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A STUDY OF FACTORS AFFECTING PURCHASE

INTENTION OF YOUNG PEOPLE TOWARDS


SMARTPHONE BRAND IN LOCAL MARKET

Research Project

BY:
P. K. NIMASHA CHAMALKI
BSC - UGC - MGT - 1517 - 110
BSc in Business Management (Special) Degree

An Independent Research Report Submitted in partial fulfillment of the


requirements for the degree of
BSc in Business Management (Special) Degree
NATIONAL SCHOOL OF BUSINESS MANAGEMENT
SRI LANKA
DECLARATION BY THE CANDIDATE

I declare that all materials included in this report is the end result of my own work and that
due acknowledgement have been given in the bibliography and references to ALL sources be
they printed, electronic or personal

Signed: _______________________ Date:


__________________

Name:

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CERTIFICATION OF THE SUPERVISOR

This is to certify that the research report presented by P K Nimasha Chamalki on a study to
review the factors that affecting purchasing intention of young people towards smartphone
brand in local market can be accepted in partial fulfillment of the requirements of the
Bachelor of Science in Business Management (Special) Degree.

Signed: _______________________ Date: __________________


Research Supervisor

Ms. Chulani Senarathna


MBA (University of Colombo)
B.Com (Marketing) Sp. (Hons.) - (University of Sri Jayawardenapura)
Charted Marketer CIM (UK)
Management Consultant/ Senior lecturer
Productivity & Management Development Division

National Institute of Business Management,


Wijerama Mawatha, Colombo 7,
Sri Lanka.

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ACKNOWLEDGEMENT

It is a great pleasure to me to thank my supervisor Ms. Chulani Senarathna, Management


Consultant / Senior lecturer attached to the Productivity & Management Development
Division, National Institute of Business Management for giving me precious guidance from
the commencement of my dissertation to the end.

Further my special thanks go to all the other lecturers in the National School of Business
Management who gave me the guidance and advice to carry out this research.

Above all my deep sense of gratitude goes to my parents, family members & others who gave
me the tremendous support and encouragement in the completion of this work.

September 2016

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TABLE OF CONTENTS

List of Tables 7
List of figures 8
Abstract 9

CHAPTER 1- INTRODUCTION
1. 1 Sri Lankan Market Overview 11
1. 2 Research background 13
1.3 Research Problem 13
1.4 Research Questions 13

1.5 Research Objectives 14


1.6 Hypotheses of the study 15
1.7 Significance of the study 16
1.8 Research Methodology 17
1.9 Key terms 18
1.10 Scope 19
1.11 Chapter layout 19

CHAPTER 2 – LITERATURE REVIEW


2.1 Purchase intention 21
2.2 Brand image 22
2.3 Pricing 25
2.4 Product features 27

2.5 Peer influence 30

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CHAPTER 3 – CONCEPTUALIZATION AND METHODOLOGY

3.1 Defining variables 33

3.2 Hypotheses development 34


3.3 Research Approach 37
3.4 Research Design 37
3.5 data collection method 37

3.6 Sampling Design 38

3.7 Research Instrument 40

3.8 Constructs Measurement 41

3.9 Data Processing 44

3.10 Data Analysis 45

CHAPTER 4 – DATA PRESENTATION, FINDINGS AND


DISCUSSION
4.0 Introduction 48
4.1 Descriptive analysis 48
4.2 Sample Profile of the Study 49
4.3 Correlation 52
4.4 Model summery 54
4.5 Hypotheses testing 56
4.6 Discussion 59

CHAPTER 5 – CONCLUSIONS AND RECOMMENDATIONS


5.1 Limitations of the Study 60
5.2 Recommendations 61
5.3 Conclusion 62

References 62

Appendix 1 65

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LIST OF TABLES

Table
No

Table 3.8.1, Survey 2016, Interval scale ……………………………………………41

Table 3.8.1, Survey 2016, References of variables................................................. 43

Table 4.1.1.2, Survey 2016, Gender Composition…………………………..………49

Table 4.1.2.1, survey 2016, Age Composition………………………………………50

Table 4.1.3.1, survey 2016, Do you own a smartphone?......................................... 51

Table 3.5.2.1, survey 2016, Reliability……………………………………………...52

Table 4.2.1, survey 2016, Correlations……………………………………………53

Table 4.3.1, survey 2016, Model summary…………………………………………..54

Table 4.3.1, survey 2016, Anova…………………………………………………….55

Table 4.4.1, survey 2016, Coefficients ……… ……………………………………..56

Table 4.5.2, survey 2016, Summary of findings……………………………………..58

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LIST OF FIGURES

Name Page
No

Figure 1.1.1, Survey 2016, Smartphone Market share –


Q12014……………………………………………………………………………..12

Figure 5.0.1., Survey 2016, Conceptual


framework…………………………………….………………………………..…..33

Figure 3.8.1.1, Survey 2016, Example of nominal


scale ………………………………………………………………………………..41

Figure 3.8.2.1, Survey 2016, Example of ordinal


scale….……………………….…………………………………………………….42

Figure 4.1.1.1, survey 2016, Gender


Composition ……………………………………………………............................49

Figure 4.1.2.1, survey 2016, Age


Composition.…………………………………………………………….………….32

Figure 4.1.3.1, survey 2016, Do you own a


smartphone?…………………………………………………………….…………33

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ABSTRACT

The main purpose of this research study is to study the factors affecting purchase intention of
young people towards smartphone brand in local market. According to previous studies brand
image, price, product features and peer influence are some main factors which affects the
purchasing intention of people.

The overall objective of this study was to determine whether these four factors impact on
young customers purchasing intention in local market. To achieve it four hypotheses were
developed. A survey was conducted to gather primary data by distributing 150 questionnaires
to young people age between 16-30 in Colombo district. The data was analyzed Pearson’s
correlation analysis.

The reliability was tested using Chronbatch’s Alpha value method and all the variables
carried equal or above 0.65 which is the standard Alpha value in reliability tests. The data
was presented using percentages and bar charts. To determine the impact of these four
variables towards young people purchasing intention. It was tested using regression analysis
by enter method. Results of the analyzing shows peer influence is the most influential
predictor (b = .252 ,P< .05) of young consumer purchasing intention. It measure the based on
beta value. Product features (b = .095 , P >.05) and price (b = .026, P>05) are not influential
factors of young consumer purchasing intention . Brand image (b = -.101, P < .05) has a
negative impact to young consumer purchasing intention in Colombo district. The findings of
the present study demonstrated that the impacts of peer influence are high when compare to
brand image, product features and price between young people in Colombo district. Finally,
the researcher has given suggestions to overcome the research problem.

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CHAPTER 01 – INTRODUCTION

Telecommunication device help us to communicate at a distance. The first


telecommunication device called pager. Pager is small telecommunications devices that can
only use to receives or transmit alert signals and send short messages. In year 1973, Hand
phone was invented by Motorola researcher Martin Cooper. The traditional hand phone is
design in large and bulky in size and only carry some basic function such as call and short
messaging system (SMS). Hand phone is now further refined to smaller and compact version.
From the hand phone that consists of numerous buttons, phone is now evolving becomes
smartphone as it can be control by touch screen. Smartphone is a mobile device which is
more than merely make and receives phone calls, text messages, and voice mail. The basic
feature of a Smartphone is able to access to the internet. It can also access digital media such
as picture, music and videos. Also, Smartphone needs to have the ability to make use of small
computer programs called applications or apps (Weinberg, 2012). The increasing innovation
in mobile phone industries has brought this craze among the people on Smartphone.
Nowadays, smartphone has been deeply accepted by most people around the world and have
become an integral part of everyone around the globe.

