2011

THE BEST COMBINATION OF ATTRIBUTES AND LEVELS OF A SMARTPHONE

Submitted By:
ANKIT SINGH

Table of Contents
ACKNOWLEDGEMENT ................................................................................................................................... 3 EXECUTIVE SUMMARY .................................................................................................................................. 4 INTRODUCTION ............................................................................................................................................. 5 LITERATURE REVIEW ..................................................................................................................................... 6 DATA AND METHDOLOGY ............................................................................................................................. 7 Data Collection .......................................................................................................................................... 7 Questionnaire ........................................................................................................................................... 8 PLAN CARD LIST......................................................................................................................................... 8 SAMPLE SIZE ............................................................................................................................................ 10 SYNTAX .................................................................................................................................................... 10 RESULTS AND ANALYSIS .............................................................................................................................. 12 HOLD OUT CASES .................................................................................................................................... 13 SUBFILE SUMMARY ................................................................................................................................. 14 Simulation Summary ............................................................................................................................... 14 CONCLUSION ............................................................................................................................................... 20

ACKNOWLEDGEMENT
The successful completion of the project is attributed to the help and support of the people directly and indirectly related to the project. I would like to express my gratitude to Mr. Shubhodip Roy. Also all the group members have been integral to the completion of the project through their contributions. We would like to thank him for taking extra efforts to teach us and always guide us.

EXECUTIVE SUMMARY
Study aims to analyse the importance of the individual attributes of Smartphone and their levels, which direct consumers to purchase their choice of Smartphones. Firstly, the various attributes and their different possible levels available in a Smartphone are selected from secondary data sources. The various attributes were operating system, keyboard style, camera resolution, memory, screen size, battery life, and applications. Each attribute has its respective levels. Then, a questionnaire is framed comprising of 30 combinations of various levels of these fixed 7 attributes and respondents are asked to rate their preference level on a scale of 1-7 where 1 denotes most preferred to 7 denoting least preference. The sample size is 85. Then, the data collected is used for SPSS CONJOINT ANALYSIS. Conjoint analysis is a popular marketing research technique that marketers use to determine what features a new product should have and to forecast what the likely acceptance of a product would be if brought to market. Rather than directly asking survey respondents what they prefer in a product, conjoint analysis employs the more realistic context of respondents evaluating potential product profiles. From this study, we found that the most important attribute of consideration before buying a smartphone is OPERATING SYSTEM, in which Android and Black berry are the most preferred one. In keyboard category, TOUCH and TYPE is preferred the most. The other most preferred levels of attributes are 5 Mega Pixel camera, 5 inch screen size, 16 Giga byte memory card and free applications. Thus, the companies should consider these attributes and levels as consumers stick to the features which give them their desired utility.

INTRODUCTION
About the Smartphone Industry

One of the fastest changing industries in today’s world is the Smartphone industry which is growing multiple folds. The ease with which people can do everything in their handsets has given rise to a totally different new world of Smart Phones. The current market leaders being the Blackberry, The Apple and The Android based Operating Systems. A recent report predicts that Android Smartphones will occupy nearly half of the market share during the next five years, with an additional 20 to 30 percent market share taken up by Apple’s IPhone.

Research shows that by 2012 Google`s Smartphone would grow to 23.2 % of market share whereas that of Apple would grow to 17.6 %. The trend has been towards making mobile devices more user friendly and bring pre packaged applications to the forefront.

Indian mobile handset market is expected to grow at 25% by volume in 2011. Of which, smartphones will be one of the hottest growth category comprising 6% of the shipments. 2.5 million Smartphones were shipped to India in 2009 and 6 million smartphones were shipped in 2010. Estimates put a possible 12 million smartphone shipments in 2011. That’s a 100% growth over the year 2010.

With more than 20 million smartphones available in India, it is crucial for various companies to understand the behaviour of India’s smartphone users.

LITERATURE REVIEW
A lot of study has been already done to study the importance and weights attached to particular attributes and their level when making a Smartphone purchase. Smartphone are still largely men dominated market; men make up 58 percent of buyers, 40 percent of whom are aged 25 to 34, and largely single with no kids. Men purchase those smartphones which give them delightful features such as gaming experiences, while women were most interested in issues such as customer support, coverage and ease of use. Secondary research advocates that the previous purchasing experience of consumers plays a very significant role in the purchase decision of the buyers. The early adopters are the ones who are the opinion leaders who can make a product star performer or a failure. The imitators are dependant on the word of mouth from these adopters who make the first impression about the product. A study conducted by Google sites that People who want a Smartphone rather than a regular cell phone place. The higher weightage is on the Operating System of the phone and the applications available: 72 percent of Smartphone buyers cared about the OS versus 42 percent for regular cell phone buyers, and 60 percent of Smartphone buyers cared about available applications versus 29 percent for regular cell phone buyers. Eighty percent of Smartphone buyers look forward for specific models, versus 50 percent of generic cell phone buyers. Brand loyalty plays a very important role in the purchase decision of a Smartphone. Blackberry users are most likely to stick to blackberry where as an I-phone user would stick to apple. Talking of the operating systems android is the latest hit among the Smartphone users over windows and Symbian due to the millions of application available with android.

