18- To 24-Year-Olds Buy Wireless At Higher Rate, Higher Prices: NPD

By Peter Arato -- TWICE, 12/23/2002

Port Washington, N.Y. — As U.S. penetration of cellular handsets levels off, the challenge for service providers and manufacturers is to reach untapped markets. One possible market for them to pursue is 18- to 24-year-olds, who have a higher propensity to buy phones than the population as a whole.

Based on NPD Techworld Cell Track data for the six months ending September 2002, 18- to 24-year-olds accounted for 16 percent of handset purchasers but only 10 percent of the total U.S. population (see table at right). Comparing the segment's buyers to the segment's total population results in an index of 159. Meaning, the share of buyers in the 18-to-24 group is 59 percent higher than the group's share of the total U.S. population (15.6 percent/9.8 percent = 159).

The rate at which 13- to 17-year-olds buy phones, in contrast, is low compared with other age groups. The group's index of buyers to their population is only 46, meaning that the group's percentage share of buyers is 54 percent lower than the group's percentage share of the total U.S. population.

As expected, the 13-to-17 age group has a higher propensity to use pre-paid calling plans than other age groups.

NPD also found that the 18-to-24 group is unique among cell phone buyers in many ways. For example, these wireless phone consumers are:

• more likely to buy on impulse (table 1). This group's index to total buyers of 141 means that it is 41 percent more likely to buy on impulse compared with all cell buyers.

• more likely to buy in electronic specialty dealers.

• spend more on a phone (an average of $68 compared with older buyers' $59) because they shop at these traditionally higher-priced outlets (table 1).

• more likely to base purchase decisions on product appearance compared with older groups (see table 2).

• and more likely to buy at regular price instead of on promotion (table 2).

While Nokia and Motorola accounted for about 56 percent of the phones bought by 18- to 24-year-olds during the six-month period, some other brands were disproportionately strong in this age group. Those brands are Samsung, LG and Sanyo, based on a comparison of responses given by this age group to responses given by all cellular buyers (table 1).

Samsung and Kyocera had especially strong performance in the six months ending September 2002 — trailing right behind No. 2 Motorola — at 10.4 percent and 9.8 percent unit share, respectively.

As suppliers introduce more feature rich phones with the ability to capture, send and view images on a color screen, it will be interesting to see how well they sell within the age group.

NPDTechworld Cell Track bases its findings on a combination of data from online consumer surveys and data provided directly from retailers. By collecting both behavioral and attitudinal data, NPD gains insights on what happened and why.

Wireless Purchase Motivators (6 Months Ending September 2002)

	Share of Mentions Total Buyers		18-24	25+	Index to Total Buyers* &18	Index to Total Buyers* 18-24	Index to Total Buyers* 25+
Had features I wanted	18.6%	19.7%	18.2%	18.6%	106	98	100
Price	14.4	12.9	13.4	14.6	90	93	102
On sale/special promotion	13.1	8.5	10.7	13.7	65	82	105
Like how product looks	8.6	15.2	13.9	7.4	176	161	86
Brand I trust	8.3	7.1	8.7	8.3	85	104	100
Store personnel recommended it	6.2	3.8	6.2	6.2	61	101	101
Brand is good value for money	5.0	5.8	5.2	4.9	115	104	98
Recom. by friend or relative	4.3	6.8	4.8	4.1	158	111	96
Latest technology	4.2	3.7	4.1	4.3	88	96	102
Came with free product	2.8	1.2	2.1	3.0	43	75	107
Goes with product I already own	2.3	1.5	1.1	2.5	64	46	110
Store promotional display	2.1	0.4	2.1	2.1	21	104	103
Warranty (service plan)	1.7	2.2	2.7	1.5	131	160	88
In-store demo	1.4	1.1	1.1	1.4	80	78	104
Read in magazine or newspaper	0.5	0.8	0.6	0.5	154	128	92
Consumer rating	0.5	0.0	0.5	0.6	0	96	109
Other	4.5	5.7	3.1	4.8	126	69	105
No particular reason	1.5	3.4	1.4	1.4	231	93	98
*Compares responses given by buyers in a select age group to responses given by all buyers.
Source: NPDTechworld
©TWICE 2002

Wireless Market

	Share of U.S. Population	Buyer Share	Buyer Share* vs Index of Population Share
&13	18.3%	0.0%	0
13-17	7.1	3.3	46
18-24	9.8	15.6	159
25+	64.8	81.0	125
	Unit Share	PRICE	Dollar Share
Total All Buyers	100.0%	$60.25	100.0
&18	3.0	46.73	2.3
18-24	14.5	68.30	16.4
25+	82.5	59.34	81.2

Overview (6 Months Ending September 2002)

