European Journal of Information Systems (2006) 15, 285291

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Exploring the influence of reference situations and reference pricing on mobile service user behaviour
Jennifer Blechar1, Ioanna D. Constantiou2 and Jan Damsgaard2
Department of Informatics, University of Oslo, Norway; 2Department of Informatics, Copenhagen Business School, Denmark Correspondence: Jennifer Blechar, Institutt for informatikk, PO Box 1080 Blindern, Oslo 0316, Norway. Tel: 47-22-85-24-24; E-mail: jennifjb@ifi.uio.no
1

Abstract Despite widespread proliferation of mobile devices providing access to a variety of advanced and data-rich services, adoption of those services remains low in most of the Western world. Thus, research related to the acceptance and use of mobile technology and services continues to develop. Traditional research in this domain has been useful for exploring adoption and use related to individual technologies or novel services. However, our research efforts indicate that users often reflect on former experiences with similar technologies or services when choosing mobile services. This suggests that when exploring mobile service usage decisions, focus cannot be placed on mobile services alone. Through two longitudinal field studies conducted in Denmark during 2004 and 2005, this article further explores the manner in which users choices of mobile services are influenced by their reference situations and reference prices. The article suggests that users cognitive referencing is an influential factor that must be considered when exploring their usage behaviour in the mobile services market. European Journal of Information Systems (2006) 15, 285291. doi:10.1057/palgrave.ejis.3000618
Keywords: user behaviour; mobile services; cognitive referencing; reference price; reference situation

Introduction
Sales of mobile phones enabling access to advanced mobile services are increasing at an unprecedented pace in Western Europe. One would therefore assume that the market for such services is growing correspondingly. However, this is not the case. The growth and size of the mobile phones market is not matched with a subsequent increase in users consumption, which still remains limited with modest growth (3GForum, 2005). This apparent incongruity is the point of departure for this article. When investigating the adoption and use of mobile services, traditional theories and models of technology acceptance are often applied. These are useful for exploring adoption and use actions related to a specific technology or service, in a isolated fashion (Lyytinen & Damsgaard, 2001). However, in our research efforts we discovered that mobile service users often made reference to existing service delivery platforms when making their mobile service usage decisions. Thus, their mobile service behaviour seemed to be influenced by their past experiences with similar service offerings (Blechar et al., 2006). This led us to suspect that in order to understand developments in the mobile services market, we could not

Received: 11 November 2005 Revised: 1 February 2006 Accepted: 20 February 2006

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focus on the mobile service alone but also needed to include users experiences with similar services available through other media. A fundamental feature of mobile services is ubiquity the access to information and services regardless of spatial, temporal or technical constraints (Kleinrock, 1996; Dahlbom & Ljungberg, 1998; Lyytinen & Yoo, 2002). However, the very nature of being able to access services over a variety of platforms leads to previously unnecessary and unavailable choices for users. We explore the choice processes and usage decisions of mobile service users in relation to their reference situation and reference price (Thaler, 1980). These reference factors are formed according to users previous experiences with similar services. Through data collected from two longitudinal field studies conducted in Denmark during 2004 and 2005, this article suggests that users reference price and reference situation can influence their mobile service usage behaviour. The contribution of this article is three-fold. First it contributes to user behaviour research in the mobile services arena by illustrating the need to consider users reference situations and reference pricing when exploring their mobile service usage decisions. Second, it illustrates the beneficial insights gained from approaching mobile service adoption and use research from a wide, compound perspective. Finally, it offers an explanation as to why there is not necessarily a good correspondence between growth in sales of phones and the advanced mobile services market. This article is structured as follows. The next section provides a brief overview of existing research on user behaviour, an introduction to the concept of referencing, as well as the proposed hypotheses. The proceeding section presents the research method. The analysis and implications of the research results are then presented. The article concludes by summarizing findings and suggesting future research directions.

