of its exponential growth, the wireless communications industry is also at its peak of competition. Currently, there are five national service providers in the market: T-Mobile, Cingular Wireless, Verizon Wireless, Sprint PCS and Alltel. Because of intense competition and promotions among cellular phone companies, the overall churn rate (how often consumers change service providers) of the industry has been about 1.6 percent, but it’s on the rise. The implementation of Local Number Portability, which allows a customer to keep his or her phone number when changing service providers, has been expected to encourage brand switching behaviour among cellular subscribers. The increased churn rate could reportedly cost cellular service providers about $20 billion dollars. Consumer brand switching behaviour is often related to their overall satisfaction with a company’s products and services. A study by J.D. Power & amp; Associates also showed that 26 percent of people who perceived the customer service performance of their respective carrier to be unsatisfactory or less than satisfactory were likely to switch cellular service providers. T-Mobile continues to provide technological innovations in a competitive marketplace. But the company faces a number of recent developments in mobile commerce. Mobile commerce (M-commerce) is broadly defined as any commercial activities conducted through various types of mobile equipments via a wireless communication network and wireless devices including digital cellular telephones, pagers, notebook computers, personal digital assistants (PDA’s) and automobiles. According to Wireless Week (2004) there were 94.9 million M-commerce users in 2003 worldwide, and the number of users is expected to grow to 1.67 billion by 2008. Moreover, worldwide revenues from M-commerce were $6.86 billion in 2003 and are expected to reach $554.37 billion by 2008. Although M-commerce often refers to any commercial transactions of tangible products, recent M-commerce applications have been widely used to deliver a variety of communication and media content (e.g. mobile advertising, cell-phone ring tones, mp3 music files, and short programming clips). Currently, T-Mobile offers a variety of M-commerce applications such as Caller tunes (at $1.49 per month), Pictures and Video Messaging (at $2.99 per month), 300 Text messages (at %2.99 per month, Unlimited T-Zones (at $4.99 per month) and 1,000 text messages (at $6.99 per month). Potential new applications include interactive video games, video- and audio-on-demand, and mobile news delivery services. With the explosive growth of the mobile telephone population, combined with developments of wireless technologies, M-commerce has become increasingly important to mobile communications service providers. (Source: Blackwell et al, 2006) Questions: 1.Define the innovation strategy adopted by T-mobile. 2.What product characteristics influence the diffusion of T-mobiles Cell technology and service provision? How can marketers remove consumer uncertainty? 3.Illustrate the adopter categories. Suggest how T-Mobile might encourage a speedy rate of adoption through the stages of the adoption process for their new offerings. 4.Explain the characteristics of Opinion Leaders, their degree of importance to T-Mobile and their impact on the DMP