The Effects of Using GiffGaff among International Students

Introduction

            GiffGaff is a known mobile virtual network operator (MVNO) that is based in the UK. Launched in 2009, this mobile telephone network brand rose to popularity due to its low-cost offerings and better deals known as “goody bags” (Lithium Technologies Inc., 2014). Essentially, GiffGaff goody bags are affordable monthly packages which include specific amounts of texts, calls, and Internet consumption among mobile users. In the UK, GiffGaff has a monthly offering of as low as £10 per month which is quite popular along with the “pay as you go” bundle which is a more flexible mobile use option for the British consumers (Sawers, 2012). In this literature review, the effects of the use of GiffGaff among international students in the UK will be examined. In addition, the different factors that influence the British consumers’ decision in choosing their preferred mobile phone network will also be determined. Finally, this literature review will identify the consumer expectations and preferences which influence their mobile phone network choice.

The Consumer Expectations and Preferences which Influence their Mobile Phone Network Choice

            In the British mobile phone market, it was identified that the most preferred mobile phone network choice for the consumers is the O2 brand with at least 28% of subscribers. This was followed by the Orange brand with 21% and Vodafone with 18% of the market. Data also show that the remaining market of British subscribers is shared by a number of low-cost mobile phone networks (Kay, 2010). Based on a study performed by Birke & Swann (2007), many British consumers, particularly those who are students prefer to have the same mobile phone network that their friends have. This is also true for international students in the UK who, based on the study’s findings, have the tendency to choose the mobile phone network that their friends use, particularly their friends who have the same nationality as theirs. This was driven mainly by the fact that when communicating with friends or family members who are using another mobile phone network, price differences on the net calls/ texts may be significant. Hence, to avoid paying extra costs when communicating with friends, international students tend to adopt the same mobile phone network that their friends use (Birke & Swann, 2007). In a different study performed by the Communications Consumer Panel (2009), it was identified that aside from cost, wide mobile coverage or reception is one of the things that British consumers expect when choosing a specific mobile phone network. Many consumers prefer mobile phone networks that offer good quality of mobile reception or signal across different locations (Communications Consumer Panel, 2009).

The Different Factors that Influence the Consumers’ Decision in Choosing their Mobile Phone Network

            In the UK, the use of mobile phone services is perceived by many consumers as very expensive. As such, cost or pricing is one of the most important factors that influence the British consumers’ decision in choosing a mobile phone network (Kay, 2010). In Britain, mobile phone network providers that offer cheaper mobile services tend to attract the young consumer segments, particularly the students. Students are described as the more “price sensitive” segment of the market as they are constantly seeking for value in exchange for the money they provide. They always look for mobile phone network service providers which offer the cheapest text and call rates and the best value MMS & Internet packages (Kay, 2010; Awan & Fatima, 2014). Aside from pricing, service quality is another important factor that influences the consumers’ decision when it comes to choosing which mobile phone network to use. Service quality encompasses the mobile network coverage, the variety of packages/ mobile use bundles (e.g., calls, SMS, Internet, and MMS) and the satisfying treatment of the company with their consumers (Awan & Fatima, 2014). These findings have also been validated in a research study performed by Mintel UK (2010) which reflected that in choosing a mobile phone network, British consumers consider price and the quality of customer service as the most important factors that influence their selection and preferences.

The Effects of the Use of Giffgaff among International Students in the UK

            One of the important reasons for the success of GiffGaff in targeting a sizeable percentage of the British market is the value that the business provides its consumers. Through the low-cost mobile service bundles that GiffGaff offers, all of its consumers are able to enjoy using the mobile network (Lithium Technologies Inc., 2014). However, recent reports have surfaced that GiffGaff is set to remove some of its unlimited data bundles including its unlimited Internet services that is low-cost and popular among many British consumers (Brian, 2014). Most likely, these changes will be affecting those consumers that are subscribed to the low-priced goody bags and flexible bundles which mainly include the students in the UK. According to Awan & Fatima (2014), the mobile phone networks’ act of offering low-cost services as well as fulfilling consumer expectations enable them to earn consumer trust and loyalty. Hence, once the mobile phone service provider stops offering these same services, it is possible for the consumers to lose their trust and loyalty to the same network provider. As emphasized by Malasi (2010), product features serve as the most important competitive tool that differentiates a brand from the competitor’s offerings. Hence, introducing a valued product feature for the consumers will more likely attract more consumers while removing important and distinct product features may create a negative impact on the level of trust and loyalty of a brand’s consumers.

Conclusion

            GiffGaff’s distinct product offerings such as its low-cost £10 per month mobile service bundle and the “pay as you go” plan enabled the mobile phone network brand to gain the huge market of students in the UK who are heavy mobile phone users. Therefore, by completely removing these same mobile services which enabled them to capture the student market, GiffGaff will more likely experience a significant decline in the consumers’ level of trust and loyalty.

References

Awan, A., & Fatima, A. (2014). Impact of marketing strategies on youth purchasing behavior: A case study of mobile phone industry. British Journal of Marketing Studies, 2(4), 72-80.

Birke, D., & Swann, P. (2007). Network effects, network structure and consumer interaction in mobile telecommunications in Europe and Asia. Annual Conference at the University of Warwick (pp. 1-4). London, UK: Royal Economic Society.

Brian, M. (2014). GiffGaff to scrap most of its unlimited data bundles. http://www.engadget.com/2014/09/11/giffgaff-scrapping-unlimited-bundles/

Communications Consumer Panel. (2009). Mobile coverage: The consumer perspective. London, UK: Ofcom.

Kay, D. (2010). International Roaming Report. http://stakeholders.ofcom.org.uk/binaries/research/telecoms-research/international-roaming/roaming_report.pdf

Lithium Technologies Inc. (2014). Giffgaff case study using community to build an entirely new kind of company. http://www.lithium.com/pdfs/casestudies/Lithium-giffgaff-Case-Study.pdf

Malasi, J. (2010). Influence of product attributes on mobile phone preference among university students: A case of undergraduate students. International Journal of Academic Research in Economics and Management Sciences, 1(6), 10-16.

Mintel UK. (2010). Mobile phones and networks – re-igniting the replacement cycle – UK – January 2010. http://store.mintel.com/mobile-phones-and-networks-re-igniting-the-replacement-cycle-uk-january-2010?cookie_test=true

Sawers, P. (2012). One year with GiffGaff: Switching to the people-powered mobile network is the best move I ever made. http://thenextweb.com/uk/2012/04/07/one-year-with-giffgaff-switching-to-the-people-powered-mobile-network-is-the-best-move-i-ever-made/