DATA AND METHDOLOGY
Conjoint analysis is a method to understand the importance and utility of the various features/attributes in a product. The method derives these values on the basis how consumer perceive the various levels of a feature/attribute and the overall importance of the feature. The products delve into the Smartphones to know which attributes and its levels do the consumer prefer the most. A list of attributes has been selected from the secondary sources. Operating System, type of keyboard, battery life, diagonal measure of the screen size in inches, Camera resolution, memory and type of applications have been selected in this study.

DATA COLLECTION
The attributes and their corresponding level are given below1. Operating system Black Berry Windows Symbian iOS Android 2. Keyboard Full Touch Touch and Type Qwerty 3. Camera Resolution 2MP 3.5MP 5MP 4. Memory 8GB 16GB 5. Screen size 2.5inches 3.5inches 5inches 6. Battery Life 5.5 Hrs

9 Hrs 7. Applications Paid apps Free and paid apps Free apps

QUESTIONNAIRE
The above list of attributes was fed into the SPSS Orthogonal Design. The software gave a set of 30 plan cards with 3 hold outs. The plan cards comprised of the all the combinations of attributes with different level. There are 7 attributes and 21 levels which are being taken in the study. The plan cards were used to form the questionnaire. The respondents were asked to rate these 30 plan cards on a scale of 1-7 where 1 is most preferred and 7 is least preferred. The plan cards are mentioned below.

PLAN CARD LIST
a - Hold out cases

Card ID

Operating System
BlackBerry Windows BlackBerry

KeyBoard
Touch And Type Qwerty Touch And Type

Camera Resolution
2 MP 2 MP 5 MP

Memory
8 GB 8 GB 8 GB

Screen Size
5 Inches 2.5 Inches 5 Inches

Battery Life
5.5 Hrs 5.5 Hrs 5.5 Hrs

Applications
Paid Applications Free Applications Free and Paid Applications Free and Paid Applications Free and Paid Applications Free and Paid Applications Free Applications Paid Applications

1 2 3 4 5 6 7 8

Windows

Touch And Type

3.5 MP

8 GB

3.5 Inches

5.5 Hrs

Android

Qwerty

5 MP

16 GB

3.5 Inches

5.5 Hrs

iOS Android Symbian

Qwerty Qwerty Full Touch

3.5 MP 5 MP 3.5 MP

8 GB 8 GB 8 GB

2.5 Inches 5 Inches 3.5 Inches

5.5 Hrs 5.5 Hrs 5.5 Hrs

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23a 24a 25

Windows

Full Touch

3.5 MP

16 GB

5 Inches

5.5 Hrs

Free and Paid Applications Free and Paid Applications Paid Applications Paid Applications Free and Paid Applications Paid Applications Free Applications Free Applications Free and Paid Applications Free Applications Free Applications Free Applications Free and Paid Applications Paid Applications Paid Applications Free and Paid Applications Paid Applications

BlackBerry Android Windows

Full Touch Full Touch Touch And Type

5 MP 2 MP 5 MP

8 GB 8 GB 8 GB

2.5 Inches 2.5 Inches 3.5 Inches

5.5 Hrs 5.5 Hrs 9 Hrs

Android BlackBerry Android BlackBerry

Full Touch Qwerty Touch And Type Qwerty

2 MP 2 MP 3.5 MP 3.5 MP

8 GB 16 GB 8 GB 16 GB

3.5 Inches 3.5 Inches 5 Inches 3.5 Inches

9 Hrs 5.5 Hrs 9 Hrs 9 Hrs

iOS iOS Symbian BlackBerry

Touch And Type Full Touch Touch And Type Full Touch

2 MP 5 MP 5 MP 3.5 MP

16 GB 8 GB 16 GB 8 GB

2.5 Inches 3.5 Inches 2.5 Inches 2.5 Inches

9 Hrs 5.5 Hrs 5.5 Hrs 9 Hrs

Symbian Android iOS

Qwerty Touch And Type Full Touch

2 MP 3.5 MP 3.5 MP

8 GB 16 GB 16 GB

5 Inches 2.5 Inches 5 Inches

9 Hrs 5.5 Hrs 5.5 Hrs

BlackBerry iOS

Full Touch Qwerty

5 MP 3.5 MP

8 GB 8 GB

5 Inches 5 Inches

9 Hrs 5.5 Hrs

26 27 28a 29 30

iOS Windows Android Windows iOS

Touch And Type Qwerty Touch And Type Full Touch Full Touch

2 MP 5 MP 3.5 MP 2 MP 5 MP

8 GB 8 GB 16 GB 16 GB 16 GB

3.5 Inches 2.5 Inches 2.5 Inches 5 Inches 5 Inches

5.5 Hrs 9 Hrs 9 Hrs 5.5 Hrs 9 Hrs

Free Applications Paid Applications Paid Applications Free Applications Paid Applications

SAMPLE SIZE
Each group member got 10 questionnaire filled on the basis of already generated plan cards. A set of 85 subjects were experimented for this study. The subjects are mostly the students of IBS who are tech-savvy and literate about smartphones.

