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TO STUDY THE CONSUMER BEHAVIOUR WHILE BUYING MOBILE

PHONES

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
Masters of Management Studies (M.M. S.)
(Two Years Full-time) Degree Course

ROLL NO.: M 36

Under the Guidance of
Dr. Arvind Ankalikar

University of Mumbai
Jamnalal Bajaj Institute of Management Studies (Autonomous)

to find out consumer behavior of smartphone buyers in Indian Market. ideas. Tie-Ups with the network carrier. Consumer behavior is defined as the processes involved when individuals or groups select. why they buy and how they respond to marketing stimuli. and status) and personal factors (such as age. this article deals with consumers' choice criteria in mobile phone markets by studying factors that influence intention to acquire new mobile phones. purchase. On this basis. it is of growing concern to look at consumer buying decision process and cast light on the factors that finally determine consumer choices between different mobile phone brands. or experiences to satisfy needs and desires. occupation. . Different consumers have different characteristics in their life that also influences their buying behavior. etc. country of origin. quality. personality. or dispose of products. INTRODUCTION The increasing interest in smartphones among the people is the main reason that has amplified the interest to research the topic. word of mouth. services. when and where they buy. roles. Mobile phone manufacturers. could be several factors that a consumer may think before buying a smartphone. etc. design and technology impact on the buying behavior if mobile phone handsets. what is the difference between them? And how they impact the customer buying decision? This research also aims at the marketing strategy of the smartphone companies to influence the buying behavior of the customer. use. The aim of this research is. marketing. Social factors such as family. the factors influencing the purchase decision and the motivations behind the purchase decision. Even when cheaper smartphones are available in the market. and self-concept) are those characteristics that could influence the buyer behavior in making the final decision. The study aims to determine whether key factors such as handset price. therefore.STATEMENT OF PROBLEM Mobile phone markets are one of the most turbulent market environments today due to increased competition and change. distributors and retails need to know who buys their product. lifestyle. groups. brand. Thus. how they buy. These strategies include Promotional campaigns. How much does the brand of a smartphone affect the buying decision of a customer? As there are various types of smartphones available in the market with a varying price. The research aims to find out the reasons behind people purchasing smartphones. sales. People’s obsession with smartphones has been increasing rapidly. why do people buy expensive smartphones? Price.

These issues have led to theories like that of the black box approach taken on by (Futrell. In an attempt to obtain some understanding. Understanding consumer behavior and “knowing customers. and the impact that these processes have on the consumer and society. It refers to how marketers are not able to tap into consumer minds. to satisfy needs and wants. This study focuses on independent variables which ensure that above recommendations and/or conclusions are taken into consideration. an understanding of how consumers generally think and behave in buying situations is vital. consume and dispose of products or services. obtain. marketers need to understand why consumers behave in certain ways to a variety of product and services offered. Figure: Dependent and Independent Variables took into Consideration . 2007). 2000). Researchers (Hawkins. They may not be in touch with their deeper motivations. marketers study consumer behavior. marketers can apply various stimuli and observe the conduct of consumers. Consumers may say one thing but do another. This hidden information is considered to be the black box. They may respond to influences that change their mind at the last minute. Recommendations such as taking into account hedonic considerations. but they cannot observe the consumers' actual thought processes. emotional and physical processes they use to select.LITERATURE REVIEW All marketing decisions are based on assumptions about consumer behavior (Hawkins. In order to create value for consumers and profits for organizations. psychographic and behavioral factors and studying the effect on the choice.” In other words. thus “keeping them in the dark. 2007) describe consumer behavior as the study of individuals or groups and the mental.” have and never will be simple. conscious and non-conscious choices will be covered by varying demographic. In order to determine the factors that influence the preferences of the today’s consumers.

