Mobile Phone Buying Trend Analysis

Wed, Dec 1, 2010

Biz Arena

The Indian Consumer durable industry can be divided into three sections

(1)   White Goods – Refrigerators, ACs, Washing machines, Speakers and Audio Equipments.

(2)   Kitchen Appliances / Brown goods – Mixers, Juicers, Microwave Owens, Cooking range.

(3)   Consumer Electronics – Mobiles, TV, VCD players, DVD players.

In our study we are focussing on the closed group buying pattern analysis of Mobile phones as Consumer Durable product.

Mobile phones are now inexpensive, easy to use comfortable and are equipped with almost every feature we desire. Mobile phones are a necessity, a style statement, a job compulsion and a lifestyle durable, all at the same time. They have become an indispensable commodity, reaching across age, sex, demographics and regional boundaries.

Key trends driving the growth in this sector are:-

  • Growth of disposable income
  • Products becoming increasingly affordable
  • Increasing share of organised retail

The project ‘My Next Mobile Phone’ involves the analysis of buying patterns of mobile phones. The study was executed in two phases: the first one being at the individual level and the second one at the group level. At the individual level, everyone listed the desired features, expectations and qualities that they aspired for in their next mobile phone. Based on these expectations, mobile phones were shortlisted and selected. In addition to this, each individual analyzed his/her thought process in short listing of phones. We rated each of the features on 10 and then compiled the raw scores to find the most preferred features that an individual wanted.

Once the individual analysis was complete, the group level analysis involved the consolidation of the common features desired in a phone. The raw scores were then compiled and common features which were desired by most of the people were consolidated. Based on these common features, we were able to analyse the thought process that goes behind buying a mobile phone. We were now able to better understand the decision making and thought process of individuals that would determine their next mobile phone. A discussion was then carried out to determine the buying behaviour of the concerned market segment. Finally, to end the analysis we tried analyze the uses of such a market study. The purpose of this study was to analyse market segment behaviour of the mobile phones , first at individual level and then at a cumulative group level for the budget range of Rs. 5000 to Rs.10000. The results were then extended to a generalised market mapping for mobile phone consumer behaviour. The problem statement required that as individuals we select a mobile phone within the budget of Rs. 10,000. This process of personal selection was documented and analyzed to determine buying pattern, analyze the thought process behind the mobile phone selection. The group was then asked to identify the trends with respect to a common market segment and consolidate the patterns of buying behavior. Based on this study, a trend analysis of the generalized market segment of students of IIT-Kanpur in the age group of 18-25 years had to be established.

AT THE INDIVIDUAL LEVEL

Each individual listed out the desired features such as long battery life, high quality camera with flash, Wi-Fi, Bluetooth etc. that he/she desired in his/her next mobile phone. This encompassed both the mandatory and optional features that the individual desired.

Then the entire range of phones available in the market was scanned and did a feature comparison to shortlist the phones that most suited their desired features and lay within the budget of Rs 5000 to Rs 10000. Eventually individuals selected a phone that most amicably met their desired expectations and would be their Next Mobile Phone.

AT THE GROUP LEVEL

After individuals had zeroed in on a phone that most suited to their expectations, a group discussion ensued, where each individual’s choice of phone and the reasons entailed in the choice were discussed. A cluster diagram enlisting the shortlisted phones of every individual was made to determine the popular choices of phones. A detailed ranking analysis of the desired features was carried out to identify common market segment behaviour. The analysis was subsequently extended to the entire batch to obtain more generalized common market segment behaviour. A discussion based on the results obtained was then carried out to analyse the common buyer expectations and the subsequent decision making process.

Cluster Diagram and its Interpretation

In the given budget, Nokia E63 emerged as the “Most Preferred Mobile Phone”. In spite of a large number of brands, only 2 manufacturers were chosen.This is in accordance with the market share of the companies which are as follows:

Brand

Market Share (%)

Nokia

53.7

LG

14.4

Samsung

9.5

Motorola

7.2

Sony-Ericsson

6.8

Others

8.4

The cluster diagram shows a prevalence of established brands with major models present in Nokia cluster. The preference towards established brands across market segments is commonly observed due to which the entry of new players has always been challenging. The first mover advantage of Nokia and the enduring service record of LG have beaten all competition.

Feature Expectation of Group

Common Features within Group:

The group was asked to choose their next mobile phones, and based on the final selections; a list of features was compiled. This list consisted of the top 10 desired features in a phone. Based on the respective preferences of individuals, the features were then ranked from 1 to 10. This data was used to observe the number of times a particular feature got ranked in top 3 desirable features, and from this a pie chart was prepared that depicts the percentage occupancy of the top 3 rank positions of the various features.

