- Task One: The Nature of the Buyer Behaviour Process
The mobile phone market has become a very competitive market. Therefore, mobile phone manufacturers have come up with various mechanisms of providing an added value for their customers. One of the ways that manufacturers have used to enhance increased value for customers is development of new technologies, e.g. the health apps for Samsung and Windows for Nokia. These features mean a lot for the customer, and influence their buying decision. The buying behaviour for B2B and B2C are influenced by various factors, and it involves a process of several steps. Marketers target their customers according to their response to the market. They identify the market influences that encourage customers to make buying decisions, and then develop new and unique ways of meeting their needs (Poulos, 2001).
Purchase Decision Making Process
The marketers of mobile phones need to understand the factors involved in the customer’s purchase decision-making process. The purchase decision-making process involves several steps: identifying a need, searching for information, evaluating alternatives, deciding to purchase, and evaluation following purchase (Du et al, 2007). Mobile phone marketers should provided added value and meet customer needs at each step of the purchase decision-making of the customers.
Step 1: Identifying a need
For a B2C purchase decision making, the customer identifies the need that meets his or her personal needs. On the other hand, the process of identifying needs involves the determination of the benefits of the product or service to the business (Poulos, 2001). For example, a single consumer in a B2C scenario may identify the need for a game app in mobile phones, while a business in a B2B scenario may identify the need for a collaborative app to be used in conferencing and collaborations within the organisation.
Step 2: Searching for Information
B2B and B2C customers search for different information about products and services. Marketers should understand what customers are looking for in order to communicate the right message to different classes of customers (Cheverton & Velde, 2011). For example, B2C buyers look for information about durability, price, product features, colour and shape. In this case, marketers may advertise their products by passing the message that their products come in different sizes, colours and shape; they last for a long time; they have plenty of entertainment apps; and they are cheap. On the other hand, B2B buyers may be concerned about the apps, delivery, warranty and the brand of manufacturers. In this case, the marketers may concentrate in communicating their brand, mission and performance; they may also indicate that the phones are delivered to the customers’ premises, and they come with a one-year warranty.
Step 3: Evaluating Alternatives
After identifying their needs and getting enough information in the market, customers evaluate alternatives based on their needs and information about the sellers. In this case, mobile phone marketers need to provide the best reasons why they should be chosen as the best mobile phone manufacturers. For B2B buyers, manufacturers may argue that they are committed to long-term mutual relationship between the supplier and the buyer. For a B2C buyer, the seller may argue that they offer products with the best features.
Step 4: Deciding to Purchase
When the customer decides to purchase, the seller should provide the customer with good customer service, e.g. free delivery for businesses, and courtesy for individual consumers. Treating the customers appropriately when they make a purchase will motivate them to come back again (Cheverton & Velde, 2011). For B2C, the customer should be welcomed to the premises, shown around, spoken to courteously, and told “thank you” and “welcome again” when they are leaving.
Step 5: Evaluation after purchase
When the customers have made purchase, markets need to evaluate the level of satisfaction of the customer (Du & Rousseau, 2003). For both B2C and B2B, customer survey is an effective tool for evaluation. In this case, the customer is told to fill a simple survey to rate the products and services offered to them.
Factors that Affect Buyer Behaviour
In the current mobile phone market, sellers should consider the motivations and emotions that encourage consumers’ buying patterns, the purchase decision process of the customers, and benefits derived by the customers. There are three factors that determine how customers rate different products: personal, psychological and social factors.
Personal factors include age, education, health status, marital status, and gender. For example, ladies may prefer different colours of mobile phones than men. In terms of age, young people prefer mobile phones that have entertainment apps while older people prefer more professional apps. Psychological factors include personality, attitudes, lifestyles, and interests. These are used mainly for B2C buyers because psychological factors are different for different individuals. For example, when selling a mobile phone the seller should consider the attitude of the buyer towards certain types of applications. Social factors such as friends, families, values, culture, and role models influence the buying decisions of both B2C buyers and B2B buyers. The culture within an organization determines what suppliers can sell to them. For example, a company that is characterized with continuous communication across all departments requires effective and efficient internet and collaborative tools for its mobile phones.