In addition, due to vast improvements in technology, more advanced and sophisticated


smartphone are introduced and launched almost every year. Smartphone has been deeply
accepted by most people around the world especially among young consumers. The
increasing trend in Smartphone among the people is the main reason that has amplified the
interest to research on the topic. People’s obsession about the Smartphone has been
increasing rapidly. Nowadays cheaper smart phones are also available in the market. But why
people buy expensive smartphones? Price, brand image, product features, peer influence etc.
could be several factors that a consumer may think before buying a Smartphone. How much
does brand of smartphone affect the buying decision of a customer? As there are various
types of smartphones available in market with varying price; what is the difference between
them? And how they impact the customer buying decision? The aim of this research is
therefore to find out purchasing intention of Smartphone buyers in local Market. The research
is trying to find out that why do people desire to purchase a smartphone, what influence
people in purchasing a smartphone and what motivate them in making the purchase decision.
It studies and analyses the factors that trigger the purchase decision of young consumers in

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smartphone brand. This research studies and analyses the relative differences among different
smartphone brands that in turn affects the consumer purchase intention towards the different
available brands. This chapter provides an overview of the research. Chapter one cover the
research background, research objectives, research questions, significant of studies, key terms
and scope of the research.

1.1 Sri Lankan Market Overview

Sri Lanka is one of the good destinations for introducing and selling new smart phone brand.
There are several brands of smart phones with different ranges of prices on the Sri Lankan
market. It is therefore important that with the growing market demand for smart phones in Sri
Lanka. Manufacturers and marketers the future purchase behavior of consumers in order to
produce and market smart phones that meet consumers’ taste for profitability. According to
GSMA intelligence,MDI anasysis,2013, around 45-50% of people in Sri Lanka own a mobile
phone now. Although this is higher in comparison to South Asia (30%) and the developing
world (40%), mobile ownership in Sri Lanka is well below that in mature markets which
typically see rates of 60-80% (GSMA intelligence,MDI anasysis,2013).

There is still headroom for subscriber penetration in the country. On the face of it, the bulk of
this growth would come from closing the urban-rural divide - mobile ownership is around
53% in urban cities as compared to 42% in rural areas. Given that the majority (85%) of the
population resides outside of cities, even if rural ownership plateaued at 50%, this still
implies an incremental rise of 1.2 million people based on current levels (GSMA
intelligence,MDI anasysis,2013). Rural households have fewer income earners (1.7 versus
1.9 in cities) while their household incomes are 25% lower than those in urban areas. An
increasing number of Sri Lankans are beginning to use their smart phones to access the
internet. Since 2009, mobile internet users have almost doubled each year. Acoording to
CyberMedia Research of a Market Intelligence and Advisory firm in its report which is
published in 2014, Sri Lanka’s mobile phone sales reached one million unities in the third
quarter of 2014 while smart phone shipment up by 100 percent which accounts for 20 percent
of the total sales. The report says the market grew 11 percent in unit shipment terms, quarter-
on-quarter (3Q CY 2014 versus 2Q CY 2014), and 43 percent growth year on year. Smart
phones segment was up 100 percent to 0.2 million units while feature phones up by 33
percent to 0.8 million units year on year. 6.8 million people in the world use smart devices

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and about 20 percent of the population use smart devices in Sri Lanka data showed
(Cybermedia.co.sl, 2014). There are multiple reasons for this exceptional growth. More and
more people are moving to smartphones. Communication, Social Networking and workplace
productivity play a huge role in this move. This is fueled by the increasing number of
“affordable” smartphones available in the market now. Mobile service providers are also
investing more on launching and promoting smartphones with special offers and services,
especially on the “data” front.Nowadays, consumers pay more attention to the brand while
choosing smartphone (Knapman, 2012). Many smartphone brands that are popular among the
users include Apple, Samsung, Sony, HTC, LG, Microsoft, Huawei and Etel have entered
into Sri Lanka recent years. According to the CMR’s Sri Lanka mobile handset market
review Q1 2014, Samsung remains as the leader in ‘smartphone’ segment with 27.7% market
share in Q1-2014, which is an increase compared to Q4-2013. Back in Q4-2013 Samsung’s
market share in the smartphone segment was 21.2%. Huawei retained the 2nd spot in the
smartphone segment with 18.9% market share, while E-Tel took the 3rd position with 13.9%
market share. Back in Q4-2013 Huawei and E-tel had 19.6% and 16.1% market shares,
respectively. A notable fact is that for the year 2013, Micromax maintained the overall 3rd
place in smartphone sales. But for the last 2 consecutive quarters E-Tel has overtaken the
sales of Micromax in that department.

Smartphone Market Share - Q1 2014

Samsung
Huawei
E-tel
Other

Figure 1.1.1, Survey 2016, Smartphone Market share – Q1 2014

Source: CMR’s Sri Lanka Mobile Handset Market Review Q1 2014 © digit.lk

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1.2 Research background

In today’s society, people are becoming more and more rely on technology especially when
communicating with others. Smartphone is one of the highly technology communication
device that allowed users to connect with each other and transfer information to around the
globe. Smartphone has brings huge benefit to the society, the beneficial aspects includes it
allow users to call and talk straightaway, send short message service (SMS), assist business
person to make schedule of working and meetings, work as navigation system (GPS), access
to the internet, entertainment, downloading applications, store data and even help in legal
matters such as track criminal via tracking system.

Younger generation is more towards new technology and innovation features which consider
fast adoption curve. Therefore, they are able to embrace new technology faster than other age
brackets. Thus, this research is taken to determine the factors influencing purchase intention
of smartphone brand: A study of young generation age between 16- 30 in Colombo District.
Consumers are defined as the individuals who purchase a good or service in the intention to
utilize them. Normally, consumers will consider a few set of alternatives before they make
their respective purchase decision. Moreover, there are many factors involved during a
consumer decision making process. These factors affect the consumers purchase intention.
With a clear and precise understanding of the consumer purchase intention pattern of
behavior, marketers will be able better position their products in the marketplace. However,
in order to understand the consumer purchase intention towards smartphone brand, research
has to be carried out. There are several factors that affect consumer purchase intention
towards smartphone brand. Researcher has identified 4 factors that affect the purchase
intention of smartphone include brand image, pricing, product specification and peer
influence. At the end of the research, marketers may have a better understanding on factors
that will bring brings impact to the young consumers’ purchase intention towards smartphone
brand.

1.3 Research Problem

In this global era, technology has become an integral part in our lives. The saying ‘world is at
your fingertips’ has become predominant nowadays. From desktop to laptops, technology has
further minimised to smartphones. There has been many large mobile phone companies
‘stepping their foot’ into the industry. Due to the large entry of mobile phone companies,

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many smartphone brand has introduced to the market in Sri Lanka, namely Apple, Samsung,
Sony, HTC, Huawei, LG, Microsoft, Blackberry, Oppo. In this ‘technology savvy’ era, it is
very difficult to study, analyse and interpret consumer purchase intention. Smartphone
companies as well as telecommunication providers even willing to financially invest in order
to study their respective potential consumers purchasing intention. Therefore, this research is
intended in the quest to study the consumer purchase intention towards smartphone brands.
Although many researches and studies have been preliminarily carried out on consumer
purchase intention and hypothesis are formed, however there is still room for improvement.
A framework as a whole indicating the distinct relationships between the related variables to
consumer purchase intention towards smartphone brands can be further development for
future studies and research. Moreover, although there has been many researches carried out
previously on purchase intention towards smartphone brands, there has not been a research
carried out on linking between young consumer purchase behaviour and its corresponding
purchase intention towards smartphone brand. This study is intended to study and analyse
specifically the factors affect the purchase intention towards smartphone brands of young
consumers. Young consumers the specified age range range is selected because these group
of pople have the highest smartphone purchase rate.

1.4 Research Questions

(i) Does brand image play a significant role in young consumer purchase decision
towards smartphones brand?
(ii) Does pricing influence the purchase intention of young consumer towards different
smartphone brands?
(iii) Does the product features affects young consumer decision making in choosing a
smartphone brand?
(iv) How does the peer group influence can affect the young consumer purchase intention
towards different smartphone brands?

1.5 Research objectives

Based on the problem statement, there are numbers of objectives being developed as below:

1.5.1 General Objectives

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This research has been developed to identify, examine and better understanding the
relationship between young consumers and smartphones brand. The general objective of
this research is to examine the factors that affect purchase intention towards smartphone
brand among the young consumers.

