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Research paper On “Factors affecting purchase of Laptop”
Submitted by, Sagar D. Ghenand. Roll no:10012016 MBA – I Div: B
The rapid developments in IT sector accompanied by increased competition and acquisitions and mergers in the market, lead both academicians and practitioners to concentrate on the consumers’ purchase decisions in portable PC industry i.e. laptop. It was in 2005 that sales of laptops surpassed the sales of desktop computers for the first time in India. Laptops are popularly used in India more for their portability rather than mobility. Portability has become the number one factor as to why more Indians are buying these portable PCs. The laptop market in 2007 saw a significant growth to 84.8 per cent. This research seeks to develop a better understanding of the factors influencing consumers’ laptop purchases. This research also seeks the differences among three consumer groups (stayers, satisfied switchers, and dissatisfied switchers) of a company with respect to the factors influencing consumers’ laptop purchases. It is found that core technical features, post purchase services, peripheral specifications, physical appearance, value added features, and connectivity and mobility are the six factors that are influencing consumers’ laptop purchases.
A customer is anyone makes regular purchases from a company or a store, while a consumer is one who makes any transactional decisions of economic nature including buying of goods and services. Consumer can be both personal consumer who buy for his or her own person and family consumption and organizational consumer which could include nongovernmental organization, political groups, companies and governments. Consumer behaviour is the study of how individuals, group, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Buying Behaviour refers to the buying behaviour of the ultimate consumer. Buying Behaviour is the decision processes and acts of people involved in buying and using products which includes social and mental processes. According to IDC India, Laptop sales in India have raised drastically, which accounts for over 25% of the total personal computer market. Laptop sales only accounted for a 3% of the total personal computer till 2003. The sales of the laptops has reached a mark of 0.68 million unit in fiscal year 2006-2007 which accounts for a growth of 59% over the same period in fiscal year 2005-2006. Sale of desktop computers and laptops has touched the mark of 8.5
million units in the fiscal year 2007-2008. There are various main players in the Indian notebook market. A premier global market intelligence firm, the laptop market has registered 79% Year-on-Year (YoY) growth during 2006. The laptop sales is growing at much faster rate than projected. India's personal computer market is undergoing a major transition. However, laptop computers cannot completely wipe out desktop computers, because both are designed to meet different needs or different consumer segments. The Laptop market is growing at a fast rate because of change in work life of consumers. As the need for "anytime anywhere" access to information is increasing, the sales of Laptops are also increasing. Other factors that are responsible for the hike in sales figure are reduction in prices and affordability. Laptops are now sold at approximately half the price at which they were sold two years ago. Laptops prices are now almost at par with the desktop computer prices. The third most important factor is duty free import of Laptops as a personal baggage that has helped a lot in increasing the penetration level of the product among the consumer population. Awareness about laptops has also increased over the years. The International Data Corporation (IDC, 2006) report mentioned that in 2005 consumers continued to respond very positively to very attractive price points, but portable demand in the business space remained very strong too. According to What Laptop (2005), Dell was the number one choice in worldwide with 7.9 million sales. It was followed respectively by HP (7.4 million), Toshiba (5.8 million), IBM (4.3 million), and Acer (3.9 million) in year 2004. Furthermore, revenue generated from notebooks has long surpassed desktops, thanks to higher average selling prices for notebooks. According to CRN (2006) in June 2005, notebook sales accounted for $216.1 million, or $1,442.66 per notebook whereas desktops accounted for $113.9 million, or $762.98 per unit. The average notebook price fell 11.8 percent from $1,635.07 in the year-ago month and in the same period, desktop prices fell 5 percent from $803.38 (CRN, 2006). In addition, new product launches to the market, acquisitions and mergers in the sector, rapid developments in the nano-technology, integrated wireless networking, and decreased prices make it extremely vital for the companies to understand the factors underlying consumers’ laptop purchase decisions.