The most important factor that consumers are concerned about is the benefits derived from the product; especially for B2B buyers. Buyers of mobile phones are not motivated by the looks of mobile phones but by the purpose they serve, that is why leading manufacturers such as Samsung have come up with applications that benefit consumers e.g. the health application.
The buying decisions of the consumer may also be influenced by the urgency, riskiness, regularity, affordability, and importance of the purchase. If the purchase of a mobile phone is urgent, for example when a previous one has been stolen and an individual is waiting for an urgent business call, the individual will be motivated to purchase a new mobile phone. If the mobile phone has been bought regularly in the past, the customer will not have making a purchase decision. In terms of risk, some mobile phones may be risky because they may be fragile and can be destroyed easily. In such a case, the buyer will not be in a rush to make a purchase decision. The importance of a product also matters a lot when making a buying decision. For example, if a customer wants to buy a second mobile phone, the importance of buying it is low. In this case, the buyer will not give great attention to the purchase decision.
The urgency of purchase influences both B2C’s and B2B’s buying decisions. However, the urgency of using mobile phones is higher for B2B than B2C because businesses may have urgent dealings with customers which may affect the businesses if they are not handled urgently (Du & Rousseau, 2003). If the current phones in the company are out of order, mobile phones are the most suitable in case of such urgency. In terms of risk, mobile phones may be more risky to individual consumers than businesses; hence risk is an important factor in determining the buying decisions of buyers in B2C than B2B. Furthermore, purchase is more regular for B2Cs than B2Bs; hence regularity of purchase affects individual customers than businesses in their buying decisions. B2C’s buying decisions are more influenced by availability of funds than B2B’s buying decisions because businesses can secure funds more easily than individual consumers.
Theories of Buyer Behaviour
There are various studies that have come up with theories of buyer behaviour. The first theory is the theory of dimensions of buyer behaviour. The three dimensions of buyer behaviour are: the uni-variate model, the multi-variate model, and the systems of equations model. The uni-variate model is a simple method in which a behavioural determinant is allowed to determine the relationship between a stimulus and its response. The multi-variate model is a reduced form method that utilizes several independent variables as the determinants of buyer behaviour. Lastly, the systems equation model involves several functional relations that interact in a complex system. The functional relations include either uni-variate or multi-variate relations.
Buyer behaviour in relation to mobile phones can be explained using the three dimensions. In terms of multi-variate model, the buying decision for a mobile is influenced by several independent variables including risk, importance, affordability, urgency and regularity. The uni-variate model suggests that only one of these factors may be used as a determinant of buyer behaviour.
The AIUAPR model suggests several steps that are involved in the marketing process: Awareness, interest, understanding, attitudes, purchase, and repeat purchase (Sherlekar & Sherlekar, 2010). In terms of awareness, customers need to be aware about a product or service before they decide whether to buy it or not. For example, Samsung’s mobile phones may not be bought if the customers are not aware of their existence, no matter how powerful the brand is. Apart from being aware, the customer also needs to develop an interest in a product before he or she buys it. For example, if a potential buyer is not interested in mobile phones, he or she may not buy a Samsung phone despite being aware of its existence. The customer must also understand the importance of the product in order to buy it. Attitudes of the buyer may be influenced by the manufacturer using proper advertising and promotion. For example, an advert of Samsung should be persuasive in order to enhance a positive attitude for the customers. As a result of the advertising, a real purchase should be made in order to complete the purchase decision process. Repeat purchase then shows that the customer is satisfied with the product.
- Task 2: Research
a) Size and Key Trends of the Mobile Phone Market
The mobile phone market has grown significantly in size over the past few years. The number of mobile phone users in the world increased from zero in 1983 to over 7 billion in 2014. The total of over 7 billion mobile phones mean that there are nearly the same number of mobile phones as people in the world, but that does not certainly mean that everyone owns a mobile phone. Therefore, there are people with more than one mobile phone handset due to the different ways they are used. Some mobile phones are used at home while others are used at work. Furthermore, different mobile phones can be used for different duties at work.