1.5.2 Specific Objectives

i To examine effect of brand image on young consumers purchase intention towards


smartphone brand.
ii To examine effect of price on young consumers purchase intention towards smartphone
brand.
iii To examine effect of product features on young consumer purchase intention towards
smartphone brand.
iv To examine effect of peer group influences on young consumer purchase intention
towards smartphone brand.

1.6 Hypothesis of the study

Subsequent of reviewing relevant literature, there are four (4) hypotheses that corresponding to the
sub-research questions is developed:

H₁: Brand image has positively relationship towards young consumer’s purchase intentions
for smartphone brand
H₀: Brand image has no relationship towards young consumer’s purchase intentions for
smartphone brand

H2: Pricing has positively relationship towards young consumer’s purchase intentions for
smartphone brand
H₀: Pricing has no relationship towards young consumer’s purchase intentions for
smartphone brand

H3: Product features has positively relationship towards young consumer’s purchase
intentions for smartphone brand

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H₀: Product features has no relationship towards young consumer’s purchase intentions for
smartphone brand

H4: Peer group influence has positively relationship towards young consumer’s purchase
intentions for smartphone brand
H₀: Peer group influence has no relationship towards young consumer’s purchase intentions
for smartphone brand

1.7 Significance of the study

This study able to provide a concept for smartphone firms a better understanding on factors
that influence the purchase intention of smartphone among young consumers in local market.
The importance and attention given to a smartphone is rapidly increasing everyday. The
complexity and the sophistication involved in the highly advanced smart phones is making
the purchase process of a smart phone getting more intense. In fact, the smart phone purchase
is increasing from the past years. Compared to 2012, smartphone sales (percentage of
number of units) in Sri Lanka have seen 80% year-on-year growth (CyberMedia Research of
a Market Intelligence and Advisory firm in its report, 2014).

“Factors affecting purchase intention towards smartphone brands; A study of young


consumers” ,although similar studies have been carried on smartphone brands and its
respective purchase intentions, however this research is directed mainly and only towards
young consumers in Colombo District. This particular research is designed and directed on
the consumers and the factors that affect their purchase intention towards smartphone.
Nowadays, customers are continuously facing the dilemma, which phone to buy. After the
smart phones have been released, the choice seemed to be even harder, since the
opportunities and offers that producers are providing are endless (Seongwon et al., 2011;
Milutinovic et al., 2011). Due to the fact of cut throat competition, smart phone markets have
become very unstable now a day. In this highly competitive smartphone market,
manufacturers constantly fight to find additional competitive edge and differentiating
elements to persuade consumers to select their brand instead of a competitor’s. So doing
researches about consumer purchasing intention of smartphones is useful to overcome the
problem of instability. When compare with children and adults the percentage of smartphone
using is higher among young people and also the factors influencing their purchasing

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decision is high. By understanding the purchasing intention of smartphone consumers, this
study is very significant to a wide spectrum of many industries related to the smartphone to
bring a real life changes in the marketing mix and marketing strategy as per the
characteristics of consumers to enhance their sales. Upon completion of this research and the
results obtained, researcher can know how to assist smartphone companies to improve their
marketing strategies or financing and to focus more about consumer’s preference. The
smartphone company can benefit when the respective firm is able to cater the needs of young
consumers and this will induce a higher sales and purchase for the respective smartphone
brand company.

1.8 Research Methodology

This describes the methodology involve and practice in this research. This includes Research
Type, Research Technique, Type, Nature Population and sample design, data analysis
methods.

1.8.1 Research design

This is a deductive research in nature. Under deductive research, again this research is
identified as a descriptive research. The reason to select this design is that this study is
conducting to take a superior conclusion of a specific problem which is affected on a
particular party. It uses proportion of young consumers to identify the factors which affecting
to their purchase intention towards smartphone brand. In here, hypotheses are developed and
examine the independent and dependent variables based on selected large representative
samples. Also, this research process is structured and formal.

This study's objective is to examine the factors that affect purchase intention towards
smartphone brand among the young consumers. This is related with the current market
situation.

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1.8.2 Types of data

Data collected from secondary as well as primary sources to achieve the objectives of this
research.

1.8.2.1 Primary Data

To collect the primary data from the units of sample, the survey method is used.
Information based on questionnaire regarding young consumer purchase intention
towards smartphone brand, to give to the selected respondents.

1.8.2.2 Secondary Data

Before going to the primary sources the researcher has concern about sufficient of
secondary sources. Because secondary data is easily available on web sites,
newspaper articles and books use to collect necessary information.

1.8.3 Data collection method

A quantitative research approach will adopt in this study. An online questionnaire will
distribute in order to gather information and the survey will conduct six weeks period.
The structured questionnaire itself was designed so as to make it easy to answer and to
cover most of the common research questions. Furthermore, the questionnaire is going to
design so as to elicit information on both demographic and product use aspects of the
respondents. Young people whose ages range from 16 – 30 will select as the target
population of this study and the study sample consist of 150 randomly chosen
respondents from Colombo district, who believe to represent the target population. This
research also uses the non-random sampling method in order to derive the sample
population to arrive at the sample size for the research. Further, the convenience
technique of non random sampling will use where the sample will drawn from the part of
the population most available or most easily select for the research study.

1.8.4 Data Presentation and Analysis Method

In analyzing the results, the researcher use SPSS (Statistical Package for Social Sciences)
due to its user friendliness and convenience of usage. Correlations among the independent
variables and the dependent variable and the hypotheses will test using this package,
which helps to arrive at crucial conclusions at the end of the study.

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1.9 Key terms

Smartphone brand, purchase intention, young consumers

1.10 Scope

The research was conducted in Colombo district. This state was chosen because it is the main
capital city of Sri Lanka. The respondents chosen are potential young customers that have
been frequently using smartphones; the research only considers young people who are in 16 -
30 as end-users. This can lead to the accuracy of data obtained and maximize end-results for
this research. In this study, the researcher will focus only four main independent variables as
factors that could influence young consumer’s purchase intention of smartphone brand.

1.11 Chapter layout

Chapter 01: Introduction

This chapter provides the overview of entire research study which contains research background,
follow by the problem statement, research objective, research question and hypotheses for the
research study that used to deliver supervision for the accurate method of this research. After that,
significance of the study and lastly is the chapter layout.

Chapter 02: Literature Review

This chapter is used to discuss about the previous research information about the topic and
those information can be used to take a sound knowledge regarding the concepts, theories
that affects the purchase intention of consumers.

Chapter 03: Conceptualization and Research Methodology

The third chapter shows a purpose of study, conceptual framework, hypothesis, defining the
variables, research type, research technique, population and sampling design, time horizon
and data analysis methods. Using these Variables and Dimensions, it is developing a Skeleton
of the remaining depth concept. And also this chapter consists with the formulation of
hypothesis, methodological choice, and method of data collection, sampling plan and data
processing and scales. Moreover, this chapter will discuss about all the information relevant
to the data collection process.

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Chapter 04: Data Presentation, Findings and Discussion.

This shows how the data were analyzed by using statistical methods and the analysis were
supported based on past research findings. The entire hypotheses that were formulated in the
previous stage will be tested in this stage.

Chapter 05: Conclusions and Recommendations

Finally, it gives the overall summary for this study and provides ultimate conclusion.
Furthermore, this chapter provides the suggestions for further researches which can be used
as the Literature review for future studies by the interested parties. In addition to that, the
appendix, and references are also mentioned under this.

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CHAPTER 2 – REVIEW OF THE LITERITURE

The factors that can affect consumers’ purchase intention towards brand in the context of
mobile phone industry are a widely discussed topic in the literature. Every consumer has
different factors behind it.This section targets popular journals, magazines and various text
books that contain fruitful information on four main factors that can affect purchase intention
of young people toward smartphone brand.

