Anil Surendra Modi School Of Commerce

A STUDY ON CONSUMER BEHAVIOUR FOR

iPHONES

FACULTY IN CHARGE : Dr. Samir Ul Hassan

COURSE : BBA
DIVISION : J
ACADEMIC YEAR : 2023 - 2024

SUBMITTED BY :
Raashi Gupta - J042
Raghav Kanodia - J043
Rashi Lakhotia - J044
Riddhima Dadheech - J045
Rishit Kataria - J046
 ACKNOWLEDGEMENT

This project would not have been possible without the kind support
and help of many individuals of NMIMS University, Mumbai. We would
like to extend our sincere thanks to all of them.

We are highly indebted to Mr. Samir ul Hassan, our Professor, for his
guidance, constant supervision which was essential for completing the
project.

We owe our thanks to our parents & every member of NMIMS

University, Mumbai for their kind co-operation and encouragement
which helped us in completion of this project.

Thanks are also due to our friends who helped us from time to time with
unconditional support.

INDEX

Sr. No. Topic Page No.

1. Introduction 1
2. Description and Relevance 2
3. Methodology 3
4. Market Analysis 11
5. Conclusion 20
6. Bibliography 21
 INTRODUCTION
The world of electronics has constantly been changing, however the one significant
gem that has been able to capture a huge market share and make its way through
the top have been Apple’s iPhones. The iphones were first launched by Apple in the
year 2007.
In this project, we have analysed the consumer behaviour with respect to iPhones
and taken into consideration several factors that exercise an impact on the
consumer while they make their decision whether or not to purchase an iPhone.
These factors include price, the consumer’s overall perception of iPhones, the
aspects that they look for while buying an iphone as well as the various
smartphones that they consider to be substitutes of iPhones. To analyse the same,
we conducted a survey with a sample size of 52 respondents.

The analysis was based on several concepts of microeconomics that include :

1) The law of demand : The law of demand was used to derive the demand curve
that is a graphical representation of the relationship between the price of iphones
and the quantity demanded of iphones.

2) Price elasticity of demand : Price elasticity of demand is nothing but the ratio of
the percentage change in quantity demanded of a product to the percentage change
in price.

3) Income elasticity of demand : Income elasticity is calculated by dividing the

percentage change in quantity required by the percentage change in income.

4) Consumer’s Surplus : It is the benefit that the consumer derives from

participating in the market and competing with various other buyers.

5) Consumer Behaviour : It is the series of actions and decisions that a consumer

makes while selecting and purchasing a particular commodity in the market.

6) The law of Supply : The law of supply was used to derive an assumed supply
curve. The law of supply states that there exists a direct relationship between Price
and Quantity Supplied. At a higher price, the quantity supplied will be higher and
vice versa.
DESCRIPTION AND RELEVANCE OF THE PRODUCT

The iPhone is a reputed and well known smartphone that has been
designed as well as developed by Apple Inc. Not only are Apple’s
iPhones one of the most popular smartphones but they also offer a wide
range of features including sleek designs, robust models, constant
innovation and high security features. If we go into further detail, A high -
resolution touch screen display accompanied by a powerful A - series
processor contribute towards the incredible performance of iPhones.
Moreover, A very well known feature of Apple’s iPhones has been their
high quality camera system. In addition, the iPhone has constantly been
focusing towards technological innovation. Apple is constantly pushing
the boundaries of what is possible with smartphones, and the iPhone has
been responsible for many groundbreaking features, such as the
multi-touch display, the App Store, and Face ID. Owing to Apple’s large
scale operations, the manufacturing, retail as well as software
development of iPhones also offers jobs to many individuals around the
globe.

