Executive Summary
Consumer behaviour attempts to understand the buyer’s decision making process, both individually and in group. Behaviour of the consumer is biased or subjective. Their decision-making process is influenced by numerous factors. Personal influencing factors are categorized into two: internal factors and external factors.
This study explores the significance of consumer behaviour in developing and refining marketing strategies. It also examines internal and external influencing factors that impact on mobile phone purchasing in Asian market. In addition, it looks at some of the success and failure examples about understanding consumer behaviour in the mobile phone industry. The strategies used by these companies must conform to the changing market environment and changing consumer needs/wants.
Introduction
Overview
Consumer behaviour is the study of how when, why, and where people do or do not buy goods and services (Baker & Hart, 1999, p. 46). It attempts to assess the influence on the consumers from external factors such as high salaries and income, growth of urban lifestyle among others (Sheth, Mittal & Newman, 1999, p. 3).
Consumers do purchase goods and services for a number of reasons and these may include reinforcing self concepts, maintaining a given lifestyle, becoming part of a particular group or gaining acceptance in a group they already belong, and or expressing cultural identity (Riquelme, 2001, p. 438).
Behaviour of the consumer is biased or subjective (Blodgett et al., 2001, p. 90). Their decision-making process is influenced by numerous factors. Personal influencing factors are categorized into two: internal factors and external factors.
Internal factors include consumer’s attitudes, personality, perceptions, personal-concepts, lifestyle, roles and emotions. On the other hand, external factors include things like household structures, group associations, subcultures, and cultural beliefs among others (Jaeger et al., 2003, p. 187; Baker & Burnham, 2002, p. 352).
Internal or psychological influences are personal thoughts and feelings. Internal influences depict the way consumers interact with the environment around them, recognise their personal feelings, assemble and evaluate information, make plans, and take action.
Consumer internal influences are very vital in knowing why and how particular behaviours occur (Dahl & Moreau, 2002, p. 47). On the other hand, external influence evolves from the formal and informal relationships that exist among people. External influences can also be referred to as socio-cultural influence (Dahl & Moreau, 2002, p. 48).
Consumer behaviour provides rich information about people who buy products and services (Hawkins, Best & Coney, 1998, p. 10). Many companies often fail to understand the needs and want of the consumers when developing their marketing strategies and this has cost them very dearly. Therefore, evaluation and understanding of consumer behaviour must come first before creating marketing strategies and plans (Gruner & Homburg, 2000, p. 6).
The decision making process of the consumers consist of five stages. These stages help in understanding how consumer behaviour influences the decision they make when they are purchasing goods and services. These stages are: identification of the need, searching for the solution, evaluation of the alternatives, making of decision and finally evaluating the decision made. The last stage is where consumers do regret or commend on their purchases (Smith, 2003, p. 20).
Purpose of the Report
The purpose of this report is to explore the significance of consumer behaviour in developing and refining marketing strategies. The study examines internal and external influencing factors that impact on mobile phone purchasing in Asian market. In addition, the study looks at some of the success and failure examples regarding understanding of consumer behaviour in the mobile phone industry. Overall results of the study will help the Asian mobile phones companies to develop and adjust their marketing strategies.
Consumer Behaviour and Mobile phone purchasing
Attitude and Mobile phone purchasing
At the present, there has been a massive shift from second generation to third generation mobile phones. This means the use of mobile phone has changed from mere calling to a variety of novel uses such as accessing internet, multimedia messaging among others. Liu (2002) conducted a study on factors that affect the brand decision in the mobile phone industry in India.
She established that consumer attitude plays a significant role in purchasing decision. In her study she found out that choice for mobile phone is influenced by attitudes towards the brand and mobile phone network. Whereas service rates and regularity dominate consumer choices between mobile phone network providers, choice for mobile phone brand were affected by mobile phone technological features (Ling, 2004, p. 43; Meyer & Johnson 1995, p. 78).
Most consumers preferred to buy mobile phones from reputable brands such as Nokia, Samsung and Motorola. Mobile phone products from these companies are widely accepted in most of the Asian market and are considered to be the best (Ling, 2004, p. 44). Chinese mobile phones experienced a lot of negativity in some Asian markets despite of the fact that some Chinese brands like Techno are high quality mobile phones (Castells et al., 2007, p. 83).
