factors affecting consumers’ choice of mobile phone selection in pakistan

Factors Affecting Consumers’ Choice of Mobile Phone Selection in Pakistan

ABSTRACT

Mobile phones during the past few years have become one of the most important

consumer accessory item and is perhaps one of the most dynamic industry in terms of

competition and change. This study discusses the factors that affect/motivate Pakistani

consumers in their mobile phone choice decision. The purpose of the study was to

identify different factors/features that consumers value in their mobile phones and then

analyze as to which factor according to them is the most important and to study the

effects of demographic differences on preferences of people belonging to diverse

demographic groups. For this particular study four important factors i.e. price, size/shape,

new technology features, brand name were selected and were analyzed through the use of

questionnaire in registering consumers’ perception of these factors. From the analysis it is

clear that consumers value new technology features as the most important variable

amongst all and it also acts as a motivational force that influences them to go for a new

handset purchase decision. The study also discusses that when selecting between

different mobile phone handsets consumers prefer well known brands instead of non

familiar brands or Chinese handsets. The study also shows that price does affect

consumers’ choice for a mobile phone but becomes less important of a factor as we move

from low monthly income to higher income earning consumers. From the study it is clear

that consumers in Pakistan are well aware of the new technology trends in the mobile

phone industry and are techno savvy. The study also reveals that male respondents were

more interested in the new technological developments in the mobile phone industry as

compared to female respondents. The study provides several recommendations for the

mobile phone manufacturers operating in Pakistan and since the smart phone era has just

begun a better understanding of consumer’s insights and preferences is needed in order to

achieve and maintain competitive edge over rivals.

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DEDICATION

Learning is a process that can be divided into three components i.e. understanding, retention and application. The process of learning is complete only when an individual not only comprehends what he learned but more importantly is able to apply it in practical. It is through report writing a student of a particular discipline can apply a concept/s to some practical issue.

This particular report is a study that discovers the factors which Pakistani consumers value the most in their mobile phones which motivates them to go for a particular choice and how by studying these factors and their interplay one could better market mobile phones to Pakistani consumers.

I am highly grateful to Almighty Allah for granting me strength and guiding me throughout my study. I consider myself lucky that I studied at the best management school of my province and cannot thank enough all of my teachers for everything. I would like to specially thank my research supervisor Mr. Amir Saeed for giving me time whenever I needed it and doing all he could do in helping me out. I would also like to thank Mr. Kareem Khan, Mr. Zahoor Ahmad, Mr. Kamran Khan and Mr. Roohullah for distributing questionnaires for me in their respective institutes and also Mr. Noorullah, Mr. Arbab Musawir and Mr. Omer Yousuf for helping me out in using SPSS software.

I dedicate my study to all of my teachers, my class mates and my university without whom it would not have been possible.

It is a humble effort on my part and I am positive in expecting the report to work as a real guide for those who further progress the study.

Muhammad Amad

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Chapter 1 PAGE NO

INTRODUCTION

1.1Background of the study 5

1.2Purpose of the study 8

1.3Scope of the study 8

1.4Methodology of the study 8

1.5Limitations of the study 9

1.6Delimitations of the study 9

1.7 Scheme of the study 10

Chapter-2

LITERATURE REVIEW

1.1Introduction 12

2.2 Consumer Purchase Behavior 12

2.3 The Status of Pakistan’s Telecom and Handset Market 14

2.4 Preferences of Pakistani Users 18

Chapter 3

METHODOLOGY

3.1 Sample and sampling techniques 20

3.2 Theoretical Framework 20

3.3 Hypothesis formulation 21

3.4 Survey Methodology 23

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Chapter 4

ANALYSIS

4.1 Questionnaire Analysis 26

5.1 Cross Tabulation Analysis 43

Chapter 5

CONCLUSIONS AND RECOMMENDATIONS

Conclusions 51

Recommendations 54

ANNEXURE

REFRENCES 56

QUESTIONNAIRE 60

LIST OF GRAPHS

Annual Cellular Mobile Tele-density 15

Annual Cellular Subscribers 15

Handset Industry Market Share-Manufacturers 16

Factors Effecting Consumers’ choice of Mobile Phone Selection

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Chapter-1 “INTRODUCTION TO THE REPORT”

1.1 Background of the Study

It started in USA on June 17, 1946 when the very first cellular telephone call was

engineered in the city of St. Louis Missouri. But the then system was impractical if we

compare it to present day mobile phones because it weighted 80 lbs and cost $30 US

dollars on monthly basis along with that 30-40 cents were also charged on every local

area call. It were the 1960’s when the world of cellular industry managed to invent the

first partially automatic vehicle mobile systems that were launched in Sweden but these

were also not practical and they weighed nearly 40kg. On April 3 rd, 1973 Martin Cooper

a researcher from Motorola managed for the first time, a call successfully made by using

a hand held cell phone, which was the first instance in history when a call was done from

a device that was a non-vehicle set. The premier economically viable fully automatic

mobile network known as the first generation i.e. 1G was initiated in Japan in 1979 from

NTT ( i.e. Nippon Telegraph and Telephone Corporation) by at first concentrating just on

metropolitan parts of the city of Tokyo. During the next five operational years NTT’s

service expanded and covered the entire Japanese population and hence became the

pioneer nationwide first generation network of the world. In 1981, Nordic Mobile

Telephone (NMT) followed its success in Japan and launched its services in Sweden,

Finland, Norway and Denmark and became consequently world’s pioneer cellular

services provider who were for the first time offering international roaming as well.

Meanwhile, in USA the first 1G network was launched by Ameritech in the year 1983

which was a Chicago based company that was using Dyna-TAC handsets made by

Motorola. After that many countries followed in the early 1980’s such as Canada, UK

and Mexico.

World’s first ever modern technology based network i.e. Second Generation 2G mobile

systems was launched in Finland by Radiolinja in 1991 which operated on the GSM

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standards and gave rise to for the first time competition in telecom services providers at a

time when the already experienced 1G NMT Network of Telecom Finland was

challenged by Radiolinja.

The year of 2001 saw the first totally commercial launching of third generation i.e. 3G

mobile technology and since then mobile phones and mobile phone services have seen an

exponential growth throughout the world and surely it can be said that the world has seen

a communication revolution because of this technology.