Theoretical insights
Recently, there has been an increasing trend in the popularity of IS research based on theories such as the Technology Acceptance Model (TAM) (Davis, 1989) to explore technology acceptance and use actions. TAM and other theories such as the Theory of Reasoned Action (Ajzen & Fishbein, 1980), the Theory of Planned Behaviour (Ajzen, 1985; Ajzen, 1991) as well as extensions and modifications to the above (e.g. Taylor & Todd, 1995; Venkatesh et al., 2003) have also been applied in the mobile services arena (e.g. Khalifa & Cheng, 2002; Hung et al., 2003). Correspondingly, this avenue of research was a natural choice and served as the foundation for our original research effort. Several attempts have also been made to compensate for some of the limitations of the above theories such as trying to better capture mobile users behaviour (Constantiou et al., 2006), understand the added value of mobile services (Anckar & DIncau, 2002) and focus on

the end-user context (Pedersen & Methlie, 2002). Much of the existing research explores mobile services in an isolated fashion, paying little attention to the choice process and usage decisions of users in light of the multitude of sources available to fulfil a service need. It is this choice process that is the focus of this article. Initial indications from our field research pointed that users often made reference to existing service delivery platforms, especially the Internet when discussing their mobile service choices, leading us to suspect that a unilateral focus on the adoption decision was not sufficient. This as well as recognizing the call for new theories and models for research in the mobile arena (Lyytinen & Yoo, 2002) led us to venture beyond our original research approach for wider theoretical insights. We looked to behavioural economics (Kahneman & Tversky, 1979) and further to the concept of referencing through transaction utility (Thaler, 1985), to explore users decisions to use advanced mobile services. Transaction utility is defined as the difference between the amount paid and the reference price for the good (Thaler, 1999, pp. 188189). The reference price is the amount of money that a consumer perceives as the regular price (ibid.) based on similar past purchases. High reference prices can increase the transaction utility such that a consumer may buy a redundant product/ service because it is considered a good deal. Alternatively a consumer may not buy a value-adding product because it is considered too expensive due to a low reference price and thus negative transaction utility (Thaler, 1985). Empirical evidence of transaction utility exists in consumer goods market analysis (Thaler, 1985) and experimental economics research efforts (Camerer & Lovallo, 1999). Applying the concept of reference price to the mobile arena, a reference for a user when making a purchase decision for information such as sports scores on the mobile, for example, may be a printed newspaper. Thus, if the price for access to sports scores through a mobile portal is higher than what the user considers as normal for a printed newspaper, then she may decide not to purchase this information through the portal because of negative transaction utility. The concept of referencing thus offered promise to explore the choice process of users in our field research as it places focus on a users assessment of a potential mobile service purchase in relation to other similar past purchases. According to this theory we thus set the following hypothesis: H1: Low reference prices negatively affect users advanced mobile service usage The reference price is one potentially influential aspect in the choice process. However, the use situation can also affect the reference price and thus actual usage decision. More specifically, when a consumer evaluates a potential purchase, she assesses the relative benefits and costs of the specific product or service (Thaler, 1985) in relation

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to a reference situation of a similar purchase. The reference situation is the reference state (Kahneman & Tversky, 2003) according to which the overall value of a purchase is estimated by the consumer and serves as a cognitive comparison point to facilitate subsequent choices. This reference situation can be used to explain why a consumer may be willing to pay more for a certain product or service in specific situations as compared to others. In the case of mobile services, this reference situation could be the physical source where a similar service was purchased. For example, continuing with the sports scores example mentioned above, the reference price may well be a printed newspaper when this is available, however, this reference price may change (i.e. increase) when physical newspapers are not available, for example when travelling abroad. Transaction utility may thereby become positive. Thus, based on this and our initial research indications of participants referencing of the Internet (Constantiou et al., 2006), the second hypothesis set in this article is: H2: The reference situation of the Internet has a negative effect on users reference prices when making mobile service usage decisions

Table 1
Element Number of participants Gender

Participant demographics
Field study 1 38 63% Male 37% Female 29 70% students 30% employees semi-public sector Field study 2 36 60% Male 40% Female 31 56% students 44% employees semi-public sector

