Impact of Consumer Behavior on Marketing Strategy
The US Wireless Industry is extremely competitive, having four big businesses fighting in a market that is very mature with a high penetration rate. This dilemma leaves Verizon, AT&T, T-Mobile, and Sprint with the task of convincing existing customers that they are the best in coverage and products, but what do the people really want? Is coverage important? What about quality of service? It seems the answer is “Not entirely” because T-Mobile is now the third operator regarding customers (when it used to be fourth) and its subscriber base is still climbing, even though their coverage and quality of service lack.
So, how was T-Mobile able to do that? They did it with a marketing strategy that took on Verizon and AT&T head-on. A marketing strategy that started taking away customers at such an alarming rate that Verizon and AT&T had to respond with the same competing product. We will explore how T-Mobile’s marketing strategy and the impact of consumer behavior made the competition change their own marketing strategies.
According to Mothersbaugh & Hawkins (2016):
The field of consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. (Mothersbaugh 6)
Most successful companies design and develop a thorough marketing strategy by conducting a market analysis and choosing a market segmentation before planning the product, price, distribution, promotion, and service. However, to have a more detailed picture of the process, one must also analyze the consumer decision process, followed by the outcomes of the market strategy in regards to financial results and customer satisfaction. (Mothersbaugh, 2016).
There have been attempts by marketers to understand and predict the behavior of individuals as consumers to improve the outcomes of marketing strategies. A basic design by Mothersbaugh (2016) puts the individual at the center of a feedback loop, whereby external and internal influences effect the decision-making process. External influences include culture, social status, demographics, the family, and marketing messages, while internal influences include learning, personal perception, memories, motives, personality and emotions (Mothersbaugh, 2016). Understanding what makes consumers behave in a specific way impact a company’s marketing strategy since it will inevitably improve the results of the marketing strategy.
T-Mobile’s Winning Strategy – Unlimited
According to Andersen (2017), Verizon and AT&T were the clear winners of a national mobile performance report, while Sprint and T-Mobile came in third and fourth respectively. Despite this, T-Mobile has lead the industry in financial and subscriber growth for the third year in a row. (“T-mobile marketing strategy shows revenue growth”, 2017).
T-Mobile’s new marketing strategy began with the arrival of their most recent CEO, John Legere, and COO Mike Sievert. Legere launched the Un-carrier re-branding of T-Mobile, while Sievert is a fiercely competitive veteran marketer of the industry. Together they are an unstoppable marketing machine that has made T-Mobile outperform the competition (Bergen, 2014).
According to T-Mobile’s CMO, Andrew Sherrard, “The Un-Carrier strategy is such a phenomenal, simple strategy. We find out what customers don’t like, we follow those pain points and in unique and provocative ways, we give the consumer what they want in wireless.” (Morrison, 2015). One of the strategies that T-Mobile implemented was giving one share of the company to their loyal customers. The stock has increased from $39.90 in May 2016 to $66.15 in May 2017 (T-Mobile, 2017). That is an increase of 60%, which a significant return on investment by any means.
T-Mobile has implemented countless other marketing strategies, but the most efficient is their Unlimited data product. The strategy is so effective that Verizon and AT&T have released the same strategy –with reluctance—but are they too late to the game?
Impact of Consumer Behavior on Marketing Strategies
T-Mobile analyzed the woes and complaints of consumers and reacted quickly. Not only did consumer behavior impact the marketing strategy of T-Mobile, but the competition had to follow suit. Metered packages are much more profitable than unlimited packages, however unlimited is what the customers want, and that’s what they got.
The free market is a great system for increasing prosperity, but it is also a great method for increasing customer satisfaction. The impact of consumer behavior on marketing strategies is dramatic. As we see with T-Mobile’s ability to listen to consumers’ complaints, designing products based on those complaints, and communicating to those customers effectively has made it a successful company. Even though its network does not perform nearly as well as its competitors, they have been able to lead the industry in financial and subscriber growth. When it comes to the company-consumer relationship, the consumer has the power to get what they want at the price they want.
Disclaimer: I am a big fan of T-Mobile and their In-carrier strategy. Being a telecom enthusiast, I know how hard industry disruption can be. But T-Mobile took Customer-First Marketing to another level!