Chapter-1

INTRODUCTION TO
CONSUMER BEHAVIOR AND
MOBILE PHONES
1.1 Introduction

Among the progress and growth of developed and developing economies in the world,

India has become one of the fastest growing economies throughout the world. Indian

economy has placed in the fourth position by the year 2050 according to Goldman

Sachs BRICS. One of the dazzling facts that grow India’s economic cycle has been the

dynamism of the service sector.

The telecom sector and its services have been recognized as an important tool for socio

economic development for a nation. Globalization, Liberalization and Privatization are

the three Indian growth boosters. The growth of telecom sector in the preliberalization

has been phenomenal. Indian service sector flooded performance is the forwarded step

in the growing economies of the world. In the telecom sector the significant role of

consumers can’t be undermined. The mobile phone market is one of the vast areas to

study the technological revolution in the mobile sector escort booming market for the

mobile phones.

The mobile phone sector in India has become very popular nowadays. Its growth is so

prodigious that it has crossed most of the industries. Undoubtedly, consumers have

made an indelible landmark on the economic landscape due to their premeditated

importance in reengineering the products and services. There is a significant impact of

consumer behavior on the strategic decisions made by the mobile sector companies. In

technology driven businesses, understanding the voice of consumers and their buying

patterns has emerged a tough challenge for the mobile companies. The reason for the

growth of this sector is consumer involvement as human being spends most of his time

in interacting with others. In modern business scenario consumers are considered as the

inception point and the last corner of marketing activities. In the era of diversified

competition where customer is the king, success depends not only on the efficiency of

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the managers in delivering what they have promised but at the same time responsibility

lies on the organization to develop such an harmonious atmosphere and culture within

the organization where value for the services are provided and quality services could be

offered to achieve the higher level motivational need of customer satisfaction. An

organization has to synchronize all its activities towards the enhancement and

achievement of satisfaction of the consumer at every stage. For achieving customer

satisfaction, understanding of dynamic consumer behavior is essential. Understanding

the consumer behavior is the most prominent topic to understand by the marketers so as

to frame marketing strategies for customer satisfaction. India being a developing

market and being a nation of diverse cultures and traditions it becomes mandatory for

mobile companies to have a deep understanding of buying behavior of consumer and

buying patterns of mobile phones by Indian consumers. With the advent of

globalization and the sequel changes in the country many mobile companies have

started making a foray into Indian mobile market due to its sky-scraping potential. As a

result of tremendous growth in mobile sector, mobile penetration in the mobile market

has overshadowed all other means of communication.

1.1.1 Customer and Consumer

Study of consumer behavior has emerged as an applied discipline. Marketers have to

deal with two inseparable market participants – Customers and Consumers.

A customer is also called a client, a buyer, a shopper or immediate purchaser or final

user of the product. The term ‘customer’ is typically used to refer to one who regularly

purchase a product from a particular store or company but he may not be the actual

consumer of a product. A customer can also be a wise searcher of the product or service

that is going to be sold in spite of deciding to buy or not to buy them. Customers will

buy a product only if consumer has demand for that product.

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A consumer is an individual who pays to consume the goods or services produced by a

seller. The consumer engages in any of the following activities;

 Evaluating of goods and services

 Acquisition of goods and services

 Using of goods and services

 Disposing of goods and services

A consumer firstly determines his wants then buys a product and uses it further for

personal use or organizational use. Consumer can be categorized into two categories:

Figure 1.1: Categorization of consumers

Personal consumer purchases goods for the personal use. Organizational consumer

buys product and services in order to run their own business.

(Hippel 2005) observed that the role of consumer has not been remained restricted to

passive recipient of product but also has emerged as an active participant in production.

1.2 Consumer Behavior and Buyer Behavior

Consumer behavior reflects the totality of consumer’s decision for acquiring,

consuming and disposing of goods, services, time and ideas. Consumer behavior is a

decision making process as well as mental and physical activity in which an individual

engages in evaluating, acquiring, using or disposing of goods and services. Consumer

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behavior is “the study of individuals, groups or organizations and the processes they

use to select, secure, use and dispose of products, services or ideas to satisfy needs and

the impacts that these processes have on the consumer and society".

Consumer Behavior is a branch which deals with the various stages a consumer goes

through before purchasing products or services for his end use. Buyer Behavior is the

study of decision making units as they buy goods for themselves or others. Thus,

buying behavior particularly involves collective response of buyers for selecting,

evaluating, deciding purchasing and post purchasing behavior. Buyer behavior is the

study of human response to services and marketing of products and services. Buyer

behavior is broadly defined by various scholars and researchers as:

 It is the behavior displayed by the consumers during the acquisition,

use and disposition of products, services, time and ideas by decision making

units.

 It is the body of knowledge which studies various aspects of purchase and

consumption of products and services by individuals with various social and

psychological variables.

 The process and activities people engages in when searching for, selecting,

purchasing, using, evaluating and disposing of products and services so as to

satisfy their needs and desires.

Consumer behavior has been defined by various psychologists are:

The study of consumer behavior deals with the decision making process and

physical activity an individuals engages in when evaluating, acquiring, using or

disposing of goods and services (Loudon and Bitta, 2002). It is concerned to

understand an individual’s buying and consuming activities. It involves the study of

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organizing acquired information and its application in making buying decision. But it

becomes difficult to understand the selection criteria of various products in case of rural

consumers. Consumer behavior is affected by perceptions, cultural forces and social

factors. (Sternthal and Craig, 1982). Consumer behavior is concerned about the

processes that are involved when people select, decide to purchase and use products,

services or experiences in order to satisfy needs and wants. Consumer behavior has two

aspects: the final purchase activity which is visible to us and the decision process which

may involve the interplay of a number of complex variables not visible to us. In fact

purchase behavior is the end result of a long process of consumer decision-making. The

study involves what consumer buy, why they buy it, how they buy it, when they buy it,

where they buy it, how frequently they buy it and how they dispose of the product after

its use (Solomon, et al. 2002). Consumer behavior deals with the study of behavior that

consumers display in searching for, purchasing, using, evaluating, and disposing of

products and services that they expect will satisfy their needs (Schiffman and Kanuk,

2007). Consumer behavior is the field of study of actions a person takes in purchasing

and using product and services including the mental and social process that precede and

follow these actions. It involves the study of what people consume, where, how often

and under what condition these goods and services are consumed (Berkowitz et al.

