Unlocked mobile phones account for 12 percent of the U.S. market with growth expected to continue, according to a new report from NPD Connected Intelligence. Unlocked phone sales are more likely to occur online, when compared to locked phone purchases.

According to the new Unlocked Phone Demand Report from NPD Connected Intelligence, the unlocked mobile phone market is growing rapidly with an estimated 28 million consumers owning an unlocked device in the U.S., accounting for 12 percent of the market. Additionally, due to limited options available in-store, half of all unlocked phones (51 percent) are being purchased online – a notable deviation from locked phone purchases which traditionally take place in-store. By comparison, 74 percent of locked phones are purchased in stores/kiosks.

Phone sellers should note that the most recent AudienceSCAN survey revealed 20.4% of Americans are planning to buy smartphones or smartphone upgrades in the next 12 months.

“Since consumers now have to pay full price for their mobile phone, the unlocked market is a cost-effective alternative and helps to address the mid-tier pricing market for consumers that are looking for a relatively high-end smartphone, but at a lower price point than the typical $600 plus price tag,” said Eddie Hold, President, NPD Connected Intelligence.

When advertising to Smartphone Shoppers, keep in mind that AudienceSCAN research reported 28.3% are willing to compromise on quality to save money on most products.

The unlocked market also provides opportunity for new entrant original equipment manufacturers to penetrate the market without a carrier commitment. While this poses a threat to established OEMs already challenged with protecting market share, awareness levels of emerging OEMs are currently below 10 percentage points.

During the past 30 days, 26.7% of Smartphone Shoppers have used the internet via browser, tablet or smartphone to visit a local store/business website to research a product or service before buying, according to the most current AudienceSCAN surve results. It’s important for smartphone retailers to have an online presence when shoppers are deciding between locked and unlocked phones.

The market is currently made up of two distinct consumer bases: frugal consumers looking for lower-priced devices that deliver; and high-end, tech focused consumers, looking to differentiate from the standard choices. With more devices available, the unlocked mobile phone market is dominated by Android devices (62 percent), as compared to iOS devices (35 percent). The report reveals that unlocked phone users are more likely to prefer prepaid plans when compared to the overall smartphone market, as well as indicate that they remain within their plans boundaries, indicating price sensitivities.

Try reaching these types of customers with TV spots that appeal to their needs. AudienceSCAN research showed 41.9% of Smartphone Shoppers took action after watching commercials in the past month.

“While costs are a major factor driving consumers to make the switch to an unlocked device, these consumers still expect their devices to deliver dependable service,” said Hold. “That’s why it’s becoming increasingly important for carriers to educate consumers on possible band/frequency issues when using unlocked devices; otherwise, consumers are likely to blame carrier networks for signal losses that are in reality device driven.”

AudienceSCAN data is available as part of a subscription to AdMall for Agencies, or with the SalesFuel API. Media companies can access AudienceSCAN data through the AudienceSCAN Reports in AdMall.