. “Demographics are about everyone: who you are. They found 52 attributes considered important by mobile data service users and identified 11 critical attributes related to the user interfaces of mobile data services devices. what kinds of food people will buy and what kinds of cars they will drive.” Demographics is one of the forces affecting acquisition of mobile phone handsets and but this research will focus on three main demographically-related factors namely culture. all showed a clear correlation with characteristics of the culture of the user’s country (as identified by Hofstede). all using Hofstede’s premises: Choi et al. the more relevant demographics will be to you. and gender. Kim & Lee (2005) investigated cultural influence and mobile interface design to clarify the relationship between cultural traits and mobile phone interfaces. and therefore the diffusion of these technologies within a culture should be studied (Urbaczewski. This necessitates a review of culture as an essential part of understanding users and the factors that influence mobile phone usage. Kim and Lee 2005) and the distinction between universal and to-be-localized components (Lee. The critical attributes such as minimal keystrokes. 2005b). As the use of mobile phones pervades the world. mobile devices are distributed throughout the world (Kim and Lee 2005). The further ahead in the future you are looking. logical ordering of menu items. Demographics explain about two-thirds of everything: which products will be in demand. what school enrolments will be when house values will rise or drop. The following studies represent the general trends. . The context of the mobile user includes user culture and the influence of culture on mobile phone use (Urbaczewski.❖ The Effect of Demographics on the Evaluations of Different Attributes Related to Mobile Phone Handsets Choice. Teo and Pok 2003a. iconic menu style. the globalization of mobile device user interface design is becoming more crucial to business success and building a loyal customer base. In the context of mobile phone design and usage existing research into the effects of culture has been aimed at the culture-based preferences for specific design attributes (Choi. variety of fonts and font colours. 2002). (2005a) looked at cultural influences on the functional design of mobile data services by comparing 24 Korean. Jones and Marsden 2005). Demography is the study of populations. Ryu et al. • Culture The mobile device market has widened to a global scale and consequently. Wells et al. etc. 2002. where job opportunities will occur. Communications technologies are entirely dependent on a social network for adoption and use. 2005. Japanese and Finnish users. Demography makes use of a wide range of data. Lee et al. including the size of a given population and its birth rates. age. Wells et al. where you’ve been and where you are going.

therefore. So generally. 2003). According to one study it is found that while age group between 23 to 30 is very reluctant to buy new mobile phones than that of the other age groups. Economically. Traditional consumers of pre-liberalization phase (1960-70s) were. stable. The new millennium consumer tends to enjoy life. According to a study conducted by Maxwell (2001) on testing of homogeneity versus heterogeneity of global consumption in a cross-cultural price/brand effect model. Indian consumers in comparison to Americans are tougher for the marketers to sell their products. Instead. 1997). Therefore. They avoided risk. culture has no impact while buying new phones. It is normally perceived that young buyers try new products. According to a fresh survey of Finnish young people aged 16-20. age and life cycle can be the delicate variables (Kotler and Keller. inward-looking and had limited choices. but what it is found lacking is a model to integrate the findings on culture with the other factors that influence mobile phone adoption and usage. it was found that mobile phone choice and especially usage is consistent with respondents‟ general consumption styles (Wilska. 2007). In the transient phase (1980-90s). 1997). Elderly consumers are selectively innovative and they accept only those innovations that provide exclusive benefits (Nam et al. status-conscious (Sahay and Walsham. ❖ Age in the Context of Mobile Phones Sabnavis (2002) identified three different consumer types of three generations in India. Exposures to a variety of products and enhancement of economic status have changed the attitudes of the upper middle – class consumers towards brands. They kept their family needs on the top and their own personal needs were subordinate to their family needs. the consumers were more risk-taking than their predecessors. Based on the findings of these studies it can be argued that culture and mobile phones have been researched to some extent. They had experienced multi-choices and had a tendency to be better off than their parents. ❖ Gender in the Context of Mobile Phones Mobile phone choice and use have also been found to be related to prior consumption styles. Indian society being hierarchical in nature is. males were found to have more technology enthusiasm and . In India. The research showed that addictive use was common among females and was related to trendy and impulsive consumption styles. He has greater self-control and looks for personal style and pleasure. However. a brand is a cue to quality because the quality of the unbranded products varies widely (Johansson. he found Indian consumers more price and less brand conscious. Indians give very high value to brands. seek greater information and are more self-confident in decision-making. 2006) in the consumer behavior process. they had no fears or concerns.