From this study, it was observed that the top 3 desirable features were: Battery Life, 3MP+ Camera with Flash, and Brand. While the features which could not be the preferences of a majority of people were: Size, Extendable Memory, Video, and GPRS/EDGE.

The top features which have emerged out of this study denote a preference towards usability.

Trend Analysis:

This exercise was an attempt to extrapolate the results to a wider group of individuals possessing the same characteristics thus representing a specific market segment. All the sampled individuals were students of MBA 1st year in the age group of 21-26 having and disposable income.

The list of 10 features was shared with the individuals and they were asked to rank the features on a scale of 1 to 10 with 1 representing the most valued and 10 the least valued. The results obtained from 20 students were then consolidated and a count was determined of the number of times a particular feature appeared in the top 3 desirable features.

Most Desirable Features in a Mobile – Within Batch

The results above show that the Battery life is the highly desirable (26%) feature indicative of the high usage of a mobile in this market segment. Secondly, with the large number of features in contemporary mobiles, the impact of battery life is quite high indicating the preference of users for long term usability. This was similar to the results obtained from the group.

Secondly, Brand turned out to be the second preference (19%). Brand comprises of various aspects such as after sales service, dealership, perception of quality, aspirational value etc. This was again showing similar trend to the closed group analysis done earlier. The camera feature which garnered high response among our closed group did not elicit much response from the batch. However, both the studies had commonality with respect to the undesirability of certain functions. Both the studies showed that the features like size, GPRS/EDGE, and extendable memory were not desired by the sample group. This observation may have a deep significance in positioning a handset in an already clustered mobile space.

Market Mapping

Here we have considered perceptual mapping, which is a graphical technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line and brand of a company is displayed relative to their competition. Perceptual maps can have any number of dimensions but the most common is two dimensions.

The group zeroed in on the following maps

1) Price vs. Features.

2) Age vs. Feature

3) Age vs. Style.

4) Age vs. Usage.

1) Price vs. Features 2) Age vs. Features

Price vs. Features is one of the most important mappings in our study. It represents the buying patterns of various customers and how they rate the difference between prices of various mobiles and features that they offer. The group observed that mobile phones with medium cost and high features are sweep the market share of mobile phones. Mobile phones with high price and high features are limited to only specific class and same is true for mobiles of low price and low features.

Form the mapping between age and features, it can be concluded that the customer within the age group of 16-24 requires multiple features while the people of high age (55 age)group limits themselves with the very specific features.

3) Age vs. Style 4) Age vs. Usage

xx’ is age and yy’ is style                                       xx’ is age and yy’ is usage

Another area of difference is in usage. When asked how much time they use their mobile phones for tasks besides voice communications, consumers younger than 18 reported that they spent 23 % of the time text messaging. The older the age, the less time spent in texting, with the rate falling to 21 percent for 18-24 years old, to 11 percent for those in the 35-39 and the 40-44 years old segment.

Implications of the report

By this survey we found out that there are some specific features/qualities which most of the people in our sample group desire. There were some features/qualities which were constantly ranked in the top three features that people desired. We then consolidated the list of five features which were constantly ranked in the top three of the desired features list. On comparing this list with the features list of the selected/shortlisted mobile phones by our batch mates, we found out that not all of these features are available in those phones. The costliest of the phones selected didn’t have all the top five features.

From this analysis, we discovered that even when a user is ready to buy a high end phone (in our specified range), he is not given all the features which he desires. At some point of time, the user has to compromise either on the price or on the quality of the phone. These high end phones have some of the features which the users don’t even rank in top six or seven list (for example wifi). Sometimes these features contribute significantly to the overall cost of the phone.

What we suggest is that the companies should focus on what users really demand rather than high end and fancy features, which somehow are not desired by the customers. By doing this, the market capitalization and overall sales of these phones would increase. Users would then get what they really demand and a better value for money. Company realizing this first would have the advantage in getting more customers and then would be able to retain them. This would be a win-win situation for both the customers and the mobile phone companies.

Even after offering a high on features phone and at a lower price, the smaller and new companies are not able to tap the larger market segment. These new market entreats have to design a marketing strategy specifically to ensure that they don’t lose out on potential customers just because of the brand image. Marketing strategy should include new offers and promotions so that the customer buys the new product and spread the word of its reliability within the market. Low priced mobile phone with features that users really want should be made so that users can get more choice at low price. Ads should focus on the highly rated features rather than on those which are not that popular. The pricing of these phones can also be lesser as some of the not so desired features contribute a high percentage in the overall cost of the phone. Low pricing can be an added advantage with respect to the marketing campaign and advertising.

References for the Market mapping are from the following research report along with fragmented information from various online sources:

Mobile phones and Youth – http://www.itu.int/osg/spu/ni/futuremobile/Youth.pdf

The Indian Consumer durable industry can be divided into three sections

(1) White Goods – Refrigerators, ACs, Washing machines, Speakers and Audio Equipments.