The relevance of the product lies in the fact that iPhones are an iconic
example of how constant innovation and improvement in technology
shape the preferences of consumers. iPhones serve as a lens through
which we can examine various economic concepts such as supply and
demand, elasticity, taxation, subsidies, and price controls. By applying
these concepts to a product as universally recognized as iPhones, We
can understand the application of various microeconomic concepts with
ease as well as clarity. Lastly, the constantly evolving nature of the
iPhone market, with new models and features being released regularly
accompanied by innovative software updates presents an ever-changing
landscape for economic analysis. This ensures that our project remains
relevant and engaging, allowing us to explore not only historical market
trends but also current market dynamics.
METHODOLOGY OF THE ANALYSIS :

MARKET DEMAND FOR IPHONES

iPhones have a high market

demand. iPhone users account
for 21.67% of the world’s entire
smartphone using population. If
we talk about the last decade ,
the number of iphone users in
2013 was just 329 million ,
implying a 44276.9% increase
in the number of users.

CONSUMER AWARENESS ABOUT IPHONES

iPhones in general also have high consumer awareness. 100% of the

individuals who took our survey had heard of iPhones, irrespective of the
fact if they had used it or not. iPhones have an image of being high priced
and therefore to a certain extent are considered luxury items. Consumer
awareness is extremely important to Apple as it forms a huge part of its
marketing and advertising strategy.

CONSUMER AWARENESS ABOUT COMPETITIVE BRANDS

Substitute goods or Substitutes are products or services which are similar

to each other and can be used in place of one another. In the world of
smartphones, the iPhone has some pretty close competitors .The largest
one of them being samsung. Apple and Samsung together dominate the
market of the smartphone industry owning a combined share of 52.61%.
They have been dominating this industry since 2013. Samsung and
Apple have been swapping places for the lead in the smartphone industry
over the past few years.
CONSUMER SURPLUS

Consumer Surplus refers to the area under the demand curve and above
the equilibrium price. In simple words, it is the benefit that the consumer
receives by participating in the market.When a consumer participates in
the market they know how much they are willing to pay for a product.
Hence, consumer surplus is the amount a consumer is willing to pay - the
price that he actually pays for the product.

Cases Buyer’s willingness to pay Market Price Consumer Surplus

1. 40,000 40,000 0

2. 60,000 40,000 20,000

3. 80,000 40,000 40,000

4. 40,000 60,000 NO SURPLUS

5. 60,000 60,000 0

6. 80,000 60,000 20,000

7. 40,000 80,000 NO SURPLUS

8. 60,000 80,000 NO SURPLUS

9. 80,000 80,000 0

Consumer Surplus on the graph is the area under the demand curve and
above the Equilibrium point
DEMAND CURVE

The Demand Curve for a particular commodity represents the quantity

demanded by consumers at various prices.
Price (in Rs.) Quantity Demanded
40,000 52
60,000 48
80,000 34
1,00,000 11
1,20,000 3

The following demand curve depicts the data collected through the
survey:

PRICE ELASTICITY OF DEMAND

Price elasticity of demand shows the change in quantity demanded of a

product in respect to a change in its price.
Price elasticity of demand = % change in quantity demanded
% change in price
There are 5 types of elasticity:
1. Perfectly Inelastic : It refers to that elasticity where a significant
change in price leads to no change in quantity demanded.Here, the
elasticity is 0.
2. Relatively Inelastic: It refers to that elasticity where the change in
price is greater than the relative change in quantity demanded.
Here, the elasticity lies between 0 and 1.
3. Unitary Elastic: It refers to that elasticity where the change in price
is equal to the relative change in quantity demanded. Here, the
elasticity is equal to
4. Relatively elastic: It refers to that elasticity where the change in
price is lesser than the relative change in quantity demanded. Here,
the elasticity is greater than 1.
5. Perfectly Elastic: It refers to that elasticity where no change in price
leads to a significant change in quantity demanded. Here, the
elasticity is infinite.

Price (in Rs.) Quantity Demanded Price Elasticity of

Demand
40,000 52 -
60,000 48 -0.15
80,000 34 -0.87
1,00,000 11 -2.70
1,20,000 3 -3.63

Here, we can observe that the good has a relatively inelastic demand at
lower prices. As the price keeps increasing, the elasticity changes from
relatively inelastic to relatively elastic. Also, the negative sign depicts the
inverse relationship between price and quantity demanded. This is due to
the law of demand.
CONSUMER BEHAVIOUR

The behaviour of consumers plays a major role in Apple’s marketing

strategies and the overall success of the company. People don't just
purchase iPhones because they appreciate the hardware but because
they are integrated into an ecosystem of software and services that offer
additional capabilities if one continues to invest in that ecosystem.