The extraordinary exponential consistent growth of mobile phones in the society is a

phenomenon never witnessed in consumer electronics’ history. The best thing about this

growth is that every person in the society whether belonging to a higher or lower class

has access to such accessories. It has now become a huge multibillion dollar industry and

as of now still growing strongly. With the emergence of the new markets like India,

Russia, China and Pakistan the mobile handset industry is still going strong and is

growing at a remarkable pace, it has surpassed the purchases of all the electronics

products like computers, televisions, cameras etc.

Instaphone could be rightly called the pioneer of cellular industry in Pakistan and it was

the first corporation to introduce cellular services to the people of the country. Instaphone

was at first owned by Millicom Corporation but later on it was acquired by Afreen Group

of industries; it started its operations in Pakistan in 1991 as an APMS mobile service

provider. In 2004 Mobilink became the first GSM service provider in Pakistan and after

the introduction of GSM service in Pakistan the industry has seen many new players and

tremendous growth. In the beginning the target market comprised of upper class

consumers but the industry’s rapid growth started after 2000-01 and today it has even

penetrated consumers belonging to the lower class. Nokia, Sony Ericsson, Samsung, LG

and Motorola at present are the leading mobile phone manufacturers in Pakistan.

The telecom sector of Pakistan during the past decade has contributed enormously to the

overall development of Pakistan. This particular sector is constantly achieving high

growth rates in the country. It is believed to be achieving growth every year despite

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economic setbacks faced by Pakistan. During the month of October, 2010 mobile service

subscribers in Pakistan exceeded the psychological mark of 100 million (The Express

Tribune, 2010). Similarly, it is believed that Pakistan amongst all south Asian regions has

the highest cellular penetration rate. According to Pakistan Telecommunication Authority

(2010), the market leader is still Mobilink with 30 million subscribers, with Telenor

enjoying the second spot having 21 million users, with 20 million users Ufone is in third

place, Warid resides in fourth place having 18.14 million subscribers and with 6.48

million subscribers Zong is at the last. Every player in the industry is working hard to

expand the services throughout the country and are entering to regions like Azad

Kashmir, Tribal Areas and Northern Areas which are still not fully covered. So far five

tribal agencies of FATA have been covered.

With increase in mobile subscribers the country has also seen increase in the purchase of

mobile handsets. A brief survey in Karachi of main mobile handset markets came up with

the information that about seventy percent of cell phones users are having two handsets at

the same time indicating the increasing demand for mobile phones in Pakistan (Najeeb,

2010). According to Pakistan Telecommunication Authority (2006), figures given about

the mobile phone sets by the local dealers show that per month 750,000 to 800,000

mobile handsets are imported into Pakistan. Among many players the four main brands

that are the market dominators of Pakistan’s handset market are Nokia having the largest

market share i.e. 55 percent, followed by Sony Ericsson having 23 percent market share,

third is Samsung with 17 percent and with five percent Motorola is fourth. Latest sets

with state of the art technology are available in the markets throughout the country,

amongst all sets, sets having music playing features and powerful cameras are very

popular and it is expected that this tendency will be persistent in the coming years as well

and ultimately such facilities would become future standards. Services or products have

many different features such as value for money, quality, cost, brand image, brand

associations, value for money etc, but it has been observed that “size/shape, new

technology features, price and brand name” are the most vital attributes in a mobile

phone for consumers (Karjeluoto, Karvonen, Kesti, Koivumaki, Maninen, Pakola, Ristola

and Salo, 2005) so these attributes have been selected for the study. In this study the

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variables that are affecting selection of mobile handsets in Pakistani market are studied

and it was searched that which factors the people of Pakistan value the most in the choice

of their mobile sets.

1.2 Purpose of the Study

I have chosen the topic of the study because of my personal interest in mobile handsets

and the industry as a whole. This research attempts to rank factors affecting consumer’s

preferences for mobile phones. This study can help advertisers to focus on that attribute

more which is ranked highly by the consumers. This research can also help the mobile

phone manufacturer/marketer in Pakistan to recognize the potential attribute positioning

errors (if any). Utmost effort has been put in to the study in making it accurate and to

make it possible to be used as a reference material for similar studies.

1.3 Scope of the Study

The study primarily focuses on respondents between the age group of 15-25, 26-35 and

36-50 and limited to four attributes. Because of being a research of a single researcher

with limited time and financial limitations, study would only target people of Peshawar.

1.4 Methodology of the Study

The study by enlarge is descriptive in nature as well as qualitative and is an applied

research. Both primary as well as secondary sources contributed to the data

For Primary data, research questionnaire was developed and used.

For Secondary research journals, online resources and newspapers were studied.

Because of the limitations, convenient sampling method was chosen, since it is evident

from the name, that sample is chosen which is at convenience. The convenient non

probability method many times is used in the preliminary research phase to get the gross

estimation of results devoid of bearing the time and cost needed in random sample

selection process.

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Sample included 100 respondents from three different age groups of mobile phone users,

majority being in the age group between 15-25 years of age because it’s observed that the

above age group has been and still is the maximum mobile phone users and is often well

aware of what they want from their cell phone. Questionnaires were distributed equally

amongst the male and female respondents. Hypothesis were formulated using past

researches done on similar topics and were tested using the findings from the

questionnaire.

1.5 Limitations of the Study

Because seeing the nature and scope of the topic, all aspects of the observable

facts under the study could not be analyzed due to many constraints, and only a

few variables were selected to find out consumers’ preferences in selection of a

mobile phone.

The most significant constraint to the report was its novel nature and new matter

under scrutiny it suffered from lack of availability of required information needed

for comprehensive examination. Mobile phones have seen their emergence as the

new consumer must have item just in the past decade and it’s still an ever

evolving consumer item.

Since my study only included sample from Peshawar and there was no

representation from rural parts of the country therefore the findings of the study

couldn’t be generalized.

Owing to lack of required time I was unable in making the study more

comprehensive and applying to all variables that may affect the phenomenon

under consideration.

1.6 Delimitations of the Study

In spite of all constraints the report is comprehensive enough to help my fellow

students to use it as a future reference material for their assignments connected to

the research topic under study.

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The results of the study could provide advertisers the consumers’ preferences

which could be targeted in their Ads. It could also be used as a reference material

by them in order to realize the consumers’ purchase decision while opting for a

particular handset, and mobile phone manufactures could modify their products

according to the consumers’ requirements.

1.7 Scheme of the Study

Mainly the study has four main sections. A section in its self is further divided into

respective chapters. Following is the format of the study which shows how it is planned.

