-Economic analysis of the success of China Mobile Campus Network.

[Keywords:] demand/opportunity cost/indifference curve group/utility/comparative effect/price discrimination

[Abstract] This paper attempts to provide an explanation for the successful promotion of China Mobile in university campus from the perspective of microeconomics, so as to introduce various factors of itself and competitors that enterprises with certain market power need to consider when adopting market strategies, and thus put forward their own suggestions on the promotion of China Unicom, which continues to maintain its leading position and is a market challenger.

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Now, in our university campus, mobile phones have become quite popular. Therefore, the college student market has also become a market for major companies to compete for. There are three monopoly enterprises in this market: China Telecom, China Mobile and China Unicom. Because of the technical gap, PHS is not very competitive in this market. In the college students' market monopolized by the Big Three, we find that mobile occupies an unparalleled market share, with brand awareness reaching 85% and brand loyalty reaching over 80% among college students, even though the tariff of Unicom is lower than that of mobile 10%. Mobile companies have benefited a lot from this. So how can mobile marketing be so successful? Next, this paper will elaborate from two aspects: the mobile company itself and its competitor, namely Unicom.

In order to analyze the future demand, let's first look at the mobile campus brand.

In March, 2002, China Mobile was forced to launch the third largest brand-M-Zone, which was known as "Global Connect" and "Shenzhou Tour": "My chassis is my decision". The so-called M-Zone is actually a redefinition and packaging of traditional mobile telecommunications services, and its main selling points are two: service and price. As a service, users in M-Zone can not only use all voice services except roaming abroad, but also use a series of data value-added services such as mobile QQ, wireless games, mobile pets, entertainment news and weather forecast. As a price, the "M-Zone" not only exempts users from the basic monthly fee, but also provides 20 yuan 360 short messages at a "premium discount", thus successfully capturing a large number of fashionable college students.

Since the profit =(P-AC)*Q, it is necessary to consider its success from both P and Q now.

Second, demand.

Demand refers to the quantity of a commodity that consumers are willing and able to buy at various prices in a certain period of time. Affected by their own prices, related commodity prices, income levels, preferences, public expectations and other factors. The demand here refers to the demand of the whole mobile communication market, and the demand faced by mobile companies needs to be analyzed from both their own and competitors.

1 self-factors

(1) First of all, the price of a commodity itself is generally negatively related to demand. Mobile companies introduced the promotion method of short message discount in the early stage of entering the market, which ensured that mobile attracted a large number of students' demand choices from the beginning. Moreover, even now, mobile tariffs are constantly decreasing in the fierce competition, and more and more concessions are given to consumers, which has become one of the reasons for the increasing number of mobile users;

Secondly, the income level of consumers is positively related to the demand for general commodities, and the disposable personal income of college students is undoubtedly increasing, so the demand for communication services is also increasing, and more students have joined the ranks of mobile consumers;

In addition, the reduction in the prices of related commodities, especially the price of supporting products, will also promote the increase in demand. Of course, what we mean here is that the prices of various brands of mobile phones except CDMA mobile phones have dropped again and again, which has promoted the overall expansion of the mobile communication market and the market share of mobile companies has naturally increased.

(2) tying and advertising

Tying is common in the real economy and society, and it is another important means for mobile companies to increase sales. Now, it has established cooperative relations with many major mobile phone stores. When you buy a mobile phone, it will provide you with mobile service, so you can enjoy preferential purchase. How could anyone refuse? This took the lead from the beginning and increased sales. At the same time, China Mobile has also spared no expense in advertising, not only inviting Jay Chou, who is in line with young people's image choice, but also engaging in fashion activities such as "Campus Image Ambassador" and "Street Dance Competition", which attracted a large number of young people's choices.

2 competitor status

Since PHS is not considered, the only remaining competitors are Unicom, especially its "upward new army".

China Unicom has created an "upward new force": "I want you to be red". Its business covers the services of GSM and CDMA networks. With voice and point-to-point SMS as the breakthrough point, GSM network, such as ringtone, ringtone download, Ruyi mailbox, Unicom Li Yin, chat and make friends, life information, etc. , all of which have been launched. On this basis, CDMA network has also added various value-added services such as interactive horizon, magic book and lottery e. Optional, highlighting the differentiated advantages of CDMA. The product is divided into two parts: basic package and functional package, which embodies the concept of "free customization and free combination", conforms to the communication consumption characteristics and usage habits of young college students, and becomes another powerful competitor in the communication market of college students.

(1) Utility, indifference curve group and budget constraint line

Here we assume that the existence of consumer preferences is complete, that is, consumers can fully consider the comprehensive satisfaction brought by all businesses of various brands.