Average age Occupation

allow back-end usage data to be collected. The advanced mobile services available to participants included: 1. Information services: News, Local Cultural/Sport Events, Horoscope, Entertainment Information 2. Application services: Postcards, Email Games, Dating and Chat, Search and Find Data collection followed a mixed-methods approach (Hammersley, 1996; Creswell, 2003) including surveys comprised of both open-ended and fixed-response questions as well as focus groups and short interviews. Reallife usage data were also collected by the participating mobile operator. A total of six surveys were distributed to participants in each field study (see Figure 1). These ranged from the initial survey gathering demographic information from participants to in-depth surveys querying participants of their experiences, intentions and satisfaction. Surveys were developed in an online survey management tool and distributed to participants via e-mail. Fixed response questions on the surveys allowed for responses on a Likert scale (i.e. 5- or 7-point scale from 1: Strongly Disagree to Strongly Agree), and open-ended questions allowed participants to enter free text. Moreover, various sets of short interviews and focus groups were undertaken with a selection of the participants. These were audio or video recorded and were semitranscribed. The foundation for most of the data collection effort in the project was traditional technology acceptance literature. However, as the project progressed and data received from participants was analysed, additional means of data analysis were employed. Namely, as we began to investigate participants choice processes, we found that we required additional theoretical tools to explore our observations of the influence of participants past purchases and use of services through other platforms such as the Internet on their mobile service usage decisions. Because of the combination of data collection methods employed in our studies, we had the opportunity not only to triangulate (Jick, 1983) data collected, but to also use this discovery (Star & Gerson, 1986, p. 151) of participants referencing to guide our further data analysis efforts. Thus, we applied the concepts of

Research method
Having presented the theoretical background, this section provides information on the research method. This article presents results from the Mobiconomy research project, which aimed to provide information related to economic aspects and business potential of advanced mobile services. The partners in the project included our research institution and six key players in the mobile services value chain; three content providers, a major mobile operator and two major technology providers. During the project, two longitudinal field studies were established between March 2004 and March 2005, each lasting approximately 3 months. Participants were selected for the field studies based on their technological experience and mobile services use profiles. Namely, participants were all mobile telephony and SMS users that were aware of advanced mobile services but had rarely or never used them prior to the field studies, thus enabling us to explore their choice processes. Table 1 offers a brief description of the participants demographics. Throughout the two project periods, participants were provided with new GPRS enabled mobile phones with pre-paid SIM cards of 35 Euro per month. This amount was selected based on participants average monthly expenditure prior to participation in the project (i.e. 70% higher). This was done so as to increase participants monthly budget available thereby enabling the purchase of novel services (Thaler, 1999) while still maintaining budgetary constraint (Smith, 1994). Participants were given the opportunity to use the phones as they wished, with the agreement to participate in data collection and

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Figure 1

Sample survey distribution timeline.

50 45 40 number of services 35 30 25 20 15 10 5 0 1 2 3 4 5 6 7 8

Daily service use

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 time (hour)

Figure 2

Time of advanced mobile services use during an indicative day.

reference pricing and reference situation ex post to explore the cognitive choice processes of users and the manner in which referencing impacted their mobile service usage behaviour. We now present the analysis and discussion of the results.

Analysis and discussion

In order to explore the actual decisions of the participants in our field studies, we turned to their actual usage data. One observation from this data is that there was a low use of the advanced mobile services offered. When investigating hourly service usage per day, we also discovered that services were primarily used during specific points of time in the day. Figure 2 illustrates the service usage for participants during an indicative 24 h period. It is evident that mobile services were most often used by participants in the evenings. This observation and the reasoning behind users choices of service use during these times are further explored in the remainder of this section. Sixty-five per cent of the participants had almost continuous access to the Internet via their PCs either at home or at school. When both the Internet and the mobile phone were available, it seemed that the services

available over the mobile phone were not frequently accessed. However, in the evenings when users did not necessarily have their PCs readily available (e.g. they were out for a social event), services were accessed. Thus, users seemed to derive utility from services, depending on their situation. In particular, when the Internet was a viable option, they did not choose to use the mobile services. As on interviewee noted, what I like to use my phone for is when I am not close to the computer or the internety(Female, 33). When users did not have access to a PC or services via other channels, then they were willing to use mobile services if the context called for it. For example, one interviewee noted: I also tried to buy news and that was OK. But it was also a limited amount of news you got though and it was something I could see on my TV as well if I had text TVyone day I lost electricity in my house so I went on my phone instead and that was kind of nice to have that opportunity (Female, 26). Hence, when users did not have access to their typical information channel, they were positive towards use of the mobile services to access the information needed. Similarly, another interviewee stated, I dont have an internet connection at home right now, so it was nice to have e-mail in my phone to check (Male, 25).