Section # 1, Introduction

The first chapter includes background, purpose, scope, methodology,

limitations/delimitations, and scheme of the report.

Section # 2, Body of the Report

The second chapter i.e. Chapter No. 2 comprises of the review of the literature connected

to the study including past researches done on the topic plus their main findings.

The third Chapter i.e. Chapter 3 covers the methodology of the study, comprising of

research questions/problems, hypothesis, sample and sampling technique plus the survey

methodology.

Section # 3, Analysis

Chapter No. 4 covers analysis of the questionnaire including the discussion of facts and

figures derived from the questionnaire, plus presentation of such findings in tables and

graphs. Analysis of the derived hypothesis is also covered in this chapter.

Section # 4, Conclusions and Recommendations

Chapter 5 has the findings and results of the study’s questionnaire, also having

recommendations for mobile phone manufactures meant for better targeting their

consumers with products and their features best suited for the target market.

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SECTION # 2

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Chapter-2 “LITERATURE REVIEW”

2.1 Introduction

Over the past few years mobile phones have become an essential source of connection

and communication throughout the world, especially during the past decade, but little

consumer research studies regarding basic motives and choices affecting buying process

of mobiles phones can be found. Similarly, we should put into our consideration several

complex factors with reference to studying the mobile phone buying decision processes.

These factors include both macro as well as microeconomic variables that may have an

effect over the development of cell phone industry as a whole and on an individual

customer’s preferences along with choice decision making in particular. Based on such

factors consumers may go for a particular brand which may have the desired features that

they require and if such important factors are identified, marketers can use such features

to get competitive advantage over their rivals, and as a result become change leaders

rather than followers because of better understanding of consumer preferences.

2.2 Consumer Purchase Behavior

In order to comprehend an individual’s choice in a cell phone’s selection or any other

product, it is imperative to study customer’s purchase behavior. A definition of consumer

behavior given by Perner (2009) “It is the study of groups, organizations or individuals

and also the procedures by which they select, acquire, use and dispose products, ideas,

experiences or services in order to fulfill their needs and wants and the potential impacts

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that these procedures have on the consumer and the society as whole”. The definition

provides some constructive arguments:

Consumer Buying Process takes place either on individual basis or in some

instances in a group for example friends can manipulate the types of apparel a

person goes for and if in the case of an organization company employees working

on the job may decide about the products that firm ought to be using.

The process of consumer buying behavior incorporates the use and discarding of

products and involves the study of how they are purchase. A matter of great

concern to the marketer is how a product is used because it reflects how by better

positioning one’s product a marketer can achieve greater than before

consumption.

Consumer behavior does not only include tangible products but along with them

ideas and services as well.

From the perspective of marketing consumer’s purchase process can be categorized into a

five step problem solving process i.e. 1. Need, 2. information gathering, 3. Evaluating the

given alternatives, 4. Purchase activity, 5. Post purchase status (Dorsch, Grove and

Darden, 2000). This five step process of decision making is most suitable for a purchase

decision that requires problem solving behavior or complex decision making process and

not for purchase decisions related to low involvement products. Similarly the purchase

decision for a new handset follows the same buying process but in some instances it may

also be affected by symbolic preferences linked to some brands.

In studying consumer choice behavior it’s important to take some general conditions into

consideration. Considering the case of the classical problem solving buying process

behavior, it is almost always the case that consumers go for information search before

taking purchase/choice decision. And it is also common in such behavior that consumers’

decision practice is directed by previously made likings for some specific alternatives. So

it shows that customers are expected to formulate their selection decision based on the

limited information search activity that they conducted (Moorthy, S., Ratchford and

Talukdar, 1997) rather than a detailed evaluation of all the possible alternatives (Chernev,

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2003). Laroche, Kim, and Matsui (2003) opined that along with information search

evaluation of alternatives is an important activity that determines consumer’s choice and

it is often influenced by “Cognitive Heuristics” or in simple words a buyer choose a

particular product provide if it fulfills his perceived values based on his past experiences.

In this specific technique of assessment a buyer automatically eliminates a brand that do

not meet his set principles and even if it does, it does not have one or two attributes of

extreme importance to him even it has all other attributes. In this study the analysis would

be limited to consumer’s choice as to which product to purchase from a given set of

alternatives and whether to purchase or not.

Similarly, it is also believed that a lot of decision behavior exercised by buyers can be

different from one individual to another due to context of purchase so this means that

mathematical modeling has its limitations because consumers may use different

approaches to make their choices (Swait and Adamowicz, 2001). Furthermore the

influence of personal preferences and context of purchase may have a greater effect on

choice if a potential buyer has little subsequent knowledge or experience.

An important thing to note is that the conventional problem solving technique used in the

making of a decision that affects purchaser’s preference might not be the best approach in

all conditions. A mobile phone selection can either be based purely on

functional/primary/rational factors or it can be based on emotional factors e.g. fun,

excitement, pleasure etc (Batra and Ahtola, 1990). It has been proven that a lot of

consumer choices may be having both rational features (e.g. communication, time

management) as well as emotional features (e.g. applications, games, music, camera).

Wilska (2003) established that the younger the consumer the more he would prefer

emotional features in mobile phones rather than rational ones.

2.3 The Status of Pakistan’s Telecom and Handset Market

The past decade has seen a telecommunication revolution not just in Pakistan but

throughout the world. It is a fact that for a lot of years Pakistan’s telecommunication

sector was ignored; the technology was outdated and stuck in the mid-20th century. In

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1999 there were 2.1 phones per hundred people in Pakistan from that it expanded to 100

million mobile phone users in 2010 and still growing, Pakistan in the past decade has

seen a communication revolution. Pakistan’s telecom sector is undoubtedly one of the

most rapid growing markets of the world. This extraordinary growth in mobile phone

subscribers has attracted many foreign mobile service providers and mobile handset

manufactures such as Nokia, Sony Ericsson, Samsung, HTC, LG, Motorola etc.

(Source: Pakistan Telecom Authority, 2010)

The telecom industry of Pakistan is estimated to be rising at a rate of 170% annually.

According to Pakistan Telecommunication authority 2.7 million subscribers gets added

into the industry on monthly basis (Ansari and Khan, 2009).