1990). Consumer behavior is concerned with the mental and emotional processes and

the observable behavior of consumers during searching for, purchasing and post

consumption of a product or service (Engel, et al. 1990). Buying Behavior is the

decision processes and acts of people involved in buying and using products. Consumer

behavior is all about purchase related activities, thought and influences that occur

before, during and after the purchase itself as performed by buyers and consumers of

products and services and those who influence the purchase. According to the

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American Marketing Association, Consumer behavior is “the dynamic interaction of

affect and cognition, behavior and environmental events by which human beings

conduct the exchange aspects of their lives.” Consumer behavior covers all the grounds

that are related to the selection of a product or service, buying and then consumption of

the goods or services (Kotler, 2002). Consumer behavior is perceived as the study of

the individuals or the groups of the individuals when they think about the selection of

the product or service. Then it is the purchase and finally consumes in order to satisfy

the needs and wishes (Perner, 2001). Consumers play a vital role at various levels of

economy-local, national and international. The individual buys good and services for

his own and household use both for family members and for others. What consumers

buy? What consumers think about product and services? How consumers make

decision? How and how much consumers spend? What consumers do in leisure time?

Marketing professionals want to know the answers to these questions. They know that

once they do have those answers, they will have a much better chance of creating and

communicating about products that a consumer likes to buy. Marketers need to

understand the group and personal influences that affects consumer buying decisions on

overall society and how these decisions are made. Marketers not only need to know the

choices of consumers but also at the same time they need to know the voice of their

target audiences.

Consumer behavior is defined as “the process and activities that people engage in when

searching for, selecting, purchasing, using, evaluating, and disposing of products and

services so as to satisfy their needs and desires” (Belch and Belch, 1993). It is the only

consumer who consumes goods and services in the market. The attraction point for

every marketer is consumer. To study consumer marketers are always ready to

understand various aspects of marketing in order to satisfy them. Consumer behavior is

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elaborated as the dynamic interaction of affect and cognition, behavior, and

environmental events by which human beings conduct the exchange aspects of their

lives (Anon, 2004). The study of consumer behavior deals with individuals, groups or

organizations and the processes they use to select, secure, use, and dispose of products,

services, experience (Hawkins, Best and Coney, 2004).

1.3 Consumer Behavior: An Emerging Field of Study

Consumer behavior is a branch which deals with various stages a consumer goes

through before purchasing products for his end uses. Consumer behavior has become

an integral part of strategic market planning. Consumer behavior should be the main

focus of every stage of the firm’s marketing activities. (Blackwell et al, 2007).

Consumer plays a very crucial role as they are the ones who finally buy goods and

services of the firm and the firm always makes influential efforts to attract them

towards its goods and services to earn revenue and enhance profitability. It has different

point of views:

 Product Mix - Products of an extreme range of attributes

 Price Mix - Wide range of cost and payment choices

 Place Mix – Place of order (door step or anywhere else)

 Promotion Mix – Various sources of advertising and promotion

1.3.1 Consumer Behavior from Marketers point of view

Today’s customer is more educated, informed, knowledgeable and highly demanding.

The marketer’s main aim is to convince them to buy their products. The global

marketplace is a study of diversity among consumers, producers, marketers, retailers,

advertising media, cultures and customs and of course the individual or psychological

behavior. The study of consumer behavior is also very important to the marketers

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because it enables them to understand and predict buying behavior of consumers in the

marketplace.

Consumer research is the methodology used to study consumer behavior; it takes place

at every phase of the buying process. It starts before the purchase of a product

continues during the purchase and even after the purchase. Researchers viewed two

different buyers buying the same product for different reasons, paid different prices,

used in different ways and have different emotional attachments towards the things.

The market strategies are framed and reframed again and again to achieve

organizational objectives by knowing and influencing their consumers. Therefore, the

knowledge and information about consumers is critical for making successful

marketing strategies. The relationship between consumer buying behavior and

marketing strategy must be consistent to attain organizational objectives.

Consumer behavior is interdisciplinary approach based on concepts and theories about

people that have developed by behavioral scientists, philosophers and researchers in

diverse disciplines of psychology, sociology, social psychology, cultural anthropology

and economics. The study of consumer behavior also helps management to understand

consumer needs to recognize the potential of consumer in lieu of new technology and to

articulate new things in term of the consumers needs so that products will be

universally accepted in the market well.

1.4 Consumer Decision Making

In today’s competitive business scenario companies are not only curious to explore the

change in tastes and preferences of consumers but they also try to decode the influential

sources of information of consumers. Source of information plays an influential role in

deciding consumer’s decision. The consumer decision making process involves number

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of related and correlated stages of activities. The decision making process begins with

the identification and recognition of an unsatisfied need or want. It then transforms into

drive. Consumer enhances his product knowledge from various sources of information.

This search converts into total information about various alternatives and finally

choosing the best one among all. Then buyer evaluates the post purchase behavior to

know the level of satisfaction. A consumer generally passes through various stages in

decision making process.

These are presenting in a flow-chart format.

Figure 1.2: Consumer Decision Making Process

(Source: Nicosia, 1966; Engel et al., in 1995)

 Problem Recognition - Problem recognition stage is the first stage of

consumer decision making process. Consumer recognizes need for the product.

The need recognition is the first and most important step in the buying

process. If there is no need, there is no purchase. This recognition happens when

there is a lag between the consumer’s actual situation and the ideal and desired

one.

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  Information Search - Once the need is identified then the consumer seeks

information about possible solutions to the problem. Consumer will search more

or less information depending on the complexity of the choices to be made.

 Evaluation of Alternatives - After recognizing need and searching information

about the desired product consumers become crystal clear about various

requirements they want in their products. The consumer will then use the

information previously collected to establish a set of evaluation criteria,

desirable or wanted features, classify the different products available and

evaluate which alternative has the most chance to satisfy him. In order to do so,

he will evaluate their attributes. Consumers search for various available

alternatives in the product range is evaluated the alternatives on various criteria.

 Purchase Decision – Purchasing a particular product or not also depends upon

the information collected in this stage. A consumer makes up his mind on the

products, store and payment options. The consumer has evaluated the different

solutions and products available for respond to his need, a consumer is now able

to choose the product or brand that seems most appropriate to his needs. Then

actual purchase can be taken.

 Post-Purchase Evaluation – The satisfaction level of consumers from the

performance of product is evaluated in this stage. The consumer determines

their satisfaction level with the purchasing outcome. Once the product is purchased and

used, the consumer will evaluate the adequacy with his original needs and whether the

right choice has been made in buying this product or not. A consumer is able to feel a

sense of satisfaction or dissatisfaction for the product in this stage.

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1.5 Consumer Behavior in the Marketing Context

A market is, “An aggregate of people who as an individuals or organizations, have

needs for products in a product class and who have the ability, willingness and

authority to purchase such products”. The aim of marketing is to meet and satisfy target

customer needs and wants. Studying consumer behavior provides knowledge to

marketers in the introduction stage of product and further improving products or

services, fixing their prices, making messages and developing other marketing

activities. Marketers are always looking for emerging trends in marketing field. In the

introduction stage of consumer behavior, it is indispensable to understand the consumer

behavior in all in relation to marketing.

The main concern was to improve the production capabilities in the firms. In this era,

consumers are satisfied to get a generic form of a product; they had least interest in the

variety of the products. So, neither the consumer nor the manufacturer concentrates on

the product differentiation. The focus in this time duration is to sell what is produced.