Another revealed that consumers would not only apply direct and verbal interaction to obtain the evaluations from the reference group but also observe reference group members behavior to make a decision and suggested that the individual’s choice of different brands might also be influenced by one’s reference groups (Bearden and Etzel. These attributes were then linked to impulsive consumption. ❖ The Effect of Behavior on the Evaluations of Different Attributes Related to Mobile Phone Handsets Choice. Comparing young students with generally more conservative housewives. it is assumed that background variables especially have an influence on mobile phone choice. technology are the important factors. • Influence of Social Reference Groups The purchase decision of products such as mobile phone. In their research. while a mobile phone looking like a compact case complete with a mirror inside was promoted by Samsung (Luna. 1957). operating system. Bourne. The study concluded that genders are becoming more alike in mobile phone choice. (1989) believed that consumer susceptibility to interpersonal influence is a general trait that varies across individuals and developed a scale to measure it. Bearden et al. 1976). 2002). The purchase decision of products such as mobile phone. Park and Lessig (1977) concluded that American students were more likely to be influenced by reference groups than general American housewives were when making their purchasing decisions and that the advertisements and promotions utilizing reference group had more direct and significant influence over consumers‟ final purchases. Because individual differences in consumption patterns are obviously identifiable. For example.trend-consciousness. is strongly influenced by the consumer’s reference groups (Bearden and Etzel. an advertisement focused on personalization through color faceplates was used when Siemens launched its series of GSM phones in the USA during 2002. One study found that consumers used both reflective and comparative appraisal to choose their products (Morchis. Becker (1991) found that demand by a typical consumer is positively related to quantities demanded by other consumers by exploring . 1982. which is used publicly. were found to strongly influenced by the consumer’s reference groups (Bearden and Etzel. Studying the customer preference groups give a good indicator of the behavior of the consumer. Bourne. concluding that reference group influence varied across products. which has been used publicly. 1982). Female are concern about mobile camera clarity and the handset colors than that of other features but in case of male the storage. Mobile phone manufacturers have been applying such interpersonal influence in their advertising and marketing practice. Park and Lessig (1977) developed the first set of scales for measuring reference group influence functions. 1982. 1957).

1961). one will agree with the group subconsciously. From a marketing research view of point. 1982). Previous research has identified three major types of reference group influences: informational influence. • Informational Influence The informational influence is based on the desire to make informed decisions and optimize the choice. one may perceive the information and recommendation from his/her reference group as credible and thus accept them with certain confidence. which are briefly described below. in most cases. A good example is an advertisement for personal care products in which consumers are punished by co-workers or . or in an opposite direction. 1990). Marketing practical applications can be seen from the use of expert power and internalization in advertising with the ads that feature doctors impersonating as spokespersons for over-the-counter medicines.restaurant pricing. • Utilitarian Influence This influence can be explained by the so-called “compliance process” in which an individual is willing to satisfy a certain group’s expectation in order to obtain the praise or to avoid the punishment from the group (Kelman. by suggesting in the advertisements that one could obtain social approval and acceptance by just using a certain commodity. that is. utilitarian influence and value-expressive influence (Park and Lessig. A best demonstration for the utilitarian influence may be the famous Asch Experiment in which participants were found to willingly conform to the group answers. the existing literature has demonstrated that reference groups have a significant influence on consumer’s purchasing behaviors. will have an influence on certain groups of consumers. Kelman (1961) suggested that an individual would accept an influence that improves one’s knowledge and ability to cope with the environment. by suggesting that one might be reject by a certain group by not using a specific product. In summary. The informational influence only functions when the individual regards the behavior and value of reference group members as potentially useful information and takes them into consideration. Wooten and Reed (2004) suggested that consumers with high susceptibility to normative influence tend to use protective self-presentation to avoid undesirable disapproval. Bearden and Etzel. An individual who is more susceptible to interpersonal influence will try to satisfy reference groups‟ expectation by complying with groups‟ norms – here refer to those compliance expectations for every group member within a particular social background or acting in an expected role displayed by the group. even changing their original right answers (Rock. 1977. While a consumer may consider whether to follow the group consciously. Especially when a consumer lacks the knowledge of a certain product and the experience of purchasing this item.

