Innovation has always been the lifeblood of the mobile communications industry but, in terms of sheer output, this year has outstripped all others by a mile.
Driven by new platforms, such as GPRS, and new multi-media messaging applications, handset and PDA manufacturers have been falling over themselves to produce ever-more dazzling designs and concepts. Cameras, colour screens, games, MP3 players – the latest phones have them all and the mobile phone industry, whose growth had momentarily stalled last year, seems to be firmly back on track. Earlier this week, Merrill Lynch, the US investment bank, said it now expects global handset shipments in 2003 to total 474 million units, up from its previous estimate of 410 million. Merrill also raised its forecast for 2004 sales to 501 million units from 420 million.
While such forecasts may please mobile manufacturers, retailers and operators, what is less than clear is whether users are capable of absorbing the waves of new technologies hitting them. Nokia, for example, the leading mobile phone brand in Ireland as it is worldwide, has no fewer than 10 phones available over the three networks, excluding older models. How is the user going to choose between these different models and how are their virtues communicated?
According to Jackie Brannigan, marketing manager, Nokia Ireland’s mobile phone division, segmentation is the key. “We put users into a half-dozen categories depending on their needs and usage patterns,” she explains. “The Classic category and Premium categories, for example, are aimed at business users. You’ll have one pitch for the corporate side and another for the trend-setting youth audience. In each case you have to point out the benefits.”
Selling and marketing mobile phones is a balancing act between operators, retailers and manufacturers. All have to be ‘singing from the same hymn-sheet’ in terms of understanding what segment each phone is aimed at. “It’s about being clever with your segmentation and then being very, very clear in your communication,” says Brannigan.
The result of imprecise targeting of messages is confusion in the user’s mind about which phone is right for them. “Confusion is the enemy that all the manufacturers face. Individual consumer needs vary and that’s why we need to get the pitch absolutely right,” she adds.
The youth audience is easier to sell to in that young people tend to keep up the latest technologies and know exactly what they want. The business user, on the other hand, tends to be older and less tech savvy. These users are therefore more likely to feel out of their depth when choosing a phone. Phone manufacturers have a strategy to address this information deficit.
“What’s important from the manufacturer’s perspectives is having a very good relationship with the corporate account managers within the mobile operators and the key corporate dealerships. The idea is to take the pain away from that type of user – once you can demo how easy it is, the response from the user is very good,” says Brannigan.
There is a perception, rightly or wrongly, that in order to drive their sales, phone manufacturers are forever foisting new phones on a market that has barely got used to the last round of launches. Brannigan argues that it is not the handset manufacturers that force new models down user’s throats but, as often as not, the marketplace that drives demand – “new trends emerge which create their own set of demands.”
Rose Hayles, marketing and communications manager, Carphone Warehouse Ireland, which accounts for 20pc of the mobile market, firmly dismisses any suggestion that there is potential information overload on the user’s part. Like Nokia’s Brannigan, she stresses that when segmentation theory is applied, the choices are not as bewildering as it first might seem.
“Each consumer will have specific needs for their phones, for example a visual merchandiser will have a need for a camera phone – this cuts the choice down to four handsets, the Sharp GX10, Sharp GX1, Panasonic GD87 or the Nokia 7650. Then you cut the choice down again by determining which network will suit the customers needs. After this it is the consumers choice of style as to which handset they choose. This example shows that even though there are many choices available we advise each individual on the handset to suit them rather than focusing on displaying the benefits of each and every handset that comes on the market. This would just lead to confusion.”
Stephen Mackerel, chief executive of Carphone Warehouse Ireland, argues that the consumer’s ability to absorb new technology is unlimited and can already be seen in the run-up to Christmas where there is already a shift towards higher-end camera phones from the lower-end more basic handsets that were in demand last year. This, he suggests, shows technology is proving no barrier, especially to the younger customer. “It’s no problem to them at all. Consumers in the 17 to 22 age group are nearly telling us what’s coming down the line in terms of technology!”