The literature on purchase decision in this part has been limited to IT related purchase decisions due to the product category which will be examined in this current study. Consumers can prefer certain products, brands or companies over others, and to understand
the reason behind these choices is exceptionally essential in order to market existing products more effectively than rivals. Consumers’ demographic profile, purchase perceptions, and their attitudes towards products or brands influence their purchase decisions. Jarvenpaa and Tedd (1996/1997) identify many factors that affect a consumer’s electronic shopping purchase decision: product understanding, shopping experience, customer service, and consumer risk. Geisler and Hoang (1992) identify five steps in the decision process to purchase IT: 1. Establish or articulate the need for IT. 2. Establish or determine which unit(s) will receive the new or modified IT. 3. Select the technology. 4. Select the suppliers. 5. Authorize the purchase and sign the authorization to commit the necessary funds. The authors conclude that services companies follow a relatively logical and analyzable decision process. According to decision making model, consumers process the environmental cues; the physical factors of the product, psychosocial cues, such as advertising, and consumers put these cues into a set of perceptions that shape their preferences. Based on these preferences, consumers make their choices subject to situational constraints, such as price. According to Hong and Lerch (2002), people evaluate various objective features when buying an IT product, and because of imperfect information and simplifications according to the decision rules people often abstract these various features into few perceptual dimensions such as ‘usefulness’ and ‘price’. In another research conducted by Kim et al. (2002), smalloffice/home-office professional (SOHO) procurement choices are influenced by a number of salient dimensions (i.e. income, performance, price, inter-purchase time, network externalities). Furthermore, surveys have repeatedly identified performance and price as two of the most important attributes in SOHOs' Laptop purchase decisions. In a more recent study, Dillon and Reif (2004) examine factors influencing consumers’ e-commerce commodity purchases, and find that a history of e-commerce purchasing have a more positive attitude towards on-line buying.
To find factors influencing purchase decision of laptop.
Three groups of consumers
• • •
Stayers - Those who had never switched from a previous brand Satisfied switchers: Those who switched for reasons other than dissatisfaction Dissatisfied switchers: Those who switched because they were dissatisfied from their previous brand
Data Collection According to the research purposes of this study, a questionnaire was prepared and then it was spread among students and professionals of VIM and VIIT College and collected the data of consumer buying behavior on purchase of laptop. Since this research was focused on the factors influencing laptop purchase decisions of consumers, it was seen appropriate to perform a traditional survey. In addition surveyor had explained the purpose of the study, with the questionnaire to the customers. The laptop brands examined in this research were limited by the following brands: Acer, Dell, HP, HCL, Lenovo, Toshiba, Compaq and Sony. A total of 50 responses were collected, but 49 of the respondents declared that they had a laptop. Furthermore, 2 of the responses were eliminated since they were considered as unusable, so as a consequence, 47 of the responses were covered in this study. Questionnaire Design and Measures of Constructs In the first part of the questionnaire, the consumers were asked whether they had a laptop or not, and those who had a laptop were only considered in the survey. The brand name of their laptop was also asked to the consumers. As stated earlier, this course of independent study has classified the consumer base of a company into three groups: stayers, satisfied switchers, and dissatisfied switchers. Therefore, the consumers in this study replied to the question about whether the current brand that they were using was their first laptop brand or whether they had switched from a previous laptop brand. As a following question, consumers, who
had switched, were asked to state the reason of why they switched from a previous laptop brand to their current brand. The options for switching included (a) overall dissatisfaction from the previous laptop brand, and (b) reasons other than dissatisfaction. These questions helped to divide respondents into three groups as (1) stayers (those who had never switched from a previous laptop brand), (2) satisfied switchers (those who switched for reasons other than dissatisfaction), and (3) dissatisfied switchers (those who switched because they were dissatisfied from their previous laptop brand). One of the objectives of this study was to investigate the factors that influence consumers’ laptop purchase decisions. For that purpose, a list of laptop features was stated in the questionnaires, which were gathered from the analysis of PC journals as well as personal interviews with the experts from the sector. The consumers were asked which factors they found important when they were purchasing a laptop. Finally, demographic questions such as age, occupation and gender were also asked.