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(Source: Pakistan Telecommunication Authority, 2010)

Shariq Syed (2008) suggests that Pakistani mobile phone market has played the most

important part in the rise of telecom business in Pakistan. The Pakistan mobile handset

market should be given equal credit for the enormous growth of Pakistan’s telecom sector

along with telecommunication service providers. Since 1st quarter of 2008 and up till

now, Pakistan is going through hard times generally in all industries and also in telecom

industry too with many negative economic indicators, political tensions, double figure

inflation & inconsistent financial plans have played their part in limiting economy’s

growth compared to previous years.

However, in spite of the economic setbacks Pakistan handset sales still remain on the

higher side and are predicted to be 27million by the year 2011. Competitive rivalry for

market share is still intense with the leadership position dominated by Nokia while

Samsung benefits from the growing market for very low cost handsets. The gray market

remains a key issue with 20%-22% share of total sales estimated for 2008 (Kerr and

Harris, 2008). The handsets distribution market is dominated by handful of companies

and among them United-Mobiles, Advance-Telecom and Mobile-Zone represent the

largest phone distributors.

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Nokia is the undisputed market share leader of cellular handset market of Pakistan

followed by two Korean manufacturers Samsung and LG. Nokia has 48 percent market

share but its declining steadily due to competition from other manufacturers and

especially from Chinese handsets. Samsung has seen tremendous rise in their market

share i.e. having 8% market share in the year 2006, its market share has increased to 30%

in 2008 and still going strong. LG is also enjoying favorable growth in market share with

its success due to two highly successful handset models that were LG, KG195 and LG,

KG270. Motorola and Sony Ericsson are showing un-impressive performance with just

5% and 1% share in the total Pakistani handset market (Syed, 2008).

(Source: Artistryofbranding.wordpress.com)

Demand for mobile phones in Pakistan has surged up their imports highly; it has seen

approximately 100 percent increase in-terms of their imported costs during the first

month of current financial year 2010-11. The Federal Bureau of Statistics (FBS) Pakistan

indicates the import bill of cellular handsets reached 39 million dollars during the month

of July as compared to the same month’s cost last year which was at US dollars 19.59

million thus showing a growth of 99.15%. Similarly mobile accessories expenditure was

27 % higher as weighed against the month of June which was $30.8 million. Altogether

according to FBS the import of handsets for the year 2009-10 moved up to 215 million

US dollars as to US 139 million dollars in the prior year indicating a surge of 54.6%.

According to the representative of Karachi Electronic Dealers Association (KEDA)

representative 55 percent increase in imports of cellular handsets is due to greater

demand of Chinese handsets (Khan, 2010).

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This increase in mobile phone demand is also characterized and inflated by continuing

demand for Chinese-made mobiles which were introduced into the market about two and

a half years ago. Chinese sets have gained popularity among the people because of

having dual SIM facilities and are copycat versions of familiar branded phones.

But the branded phone manufacturers like Nokia, Samsung, LG, Sony Ericsson etc have

managed to maintain their market share among the masses of the society who still prefer

branded sets compared to Chinese handsets. Pakistan’s handset market is unique in the

sense that it sees a surge in sales just before and after the Eid festival (“Mobile handset

import bill up 100 percent”, 2010). Mr. Imran Zaki, marketing head at LG electronics

reports that demand from the market is constantly increasing day by day particularly in

entry stage segments, that includes lowest costing handsets ranging between Rupees 1200

to Rs 2000.

2.4 Preferences of Pakistani Users:

Nokia for understanding consumer’s preferences in a mobile phone conducted a study

and found out that Pakistani customers prefer style over the desire of being connected.

Their study also concluded that latest mobile phones teamed up with attractive folding

designs quick launch short cut buttons are in style, and these preferences are commonly

acceptable in Pakistan compared to markets within Asian and Asia Pacific regions.

Nokia’s study also came to the conclusion that for innovation demanding customers

Nokia needs to bring in entertainment filled intelligent multimedia experience in an ultra

slim easy to use package (Bhatti, 2007).

Giving an interview to The Daily Nation about their study of mobile telephone users’

preferences for Nokia in Pakistan, the Vice Pesident for Nokia Cell Phone Market and

Sales Operations Middle East and Africa Mr. Tomi Paatsila revealed that customers in

Pakistani market surpassed other nations customers in their desire for innovative

technology and that Pakistani consumers were very conscious about style and shape,

which was beyond their expectations. He revealed that Pakistani customers desired

design and style more than any other factors.

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Nokia’s consumer preference study in mobile phone also showed that youth demanded

more innovation in multimedia options that is coupled with a slim handset. Based on

these demands Nokia has managed to modify their products accordingly. It was also

found that users in Pakistan were aware of the technology and with that in mind Nokia is

now modifying its products to offer intelligent and entertainment filled multimedia

experience in a user friendly interface and ultra slim package (Bhatti, 2007).

According to Aijaz (2008) nowadays customers are asking for more and more

compatibility in their handset’s user interface, which is why Nokia is liked by all for its

user friendly interface. A study conducted by Nokia showed that those Pakistanis who go

for low priced handsets still want the best possible package for their phones. Nokia’s

handset prices range from Rs. 2000 to over 50000. In order to measure Nokia’s market

share and satisfaction of their customers a survey was conducted in Lahore by Omar Aziz

in 2008 and he discovered that demographics of the locality play the most vital role, he

observed that Defense Housing Authority’s residents preferred brand reputation and

quality, whereas price was not considered as a major factor for residents of DHA. While

the preferences of the people of inner city of Lahore were totally different who were

more attracted towards lower prices as compared to other variables.

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Chapter-3 “METHODOLOGY”

3.1 Sample and Sampling Techniques

A sample of 100 people was taken by using the sampling method of Convenience

Sampling (or Accidental Sampling). In Convenience Sampling (also known as

opportunity or grab sampling technique) a sample is taken from the population which is

at convenience or in other words which is close at hand and it is a form of non-

probability sampling method. Since lack of financial resources, time constraint and a

study conducted by a single researcher, convenience sampling was adopted as the

population sampling technique for this particular research.

3.2 Theoretical Framework

It has been found that variables like demographics, price of the handset, brand familiarity,

new technology features/applications does have an impact on consumer’s decision to go

for particular mobile phone selection (Karjiluoto., Karvonen, Kesti, Koivumaki.,

Manninen, Pakola, Ristola and Salo, 2005). So as a result it can be inferred that mobile

phone choice is a dependent variable which is affected by demographics, brand

familiarity, price, technology features which are independent variables and hence have a

direct impact on consumers’ choice of mobile phone selection.

