UNIVERSITI MALAYSIA SARAWAK

FACULTY OF ECONOMICS & BUSINESS

CORPORATE MASTER IN BUSINESS ADMINISTRATION

EBA6093 - RESEARCH METHODS AND STATISTICAL ANALYSIS

GROUP ASSIGNMENT:

RESEARCH PROPOSAL

LECTURER: DR. VENUS KHIM-SEN LIEW

PREPARED BY: CLEMENT KHO TCHE WOON (14030213)

LING FUNG MEE (14030163)

S.M. SHAHIDUL ALAM (14030211)

MARJAN SAMOOTY (14030027)

DUE DATE: 30 Nov 2013

Table of Contents:

1. Introduction ____________________________________________________________ 3
1.1. Problem statement ________________________________________________________ 6
1.2. Research Objective ________________________________________________________ 7
1.3. Organization of the study ___________________________________________________ 8

2. Literature review ________________________________________________________ 8

2.1. Introduction _____________________________________________________________ 8
2.2 theoretical framework _______________________________________________________ 11
2.3. Influencing factors _______________________________________________________ 12
2.3.1. Brand ___________________________________________________________________________ 12
2.3.2. Product Features______________________________________________________________ 13
2.3.3. Price ________________________________________________________________________ 16
2.3.4. Social influences ______________________________________________________________ 20

3. Research Design _______________________________________________________ 21

4. Empirical Findings ______________________________________________________ 23
4.3. Hypothesis Testing ______________________________________________________ 23

5. Concluding Remarks ____________________________________________________ 23

6. Reference _____________________________________________________________ 23

TITTLE : FACTORS AFFECTING THE CONSUMER CHOICE OF SMARTPHONE AMONG THE

YOUTH ADULTS IN URBAN AREA OF KUCHING, SARAWAK, MALAYSIA
1. Introduction

Billions of cash were spend by large companies and firm each year for just studying the
behavior of the consumers. For those companies, to get hold of consumer behavior, means to
get hold of sales. Some company even hire researchers to scan human brain just to find out the
behavior of consumers. As studies in consumer behaviour getting deeper, researcher found that
marketer may influence their buying behaviour but not control. (Yakup D etc al, 2011). The
the study of consumer never end due to the reason of technology. Technology like
telecommunication technology is getting more and more modern where the behaviour of
consumer is getting complex as the need of consumer increase as technology increases.

Advancement in the telecommunication technology has made the mobile phones as one of the
necessity of the modern life especially among the youth, world-wide. In recent years, the mobile
phone are no longer an interpersonal communication device, but has evolved into a multimedia
machine known as smartphone (Ting, 2011). Consumers are perceived to be dependent on their
smart phones when they view them as a necessity and have strong propensity for continuous
high usage, being engaged and unwilling to part from them (Tian et al., 2009). Smartphone is
the key gadgets for accessing the mobile internet and powerful new computing devices that
native software applications and capability to connect and run an innumerable of internet-based
services. The wide-spread use of internet, having access on the go to the social networks, news
websites, mobile commerce, and exchanging emails, are on the growing trend and the
smartphones is on higher demands as the right tools for this trend.

Smartphone is not only the trend it is something that can replace the mobile phone to be the key
gadget in the future of mobile phone industry. The trend for replacing normal mobile phones
with smartphones is getting heat up and this trend is pushing the normal mobile phones to the
edge of extinction. Nowadays, young adult more consider the smartphone and they tend to shift
their preferences from a basic phone to a Smartphone. Different young adults have his/her own
taste and need when purchasing a new smartphone. How young adult behave and choose when
purchasing a smartphone can relate to their characteristic. Moreover in other similar researches
it is revealed that there are always curtain factors that affect consumers to behave in curtain
ways and especially when it is time to decide about purchasing, these factors play an important
role. Some heavily influencing quality in this process are being price conscious, brand
conscious, quality conscious, innovation conscious and recreation conscious.(Chow et al, 2012)
There are many other factors that can influence the choice of young adults to use and purchase
Smartphone, however those mentioned have the higher occurrence based on the literature
review section which follows in a later chapter

Background
Smartphone has been one of the trend since the early of 21 century. The emerging of
different operating system in smartphone making smartphone as one of the necessity of life
where it can act as communication device and even can act as a computer. As the sales of
smartphone increase each of the year, manufacturer companies start studying the consumer
that purchase the smartphone or potential smartphone consumer.