(2) Kitchen Appliances / Brown goods – Mixers, Juicers, Microwave Owens, Cooking range.

(3) Consumer Electronics – Mobiles, TV, VCD players, DVD players.

In our study we are focussing on the closed group buying pattern analysis of Mobile phones as Consumer Durable product.

Mobile phones are now inexpensive, easy to use comfortable and are equipped with almost every feature we desire. Mobile phones are a necessity, a style statement, a job compulsion and a lifestyle durable, all at the same time. They have become an indispensable commodity, reaching across age, sex, demographics and regional boundaries.

Key trends driving the growth in this sector are:-

Ø Growth of disposable income

Ø Products becoming increasingly affordable

Ø Increasing share of organised retail

The project ‘My Next Mobile Phone’ involves the analysis of buying patterns of mobile phones. The study was executed in two phases: the first one being at the individual level and the second one at the group level. At the individual level, everyone listed the desired features, expectations and qualities that they aspired for in their next mobile phone. Based on these expectations, mobile phones were shortlisted and selected. In addition to this, each individual analyzed his/her thought process in short listing of phones. We rated each of the features on 10 and then compiled the raw scores to find the most preferred features that an individual wanted.

Once the individual analysis was complete, the group level analysis involved the consolidation of the common features desired in a phone. The raw scores were then compiled and common features which were desired by most of the people were consolidated. Based on these common features, we were able to analyse the thought process that goes behind buying a mobile phone. We were now able to better understand the decision making and thought process of individuals that would determine their next mobile phone. A discussion was then carried out to determine the buying behaviour of the concerned market segment. Finally, to end the analysis we tried analyze the uses of such a market study. The purpose of this study was to analyse market segment behaviour of the mobile phones , first at individual level and then at a cumulative group level for the budget range of Rs. 5000 to Rs.10000. The results were then extended to a generalised market mapping for mobile phone consumer behaviour. The problem statement required that as individuals we select a mobile phone within the budget of Rs. 10,000. This process of personal selection was documented and analyzed to determine buying pattern, analyze the thought process behind the mobile phone selection. The group was then asked to identify the trends with respect to a common market segment and consolidate the patterns of buying behavior. Based on this study, a trend analysis of the generalized market segment of students of IIT-Kanpur in the age group of 18-25 years had to be established.

AT THE INDIVIDUAL LEVEL

Each individual listed out the desired features such as long battery life, high quality camera with flash, Wi-Fi, Bluetooth etc. that he/she desired in his/her next mobile phone. This encompassed both the mandatory and optional features that the individual desired.

Then the entire range of phones available in the market was scanned and did a feature comparison to shortlist the phones that most suited their desired features and lay within the budget of Rs 5000 to Rs 10000. Eventually individuals selected a phone that most amicably met their desired expectations and would be their Next Mobile Phone.

AT THE GROUP LEVEL

After individuals had zeroed in on a phone that most suited to their expectations, a group discussion ensued, where each individual’s choice of phone and the reasons entailed in the choice were discussed. A cluster diagram enlisting the shortlisted phones of every individual was made to determine the popular choices of phones. A detailed ranking analysis of the desired features was carried out to identify common market segment behaviour. The analysis was subsequently extended to the entire batch to obtain more generalized common market segment behaviour. A discussion based on the results obtained was then carried out to analyse the common buyer expectations and the subsequent decision making process.

Cluster Diagram and its Interpretation

In the given budget, Nokia E63 emerged as the “Most Preferred Mobile Phone”. In spite of a large number of brands, only 2 manufacturers were chosen. This is in accordance with the market share of the companies which are as follows:

Brand

Market Share (%)

Nokia

53.7

LG

14.4

Samsung

9.5

Motorola

7.2

Sony-Ericsson

6.8

Others

8.4

The cluster diagram shows a prevalence of established brands with major models present in Nokia cluster. The preference towards established brands across market segments is commonly observed due to which the entry of new players has always been challenging. The first mover advantage of Nokia and the enduring service record of LG have beaten all competition.

Feature Expectation of Group

Common Features within Group:

The group was asked to choose their next mobile phones, and based on the final selections; a list of features was compiled. This list consisted of the top 10 desired features in a phone. Based on the respective preferences of individuals, the features were then ranked from 1 to 10. This data was used to observe the number of times a particular feature got ranked in top 3 desirable features, and from this a pie chart was prepared that depicts the percentage occupancy of the top 3 rank positions of the various features.

From this study, it was observed that the top 3 desirable features were: Battery Life, 3MP+ Camera with Flash, and Brand. While the features which could not be the preferences of a majority of people were: Size, Extendable Memory, Video, and GPRS/EDGE.