The main concern was to sell the additional products being produced. In this phase

supply exceeded demand in the production so motive is to sell the products produced in

the manufacturing concerns.

In the marketing orientation time, the focus was to know more about the consumer’s

needs and preferences. Due to growing interest of the consumers in the products and

services, companies shifted from the sales orientation to marketing orientation.

Consumer’s preferences were taken as first priority by the manufacturers rather than

focusing more on the production or selling of products. Once a marketer identifies an

unfulfilled need, or partially fulfilled one, he has an opportunity to exploit. To this end

he has to determine the appropriate marketing mix. The marketer has to judge the

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consumer behavior constantly so as to market their products at the right time. In a broad

sense all the markets can be divided into two categories: seller’s market and buyer’s

market. In a number of consumer product categories, advertising or other

communication strategies are given a lot of importance in the formulation of brand

strategy.

The basic belief of marketing-oriented company is that the customer is the attraction

point around whom the business revolves. Therefore, understanding about people in

general and what makes a customer happy is a vital part of business success. Market in

today’s world itself means – meeting customer needs and delighting customers. It is the

only customer around whom all the marketing strategies are formulated and

implemented. In order to meet competition at the market place, the marketing managers

are using various methods to add value to the final product which will reach in the

hands of the consumers. Marketing as an ever changing environment and due to the

growing concern or awareness among marketers to go for a careful study of the

consumer behavior around which all marketing activities are made.

1.5.1 Different Types of Consumer Buying Roles

Consumer buying behavior refers to the buying behavior of final consumers.

Consumers make various decisions regarding purchases that depend on the direct

communication with the marketers. Consumers of different products coming from

different age-groups, different social - cultural backgrounds and from different

geographical locations behave differently while making selection. Consumer behavior

has termed as nomenclature for the pattern of actions for decision-making that the

consumers employ while making a purchase.

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The five main buying roles are as follows:

Figure 1.3: Buying role of consumers

 Initiator – The person who decides to start the buying process.

 Influencer – The person who tries to convince others to purchase the product.

 Decider – The person who makes the final decision of purchase.

 Buyer – The person who is going to buy the product directly from the shop.

 User – The person who uses a product.

1.6 Factors Influencing Consumer Behavior

Consumer buying characteristics affect buying behavior as consumer purchases are

influenced strongly by cultural, social, personal, psychological characteristics.

Whenever a consumer buys anything from the market, final decision is affected by

various factors like:

 Cultural

 Social

 Personal

 Psychological

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The first stage of understanding buyer behavior is to focus on the factors that determine

the “buyer characteristics” in the “black box”. The marketer must be aware of these

factors to develop an appropriate marketing mix and strategies for its target market.

Figure 1.4: Factors Influencing Consumer Behavior

1. Cultural Factors

Consumer behavior is deeply influenced by cultural factors such as buyer’s culture,

subculture and social class.

 Culture – It is the part of every society and is the important cause of person

wants and behavior. The influence of culture on buying behavior varies from

region to region.

 Subculture - Each culture contains different subcultures such as religions,

nationalities, geographic regions, racial groups etc. Marketers can use these

groups by segmenting the market into various small portions.

 Social Class - People from different social classes tend to have different desires

and consumption patterns. Disparities resulting from the difference in their

purchasing power. According to some researchers, behavior and buying habits

would also be a way of identification and belonging to its social class.In this

way marketing activities could be tailored according to different social classes.

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2. Social Factors

Social factors impact the buying behavior of consumers. The important social factors

are: reference groups, family, role and status.

 Reference Groups - Reference groups have potential in forming a person

attitude or behavior. The impact of reference groups varies across products and

brands.

 Family - Buyer behavior is strongly influenced by the members of a family.

Therefore marketers are trying to find the roles and influence of the husband,

wife and children. If the buying decision of a particular product is influenced by

wife then the marketers will try to target the women in their advertisement.

 Roles and Status - Each person possesses different roles and status in the society

depending upon the groups, clubs, family, organization etc. to which he

belongs. For example a woman is working in an organization as a finance

manager. At the same time, she is playing two roles simultaneously: role of a

finance manager as well as role of a mother.

3. Personal Factors

Personal factors can also affect the consumer behavior. Some of the important personal

factors that influence the buying behavior are: lifestyle, economic situation, occupation,

age, personality and self concept.

 Age - Age and life-cycle have potential impact on the consumer buying

behavior. It is obvious that the consumer’s taste and preferences about goods

and services changes with the passage of time. Family life-cycle consists of

different stages such young singles, married couples, unmarried couples etc.

which help marketers to develop appropriate products for each stage.

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  Occupation - The occupation of a person has significant impact on the buying

behavior of consumer. For example a marketing manager of an organization

will try to purchase business suits, whereas a low level worker in the same

organization will purchase rugged work clothes.

 Economic Situation - Consumer’s economic situation has great influence on his

buying behavior. If the income of a customer is high then choice of more

expensive products will be there and a person with low income will purchase

inexpensive products.

 Lifestyle - Lifestyle of customers is another import factor affecting the

consumer buying behavior. Lifestyle refers to the way a person lives in a society

and purchases the things according to his surroundings.

 Personality - Personality changes from person to person, time to time and place

to place. It also has a great influence on the buying behavior of customers.

Personality is the totality of characteristics of a man.

4. Psychological Factors

There are four important psychological factors affecting the consumer buying behavior.

These are perception, motivation, learning, beliefs and attitudes.

 Motivation - The level of motivation affects the buying behavior of customers.

Every person has different needs such as physiological needs, biological needs,

social needs etc.

 Perception - Selecting, organizing and interpreting information in a way to

produce a meaningful experience of the world is called perception. There are

three different perceptual processes which are selective attention, selective

distortion and selective retention.

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  Beliefs and Attitudes - Customer possesses specific beliefs and attitudes toward

various products. Since such beliefs and attitudes make up brand image and

affect consumer buying behavior therefore marketers are interested in them. All

these factors combine to perform a comprehensive model of consumer behavior

that reflects consumer decision making process. The major factors and the

process of decision-making shape the behavior and preferences of consumer

behavior.

1.7 Consumer Behavior in Mobile Phones

India is the second largest consumer market in the world. The Indian consumer profile

has been changed in terms of education, income, age, gender, occupation and reference

groups. There is a shift in consumer brand preferences for daily need products to high

end technologies with the explosion of technology. The consumer buying preferences

are rapidly changing and this result to change in the consumer behavior for a product.

Products that were previously considered luxury items have become a necessity

because of the changing lifestyle and rising income levels. In today’s era of

communication, the traditional ways of conveying messages through post and mails

have replaced by e-mails and mobile phones. Use of mobile phone does not remain

restricted to higher class but it has become an integral part of lower and below poverty

line class. Study of consumer behavior in mobile phone industry has emerged as an

interested area for researchers. The growth of mobile phone sector in India has become

so stupendous that it has surpassed most of the other industries. The reason behind its

rapid growth is the change in life style of consumers and in technology and innovation.