2.1 Purchase intention

According to Richard, Loury & David (2013), purchase intention defined as the possibility
and willingness of consumer to purchase a particular good or service in future. Laroche et al.
(1996) define purchase intention is the individual’s intention to purchase a particular brand
they have chosen after certain evaluation. There are few researchers found out consumer’s
purchase intention is based on their past experience, their preference toward the product as
well as the external environment to collect information, evaluate alternative, and make
purchase decision. (Dodds et al., 1991; Schiffman & Kanuk, 2000; Yang, 2009). Besides,
according to Dodds (1991) and Schiffman & Kanuk (2000) when consumers have higher
willingness to purchase a product they will have a higher purchase intention. Furthermore,
purchase intention also refers to consumer’s intention to repurchase or purchase (Wand &
Tadisina, 2008; Philip et al., 2002).

Higher brand image will lead to higher purchase intentions (Wang, 2006). In purchasing
apparel products, brand image is crucial because it impacts consumers’ preference and
intentions to purchase. It also has direct impact on consumers’ willingness to pay high price
and recommend the particular brand to others. According to Chang and Albert (1994),
marketers often uses product price and features as the main variable to influence their
consumers’ product evaluations and purchase intentions. Every product have its own price
range, if the actual price exceed the acceptable price range, consumer’s purchase intention
tend to reduce. Besides, social influence also plays a significant role in consumer’s purchase
intention. Ibrahim, Kassim, & Mohamood (2013) conclude that social influence has high
impact in attracting young consumers to purchase smartphone. Consumers will collect brand

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information from various sources around them such as co-worker, friend and family and
finally they will decide about their brand choice.

Furthermore, purchase intention is the common tools that used by marketers to predict the
sales of existing goods and services (Armstrong, Morwitz & Kumer, 2000). Marketers are
interested in understanding consumer’s purchase intention, so that they are able to properly
segment the market and as a source to their decision making. Thus, previous research has
proof that there are positive relationships between brand image, price, product feature and
peer influence with purchase intention (Lin & Lin, 2007; Ibrahim, Kassim, & Mohamood,
2013).

2.2 Brand image

Brand is the name of uniqueness with respect to name, sign, term, or design or blend of them,
proposed to classify the products or services of one supplier or group of suppliers to have
competitive advantage on others in the market (Keller 2002).It is the most valuable asset for a
company, where it represents a product or service means to consumers. Brands are more than
just names and symbols. It is also the element of relationship between company and
customers (Kotler and Armstrong, 2010). According to Kotler, brand image also defined as a
person’s beliefs, ideas, and impression regarding to an object. The brand name has directly
influenced customer’s perception toward the quality of the offering. When customers are
satisfied, they generate word of mouth and it will lead to others to be interested and choose
the brand (Azad and Safaei, 2012). To enhance consumer response, marketers strive to build
brand equity in order to capture consumer preference and loyalty. Brand equity is the added
value endowed on products and services and it may reflect how consumers think, feel and act
with the brand. A study on the effect of brand name toward mobile phones shows that people
trust the well known brand for its quality, performance and believe that brand shows a person
lifestyle and societal status. Brand is a name, term, design, symbol or any feature that
identifies one seller’s goods or services as distinct from those of other sellers. According to
research, brand has a moderate impact on consumer behaviour. In terms of gender, it's impact
female more than male. Also, lower income group consumers have a greater impact on brand
toward their behavior due to after sales service and limited purchasing capacity. 53.3% of
people strongly agree that they choose a brand due to perceived good brand quality (Farzana,
2012). It shows that brand could influence purchase decisions, and it should be further look

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into the effect of factors such as brand awareness, brand equity and brand association has on
purchase decision.

Generally, brand image means image of any particular product that set into the mind of
consumers or anything that linked in the memory to a brand (Aaker, 1991). Brand image is
the set of concepts, feelings, and attitudes that a consumer has regarding a brand (Ko, Kim,
Claussen & Kim, 2008). According to Keller (1993) and Biel (1993), they both defined
consumer’s perceptions about a brand are reflected by the brand associations in their memory
and they often connects the brand name with variety of attributes and associations. These
associations can be characterized into strength, favorability and uniqueness of the brand.
These brand associations help consumers to process information and create positive feelings
of consumers towards the brand. It also differentiates the brand from its competitor, generate
demand, and provide a basis for brand extensions (Aaker, 1991).

The brand associations held in consumer memory imply the impression toward a brand
(Keller, 1993). These associations can be characterized into three aspects which include
strength, favorability and uniqueness of the brand. In the brand associations, strength
indicates consumer accessibility of relative brand information and the consistency of the
information over time. Favorability of brand association means the desire of consumers
towards a brand. It depends on how the product and supporting market program able to
successfully capture the purchase intention and delivered information to their consumers.
Uniqueness of brand association is the overall mind reflection and belief of consumers
toward a particular brand with its unique qualities such as design, packaging, color, texture
and other abstract dimension (Mulugeta, 2012) which not possessed by other competing
brand (Lee and Wu, 2011).

Consumer demands as the key factor in specific products as well as the basis of product
design and further proposed three dimensions for brand image which are functional, symbol,
and experience benefits (Park et al, 1991). Functional benefits mean the intrinsic advantages
received by consumers while using the product or services. It is corresponding to product-
related attributes that satisfy the consumers’ basic needs (Keller, 1993) such as physiological
and safety needs.

Symbol benefits are more on extrinsic advantages that bring to the consumer while owning
the brand. They closely regarding to non-product related attributes and relate to fundamental
needs for social acceptance or selfexpression and outer directed self-esteem. Consumer might

23
value the brand in term of the prestige, fashionable or stylish. For example, among the
smartphone brand, Apple has a higher brand image in consumer mind. Consumer always
associate Apple with outstanding quality, trustworthy, prestige, stylishness and elegant.
Apple brand users often connect the brand with higher symbolic association (Salciuviene,
Ghauri and De Mattos, 2009) such as increase their status and individual self-image. In fact,
some of the Apple users might think that they have higher status than consumers who are
using other brands.

Experimental benefits are the inner experience that consumer gain when using the product
and correspond to product-related that brings subjective satisfaction to consumers. These
benefits satisfy experiential needs such as sensory pleasure, variety, and cognitive stimulation
(Keller, 1993). A strong brand image can lead to higher level of satisfaction and increase
consumer confidence to purchase it (Laroche, Kim and Zhou, 1996).

Thus, according to Richardson, Dick & Jain (1994) brand image is often used as an external
factor for purchase decision making. When the new product is launched in the market with
the established brand name the chances of failure of that product would be less and there
would be fewer expenses incurred on marketing of the product. (Martienz and Pina, 2012).
Adding more, brand means trust in the eyes of the customer and customer is trustworthy that
quality would not be compromised. The Intel success story is the example; they are building
their brand name since 1991. Now, with little effort to launch new product they are earning
long-term profits and this is all due to brand name. (Maha and Mac Anthony, 2012) In
customer decision making process brand plays the very important role. While purchasing the
new product customer always go through some decision making steps. The consumer
purchased the specific brand but first gets the information about the brand and after that sees
the product requirement. If the product looks like suitable it then matches it with the other
brand product. After matching the customer decides which product is too purchase. When the
customer buys the same product brand habitually, the customer past experiences about the
particular brand plays the vital role about the purchasing of the product. (Keller, 2008). Brand
name really influenced the consumer of smart phone. The previous research suggested that
the brand image can increased the confidence of consumer to buy certain brand smart phone.
(Maha and Mac Anthony, 2012). According to Hyun & Kim (2011), consumers willing to
pay premium price for the brand because they think that the brand is unique compare to other
brand (Lee, Lee and Wu, 2009). Brand image helps consumers to decide which brand gives
them more value. Eze, Tan and Yeo (2012) conclude that consumers will always go for brand

24
that has better image rather than those with lower brand image. It is because consumers
perceive that product with good brand image have provides better quality. A successful brand
image increases the likelihood of consumer purchase intention toward a brand and helping
consumers in recognizing their needs and satisfaction (Hsieh, Pan, and Setiono, 2004).

2.3 Pricing

Price is one of the most crucial variables not in the smart phone industry but in all other
business aspects. Price is essential not just for the buyer but the seller as well. It is the fact
that higher the price higher the product quality which would result in higher the user
satisfaction. Pricing in an inevitable factor in determining a products or services’ relative
price. Price is the amount of money charged for a product or service. Broadly, price is the
total amount being exchanged by the customer to obtain a benefit of the product or service
owning (Philip Kotler, 2011).