Following factors influence consumer behaviour:

1. Indifference Curve Map: It represents all the combinations of a

market basket where a consumer derives either same satisfaction,
higher satisfaction or lower satisfaction.
The following indifference curve map shows the possible combinations
of iPhones and Samsung phones that a consumer is indifferent to:

● The consumer is indifferent

between consuming 3 iPhones
and 2 Samsung phones, or 2
iPhones and 3 Samsung phones
(both points are on the same
indifference curve labelled
"IC1"). The consumer would
prefer to consume 4 iPhones
and 3 Samsung phones (on a
higher indifference curve “IC2”)
over either of the previous combinations.

● The slope of an indifference curve represents the marginal rate of

substitution (MRS) of one good for the other. The MRS is the rate at
which the consumer is willing to give up one good in order to get one
more unit of the other good. If the MRS of iPhones for Samsung
phones is 1:2, this means that the consumer is willing to give up 1
iPhone in order to get 2 Samsung phones.
 ● The study of indifference curve and MRS helps us better understand
the consumer behaviour as a consumer will choose the combination
of goods that lies on the highest indifference curve within their
budget.

2. Income: Typically, iPhone users tend to have higher incomes. Based

on our survey we found that 36.5% of the respondents had an annual
family income exceeding 5,000,000 Rs.

3. Price: The iPhone is a premium product and its high price point may
create a barrier for some customers. However, many iPhone users are
willing to pay more for the brand's quality and features. In fact, from our
survey data, 65.4% of users mentioned their willingness to spend over
60,000 Rs on their iPhone.

● The relationship between the price

and consumer behaviour can be
displayed with the help of the Price
Consumption Curve. The price
consumption curve notes all utility
maximising combinations of goods
when the price of a good changes.
● The price consumption curve of iphones is downward sloping
indicating that the two goods (Samsung and iphone) are substitutes.

4. Features

5. Brand Loyalty

6. Product quality

7. Status symbol

8. Social pressure
MARKET STRUCTURE
The iPhone industry operates under an oligopoly market structure, where a
small number of sellers compete with each other.

Key statistics for the smartphone market in 2022:

· Total number of smartphones sold: 1.3 billion units

· Revenue generated by the global smartphone market: $450 billion

· Average price of a smartphone: $300

Oligopolistic characteristics of the industry:

● Limited number of sellers

● Non price competition
● Product Differentiation
● Barriers to entry
● Interdependence

DERIVATION OF SUPPLY FOR iPHONES :

The supply curve for iPhones shows the relationship between the price of
iPhones and the quantity of iPhones that sellers are willing to sell at that
price. This is an assumed supply schedule. Since iPhones are a luxury
good , their supply curve will be upward sloping.

SUPPLY SCHEDULE:

PRICE QUANTITY SUPPLIED

45000 0
100000 100
EQUILIBRIUM:

(This is an assumed and hypothetical

equilibrium)

The equilibrium price and quantity in

the iPhone market are determined by
the intersection of demand and supply
curves. When the quantity demanded
equals the quantity supplied, the
market is said to be in equilibrium.
Changes in demand or supply can lead to shifts in the equilibrium price
and quantity.

The equilibrium price is 80,000 Rs and the equilibrium quantity is 34

iPhones. The supply-demand ratio has been in equilibrium since the sale
of the first models.

FACTORS AFFECTING THE DEMAND

● PRICE
● INCOME
● PRICE OF SUBSTITUTE GOODS
● PRICE OF COMPLEMENTARY GOODS
● EXPECTATIONS ABOUT FUTURE PRICES
● ADVERTISEMENT
● TASTES, HABITS AND FASHION

FACTORS AFFECTING THE SUPPLY :

● PRICE
● STATE OF TECHNOLOGY
● COST OF PRODUCTION
● INFRASTRUCTURAL FACILITY
● GOVERNMENT POLICY
● FUTURE EXPECTATIONS ABOUT PRICES
FINDINGS OF THE MARKET ANALYSIS :

CONSUMER PROFILE :

Out of the 52 people who filled the survey, 59.6% were between the ages of 18-30,
26.9 % of the people were below 18 years of age, 7.7 % were between the ages of
31 - 45 and 5.8 % were above 45 years of age.

69.2% of the people who filled the survey were females and 30.8% were males.
Out of all the people who took the survey, 79.6 % of the people were Students,
15.4% were employed, 5.8 % were homemakers and 1.9% were retired. Hence, the
majority of the survey takers were students.

Out of all the 52 respondents, 36.5% had an annual family income of Rs 50,00,000
and above, followed by 30.8% having Rs.10,00,000 - 30,00,000 as their annual
family income. 23.1% had an annual family income of Rs. 30,00,000 - 50,00,000
while the remaining 9.6% had an annual family income below Rs.10,00,000. As
iPhones are usually high priced , it seems valid that most of the survey takers that
have used an iPhone have an annual family income of more than 30,00,000.
MARKET ANALYSIS

Out of 52 people who took the survey, 44 people had used iPhones before
whereas 11 of them had never used iPhones before. This reveals how well
established Apple is as a brand and also speaks volumes about Apple’s popularity
in the market. Clearly, there exists a market for Apple’s iPhones with high demand.

Out of the 11 people who had never used iphones before, 57.1% had a desire to
purchase an iphone in the future and 42.9% had no such desire. Majority of the
people who do not have an iPhone now have a desire to purchase it in the future,
this shows that the iPhone is not a commodity that is easily available to everyone,
this can be explained through the high prices of Apple’s iPhones. They are usually
priced above 60,000 thereby many individuals are limited because of their budget
constraint. Also, the “desire” to purchase in the future shows that iPhones are a
luxury commodity.
Half of the total respondents wish to upgrade their iPhone once every 2-3 years.
25% switch their iPhone once every 4-5 years. 12.5% upgrade their iPhone every
year. The remaining 12.5% upgrade it after more than 5 years. This shows that
Apple constantly innovates and keeps rolling out new features which attract people
to buy the newer versions. It is a general notion that newer models of iPhones are
better suitable status symbols compared to older models of iPhones.

According to our survey, 82.7% of iPhone customers believe that owning an iPhone
is a status symbol. Many people buy iPhones because they want to conform to
societal expectations. This reveals that the iPhone is a luxury good. It is associated
with success, wealth, and sophistication.
On being asked about their overall perception of iPhones, the majority (38.5%) of
the people gave it a rating of 4 out of 5, Followed by 28.8% of the people rating it 5
out of 5. Perception involves their experience with the product as well as how they
feel about the product even if they have not used it before. The positive response
can be justified by Apple's constant innovation in their products. They offer the best
consumer experience by providing a user-friendly interface. Apple has also been
able to create a high brand loyalty because of this.

Majority of the respondents are influenced by price and the camera quality with
63.5% and 67.3% respectively. 50% of people's decisions are also affected by the
performance of the phone. 48.1% and 40.4% people consider brand reputation and
colour respectively while making their decision. Design and specific features affect
32.7% and 34.6% respondents respectively. Unexpectedly, price is only considered
by 63.5% people which makes the commodity relatively inelastic. The major drivers
are camera quality and performance. Brand Reputation also majorly influences the
decision of consumers. This is because iPhones are considered to be a status
symbol.
Out of the 52 people who answered our survey, 42 of them knew and believe that
Samsung is a strong competitor to the iPhone. Samsung is followed by Oneplus,
Google Pixel, Oppo, and Xiaomi in the line of competitors. Apple and Samsung
together dominate the market of the smartphone industry owning a combined share
of 52.61%.Through, analysing the survey we can state that Samsung and iPhone
are closely related substitutes.