Today every human being wants to remain in touch with others all the time and at any

cost. Mobile phones have emerged as the most effective communication source as a

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result of this, penetration of mobiles in the segment has overshadowed all other means

of communication. Frequent changes and challenges in the mobile phone industry have

been made on regular basis. The penetration of mobile phone handsets and the diffusion

of mobile technologies have dramatically increasing in recent years. Although a mobile

phone was initially designed for voice communication, its functionalities have

increasingly expanded to perform various tasks and fulfill different purposes such as

listening to mp3 music, playing WAP games, watching video. Mobile phones can be

used for a list of m - commerce services (Anckar and D'Incau, 2002). Based on

previous studies the use of a mobile phone can be categorized into four main

categories: communication-oriented (sending or receiving e-mail etc.), entertainment-

oriented (listening to music, playing a game, and watching a movie clip etc.) personal

information-oriented (using personal organizer, alarm clock, and office applications

etc.) and commercial transaction-oriented (checking bank account, doing shopping, and

paying bills etc.) (Sheng and Nah, 2004). The mobile phone market has become

broader within the last three to five years due to more affordable mobile phones along

with lower service costs. This market is very competitive as it offers the same products

and services with different features and different costs in the phones which buyers have

choices to choose from. Effective marketing strategies always start with “a thorough

understanding of how and why consumers behave as they do” (Merenski, 1998).

Specifically, in order to find out solutions to customer needs and desires, the marketer

requires a thorough knowledge of buyer motivations and decision-making processes

along with all the environmental and other factors that also have an influence upon

them.

To tailor various strategies that suit the consumer, marketers must find out the solutions

to the following questions:

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  Why does the customer want to buy a particular product or service?

 How will he or she decide which option to purchase?

 What factors influence his decision?

Consumer behavior is all about purchase related activities, thought and influences that

occur before, during and after the purchase itself as performed by buyers and

consumers of products and services and those who influence the purchase. Consumer is

he who really consumes or uses the product. Consumer behavior refers to the mental

and emotional process and the observable behavior of the consumers during searching,

purchasing and post consumption of a product or service. Mobile industry has become

very competitive by introducing innovative products at lower cost.

It radically changes the standard of living of people. It is well perceived fact that

consumer behavior has become the important factor of business success. However

many conclusions have drawn with regard to marketing strategy. But there are very few

studies related with marketing strategy in mobile sector with special reference to India.

In Indian mobile sector mobile telephony is called as “sun-rise industry’’.

The main factors of more competition are:

 Customers want better services and products at a lower cost.

 A number of functions in just one mobile phone: E-mail, text messaging,

internet surfing, 3D, wifi, gaming, Mp3, Mp4.

 New technology improvement in mobile phones as 4D technology in smart

phones.

 Better network services

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According to ibef.org report; Mobile phone services have recognized the world over as

an important tool for socio-economic development of a nation. India is currently the

world’s second-largest telecommunications market and has registered exceptional

growth in the past few years. The reasons for growth of the telecom sector in India are

reform measures by the Government of India, active participation of the private sector

and wireless technology. With the intense competition operators need to work closely

with mobile handset makers and software developers to match their handset portfolios

according to consumer’s desires and needs. The increasing availability and rapid take

up of sophisticated connected devices is changing the way of our lives and

communication. The convergence of mobile phones broadcast and internet markets has

created a burden of choice for consumers – the choice to consume more than ever

before, anywhere, anytime and anyhow. This study of consumer behavior deals with

deeper understanding of consumption patterns and behavior of consumer for mobiles.

The scope of consumer behavior includes not only the actual buyer but also the various

roles played by different individuals. In recent year, adoption of mobile phone has

exceptionally rapid in many parts of the world and especially in India. The Indian

telecommunications market is characterized by a large number of national and

international mobile players. The mobile industry has become more competitive. It is

necessary to identify the consumer attitude and behavior towards product. Exchange of

information becomes the necessity of life to a common man. Consumer purchase

behavior for mobile phone and its influence in the decision – making of its purchase is

more complex. For this, there is a need to do a comprehensive detailed study to

understand consumer behavior towards mobile phone.

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1.8 Mobile Sector

Mobile phones have become as common as televisions. Phenomenal adoption of

mobiles across the globe has increased due to rise in digital mobility and connectivity.

The market size of mobiles has exponentially increased globally. Indian market does

not remain untouched from this phenomenon. With independence all foreign

telecommunication companies were nationalized to form Post, Telephone and

Telegraph, a monopoly run by the Government of India. The Indian mobile sector like

most other infrastructure sectors has controlled by the state. The Department of

Telecommunications (DoT) is the key body for policy issues and regulations apart from

being a basic service provider to rest of country. Fully automatic mobile networks

were first introduced in the early to mid-1980s (the 1G generations). Until the early

1990s, most mobile phones were too large to be carried in a pocket so they were

usually permanently installed in vehicles as car phones. With the advance of

miniaturization and smaller digital components, mobile phones got smaller and lighter.

In current scenario, daily activities have been revolutionized by the mobiles. It has

become central part of everyday life.

1.8.1 Leading Mobile Service Providers

The first mobile service operator in India was the state-owned incumbent BSNL.

Subsequently after the telecommunication policies were revised to allow private

operators, companies such as Vodafone, Bharti Airtel, Tata Indicom, Reliance, Idea

Mobile and Aircel have entered the space in India. Every individual mobile service

provider has its own plans, policies, packages and corresponding rates. Although these

facilities have offered by various companies but every company is committed to serve

only one common purpose of facilitate better connectivity to its consumers so that they

can maintain good conversations for both personal as well as business motives. It is

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consumer’s duty to acknowledge the value and usefulness of best services of various

brands in mobiles. Consumer demands that service provider who offers the widest

choice criteria of features and excellent customer service and avoids hidden charges.

India has emerged fastest growing mobile phone market in the world. The booming

mobile industry has attracting large amount of investments in the country.

1.8.2 TRAI Reports (2013-2014)

According to TRAI data, Airtel Bharti continues to lead the mobile service provider

market in India with 20.67 percent share in July 2012.

Graph 1.1: Service Providers Market Share’ July 12

The number of telephone subscribers in India decreased to 944.81 million in July 2012

from 965.52 million in June 2012, down 2.14 percent. Substantial dip in mobile users of

Reliance Communications has contributed to the decline in growth of overall mobile user

base of the country. TRAI said the decline is due to large scale disconnections by some of

the service providers.

Meanwhile the share of urban subscribers has declined to 63.83 percent from 64.40

percent.