number of children. Electronic products giant Sony has a famous celebrity playing a successful manager’s role in its Sony mobile phone advertisement and implying that people who use the same mobile phone will have the same characteristics with that expected group ❖ The Effect of Psychographics on the Evaluations of Different Attributes Related to Mobile Phone Handsets Choice. income. One good example of using this influence in marketing practice was used by soft drink giant Pepsi. Where they differ is in what types of characteristics they describe. Demographics uses traits of people such as age. Psychographics and demographics are similar in that they both refer to the characteristics of groups and individuals. and computers.friends for not using anti-dandruff shampoo. • Performance and Image/Impression Dimensions Mobile phones are becoming increasingly popular. home appliances. • Value-Expressive Influence This influence may be best explained by the “identification process” in which people are willing to better express themselves to the society by making themselves similar to the group that they want to belong to (Kelman. The design of mobile phones is slightly different from general consumer electronic products such as audio/video. including preferences and lifestyle choices (Holladay. Due to the competition in this new market. This study addresses performance. conjoint analysis technique has been used to collect consumer preference data. deodorant or mouthwash in fact take advantage of the reference group’s utilitarian influence. Conjoint analysis in product design is usually conducted based on the assumption that consumers evaluate the value/utility of a product/service by combining separate aspects of utility provided by each product attribute (Hair et al. home size. Under this influence. many companies are gearing towards a “consumer-orientated” approach in their product design. 1995). gender. the company has aired its Young Generation brand image extensively so that its targeted consumers had accepted the value of this specific group. occupation. one may actively follow the groups‟ beliefs and rules while neglecting the praises or punishments and decide to completely accept and internalize the value of that reference group. In specifying design elements of mobile phones as well as other consumer products. Consumers seem to perceive the . Psychographics instead focuses on people’s actions. etc. 1961). image/impression and technological dimensions that relate to people’s actions. 2004).

M. and color displays are influencing consumer decisions to acquire new models (In-Stat/MDR. 2003) and we likewise include it. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP). and multi-media contents. 2002. we have added web connectivity as a factor. it can be expected that new features will influence the intention to acquire new mobile phones. and so forth. icon interface. Due to the integration of functions such as address books. digital standards. Since studies of mobile adoption (Van Akkeren. J. Another specific factor for cellular devices is payment and cost (Kleijnen. 2003) point to present applications dominated by voice communications and the simple Internet. This study will emphasize concern for the reliability of mobile devices. the importance of technology product suitability. Thus.19 billion and has registered strong growth in the past decade and a half. but a future of the complex web. more developed messaging services. Liu. and future web-connectivity INDIAN MOBILE INDUSTRY ❖ Introduction India is currently the world’s second-largest telecommunications market with a subscriber base of 1. the two major models and recent studies seek to explain user adoption and acceptance of the technology. Mobile phones in South Korea differ from each other in almost all design features. and e-commerce enhanced uses. In sum. message management. technology product suitability. and the present study adds the factors of cost. The theoretical framework combines the Rogers and Davis models. O’Keefe. Since cell phones are vulnerable to security and privacy violations. including shape. and D.hardware/software/service of a mobile phone as a single entity while the design and planning of each element are typically managed by different companies. de Ruyter. that is. radio. calendars. Harker. and web-connectivity. and material. . A possible way to approach this design problem would be a model-based evaluation. Internet. 2002. a significant number of software usability issues are introduced in menu design. digital standards. and K. animation. reliability. size. and therefore the following hypothesis was developed. better memory. security. ❖ Technology Adoption Another important aspect that has risen from different studies is that consumers purchase new phones due to the fact that their existing one’s capacity is not appropriate referring to the idea that new technology features such as built-in cameras. identifying the functional relationships between user satisfaction and the specific design features of a product. color. 2004).