Price is the total amount of monetary terms that customers are willing to give in exchange for
a particular product or service. Besides that, according to Stanton (1992), price is the amount
of money or goods needed to acquire some combination of other goods and its accompanying
services.” Price is the element of the marketing mix that stable in certain period but at one
moment the price might be increase or decrease and price become as the single element that
revenue from the selling. Although price is an element of the marketing mix that is stable,
however price also subject to fluctuation. Moreover, Stanton defines that price is an element
present in the marketing mix that solely affects the income from the product at certain time
periods. This leads to a scenario where higher prices are imposed on products and consumers
are willing to purchase them. Some of them preferred high quality products and willing to
pay high price for it but some of them are not (Monroe, 2003). According to the study of
Kupiec and Revell the customer buy the product with the intent to satisfy his desires. For this
phenomenon the customer paid the price according to his desire. Moreover according to
Bettman, Johson, and Payne (2000) all customers have different priorities and their priorities
will be affected by different situation and diverse factors. Tastes, motivation, needs, status,
lifestyle varies from person to person and this concept is also used while purchasing the
product. Chisnal (1985). As the result some paid high price to achieve high quality for their
optimum satisfaction and some them not willing to pay high price Monore (2003). Moreover
research revealed that there is the strong relationship between consumer characteristics and
consumer behavior towards purchasing a product. The main feature includes quality, price

25
and brand consciousness, recreation and innovative awareness that can confuse the buyer
what to buy and what to leave. (Leo, Bennet and Hartel, 2005). Hence, it is the need of the
hour to examine the factors, which influence consumer’s assessment towards purchasing
smart phone. There are four main variables under research in this study such as brand,
features of the product, price and social influences. In other factors the materialistic behavior
of consumer also has the impact on buying products. The materlisim concept states that all
luxury items have high value and for high value they paid high price, so the people who
believe in materialism buy luxury items to gain status and self-recognition in the society.
(Tim, 2002), (Yusuf and Abdullah, 2003). Price has the direct and positive effect on the
consumer behavior. In case of smart phone there is wide range from low price to high price.
Prices are differentiating with each other because of quality, brand, specifications, status, etc.
(Kunaletal 2010). According to the literature it is concluded that there is the positive and
direct relationship between price and purchase intent and this relationship is getting hard with
the passage of time. On the contrary, not at all time products are priced at a premium and
higher price. According to Lynn Albright, the vice president of Old Navy, states higher prices
won’t be needed if costs can be lowered. According to Raghuram Iyengar from The Wharton
School, he states that Apple iTunes can raise profits not by raising their prices, but by
lowering them. The value of money varies from different people. Some might think it is
valuable for a high price but others might think it does not worth for the value of money.
There are so many methods of pricing, such as mark-up pricing, target-return pricing,
perceived-value pricing, going rate pricing and promotional pricing (Kotler and Keller,
2012). If the discount rate is low, it should be presented in its value; whereas if the discount
rate is high, it should be presented in percentage, so that customers will have higher purchase
intention (Isabella, 2012).

From the consumers’ perspective, price provides a source of information for buyers to judge
product quality (Carpenter, Glazer, and Nakamoto 1994; Sivakumar and Raj 1997),
especially in cases where they are purchasing highly innovative e products and lack the
knowledge required to objectively evaluate the product/technology.

Pricing a product and dual effect, meaning it is both advantageous at the same time
disadvantageous, depending on the type of products and how it is typed. The main two types
of pricing is low pricing and high or premium pricing. Higher pricing positively affects
purchase decisions of consumers (Erickson and Johansson 1985). The research concludes that
when the product is high priced, it directly influences and stimulates a purchase intention.

26
(Tellis and Gaeth, 1990) and (Bloch & Black, 1988) journal article further enhances this
statement. Based on these researches, when the product is high priced, it has a positive effect
on the product purchase. A real life current example would be Rolls Royce and Aston Martin.
Although high priced, it leaves a luxury and rich perception in the minds of consumers;
thereby causing a positive effect on its demand. This mainly caused by the perception that a
higher priced product has a higher quality.

On the other hand, there has also been a study that proves high-priced imposed on products
leads to a detrimental effect. The high-priced implies a negative effect on the products
purchase intention. According to Dickson and Sawyer (1990), ‘what is clear is that shoppers
are very heterogeneous in terms of their attention and reaction to price and promotions. This
literally means that products that have the same functionally and that are not differentiated
will tend to have a negative effect when it is high priced. In general, these products mostly
compete on cost-leadership strategy, whereby each company will try to manufacture the
goods with the least cost as possible.

2.4 Product features

After price the product feature plays the important role. In recent times the customer craze to
buy the smart phone with good features and stylish looks has high demands. Product is
anything that can be offered to a market for attention, acquisition, use, or consumption that
might satisfy a want or need (Kotler, Philip, Armstrong, and Gary, 2007). Smartphone is an
electronic product that providing ease of use with variety of function. Feature is an attribute
of a product to meet the satisfaction level of consumers’ needs and wants, through owning of
the product, usage, and utilization of a product (Kotler, Philip, Armstrong, and Gary, 2007).

Feature can be define like touchscreen feature, camera functionality, WiFi , High- resolution
display, new design, waterproof and shockproof, LTE or 4G speed internet connection.
Besides that, smartphone feature such as application installation, high gigabytes of storage,
large-screen and powerful processor (Oulasvirta, 2011). On the other hand, the same
researcher found that complex functionality of software like operating system and high
specification of camera megapixel are more attachment to it. A Frost and (Sullivan 2010)
new research revealed that the interest in advanced features and applications is increasing due
to the new service provided by mobile operator such as internet, media and entertainment. In
recent days the consumer choice of buying smart phone is influenced by the functionality of

27
smart phone. Functionality in terms of (Oulasvirta et al) states that different phone
characteristics with connectivity of wireless, installation of application programs, a system of
file management, presentation of multi-media programs, camera, picture, video quality and
mobile memory e.t.c. In addition the user of smart-phones spotlight on classy operational
system of mobile phone and high camera resolution function. In market following smarts
phones are very much popular Apple, Samsung, Nokia, Sony, and Blackberry. (Gowind,
2010). Due to the different specifications of the mobile phone customers make their choices
while comparing one mobile phone features to another mobile phone. In the same way each
operating system has its own unique features and has personality (Chow et al, 2005). Personal
values are influenced by special features and special attributes of the product. Customer
purchased the products which are based on these special attributes. (Psyarchik and Wicklife,
2001). Based on value of the combination products are chosen which have special attributes
and features. (Heikii et al 2005) states that among different smart phone brands one brand
have been chosen by customer based on self knowledge and past experiences. The study
further explains that there are three main attributes (feature, fee connection and price) which
has the main role in decision making where as to purchase smart phone. Study revealed that
customer experience and customer importance to features can make them ultimately good
decision maker. According to (Jainarian, 2012) customer makes the comparison of different
brands featuring the products considerable attributes to make their choices well. It is know
the fact that customer takes keen interest on these attributes i.e. the specification of the
product with respect to function and makes the decision of purchasing accordingly. Hence the
more product feature enhances the customer needs and wants to purchase the product. A
study in the Philippines stated that with the advancement of new technology in the mobile
industry the new features have largely affecting the customer choice. Now, mobile storage
capacity and sms-options have more impact than mobile size so, this is the main reason all
the famous brands are launching their product with the similar in size but with different
features. Furthermore, the mobile with the better potential features and larger screen has more
trend than the mobile price. (Liu, 2002). Yen-Han, Hong and Kim (2003) study put the one
step ahead that in their survey the results stated that 78% choose the design of the phone with
the following characteristics like simplicity, attractiveness, image, color, texture, etc which
relates the overall satisfaction . The main finding of the study is that not just the image and
impression but the overall shape of the mobile phone is important in the case of phone
demanding. In another study of Han, Kim, Yu result shows that attractiveness, harmonious,
and luxuriates of mobile phones relates to phone size, color, weight, material, button shape
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influences the buying decision of the customer. The study of Lin et al (2006) explained that
five mobile phone features such as camera, color, screen, dialing, internet and wireless
connectivity have been role to drive high the user satisfaction. In recent times to satisfy
consumer wants up to optimum level the smart phones companies offering different features
in one mobile set such as web browsing, surfing and downloading, email, instant messaging,
multimedia programs, GPS, Wi.Fi games etc. (Goldman, 2010). According to Meirovich &
Bahnan (2008), new attractive product features will finally satisfy consumers as a foundation.
Therefore, a feature of smartphone will influence the young female consumers choice
towards smartphone brands and based on the features consumes will differentiate which
smartphone brands will be the origin they made the choice. According to Dziwornu (2013),
the factors of influence consumers purchase decision of mobile phone, special feature and
design is one of the main elements that cause the results.