Southeast Asia country like Malaysia and Singapore smartphone sales that grow
rapidly is one of the factor that hype up the smartphone sales globally. Sales of Smartphone in
Southeast Asia (SEA) are shown in a research by GFK below in figure 1. In figure 1, the
growth of the smartphone was increasing yearly with the contrast of dropping sales of normal
mobile phone. The sales of smartphone was 12.7 % in year 2010 and rise to 20.5% in 2011
than 25.4% in year 2012 which is a rising of almost 100% in just two year times. In the other
way, mobile phone sales drop form 87.3% in year 2010 to 74.6% in 2012.
 Figure 1: smartphone, mobile phones sales(source: GFK Asia)

Malaysia is one of the top country that contribute to the increasing of smartphone sales.
From one of the research the penetration rate of Malaysia in Southeast Asia achieved 132.93
%, amongst the third highest penetration rate in Southeast Asia region.

Country Penetration Rate (%)

Vietnam 166.76%
Singapore 150.61%
Malaysia 132.93%
Brunei Darussalam 111.77%
Thailand 105.05%
 Indonesia 104.25%
Philippines 85.41%
Laos 61.35%
Cambodia 27.49%
Myanmar 0.92%
Table 1: Penetration rate (%) in South East Asia

In another analysis by Ericsson Consumer Lab in Southeast Asia and Oceania,

Malaysia's smartphone penetration rate has increased to 63% this year from 47% in 2012 (The
sun daily, Sep 2013). Based on the same analysis Todd Ashton, the president of Ericsson for
Malaysia, forecasts even a stronger uptake for smartphone subscriptions in Malaysia to reach
4.5 billion by 2018. Also Malaysian Government is expecting to reach 75% household
broadband penetration by the year 2015. Smartphones are now the more accessible and mobile
devices that can provide easy access to broadband connection. Therefor all the statistics given
will suggest a huge market for the smartphone in the coming years in Malaysia especially
among the youth adults.

The issue to this trend is when the smartphone user are increasing rapidly, the
behavior of smartphone user become more and more unpredictable. This can lead to
confusing in market which can affect the market in ways such as that getting lower expected
sales. Therefore, a survey must be done to know and understand current market condition
especially the behavior of consumer. The method can be using questionnaire to distribute
among the citizens. After the data collection, some analysis also can be made based on the
data collected.

1.1. Problem statement

Despite the facts about the smartphone penetration in Malaysia, surveys that have been
conducted are seemed still less and far between the decent understandings for the consumer’s
preference on smartphone usage. Moreover, previous studies are mostly centering on the usage
of the specific mobile applications and therefore the detailed picture of smartphone users’
preferences in different regions of Malaysia is unclear. Thus the purpose of this study is to focus
on the geographical region of east Malaysia (Sarawak), and in the urban area of its capital city
(Kuching) and try to investigate how the majority of smartphones’ consumer who are mainly
youth adult, choose and decide their smartphone of their preference to purchase which results
in better understanding of the their purchasing behaviour.

Such information is vitally important for both academics and practitioners. From the academic
viewpoint, the overview of the smartphone market in Malaysia provides them a basic principle
where they can further design their research. On the other hands, practitioners such as mobile
phone manufacturers, application developers, and relevant stakeholders or supplier in the
industry would greatly appreciated the information as the information provided used to
strategize their marketing strategies, and plan for the future directions. From the point of
marketing strategy, knowing the consumer behavior and purchasing decision making is a
valuable asset to stand out among the other competitors in the smartphone market.

1.2.Research Objective
Drawn from the issues, the purpose of this study is to better understand the current dynamics
of the Malaysian demand market for smartphone and the consumer purchasing decision
(especially in the region of east Malaysia, Sarawak) . This study has looked into the familiarity
of users towards smartphones, choices of smartphone brand and service providers, and most
importantly the determinants that influence their purchasing decision. Additionally, the
consumers’ preferences on smartphone specifications such as design, computing power,
operating platform, and price were investigated. In short the study tries to investigate “What
are the factors that significantly influence the consumer intention toward purchasing
smartphones.”

Specifically, the purpose of this study can be listed as below:

i. To understand the level of influence of price towards consumers’ decision making in
purchasing smartphone
 ii. To understand the role of product features towards consumers’ decision making in
purchasing smartphone
iii. To understand the impact of different brand name towards consumers’ decision making
in purchasing smartphone
iv. To understand how social influences can affect consumers’ opinion towards decision
making for purchasing smartphone

Also this study tries to understand any special behavior of consumers when purchasing
smartphones (such as responding to in-store marketing)

1.3.Organization of the study

The chapter of study is organized as the follows. First, chapter one provides the
background of study, problem statement, objective of study, and motivation of study and scope
of study for this study in determining the consumer choice in demanding the smartphone among
young adults. Follow by the chapter two which review on theoretical framework on factor
affecting the consumer choice in demand the phone, empirical testing procedure and the
empirical finding on the journal related. While in chapter three, it highlights the conceptual
framework of factor affecting the consumer demand of smartphone and its implication, the
methodology and the sampling design employed where survey by questionnaire and software
of interpretation SPSS are used to identify the dynamic factor in determining the consumer
purchase decision towards smartphone.

2. Literature review

2.1. Introduction
Factor that affect consumer to making decision when purchasing is always an interesting topic
among the researcher. Theories and fact have been created to prove how consumer act and
behave when making decision in purchasing goods. Utility theory which state that consumer
make decision based on the expected outcomes of their decision is the first formal explanation
of consumer decision making developed by Bernoulli. (Michael R, 2005). The theory was based
on consumer with rational act but not all consumer was rational and even one have no consistent
rational. This is heavily influenced by other factors such as environment factors.

Alba, Hutchinson, & Lynch (1991) state that most consumer decisions are necessarily
dependent on memory and thereby range from the purely memory-based to mixed Memory is
something that deep in our brain where it records the life of a person and the experience of a
person. Influence by those records’ experience, memory starts to act and behave differently
either positive or negative naturally. Memory theory affects the brand salience. Brand salience
defines as “the prominence or level of activation of a brand in memory” (Alba and
Chattopadhyay, 1986). When consumer purchasing a goods, he/she actually depends on his/her
own memory, the better the brand salience in the consumer mind, that particular brand will have
a better chance to be purchased. This insists that brand has high influence in the demand of
smartphone market.

Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of the market economy. According to the Law of Demand, demand is the quantity of
a given product that people will be able and willing to purchase at a particular price. As a rule
of thumb, the higher the prices of a certain products, the lower the demand for it will be. The
relationship between price and quantity demanded is known as the demand relationship. The
price therefore is a reflection of demand in terms of the demand law ( Jasuaverdez. 2011).
Theory of materialism is also one of the theory supporting the factor of price. It explains that
the consumer will perceived high value on all luxury product, which including high innovative
or new technology product, because this kinds of products are usually charge at unreasonable
high price (Vitzthum, 1995 ; Lange, 1925). These two theory explains how price act as a major
factor in the market.

Menger (1871), Jevons (1871) and Walras (1874) lay down the basic marginalist framework on
neoclassical consumer demand theory that the economic value depend on the evaluation that
subjects give to its marginal units. Total utility as a cardinal function u(x) of the quantity
consumed of the goods, and marginal utility as the function obtained by differentiating total
utility. In addition, Jevons assumes that marginal utility is a positive and decreasing function.
Marginal utility of the commodity is independent of the quantities consumed of all the others.
Features like touchscreen functionality, Wi-Fi, and location-based services remain in demand,
and software application installation, full programmability, multimedia Presentation, high-
resolution displays and numerous operation system continue to play a significant role in fulfill
the satisfaction of the consumer. Thus, functionality or product features of smartphone will be
important tool to influence the consumer choice. This is due to reason that the consumer will
tend to do the comparison of the product features when making their choices.

Theory of social impact develop by Lante in 1981 shows more and more influence in recent
days. This theory describes social impact in terms of social force fields that impinge upon us,
pushing us to think or behave in a particular way (Jeffrey M J,1987). This influence the
smartphone market as people tend to think smartphone as a better phone and as smartphone
consumer increase it again give consumer without smartphone think that smarthophone is a
better choice.

Based on a previous study investigating consumer behavior towards technological innovative

products, Deeb (2012) investigated that consumer shows different types of behavior because of
attitude, price consciousness, return on investment, functional barriers and some psychological
barriers like norms and traditions (Lars Perner, n.d). Other particularly similar study by Norazah
(2012) on the university students of federal territory of Labuan, Malaysia proved that factors
such as price, device feature and social norms have the highest influence in making decision
for consumers of smartphones.