According to Epstein (2013), the global mobile phone shipments increased from 6% in the second quarter of 2013. The amount of global shipments increased from 428.8 million units on the first quarter of 2013 to 432.1 units in the second quarter. IDC predicted that the number of shipments would increase to about 1.8 billion by the end of 2014 (IDC, 2013). This figure is also expected to rise to about 2.3 billion by 2017. In terms of market share, Samsung commands the largest market share followed by Nokia and Apple respectively.
Global Share of mobile phone vendors (Statisca, 2014)
From the figure above, Samsung illustrated an increasing market share from the first quarter of 2010 to the first quarter of 2014. In 2010, Nokia enjoyed the largest market share of 34.7% while Samsung had a market share of 20.7%. However, Samsung improved to take the leading position in the first quarter of 2014 with 24.3% market share while Nokia dropped to the second position with only 11.3% market share. In the second quarter, the leading position of Samsung was strengthened as its market share improved to 26.2% of the global market. Nokia’s market share was 14.1% in the second quarter of 2014. Between 2012 and 2013, Apple sold 31.2 million iPhones to maintain its third position in terms of market share. Its percentage market share increased from 6.4% to 7.2 percent within the same year. By the first quarter of 2014, Apple’s market share had risen to 9.7%. In terms of shipments, Samsung shipped the largest amount of mobile phones in the second quarter of 2013. According to IDC (2013), Samsung shipped 107 million mobile phones followed by Nokia which shipped 61.1 million. In the third position was Apple which shipped 31.2 million mobile phones.
The main reason why the market size of mobile phones has increased significantly is due to the rise of demand of value-oriented consumers. Smartphones have become the major sellers in the market with Android taking the largest share of 1.3 billion shipments in 2014. The Samsung’s Galaxy series are some of the most preferred options in the market. With increasing competition in the Mobile Phone market, vendors produce new platforms with new technologies from time to time. For instance, Samsung produced Galaxy Alpha and Galaxy Note 4 recently. Its health application has also attracted value-oriented consumers.
b) Competitor Analysis
The mobile phone industry is one of the most competitive industries in the world. The competition within the industry is caused by the vendors’ focus on customer-value oriented demand. Mobile phone customers are very many, and they are all motivated by the value and benefits derived from the use of the devices. Competitors therefore compete on the basis of customer-oriented value, including the introduction of new features and technologies that meet the changing demand of customers in the market. For example, the demand for 3G and 4G models in Africa and Asia has encouraged the increase of mobile phone handset shipments among various manufacturers. Some of the leading competitors in the mobile phone industry are: Samsung, Nokia, Apple, LG and Huawei. The chart below shows the approximate market shares of these vendors in the first quarter of 2014.
Samsung
Samsung shipped 113 million phones in the first quarter of 2014, claiming approximately 28% of the total market share. The company is an innovator. However, the company’s growth has been slowed down by competition by Chinese manufacturers. One of the opportunities of Samsung is that there is a great potential for the Green Handset Initiative which enables the manufacturer to produce environmentally friendly mobile phones in future. The rural markets of Africa and Asia with an increasing demand also offer an opportunity for the company to expand its markets because it offers its mobile devices to such low-end markets.
One of the advantages or strengths that have caused the company’s leading position against competitors is its production of many different types of phones which meet different consumer needs. The company offers several Galaxy series including Galaxy Note, Galaxy Camera and Galaxy Gear. It also offers Smartphones, tablets, mobile accessories and basic mobile phones. Furthermore, Samsung offers various applications to meet customer needs including internet, radio, health apps, games, etc. Its unique offers are boosted by innovation and improved technology that is unrivaled in the market. The third strength of the company is that its products are reliable. The main weakness of the company is that it offers its products at relatively high prices compared to its close competitors including Nokia, Huawei and others.
Nokia
The recent acquisition of Nokia by Microsoft provides an opportunity for the company to improve its market share through enhanced modification and innovation. Nokia is one of the market leaders, and it was the leading until 2013 when Samsung took over as the leading mobile phone seller. Nokia targets trendy young people and professionals. For example, the recently released Nokia Lumia Windows Phone targets professionals and trendy people with specific demand for value-oriented products.
In terms of strengths, Nokia has a strong brand position. The company also has a strong distribution network across the world, utilizing local distributors in all the countries where it operates its business. In terms of weaknesses, Nokia is slow to adopt new technologies and is not easy to cope with the accelerating pace of innovation adopted by competitors. It mainly focuses on traditional way of doing things.