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Factors Effecting Consumers’ choice of Mobile Phone Selection

3.3) Hypothesis Formulation

Not a great amount of research is available on mobile phone choice. However, a few

articles have studied consumer decision process in relation to their mobile phone usage.

Riquelme (2001) studied how much prior information consumers posses when making a

choice between different mobile handsets of different brands. He based his study on six

key variables i.e. connection fee, free calls and call rates, mobile phone features, access

cost and mobile to mobile phone rates; these variables were rated by the respondents in-

terms of their importance. The results of the study illustrates that respondents with

previous knowledge about a particular product can make their choices relatively well but

they had a tendency to overestimate the significance of free calls and call rates, features

and undermine the significance of mobile to mobile phone tariffs, monthly subscription

fees and phone rates.

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Demographic variables play an important role in selection of mobile phones amongst

people belonging to different demographic groups. Demographic variables include age,

gender, income, class and employment (Johansson, Douglas and Nonaka, 1985). Wilska

(2003) conducted a survey of young people between the age of 16-20 in Finland and it

was found that mobile handset choice was consistent with their general consumption

patterns. The studied explained that in females addictive use was common and they

exhibited impulsive consumption patterns and went for trendy handsets. While, male

respondents preferred more technology packed handsets and they were also trend

conscious. However, the research concluded that both the gender’s preferences are

becoming alike in mobile handset choice behavior. Since personal differences in purchase

patterns are becoming more and more identifiable so demographic variables were

included in the questionnaire for analysis and the effect of demographics on certain

perceptions about mobile phone related behavior have been studied by using cross-

tabulation.

Similarly, brand familiarity also has an effect on consumers’ mobile phone choice along

with other features. In a survey of Asian mobile phone users, Liu (2002) came to the

conclusion that the brand of the phone did have an impact on mobile phone choice

decision as all the competing brands in the study had similar sizes/features and majority

of the respondents preferred a well known brand instead of a new one. The sales of

mobiles handsets are affected by replacement of an outdated set by a new model of it

because of constant technology change in the industry consequently, many people opt for

a familiar brand to replace it than go for an unknown one. So it can hypothesized that

brand of the mobile phone has an effect on mobile handset selection to some degree:

H1: When choosing between different mobile phone models, consumers prefer well-

known brands.

One of the most important factor that effects many purchase decisions is a product’s price

and in mobile phone choice too it can be considered as an important variable, more

importantly among young consumers (Karjaluoto et al., 2003). Karjaluto et al. (2003)

conducted a survey of 397 respondents and found that price was the most important

dominant factor that was influencing the choice decision of new mobile phone models

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along with other factors like new technological advances etc. Chinese mobile phones are

dominating Pakistani handset market for the simple reason that they are providing cloned

models of famous brands but at an extremely affordable prices and this is the reason why

they are a huge success story in Pakistan (Hassam, 2010). So, a hypothesis can be

reached that the price of mobile phone has an impact over its choice:

H2: Price has a direct effect on consumer’s mobile choice decision.

Many studies have revealed that consumers go for a purchase decision of a new handset

based on the simple fact that their present mobile phone has become outdated and need a

new model with better messaging system, in-built camera, larger memory capacity,

sharper color displays, new multimedia features etc (O’Keefe, 2004). Nokia conducted a

survey of Pakistani consumers as to what they prefer the most in a mobile set and they

found that young consumers needed and were conscious of the new technology and

wanted entertaining and intelligent media services in their handsets (Bhatti, 2007). Since

mobile handset industry is a dynamic industry in which new technology and applications

are being introduced at a fast rate due to constant demand and expectations by the

consumers so the following hypothesis can be formulated:

H3: New technology features increases consumers’ motivation to acquire new phone

models.

3.4) Survey Methodology

In order to test the hypothesis a questionnaire was designed to find out as to what are the

factors that determine the choice of a mobile phone selection in Pakistani consumers and

to study which factors are valued the most and how much effect does demographic

differences have in mobile phone preference amongst consumers belonging to diverse

demographic sets. A sample size of 100 respondents was taken by using Convenience

Sampling method. Most of them were circulated amongst the students of Institute of

Management Sciences and Edwardes College Peshawar, some of them were also

distributed amongst the employees of Accountant General Office Peshawar.

23


The hypotheses were tested by asking different relevant questions regarding the pre-

determined hypothesis and results were processed using SPSS software by using

frequency distribution tables and cross tabulation. Based on the results of the

questionnaire and its analysis various conclusions were derived and recommendations

were given so as to how better market mobile handsets to consumers of Pakistan.

24


SECTION-3

25


Chapter-4 “ANALYSIS”

On the basis of past research on the topic under study hypothesis were developed and to

test these hypothesis a questionnaire was designed and distributed among 110

respondents amongst which 100 questionnaires were useable. Among the total 100

respondents 61 of them were male and 39 of them female. For demographics Gender,

Age and Income level were selected. The majority of the respondents were university

students of Institute of Management Sciences Peshawar belonging to different BBA,

MBA and MS programs, college students of Edwardes College were also a part of the

study while questionnaire were also circulated amongst staff of Accountant General

Office Peshawar. The respondents belonged to three different age i.e. 15-25, 26-35, 36-

50.

Demographics

26


27


Income/pocket money per month

Frequency Percentage Valid Percentage Cumulative Percentage

2000-5000 37 37.0 37.0 37.0

6000-10000 37 37.0 37.0 74.0

11000-15000 19 19.0 19.0 93.0

16000-25000 6 6.0 6.0 99.0

40000+ 1 1.0 1.0 100.0

Total 100.00 100 100

28


29


A total of 96% respondents had mobile phones while 4% still were a segment that

did not own a mobile phone indicating that this 4% can also be a market worth

capturing. The overwhelming amount of respondents having a mobile phone

shows that nowadays cell phones have become a must have accessory for nearly

everyone.

30


This question was asked in order to know how successful Chinese Mobile replica

phones are in our market and whether they have a potential to replace the already

famous brands known by all. 66% percent respondents believed that they are not

any threat for the present brands indicating that famous brands still have a strong

following but 34% of the respondents were seeing them as the replacement for

the present established brands, but no one in the study possessed a Chinese

mobile indicating that it was just a matter of perception and people were still

brand loyal to the present brands because their actions did not reflect their

perception.