SYNTAX
All the entries from the respondents were filled in a separate SPSS file named “PLANCARD DATA”. The details of the Orthogonal design and the data were given in syntax file as given below.
CONJOINT PLAN ='C:\Documents and Settings\Administrator\Desktop\MR project\FINAL\SmartPhones Plan Cards.sav' /DATA = 'C:\Documents and Settings\Administrator\Desktop\MR project\FINAL\PLANCARD DATA.sav' /SCORE=SCORE1 TO SCORE30 /SUBJECT=ID /FACTORS = OS (DISCRETE) KEYBOARD (DISCRETE) CAMERA (DISCRETE) BATTERY (DISCRETE) SCREEN (DISCRETE) MEMORY (DISCRETE) APPLICATIONS (DISCREET) /PRINT = SUMMARYONLY /UTILITY = 'C:\Documents and Settings\Administrator\Desktop\MR project\New Folder\utility2.sav' /PLOT = ALL

“CONJOINT PLAN” gives the path of the Orthogonal Design and “/DATA” gives the path to the data file where the responses of the candidates are entered. The method of measuring the respondents likeliness of the profile given in the questionnaire is rating based. Since rating on a scale of 1-7 is taken column values in the data file are referred as “SCORE”. “/SCORE” defines the Column values in the Data file.”/SUBJECT” defines the respondents’ ID.”/FACTORS” defines the relationship between rating data and the factor/attribute levels. In the above syntax factors are considered to be “DISCREET” as all the respondents can treat the Levels differently. The reason which they stated was that the respondents income level, their lifestyle and profession makes them think differently.”/UTILITY” gives the utility being given by each respondent to factor level in while rating each profile.”/PLOT” plots all factor levels in a graphical representation for easier representation of the data.

RESULTS AND ANALYSIS
IMPORTANCE 32.77 UTILITY -0.1098 0.1275 -0.0431 0.2549 -0.2294 -0.0379 0.0092 0.0288 -0.0484 0.0013 0.0471 6.61 -0.0284 0.0284 -0.1425 0.0196 0.1229 -0.0314 0.0314 LEVELS WINDOWS ANDROID iOS BLACKBERRY SYMBIAN QWERTY FULL TOUCH TOUCH AND TYPE 2 MP 3.5MP 5 MP 8 GB 16 GB 2.5 INCHES 3.5 INCHES 5 INCHES 5.5 HRS 9 HRS FREE APPLICATIONS FREE AND PAID PAID APPLICATIONS CAMERA ATTRIBUTES Level Utility = Importance * Utility -3.598146 4.178175 -1.412387 8.353073 -7.517438 -0.521883 0.126684 0.396576

OPERATING SYSTEM

13.77

KEYBOARD

12.69

-0.614196 0.016497 0.597699 -0.187724 0.187724 -1.808325 0.248724 1.559601 -0.203472 0.203472

MEMORY

12.69

SCREEN SIZE

6.48

BATTERY

14.99

0.1529 -0.0144 -0.1386

2.291971 APPLICATIONS -0.215856 -2.077614

Combinations of Smartphones BEST COMBINATION OF SMARTPHONE 2ND BEST COMBINATION OF SMARTPHONE

Total Utility 13.590116 3.963028

The above the given table shows the importance of the each factor/ attribute of the smart phone as per the respondents. It also shows the utility per level in each factor/ attribute as perceived by the respondents. Total Utility = Importance of an attribute (for example Operating System) * Utility of 1st level of an attribute (for example Blackberry which is a level of Operating System) + Importance of another attribute (Camera Resolution) * Utility of 1st level of the attribute (Camera Resolution) + ……… There are two combinations added/included in the orthogonal design as a part of simulation to predict preferences for the profiles (Best combination of smartphone and 2nd Best combination of smartphone). These combinations were not rated by the respondents. The total utility is being calculated to know which the best combination among the two. It is clearly seen that the CARD31 (BEST COMBINATION OF SMARTPHONE) is the best combination when compared to the CARD32 (2ND BEST COMBINATION OF SMARTPHONE).