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Table 2

Reference price and actual mobile service usagea

Users not perceiving mobile services to be too expensive (N 19) 107.11 T 2.62 Sig. 0.014 P-value Po0.05

Users perceiving mobile services to be too expensive (N 42) Means of total mobile service use
a

57.45

Data have been cleaned to remove outliers, such as participants with zero mobile service usage.

Table 3

Internet use and actual mobile service usagea

Users with non daily use of similar Internet services (N 20) 98.05 T 2.23 Sig. 0.029 P-value Po0.05

Users with daily use of similar Internet services (N 41) Means of total mobile service use
a

60.66

Data have been cleaned to remove outliers, such as participants with zero mobile service usage.

In many cases, we noted that participants often used the Internet as their reference when discussing the use or non-use of mobile services. This Internet experience also had an impact on the formation of their reference price in that participants often compared the prices of both technological platforms (PC vs mobile phone). The comparison sets a challenge as Internet was typically provided to participants through their employer or at school where they did not directly pay for access. Thus, participants often viewed Internet services as being nearly free of charge, leading to a low reference price. Therefore, nearly any price charged for the mobile services was perceived as too expensive. As one participant noted: I have not seen the services I would like to use yet. Furthermore I find them quite expensive, and not adding anything, that computers cannot do better and cheapery (Male, 35). The following comment captures this observation, indicating the negative transaction utility: yThe problem with the mobiles services is, that I have to pay for information that has become commodities. Why pay for news, which is free on the internet? Why pay 2kr for a joke, when I can get thousands for free on the internet? I need something original and unique for a mobile service (Male, 27). Through our qualitative efforts we found support for our second hypothesis that participants reference situation of the Internet had a negative effect on their reference prices when making mobile service usage decisions. The further potential influence of the reference price on users transaction utility and thus mobile service usage was explored quantitatively through participants responses on the initial survey and through their actual service usage. Here, we asked participants to reveal on a 5-point Likert scale whether they thought that mobile services were expensive. Participants who believed the mobile services to be too expensive had a lower reference price, which suggests lower or negative transaction utility, than participants who did not. We then compared

the total service usage of those with high reference prices (responses from 1 to 3) and those with low reference prices (responses 45). Thus, we explored the potential impact of the reference prices on their actual mobile service usage. From Table 2, we observe that participants with low reference prices had significantly lower total use of the services than participants with high reference prices. This supports the first hypothesis that low reference prices have a negative influence on actual service usage. The potential impact of the reference prices formed through the reference situation on actual service usage was also further explored. Because we found the Internet to be a common reference situation, we investigated the actual mobile service use of participants according to their Internet service experience. In particular, we explored participants use of Information and News services on the PC-based Internet prior to the field studies with their mobile services use. These two types of services are very similar through both service delivery platforms and we believe that participants with high usage of PC-based Information and News Services prior to the project would be more familiar with them and thus have a lower reference price than participants with less such service use. This lower reference price would create lower or negative transaction utility that could then further influence their service choices. In particular, participants experienced with these services on the PC-based Internet may have lower actual use of the services on the mobile. In these cases we focus on frequency of use to explore whether daily use of the Internet services prior to the project seemed to influence participants actual usage of the mobile services. According to Table 3, it appears that participants who used services such as News and Information on a daily basis through the Internet prior to the field studies had significantly lower use of similar mobile-based services than those who were not daily users. This suggests that