The starting point of studying consumer behavior is desire, and the satisfaction of desire is utility, or more accurately, utility refers to the degree of satisfaction that consumers get when they consume a certain commodity or service. Utility depends on two aspects: 1) objective factors, that is, the use value of goods; 2) Subjective factors, that is, people's subjective psychological feelings. The starting point and purpose of consumer behavior is to pursue utility maximization. Under a certain income or expenditure level, the curve with the same satisfaction degree to different commodity combinations is the indifference curve. Therefore, whether China Mobile or China Unicom want to gain the market, they must meet the needs of students from these two aspects, so that they can get the maximum utility.

1) First, compare the practical effects of both businesses on students from objective factors.

When "M-Zone" entered the campus market, it grasped the characteristic that most students had no income of their own, so it was more economical in communication expenses. At the same time, you can enjoy the discount of monthly SMS. At the same time, MMS, Fetion, mobile QQ and other value-added services suitable for young students were introduced, which brought more value for money to students.

In the brand promotion of "up New Force", SMS discount is also the biggest selling point. However, compared with the "M-Zone", although it has a slight advantage in price, it has lost its advantage due to the shortcomings of poor network, lagging short messages and poor fashion. Moreover, because the value-added services such as lottery e and magic book provided by "Up New Power" can only be provided by CDMA network, users of GSM network lose these effects because of the existence of purchase cost.

Therefore, from the objective and practical utility of both sides, the "m-zone" is better.

2) Secondly, analyze students' subjective utility.

As soon as the M-Zone appeared, I wanted to walk into the lives of young people and lead their lives. From the beginning of brand design, M-Zone tries to be close to the tastes of young people and make them satisfied with the use of M-Zone, that is, its effect. At the same time, Jay Chou was invited to speak for the "M-Zone", and his popularity soared. With all kinds of fashionable value-added services and membership privileges, students have joined the "M-Zone". Instead of simply calling, texting and playing games, they have got their own "Youth Exchange Autonomous Region" and enjoyed the beautiful feeling of "My site, listen to me", thus making the "M-Zone" novel and bold. It just conforms to the intrinsic value orientation of college students, becomes the best externalized expression of their personality, brings subjective enjoyment to college students and greatly increases their psychological utility, so the M-zone naturally becomes their tendentious choice.

In contrast, the above-mentioned various value-added services of "up New Force" cannot be popularized because they are CDMA networks or their positioning and publicity are not in place. At the same time, the slogan "I want you to be the most popular" has been put forward, but so far there is no clear business matching with it, which can not reflect the uniqueness of "UP New Force", and the brand connotation is contrary to the team spirit, so that students can't understand what it advocates. Therefore, even in terms of subjective utility, China Unicom is far from being able to compete with mobile.

Therefore, the only SMS discount that China Unicom can compete with China Mobile in price can't make up for the loss of value-added services. The mobile service is getting better and better, which increases the intangible satisfaction of mobile users. In the indifference curve group (different income or expenditure levels have different indifference curves, which are reflected in the coordinate map to form indifference curve group. Among them, the farther away from the origin means the greater the utility. ), u 1 indicates that the utility u2 of mobile service is Unicom, U 1 > U2.

Next, we only need to consider the budget constraint line. The budget constraint line represents the maximum combination of the quantity of various commodities that consumers can buy under certain income and price conditions. Whether you choose to move or Unicom, you must do it under budget constraints. The budget constraint line is determined by income and commodity prices. The increase of income and the constant price or the decrease of income will improve students' consumption level, which is manifested in the budget constraint line, making MN move to EF. As college students have more and more funds at their disposal, and the price of mobile communication has been declining, both of these factors lead to the outward shift of the budget constraint line. When it is tangent to u2, the equilibrium point selected by consumers is obtained, and the maximum effect is achieved.

(2) Opportunity cost

We have mentioned the problem of opportunity cost in the above article. Here, let's look at an economic story first. It tells that Jordan can mow his lawn in two hours, while his neighbor Jenny can mow his lawn in four hours, so Jordan has an absolute advantage in this matter. So, should Jordan mow the lawn for his home? If he prunes himself, then he loses the benefits of participating in advertising endorsements or ball games for these two hours. This shows that if you engage in any activity and get anything, you have to pay the corresponding cost. Nothing for nothing.

Why are there such principles? Because people's needs are infinite, and resources are scarce and limited. Resources have many uses. If we use resources for one purpose, we must give up other uses. The so-called opportunity cost refers to the maximum income that can be obtained in other uses when a certain resource is put into a specific use.

"M-Zone" entered the college student market a few years ago, and with the initial preferential SMS service, it has occupied 90% of the student users. Moreover, in order to compete with PHS and China Unicom, China Mobile spared no expense to make a lot of concessions. Therefore, if some students consider switching to the Internet, first, there will be the risk of losing money. Even if they switch to China Unicom, which is cheaper, there will be the risk of reducing the contact between classmates and friends. When the "Up New Force" is promoted on campus, it is often encountered such an embarrassing situation: a classmate finally agrees to transfer to the internet under the hard persuasion of the promoter, but the classmates around him threaten not to send him text messages again, because the price of internet text messages is much higher. This reduction in contact virtually translates into one of the potential opportunity costs for Unicom users.