Most mobile phone companies in the Asian market sold their products through local network service providers. Mobile phones sold through network service providers which are reputable for strong and reliable networks recorded the highest sales compared to those with negative reputation.
Some of these network providers have customized mobile phones to an extent that they can only use their lines. This has had considerable impacts on the sales of reputable mobile phone brands since consumers’ attitude towards some of the network service providers varies (Ling, 2004).
Reference Group and Mobile phone purchasing
Previously mobile phones were being perceived by general consumers as expensive luxury commodities which could only be afforded by a few. However, mobile phones are increasingly becoming common, affordable and accessible even in the rural areas (McNeill, Sanders & Civille, 2000, p. 163). According to a consumer behaviour research conducted by Srivastava (2005) in the Asian market, the purchasing decision of most of the consumers is influenced by reference groups.
These include friends, family, work-mates, and peer groups among others. Hawkins Best & Coney (1998) defines a reference group as a group used by individuals to express their purchasing behaviour in a specific circumstance.
A reference group in this case consists of a group of individuals that a person has frequent contact with and those that he/she does not have direct contact or membership but considerably have influence on his/her purchasing behaviour (Blodgett et al., 2001, p. 90). The latter group may include celebrities, college students, and national leaders among others (McNeill, Sanders & Civille, 2000, p. 164).
Srivastava (2005) emphasizes that mobile phones have transformed from technological gadgets to social gadgets with communication being the main purpose of purchasing a mobile phone.
Nevertheless, facilitating coordination between friends and families and strengthening social interaction are the most significant elements of using cellular phones (Yoo & Donthu, 2002, p. 390). According to McNeill, Sanders & Civille (2000), owning a state of the art mobile phone is nowadays regarded as an achievement, not only money-wise but also socially in terms of integration within the society.
Certain groups have been identified through the use of mobile phones. For example, Nokia Company has been conducting a huge campaign for its Asha phone with the youths in mind.
Most youths in Asia, Africa and the rest of the world have been identifying with the QWERTY movement and this is the reason why Nokia Company opted to introduce a cheaper phone with QWERTY characteristics. QWERTY phones are so much appealing to the youth and most youths want to identify with it. This is an example of how reference groups do influence consumers’ purchasing decisions (Bloggers Association of Kenya, 2012).
Motivation/Emotion and Mobile phone purchasing
Sheth, Mittal & Newman (1999) defines motivation as unrelenting need that inspires and motivates consumers’ long term ambitions. Emotions on the other hand are provisional state that reflects the present changes in motivation. Motivation and emotions are budding forces that stir up and stimulate some behaviour in consumers. The two normally work together to influence consumers’ behaviour. Motivation compels consumers through buying process while emotions drive the motivation (Thrash & Elliot, 2003, p. 873).
According to a study conducted by Ling (2004), consumers normally have emotional attachment to there cellular phones than any other electronic gadgets. This is manifested in numerous ways. She found out in her study that most people tend to use emotional terms when describing their experience with their cellular phones.
For example, some of the people she came across told her how they normally panic when their batteries run down or how they love using their mobile phones since they are not restricted to phone their friends whenever they are. In addition, mobile phones always act as a linkage between people who are already in some forms of relationships.
Therefore, mobile phones create a sentiment of being near the loved ones. Being alone no longer means being on your own since friends and families can always stay in touch using the mobile phone. To some people mobile phones have become a part and parcel of them like an extension in their body and have made a habit of fumbling with their phone even when not on use (Liu, 2002, p. 49).
Consumer relationship with the mobile phone is extended to the information contained and stored in the mobile phone itself. Immediately an individual acquires a mobile phone and inserts his/her SIM card the subsequent activities entail customizing phone features including ring tones, messaging service among others.
In addition, mobile phones normally have a record of telephone numbers, e-mail addresses, personal notes, personal diary, videos, photos and many more items that are exceptional to an individual consumer. Therefore, mobile phones have become so valuable to the users that once they are lost they are difficult to replace (Thrash & Elliot, 2003, p. 873).
Some experts argue that individual’s emotional attachment to their mobile phones is as a result of their relationships with others and that use of these phones is not a personal obsession. However, with the introduction of computer and video games on the mobile phones would make this an interesting debate. Many studies carried out on the use of mobile phones among the young people show that most of them prefer to play mobile phone games, even when they have PCs and games console (Vincent, 2005).