By supporting of previous researchers’ work and theories, four independent variables of brand,
price, product features and social influence are suggested to be studied which can significantly
influence the demand of the smartphone.
Above all these factors, yet there are other motives for consumer to behave differently when
purchasing a smartphone. In a survey revealed by BDS Marketing in 2012, statistics showed
that 26 percent of smartphone buyers purchased a different brand of phone originally intended
to purchase once at the store. Sean Wargo, Sr. Director of Business Intelligence for BDS says:
“Sales and promotions in the store do have an impact, but so does the associate, making them
a key component of the selling process and an important target for in-store marketing efforts.”

2.2 theoretical framework

This section will present a framework to become theoretical element for empirical analysis to
study. After review the selected article, researchers are provided analysis framework which is
an evolving body of knowledge concerning smartphone behavior has been emerging in the
marketing literature. The common themes conducted through the research to identify the factors
affecting the consumer choice of Smartphone among young adult

This study intends to determine the association between the four independent variables, such as
product features, brand name, price and social influences, and demand of Smartphone among
young adults. With this goal, the following hypotheses are proposed to test:

H1: Brand name significantly influences consumers’ demand for smartphones among young
adults.

H2: Product feature significantly influences consumers’ demand of Smartphone among young
adults.

H3: Product price significantly influences consumers’ demand for smartphones among young
adults.

H4: Social influence significantly affects consumers’ demand for smartphones.

H5: Other special factors of marketing (In-store) marketing can affect consumers’ demand for
smartphones.

The schematic diagram of the suggested hypothesis is depicted as below

 Brand H1

Features H2
Purchasing Intention
H3
of Smartphones
Price
H4
H5
Social Influence

Other factors

( In store- marketing)

2.3. Influencing factors

2.3.1. Brand
A brand is a name, term, sign, symbol or design or combination of them, intended to identify
the goods and service of one seller or group of sellers and to differentiate them from those of
competition which make them more unique (Keller, 2002). When a new product is marketed
under a well-known brand name, marketing cost and failure rates are being cut down.(Martinez
and Pina, 2010) Furthermore, brand name signified a level of quality and consistency
consumers could trust where this can be seen from a few high technology companies like Intel
start to building up the brand name since year 1991 which can result in short term recognition
and long term profit.( Knapman,2012; Ahmed,1991; Maha & Mac Anthony ,2012)

Brands play a very important role in the consumer decision making processes. To purchase a
specific product, customers always follow a sequences of steps in decision making. They start
realizing a requirement of product, get information, identify & evaluate alternative products
and finally decide to purchase a product from a specific brand. When customers purchase
particular brand frequently, he or she uses his or her past experience about that brand product
regarding performance, quality and aesthetic appeal (Keller,2008).
Consumer of smartphone can be really influence by the brand name as when they try to purchase
a new smartphone, a strong clear and nice image of brand can increase the consumer confidence
which lead the consumer in purchasing certain brand smartphone. (Maha & Mac Anthony ,
2012)

H1: Brand name significantly influences consumers’ demand for smartphones among young
adults.

2.3.2. Product Features

Despite the economic downturn, consumer’s thirst for the sophisticated devices and features
continues to grow, and so does the market serving it. In the new research by Frost and Sullivan
(2010), synergies among the mobile operators, internet, media and entertainment players further
support the interest in advanced features and applications.

Product features is hypothesized to have positive impact with the quantity demanded where the
product features with the difference function can give the differences satisfaction to the
consumers. Product features which is important element by the reason of consumers purchase
the goods for expected satisfy their need and achieved their satisfaction level. Neoclassical
school has pointed out the utility function of the consumptions. At the present theories of
Menger (1871), Jevons (1871) and Walras (1874) lays down the basic marginalist framework
on neoclassical consumer demand theory that the economic value depend on the evaluation that
subjects give to its marginal units. Total utility as a cardinal function u(x) of the quantity
consumed of the goods, and marginal utility as the function obtained by differentiating total
utility. In addition, Jevons assumes that marginal utility is a positive and decreasing function.
Marginal utility of the commodity is independent of the quantities consumed of all the others.
Features like touchscreen functionality, Wi-Fi, and location-based services remain in demand,
and software application installation, full programmability, multimedia Presentation, high-
resolution displays and numerous operation system continue to play a significant role in fulfill
the satisfaction of the consumer. Thus, functionality for Smartphone will be important tool to
influence the consumer choice. This is due to reason that the consumer will tend to do the
comparison of the product features when making their choices.
In the previous research, Chow; Chen; Yeow and Wong (2012) used the product features as the
independent variables in their study on the demand of smartphone among the youth adults. In
their study, product features with the difference function can give the differences satisfaction
to the consumers. A product features is an attribute of demand in satisfying the consumer’s
need and wants through the purchasing behavior of product, usage, and consumption of the
products in meeting customer’s satisfaction level (Kotler & Armstrong, 2007). In determining
the choice, design was found to be the most important determinant of consumer response and
product in sales and marketing success (Bloch, 1995; Crilly et al., 2004; Mohd Azam et al.,
2012).

