Abstract
This paper basically examines the factors that impact the purchasing decision of a Smartphone buyer in India. India is one of the world’s fastest growing economies in the world, and Smartphone market is growing at a very fast pace as nowadays smartphones have entered both into our personal and business life. This research is to analyze the internal and external factors affecting the purchasing behavior of the consumer. The research will also throw some light on price factor. Initial problem structuring involves the Stakeholder analyses, Behavior over Time graph and Causal loops. Then a Literature review is done related to different researches already done in this field. Then an approach is decided of what Research methodology will be carried out and the sequence in which primary data collection will be done. This study will help companies in their marketing techniques of how they should carry out different campaigns and target which aspect of Consumers.
Introduction
The increasing trend in Smartphone among the people is the main reason that has amplified the interest to research on the topic. People’s obsession about the Smartphone has been increasing rapidly. The aim of this research is therefore to find out consumer behaviour of Smartphone buyers in Indian Market. The research is trying to find out that why do people desire to purchase a smartphone, what influence people in purchasing a smartphone and what motivate them in making the purchase decision.
Different consumers have different characteristics in their life that also influences their buying behavior. Social factors such as family, groups, roles and status) and personal factors (such as age, occupation, lifestyle, personality and self-concept) are those characteristics that could influence the buyer behavior in making final decision.
Nowadays cheaper smart phones are also available in the market. But why people buy expensive smartphones? Price, quality, brand, country of origin, marketing, sales, word of mouth etc. could be several factors that a consumer may think before buying a Smartphone. How much does brand of smartphone affect the buying decision of a customer? As there are various types of smartphones available in market with varying price; what is the difference between them? And how they impact the customer buying decision?
This research also aims on the marketing strategy of the smartphone companies to influence the buying behavior of customer. These strategies include Promotional campaigns, Tie-Ups with network carrier etc.
PROBLEM STRUCTURING
The area of study is Consumer Behavior towards smartphones industry in India. As Smartphones are becoming an integral part of our life and we cannot imagine a day without them, this effort is being made in order to find out the tangible and intangible factors affecting the purchasing decision of the consumer.
1. Stakeholder’s Analysis
Stakeholder Map
Before buying any Smartphone, a consumer goes through a series of Decision making steps in which first of all a need is recognized, then Information search is made, after that different alternatives are evaluated and then finally a purchase decision is made. Stakeholders involved during the purchase of Smartphone can be External, Internal, Social. Other stakeholders may involve price, features offered by the smartphone, its brand equity and brand awareness. Internal Stakeholders will involve Perception, Learning, Motives, Personality, Emotions and Attitudes. External Stakeholdes may include Culture, Demographics, Social status, Reference groups, Family and different marketing Activities.
Stakeholder Chart
2. Behavior Over Time Graph
3. CAUSAL LOOP
There were a lot of observations that were made during this research. There are a lot of factors which affect an individual’s preference to buy a smartphone. As pointed out earlier in Stakeholders map that there are numerous stakeholders involved, factors which are responsible for attractiveness of this sector is shown in Causal Loop. If the Attractiveness of any sector increases, it will increase the Number of competitors involved which as a result will decrease the market share of various players and then they will be forced to decrease the Price of their products in order to remain competitive which will drive their profits down. Hence, decrease in revenues which will negatively affect the Attractiveness of that sector, hence, it is a Balacing loop. In the other loop, some other factors are listed down. As market share of competitors decrease, Competition between them will increase which will force down their risk taking ability and as a result decrease the level of technology they are using in their products, this will result in decrease in their Quality. As Quality will decrease tendency to buy Smartphone will decrease which in the end will decrease the Attractiveness of segment.