As a result of this emotional attachment to mobile phones, mobile phone companies have been working indefatigably to improve the mobile phone to increase consumers’ emotional attachment to their mobile phones. Studies show that some consumers are willing to spend more than $600 for a single gadget as long as it has the features they want.
At present, the very expensive I-phones and I-pads have dominated the mobile phone market and some consumers are willing to pay for them. These phones have extraordinary features that increase their emotional attachment to the consumers. A number of the companies have also resorted to adding these features in cheaper mobile phone versions (Riquelme, 2001, p. 440).
Successful and failure examples
Over the past years, significant progress has been made regarding the development of new marketing strategies that conform to the consumers’ needs and wants. These developments have emphasized on reducing rates of product failure in the consumer market; however rate of product failure is still high and has not changed that.
An example of this failure was experienced by AT & T Company which introduced its first picture phones in 1964 Global Fair. The picture phone was launched in 1970 but slumped in 1974 due to lack of demand. A number of companies also attempted to launch different versions of picture phones in the 80s and early 90s and experienced the same fate (Floyd, 2001).
Still, AT & T re-launched the picture phones in the early 90s and experienced the same results. Despite of market failure, the company has been adamant in re-launching this product in the market. Even with the present age of internet based mobile phones, picture phone’s time has not come.
At the moment consumers are scrambling for smart phones, but they are still uninterested in picture phones. Therefore, new products that do not conform to the consumers’ needs and wants are bound to fail. Companies nowadays are starting to embrace tools of marketing research to establish consumer preference and need/wants (Floyd, 2001).
Apple PLC is an example of a company that has been able to understand consumer behaviour in the mobile phone market. Its success is attributed to their market penetration strategy. The company is taking advantage of the computing revolution taking place at the moments by providing relatively cheaper and portable alternatives to laptops and desktops. In addition, the company has a tendency of introducing new features or quality devices which conforms to the current consumer needs and wants (Spark, 2009).
The earlier smart phones that dictated the market were blackberries. They were viewed as top technological phones since they were able to combine normal phone features with PDA. Blackberries were replaced by I-phones. Apple I-phones are the greatest success story in the mobile phone history. Currently the company is introducing Android powered I-phones with the most powerful hardware and software (Spark, 2009).
Conclusion
In the past years, most marketers relied on daily contacts with the consumers to understand them. However, as companies and marketers expand, they normally lose contact with the consumers. This is the reason why most of these companies and marketers have resorted to consumer research since it is the only way they can learn more about consumer behaviour. Companies that actually understand how consumers respond to their products and services in the market are likely to gain competitive advantage over its rivals.
Consumer behaviours are significantly influenced by cultural, social and psychosomatic elements. Therefore, companies must consider the needs and wants of the consumers first before developing any marketing strategy. The needs and wants of the consumers vary considerably depending on internal and external factors. As a result, companies must identify with how consumers transform marketing and other factors into buying response.
When product managers are asked if a specific strategy will generate the desired outcome, they would generally say that it depends on: the product or service, targeted consumers, the message and the design of the strategy. All the above mentioned elements form the marketing mix. Conventionally, marketing mix include the 4Ps (Product, price, promotion and place) and are used to position product brands and to create value for these brands alongside the strategies used.
In the case of our study, mobile phone companies in the Asian market can generate high volumes of sales if they set their priorities right. A number of literatures in our study have emphasized that individuals cannot be classified as a single entity since numerous internal and external factors influence their purchasing decision.
Therefore, the mobile phone companies have to meet the needs and wants of the mobile phone consumers taking into account the consumers attitude, reference groups and motivational and emotional attachment to the product.
The concept of reference groups has an enveloping effect on marketing studies. Reference groups have been used as a foundation for numerous marketing studies in different fields. But for our case he asserts that reference groups influence individuals in a number of ways including needs for social approval.
Consumers apply both comparative and reflective assessment when purchasing a product. Although some consumers may decide to follow reference group(s) with caution, those who are more vulnerable to peer influence will always strive to satisfy the expectations of the reference groups by abiding by their norms. These norms normally function without verbal interactions or thinking. Companies apply their knowledge of motivation and emotions to formulate their marketing strategies.
They can find ways of stimulating consumers’ emotions and motivating them to fill the need provoked by these emotions. Consumer attitude represent how the consumers perceive the products and services in the market. Companies must carry out marketing research to establish how there products and services are generally perceived in the market and make necessary adjustments.
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