Bringing the aspect of price into the discussion this week has turned it into a topic of great interest to me, being a marketing major. Most purchase decisions are based on price. Consumer behavior will evolve, and become more complicated, as price increases.
On the other hand, if regulations would require providers to only offer an increased speed option, without slowing down the existing option, people could choose. For me, I would be perfectly happy with my current service. Someone that uses their computer for far more technical things, involving advanced video, audio, gaming, etc., may feel the faster speed is worth paying more.
What is my breaking point, when it comes to price for internet activity? That’s a really tough question. Right now, so much of my life is internet dependent. I recently had my modem struck by lightning (or it just broke) and was offline for almost a week. The impact that had on my everyday functions and tasks was a little alarming. Everything was complicated.
I have three courses online this semester so, obviously, most of the work I do for assignments is online. When I lost my internet service, I was completely lost also. I attempted to work on my iPhone, however, the tiny screen just does not make for an enjoyable viewing or reading experience.
It reminded me of the topic of the “digital divide”. The issue is for rural areas of the country, or world really, that do not have the internet connection options that urban areas have. People are being left behind because they do not have adequate service at a reasonable price.
Some friends of mine recently moved from Chatham, Illinois to a home about five miles outside town. Those five miles have made a huge impact on the quality and price of the internet service they have available to them.
The only option they have is satellite internet at their new home. There is a limit on the amount of data they can upload and download every month, and the cost far exceeds the cost they had in town. One of them works from a home office so internet is not just an option, it is a necessity.
If providers begin increasing their prices to absorb their increased costs, I believe it will immediately increase the digital divide to include even more lower-income people in urban areas. Public areas that offer free internet connection may start charging also.
Any company that we purchase a product from will have to account for an increase in cost they incur to do business. This will come from price increases on their products. So any cost increase this widespread could increase the price of every product we purchase, not just internet service.
I think my breaking point now, and in the future, is completely dependent on what I have going on in my life. While a student, the internet is worth quite a bit to me. Having service at home means not having to drag my children to McDonald’s to get work done. It means being able to cook dinner, or switch laundry around, at the same time as researching for a paper or project. At this point in my life, my time is worth far more to me than a little more money each month.
With that said, when I am working somewhere I have internet access to do my work, while I’m at work, my breaking point will decrease. However, because my children will still be students, their need for home service will make me continue to pay.
When my children are all off at college, and I live in an urban setting with many businesses that offer free internet use, I would consider that a likely substitute when pricing home service. If I’m in a more suburban setting that would require me to get in my car to get somewhere with service, I would value home service a little higher, and be willing to pay more.
My husband and I plan to retire to some tropical location in Mexico, Central or South America (don’t we all?). 🙂 At that point, I’m not sure how important home service will really be to us. I could see us simply packing our laptops up and biking to a coffee shop or restaurant for a few hours everyday. There will be no urgency or need for frequent use like we have now.
I really think this comes down to individual needs and what alternatives are available. For marketing purposes, you really don’t want consumers to start considering substitutes for your product. If the internet service providers increase their prices too much, I believe it will backfire on them with a loss of customers.