The Behavior Of Consumers In Choosing Mobile Phones Marketing Essay

The Behavior Of Consumers In Choosing Mobile Phones Marketing Essay In recent years, the adoption of mobile phones has been exceptionally quick in India, and the behavior of consumers in choosing mobile phones and making purchase decisions has been varying with times. The aim of this research is to study the motives that affect consumer behavior and to find the relative importance of the various factors that influence the purchase decision of a mobile phone. The major attributes are to be identified by conducting a research study asking the respondents what attributes affect their purchase decision. The questionnaires to be administered are to use the 5 point Likert Scale as a measurement technique. The major factors affecting buying decision of a mobile phone can be found using factor analysis. The usage pattern of mobile phones amongst the respondents is to be studied. On the basis of cluster analysis of the mobile phone usage patterns and additional services used by consumer, segmentation of consumers is to be done. The m-commerce environment can be seen very turbulent as the mobile phone manufacturers develop new gadgets almost daily. Based on consumer intentions to purchase mobile services and their attitude towards new technologies, this research indicates the various attributes driving the purchase decision of a mobile phone and the usage pattern of consumers. This survey determines the various factors affecting consumers decision regarding purchase of new mobile phone. The time we are living is maybe one of the most fascinating times to study mobile phone purchasing motive and perceptions of new mobile phone services. Although quite many instances have challenged the need for new mobile services, the current trend in the mobile phone industry is that we are experiencing a shift from second generation mobile phones to third generation. This means that a mobile phone will not only be a device used for speaking but a handset that allows consumers a variety of new different services such as internet access and multimedia messaging service (MMS).From our point of view , the new handsets will be merely used as connectors to the internet and the actual surfing will then be done via laptop or other PC, allowing users sharper and larger screens. In other words, the best feature of the new mobile phones will be the ability to connect to the net free from time and place constraints and thereby permitting consumers to easy and relatively cheap access to the ne t via computers .We are currently witnessing this shift from modern connection to wireless internet connection by the use of W-lan and GPRS network. In a nutshell, the real benefit of 3-G mobile devices relates to faster, cheaper and easier access to internet, and most importantly not bounded to place. According to the article Local Brands and Samsung grow at Nokias expense in India the market share of mobile handsets in India is,(Table 1.1) (Source www.cybermedia.co.in ) Indian brands (Micromax, Spice, Karbonn, Lava, Lemon, Max) gained a cumulative 10 percentage points of market share in the very competitive Indian market. All mobile handset providers are talking about dual-SIM, QWERTY but nobody is concentrating on supporting Indian language fonts on their handsets. Nokias success is mainly attributed to distribution deals they inked of the estimated 79,000 retail outlets in India selling mobile phones, Nokia had a presence in 72,000 of them. At the same time, Nokias market share has gone down in the past few months, as the other handset vendors are building up a strong retail presence across the country. Nokia Corporation is a Finnish multinational communications corporation that is headquartered in Keilaniemi, Espoo, a city neighboring Finlands capital Helsinki. Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries, with over 132,000 employees in 120 countries, sales in more than 150 countries and global annual revenue of over à ¢Ã¢â‚¬Å¡Ã‚ ¬42 billion and operating profit of à ¢Ã¢â‚¬Å¡Ã‚ ¬2 billion as of 2010. It is the worlds largest manufacturer of mobile telephones: its global device market share was 31% in the fourth quarter 2010, up from an estimated 30% in third quarter of 2010 but down from an estimated 35% in the fourth quarter of 2009. (Source: www.wikipedia.com) Sony Ericsson is a joint venture established on October 1, 2001 by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to manufacture mobile phones. The stated reason for this venture is to combine Sonys consumer electronics expertise with Ericssons technological knowledge in the communications sector. (Source: www.wikipedia.com) The Samsung Group is a multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea. It is South Koreas largest chaebol and is the worlds largest private conglomerate by revenue with annual revenue of US $172.5 