Perceptions of mobile plan unit pricing and terms and conditions

Abstract

Purpose The purpose of this paper is to test the efficacy of disclosing unit pricing and increasing the type size of complex terms and conditions in advertising. This is in line with recommendations made by global telecommunications regulators, including in Australia, to protect consumers in selecting mobile plans. Design/methodology/approach The authors employed a 2 (unit price disclosed: no, yes)×3 (type size: nine-, 12- and 15-point terms and conditions) full factorial, between-subjects experimental design using a scenario and fictional advertisements for 24-month mobile phone plans. This was complemented by 24 in-depth interviews with consumers who had recently purchased “real” plans and their assessment of these. Findings Extra information in the form of unit pricing has a positive influence on consumers’ value perceptions, but not on perceived confusion or risk. Presenting complex terms and conditions in larger type increases consumers’ perceived confusion and risk, but not perceived value, as consumers have difficulty understanding the complicated information presented. Research limitations/implications This study focused on a single country market for one product type of mobile phones, using a limited range of mobile plans. Practical implications Public policymakers and providers are advised to pre-test planned changes to advertising’s informational content prior to implementation to identify the efficacy of proposed changes to protect consumers. Consumers may also need to be educated to accurately interpret complex plans. Originality/value The study contributes to the domain of informational content in advertising as a form of consumer protection. The effect of unit pricing and larger type for terms and conditions on consumer perceptions has not been examined previously in complex product settings.