The top features which have emerged out of this study denote a preference towards usability.

Trend Analysis:

This exercise was an attempt to extrapolate the results to a wider group of individuals possessing the same characteristics thus representing a specific market segment. All the sampled individuals were students of MBA 1st year in the age group of 21-26 having and disposable income.

The list of 10 features was shared with the individuals and they were asked to rank the features on a scale of 1 to 10 with 1 representing the most valued and 10 the least valued. The results obtained from 20 students were then consolidated and a count was

Most Desirable Features in a Mobile – Within Batch

determined of the number of times a particular feature appeared in the top 3 desirable features.

The results above show that the Battery life is the highly desirable (26%) feature indicative of the high usage of a mobile in this market segment. Secondly, with the large number of features in contemporary mobiles, the impact of battery life is quite high indicating the preference of users for long term usability. This was similar to the results obtained from the group.

Secondly, Brand turned out to be the second preference (19%). Brand comprises of various aspects such as after sales service, dealership, perception of quality, aspirational value etc. This was again showing similar trend to the closed group analysis done earlier. The camera feature which garnered high response among our closed group did not elicit much response from the batch. However, both the studies had commonality with respect to the undesirability of certain functions. Both the studies showed that the features like size, GPRS/EDGE, and extendable memory were not desired by the sample group. This observation may have a deep significance in positioning a handset in an already clustered mobile space.

Market Mapping

Here we have considered perceptual mapping, which is a graphical technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line and brand of a company is displayed relative to their competition. Perceptual maps can have any number of dimensions but the most common is two dimensions.

The group zeroed in on the following maps

1) Price vs. Features.

2) Age vs. Feature

3) Age vs. Style.

4) Age vs. Usage.

1) Price vs. Features 2) Age vs. Features

Price vs. Features is one of the most important mappings in our study. It represents the buying patterns of various customers and how they rate the difference between prices of various mobiles and features that they offer. The group observed that mobile phones with medium cost and high features are sweep the market share of mobile phones. Mobile phones with high price and high features are limited to only specific class and same is true for mobiles of low price and low features.

Form the mapping between age and features, it can be concluded that the customer within the age group of 16-24 requires multiple features while the people of high age (55 age)group limits themselves with the very specific features.

4) Age vs. Style 5) Age vs. Usage

xx’ is age and yy’ is style xx’ is age and yy’ is usage

Another area of difference is in usage. When asked how much time they use their mobile phones for tasks besides voice communications, consumers younger than 18 reported that they spent 23 % of the time text messaging. The older the age, the less time spent in texting, with the rate falling to 21 percent for 18-24 years old, to 11 percent for those in the 35-39 and the 40-44 years old segment.

Implications of the report

By this survey we found out that there are some specific features/qualities which most of the people in our sample group desire. There were some features/qualities which were constantly ranked in the top three features that people desired. We then consolidated the list of five features which were constantly ranked in the top three of the desired features list. On comparing this list with the features list of the selected/shortlisted mobile phones by our batch mates, we found out that not all of these features are available in those phones. The costliest of the phones selected didn’t have all the top five features.

From this analysis, we discovered that even when a user is ready to buy a high end phone (in our specified range), he is not given all the features which he desires. At some point of time, the user has to compromise either on the price or on the quality of the phone. These high end phones have some of the features which the users don’t even rank in top six or seven list (for example wifi). Sometimes these features contribute significantly to the overall cost of the phone.

What we suggest is that the companies should focus on what users really demand rather than high end and fancy features, which somehow are not desired by the customers. By doing this, the market capitalization and overall sales of these phones would increase. Users would then get what they really demand and a better value for money. Company realizing this first would have the advantage in getting more customers and then would be able to retain them. This would be a win-win situation for both the customers and the mobile phone companies.

Even after offering a high on features phone and at a lower price, the smaller and new companies are not able to tap the larger market segment. These new market entreats have to design a marketing strategy specifically to ensure that they don’t lose out on potential customers just because of the brand image. Marketing strategy should include new offers and promotions so that the customer buys the new product and spread the word of its reliability within the market. Low priced mobile phone with features that users really want should be made so that users can get more choice at low price. Ads should focus on the highly rated features rather than on those which are not that popular. The pricing of these phones can also be lesser as some of the not so desired features contribute a high percentage in the overall cost of the phone. Low pricing can be an added advantage with respect to the marketing campaign and advertising.

References for the Market mapping are from the following research report along with fragmented information from various online sources:

Mobile phones and Youth – http://www.itu.int/osg/spu/ni/futuremobile/Youth.pdf

,

Leave a Reply

IMPORTANT! To be able to proceed, you need to solve the following simple math (so we know that you are a human) :-)

What is 7 + 6 ?
Please leave these two fields as-is: