Consumer Behavior Literature Review

INTRODUCTION:

Profile of students: 2014 was the year, which saw an increasing number of students of XLRI batch, belonged to Generation Z. The current students are the ones who were born into a digital world and they find it difficult remembering a time without the Internet, laptops and most importantly mobile phones. Also, they are used to process huge amounts of information using high speed Internet. Since this generation has spend an increasing amount of time interacting on social media than rest others, large amount of information which they receive is through others, which at times is not without personal bias.

Some of the other qualities attributable to them are listed in the picture below:

Given the limited income (owing to zero or 1-2 years of work experience), price is a key factor when students select their prospective alternatives of phones. Therefore, mid-range handsets are more popular in this segment instead of the high end ones.

Mobile market and Brands in India:

Some of the important headline facts ands figures related to mobile phone market in India: Around 200 Million units of feature phones were sold in India during 2013 Smartphones registered the fastest retail volume growth of 172% during 2013, with sales reaching 44 Million phones.

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Launch of affordable smartphones has decreased the increase in sales of feature phones. Mobile phones are expected to register retail volume growth of CAGR 9% with sales reaching 39 million units by 2018

Growth in the category and market share and its variance in last five years is given in the table below:

QUALITATIVE RESEARCH

India is a booming market for mobile phone industry.

As per the report from IPSOS Consulting, Mobile subscribers grew from 2 million in 2000 to 939 million in 2012. Due to plethora of options available in the market, customers get to choose the right product for them as per their needs. In order to understand the factors considered by a potential customer while making the buying decision in depth interview was conducted with people who bought mobile phone recently and the people with prior work experience in mobile manufacturing companies as described in Annexure1 Variables Identification

The variable of our study are reasons for purchasing, criteria of mobile purchase, major information source, Demographic and Psychographic characteristic of mobile buyer across brands, satisfaction of the mobile purchase across brands, barriers to buying mobiles students face, awareness about mobile models, money spent on mobile in a year by students. The following table presents the details of variables of our study.

Variable

Parameter
Reason for purchasing
Calling, feeling connected, convenience
Criteria of mobile purchase
Price, sim slots, gaming ease, camera, screen size, warranty, graphic, processor, RAM, OS,storage Source of information
Friends, shopkeepers, blogs, e-commerce websites
factors influencing the purchase
discount offers, EMI,exchange offers, festivals, gifts, sales promotions
Demographic and psychographic characteristics
Of mobile buyers across brands
Prior work experience, gender, specialization
Satisfaction of mobile across brands
Brand loyalty, recommendation to others
Barriers to buying
Availability, time, inconvenience
Awareness about mobile models
Based on gender, used source of information
Money spent on mobile in a year
Average expenditure, frequency of purchase, number of phones used at a time

Annexure-A (Details of In-depth Interview)

Objective of In-depth Interview
Identify the reasons for a new purchase
To understand the factors affecting the buying decision
To understand the role of WOM and other sources of information in making the final decision
Identify the essential features in the mobile phone bought
Identify the desired features in the mobile phone

Screening Questions
Purchased a mobile phone after coming to XLRI
Or worked for a mobile manufacturing firm before coming to XLRI Introduction of Awareness
Name, Home town
Sources of information
Behavior
Influence of various source of information
Relevant Attitude and Value
Activity
Aspirational Value
Conclusion
What are the main reasons for buying a particular phone?

Literature Review

Studies on consumer behavior regard consumers as key determinants of organizational success and it has been found that the most successful organizations are those that are customer-centered (Blackwell, Miniard, & Engel, 2006). It is a study of decision-making process of buyers whether they are individuals or a group to understand their demand. For companies it is very important to understand consumer behavior so that they can identify their requirements and cater to their expectations from the product or service. It is only then they will be able to capture their target market and maintain their market share. Dorsch, Grove and Darden (2002) in their research on customer choice of mobile phone found that from the perspective of marketing consumer’s purchase process can be classified into a five step problem solving process such as: need recognition, information search, given alternatives evaluation, purchase activity and post purchase evaluation When buying a product a lot of interpersonal and social factors are involved and so is the case for mobile phones.

A study by Karjaluoto et al. (2005) on analyzing factors affecting decision making process for buying mobile phones in Finland, classified the factors into seven categories: innovative services, multimedia, design, brand and basic properties, outside influence, price and reliability. The authors also found from the two studies that while technical problems were the basic reason to change mobile phone among students; price, brand, interface, and properties were the most influential factors affecting the actual choice between brands. Liu (2002) conducted a similar study focused on decisions regarding brand for the mobile phones in Asia, found that the choice of a mobile phone is characterized by two attitudes towards brands: attitudes towards the mobile phone brand and attitudes towards the network.

Largely new features affect customers’ choice of mobile phone brand than its size. This trend of choosing is definitely towards phones with better capacity and larger screens. It can also be seen that the current trend is seeing a shift in the mobile phone industry from second-generation mobile phones to third generation. Factors like Internet access and MMS services etc are also impacting consumer-buying behavior. In another study, Riquelme (2001) studied the amount of self-knowledge consumers have when choosing between mobile phone brands. It was built upon six key attributes (telephone features, connection fee, access cost, mobile to mobile phone rates, call rates and free rates). The research showed that consumers with prior knowledge were able to predict their choices relatively well but customers tended to overestimate the importance of features, call rates and underestimate the importance of monthly access fee, mobile to mobile phones rate and connection fee.

References:

1. Blackwell, R. J., Miniard, P. W., & Engel, J. F. (2006). Consumer behavior (10th Ed.) Cincinnati, Orlando: Harcourt College Publishers. South Western-Thomson Learning. 2. Karjaluoto, H., Karvonen, J., Kesti, M., Koivumaki, T., Manninen, M., Pakola, J., Ristola, A., & Salo, J. (2005). Factors Affecting Consumer Choice of Mobile Phones: Two Studies from Finland. Journal of Euromarketing, 14(3), 59–82. 3. Liu, CM (2002). The
effects of promotional activities on brand decision in the cellular telephone industry, The Journal of Product & Brand Management, vol. 11, no. 1, pp. 42-51. 4. Dorsch, MJ, Grove, SJ and Darden, WR (2000). Consumer intentions to use service category, Journal of Services Marketing, vol. 14, no. 2, pp. 92-118. 5. Riquelme, H. (2001). Do consumers know what they want? Journal of Consumer marketing 18(5), 437-448