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the more participants were familiar with similar Internetbased services, the lower their reference price and the transaction utility and hence the lower their actual use of the advanced mobile services. Through the results of our field studies, it appears that the reference situation, namely the Internet, played a significant role in the formation of the reference price and that this had an influence on mobile service usage. Here, many participants noted that they were not willing to pay the additional cost of accessing mobile services due to the availability of similar services through other means. These data indicates the danger of mobile services being viewed merely as high-priced substitutes of Internet services in the eyes of users. In such cases, if mobile operators do not exploit their opportunity to diversify their service portfolio focusing on the mobility attribute that mobile phones provide, they may remain merely commodity (i.e. communication) service providers. Better understanding the formation of consumers reference situations and reference prices can play a critical role in the identification of such future value adding services on mobile platforms.

Conclusion
This article has chosen a wide compound perspective to explore mobile service usage behaviour. In addition, it has also addressed the incongruity between soaring mobile phone sales and the slow growth in use and purchase of advanced mobile services. Initial indications from our empirical data, which were collected primarily through concepts from traditional technology acceptance literature, placed the need for us to consider users references when exploring their mobile service usage decisions. This led us in the direction of behavioural economics in order to develop and explore our hypotheses that reference prices and reference situations would influence users decisions and thus actual mobile service usage. The hypotheses were investigated through data collected from two longitudinal field studies conducted in Denmark during 2004 and 2005. Through these data it was evident that users purchased mobile services only at certain points in the day when they were not at home or at work/school with connections to the Internet via their

PCs. In addition, this effort illustrated the manner in which users looked to services available on the Internet to form their reference situations and reference prices. And thus, that nearly all mobile services available to users in the field studies, due to their similarity to services already available via the PC, were considered expensive. These reference prices seemed to further influence actual mobile service usage and purchase decisions, thus we found support for the two hypotheses presented in this paper. The insights generated underline the benefits gained when approaching mobile service adoption and use research in a holistic manner, and the importance of considering the influence of consumers referencing on their mobile service usage behaviours. Since access to the Internet via PCs and other technological platforms (e.g. WiFi) is becoming common place, situations where access to services via the mobile phone will be the preferred alternative for service provisioning, will become even more scarce than they currently are. Further, this will likely not be sufficient to finance the astronomic figures paid by operators for the right to offer third generation mobile telephony. We therefore urge operators and content providers to collaborate to develop services that are not simply replicates of web-based Internet services but also take into account users referencing and the actual place of services in their everyday routines. Here, focus on users reference pricing and reference situations can be useful to better understand this consumption environment. Further research in this domain should continue to look beyond existing construct-based research to better take into account the entire environment that a user is in. This is especially true as physical and psychological boundaries continue to converge, and comprehensive considerations such as this become critical. This article is an effort to progress and guide research in this domain in that direction.

Acknowledgements
This research was conducted as part of the Mobiconomy Project at Copenhagen Business School. Mobiconomy is partially supported by the Danish Research Agency, Grant number 2054-03-0004.

About the authors

Jennifer Blechar is a Ph.D. candidate with the Department of Informatics, University of Oslo, Norway. She holds an M.Sc. from the London School of Economics and Political Science and has several years experience as a consultant within the Telecommunications field. Her research interests involve the behaviour of users in the adoption and use of advanced mobile services. Ioanna D. Constantiou is Assistant Professor at the Department of Informatics, Copenhagen Business School, Denmark. Her research is focused on the Economics of Information Systems and in particular on Consumer Behaviour in Information Technologies Markets. She holds a Ph.D. from the Department of Management and Technology at Athens University of Economics and Business.

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Jan Damsgaard is professor at the Department of Informatics, Copenhagen Business School, Denmark. J.D. researches the diffusion and implementation of complex, networked and standard-based technologies such as intranet, Internet portals, EDI, and mobile services. He has presented his work at international conferences (ICIS, ECIS, PACIS, HICSS, IFIP 8.2. and 8.6)

and in international journals (European Journal of Information Systems, Information Systems Journal, Journal of Strategic Information Systems, Information Society, Journal of Global Information Management, Journal of Organizational Computing and Electronic Commerce, Information Technology and People and Journal of the Association for Information Systems).

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