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 Graph1.2: Subscription detail during July 2012

Share of rural subscribers has increased to 36.17 percent in July 2012. The overall

teledensity in India reached 77.79 in July from 79.58 in June 2012, mobile subscription

in urban areas decreased to 603.03 million in July 2012 from 621.76 million in June.

Subscription in rural areas decreased to 341.79 million from 343.76 million. The

overall urban teledensity has decreased from 169.03 to 163.66 and rural teledensity

decreased from 40.66 to 40.40.Wireless subscription in urban areas decreased from

597.59 million in June 2012 to 578.90 million in July 2012. The wireless subscription

in rural areas decreased from 336.51 million to 334.58 million.

The urban wireless Teledensity has decreased from 162.46 to 157.11 and rural

Teledensity has decreased from 39.80 to 39.54.

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 Table 1.1: Growth/ Decline in Subscribers

Service provider Subscriber Subscriber Subscriber Rate of Market Market

base (million) base (million) base (million) growth share share
Sep, 13 Dec, 13 Net additions (percen (percent) (percent)
t) Sep, 13 Dec, 13

Bharti 196.73 201.76 5.04 2.56 21.86 22.05

Vodafone 155.59 160.46 4.87 3.13 17.29 17.53

Idea 127.23 128.69 1.46 1.15 14.14 14.06

Rel Communic. 117.50 118.48 0.98 0.82 13.06 12.95

Tata 65.40 64.78 -0.26 -0.40 7.23 7.08

Aircel 63.25 66.91 3.67 5.80 7.03 7.31

Loop Mobile 2.89 2.98 0.09 3.21 0.32 0.33

Quadrant 1.93 2.16 0.24 12.23 0.21 0.24

Sistema 9.61 9.86 0.25 2.62 1.07 1.08

Telewings 32.36 32.78 0.42 1.31 3.60 3.58

Videocon 3.24 3.97 0.72 22.35 0.36 0.43

BSNL 117.23 115.23 -2.00 -1.70 13.03 12.59

MTNL 7.28 7.13 -0.15 -2.09 0.81 0.78

Total 899.86 915.19 15.33 1.70

Source: www.trai.gov.in

Bharti is the leading operator in Access segment in terms of number of subscribers and

net addition. During the quarter, Bharti recorded the highest net addition of 5.04

million, followed by Vodafone (4.87 million) and Aircel (3.67 million). BSNL

recorded the highest net decline of 2.00 million subscribers during this quarter.

24
 Table 1.2: Growth in Wireless Subscriber base

Service No. of total Subscriber Subscriber Rate of Market Market

provider Subscribers base base (million) growth share share
(million) (million) Net additions (percent) (percent) (percent)
Sep, 13 Dec, 13

Bharti 193.39 198.14 5.02 2.60 22.21 22.39

Vodafone 155.54 160.41 4.86 3.13 17.87 18.10

Idea 127.23 128.69 1.46 1.15 14.61 14.52

Rel Communic. 116.26 117.24 0.98 0.84 13.35 13.23

BSNL 97.86 96.29 -1.57 -1.60 11.24 10.86

Aircel 63.25 66.91 3.67 5.80 7.26 7.55

Tata 63.55 63.27 -0.28 -0.44 7.30 7.14

Telewings 32.36 32.78 0.42 1.31 3.72 3.70

Sistema 9.56 9.81 0.25 2.62 1.10 1.11

Videocon 3.24 3.97 0.72 22.35 0.37 0.45

MTNL 3.74 3.59 -0.15 -4.00 0.43 0.41

Loop 2.89 2.98 0.09 3.21 0.33 0.34

Quadrant 1.73 1.96 0.23 13.33 0.20 0.22

Total 870.58 886.30 15.72 1.81

Source: www.trai.gov.in

Bharti remains the leading operator with 198.41 million subscribers at the end of Dec-

13, followed by Vodafone (160.41 million) and Idea (128.69 million). In terms of net

additions during the quarter Bharti (5.02 million) has added the highest number of

subscribers followed by Vodafone (4.86 million). BSNL has the maximum net loss of

1.57 million wireless subscribers during this quarter.

25
GSM Services

The GSM subscribers were 824.06 million at the end of Dec-13 as against 807.68

million at the quarter ending Sep-13 showing a growth of 2.03percent. Bharti with

198.41 million subscribers continues to be the largest GSM mobile operator, followed

by Vodafone (160.41 million).

Table 1.3: Group-wise Market Share (in terms of subscription) within GSM service

Service provider No. of total Market No. of total Market Net Additions
Subscribers Share Sep, Subscribers share (in Millions)
(million) 13 (million) (percent)
Sep, 13 Dec, 13 Dec, 13

Bharti 193.39 23.94 198.41 24.08 5.02

Vodafone 155.54 19.26 160.41 19.47 4.86

Idea 127.23 15.75 128.69 15.62 1.46

BSNL 95.47 11.82 93.99 11.41 -1.48

Rel Communic. 83.85 10.38 84.88 10.30 1.03

Aircel 63.25 7.83 66.91 8.21 3.67

Tata 45.13 5.59 45.64 5.54 0.51

Telewings 32.36 4.01 32.78 3.98 0.42

MTNL 3.61 0.45 3.46 0.42 -0.15

Videocon 3.24 0.40 3.97 0.48 0.72

Loop 2.89 0.36 2.98 0.36 0.09

Quadrant 1.72 0.21 1.95 0.24 0.23

Total 807.68 100 824.06 100 16.39

Source: www.trai.gov.in

There has a net increase of 16.39 million GSM subscribers during the quarter ending

Dec-13.

26
CDMA Services

The CDMA subscriber base has declined from 62.91 million at the end of Sep-13 to

62.24 million at the end of Dec-13; hence a negative growth rate of 1.07percent has

recorded. Reliance Communications Group with 32.37 million subscribers continues to

be the largest CDMA mobile operator. In terms of net additions during the quarter, all

the service providers except Systema Shyam recorded decline in their subscriber base.

Table 1.4: Market Share (in terms of subscription) within CDMA Service

Service provider No. of total Market Share No. of total Market Net
Subscribers Sep, 13 Subscribers share Additions
(million) (million) (percent) (in Millions)
Sep, 13 Dec, 13 Dec, 13

Rel Communic. 32.42 51.53 32.37 52.01 -0.05

Tata 18.41 29.27 17.63 28.32 -0.78

Sistema 9.56 15.19 9.81 15.76 0.25

BSNL 2.396 3.79 2.30 3.70 -0.08

MTNL 0.13 0.21 0.13 0.21 -0.002

Quadrant 0.01 0.01 0.003 0.004 -0.004

Total 62.91 100 62.24 100 -0.67

Source: www.trai.gov.in

There has a net decline of 0.67 million CDMA subscribers during the quarter ending

Dec-13.