doubled in six months to 359 petabytes or 3. It would generate around 3 million direct job opportunities and 2 million indirect jobs during this period. Data usage on Indian telecom operators' networks (excluding Reliance Jio).9 GB in 2017 to 18 GB by 2023. The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years according to estimates by Randstad India. ❖ Market Size The mobile industry is expected to create a total economic value of Rs 14 trillion (US$ 217. Xiaomi's aggressively priced suite of high-spec handsets and market expansion strategy enabled it to take the top spot in the world's biggest smartphone market after China.3 percent year-on-year to reach US$ 103. The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector.7 million gigabytes per month as 4G data usage share increased to 34 percent by the end of June 2017$. According to a report by leading research firm Market Research Store.9 billion by 2020. as it was outsold by China's Xiaomi in the final quarter of 2017.37 billion) by the year 2020. India’s smartphone market grew 14 percent year-on-year to a total of 124 million shipments in 2017. The employment opportunities are expected to be created due to a combination of government’s efforts to increase penetration in rural areas and the rapid increase in smartphone sales and rising internet usage. the Indian telecommunication services market will likely grow by 10. The government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to the consumer at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country. data from two tech research firms shows.according to report prepared by GSM Association (GSMA) in collaboration with the Boston Consulting Group (BCG). . Samsung Electronics has lost its crown as the top smartphone seller in India for the first time in six years. creating opportunities for new businesses. The monthly data usage per smartphone in India is expected to increase from 3. The country is the fourth largest app economy in the world. The rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India over the next five years.

7 billion global users by 2025.Q4 2017 25% 34% 6% 23% 6% 6% Xiaomi Samsung Lenevo Vivo Oppo Others IDC mobile phone market report says One Plus captured 48% of the Indian Premium Market share and Apple netted about 38% followed by Samsung at 4%. the Indian telecommunication sector is expected to witness fast growth in the next few years. contributing around 5 percent to the country’s GDP. India Smartphone Shipment Market Share . Premium Mobile Market Share 10% 4% 38% 48% Apple One Plus Samsung Other ❖ Road Ahead India will emerge as a leading player in the virtual world by having 700 million internet users of the 4. With the government’s favorable regulation policies and 4G services hitting the market. . each with about 6 percent market share. as per a Microsoft report. Lenovo. ahead of Samsung's 23 percent. and Vivo came in behind them. Internet economy expected to touch Rs 10 trillion (US$ 155 billion) by 2018. Counterpoint pegged Xiaomi's smartphone market share in India at 25 percent in the fourth quarter based on shipments. Oppo.

the Primary data collection is used. .400 MHz to promote initiatives like the Internet of Things (IoT). instant high definition video transfer as well as its Smart Cities initiative. Using primary data collection had allowed addressing specific issues to consumers about their use of their Smartphone and factors that influenced them in the purchase decision-making process for a smartphone.300 MHz and 3. The Government of India also plans to auction the 5G spectrum in bands like 3. The Indian mobile phone industry expects that the Government of India's boost to production of battery chargers will result in setting up of 365 factories. Additionally. The data collection was a critical part of the research as this was the core of the findings. machine-to-machine communications. ❖ To analyze what are the factors which influence and eventually motivate the customer to buy a smartphone in Indian market. METHODOLOGY With the purpose of answering the research questions in this dissertation. ❖ To analyze the theoretical implication of brand of smartphone in the Indian market and what is the effect on the purchase decision-making process. ❖ To develop a framework for the effects of external influence and internal influence which affect self. using primary data allowed greater control of the collection of information.concept.000 jobs by 2025. and lifestyle of the consumer which result in purchasing decision-making process. thereby generating 800. RESEARCH OBJECTIVE ❖ To identify to what extent evaluation of outcomes and beliefs affect consumers’ attitudes and intention to purchase in the smartphone market in India.

are you satisfied with your smartphone? 3) Would you like to switch to another brand with additional features? 4) Frequency / Level of switching smartphones? 5) How much are you willing to pay for a smartphone? 6) Does the country of manufacture or size of manufacturer matter? 7) What is the level of influence of family and friends/word of mouth? 8) How much is your status in society a factor in making a purchase decision for a smartphone? 9) What is the level of influence of festival offers and promotional offers? 10) What is the level of influence of advertisement? 11) What is the level of influence of after-sales services provided by manufacturers? 12) What is a level of influence on finance before buying a smartphone? 13) Do you get influenced by the company brand name? 14) How much the quality of smartphone influences you? 15) What is the level of influence of previous experiences from using the product of a certain brand? 16) Do you get influenced by the technical specifications of a smartphone? 17) Which brand of the smartphone did you purchase last? .QUESTIONNAIRE 1) Do you own a smartphone? 2) If yes.