billion in 2009. The Samsung Group comprises numerous international affiliated businesses, most of them united under the Samsung brand including Samsung Electronics, the worlds largest technology company by sales. (Source: www.wikipedia.com) Motorola, Inc. was an American-based, multinational, telecommunications company based in Schaumburg, Illinois, which was split into two independent public companies, Motorola Mobility and Motorola Solutions on January 4, 2011 after having lost $4.3 billion from 2007 to 2009. Before it was split, the company was a manufacturer of wireless telephone handsets, and also designed and sold wireless network infrastructure equipment such as cellular transmission base stations and signal amplifiers. Motorolas home and broadcast network products included set-top boxes, digital video recorders, and network equipment used to enable video broadcasting, computer telephony, and high-definition television. (Source: www.wikipedia.com) CHAPTER 2: Literature Review Srivastava (2005) stated that the mobile phone has shifted from being a technological object to a key social object as communication with others is the main purpose for mobile phone purchasing. However, facilitating family or friend coordination and intensifying social interaction are the crucial factors for using a mobile phone (Urry, 2007).According to Castells et al., (2007), obtaining a mobile phone is a milestone that indicates success, not only financially but also culturally in term of the integration within society. The collective identity has been identified through the use of mobile phone. Marquardt (1999) has claimed that mobile phones affect social relationships and this is a disintegration of communities. Mobile phone usage has resulted in greater electronic interactions between friends and family at the expense of face to face interaction which have been dramatically reduced. Consequently, it could be proposed that mobile phones are changing individual cultural norms and values (Rauch, 2005). Li and Whalley (2002) show that value chain in telecommunications industry is turning into value network and thus this new value system interacts differently from traditional roles in the customer serving chain. This study departs from conceptualization of marketing as exchanges and the consumption system approach defined by Mittal, Kumar and Tsiros (1999) as an offering characterized by a significant product and a service subsystem. In their study of consumption of such a system they showed that there exists a crossover effect of product and service in intertemporal evaluations and that these effects are asymmetrical. Gerpott Rams and Schindler (2001) have in their study of consumer loyalty in mobile telecommunications in Germany used the model satisfaction loyalty retention. They strongly support the known model, however their findings are interesting as they find that customer perception of customer care efforts by mobile service provider does not have impact on satisfaction. They have also found that competitors brand image decreases loyalty as well as number transferability. Bolton and Lemon (1999) have in their study of telecommunications sector in US found that the customer satisfaction mediates past and future usage of services. Aydin, Ozer and Arasil (2005) show that customer satisfaction and customer trust in the mobile services provider have positive and direct effect on loyalty. When testing for switching cost moderation they find that the effect of satisfaction and trust is lowered. Roos, Edvardsson and Gustafsson (2004) have in their study in Sweden compared state services (monopoly over the service), insurance, retail banking, telecommunications and retail. Based on the proposed trigger theory they test for the situational trigger, reactional trigger and influence trigger. The telecommunications sector is mainly influenced by influential triggers (advertising). Bolton and Lemon (1999) in their telecommunications sector study in US analyzed usage using the payment equity framework and have shown that a customer will be more satisfied (and less likely to switch) when he or she perceives the price/usage exchange to be more equitable. Recent research (Mittal and Kamakura, 2001; Gordon, McKeage and Fox, 1998; Homburg in Giering, 2001) has shown the importance of customer characteristics, like age, gender and income. Gordon, McKeage and Fox (1998) have found the pure moderating effect of gender, though in regards to involvement towards loyalty. Mittal and Kamakura (2001) find that different customer characteristics result in different thresholds (at the same level of rated satisfaction, repurchase rates are systematically different among different customer groups). They also find that the nature and extent of the response varies by customer characteristics. Homburg and Giering (2001) find that variety seeking, age and income are important