Isiklar and Buyukozkan (2007) carried out a study on users’ preferences by evaluating the
mobile phone options. Different mobile features namely physical features, functionality,
technical characteristics, brand choice and ‘customer excitement’, were compared as a multi-
criteria approach for decision making. The results showed that functionality was the most
dominant factor among all three phones under consideration while the ‘customer excitement’
and the basic requirements were found to be least influencing factors. The results of the study
of Mack and Sharples (2009) also pointed out the significance of features in predicting
mobile phone choice. Their experimentation indicated that usability is an important element
in choice of a mobile phone but not as much as the users believed it would be. In reality,
other such attributes especially features, visuality and cost might be of top priority when
making a product choice (Nowlis and Simonson, 1996). Another research study conducted by
Han et al. (2004) on 65 design features for 50 different mobiles. Regression models were
developed by them to relate the design features with satisfaction and luxuriousness,
attractiveness and harmoniousness. It was found that various design features have a
contribution as size and weight of the phone, its material, color, shape of buttons and
interface features (Vu, 2012).

Product features has the positive impact with purchase intention by providing different
feature and function build different satisfaction in consumers heart. Product features can be
divided into hardware and software. Hardware is the product that can be touch or use
physically and it is visible. Software is the Operating System (OS), Operating system is the
program to run the computer, smartphone or electronic device. There are few OS in the

29
market which is Android, iOS is from Apple, and Windows is from Microsoft, Blackberry,
Symbian (Russell, 2012). Consumer who purchases smartphone based on design as the
important factors for device specification that contain 56% exclude the functionality of WiFi,
price, processor power and others (Osman, 2012). Based on the same research of Osman
(2012), customer decides choices will rely on the design and it was the most important factors
for making the choices.

According to Osman (2012), consumer will purchase a smartphone not only based on the
hardware functionality while will software is the main factors that influence consumers to
buy a smartphone or brand. In the research, 33% of consumers purchase based on the
software while another 17.6% of consumer purchase based on hardware. Based on a research
firm, Google Android own the global market share of 78% in mobile operating system, while
Apple iOS owned only 18%, Microsoft Windows phone 8 owns only 2.5% of market share,
Blackberry owned 0.5% and others is only 0.6% (International Data Corporation, 2014). This
results shows consumer purchase a smartphone or brands based on the software is much
higher than hardware.

A research finding shows the ranking of durability, performance and features which shows
features is 85.8% that will influence the student’s purchase of mobile phones behavior (Vida,
Cosmos, & Samuel, 2013). According to Karen Lim Lay-Yee (2013), product feature is the
factors that concern by smartphone users which they study the new function and new
innovative of functionality for hardware and operating system.

2.5 Peer Influence

Peer influence is commonly defined as the extent to which peers exert influence on the
attitudes, thoughts, and actions of an individual (Bristol and Mangleburg, 2005). According
to Schiffman and Kanuk (2007), the values and attitudes of a group that an individual treat as
a benchmark to his or her current behavior is consider reference group. According to them
friends’ options and preferences are an important influential factor in determining the
products or brands selection, especially for a single individual who lives alone (Schiffman
and Kanuk, 2007). Asch (1973) and Venkatesen (1973) found that peers, who are present at
the time of purchase, play a crucial role in choosing a specific brand, especially with concern
to product and rational impacts. Based on Bristol and Manglegurg (2005), reference group
can be anyone who has direct interaction with an individual with values, attitude, and norms

30
provided such as parents, co-workers and peers. Moreover, peer influence is defined as the
degree which peers exert influence on the thoughts, attitudes and action of an individual.
(Bristol and Mangleburg, 2005).

There is the famous saying that the man is the social animal and man lives in social
environment. In the environment there are so many social influences by the people and the
environment. Social learning theory portrays that there are some cognitive and environmental
factors which persuade the human learning and behavior. In social context the man learned a
lot. The social learning theory also explains that people learn from one another together with
an idea, observational learning, modeling and stimulation. (Abbott, 2007). The evolution of
this theory is from behaviorism however occasionally recognized as social cognitive learning.
Moreover, the study explains that environmental stimulus is based on psychological factors
which are influenced by social learning. The customer while buying smart phone can have
the vital role in decision of purchasing relayed upon the information from family and friends.
(Deeb 2012). According to literature the takings off mobile phones specifically benefit the
purchaser and generally benefited the whole community at large. (Harsh, 2011). According
to Bearden and Etzel (1982), there are three different type of social influence which is
informational, utilitarian influence and value expressive. Informational influence is
considered an individual improve his or her knowledge on the environment or the ability to
suit with the environment. Additionally, Manglegurg (2004) explained informational
influence includes observing how others perform or actively searching information from an
expertise. If an individual receive the information and treat it as a fact in reality then he or her
are more likely to make same decision as others (Manglegurg et al., 2004). Utilitarian
influence is explained as an individual try to meet the expectation of others in order to receive
prize or to prevent from punishment. Value expressive influence will influence a person when
he or she wants to strengthen his or her ego (Bearden and Etzel 1982).

Mourali, Laroche and Pons (2005) found that individualistic orientation have a negative
relationship with the utilitarian and value expressive influence, but it does not have
significant relationship with information influence. Suggested by psychological and
consumer behavior literature, the relationship between self-esteem and affection to
interpersonal influence is negative correlation (Mourali, Laroche and Pons, 2005).

According to Bearden and Etzel (1982), the degree of peer influence is vary on affect
purchase decision of different products. His study was concerned with two dimensions. First

31
is the degree of influence on luxury versus a necessity and the second dimension is concerned
with the degree of influence on publicly or privately used product. Publicly luxuries products
are not own by everyone and it is normally more apparently. These kinds of products are
exclusive and tend to be more easily influence by peer group. On the other hand, privately
necessity products are not exclusive and unable to be observing by public when it is used.
This category of products is socially irrelevant and everyone can easily own the products,
thus it is less likely to be impact by peers influence. The studies found out peer influence play
an important role on publicly consumed luxuries than privately consumed necessities and
privately consumed luxuries also attracted more peer influence than privately consumed
necessities (Bearden and Etzel, 1982). According to Farzana (2012), consumers are always
influence by their social group in the decision making process and individual are more likely
to seek the advice from those who are more expert in the area especially when purchase a
high-involvement products. According to her research, in the purchasing smartphone process
for generation Y, the social influence might come from peers (Farzana, 2012). According to
study by Lachance et al. (2003), compare to parental influence, peers have higher degree of
influence toward a teenager in choosing a clothes brand (Lachance et al., 2003). From
another research done by Yoh (2005), peers exert higher level of influence than parent in
teenagers’ athletic shoe purchasing (Yoh, 2005). Similarly, Subaramanian and Subramanian
(1995) found peers have stronger influence on young adult in choosing fashion cloth
(Subaramanian and Subramanian 1995). In a study conducted on young Black berry smart
phones users in Indonesia (Heryiati, 2011) explains that some societal influences that is word
of mouth attracts very young users to purchase the specific products and shows the huge
interest towards the brand unique and special features. In other research on students revealed
that the students purchased their first smart phone is due to the influence of friends. In other
research on students revealed that the students purchased their first smart phone is due to the
influence of friends. The research in East Malaysia (Norazah, 2013) on students exposed that
social and cultural influence extensively affects students purchasing decision of smart phone.

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CHAPTER 3 - CONCEPTUAL FRAMEWORK

Conceptual framework is formed based on the research objectives and research questions. It
displays both dependent variable and independent variables. These variables are connected
and linked to form a test on this study. Figure 3.1 is the conceptual framework that focuses
on four dimensions that determines the purchase intention of customers towards smartphone
brand. The four dimensions of independent variable include brand image, pricing, product
features, and peer influence whereas the consumers purchase intention towards smartphone
brand will be the dependent variable.

Brand Image H1

H2
Pricing
Purchase intention
H3
Product Features
H4

Peer Influence

Figure 5.0.1, Survey 2016, Conceptual framework

Source – Developed for the research

3.1 Defining variables

3.1.1 Dependent variables

A dependent variable is what measured through research topic and what is affected
during the experiment. The dependent variable responds to the independent variable. It is
called dependent because it "depends" on the independent variable. However according
to the above diagram purchase intention is the dependent variable of this research.

33
3.1.2 Independent variables

The independent variable is the variable that is manipulated in this study. The
independent variable is something that is hypothesized to influence the dependent
variable. The researcher determines for the participant what level or condition of the
independent variable that the participant in the experiment receives. The independent
variables of this research Brand image, pricing, product features and peer influence.

3.2 Hypotheses development

Subsequent of reviewing relevant literature, there are four (4) hypotheses that corresponding
to the sub-research questions is developed:

3.2.1 The relationship between brand image and purchase intention towards
smartphone brand

According to studies have made by Anosh, Naqvi and Ghulam (2014), brand image has
significant and positive relationship with consumer’s purchase intention towards
smartphone in Dera Ghazi Khan, Pakistan. From the study, they have analyzed few
important factors that influence the smartphone purchase decision such as brand image,
brand perception, brand preference and brand loyalty. The Pearson correlation results
shows brand image has the highest correlation value which is 0.754 of the smartphone.
Most of the respondents indicated brand image is their main consideration when
purchasing smartphone (Anosh, Naqvi & Ghulam, 2014). Shahzad and Sobia (2013), has
investigating the factors affecting youth purchase decision towards smartphone. The
research finding shows that brand image has positively impact on smartphone brand
choice. Therefore the hypothesis developed as below:

H₁: There is significant relationship between brand image and the consumers
purchase intention towards smartphone brand

3.2.2 The relationship between pricing and purchase intention towards


smartphone brand
According to Juha Munnukka (2008), there is a strong positive relationship between the
consumer’s perception on price and their respective purchase. The perception on the
price directly affects the purchase intention. Consumers perception of price refers to
consumer’s point of view whether the brand of a product is ‘underpriced’ or ‘overpriced’

34
.Mohammad Faryabi (2012) states that consumers respond strongly to price changes in
the marketplace .Consumers are purchase intention is induced by the sales programmes
such as sales promotions, couponing and price discounts. In addition, price is used as a
main variable by marketers in order to influence purchase behavior of potential
consumers (Albert R.Wildt, 1994).
H₁: There is significant relationship between pricing and the consumers purchase
intention towards smartphone brand

3.2.3 The relationship between product features and purchase intention


towards smartphone brand
According to Karen Lim Lay-Yee (2013), product feature has significant relationship
with customer purchase decision on smartphone which the result shows correlation of
0.777 which is strongly support. Based on Shaharudin, Mansor, Hassan, Omar, & Harun
(2011) research, their results shows the result of there is significant influence of special
features towards purchase intention of motorcycle/scooter. New technical properties or
new features will influence the intention to acquire new mobile phones (Liu, 2002).
Besides that, special feature and design act as a main factors that influence consumers
purchase decision towards mobile phone that supported by Dziwornu (2013).

H₁: There is significant relationship between product feature and the consumers
purchase intention towards smartphone brand

3.2.4 The relationship between peer influence and purchase intention towards
smartphone brand

According to Karen Lim Lay-Yee (2013), peer influence has significant relationship
with the customer purchase decision and this factor is the second highest affecting
students’ dependency on smartphone among the others three variable which is brand
image, product feature and price tested by Suki and Suki (2013). The findings of S.
Franklin John (2013) conclude that peer influence effect on the buying behavior of the
two-wheeler purchasers especially purchasers in the age group of 40-50 years are
significantly get influenced by their peers. R Makgosa and K Mohube (2007)

35
demonstrate publicly consume products such as sunglasses and shoes attracting more
peer influence than privately and necessity products such as toothpaste.

H₁: There is significant relationship between peer influence and the consumers
purchase intention towards smartphone brand.

Research Methodology -

3.3 Research Approach


The researcher use quantitative approach to conduct the study. Quantitative is predominantly
used as a synonym for any data collection technique (such as a questionnaire) or data
analysis procedure (such as graphs or statistics) that generates or uses numerical data.
(Zikmund, 2008)

The type of the study is descriptive study. A descriptive study is undertaken in order to
ascertain and be able to describe the characteristics of the variables of interest in a situation.
(Sekaran, 2010). Descriptive studies that present data in a meaningful form thus help to
understand the characteristics of a group in a given situation, think systematically about
aspects in a given situation, offer ideas for further problem and research, help make certain
simple decisions. Therefore the study was designed to find out factors affect to customer
purchase intention.

This study undertaken as explanatory study. An explanatory study means studies that
establish causal relationships between variables. (Zikmund, 2008)The emphasis here is on
studying a situation or a problem in order to explain the relationships between variables. In
explanatory study take quantitative data and subject the data to statistical tests such as
correlation in order to get a clearer view of the relationship.

These time horizons to research design are independent of which research strategy is used.
In this research researcher done cross-sectional study, because it conduct in a particular time
period. Cross-sectional studies often employ the survey strategy. (Sekaran, 2010)

36
3.4 Research Design
Research design is defined as a detailed plan for conducting a research study (Collis and
Hussey, 2003). A research design is the clear objective derived from the research question,
determination and statement of the general research approach or strategy adopted for the
particular project. Quantitative research is numerical data that collecting from questionnaire
and using numerical form such as graph or statistic. Quantitative research was implant in
this research for the purpose of determine the variables that will affect the young consumer’s
purchase intention on smartphone brand. Besides, it tests the hypothesis and quantifies data
from questionnaire, bring the research question and literature review together. Descriptive
study is described how the independent variable (brand image, pricing, product features and
peer influence) influence the purchase intention of young consumers.

3.5 Data Collection Method

In this research, researcher have two types of information data collection which is primary
data and secondary data. Primary data is the information obtained directly from the first
hand sources which means survey, experimentation and observation. Those data is not been
previously published in the website or anywhere and is a new or original data collected from
the respondent such as sources from marketing survey. Secondary data have three main
types which is documentary, survey and multiple sources, documentary secondary data is
important for the research study in written material which is collect published information
for the purpose of support the research study as a reference such as books, journals,
magazine articles and newspapers. In this research, primary data collected through distribute
questionnaire through survey form or online distribute while in the research study researcher
use books, journals and magazines article as the written secondary data references.

3.5.1 Primary Data Collection

In this research study, questionnaire survey method is the primary data collection
method as the main sources of information. Researcher will distribute 150 copies of
questionnaire through online method or distribute survey form randomly to completed
by young consumers who between age 16-30 in Colombo district. This method will ease
in the final stage of data coding, data analysis and data interpretation by making the
process simply and simple. This kind of data collection method that chosen to be use

37
because of reliability, simplexes, direct response, easy to achieve and using multiple
choice questions can reduce the possibility of uncertainty in results.

3.5.2 Secondary Data Collection

Secondary data is collected through internet online such as Online Journal and Articles.
The ease of accessibility and reliability, this research is utilize with Google as the main
search engine and tool to collect the secondary data through Google Scholar, and via
ebooks. The fully utilize of the relative online source, author are able to complete the
research and access to relative online journals and articles to strengthen this research
result by this journals supports.

3.6 Sampling Design

Sampling is the selecting a portion from the target population to represent the population to
accomplish the survey. The objective of the sampling design is to know the characteristic of
the population. The sampling design is specified on the population frame, sample size,
sample selection, and estimation method.