27
1.8.3 Problems and Challenges in Mobile Sector

(Srivastava 2006) asserts that increasing competition, emerging markets, retaining

customers, government regulations and maintaining cost are the basic problems faced

by mobile sector. Increase of rivalry between various service providers leads to price

war. In the growing market the subscribers have a vast range of choices from various

service providers. The challenge for the companies is to give the customers a good low

cost plan. Due to growing competition, the existing customers might switch over to

other connections which are highly beneficial as compared to the existing ones.

Telecom Regularity Authority of India (TRAI) norms is stringent and the service

providers find it difficult to meet the norms as per government regulations. The service

providers feel that the maintaining cost for hotline centers and the staff is high. The

mobile subscriber base in India has expanded to 670.6 million in August 2010 with the

addition of 18.2 million new users during the month. Indian mobile industry has been

emerged as the second fastest growing industry next only to IT industry. It has

demonstrating strong growth rate due to the government support in the form of many

regulatory and policy changes during the last 15 years.

The key regulatory and policy changes which created positive impact on the industry

are:

 Switching over from fixed license fee to revenue sharing

 Introduction of third and fourth operator

 Introduction of calling party pays regime

 Introduction of universal access license

 Changes in access deficit charges

 Issue of license to new operators

 Transparent 3G spectrum auction policy

28
1.9 Mobile Phones Market Growth in India

The mobile phone market has expanded by over 5percent to about 1.91 billion units in

2014. The opportunity for smart phones in the premium category is now fading, global

research firm Gartner has said. The mobile phone market will continue to experience

steady growth, but the opportunity for high average selling price (ASP) smart phones

are now ending. The market is being driven by a shift to lower-priced devices in nearly

all device categories. Overall mobile phone market is growing faster day by day. Both

Nokia and Samsung have managed to hang on to their top slots in the overall mobile

and smart phones segments respectively, according to CMR's India mobile handsets

market review 3Q 2013 . India registered 62.9 million mobile handset shipments for the

period July-September (3Q) 2013, of which 11.1 million units were smart phones. The

smart phone segment has witnessed a growth rate of 152 per cent year-over-year in

comparison to a -0.8 per cent growth for feature phones. Even though local handset

brands cover 47 per cent of the market apple cart, analyst Tarun Pathak said the

competition for these companies will get tougher when their China-based ODM

partners directly enter the Indian market early next year. One such ODM, Gionee has

already started making an impact in the market. "Going forward 3G smart phone

shipments will continue to rise and it is expected to see a few smart phone vendors

introduce 4G-enabled devices by the end of 2013”.

1.10 Mobile Phone Market Strategies

A SWOT analysis of a mobile company entails to find out the strengths, weaknesses,

opportunities and threats involves in the operation of the company. The analysis also

identifies external opportunities and threats that may help or hurt the company in the

future. Mobile communications refers to how data and information are sent and

29
received globally, and although that has remained constant over time, specifically how

information is transmitted has changed due to technological advances.

1.10.1 SWOT Analysis of Mobiles

Strengths

SWOT analysis identifies the internal structures within the industry and company that

are performing well or better than expected. The internal structures could highlight

human resources, physical capital or elements within the company’s control. There has

a substantial decline in tariffs over the years.

Local call tariff for mobile at the rate of Rs. 15.00 is now declined to less than Re 1.00.

One minute STD call between Delhi and Mumbai at the rate of Rs.37.00 now cost Re

1.00 for local call. The adoption of new technology has a major factor that has helped

service providers to reduce the tariffs considerably. India is the fastest growing free

market democracy in the world. India’s emergence as a leading destination for foreign

investment is a result of stable economic outlook, large market potential, large talent

pool, low labor cost.

A mobile phone comes to a great help in urgency while driving by the freeways, in the

vehicle jams, it is the only object that acts as a rescue device. Sticking in an alone

place, calling somebody for help and asking for directions are some of the urgent acts

that a mobile phone can do. Although mobile phone usage can be dangerous while

driving but sometimes it can be a time saver on some urgent matters. Companies find it

another medium to advertise their products to reach to the consumers. Nowadays,

mobile phone is not used just for phone calls but also for other functions like

messaging, watching videos, songs, games, alarm clocks, notes, calendar and

reminders. It is like so many things in one box. From the industry and economy point of

30
view, mobile phone companies have flourishing Indian capital market in billions. This

is a positive wave for the strengthening of economy.

Weaknesses

Weaknesses are internal structures of the company that are performing poorly or worse

than expected. The internal structures could highlight human resources, physical capital

within the company’s control. Huge initial fixed cost for service providers and digital

technology has widened the scope of applications and created new areas of service

provision. Mobile telephony and wireless internet are some of the examples of such

services. Despite technological changes that reduce the demand for spectrum,

availability of spectrum continues to be a constraint.

Besides huge costs for advanced technologies like mobile number portability (MNP).

Indian companies do not have the expertise in running multi-country operations. A

mobile phone user can receive calls when mobile user is in the middle of something. In

case consumer of mobile takes the call it can be rather disrupting. Some people get so

much addicted to mobile phone for talking, listening and watching videos that they

forget the real purpose of the phone and waste large part of their time in unnecessary

interaction over their mobile phones. The mobile phone advertisements through

messages are becoming a pain for the mobile phone users. A mobile phone can be

helpful while driving and talking in case of urgent matters but increasingly it is

becoming cause of accidents because it crashes the attention of a driver.

Opportunities

The boom in mobile phone usage expands around the globe covering all income

spectrums. A mobile phone remains no longer an expensive business luxury or a status

symbol but has become a vital necessity for every user. Although the mobile sector in

31
India has growing strongly as compared to other sectors. Among worldwide perspective

India seems to be the largest untapped mobile market. In today’s scenario, consumers

engage more into text based services than the web based applications. Fueling the

growth of the mobile phone market is the starting of standard mobile phones to smart

phones capable of more than a simple phone call. Smartphone allow users to browse

the web, get GPS directions, listen to music, share photos and other forms of social

networking, use email and run applications such as games and more.

Threats

The threats of mobile phone market would involve the external structures outside the

industries or the company’s control that could potentially hurt the company or cause

harm in the short or long run conflict between DoT and TRAI. The absence of clear

separations in DoT’s responsibilities for policy, regulation and operations led to several

delays and lowered the credibility of the government. TRAI had earlier told DoT that

3G auction should be restricted to existing operators on the grounds that new players

would find it difficult to roll out services quickly. Integration during mergers is

challenging.

Other threats

Lost or Stolen Threat is one of the most prevalent mobile threats. The mobile device

is valuable because this device stores personal and organizational information that can

be used in a serious act.

Network exploits other software that operates on local or mobile networks. Once

connected, they can install malware on phone without ones knowledge. This can harm

mobile phone device fully.

32
Spyware is a threat that enters into the mobile device without ones knowledge or

approval. Data commonly targeted by spyware includes phone call history, text

messages, user location, browser history, contact list, email and private photos. This

stolen information could be used for identity theft or financial fraud.

