Saturday, January 17

Marketing logic

Over the past few months, my mom and I have discussed switching cell phone plans.


It's been an on-again, off-again conversation. Originally it came about when Tim needed some form of PDA. We considered a smartphone, since we could get a discount by signing a new contract. That, however, became moot when a kind and generous reader gave us her old PDA.


Since then, the discussion has surfaced from time to time. Tim's RAZR was giving us fits, and we wondered if it was about to shuffle off this mortal coil. But we went to a T-Mobile store and, after installing a new SIM card, the phone is functioning relatively well again. (Though Tim maintains its ability to get a signal is continually degrading.)


We discussed the option in depth when, for the first time in four years, we had an overage. A severe overage, to the tune of about $60 -- doubling our usual bill. Since I was suggesting AT&T for rollover minutes, this did seem to be the universe urging us to get on with the switch already.


Then Mom made a point: Did a once-in-four-years overage of $60 really make a new plan (costing $10 more a month) worthwhile?


Technically, no.


Rollover minutes seem like a great option. We rarely use all of our minutes, yet we pay the same rate regardless. So, the marketing logic goes, let's keep those minutes for up to a year. Then, we can be less careful, since we'll have a buffer in place. This would be great, since we have the lowest minutes plan (500) and are thus pretty strict about usage.


I was getting pretty enthused about this idea of "saving" minutes from one month to the next. The commercials were right -- I pay for the minutes, I should get to use them. Right?


Uh, maybe not.


At some point in this process, I stopped and asked myself, "If we rarely use all of our minutes, how likely is it that we'll actually use these rolled-over minutes?" It's pretty unlikely, actually.


You can argue (and I certainly have) that we could be less strict in our usage. This would allow us to take advantage of rollover minutes. Much like belongings swell to fill available space, our use could grow to fit our allowances, rather than our actual needs.


But once again, real logic has gotten lost in the shuffle. If we get used to using more cell minutes, won't that necessarily mean fewer minutes are left to roll over? Either way, it means these rollover minutes probably won't get used. The fact is, if we do change plans, we're mostly going to be paying for a perceived need, rather than a real one.


Perceived needs are how wireless companies make the big bucks. They try to convince us we need to be able to surf the web or check email anywhere for just $25-35 per month. They offer us 4 channels of TV on a 3" screen for only $15 a month. Or GPS for $10/month. (Because, if you're paying that much for the Web, you wouldn't want to just use Mapquest!) Whatever the latest technology, commercials tout it as the most convenient, conveniently forgetting to mention it's also the most expensive. But those bells and whistles get us into the store, if only out of morbid curiosity, and customers leave with far more than they thought they wanted -- and a helluva lot more than they needed.


But that's marketers' specialty. It's how they earn their pay. Their job is to create a need where there is none. If cell phone sales drop, they just add more gadgets and convince people to trade up. And that requires, not just skill, but their own brand of logic.


They've gotten us used to the idea that phones should do more than receive calls. They should have cameras. And play music. And sync to your computer. And have a day planner. And surf the web. And compare prices. And give directions.


But maybe the biggest coup is that they've convinced us that we need cell phones. The average person doesn't need a cell phone. Few folks do.


Okay, resident managers find it very useful. And salespeople who are in their cars a lot. But for the average person? It's a convenience. A very alluring one. And marketers have gotten so far inside our heads that now we almost do the work for them.


Think about it: Do you buy so many minutes because you need to make calls? Or do you make calls because you're already paying for the minutes?


Even if you're not willing to give up your phone, here's a trick that might get you to at least rethink the value of your rate plan:


First, add all the used minutes together -- including nights, weekends and mobile-to-mobile. Divide this sum by your monthly fee. You have an overall cost per minute used. Chances are, this comes out to a pretty good deal.


But, here's the catch: How many of those calls would you still have made if you were watching your minutes or didn't have a cell at all? Probably quite a few less.


Now, think about the fact that you may be using a lot of mobile-to-mobile and night minutes simply because you have them.


