Get Smart - enGaGinG the diGitally diSenGaGed

Mobile phone network and retailers are watching their traditional sources of profit be eaten away by a myriad of providers chasing after the same consumer. Is the future all doom and gloom?

We say not. There’s an untouched market with a disposable income of £288 million out there – the Digitally Disengaged.

Hard times

As the mobile phone market shifts towards contracts, the PAYG market is in decline. More lucrative than the former, the PAYG customer buys their handset outright and pays more per unit of usage. To exacerbate the issue, many contract customers are moving onto longer contracts, so there are fewer people out of contract per month.

So it must come as extremely good news that there is a relatively untapped market just waiting to be targeted.

Increasing market polarity

There are two camps of mobile phone users, the larger being the Digital Enthusiasts where the youth hang out, fused with their social circle 24/7 and never

missing a tweet. They start young, playing games on their parents’ phones, and by thirteen, 80 percent of them have their own. GfK Research Panels- Kids Panel- Q4 2011

But the greatest concentration in this camp is the 16-24 age group, where smartphone penetration is at its highest. GfK Research Panels- Telecoms Panel- Q4 2011

Over in the corner, largely ignored by the smartphone crowd, are the older generation with their obsolete handsets (usually turned off) and low usage. They are the Digitally Disengaged, but it is with them that the future may lie.

The digitally disengaged – who are they?

Many of the Digitally Disengaged are on PAYG, which in one sense is a good thing as they pay more per unit of usage and buy their handsets outright. However, their low usage equals low spend - bad news for networks.

Their mobile phone may only be purchased to use in emergencies. This is particularly true of those aged 65+; in fact, 22 percent of this age group are ‘Emergency Only’. The handsets, cheaper models that are less frequently replaced, are often hand-me-downs, gifts from children, or picked up from a supermarket.

Research Panels / Telecoms

When we see that 51% of those aged 55-64 have owned their handset for over two years, compared to 22% of 25-34 year olds, we have to ask - can this group be worth targeting?

A pot of gold?

If the Digitally Disengaged were to cross into the smartphone market, there’s potential for lucrative rewards. For example, there are currently 3.7 million empty nesters with a total disposable income of £288m, more than double that of families with children still living at home and spending only £102m. click here to read article

Learn from the success of others

In recent years, some new technology products have managed to tap into this market. A few years ago, a surprising number of older consumers, hardly your typical ‘gamers’, started buying Wii consoles for themselves. Perhaps this is in no small part thanks to Nintendo’s first broad-based launch advertising strategy in 2006 which included a two-minute video clip showing a varied assortment of people, young and old, enjoying the Wii system. click here to read article This wider targeting strategy trod the fine line of appealing to older consumers without alienating younger customers.

Apple also appears to be targeting the iPad Tablet to all ages by showing only customers’ hands in their adverts, rather than their age-defining faces. Uses of the Tablet that are more beneficial to older consumers are demonstrated, such as online shopping, looking up recipes and checking the football scores, weather reports, and maps and so on. And it appears to be working - Tablet penetration has doubled in the 45-64 yr old market in the last nine months alone. GfK Research Panels- Telecoms Panel- Q4 2011

Embracing the technophobe

In addition to their universal targeting, Wiis and iPads have Intuitive Technology in common. Simple-to-use controls based on movement of the body make controlling them simpler and more instinctive and actually far better suited to an older market.

Consequently, it would seem logical that by adopting a broader targeting strategy, smartphone providers too could reach and engage the Digitally Disengaged.

The future’s bright

The Digitally Disengaged could well be transformed into Digital Enthusiasts with the right targeting and campaigns. Their engagement with smartphones would lead them to purchase more expensive handsets, utilise them fully and upgrade more often. This would have a knock-on effect for the networks, as increased handset engagement leads to higher usage and therefore higher monthly contract or top-up spend.

The first providers to recognise this will be well positioned to reap the rewards. Isn’t it time the older generation were brought in from the cold and switched on to the benefits of the smartphone?

Contact:

For more information contact GfK

Mary Came, Senior Account MangerTel: 020 7890 9691Email: mary.came@gfk.com

To learn more click here

GfK. Growth from Knowledge | www.gfk.com