By Lisa Johnston
New products on display at the American International Toy Fair, held in N
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|
|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|
|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|
|Read in magazine or newspaper||0.5||0.8||0.6||0.5||154||128||92|
|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.|
|Share of U.S. Population||Buyer Share||Buyer Share* vs Index of Population Share|
|Unit Share||PRICE||Dollar Share|
|Total All Buyers||100.0%||$60.25||100.0|
|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+|
|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)|
|First Time Buyer||23.2%||48.3%||34.3%||19.9%||208||148||86|
|Share of Buyers|
|Pricing by Key Channel|
|Net Retail Price|
|For regular price||19.9||33.1||24.9||18.5||166||125||93|
|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|
|Share by Key Brand|
|Pricing by Key Brand|
|Net Retail Price|
|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|
|Some other plan||3.5||5.8||2.7||3.6||166||77||103|
|*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.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.