Malware is software that performs malicious actions on phone. Without consumer’s

knowledge, malware can make charges to phone bill, send unsolicited messages to

contact list.

1.10.2 Marketing Mix Strategies for Mobiles

Marketing mix contains following four Ps:

Figure 1.5: 4Ps of Marketing

Product

Creating the right product is an essential step in a successful marketing mix. Most

familiar products nowadays are the mobile phones. Mobile companies must produce

mobile handsets that are attractive, well designed, easy to use and have the additional

features that customer’s want. These include music players, video and picture features

and Internet access.

33
First among the 4P in the mobile marketing mix strategies is product mix. Product

stands for both goods and service combination offered to the consumer to satisfy their

needs. In the highly regulated mobile industry, all service providers offer almost the

same type of services. The drawback is that no brand can be marketed with Unique

Selling Proposition (USP) for long because it can be imitated immediately. Thus it is

better to focus on some selected ideas as mobile service offerings which have

immediate used by the consumer in mobile sector market.

Mobile companies like Nokia, Samsung, LG, Sony Ericsson comes up with the creative

and innovative phones almost after every 6 months. Nokia launched its first GSM

mobile phones in its model 1011 in 1992 along with its few versions and with lesser

demand. Then it launched another handset Nokia 2100 with Nokia ring tone and

continuing coming up with new models with different innovations like sending,

receiving messages.

Mobile phones allow its users to attain plenty of benefits:

 To share and listen music.

 Connecting with friends, family members anytime, anywhere.

 Broadband Internet services include wifi, Net surfing, Google play services and

video phones.

 Networking equipment allowing various technologies to interlink wirelessly.

 Communications and information solutions to business and government.

34
Price

It is important for every marketer to set prices of the product at the level in which

customers will eager to buy. Prices are linked to the product life cycle. In the initial

phase prices are high to cover development costs and some marketers follow price

skimming strategy in the introduction stage. Later on, when sales are increased costs

are reduced and prices came down. Products that are technologically advanced can be

sold at premium prices to reflect the initial research and development that has gone into

them. Price is itself a key factor in the selling of any product. Pricing strategies of

companies must be different, competitor based, penetrating, skimming. The factors

affecting the amount charged for a product or services are the cost of production,

customer demand and competition. As Indian mobile industry started in 1995, its main

concentration is on manufacturing mobile handsets with GSM technology. In Initial

stages focus was on launching mobile phones with low cost in rural areas. Competition

was very tough at that time so companies like Sony, Samsung, and Motorola started

offering low cost handsets to stay in the mobile market.

Place

Place is from where customers got the product actually. Distribution is the process of

moving goods from manufacturer to retailer and retailer to customer. Mobile companies

distribute its products through independent retailers. Sometimes 'place' is closely linked

to product. 3G phones are mainly sold through 3G network providers. A place where a

product is to be sold should be easily accessible to its customer.

35
Promotion

Promotion refers to the ways that a business communicates the existence and nature of

its products to its market. It includes paid for 'above-the-line' promotion such as media

advertising and 'below-the-line' promotion such as special offers and discounts. The

type of promotion is linked to product life cycle. For the promotion of a new product, it

is important to highlight its features to their target customers inform customers of its

features.

1.10.3 Product Life Cycle of Mobiles

Mobile phone is still in the growth stage, but it’s getting to the end of the growth stage

and turning into maturity stage. Apple Inc. basically changes the mobile phone industry

since they introduced the first I phone in 2007. Apple Inc. essentially shifted the

mobile phone industry from the maturity stage back to the growth stage in 2007.

Mobile phone industry is growing so fast that it has become a necessity. Mobile phones

used to be viewed as a luxury or just for working professional. Nowadays, even a

teenager has a mobile phone. Parents are getting mobile phones for their children

because they want to communicate them whenever they are far off. For a lot of people,

mobile phone is already part of their lives. Customers are very familiar with the mobile

phone products and they prefer to decide themselves about the purchase of mobile

phones. Customers before buying mobile phones compare their features according to

their needs. The mobile phone industry’s growth and profitability depends entirely on

its ability to attract new customers. By increasing and improving the mobile phones and

its services it will attract more potential buyers, because technology alone will not

attract buyers instead companies want value-added services for mobile-phone

securities.

36
Product Life Cycle

The product life cycle of mobile phones have drawn in following diagram:

Figure 1.6: Product Life Cycle of Mobiles

Introduction Phase

From the year 1985 to 1997, when mobile phones firstly introduced they were

considered as a low quality technology in terms of poor reliability, shorter battery life,

high call rates and moreover high priced too even for a basic model as compared to

pagers. In this stage mobile phones were heavy and tough to use as its design and

development are the key factors in its success. During introduction mobiles were not as

popular as in today’s life and not more companies were there in the mobile market.

Nokia, Panasonic were few mobile companies in this line in introduction stage and they

were charging higher prices.

Growth Phase

In the years 1998 to 2000, there is suddenly an explosion as the rate of mobile phone

subscription increases from 25percent to 74percent. Mobile phones went from being a

minority user group to an essential of life. In this stage mobiles with no antenna was

launched, with better features like games, alarms etc.

37
Saturation / Maturity

In year 2000, mobile phones reached to even the most social and technological element

of society. By 2009, it looks like mobile phone market has reached the peak and

saturation level. In this stage, many touch screen models came up in the market. Lot of

competition within the mobile companies. Dropping of mobile phone prices is taken as

a strategy in this stage. Mobile Phone companies attract buyers in two ways during the

maturity Stage:

 Service: Making mobile phone more affordable will attract buyers to buy more

mobile phones and increase competition between companies to lower service

fee.

 Innovative Phone Style: The new designs and improvement in the physical

appearance of the mobile phones and more add-on features attracts customers to

buy it at a higher rate.

Decline Phase

In this stage old traditional bulky mobile phones have replaced by the new smart

phones. The smart phone started to decline the sale of digital cameras to get

photographs.

1.11 Future of Mobile Phones

From the year 1991 to till now a lot of changes have taken place in mobile phones.

Previously, mobile phones have a statuesque of a person and a costly mean of

communication but now it becomes the main stay in the telecommunication market.

Presently it is the 3G and 4G arena. Mobile phone markets are one of the most turbulent

market environments today due to increased competition and change. Thus, it is of growing

38
concern to look at consumer buying behavior and showering light on the factors that finally

determine consumer choices among different mobile phones.

Although mobile phones have become a fundamental part of personal communication

across the globe during the past ten years, consumer research has devoted little specific

attention to motives and choice underlying the mobile phone buying decision process.