In the modern era, the functionality of Smartphone is an important tool to influence the
consumer choice of buying smart phone. In term of functionality, Oulasvirta et al. (2011) stated
that the numerous phone feature with wireless connectivity, a built-in Web browser, application
installation, full programmability, a file management system, multimedia presentation and
capture, high-resolution displays, several gigabytes of storage and location and movement
sensors. Moreover, Smartphone users more focus on sophisticated operational system of phone
and high camera megapixels function. Besides, the most popular an operation system for mobile
phone in the market are Symbian, RIM Blackberry, Apple iPhone, Windows mobile, Google
Android and Linux (Gowind, 2010).

Based on the differentiation on product features, the consumer tends to do the comparison of
the product features when making their choices. Similarly, each operating system has its own
background and exclusive personalities (Chow et al., 2005). Consumers selected product based
on the attribute which create specific benefit that generate specific feature that are supportive
of personal values (Psyarchik & Wickliffe, 2001). Products with attribute that cause these
factors are chosen based in the importance of combination.

Previous literature on smart phone choice is studied by Heikii et al. (2005) who examined how
much self-knowledge consumers have when choosing between different smart phone brands.
The study was built upon three key attributes (telephone features, connection fee and price),
related to smart phone purchasing consumer had to importance rate. The research showed that
consumers with prior experience about a product and over-estimate the importance of features
can predict their choices relatively well. According to Jainarain (2012), consumers make
comparisons between the competitive brands based on the consumer choice in featuring the
product’s significant attributes. This bring to the light the fact that there is significant
importance of the basic functionality of product in determining the consumer choice of
smartphone, as stated by him, the attributes can be split into tangible such as actual
functionality, new features, appearance. An attribute of product feature require successful
satisfy consumer needs and drive desire for the purchase of the product.

Similarly, a study conducted by Liu (2002) in the Philippines showed that choices of the
smartphone brands are influenced by the new technology features such as SMS-options and
memory capacity, more than size. Due to the fact, findings support that all competing brands
have a almost similar sized phone that are small enough. The choice trend is actually be not
towards the size of the phones, but is towards phone with the better capability and larger screen
(Liu, 2002). Instead of the better capability and large screen, Yun, Han, Hong and Kim (2003)
investigated the look and feel of the fifty different mobile phone using a consumer survey. The
study found out seventy eight participants choose the design of phones on the perceived scale
of image charateristci, including luxuriousness, simplicity, attractiveness, colourfulness,
texture, delicacy, harmonious, salience and overall satisfaction. The main findings of the study
stated the image and impression characteristic of the product is closely specification as well as
the overall shape of the product in demanding the phone. Same study carried out by the Han,
Kim, Yun, Hong and Kim (2004) in a user study of 65 design features to overall statisfaction
and ‘luxuriouness’, ‘attractive’ and ‘harmonious’. They found that a number of design features
contributed, such as phone size and weight, color, material, button shape and interface features
influence the choice of users buying decision.

Product design and features affected the consumer choice of phone strongly supported the
statement in Ling et al. (2006) examined user’s preference levels with five mobile phone design
features namely camera, color screen, voive-activated dialing Internet browsing and wireless
connectivity. The results showed that color screen, voice-activated dialing and internet
browsing feature predict users; satisfaction level. Similarly, Smart phones offer larger and
higher resolution screens and provide consumers with a tremendous array of features, including
mobile web browsing, thousands of applications, e-mail, instant messaging, picture messaging,
video and audio playback, GPS, games, a video camera, picture and video editing and much
more (Goldman, 2010).
H2: Product feature significantly influences consumers’ demand of Smartphone among young
adults.

2.3.3. Price
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of the market economy. According to the Law of Demand, demand is the quantity of
a given product that people will be able and willing to purchase at a particular price. As a rule
of thumb, the higher the prices of a certain products, the lower the demand for it will be. The
relationship between price and quantity demanded is known as the demand relationship. The
price therefore is a reflection of demand in term of the demand law.