DATA ANALYSIS and RESULTS
Demographic Profile of the Respondents Of the 47 respondents, approximately 6.38% were female whereas 93.62% were male. Additionally, almost 93.61% of all respondents were under the age of 30. The age structure of the participants of this survey was as follows: 85.10% of the consumers was between 1823 year old, 8.51% was between 24-29, 6.38% was 30 and above. Of the 47 respondent 93.61% are students 6.39% are professionals. Brand Usage Profile of the Respondents The participants were asked to choose the laptop brand that they were using at the time of the survey. Table 1 illustrated the frequency distribution of laptop brands by the respondents of the survey. In other words, the frequency of laptop brands used by the respondents can be summarized as follows: Dell 31.91%, Compaq 10.64%, Acer 12.77%, Sony 10.64%, Toshiba 4.26%, HCL 6.38%, HP 12.77%, and Lenovo 10.64 %
Table 1: Frequency distribution of laptop brands Frequency distribution of laptop brands Brands Dell Compaq Acer Sony Toshiba HCL HP Lenovo Total Frequency 15 5 6 5 2 3 6 5 47 Percentage (%) 31.91 10.64 12.77 10.64 4.26 6.38 12.77 10.64 100.00
Graph 1: Brand Usage Profile of the Respondents
Distribution of respondents according to three customers group The respondents of this study were also asked whether the current laptop brand that they were using was their first laptop brand or whether they had switched from a previous laptop brand. Furthermore, the participants who declared that they had switched from another brand were asked to state the reason of why they had switched. The alternatives for switching included (a) overall dissatisfaction from the previous laptop brand, and (b) reasons other than dissatisfaction. Hence, the laptop users were classified into three groups: (a) stayers (those who did not switch), (b) satisfied switchers (those who switched for reasons other than dissatisfaction), and (c) dissatisfied switchers (those who switched because they were dissatisfied from their previous laptop phone brand). Table 2 demonstrated that 85.11% of
the respondents were stayers, while 8.51% of them were satisfied switchers and 6.38% of them were dissatisfied switchers. Table 2: Distribution of respondents according to three customers group Three customers groups Frequency 40 3 4 47 Percentage (%) 85.11 6.38 8.51 100.00
Stayers Dissatisfied switchers Satisfied switchers Total
Graph 2: Distribution of respondents according to three customers group
Features Influencing Consumers’ Laptop Purchase Decisions
Consumers, who participated to this survey, were given a list of features related with laptops and then they were asked to show how important these features for them while purchasing a laptop. Respondents who found a feature “most important” gave “5” to that item while others who found it “Least important” gave “1”. Hence, as it was seen in Table 3, processor speed and type, memory and hard disk capacity, Brand image, after sales service and display resolution quality became the top five features which had the following highest mean values respectively: 4.51, 4.26, 4.04, 4.02, and 3.96. It was also noteworthy to mention that all the features listed in the survey were considered important by the respondents since the lowest mean value was 2.70 for the feature of TV/Audio Connection.
Table 3: Importance of laptop features in consumer's purchase decision Importance of laptop features in consumer's purchase decision Items Processor speed & type Memory & hard disk capacity Brand image After sales service Display resolution quality Repair maintenance Guarantee & warrantee Wireless intern ate Weight N 47 47 47 47 47 47 47 47 47 Mean 4.51 4.26 4.04 4.02 3.96 3.94 3.70 3.57 3.43 8
DVD/CD player Bluetooth Design and colour Speakers TV and audio connection
47 47 47 47 47
3.36 3.30 3.23 2.87 2.70
Graph 3: Importance of laptop features in consumer's purchase decision
Importance of laptop features in consumer's purchase decision stayers Stayers shows somewhat similar trend as seen in aggregate respondent about factors important while purchase of laptop. As processor speed and type at same place and repair and maintenance came 2nd in case of stayers.
Table 4: Importance of laptop features in consumer's purchase decision stayers Importance of laptop features in consumer's purchase decision stayers Item N Mean Processor speed & type 40 4.45 Repair maintenance 40 4.25 Memory & hard disk capacity 40 4.225 After sales service 40 4.05 Brand image 40 3.875 Display resolution quality 40 3.85 Guarantee & warrantee 40 3.825
Wireless internet Weight Bluetooth DVD/CD player Design and colour Speakers TV and audio connection
40 40 40 40 40 40 40
3.475 3.425 3.4 3.325 3.075 2.875 2.7
Graph 4: Importance of laptop features in consumer's purchase decision stayers Importance of laptop features in consumer's purchase decision for satisfied switchers As results in table 5 supports the answers of respondents that ‘they were satisfied with previous brand but wants to experience some other brand hence switched from previous brand’ and ‘they were satisfied with their previous brand but for up gradation switched to other brand’ as some of them mentioned now a day’s internet TV is getting popular hence for TV and Audio connection they are upgrading and switching to other brands which provide these technology. Thus we can see the factor which is least important in aggregate became 2nd important in satisfied switchers consumer group. Thus as highest mean values for brand image 5 and TV and audio connection 5, processor speed and type 4.75 supports answers as they consider these things important while purchasing laptop.