So now take only daytime minutes (no night, weekend or mobile-to-mobile) and divide that by your monthly fee. My bet is this is a much closer representation of your real use of your cell phone. And I bet it's a lot more than the last figure.


Of course, I'm presuming here that all those other calls could be avoided -- which isn't probable. But do consider how many of those calls could have waited until you were by a landline, and just how much you could be saving that way. (This is the last math exercise, I promise.)


Add up the minutes of your local calls. Multiply that by the last per-minute rate you found. Now compare that to a no-frills (no caller ID, no call waiting, no nuthin but a ringing phone) landline. Here in Seattle, that costs about $15-20 after taxes.


Still, that doesn't help you on long-distance calls. But, for around 4 months before our wedding, I was on the phone with my best friend/maid of honor in Florida at least twice a week, each call a minimum of 30 minutes, and our phone bill was still only $33. That included local service and a $6 monthly charge for a cheap long distance plan.


Okay, so if we were all perfect frugalists, we'd toss our cell phones out the window right now. But judging by the lack of clattering noises, I'm going to say that most of you are hugging your phone, telling it you won't let the mean blogging lady hurt it. And that's fine. Well, all except talking to your cell phone.


I'm not saying you have to give up your cell phone. Mom and I may still switch to AT&T for the simple fact that a) $10 isn't that much to pay for peace of mind and b) the reception has to be at least marginally better than what we're getting from T-Mobile.


What I am saying, in fact, is that we need to start thinking realistically about our spending, especially on things like cell phones. We've been immersed in marketing logic. We've been trained by marketers to think of all the value we can get from our plans.


All those 'unlimited' minutes on nights and weekends? All those calls we can make to other folks with our carrier? To paraphrase my favorite, ranting, cartoon squirrel, "If all this stuff is free, why are you paying $70 a month?!"


We're trained to think of all the items we get to have at our disposal, instead of what we're actually using. And it seems to me that marketers go to great lengths to keep us from figuring out the actual cost per use.


For example, Tim and I don't text. We don't particularly like texting and see no need to pay for it. No one ever remembers this. (Once, we even got a "Merry Christmas" text from a relative that we were due to see two hours later!) And so, with forgetfulness and spam, we pay anywhere from 20 cents to $1.80 a month in text charges. Yet whenever we mention this to someone, usually to remind them not to text us, they advise us to just get a texting plan (starting at $5/month) to avoid the headache.


For the record, I actually have a friend that got so sick of trying to budget for the random texts, he actually decided to pay the extra $5 a month. Now, of course, he told me, they're getting their money's worth, since his wife has become addicted to texting. Talk about marketer's math!


I guess the real question here is whether we're paying these prices because the value is there, or whether we're finding the value because we've agreed to pay the prices. It seems like we rationalize an awful lot of things -- always with the help of commercials, telling us what new technology we need -- in order to feel okay about paying $50-100 a month.


How many people would text at the same levels (or at all) if they were charged 10 cents a pop? But since you're paying for an unlimited plan, you figure you may as well get your money's worth. Except, and maybe this is just my eternal question, if you wouldn't normally use it, are you ever really getting your money's worth?


Or is it just marketing logic at its finest?

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7 Comments:

Blogger Naturally Frugal said...

Great post Abby! I completely agree and have considered giving up my cell phone or going on a "pay as you go" plan. I don't use it very much, but do text quite often so I'm not sure how that would work. Damn those sneaky marketers, they have really got us going.

January 17, 2009 at 9:02 PM

 
Blogger Shevy said...

As I told my Blackberry, the nice lady isn't talking about you, just the people who don't *need* their cells.

(Actually, what *I* need is a padded cell and not just because I talk to my cell phone, but that's beside the point.)

In our case, we pulled the plug on our $50/month landline (which was almost never used) and kept our cells. In fact, my hubby decided to upgrade to a Blackberry after seeing how much I loved mine but he did have the brains to wait until his carrier had a free Blackberry offer.

My hubby *is* a salesman and needs a cell (part of which is paid for by his work) and I spend large quantities of time every day in the car or van driving, usually with 1 to 3 young children.