One of the major opportunities of Nokia is the Green Handset Initiative that is common in mobile phone industry, whereby companies focus on developing environmentally friendly handsets. The increasing demand for 3G and 4G models in the world also offers an opportunity for the company to expand. One of the main threats of the company is competitive rivalry. Samsung already overtook it as the market leader, and Apple is set to overtake it if it does not step-up its innovations. iPhone offers a real threat to Nokia’s traditional mobile handsets. The rise of Chinese mobile phone manufacturers also offers competitive rivalry to the company.
LG
LG is a South Korean Multinational Corporation with presence in several regions including Asia, Middle East, Europe, North America and South America. The company employs about 87,000 executives and employees across the world. LG is positioned in the CDMA market and the GSM market. The company provides high-quality features such as MP3 music player, high memory and clear camera. LG is one of the market leaders.
LG has advantages in terms of its features and applications. For instance, the Knock Code application developed in 2014 helps consumers to protect their Smartphones through their safe screen locks. LG’s strength is also clear in its marketing strategies. The company uses attractive and convincing commercials, e.g. the four commercials that show how Knock Code can protect one’s Smartphone. This convinces consumers that their handsets are safe of they buy from LG. One of the main opportunities for the company is the growing middle income classes in Asia and Africa which offers it a market growth potential. The growing technological potential of South Korea also enables the company to come up with new technologies to fight competition. The main threat of the company is competitive rivalry from companies such as Samsung, Nokia and Apple.
Apple
Apple is a US-based multinational corporation dealing with mobile devices including Mac, iPhone, iPad and iPod. The company enjoys the third position in the world in terms of market share. The main strength of Apple is its unique and unrivaled innovation. The iPhone, iPod and iPad mobile devices are unique and inimitable. The company has also developed the iTune innovation which allows consumers to share and enjoy music, movies and TV series in their mobile devices. The company also has a dedicated team of experts who offer effective human resources and capabilities to build the company. The main weakness of the company is that it has a small range of products compared to other market leaders such as Samsung and Nokia.
In terms of opportunities, the company can expand its iTunes due to the increasing demand of entertainment services by the young people. Furthermore, the company can take advantage of Green Handset Initiative which may enable the company to improve the demand of its unique products. The main threat of the company is competitive rivalry from companies such as Nokia and Samsung.
Huawei
Huawei mobile phones are designed by the Huawei Technologies, a German based information and technologies company. The Ascend series are the main innovations of the company, including Ascend Mate7, Ascend G7, Ascend P6, Ascend P2, etc. The company is a follower, and its offerings are almost similar to those of Samsung. In terms of strengths, Huawei is sensitive to changing technologies, and it has adapted to such changes to improve its offerings in the market. The company also has a strong research and development team to enable the company to adapt to changing technologies. The main weakness of Huawei is that it has not established a wide range of products to meet the different needs of consumers.
Huawei’s opportunity is the future focus on 5G as the demand for improved models increases. The company may edge out competition by providing effective 5G to do away with the 3G and 4G models. The main threat of the company is the economic crisis that is affecting Europe. Countries of Europe including Germany are still struggling with their economies, and this affects the purchasing power of potential consumers.
- Task 3: Market Research Planning
a) Market Research Plan
Marketing research plan for mobile phones helps the researcher to establish market niche and identify customer needs that have not been met. It is also an important way of determining how customers perceive the products of a company against those of competitors (Hague, 2002). It enables the entrepreneur to determine whether to enter the market, launch a new product, promote the current brand, optimize marketing campaign, or improve customer service.
Research Problem and Research Questions
This marketing research plan focuses on what consumers find deliver the most in terms of customer usage and satisfaction. In this case, the marketing research addresses customer satisfaction, and what factors drive customer satisfaction. The marketing research enables the business to develop appropriate marketing strategies, services and products that can deliver the most value for the customer in terms of usage and satisfaction. The research questions include:
- What are the factors that influence customer satisfaction?
- How can customers be served in order to satisfy them?
- What are the customers’ perceptions about mobile phones?
- What is the importance of customer satisfaction in mobile phone markets?