According to Kupiec and Revell, Intention to purchase depends on the degree to which
consumers expect the product to satisfy them when they consume it. When consumers want to
make the purchase decision, they will pass through the process through recognition, search
information, evaluation, purchase, feedback. Therefore, the consumer will choose a product or
brand to consume from various choices in the market.

According to Bettman, Johnson and Payne (2000), different situation will be affected by
different factors. Consumer has different tastes, needs, motivation and lifestyle when they want
to purchase a product (Chisnall, 1985). Some of them preferred high quality and willing to pay
high price, some of them are not (Monroe, 2003). Furthermore, the consumer behaviour towards
purchasing a product can be investigating through the consumer characteristics. It include brand
conscious, price conscious, quality conscious, recreation conscious, innovation conscious,
confused by over choice, impulsive and brand (Leo, Bennett, and Hartel, 2005). Therefore, it is
important to study the factors that affect consumer’s decision towards buying a Smartphone.
The variables under investigation in this study include product features, brand name, price and
social influences. Materialism have some level of impact on peoples live and also relate with
wellbeing, people are happy when they possession of certain luxury product, thus they use all
the ways to pursuing them. People who are strong in materialistic are integrated with desires
and goals to attain wealth in order to processions of certain luxury products that impress others
and also can gain some sense of social recognition (Tim, 2002; Yusuf & Abdullah, 2003 ).
Theory of materialism explain the consumer will perceived high value on all luxury product,
which including high innovative or new technology product, because this kinds of products are
usually charge at unreasonable high price (Vitzthum, 1995 ; Lange, 1925).

Moreover, smartphone may affect the purchase intention of consumer, but it must charge at
abnormal high price. As an example, the luxury product like smartphone will become a normal
good or even an inferior good, if the purchasing power of overall consumers increased, which
mean that everyone can possess the smartphone, thus it no longer can be the badges of social
status (Moser & J.D, 1995; Jee Han, Joseph, & Xavier, 2010).

Price is only one of the several costs faced by consumers. Other purchase related costs include
the time spent shopping, displacement costs, emotional costs. However, price is the cost that
shoppers can best determine, and thus plays an important role in their decision. For example,
in a recent study of shoppers selection of an outlet at which to make a purchase, price was
consistently stated as a major influencing factor (GfK, Shopping Monitor 2000). Such a finding
is consistent with the feelings of retailers themselves, who indicate price is an important
selection criterion for shoppers (Ag·rdi and Bauer, 2000). Clearly, interviewing shoppers
definitely brings in some subjectivism, and while it is possible that shoppers actually do feel
that price is the top priority, they are not guaranteed to act accordingly in a real decision
situation. On the other hand, there have been suggestions that we overestimate shoppers price
awareness as well as the number of shoppers who actively seek price information, and
respond to promotions (Urbany et al., 1996). Research conducted by Urbany and Dickson
(2000) based on a representative sample of both retailers and shoppers providing an estimate
concerning price awareness and sensitivity in terms of actual level and the level assumed by
managers, suggests that retailers greatly overestimated the number of shoppers who actively
search for price information.

An important and complex area of research is whether sales increases resulting from promotions
really originate from purchases by shoppers won over from other shops and not from extra
expenditure by store loyal shoppers. Answering this question is important for retailers as a
conventional focus for such campaigns has clearly been to win over shoppers, and to promote
store-switching behaviour. One related area of research has concentrated on in-store price
awareness, seeking to ascertain the extent to which shoppers can recall the price of the products
they purchased. Much research attention has been devoted to this question because
reference price theory is based primarily on the idea that shoppers set a certain price for
themselves on the basis of their shopping experience (external reference price). This price is
used as a benchmark during their further shopping, and they decide on that basis whether they
should buy something at a given price or not (Winer, 1986). Summarising in-store price recall
research (Dickson and Sawyer, 1990; Le Boutillier et al., 1994; Vanhuele and Dreze, 2002;
Estelami and Lehmann 2001), it Price knowledge is not high even seconds after selecting the
product, with research such as that of Dickson and Sawyerís (1985) indicating only between
54% and 60% of the shoppers look at the price tag at all. It appears that, once shoppers turn
their attention to another product, they forget the price of the item just purchased. This may
explain why price knowledge immediately after the selection is higher than upon asking the
same question at the cash desk. Among those who, while not knowing the exact or even the
approximate price, adopted a subjective reference price, a higher number of shoppers can
properly recall whether the given product is more expensive, cheaper, or of equal price than the
general price of the category. Price awareness has also been found to vary from one shopper
group to the other. Certain demographic groups such as women, married persons, elderly people
and home workers are more liable to search for, and use, price information consciously
(Zeithaml, 1985).