Majority of the people who took the survey did not think the iPhones offer value for
money. The reason underneath is that people are able to purchase smartphones at
around 20,000 which offers almost all necessary facilities. This is also a
commentary on the diamond water paradox. Irrespective of iPhones not offering
value for money and being high priced, consumers still purchase them. The reason
is because iPhones are a luxury commodity, they offer their consumers a sense of
superiority. However 36.5% of the people did believe that iPhones offer value for
money, they recognise all the features and services that iPhones offer.
About 44.2% of the people who took the survey are willing to pay 60,000 to 80,000
for an iPhone, followed by 26.9% of them willing to pay 40,000 - 60,000. Generally ,
the people who are willing 60,000 to 80,000 will be able to find iPhones in their
desired price range. On the other hand , people valuing iPhones between 40,000 -
60,000 might not be able to obtain iPhones. About 5.8% are also willing to pay more
than 1,00,000. This shows the brand loyalty of the consumers towards apple.

According to the survey 80.8% users would recommend an iphone to someone

else. This reveals that Apple enjoys high levels of customer loyalty and strong
network effects. As more individuals adopt iPhones the value of the platform
increases. The strong brand loyalty of iPhone customers has allowed Apple to
maintain high prices for its products.
30.8% of survey respondents accepted facing some difficulty when buying an
iPhone. Long lines outside Apple stores on launch day is a classic example of
consumer excitement and anticipation for a new iPhone model. This reveals that the
iPhone is a very highly demanded product. This shows the adequate supply of
iPhones in the market.
CONCLUSION :
As we wrap up our study, we observe that consumer behaviour with respect to
iPhones is influenced by a series of factors. There are various microeconomic
principles that intertwine to form a consumer’s decision. These principles include
The law of demand, The law of supply, Price elasticity of demand, Income elasticity
of demand, Consumer’s surplus and Consumer behaviour.

The overall conclusion that we derive from the market survey is as follows :

● With respect to the consumer profile, the majority of the survey takers were
aged between 18 to 30. They were mostly students. The annual family income
of most of the people who took the survey was above Rs.30,00,000.
● Most of the people owned an iPhone or had used an iPhone in the past.
● Out of the people who had not used an iPhone ever, most of them had a
desire to purchase it in the future.
● About 50% of the people stated that they purchase a new iPhone every 2-3
years.
● More than 80% of the people felt that iPhones are a status symbol.
● The overall perception of iPhones was observed to be positive with most
people rating it as 4 out of 5 as well as 5 out of 5.
● Camera quality, price, performance and brand reputation are the four most
important determinants that influence the consumer’s decision to purchase an
iPhone.
● Most people believe that Samsung and OnePlus are true competitors of
iPhones and can be considered to be substitutes of iPhones.
● 33 out of 52 people believe that iPhones do not offer value for money.
● 65.4% of the survey takers are willing to pay Rs.60,000 or more for an iPhone.
● 80.8% of the people have a positive opinion on iPhones and thus are willing to
recommend it to others.
● 69.2% of people have not faced the challenge of low supply or high demand.
Through this project, we conclude that iPhones are an item of luxury. This is proven
by the fact that even though iPhones do not offer value for money to the majority of
consumers, they are still willing to pay 60,000 or above for the product. They are
viewed as a status symbol by many because of the high prices charged by Apple.
They provide their owner a sense of superiority. At higher prices, iPhones are
relatively elastic, hence they display properties of a luxury good. Apple's branding,
innovative product features, and carefully crafted advertising campaigns have
contributed to the iPhone's immense popularity and premium positioning in the
market.
 BIBLIOGRAPHY:

● https://forms.gle/gYvMXnRf8xD82Rik8 (The link to the survey that

we created for the project)
● “Microeconomics Eighth Edition” by, Robert S. Pindyck and Daniel L.
Rubenfield
● “Principles of Microeconomics Eighth Edition” by, N. Gregory
Mankiw

CONTRIBUTION :
There was equal and fair contribution by each of the team members.