Design and execution of Customer Satisfaction Survey
In order to get relevant information needed to answer the research questions, it is important to use a customer satisfaction survey. The research technique to be used in this marketing research is interviews. This involves a questionnaire addressed to customers who are required to answer specific questions about their perception of customer satisfaction (Hayes, 2008). A sample of 75 mobile phone customers will be given a questionnaire with interview questions to answer. The answers to the questionnaire will then be collected and analysed. A simple questionnaire is attached in the appendix for this purpose. The research also utilizes a random sampling technique in which customers seen buying from different vendors are selected and interviewed randomly (Stone et al, 2004).
In terms of execution, the researcher will visit customers at their shopping areas and request them to participate in the survey. During the interview, eye contact is retained to get the feelings and facial expressions of the customer (Hague, 2002). The researcher should also be attentive and always smiling and nodding. Furthermore, the interviewees should be allowed to communicate during the interview. Listening is also a good skill for effective interview. Most of the questions are open-ended to allow the customers to express their feelings and attitudes freely.
Research Technique
This method of research to be used is known as qualitative research. This involves the identification of customer feelings and motivation in order to get information (Hayes, 1998). The level of customer satisfaction in this case is measured in terms of values, perceptions, attitudes and beliefs of the customers.
Analysis
The data collected can then be analysed using tables and pie charts. In this case, the variables include customer service, brand position, product quality, after sale service, benefits and level of customer satisfaction (Hayes, 2008). Customer satisfaction is a dependent variable and the other variables are independent variables. A pie chart is illustrated below.
The pie chart indicates that product quality drives customer satisfaction in the mobile phone market because most respondents argue that they look for quality of the product in order to be satisfied. This is followed by the benefits offered by the company and then the customer service, brand position and after-sales service of the vendors.
Recommendations
- Mobile phone vendors should improve their brand position in order to enhance brand loyalty and encourage repeat purchase
- The vendors should also improve the product quality in order to increase customer satisfaction.
- They should also provide effective customer service in order to improve customer satisfaction.
- Vendors need to provide good after-sales services such as repair and maintenance, and delivery of products.
b) Relationship between brand loyalty and repeat purchase
From the survey, the researcher asks whether the customers come back to buy from the same vendor on renewal. The number of customers answering with “Yes” determines the number of customers with repeat purchase. The repeat purchase is usually associated with brand loyalty. So the customer should be asked whether he/she is loyal to a specific company. Most of the customers who are loyal to a specific brand usually come back to buy from the same vendor through repeat purchase (Czerniawski & Maloney, 1999).
Brand loyalty is the faithfulness of customers to a specific brand, expressed through repeat purchase (Czerniawski & Maloney, 1999). One of the major reasons why customers come back for the same product on renewal is because they are satisfied with the first product. If the customer is satisfied with the benefits and product features of the first mobile phone, then they are likely buy the same type of mobile phone repeatedly on renewal. Brand loyalty can also be achieved by companies by successfully breaking the habit of the consumer. For example, if the customer habitually buys a smartphone with Android software, a company can break this habit by producing a Windows phone with more benefits than the Android phone. Another thing that drives repeat purchase is the provision of an optimum product (Czerniawski & Maloney, 1999). If a mobile phone is offered at the right price and the required quality, the customer will demonstrate brand loyalty through repeat purchase. Brand loyalty can be achieved by understanding the perceived customer value, brand trust by customers, level of customer satisfaction, repeat purchase behaviour and customer commitment.
c) Evaluation of the Research Plan
This research plan has used a customer survey questionnaire to determine the drivers of customer satisfaction among mobile phone users. The research plan tested the impact of certain factors on customer satisfaction. Such variables include brand position, after sales service, customer service, benefits and product quality. Product quality was found to be the leading factor determining customer satisfaction.
The research method adopted is a qualitative method involving primary sources. The advantage of this method is that it is suitable for customer satisfaction because customer satisfaction is mainly measured by values, attitudes and beliefs rather than numerical figures. The primary sources are also advantageous because it is possible to get information directly from the customers; hence it is easy to read their feelings and attitudes. The disadvantage of this method is that it is not easy to measure data objectively.