HOLD OUT CASES
Total Utility

23a 24a 28a

iOS BlackBerry Android

Full Touch Full Touch Touch And Type

3.5 MP 5 MP 3.5 MP

16 GB 8 GB 16 GB

5 Inches 5 Inches 2.5 Inches

5.5 Hrs 9 Hrs 9 Hrs

Paid Applications Free and Paid Applications Paid Applications

-1.802967 10.436949 1.096505

The above holdouts cases can be checked for the internal validity of the model. Here the total utility of any of the holdout cases is less than the best combination which we have taken. The total Utility of the best combination is 13.590116 that is higher than any of the holdout cases. Thus the model is internally validates the responses taken by the subjects. Pearson's R = 0.929 Kendall's tau = 0.822 Significance = 0.0000 Significance = 0.0000 Significance = 0.3008

Kendall's tau = 0.333 for 3 holdouts

This table displays two statistics, Pearson's R and Kendall's tau, which provide measures of the correlation between the observed and estimated preferences. The higher the correlation between observed and estimated validates the conjoint model. The hold out correlation should be smaller than the Pearson’s R and Kendall’s Tau which gives a better indication of the fitness of the model. The lower the correlation of the holdouts’ Kendall’s Tau the better the model.

SUBFILE SUMMARY
No reversals occurred in this split file group. The Subfile Summary gives the count of number of reversals. These reversals denoted the respondents who have not responeded rationally. The summary shows that there were no reversals.

SIMULATION SUMMARY (85 subjects/ 85 subjects with non-negative scores)
Card Max Utility* 31 32 64.71% 35.29 BTL 52.86% 47.14 Logit 59.09% 40.91

This table gives the predicted probabilities of each of the simulation plan card profile which has been formed based on the above result. The two plan card profiles created have been tested on the base of the 85 responses by the subjects. The maximum utility determines the probability as the number of subjects who predicted to choose the plan card profile divided by the total number of respondents. The BTL model caluclates the probability as the ratio of a plan card profile's utility to that for all simulation profiles, averaged across all respondents. The logit model uses the natural log of the utility. Across the 85 subjects in this study, all two models indicated that simulation profile1 would be preferred by most of the respondents.

The above chart shows that the importance of the various factors/ attributes perceived by the respondents. The graphs states that the respondents have considered Operating Systems to be the most important factor. The Memory and the Battery life is considered to be the lowest in importance.

The above graph shows the utility quotient of the various levels in Operating System factor/attributes of Smartphones. The graphs states that the Blackberry and Android are most preferred Operating System in the Smartphones category. While filling the questionnaire some of the respondents reciprocated that they faced problems with Windows and Symbian Smartphones and disliked it. Apple iOS is less preferred because of its premium pricing which is inaccessible to the respondents at IBS. Android on the other hand is a new open source Operating System which promises a lot in near future. BlackBerry services might be one of the factors why respondents give the Operating System more preference.

The above graph illustrates that the respondents have given “TOUCH AND TYPE” most preference. The reasons can be that they were facing problems with the full-touch as it is slow and respondents are unable to type messages fast. The QWERTY option does not provide an option to touch and respondents might have felt it less style quotient. To overcome both the issues the respondents have given “TOUCH AND TYPE” the highest preference.

The respondents have given highest preference to the 5 Mega Pixel camera resolution cameras. With advent of convergence of technology higher resolution cameras are being most preferred.

The respondents have perceived more utility towards the 5 INCHES screen size. Relating this to the type of screen i.e “TOUCH AND TYPE” , we can conclude that the respondents have perceived it the best choice.

Smartphones generally have many applications and converged functionalities such as Camera, Bluetooth and etc. which require more battery backup. The above graph supports the same.

The graph above shows that the respondents have given more preference to the 16 Giga Byte memory card for the Smartphones.

The respondents gave more utility to the FREE APPLICATIONS to the PAID APPLICATIONS. The respondents are clearly price sensitive in this case.

CONCLUSION
From the above it can be concluded that the respondents have preferred Operating System to be the most important factor while purchasing a Smart phone. Android and Black berry being the most preferred one. Android being a new open source operating system, promises a lot in the near future, and thus is in demand. In keyboard category, TOUCH and TYPE both are preferred the most, reason being full touch slows down the speed of sending messages, and QWERTY is no more a style quotient among youngsters, so to keep balance between the two Touch and Type are preferred. Also because of the advent of convergence of technology 5 Mega Pixel camera is the most preferred. Respondents have shown inclination towards 5 inch screen size. Also 16 Giga byte memory card and free applications are preferred the most. Conducting such studies in the market can bring companies closer to their consumers thus increasing their market share and profitability. This also assists companies to make future strategies for their product categories. Such studies can facilitate companies to measure the level of convergence of products while leapfrogging into new dimensions of technology and thus minimize their risk.

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