brand loyalty

Whether they go with Sprint, T-Mobile, AT&T, Verizon Wireless, or another cell phone service carrier, consumers often choose and use a calling plan based on what their friends use. Although brand loyalty may play a role, many people are particularly concerned about whether they can call or text other in-network customers for free and when they can make or receive other calls without charge. It is a matter of dollars and sense: On some service plans, the cost of calling or texting friends who use other carriers, or using data to access the internet—especially during periods of peak pricing—can add up quickly.

A growing number of consumers are making purchase and consumption decisions based on who is switched into or out of a carrier’s network. These decisions are complicated by the fact that carriers usually require customers to sign a one- or two-year contract and pay a hefty fee if they want to switch carriers before the end of the contract. Once their contracts are up, however, some consumers will follow their friends from carrier to carrier, switching phones in the process, so that they can talk and text whenever they like. Friends who do not switch may wind up getting fewer calls and text messages, keeping their calls and messages short, or waiting to talk or text until off-peak hours.

For example, after a friend switched from Sprint to T-Mobile because so many in her group were using the carrier, one college student observed, “We used to talk every day all day. Now I only hear from her after 9 P.M. so that she doesn’t use her minutes.” To stay connected without spending a fortune, this student plans to sign with T-Mobile as soon as her contract with Sprint expires.

Carrier choices can bring in-network friends closer while impeding communications with out-of-network friends. “I try not to talk to those who don’t have Sprint. I don’t have minutes to waste,” explains a 23-year-old Sprint customer. On the other hand, this customer became better friends with a casual acquaintance after both realized that with the Sprint network in common, they could call each other as often as they liked.

For their part, the carriers recognize that these dynamics can greatly influence decisions and usage. Sprint, for instance, moved the start of its “night” period up to 7 P.M. instead of using the 9 P.M. start time that many competitors have set, giving customers two additional hours of lower-priced, off-peak calling time. T-Mobile began offering a plan that allows customers to specify five out-of-network phone numbers that they can then call free at any time. More carriers are also introducing flat-rate plans with unlimited calling.

Not everyone wants to talk, however. Verizon Wireless examined its records and found that a growing number of its 66 million customers were using cell phones more for texting rather than for calling. In any given month, customers were sending more than 10 billion text messages (New Year’s Day is Verizon Wireless’s busiest text day of the year while Halloween is its busiest day for video and photo messages). On the basis of this research, the company introduced plans that allow for unlimited text, video, photo, and instant messages. Users on these plans pay for voice phone calls by the minute.

Because most cell phones are preset to work only on a specific network, switching carriers generally means switching phones. This change is not a big obstacle for consumers who want the latest technology, but it represents an extra expense—and a bit of a learning curve—for those who like their current cell phone. Because of this cost, Verizon Wireless recently opened its network to allow customers to “bring their own phones” (as long as the phones have been tested for compatibility).i

How does normative influence affect carrier choice? What are the marketing implications for Sprint and other carriers?

What role is informational influence likely to play in a consumer’s decision. After his/her friends have switched carriers after his or her friends have switched?