Then there's our rural home. We have neither a phone nor internet there (which would have to be satellite internet) because it doesn't make sense to pay for having them there constantly when we're only there occasionally at this point.

So, when we're there we need to use a cell and our Blackberries allow us to also stay in touch online. Hubby needs to read his work email and I read and comment on blogs or post on mine. Having switched to the Blackberries from regular cell phones has eliminated many 20 minute drives to the nearest town to use the wifi at Safeway.

I frankly don't know how I ever managed before I got a cell but I agree that there are people who just have them because everybody else does and who don't really use them.

January 17, 2009 at 9:08 PM

 
Blogger jbob said...

I wrote a paper about this for a humanities class not long ago. People have never needed most of the technology that is currently available. If you wanted to communicate with someone, you used to have to send them a letter (through the post office), call them on a land line (and hope they were home and not talking to someone else) or meet them somewhere and actually TALK to them. Now, however, there must be at least five or ten different ways to get the same message across, and most of them are seen as "requirements" by almost everyone. Some people only have a certain gadget because it's the only reliable way to get in touch with one or two specific people. Almost everyone ends up paying ridiculous amounts of money for something they never needed before and could almost certainly continue to live without, if they had to, but either no one realizes it or no one cares. Marketers are geniuses.

January 17, 2009 at 9:54 PM

 
Blogger Abby said...

Naturally Frugal,

Indeed, marketers earn their keep! It must be hard to wean yourself from a regular cell to a pay-as-you-go, so perhaps you just have to treat it like any "diet." You just slowly cut back your use until you've found a healthy balance.

Shevy,

I'm so glad your Blackberry isn't afraid of me.

Seriously, though, you're right: Some people do wring every last cent of use from the cell phones. And if your area is really that rural, then you're probably saving some on internet. Not to mention all that gas to and from Safeway's wifi haven...

Jbob,

You're right. Most of us don't need the technology we use. Tim loves his Xbox 360 to death, but it's not necessary. Nor are the LCD/plasma TVs we drool over. I think it's about recognizing what you need in life versus what you want. Then looking at your budget and deciding exactly how much you want to give up to get it.

I definitely learned just how unnecessary having the latest technology is. I'm still slowly getting rid of VHS tapes and now DVDs are headed for obsolescence?! Forget it. I rarely re-watch movies anyway. I say just stop buying the darn things and worry about the bigger expense of the players -- be it CD/MP3, DVD/Blu Ray. Or even affording a super-laden-with-bells-and-whistles phone. Which sounds like an awfully loud phone, really.

January 17, 2009 at 10:04 PM

 
Blogger Over the Cubicle Wall said...

$8 to jam yourself full of food on an all you can eat buffet or $6 to order off the menu (and still probably eat more than you need)? Most people will go for the $8 buffet without thinking twice. Marketing is the anti-logic.

January 18, 2009 at 7:31 AM

 
Blogger Maryea said...

I agree, Abby. I have a phone that has many capablitlies I don't need and don't use. At least I am not paying for most of them. However, some of our kids are into texting and we have to incoming texts and one kid only responds to texts generally so we have started texting out of necessity (regardless of how they act they are our kids and we want to stay in contact!). It is also nice to get the occasion pics of our grandchildren. So yesterday we bought the $5 package for text messages. Hated to add to our bill but decided we would likely be spending more if we don't.

January 18, 2009 at 9:15 AM

 
Blogger Shevy said...

@jbob

Interesting idea that "people have never needed most of the technology that's currently available".

The same could be said of transportation technology. After all, we got along with horses, carriages and sailing ships for a long time. Maybe we don't need cars and planes?

Although it's funny about cell phones. Remember when pagers were relatively new? The guy with a beeper was probably either a doctor or a drug dealer!

And remember when "they" said nobody needs a computer with a gigabyte of memory? I'm not going back to a Commodore 64 any time soon, thanks.

I take what I like and what is useful to me of new technology (my Blackberry and my laptop with 60gBs) and leave the rest (video game systems and MP3 players). This is definitely an area where "Your Mileage May Vary".

January 18, 2009 at 2:57 PM

 

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