Moreover, it is important to distinguish between buying behavior of customers in their

choice of mobile phones and brands and the buying behavior in their changing of mobile

phones and brands. As the mobile phone market is a typical technology push driven market

where products are created ahead of the recognition of existing recognized consumer needs

(Gerstheimer and Lupp, 2004), mobile phone development is based on consumers‟

possible future needs and thus companies that best hunch the technologies and services of

future will be the leaders in the discipline (Brown, 1991; Hamel and Prahalad, 1991;

Kumar, 1997; Nagel, 2003)

1.11.1 Mobile Industry in India - Forecast, Trends and Opportunities

(2001-2017)

The Indian mobile communications network is the third largest in the world and the

second largest amongst the emerging economies of Asia. Today, it is one of the fastest

growing markets in the world. The mobile communication sector continued to register

significant success during the years and has emerged as one of the key sectors

responsible for India’s resurgent economic growth. However, the market for mobile in

India expanded at the rate of 2percent in 2011 which represents the slowest growth rate

in the past five years. By the year 2016, the market is expected to have a penetration

rate of over 80percent. The market has undergone a substantial change in terms of

mobile versus fixed line mobile and public versus private participation. The preference

for the use of mobile phones has been predominant in the sector. Participation of the

39
private entities in the mobile sector is at increasing rate there by presenting the

enormous growth opportunities. There is a clear distinction between the Global Satellite

Mobile Communication (GSM) and Code Division Multiple Access (CDMA)

technologies used. The dominance of the mobile sector continues to be the detriment of

the traditional fixed-line industry. Rising demand for a wide range of mobile equipment

has provided excellent opportunities to domestic and foreign investors in the

manufacturing sector. The last two years have witnessed many renowned mobile

companies setting up their manufacturing base in India. Ericsson has set up GSM Radio

Base Station manufacturing facility in Jaipur. Elcotel has set up handset manufacturing

facilities in Bangalore. Nokia set up its manufacturing plant in Chennai. LG Electronics

set up plant of manufacturing GSM mobile phones near Pune. A large number of

companies like Alcatel and Cisco have also shown interest in setting up their research

and development centers in India. With the above initiatives, India is expected to be a

manufacturing hub for the mobile equipment industry in the coming years.

Bharti Airtel, BSNL, MTNL, Reliance Communications and Idea Mobile are the top

players in the industry. The mobile sector is a very capital intensive sector and involves

high value investments. Each player is analyzed through a company overview, analysis

of their businesses, a financial analysis and a SWOT analysis. In the analysis of the

mobile industry in India it is analyzed that the industry starting with an overview of the

business conditions in India and the Asia Pacific region for the mobile sector. An

analysis of the mobile sector in India is carried out through the analysis of industry

statistics, the growth in the market, ARPU analysis of this sector, the expansion and

development of the mobile network in the country, the development of 3G and 4G

services in the country, the growing role of mobile content and VAS facilities in the

market and the statistics of the major players in the mobile services sector in India. An

40
outlook for the sector is also included. Major industry vendors and players such as

MTNL, BSNL and Bharti Airtel are analyzed through a company overview, analysis of

their mobile services, analysis of their network, company strategy, company financials

and a SWOT analysis.

Mobile sales in India reached 251 million units in 2013, 13.5 percent rise over 2012

sales of 221 million units. The mobile handset market is expected to show steady

growth through 2016 when end-user sales will surpass 326 million units, according to a

study by Gartner. According to a study conducted by the reputed International Agency

Ovum (Jan 2005) on “The Economic Benefits of Mobile Service in India” the Indian

mobile industry is a major contributor to the socio- economic growth of the country in

terms of employment generation, revenues to the government, GDP growth and rural

development. The Indian mobile phone market is competitive with more than 150

device manufacturers selling devices to consumers. Most of these manufacturers

remain focused on the low-cost feature phone market which still constitutes over 91 per

cent of overall mobile phone sales offering a huge market to compete in. “The increase

in share of smart phone device sales declining sales to first-time buyers and the

continuous focus of global manufacturers on the low-cost feature phone market. Some

of the local and Chinese mobile manufacturers are building capabilities, distribution

and brands as they prepare to compete with the big global players at a larger level

covering broader consumer segments. Manufacturers such as ZTE, Micromax, Karbonn

mobile, Huawei stand at sixth, seventh and twelfth in the Indian smart phone market in

1H12 and are constantly expanding their smart phone portfolio to compete at a larger

level with big global manufacturers Samsung and Nokia, which held the first and

second position respectively.

41
1.12 Scope of Study

The primary aim of study is to examine the comparative buying behavior of consumers

of Ludhiana and Sangrur district towards the purchase of mobile phone. Similarities

and dissimilarities between buying behavior of urban and semi urban areas towards the

purchase of mobile phone have assessed in the research study. Suggestions have made

to the mobile manufacturing companies about innovative marketing strategies as per

the change in tastes and preferences of consumers and their implementation in urban as

well as semi urban markets. On the basis of review of different studies by the experts

various studies has taken on buying behavior of consumers in mobiles and comparative

analysis have performed on the factors (Price, Quality, Style, Look and Brand) for the

purchase of mobile phones. The research is beneficial in finding the various sources of

information used by the consumers. Various factors have been identified and the extent

to which these factors affects the decision making of consumers has analyzed in this

research. This study is beneficial in formulating the marketing strategies to grab market

share by perceiving the consumer’s attitudes towards mobile phones. The findings of

the present research can be used by managers for periodic monitoring of service quality

as perceived by customers. The study area is confined to Sangrur and Ludhiana district

of Punjab.

Concluding Remarks

The motive behind conducting the study on consumer behavior is to demystify the

approach of consumers while making buying decisions. Marketers always show their

keen interest to know the likings and preferences of consumers while visiting shopping

stores and formulate strategies to make products accordingly. In order to cope with

intense competition, marketers can utilize the current information about behavior of

42
their target customers in order to launch a new product or to reposition their existing

product. If companies become successful in understanding the mindset of consumers

and make them buy their products then there would be immense chances for

exponential growth for companies. Consumer behavior field in terms of their needs

and wants as well their perception, attitude and personality including motivation

and their rate of involvement is also vital not only for the marketers but also for the

government and society as a whole. The study of consumer behavior remains a corner

stone to successful marketing strategy.

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20. Walters C. Glenn and Bergiel Vlaise, J. "Consumer Behavior: A Decision

Making Approach." South Western Pub. Co., 1989

Media Reports and Press Release:

1. Cellular Operators Authority of India (COAI), 2005.

2. Telecom Regulatory Authority of India (TRAI).

3. Department of Telecommunication (DoT)

4. Department of Industrial Policy and Promotion (DIPP)

5. National telecom policy, 1999.

6. World telecommunication development report, 2002.

7. Economic Survey, GOI, 2002.

8. Braff Adam, Passmore William, J, and Simpson Michael. “Going the distance

with telecom customers”, The Mckinsey Quarterly, No. 4, Pg. 83, 2003.

9. OECD. “Mobile multiple play; new service pricing and policy implications."

OECD Digital Economy Papers No. 126, 2007.

Website

1. http://www.ibef.org

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