LITERATURE REVIEW
Existing Literature:
Smartphone market can mainly be divided into two segments named as camera group in which people consider camera performance as comparatively important. The second group can be named as performance and outer image group in which people consider smartphone performance, such as integration of hardware and software and file transfer and display and the outer image that a smartphone carries, such as design and brand image are very important. Regarding purchase decision, the discriminant function is visible only in the case of Apple and, in order of effectiveness: design, integration of hardware and software, file transfer and display, price of the phone, camera, and brand image factors affect people’s smartphone buying decision.
This study took a look at Branding with a new perspective and driven out two implications. The first is that Marketing managers should always try to focus on Brand Loyalty which always acts as one of the important factors contributing towards Brand Equity. Brand loyalty has various advantages associated with it like: holding the existing customer base, exploring the new customer base market, increasing the market share, supporting brand extensions and strengthening Brand as compared to the competitors. The other important factors in this context are Brand awareness and Perceived Loyalty. The second implication is that Brand Equity must be studied further taking into account cross-country and cross-cultural effects into account so that new insights about Brand Equity can be used in future.
As per IDC India, the golden formula for success in smartphone industry in India is to have a sub $200 smartphone with large display screen and dual-sim slot. Local brands have realized the importance of this much earlier than global brands. Local brands like Micromax and Karbonn were very quick to realize this trend and as a result more than half of the smartphone market have been captured by local vendors. This is also because of shifting customer base from feature phones to smartphones in India. Though tier one brands would continue to have their own fixed set of customers who are Brand loyal, who prefer Quality over Price and who rely on better after-sales service. There is still a big chunk of customers who still prefer low cost smartphones and the main factor contributing to their pricing decision is Price. Local vendors have their own advantages as there is low R&D cost , low industrial designing and less research required for software updates.
This study brought out that how consumers’ psychologiocal factors(Motivation, Perception and Attitude) are associated with Brand Equity (Brand Loyalty, Brand Association and Perceived Quality). The reason that urge or motivate people to purchase gadgets is to help themselves to be up to date. They consider battery life time as one the important factors while deciding to buy any gadget. Their attitudes are shaped by the family members who are also many a time a stakeholder in the purchasing decision. Consumers’ perception are shaped by newspaper readings, online reviews given by various expert websites and also to compare between more than one gadget.
This study was basically conducted in order to judge consumer behavior in case discounts are offered to them. Commodity used in this study can be generalized to Eletronics components also. In this study two experiments are conducted to find out the Framing Effect on the consumers’ perception. Here the discounts are offered in two ways one in absolute terms i.e. the currency being referred and in percentage terms. The case is repeated in case of both low and high discounts. It was found that in case of high discounts, Consumers are more attracted towards the discounts shown in terms of percentage than in absolute terms, and in case of low discounts, consumers preferred those discounts which are offered in absolute terms rather than in terms of percentage. Alongwith discounts, perceived quality also plays a major role because consumers sometimes start making some assumptions regarding the quality of the product offered. In this case, some other factors like expectations and past experience must be taken into consideration.
This study was basically done to provide a conceptual framework in order to develop brand strategy and to study brand equity. This paper provides a comprehensive idea of how marketers can create value for a brand. Marketers may agree that they should take a broad and long term view of marketing decisions for a brand, but in what way may not be obvious. By realizing that marketing activity can potentially enhance or maintain consumers’ awareness of the brand or the favourability, strength, and uniqueness of various types of brand associations, the customer based brand equity framework may provide the perspective that will enable marketers to take better short and long term marketing decisions.
Research Objective
To study the effect of different factors which affects the Consumer Behavior towards smartphones in India.
Research Questions
1. What are the effects of Culture, Social status and marketing activities have on purchasing behavior in Indian market?
2. How does attitude and perceptions affect consumer behavior towards smartphone in India?
3. What are the effects of cost and featuers of smartphones while purchasing it?
4. What is the efect of the brand on the consumer while purchasing a smartphone?
Research Methodology
Literature Review
First part of the research will consist of literature reviews in which various researches that have been done before in this area will be considered.