At the same time, because Unicom is not as mobile as mobile in fashion business and various campus activities, these activities and businesses that fashionable college students can't enjoy become another part of the opportunity cost.

To sum up, whether from the early "up new army" or now, the opportunity cost is huge for students, which leads to the increase of the total cost of using Unicom and becomes one of the important factors we have to consider.

(3) Comparative effect

Comparative effect is an external positive effect. In this role, consumers often want to have a product that almost everyone has. It may not be useful to yourself, but you must not fall behind. It is associated with fashion and trends. The comparison effect is very common in the whole economic life, ranging from children's small toys, such as Barbie dolls, to the automobile industry, which is still very prosperous today. Because the demand of the whole market is the sum of the demand of many individual consumers, the comparative effect not only affects the consumption psychology of individual consumers, but also affects the distribution of the demand of the whole market.

I think the reasons why college students choose "M-Zone" mentioned in this paper should also include this psychological and behavioral comparative effect.

Due to the early success of "M-Zone" in the university campus market, 90% of students became its users. Mobile invited Jay Chou as its spokesperson to sponsor the "Music Festival" and hold a "Street Dance Competition", which successfully made the use of mobile "M-Zone" a trend and fashion in the university campus, and talked about various fashionable data services became a hot topic. Because of this, the students in the later period chose the mobile communication service, preferring to use the "M-Zone" with a large number of people because they didn't want to be considered as a backward group, giving up Unicom's "upward new force", thus forming a cycle that is very conducive to mobile, which makes mobile occupy the psychological preference of users in the later consumer competition with such an effect, thus seizing most of the demand in the college student market. In contrast, on the one hand, Unicom lost the opportunity because of its late entry, and on the other hand, because of poor publicity and promotion, students have a psychological expression that Unicom is not fashionable enough to use, thus falling into an unfavorable cycle and losing their competitive advantage.

Third, price discrimination.

As one of the three giants of mobile communication, mobile companies undoubtedly have the ability to influence the market, so they have market power higher than MC pricing. In addition, after the completion of the network, the marginal cost MC of each additional user is almost zero, which makes the pricing of mobile companies have more room.

1) First of all, it is proposed that different discounts will be given when the consumption reaches different quantities, such as pre-storing 100 to send to 360 yuan. In this way, the two-level price difference is realized, that is, for the same goods and services, different grades are divided according to different consumption.

2) Various businesses have different combinations, even for students, there are "M-Zone", "Shenzhou Travel Card" and other businesses suitable for different consumer needs. Students can choose according to their own needs, thus realizing three-level price discrimination.

Mobile companies have successfully used the second and third price differences, thus occupying a large amount of consumer surplus. It can also make students with different needs better satisfied.

Four suggestions

1 First of all, for mobile companies, we should continue to take these successful measures to maintain the leading position in market share. In addition, in order to better compete with China Unicom for low-end users, we can consider lowering the price again, because once the network is established, MC=0 for each additional user.

We mainly learn from its successful experience, so as to enhance the competitiveness of a challenger in a weak market like China Unicom, improve the market competition mechanism and break the strong monopoly.

Therefore, in the above part, this paper attempts to analyze the economic phenomenon of "M-Zone" suppressing "upward new forces" from the aspects of utility curve, opportunity cost and comparative effect, and accordingly puts forward the following suggestions for the marketing improvement of Unicom enterprises and brands:

First of all, we can notice that both the opportunity cost and the comparison psychology that students are considering are largely due to the insufficient utility of China Unicom to consumers and the inability to maximize its utility. Therefore, the most fundamental measure to improve this disadvantage is to improve effectiveness.

The first is to break through the technical barriers, improve the quality of the two networks, especially the GSM network, and introduce more services that can compete with mobile. At the same time, we will strive to reduce the cost of CDMA mobile phones, promote popularization, and let users pursue more practical value, so as to achieve the improvement of objective utility.

Second, consider increasing subjective satisfaction. This is based on the improvement of objective utility. In addition, more fashionable campus cultural activities and more intimate services are also important.

Secondly, by strengthening publicity, using advertising and tying means, on the one hand, more students can accept their concept of "innovation, self-confidence, sharing and teamwork", and at the same time, they can increase sales through bundling. Of course, the price of selling mobile phones is definitely more favorable than that of mobile companies.

Finally, we can't ignore the important influence of price on demand. Therefore, we should continue to maintain the current situation of low tariff 10%, seize low-end users by virtue of its substitution for mobile services, attract some students at least in the near future, and reduce the occurrence of network transfer.