Dickson and Sawyer (1990) noted that shoppers giving price estimates made mistakes of such
magnitude that the difference compared to the actual price was greater in the majority of the
cases than the price spread of products within the same category. That is, shoppers did not only
demonstrate poor price recall, the price they gave was lower or higher than the price of any
product in the category. Even when a product was being promoted, only 50% of the shoppers
remembered correctly, and could recall whether they had purchased a special priced product.
This leads one to question the effectiveness of promotions. One implication is that it may be in
the shared interest of both retailers and manufacturers to spend more on in-store POP materials
than on the (price) promotion itself. The tendency to overestimate the reduction in price
suggests that it is the special price status itself that is the attraction for shoppers. Thus there
may well be a minimum rate of reduction that makes shoppers evaluate the offer as being a
good bargain. It is easily apparent that many special price tags only really offer a very small
price reduction. In the course of our interviews, shoppers not infrequently reported negative
feelings with regards promotions that were simply a ëbaití. Thus, while clearly exists shoppers
who are sensitive to promotion will buy anything that is labelled special-priced.
Smartphone’s demand is increasing gradually nowadays in worldwide and this demand is
affected by a lot of factors. Price is one of those factors, which affects the purchase intention of
consumers directly. Price makes consumers think should they get this specific product, or a
similar product for a cheaper price. It has a positive impact on behavioral intentions. Price is
one tangible cue from which consumers form expectations. If we look at the Smartphone’s
market, we find the price of the different Smartphone varies differently. Some are expensive
and some are cheap. There is an active relation between price and consumers satisfaction.
Consumers tend to pay a higher price for a product if they are satisfied with that. Furthermore,
sometimes they buy high priced Smartphone to demonstrate their social status. The level of
price is found to positively affect behavioral intentions mainly because price establishes image
of the brand in the eyes of the consumers. In a consumer’s heuristics, a high price connotes a
high quality and image. For a conceptual convenience, there are two types of products by price:
high-priced brands and low priced brands (Kunal et al., 2010). High-priced brands such as
iPhone are brands on the market whose image is seen as the key factor. Consumers of these
brands often purchase them mainly for image and are willing to pay a premium price for their
perceived high quality and status, which make them price-inelastic. Low-priced brands tend to
be purchased for utilitarian value, with the consumer relying on the perceived value for price.
Consumers would typically look for low prices of these brands or substitutes to get the best
value (Kunal et al., 2010). Consumers tend to interpret higher prices with higher quality, and
low prices are perceived as an indication of inferior quality.

According to Thaler (1985), there is more than couple of brand of mobile phone that consumer
will find in today’s market, this will most likely influence the consumers’ indicator on the
pricing that being sold. Price is no longer an element that can be ignored for investigation
whether or not it is a crucial factor that affects consumer’s behavior in products and services.
Recently, most of the consumers are pursuing a high quality services, though service is an
important factor, yet the unwillingness of consumers to pay for obtaining a higher level of
service by sacrificing an extra amount can still be seen.

Several previous research on the relation between independent variable PRICE and dependent
variable PURCHASE INTENTION OF YOUNG ADULTS show that Purchase intention tends
to be reduced when the actual price on products is higher than acceptable price range (Dodds
W. B., 1991) and If the price is lower than acceptable price range seriously, consumers are lack
of confidence towards the products quality (Peter, 1969). But except these theories, if we
examine the purchase intention of Smartphone among young adults, we find that there is a
positve relationship between price and purchase intention and the relationship is getting
stronger day by day. For example, young lads go for the higher priced smartphone rather than
choosing a cheap one because Smartphone is just not a product for communication to them
anymore but also a product which they consider a part of their fasion. Even if the price is high,
they tend to buy it because they think it is a matter of pride having a expensive smartphone.
Smartphone is becoming a luxury product just like other luxury goods.

H3: Product price significantly influences consumers’ demand for smartphones among young
adults.

2.3.4. Social influences

Social learning theory talks about how both environmental and cognitive factors interact to
influence human learning and behavior. It focuses on the learning that occurs within a social
context. It considers that people learn from one another, including such concepts as
observational learning, imitation, and modeling (Abbott, 2007). This theory originally evolved
from behaviorism but sometimes called social cognitive learning. The theory suggests that
learning is influenced by psychological factors and is based on responses to environmental
stimuli. On the other hand theory of social impact states that factors such as strength (how
important the influencing group of people are), and immediacy (how close the group are, in
terms of space and time) heavily influence on the likelihood that a person will respond to social
influence. The effect is most powerful when everyone in the group (apart from the person being
persuaded) clearly agrees.

For innovative products (such as smartphones), informational sources such as past experiences,
suggestions from family and friends, can have the important role in purchasing decision.
(Deeb,2012) The literature generally shows that adoption of (primarily) mobile phones has
significant benefits not just to the adopter, but to the community at large.(Harsh, 2011)
Cultural differences also play a role in adoption of smartphones. A prior study by university of
Taiwan, comparing the adoption rate and the type of usage between 2 different nation of Asian
and Americans shows that the more differences between the views and needs of a society, the
usage, demand, and the rate of adoption will differ respectively.
Another investigation among the young users of Blackberry smartphones in Indonesia
(Heryiati,2011) reveals how some social influences such as word of mouth (as some example
of stimuli of the environment for the consumers) were successful in a boom of users for using
blackberry smartphones and showing interest toward special brand with special specifications.
Many users of smartphones especially the younger ones admit that their first attempt to become
the smartphone holders was under the influence of friends and classmates. In the research
among students demand for smartphone in Labuan province in east Malaysia (Norazah, 2013)
Results via multiple regression analysis revealed that social needs and social influences
significantly affect students’ dependence on smart phones.
Forbes magazine (Parmy Olson, 2012) mentions statistics of a research by Nileson, that 48%
of American children below the age 12 have the Apple’s iPad as number one in their wish list
for gifts. The growing trend , among the Apple users in the US is another indicator that how
impact of other member of their society resulting in the need and demand for that particular
product.

H4: Social influence significantly affects consumers’ demand for smartphones.

2.4 Research Design or Testing Procedures

2.5 concluding remark

3. Research Design
Research Design or Testing Procedures

From all the literature review, questionnaire seems to be the most common method used by the
researcher. (Mohd Azam, Maziani, Azlan, & Tan, 2011; Chow, Chen, Yeow, & Wong, 2012;
Norazah Mohd Suki, 2013)Self-completion questionnaire are widely use in most of the research
field, it is a cost effective way to collect data and it help people to express their feeling
completely without feeling any pressure.( Strange V, 2003). Moreover, most of the literature
reviewed use scale method to measure the variable in their studies.

Norazah Mohd Suki,2013 used a self-completion survey to collect data for their studies. This
approach similar to other researcher such as Mohd Azam, Maziani, Azlan, & Tan, 2011and
Chow, Chen, Yeow, & Wong, 2012. In the study conducted, 400 questionnaire were disctrubute
among the student from pre-screened university students studying at the pubic higher learning
institution in Federal Territory of Labuan, Malaysia who has smartphone or used a smartphone
before. Form the 400 questionnaire distribute, only 320 set of data are usable to proceed to the
next stage which is 80% of the total questionnaire distributed. The questionnaire consist of three
section which is section A, B and C. section A contain the demographic profile of respondent
such as age, gender and so on. Section B consist of questions that ask respondent of their
experience of using smartphone. section C will be the question related to the factor that affect
the demand of smartphone. The questionnaire in the studies used 17 item to measure the
independent variable and 5 question to measure the dependant variable by using a 5 point likert
scale method ranging from 1 strongly disagree and 5 strongly agree.

Mohd Azam, Maziani, Azlan, & Tan, 2011 used the similar method to collect data they data
collet are wider. They tend to collect data from online and offline survey. And the respondant
data mostly collected from the main city of Malaysia. They data collected is not restricted to
any category as long it is Malaysian. A total of 1814 set of data are collected. Hence, they use
sampling method.

Chow, Chen, Yeow, & Wong, 2012 conduct their data collection almost similar to Noraizah
where the only difference will the target respondent will be the undergraduate and post graduate
students who were between 17 to 25 years old with 300 students targeted at Multimedia
University, Melaka. 41 set of questionnaire data were collected. A total of 22 item are in the
questionnaire of 3 section A,B and C here the likert scale also used ranging from 1 strongly
disagree to 5 strongly agree.
4. Empirical Findings
4.3. Hypothesis Testing

5. Concluding Remarks

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