31


This question is of particular importance because it shows a trend that a

considerable number of respondents use 2 or more mobile phones at the same

time for different reasons. 62% respondents had a single mobile handset while

24% had two mobile phones, 5% had three phones and 9% had four or above.

These are important findings because they present an opportunity for mobile

handset providers to study why people carry multiple handsets and how by

understanding their reasons one could target them with their products. This also

shows that a single individual having multiple mobile phones can be a target

customer for multiple brands at the same time.

32


Q.4. Which company’s mobile phone do you have?

Frequency Percent Valid Percent

Cumulative

Percent

Valid nokia 73 73.0 73.0 73.0

sonny ericsson 3 3.0 3.0 76.0

motorola 2 2.0 2.0 78.0

samsung 18 18.0 18.0 96.0

other 4 4.0 4.0 100.0

Total 100 100.0 100.0

73% of the respondents had Nokia handsets indicating that Nokia is by far the market

leader followed by Samsung having 18% of the respondents using it while Sony Ericsson

once a dominant player in the market just had just three respondents owning its handsets

while Motorola was struggling with two votes. 4% people under study used other brands

that were HTC, iphone and LG.

33


Q.5. Which factor to you is the most important in purchasing a mobile phone

for yourself?

Frequency Percent

Validity of

Percentage

Cumulative

Percentage

brand name 37.0 37 37 37

price 10 10.0 10.0 47.0

new technology features 47 47.0 47.0 94.0

size/shape 6 6.0 6 100

Sum= 100.0 100 100

This was the most important question that respondents were asked and it was asked to

find out as to what according to them was the most important factor in a mobile phone for

them which motivates them to purchase it. Out of the four factors selected for the study

34


by the help of past research “New Technology Features” was the most important reason

to purchase a mobile phone for 47% of the respondents while followed closely by 37%

respondents preferring “Brand Name” indicating them to be brand conscious.

Surprisingly just 10% of the respondents valued Price as the most motivating factor

which shows the fact that in purchasing a mobile phone not great many people in

Pakistan rank price as the determining factor in a mobile phone purchase decision. 6% of

the people took size/shape as the most important factor for them in purchasing a mobile

phone.

Since new technology features have been ranked first amongst all the factors of influence

this proves hypothesis H3 which says that these new and improved technology features

motivate consumers to go for a particular set with superior technology. However,

consumers’ under study have not valued price as an important factor hence disproving

Hypothesis H2 as a result.

35


Q.6. How Often do you Buy New Mobile for Yourself?

FREQUENCY PERCENT VALID %age Cumulative %age

Within Six Months. 12 12.0 12.0 12.0

Within a year. 36 36.0 36.0 48.0

When new model of your

present set arrives.14 14.0 14.0 62.0

When the last one stops

working.38 38.0 38.0 100.0

100-0 100.000 100.000

This question was asked to know how often are people in Pakistan motivated to go for a

purchase decision of a new mobile set. 38% respondents do not buy a new handset for

themselves until their present set stops working and is of no use to them while 36%

purchase a new set for themselves every year. 12% of the respondents buy a new set for

themselves every six months. 14% of the people who were studied showed that they are

motivated to buy a new set for their selves only when a new model of their present set

arrives in the market which shows that they are brand loyal.

36


This question was a cross question to the previous question about respondents

take on Chinese mobiles as the replacements for current established brands in

order to check the consistency of opinions and check for contradiction in

answers. This question’s findings indicates that 89% people do not see Chinese

mobile phones dominating and replacing the current brands which is consistent to

the results of the previous question as well in which 66% respondents did not see

Chinese mobile as replacements for the familiar brands. It is also obvious from

the results of the above question that maximum number of the research subjects

37


believed the branded mobiles are here to stay and are not under any impending

danger from Chinese phones hence consequently proving hypothesis H3.

Very often things of necessity become things of luxury showing one’s Status in a

society and mobile phones to some extent do become symbols of an individual

achievement/status. 57% respondents replied negatively to it and did not agree to

the notion that mobile is a status symbol while 43% replied positively indicating

that a considerable number of individuals still take mobile phones a sign of Status

and achievement.

38


Q.9. In what price range does your current mobile phone lie?

Occurrence %age Valid %

collective

Percentage

2000-5000 24 24 24 24

6000-10000 20 20.0 20.0 44.0

11000-15000 29 29.0 29.0 73.0

16000-25000 15 15.0 15.0 88.0

25000+ 12 12.0 12. 100

100.000 100 100.00

The respondents had mobile phones from diverse price ranges with majority i.e.

29% of them had handsets in the price range of 11000 to 15000 rupees, 20% in

the range of 6000 to 10000 rupees and 24% in the range of 2000 to 5000 rupees.

While 12 respondents owned a mobile phone worth more than 25000 rupees.

39


Q.10. Does a new model of your mobile phone motivate you to buy a new set for

yourself?

This question was asked to know how brand loyal customers are to their present

brand and whether they are motivated by the new models with new technology

features of their present handsets or not. 69% of them do get motivated while

31% replied negatively. The results of this particular questions also proves H3

40


hypothesis which says that features that are new in a mobile phone as compared

to other sets of rival companies increases customers’ drive to acquire them.

Likert scale was developed to study as to how important price is to a Pakistani

consumer in purchasing a mobile phone. Most of the respondents agreed that for

them price is an important factor in mobile handset purchase decision, 23%

respondents slightly agreed to it, 19% agreed while 18% highly agreed. Only a

few disagreed to it while 21% were neutral to it. The above question also answers

and tests Hypothesis H2 and the results show that a plain majority do agree that

41


price does affect them in their purchase and choice of cell phones thus supporting

the Hypothesis H2 in result.

This question was asked to know whether a mobile phone is just a

communication device or there is something more to it. Over the years of

development and evolution mobile phones are now an entertainment media, a

computer, a gaming handheld device, a calculator, a record keeper, a pocket

dictionary etc. The answer had a split mandate only a slight majority replied

42


positively while many disagreed to it. While 24% of the respondents were

indecisive.

Cross Tabulation Analysis

Gender * Which company’s mobile do you have? Cross Tabulation

Which company’s mobile do you have?

nokia sonny ericsson motorola samsung other Total

Gender male 48 1 1 11 0 61

female 25 2 1 7 4 39

Total 73 3 2 18 4 100

From the data it was clear that male respondents preferred Nokia more than any

other brands i.e. 78% of them preferred Nokia, while in female respondents 64%

of them preferred Nokia. Sony Ericson, Motorola and Samsung were preferred

nearly with the same ratio in both the genders. 10% of the female respondents

had handsets of other brands which were not included in the given options.

43


Gender * Which factor to you is the most vital factor in purchasing a cellular phone for

yourself? Cross Tabulation

Which factor to you is the most essential in purchasing a cell phone for yourself?

brand name price

new technology

features size/shape Total

Gender male 21 6 32 2 61

female 16 4 15 4 39

Total 37 10 47 6 100

From the cross tabulation analysis of the above question it was discovered that

34% male and 41% female respondents preferred brand name, 15% male and

10% female preferred price, 52% male and 38% female favored new technology

features, 3% male and 10% female favored size/style. So to male respondents the

most important factor for them in the purchase decision of a mobile handset was

“new technology features” and the least important factor was size/shape of a

mobile, while for female respondents the most favored factor was “brand name”

and least favored factors were price and size/shape of a mobile.

44


Age Range * Which factor is most important to you in purchasing a mobile phone for

yourself? Cross Tabulation

Most important factor?

brand name price

new technology


Age Range 15-25 28 9 35 6 78

26-35 8 1 8 0 17

36-50 1 0 4 0 5

Total 37 10 47 6 100

Three age groups were involved in the study and the age group having

respondents between the age of 15-25 preferred new technology features the most

in a mobile phone which is understandable because they are aware of their

applications and most of the mobile phones are marketed to them. Age group

between the range of 26-35 years preferred brand name and new technology

features equally while price was not seen as an important factor. While

respondents of the age group 36-50 favored unanimously with 80% of the votes

new technology features as their most important desirables in a mobile phone.

45


Gender * Does a new model of your mobile phone motivate

you to buy a new set for yourself? Cross Tabulation

Does a new model of your mobile phone motivate you to

buy a new set for yourself?

Agreed Disagreed Sum total

Gender Male 44 17 61.0

Female 25 14 39.0

69 31 100.00

Although both the genders agreed that a new model of their present phone does

motivate them to buy a new phone for themselves but, male respondents replied

more positively with 72% agreeing as compared to 64% females.

46


Gender * In what price range does your current mobile phone lie? Cross Tabulation

In what price range does your current mobile phone lie?

2000-5000 6000-10000 11000-15000 16000-25000 25000+ Total

Gender male 17 15 16 8 5 61

female 7 5 13 7 7 39

Total 24 20 29 15 12 100

When price of the mobile phone of individuals was cross tabulated with their

gender it was found that majority of the male respondents had mobile phones that

were in the price range of 2000-5000 rupees (i.e. 27% male respondents) while

26% of them had handsets within price range of 11000-15000. Majority of the

female respondents had mobile phones between the price range of 11000-15000

rupees while only 12% of them possessed handset in between the range of 6000-

10000 rupees. All in all surprisingly more female respondents had expensive sets

than male respondents i.e. 17% females respondents had mobile sets with price

range of more than 25000 rupees while 8% male respondents had such phones.

47


In what price range does your current mobile phone lie? * Which factor to you is

mainly essential in purchasing Mobile set for yourself? Cross Tabulation

Vital Factor?

brand name price

new

technology


In what price range does

your current mobile

phone lie?

2000-5000 10 4 10 0 24

6000-10000 6 4 9 1 20

11000-15000 16 1 12 0 29

16000-25000 5 1 7 2 15

25000+ 0 0 9 3 12

Total 37 10 47 6 100

When respondents’ mobile phone price was cross tabulated with the factor to

which they value the most in a mobile phone some predictable answers were

found. Respondents having mobile phones with price range between 2000-5000

valued price to some extent while the respondents with most expensive mobile

phones did not value price as an important factor, to them new technology

features were the most important must haves in their handsets . As we move

along from less expensive to most expensive handset owners it can be seen that

price becomes less and less important.

48


Monthly income/pocket money? * Which factor to you is the most important in

purchasing a mobile phone for yourself? Cross Tabulation

Which factor to you is the most important in purchasing a mobile phone

for yourself?

brand name price

new

technology


Monthly income/pocket

money?

2000-5000 15 3 18 1 37

6000-10000 13 6 15 3 37

11000-15000 6 1 10 2 19

16000-25000 2 0 4 0 6

40000+ 1 0 0 0 1

Total 37 10 47 6 100

From the above comparison between respondents’ monthly income/pocket

money and to which factor they value the most in purchasing a mobile set for

themselves, it is clear that price with less monthly income respondents is a valued

49


factor but as we move along to higher income respondents price becomes less and

less important.

SECTION-4

50


Chapter-5 “CONCLUSIONS AND RECOMMENDATIONS”

Conclusions

Primary objective of this specific study was to examine consumers’ purchase behavior

relating to cell-phones and to look into the reasons which affects them to make their

choice. From the findings of this study it was clear that mobile is no longer a luxury of a

selected few in the society rather it is now a necessity and almost every posses one or

more handsets. It was also clear that Nokia is by far the market leader and has the largest

market share followed by Samsung, Sony Ericson, and Motorola.

Hypothesis H1 claimed that consumers prefer banded sets over unbranded ones and was

highly supported by the results of the study and proven as a result. The second hypothesis

H2 which related price with purchase decision got a mixed response in one question

respondents ranked it lowly as a factor affecting them in a purchase decision but when

asked to rate price and its importance as a motivational variable in purchase decision

many of the consumers rated it highly thus more research is recommended for the

conformation of Hypothesis H2. Hypothesis H3 was highly supported by the results of

the study and decisive majority of the respondents did agree with the hypothesis that new

technology features indeed affect people in choosing a particular product for themselves.

Although from the literature review it was found that Chinese mobiles are the new

dominant force and they may change the dynamics of the market but the results of this

study showed that even though majority of the respondents saw them as the replacements

for the present familiar brands but when asked would they prefer them instead of present

brands they replied negatively. So it can be inferred that even if there is a perception that

51


Chinese mobiles are penetrating the market but still no one from the respondents owned a

Chinese mobile indicating that they still prefer the familiar brands and it is only a

perception that Chinese mobiles are taking over the market.

When the respondents were asked about the most important question of the research that

what according to them is the most important factor in a mobile phone selection? It was

found that overall Pakistani users surprisingly value “new technology features” as the

most motivating factor in purchasing a mobile phone for themselves. It was also found

that female respondents slightly valued brand name more than new technology features as

their most important factor while male respondents voted for new technology features

which shows demographics (i.e. gender in this case) having an effect on perception.