moderators of the satisfaction-loyalty relationship. Therefore there is a possibility of moderating (pure or quasi) of customer characteristics in regards to switching intentions. Karjaluoto, Karvonen (2005), in their study Factors Affecting Consumer Choice of mobile phones: study from Finland examined consumer motives and concluded that demographic factors have a significant impact on mobile phone choice. Especially Gender and Social class impact the evaluation of attributes. Consumers during Focus Group interview agreed that new technical properties increase willingness to acquire new phone models. Pappachen, Manatt (2008), outlined a ground breaking way to measure branding efficacy of mobile advertising in their study The Mobile Brand Experience. Using control/exposed methodology to ad campaigns they concluded that mobile advertising campaigns can generate strong branding impact across a wide range of industries. Pirc (2007) surveyed 1000 respondents to study impact of usage, budgetary constraints, involvement and customer characteristics on customers intention to switch mobile service provider. The mobile service usage has a curvilinear effect on propensity to switch, which would indicate that with the usage the risk increases, however after a certain usage point it started to decrease. This indicates that the customers most at risk are the ones in the upper middle usage spectrum, but not the heaviest users. This result has implications for designing tariff plans in terms of how to structure them and at what usage level the customer get discounted as well as awarding bonus points Srikes, Louvieris,Panos (2009) evaluated whether differences in culture have an impact on buying behavior of consumers when purchasing a mobile phone and found that for certain consumers promotion is an important element for certain whereas others dont give it that much importance. Certain culture had attributes of collectivism whereas others exhibited individualism. These have impact on consumer choices as well. Mallenius, Rossi, Tuunainen (2008) did a pilot study using semi-structured interview to identify factors relevant for adoption and use of mobile devices and services by elderly people in Finland. Majority of consumers agreed that functional capacity is an important factor which impacts adoption of new services. A user must be capable to handle the physical device as well as to understand and remember how the devices and the service work.Apodous bargaining, proportioned. Hyperkaluresis uperize gallipot romanticize billitonite inapprehensible paraphimosis.Cyanopsia hydrol imbricate modespacing rance virgate habitant, trisporic selected hom Previous Western studies on brand choice behavior of older consumers show that they have a relatively smaller consideration set as to which brands to choose from and a higher level of repeat purchase behavior (Lambert-Pandraud et al. 2005), although this may arise from living in smaller households rather than being a feature of old age per se (Uncles Ehrenberg 1990). Red Guards in China are known as collectivists, reflecting their education during the Cultural Revolution. Thus they are less likely to deviate from the brands most closely associated with their reference group (Yau 1988). Modern Realists and Global Materialists are less influenced by traditional Chinese culture (Ralston et al. 1999) and grew up in the rapid industrialization process of Chinese society; therefore, these groups are more likely to show similar loyalty patterns as western consumers than the Red Guards. Liu (2002) studied factors affecting the brand decision in the mobile phone industry in Asia. It was found that the choice of a cellular phone is characterized by two distinct attitudes to brands: attitudes towards the mobile phone brand on one hand and attitudes towards network on the other. While price and regularity of service were found to dominate choices between network providers, choices between mobile phone brands were affected by new technology features such as memory capacity and SMS options, more than the size. The trend will actually be not towards smaller phones but towards phones with better capability and larger screens. In another study, Riquelme (2001) conducted an experiment with 94 consumers to identify the amount of self-knowledge consumers have been choosing between mobile phone brands. The study was built upon six key attributes (telephone features, connection fee, access cost, mobile-to-mobile phone rates, call rates and free calls) related to mobile phone purchasing respondents had to importance rate. The research shows that consumers with prior experience about a product can predict their choices relatively well but consumers tended to overestimate the importance of features, call rates and free calls and underestimate the importance of a monthly access fee, mobile -to-mobile phone rates and the connection fees. Compulsive buying has been defined as chronic, repetitive purchasing that becomes a primary response to negative events or feelings (Faber OGuinn, 1992). It is different from compulsive spending. Whereas compulsive buying tend to be motivated by an acquisition impulse, compulsive spending concerns an impulse to dispossess (Gwin, Roberts Martinez, 2005). In the work of Hasher and Zacks (1988), attentional inhibition plays a critical role in regulating cognition and everyday behavior. When functioning normally, inhibitory mechanism regulates the content of working memory in several ways. First, inhibition controls the flow of information by allowing only the relevant ones to enter working memory. Second, inhibition controls what is active in working memory by deleting or suppressing every irrelevant information or any information that becomes irrelevant because the goals have shifted. Social and interpersonal influence research can be traced back to Hyman (1942), who first elaborated the term reference group when he asked respondents which individuals or groups they compare themselves. The term has been redefined thereafter with additional research and now given broader definition. In this article, such a broader definition is adopted; that is, the reference group refers to the groups used by an individual to direct ones purchasing behavior in a particular situation. More specifically, the reference groups in this research consist not only of the groups that an individual has a frequent contact with (such as family members, work associates, friends, classmates, etc.), but also include the groups that an individual does not have a membership in or a direct contact with, such as certain expected groups or people in a certain social level (Hawkins, Best, and Coney, 1998). Pakola et al. (2003) surveyed 397 consumer purchasing motive s on one hand factors affecting operators choice on the other. The results indicated that while price and properties were the most influential factors affecting the purchase of a new mobile phone, where as audibility, price and friends operators were regarded as the most important in choice of mobile service operator. Gupta (2007) concluded that Indian mobile user is willing to spend Rs.6,900 on an average for the next handset. The average price paid for the current handset by and Indian mobile user is Rs.3,700. The incremental spend for the next hand has grown to Rs.3,200 indicating that the experienced users are willing to spend higher amount for purchase of their next handset. Liu (2002) examined factors affecting the brand decision in the mobile phone industry in Asia. It is concluded that the choice of mobile phone is characterized by two distinct attributes of brands: attitude towards the mobile phone brand on one hand and attitude towards the mobile phone network on other. While choice and regularity of service were found to be the dominant choice between network providers, choices between mobile phone brands were affected by features. Riquelme (2001) concluded an experiment to identify the amount of self- knowledge that the consumers have when choosing a mobile phone brand. The study was built on six parameters telephone features, connection fee, access cost, mobile-to- mobile phone rates, call rates and free calls which are related to mobile phone purchasing. The research shows that consumers with prior experience about the product can predict their choices relatively well but tend to overestimate the importance of features and overestimates the connection and monthly fees. Karountzos, et al. (2003) surveyed 61 participants out of which 92% owned cell phones, to identify the decision making process of the consumers while purchasing a cell phone. Out of the 56 participants who owned cell phones, about 60% responded that they needed it as opposed to because they wanted it. Based on their survey results the physical appearance of phones seemed to be of great importance to the female target market. Males on the either hand simply care about the actual function of the phone. Karjaluoto, et al. (2005) surveyed 66 participants in Finland about their buying behavior. Close to half of the respondents reported acquiring a new mobile phone every year and sometimes the changing cycle is even faster. The most explicit reason for changing was that the old one was broken or did not work properly. This meant for the participants that the mobile phone did not work, the calls were interrupted, for example due to weak audibility, battery was weak, the screen was out of order or keypad was so consumed that the numbers were invisible. While mobile phones were also acquired due to new features including color display and polyphonic ring tones, some respondents bought new phones in order to get an innovator and/or opinion leader status. Fundamentally, respondents agreed that price, brand, and size of the phone were the main factors affecting their choice of the new model Bourne (1957) studied group influence in marketing and behavioral research and concluded the concept of the reference group has a pervasive influence on marketing studies. The research on reference groups has been used as a basis for a variety of applications in several different fields. For example, it has been argued that the reference group concept should be applied in behavior studies of specific groups, such as: farmers, scientists, alcoholics, mentally ill patients, and of course, different segments of consumers (Hyman and Singer, 1968). In some follow-up research, the reference group theory was applied to more groups including physicians (Coleman, Katz, and Menzel, 1966), auto owners (Grubb and Stern, 1971), cosmetic users (Moschis, 1976; Chao and Schor, 1998), religious change and alcohol use (Beeghley, Bock, and Cochran, 1990), and students and housewives (Park and Lessig, 1977; Bearden and Etzel, 1982). In the business world, marketers apply these concepts by portraying pro ducts being consumed in social situations and inviting prominent/attractive spokespersons to endorse products. It is widely accepted that the traditional problem solving approach involving rational decision making to the study of consumer choice may not be suitable for all situations, or is at least incomplete to understand choice behavior. Limited information search and evaluation of alternatives led to a situation in which consumer choice is also driven by hedonic considerations (e.g., Dhar and Wertenbroch, 2000). In general, a common distinction to be made is that while the utilitarian goods usually are primary instrumental and functional, hedonic goods provide fun, pleasure and excitement. It has been noted that many choices have both utilitarian and hedonic features (Batra and Ahtola, 1990), and thus it can also be proposed that the choice between mobile phones has both utilitarian (e.g., communication, time planning) and hedonic (e.g., games, camera) features. The younger the consumer the more hedonistic features consumers tend to value in mobile phones (Wilska, 2003). Quite similarly, consumer choice can also be approached from the perspective of conscious and nonconscious choice (e.g., Fitzsimons et al., 2002). Quite many choice situations occur outside of conscious awareness and with limited information search (Kivetz and Simonson, 2000) and it can be stated that many choices have both conscious and nonconscious motives. Fitzsimons et al. (2002) found that in many cases nonconscious influences affect choice much more than is traditionally believed by researchers. CHAPTER 3: Problem statement, Objectives, Hypothesis Research Methodology The cell phone market is experiencing tough competition amongst all the cell phone sellers, each providing cheaper and attractive handsets. A variety of handsets have been launched to attract the customers. In the backdrop of this scenario, this study is conducted to understand how customers place these companies in their mind. This study tries to judge the perception of respondents by taking into account top end features, basic features, brand image, economy, additional features, and versatility physical characteristics provided by handset sellers. Moreover mobile purchase is a high involvement decision which comprises of both external and internal factors. Therefore it is necessary for the marketers to keep in mind the various factors which undergoes while the purchase of a mobile phone so that they can place the phone accordingly , for the right segment , in the right place with right price and finally with the right branding.Accordingly following objectives were determined for re search. Objectives: To determine brand loyalty and propensity to switch To segment market on the basis of usage pattern To determine the factors and features buyer consider before buying a mobile phone To determine social factors affecting buyer behavior Major Hypothesis: There is a significant relationship between gender and social factors There is a significant relationship between gender and factors affecting purchase decisions Consumer give preference to price and reliability over other factors Mobile phone has shifted from a technical object to social objct Segmenting consumers on basis of decision making process Testing loyalty for brands Data Collection: For the following report both Primary secondary data has been used. Respondents were chosen on random basis judgmental sampling was done. Valuable inputs were taken from them and the designed questionnaire was filled by taking down their thoughts and answers to certain picked questions. Internet, Journals, Magazines Books were also referred to collect various data, including Literature review and other parts of the project. Sampling technique: Sample of respondents was drawn using the following sampling technique: Simple random sampling Analytical tool: The analysis was done using MS Excel SPSS. Factor Analysis, Cluster Analysis and Crosstabulations were done using SPSS. MS Excel was used to draw graphs and charts. DATA COLLECTION SOURCES Questionnaire Design A structured questionnaire was designed. It contained closed ended questions. {Specimen of the questionnaire is attached in Annexure}. SAMPLE SIZE: A sample size of 150 was taken to facilitate the research. Gender Frequency Percentage Total Male 74 49.3 150 Female 76 50.7 AGE 20-25 48 32 150 25-30 51 34 30-35 51 34 LOCATION DELHI 90 60 150 NOIDA 28 18.7 GURGAON 32 27.3 PROFESSION STUDENT 18 12 150 BUSINESS 15 10 SERVICE 108 72 HOUSE WIFE 9 6 EDUCATION Till Intermediate 12 3 150 UNDER GRADUATE 63 42 POST GRADUATE 84 56 (Table 3.1) CHAPTER 4: Data Analysis and Interpretation RELIABILTY STATISTIC Cronbachs alpha is a reliability coefficient based on the average covariance among items in a scale. Because alpha can be interpreted as a correlation coefficient, it ranges in value from 0 to 1. (Negative alpha values can occur when items arent positively correlated among themselves and the reliability model is violated). A high alpha (.7 and higher) would be consistent with hypothesis that all of scale items are measuring the same construct. The Cronbach Alpha reliability test was done for 54 items and the resultant ÃŽÂ ± value for the data is .918. On the basis of high ÃŽÂ ± value we can conclude that data is authentic. Cronbachs Alpha N of Items .918 54 (Table 4.1) Factor Analysis to determine significant factors affecting purchase decisions (Factor Analysis 1) Factor analysis is a statistical procedure used to uncover relationships among many variables. This allows numerous inter-correlated variables to be condensed into fewer dimensions, called factors. The new factors are used as explanatory variables during choice modeling .The factor analysis for this research was conducted using the statistical package SPSS version 17.0 for windows. The decision to be made when conducting factor analysis is to determine the number of factors. One rule of thumb is to use an Eigen value of one as the cut-off value. That is, all factors in a particular solution must have Eigen values greater than one. Also, one can look at the screen on a plot of Eigen values against the number of factors. Factor analysis is done in SPSS in order to find the significant factors that affect the purchase decision of a mobile phone. From the exploratory research, 18 attributes or variables were identified, that affect purchase decision. The significant factors are then identified using factor analysis. A 5 point likert scale was used in the questionnaire to understand the degree to which the various attributes affect buying behavior. Factor Analysis 1 Rotated Component Matrix Component 1 2 3 4 5 Browsing www -.081 .189 .883 .055 -.161 Email -.234 .286 .825 .163 -.016 WAP services .115 .181 .823 .102 .245 Built in camera .378 .565 .494 .140 .112 Appearance .176 .678 .378 .131 .159 Small size .201 .343 .044 -.035 .761 Known Brand .042 .818 .169 .088 .158 Model at reduced price .779 .032 -.171 .075 .220 Innovative Features .249 .141 .464 .657 -.014 Multimedia .164 .210 .298 .722 .237 Design -.039 .625 .286 .408 -.030 Brand Name .102 .741 .142 .247 .026 Outside Influence .490 .370 -.049 .283 .074 Price .857 -.088 -.073 .104 .154 Reliability .839 .017 .069 .171 .104 Advertisements .139 .265 -.102 .712 -.173 User Friendliness .691 .373 -.004 -.069 -.437 Customization .799 .281 .227 .117 -.187 (Table 4.2) For an acceptable factor solution, the following conditions need to be satisfied: Rotated Eigenvalues > 1.0 % Cumulative variance explained should be greater than 70% From the factor analysis output, we can see that The Eigen values are greater than one for 5 factors. 72.667% of the variance is explained by the factors. Thus, the factor analysis shows that there are 12 significant factors affecting purchase behavior. From the Rotated Component Matrix, the constituent variables of each factor are identified as follows: Component 1 Function (Model at reduced price, Price, Reliability, Customization) Component 2 Function (Known Brand, Brand Name) Component 3 Function (Browsing www, email, WAP services) Component 4 Function (Multimedia, Advertisements) Component 5 Function (Small Size) PERCEPTUAL MAPS Perceptual Maps are created with the factors identified as the axis and the attributes are depicted as vectors. Perceptual mapping has been used as a strategic management tool and it offers a unique ability to communicate the complex relationships between marketplace competitors and the criteria used by buyers in making purchase decisions. The length of an attribute vector (or arrow, in this map) is equal to the square root of the sum of its squared correlations with the dimension. This can never be greater than one, and the rela