Age Segment Importance
Planned vs. Impulse Buying
Unit Share	TotalBuyers	&18	18-24	25+	Index to Total Buyers** &18	Index to Total Buyers** 18-24	Index to Total Buyers** 25+
Total	100.0%	100.0%	100.0%	100.0%
Planned to buy it	85.6	88.4	79.7	86.6	103	93	101
Bought it on impulse	14.4	11.6	20.3	13.4	81	141	93
First Time Buyers (as opposed to replacement)
Buyer Share
First Time Buyer	23.2%	48.3%	34.3%	19.9%	208	148	86
Channel Importance
Share of Buyers
Total Market	100.0%	100.0%	100.0%	100.0%	100	100	100
Electronic Specialty	12.3	15.4	15.8	11.5	125	128	93
Mass Merchants	4.8	9.4	4.0	4.7	196	83	98
Carriers	61.7	50.1	53.1	63.8	81	86	103
Cellular Specialists	14.0	15.2	17.9	13.2	109	128	94
Remaining Channels	8.0	10.0	9.6	7.6	125	120	95
Pricing by Key Channel
Net Retail Price
Total Market	$60.25	$46.73	$68.30	$59.34	78	113	98
Electronic Specialty	97.69	52.05	110.51	96.89	53	113	99
Mass Merchants	41.45	50.59	27.75	42.99	122	67	104
Department Stores	73.09	0.00	54.75	75.81	0	75	104
Carriers	56.48	50.25	67.03	55.15	89	119	98
Cellular Specialists	55.51	33.69	55.21	56.52	61	99	102
Remaining Channels	52.23	36.48	49.42	53.69	70	95	103
Promotional Influences
Unit Share
Total	100.0%	100.0%	100.0%	100.0%
For regular price	19.9	33.1	24.9	18.5	166	125	93
On sale	22.9	26.0	21.7	23.0	114	95	100
With an instant rebate	10.3	7.9	11.6	10.2	77	113	99
With a mail-in rebate	18.4	9.6	23.1	17.9	52	126	97
With a credit toward cell service	6.7	5.0	4.3	7.2	75	64	107
Free with cell service	19.0	7.8	16.4	19.9	41	86	105
A lower price that you negotiate	4.0	3.8	5.4	3.8	95	135	95
Other	7.4	8.1	6.4	7.5	109	86	101
Not Sure	5.5	9.6	5.0	5.4	175	91	98
Share by Key Brand
Unit Share
Category	100.0%	100.0%	100.0%	100.0%
Nokia	38.3	52.0	36.7	38.1	136	96	99
Motorola	22.4	16.2	19.6	23.1	72	88	103
Kyocera/Qualcomm	11.0	9.6	9.8	11.3	87	89	103
Samsung	8.0	7.0	10.4	7.6	88	130	95
Ericsson	6.0	5.6	6.3	6.0	93	105	100
LG	5.0	3.2	7.8	4.5	64	156	90
Audiovox	3.3	4.0	2.1	3.5	121	64	106
Sanyo	2.1	1.4	2.6	2.0	67	124	95
Panasonic	1.6	0.5	1.8	1.6	31	113	100
Pricing by Key Brand
Net Retail Price
Category	$60.25	$46.73	$68.30	$59.34	78	113	98
Nokia	36.48	33.37	35.21	36.85	91	97	101
Motorola	80.80	59.63	91.42	79.76	74	113	99
Kyocera/Qualcomm	53.61	53.73	61.79	52.36	100	115	98
Samsung	96.00	97.92	108.72	92.89	102	113	97
Ericsson	46.19	56.19	67.96	41.79	122	147	90
LG	101.72	28.86	109.99	101.08	28	108	99
Audiovox	38.22	32.02	66.52	35.57	84	174	93
Sanyo	112.90	146.60	112.19	112.17	130	99	99
Panasonic	45.95	0.00	43.93	46.89	0	96	102
Plan Type
Unit Share	100.0%	100.0%	100.0%	100.0%
One rate plan with a limited block of calling minutes	71.7	49.5	70.6	72.7	69	98	101
One rate plan with unlimited calling minutes	14.3	13.3	15.6	14.1	93	109	99
Per minute plan	1.4	1.7	1.3	1.4	121	93	100
Pre-paid	8.5	26.7	8.7	7.8	314	102	92
Some other plan	3.5	5.8	2.7	3.6	166	77	103
No plan	0.7	3.0	1.0	0.5	429	143	71
*The index number compares a demographic's share of total cellular purchases to the demographic's share of total U.S. population. The 18-24 group's index of 159 (15.6% ÷ 9.8%) means the group's share of cellular buyers is 59% higher than the group's share of the U.S. population. **Compares responses given by buyers in a select age group to responses given by all buyers. Source: NPDTechworld ©TWICE 2002