Astonishingly price was not seen as a major motivational factor in mobile phone

purchase decision along with size/shape.

It was also found that most of the people under study purchased a new handset for

themselves only when their present set stopped working and a great number of them went

for a new mobile within an year. While only a few were motivated to buy a new model of

their present handset indicating brand loyalty is not that common. But when the

respondents were asked a cross question that whether a new model of their present

handset motivates them to buy a new phone for themselves (i.e. Question No.10) a wide

majority of them replied positively indicating contradiction in the respondents’ replies for

two similar questions. It was also discovered that male respondents were motivated more

than the female respondents to buy a new phone for themselves by the entry of a new

model of their existing handset thus showing effects of demographics (i.e. gender) on

purchase behavior.

Mobile phones over the years have been seen as a mark of achievement/status symbol

and when consumers were asked about it, they showed split mandate i.e. nearly half of

them agreed while half of them did not agree with the notion. But still a slight majority

believed them not to be a sign of status symbol.

Although Pakistan is a developing country but from the study it was clear that it is a

market for all kinds of players i.e. the respondents had diversified handsets ranging in all

52


price ranges. The majority of the respondents had mobile phones in the price range of

11000 to 15000 rupees. Demographically speaking majority of the females had handsets

between the price range of 11000-15000 while majority of the male respondents had

mobiles phones in between the price range of 2000-5000 rupees.

Respondents were asked to rate the intensity of how much they valued price as the most

important determining factor in their purchase decision a good majority of them agreed

with it many were indecisive while a few of them did not see price as an important factor

influencing their purchase decision regarding their mobile phones. When monthly

income/pocket money was cross tabulated with the factors which users value the most in

a cell-phone it was found that the importance of price becomes less and less significant

when we move from low income getters to higher ones indicating the effects of

demographics (i.e. in this case income) on mobile phone selection.

When asked whether they see a mobile phone as just a communication device and

nothing else the respondents’ reply was again not unanimous nearly one third of them

agreed, one third of them disagreed while one third of them were indecisive about it.

53


Recommendations

From the study it was clear that the respondents preferred new technology

features more than anything else in their handsets so it is advised that the mobile

phone manufacturers should concentrate on that and their advertising should

highlight the properties and abbreviations (e.g., EDGE, GPRS, WIFI, GPS) and

at the same time educate the people about the benefits of these attributes in their

promotions.

Since smart phones era has just begun so the importance of reseller is becoming

more and more essential as such phones have loads of features and properties and

the users might be requiring hand-on instructions of their use. Furthermore, better

post purchase services should be there as well for such phones because that may

determine competitive edge over other rivals.

The study also revealed that many of the respondents did not value price that

important as compared to other factors in mobile phone selection and were

willing to pay higher prices if provided with better features than others. So it is

recommended that consumers can be charged higher prices for high end products

but their phones should have the attributes in them that are better/different than

rival’s products.

It was also discovered that many of the people under study had multiple phones

at the same time so this presents an opportunity for mobile phone manufactures to

study why they carry multiple phones at the same time and how they can target

them either through making phones based on their preferences or introducing

dual SIM handsets for such segment.

From the results of the study it is clear that Chinese handsets do not present an

imminent threat to the present familiar brands, but still all the major brands can

54


jointly take legal action against the replica Chinese phones that use their

trademarks/intellectual properties illegally.

This study provides a number of insights into the factors that has the most

influence on the choice of a mobile handset but this is just the tip of an ice berg, the work

is not comprehensive enough so that its findings can be generalized but still it can be a

premier report on the mobile phone handset market in Pakistan. There are numerous

studies conducted on mobile phone service providers in Pakistan but research on the

handset market in general and in the case of Pakistan in particular is insufficient.

An important and major limitation of this report was related to its sample range which

was relatively small and a big chunk of the sample was taken from university students

who had unique demographic characteristics and it may be noted that only 4% of the

people of Pakistan manage to study in universities, so a large number of population is still

there to be studied for the phenomenon under investigation. The sample was not

diversified enough to include people from all parts of the country especially people

belonging to rural areas that constitute majority of the population of Pakistan. Because of

such limitations in the sample the findings cannot be generalized.

Furthermore, many of the attributes in a mobile phone like MMS, SMS, camera,

multimedia features, WIFI connectivity, dual SIM support etc. were combined as “new

technology features” but they can themselves be studied as individual factors and how

much an individual value them compared to each other.

55


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ANNEXURE

59


QUESTIONNAIRE

Gender: (1) Male (2) Female Age group A) 15 to 25 B) 26 to 35 C) 36 to 40

Monthly income/pocket money

A. 2000-5000 rupees B. 6000-10000rupees C. 11000-

15000rupess

D. 16000-25000rupees E. 26000-40000rupees F. Above

40000rupees

1. Do you own a mobile phone?

a. YES b. NO

2. Do you see Chinese mobile phones as replacements for current well

known brands?

a. YES b. NO

3. How many mobile sets do you use/have at present?

a. 1 b. 2 c. 3 d. 4 and above

4. Which company’s mobile handset do you have?

a. Nokia b. Motorola c. Sony Ericsson d. Samsung

e. Other

5. Which factor to you is the most important in purchasing a mobile phone

for yourself?

a. Brand Name.

b. Price.

60


c. New Technology Features.

d. Size/shape.

6. How often do you buy a new mobile phone for yourself?

A. Within 6 Months

B. Within an year

C. When new model of your present set arrives.

D. When the last one stops working.

7. Do you prefer Chinese mobiles over the branded ones?

a. Yes b. No

8. Do you believe cell phone is a “status symbol”?

a. Yes b. No

9. In what price range does your current mobile phone lie?

a. 2000 to 5000 rupees

b. 6000 to 10000 rupees

c. 11000 to 15000 rupees

d. 16000 - 25000 rupees

e. 25000 onwards

10. Does a new model of your mobile phone motivate you to buy a new set

for yourself?

a. Yes B. No

11. Rate price in order of importance to select a new mobile phone?

Most important factor --1----2-----3-----4-----5-----6-----7---Least important

factor

12. A mobile phone is just a device for communication and that’s it?

Highly agreed --1------2------3------4------5------6-----7---Highly disagreed

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factors affecting consumers’ choice of mobile phone selection in pakistan

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