The random sampling method used is an appropriate one because it ensures that any type of customer can be interviewed; male or female, low-end or high-end, young or old, etc. The method also ensures that the answers to the questions are randomly distributed for more reliable outcome (Brace, 2008). The sample size of 75 customers is easy to manage for this research, while at the same time it is sufficient to derive viable conclusions. The questions asked of the respondents are very viable because they address the research problem appropriately. All the questions ask about the factors that drive customer satisfaction and brand loyalty. Through the questions, it is possible to make conclusions in terms of the determinants of customer satisfaction.
The interview method is a reliable one, but it could also be done differently. One of the techniques that could be used is observation. This method enables researchers to observe the behaviour of respondents firsthand. In the current research, the customers can be observed on how they buy, how they react (facial expressions), natural setting (where) of the purchase, and number of purchase or customers buying from a vendor on a single day. Another important technique is the use of Focus Groups. This involves holding group meetings to obtain collective views of participants.
References list
Apple (2015). iTunes. Accessed February 6, 2014 from https://www.apple.com/itunes/
Brace, I. (2008). Questionnaire design: How to plan, structure and write survey material for effective market research. London: Kogan Page.
Cheverton, P., & Velde, J.P. (2011). Understanding the professional buyer: What every sales professional should know about how the modern buyer thinks and behaves. London: Kogan Page.
Czerniawski, R.D., & Maloney, M.W. (1999). Creating brand loyalty: The management of power positioning and really great advertising. New York: AMACOM.
Du, P.P.J., & Rousseau, D. (2003). Buyer behaviour: A multi-cultural approach. Oxford: Oxford University Press.
Du, P.P.J., Rousseau, D., & Boshoff, C. (2007). Buyer behaviour: Understanding consumer psychology and marketing. Cape Town, South Africa: Oxford University Press.
Epstein, Z. (2013). Sizing up the Mobile Handset Market in Q2. Accessed February 7, 2014 from http://bgr.com/2013/07/26/mobile-phone-market-share-q2-2013/
Gerson, R.F. (1993). Measuring customer satisfaction. Menlo Park, Calif: Crisp Publications.
Hague, P.N. (2002). Market research: A guide to planning, methodology & evaluation. London: Kogan Page.
Hayes, B.E. (2008). Measuring customer satisfaction and loyalty: Survey design, use, and statistical analysis methods. Milwaukee, Wis: ASQ Quality Press.
Hayes, B.E. (1998). Measuring customer satisfaction: Survey design, use, and statistical analysis methods. Milwaukee, Wis: ASQC Quality Press.
Huawei (2015). Market trends: Defining 3G. Accessed February 6, 2014 from http://www.huawei.com/de/industry/market-trends/index.htm
IDC (2013). Worldwide Mobile Phone Market Forecast to Grow 7.3% in 2013 Driven by 1 Billion Smartphone Shipments, According to IDC. Accessed February 6, 2014 from http://www.idc.com/getdoc.jsp?containerId=prUS24302813.
Poulos, M. (2001). Buyer behaviour: Implications for marketing. Frenchs Forest, N.S.W: Pearson Education Australia.
Sherlekar, S.A., & Sherlekar, V.S. (2010). Global Marketing Management. New Delhi: Himalaya Pub. House.
Statistica (2014). Global market share held by mobile phone vendors from 1st quarter 2010 to 1st quarter 2014. Accessed February 6, 2014 from http://www.statista.com/statistics/272758/global-market-share-held-by-mobile-phone-vendors-by-quarter/.
Stone, M., Bond, A., & Foss, B. (2004). Consumer insight: How to use data and market research to get closer to your customer. London: Kogan Page.
Appendix: Questionnaire
- What is your gender? Male O Female O
- How old are you? 18-24 O 25-34 O 35-44 O 45-54 O Above 54 O
- What features are you looking for when buying a mobile phone?
- What benefits do you want to derive from using a mobile phone?
- What do you need from a mobile phone vendor in order to be satisfied?
- What do you think is your level of satisfaction with the company?
O Very Satisfied O Satisfied O Fairly Satisfied O Not satisfied
- List the things that you want your vendor to do in order to improve your level of satisfaction?
- Are you loyal to a specific company?
- Do you usually come back to buy from the same vendor on renewal?