Table 5: Importance of laptop features in consumer's purchase decision for satisfied switchers Importance of laptop features in consumer's purchase decision satisfied switchers Items Brand image TV and audio connection Processor speed & type Repair maintenance After sales service Display resolution quality DVD/CD player Speakers N 4 4 4 4 4 4 4 4 Mean 5 5 4.75 4.5 3.75 3.75 3.5 3.5
Memory & hard disk capacity Guarantee & warrantee Wireless internet Bluetooth Design and colour Weight
4 4 4 4 4 4
3 3 3 2.75 2 1.75
Graph 5: Importance of laptop features in consumer's purchase decision for satisfied switchers
Table 6: Importance of laptop features in consumer's purchase decision for dissatisfied switchers Table 6 shows that while purchasing laptop dissatisfied switchers consider processor speed and type, design and colour and brand image as important factor with highest mean of 5 each. Importance of laptop features in consumer's purchase decision dissatisfied switchers Items Processor speed & type Design and colour Brand image Wireless internet Memory & hard disk capacity After sales service Display resolution quality Weight Bluetooth DVD/CD player Guarantee & warrantee Speakers TV and audio connection N 3 3 3 3 3 3 3 3 3 3 3 3 3 Mean 5 5 5 4.67 4.33 4.33 4 4 4 3.33 3 2.67 2.67
Graph 6: Importance of laptop features in consumer's purchase decision for dissatisfied switchers
Year by year the number of people who are using and owning personal computers (PC) substantially increases in all over the world. Contrary to the introduction years of computers, today they have been used by almost all age groups, and by both males and females, and the gap between age groups with respect to computer usage/ownership decreasing. In such a volatile industry, it becomes extremely important to learn the factors that are influencing consumers’ purchase decisions. Among all the consumer groups it is found that processor speed and type and brand image are in top five factors which are considered important while purchasing laptop. For aggregate results processor speed and type, memory and hard disk capacity, Brand image, after sales service and display resolution quality became the top five features which influence purchase of laptop. In case of stayers they show somewhat similar trend with aggregate results in important factors considered while purchasing laptop. In case of satisfied switchers brand image, TV & audio connection , Processor speed and type, repair and maintenance, after sales service are top five features which they consider most important while purchasing laptop.
In case of dis-satisfied switchers Processor speed and type, Design and colour, Brand image, wireless internet, memory and hard disk capacity are top five features which they consider most important while purchasing laptop. Thus we can say that as the consumer group changes important given to factors also changes. It is observed more in case of satisfied and dissatisfied switchers due to their experience about various factors from previous brand.
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Study of factors affecting purchase of laptop
Personal information Name Contact no. Gender Occupation Age group Questions Do you have laptop? What is brand name of laptop? Whether current brand is your first brand? Yes No Yes No Male Student 18-23 24-29 Female Professional 30 & above
If no then reasons for changing
a) Dissatisfaction from previous brand in terms of following 1. Battery back up 2.After sales service Other reason if any: b) Reason other than dissatisfaction. 1. I was satisfied with previous brand but for up gradation I am switching to other brand. 2. I was satisfied with previous brand but want to experience other brand. 3. Other reason if any: 4. To which brand you have switched :
Features influencing purchase of laptop Please rate following items as per given scale "1" Least important "5" Most important Sr.n o. 1 2 3 4 5 6 7 8 9 10 11 12 13 Features Processor speed and type Memory and hard disk capacity Guarantee and warranty Wireless internet Display resolution quality DVD / CD player Speakers Weight Bluetooth TV and Audio connection After sales service Repair and maintenance Design and colour Rank