Doing a literature review will help in analyzing and pointing out that among a lot of factors that are involved while purchasing smartphones what are the factors which are most significant.
Secondary data collection
After that Secondary data collection will be done in which some surveys which have been conducted earlier regarding the same topic will looked upon. Syndicate resources of secondary data include surveys which may be periodic surveys, panel surveys, shared surveys or maybe psychographics and lifestyles related will be able to provide a good insight. Syndicate resources also include Purchase and Media Panels and also Electronic Scanner devices.
Focus group Interviews
First of all we need to divide the Customers of Smartphones into diferent segments. The segments will be based on earlier use of any smartphone, based on use patterns(people who are extensive Internet users, people who mainly use their phone for calling purpose only) and people acording to whom price is one the major criteria(low-segment, mid-segment and high segment).
i. Customers who do not possess a Phone
ii. Customers who possess a Feature Phone not a Smartphone
iii. Customers who use Internet extensively
iv. Customers who mainly use phones mainly for calling purpose
v. Customers who have earlier purchased low segment smartphones and are price sensitive
From these interviews, customer perceptions and their implicit interests can be tapped. The atmosphere should be very informal so that the participants freely express their opinions and the insights obtained could be tested on a larger scale in the questionnaire. Some observation studies can also be done to gauge the interests of people while identifying with products. During these Interviews the effectiveness of Brand will also be checked as Brand forms a very important part during decision making process.
Questionnaire Preparation and Survey
A Questionnaire need to be prepared which can take information from the respondents in an appropriate, simple and cost-effective manner. The type of questions in a questionnaire can be divided into three parts: fact, opinion and motives. The Questionnaire can be send via-emal or can be uploaded on a facebook page in order to cover as much as possible. This can also be filled using representatives near digital shops like Reliance Digital, MobileStore,etc.
Some sample questions:
1. Do you own a Smartphone?
2. Would you like to switch to a different brand with additional features?
3. How much are you willing to pay for a Smartphone:
‘ 5000-10000
‘ 10001-15000
‘ 15001-20000
‘ 20001-25000
‘ 25001-30000
‘ 30000 and above
4. You will prefer a Smartphone of Local manufacturer, a Multi national firm or it does not matter?
5. Select the degree of influence these factors have in your purchasing decision of a Smartphone[Rate between 1-7]
‘ Family and Friends
‘ Price
‘ Quality and Features
‘ Festive Season
‘ After Sales Service
‘ Operating System
‘ Brand Name
6. Age:
‘ 18-24
‘ 25-30
‘ 31-40
‘ Above 40
7. Occupation:
‘ Student
‘ Employee
‘ Self-employed
‘ Government
Depth Interviews with Customers
The purpose of depth interviews would be to uncover hidden preferences of the consumers so that they can be tapped. Also as they last longer, the time consuming parts such as conjoint analysis data collection can also be done in this type of primary data collection method.
Significance of the Study
Smartphones have changed the way we live, communicate and connect with people around us. With just a touch we can surf through internet, we can stay up to date about news all over the world, we can check weather news, we can reach anyplace using GPS, we can book hotels and flights, we can order online any commodity whenever required using just a Smartphone. Various Social networking websites can be accessed using Smartphones, you can also check reviews of several eating places like using zomato. This case study basically looks into the factors that play major role during the purchasing process of a Smartphone. As the Smartphone market in India shrank for the first time in October-December quarter of 2014, firms need to rethink their strategies and how to expand their market and hold onto the existing market.
Limitations of the Study
‘ Sample chosen for this Research may not be the exact representation of the entire population.
‘ Research is done on limited number of people for practical reasons.
‘ This whole process which involves Focus group interviews, Depth interviews, Questionnaires and Surveys will take a lot of time.
‘ There can be some bias that may develop based on Researcher’s own preferences.
‘ Research is not done separately for rural and Urban market.
‘ Secondary data is limited because Smartphone market of our country is changing day by day making these secondary researches obsolete.
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