3.5.1 Target Population

Target population is the group of individual that carries almost the same characteristics.
The young consumers between ages 16 - 30 are the target population for this research as
researcher’s respondent.

3.6.1 Sampling Frame and Sampling Location

The sampling frame for this research study is focused on both males and females.
Sampling frame for this research is young consumers who purchase and use smartphone
in their daily life. The sampling frame includes young consumers who are college
students as well as working young adult people with disposable income. The sampling
location is around Colombo district.

3.6.2 Sampling Element

Sampling elements is the single unit of the target population which information will be
obtained. In this research, researchers choose individual candidate as respondents to
answer the questions. The respondents in this research are those young consumers from
age 16 to 30 who stays in Colombo district.
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3.6.3 Sampling Technique

Sampling Technique based on the method of probability or non-probability sampling.


Probability sampling methods is choosing sampling on random or chance selection from
the target population. Non-probability method is the probability of each case being
selected from the population is not known; in this research, non-probability method is
preferred because it is convenience and sample could be chosen from many ways. Under
non-probability sampling technique, one of the sampling method been used in the
research is convenience sampling. Convenience sampling is used when the researcher is
familiar with the respondents. Therefore, NSBM students were chosen as one of the
groups of respondents for the research due to the availability and familiarity to the
researcher. Besides, under non-probability sampling technique, purposive sampling also
been used in the research. Purposive sampling is used to access a particular subset of
people. In the research, researcher have access to the young consumers whose age 16 to
30. Therefore, those people who do not fit the requirement of the research are rejected.
For instance, male and female respondents whose ages are less than 16 and beyond 30.
150 copies of questionnaires were distributed to the chosen target sampling at age of 16-
30. The incomplete questionnaire was eliminated. There were a total of 116 of sample
size after the collection and combine of questionnaire from online questionnaire and
paper survey form. The sampling will not be duplicated or survey done by the same
person so that the quality of data can be more accurate and results are reliable. To get
easy calculating sampling error and know each sample probability for the result, simple
random sampling is the most suitable method.

3.6.4 Sampling Size

The target population of young consumer is surveyed by 150 questionnaires that


distributed randomly in Colombo district. After the collection of questionnaire, there are
8 of questionnaires are fault replied, blank and missing by respondent, and some are not
responded. So the sample size is decreased to 116.

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3.7 Research Instrument

The research instrument involved questionnaire design, pilot test result, and construct
measurement that discuss about the instrument have been used to measure the behavior.

3.6.1 Questionnaire Design

Questionnaire is a tool that used for collect and record information from respondent about
specific issue. Questionnaire often used to gather direct information regarding to
respondent’s behavior or search for basic opinion of a group of respondent regarding a
specific issue. Furthermore, it is quite easier to use questionnaire when the sample size is
large and save cost of the research. Besides, it also allows researchers to reach respondents
who are spread across wide geographical area. In order to collect useful and informative data
from the respondent, the questionnaire was designed with thought and effort. The self-
administered questionnaire had used by the researcher for collecting data. In the self–
administered questionnaire, respondents are required to complete the questionnaire on their
own on paper or via Internet without the aid of researchers (Self-administered questionnaire,
n.d.). Basically, only 2 types of questions will be asked in the questionnaire, openended and
closed-ended. The questions where the researchers do not provide the respondent with a set
of answer to choose are called open-ended questions. Instead, the respondent is required to
answer the question in their own words, which will provide the researchers qualitative data.
Meanwhile, closed-ended question provides researchers quantitative data. In the
questionnaire, the researchers provide a list of answer for respondent from which to choose
(Sociological Research Skills, n.d.). In this research closed-ended question are used in the
questionnaire. The purpose of using this type of questions is because it is much easier to
answer. Respondent only need to choose the answer given in the questionnaire and it
required less time to complete. The questionnaire consists of 3 main sections. Section A has
6 questions surveying about the general information of the respondent. The questions ask
about the gender, age, current status, current smartphone’s brand, preferred smartphone
brand and the money their spent on purchase smartphone. In Section B, there are 21
questions that surveying respondents on the factors that influence their purchase intention
towards smartphone brand. It is divided into 4 parts which is brand image, price, product
feature, peer influence. Lastly, Section C consists of 5 questions that surveying respondent
on their purchase intention towards smartphone brand which is the dependent variable of the
research.

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3.8 Constructs Measurement

According to Cavana (2001), there are 4 types of constructs measurement. There are interval
scale, nominal scale, ordinal scale and ratio. This research has used interval, nominal and
ordinal scale to measure behavior. In Section A, researchers used nominal scale and ordinal
scale, while in Section B and Section C researchers used Interval Scale.

3.7.1 Interval Scale

Interval scale often practiced by researchers in measuring the subjective characteristics of


respondents. In this research, respondent were asked about their intention to purchasing
smartphone brand in relation to brand image, pricing, product feature and peer influence.
Interval scale benefits the researchers by allows them to arrange the objects in a specified
order and measure the distance between the differences in response ratings. Likert scale is an
ordered, one dimensional scale from which respondents chooses one option that best aligns
with their view (Rocco Moliterni, 2008). Usually, it consists of five options and each
question is a statement. The respondent may agree or disagree to the statements and the
scoring are in numbers such as 1 represent Strongly Disagree; 2 represent Disagree; 3
represent Neutral; 4 represent Agree and 5 represent Strongly Agree. Likert scale was used
in Section B of the questionnaire to measure the respondent opinion.

Measurement Numerical
Strongly Agree 1
Disagree 2
Neutral 3
Agree 4
Strongly Agree 5
Table 3.8.1, Survey 2016, Interval scale

3.8.1 Nominal Scale

According to Kinnear (1993), nominal scales were used for identification purposes because
they have no numeric value. Besides, it also does not contain any quantitative information
and no ordering regarding to the variables (Hair et al, 2007). For example, in Section A,
respondent were asked about their gender – Male or Female.

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Figure 3.8.1.1, Survey 2016, Example of nominal scale

Gender -

Male

Female

3.8.2 Ordinal Scale

Ordinal scale is the scale that arranges objects based on magnitude in an ordered relationship
since there is no different measurement. Ordinary Scale is used to measure Age and Personal
Spending.

Figure 3.8.2.1, Survey 2016, Example of ordinal scale

Age –

16 Years - 20 Years
21 Years - 25 Years
26 Years - 30 Years

Variables Issue Description References


Tee, Behrooz &
Brand image of my smartphone increase my status in
Brand Image 1 the society. Benjamin, 2013.
Tee, Behrooz &
Brand image is an attraction for me to purchase a
2 smartphone. Benjamin, 2013.
Tee, Behrooz &
I will consider the brand image when buying a
3 smartphone with higher price. Benjamin, 2013.
Tee, Behrooz &
Smartphone’s brand name is my major priority when
4 making a purchase decision. Benjamin, 2013.
Sinhaa & Batrab,
Price is an important factor when purchasing
Price 1 smartphone. 1999
Grewal, Krishanan,
I compare prices of other smartphone’s brands and store
2 brands before I choose one. Baker & Borin, 1998
Sinhaa & Batrab,
I buy Smartphone because they are worth to used with
3 compared to their price & usage quality. 1999

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Cheong and Park,
I am willing to buy smartphone even though the price is
4 higher. 2005
The cheapness of some Smartphone‘s brand suggests to
5 me that they may have some risks, such as low quality. Steiner, 2004
If two smartphone’s had the same features I would
Product
choose the Smartphone that is the current trend from an
Features 1 operating system point of view. Jainarain, 2013
If a smartphone designer upgrade the user interface
2 completely, I would welcome the change of brand. Jainarain, 2013
I would rather choose a smartphone brand that has an
3 attractive design over one that has standard design. Jainarain, 2013
I would rather choose a smartphone brand that has a
4 superior camera over one that is fast and responsive. Jainarain, 2013
I would rather choose a Smartphone brand that has a
mature app store over one that is the current trend from
5 a brand point of view. Jainarain, 2013
I would rather choose a smartphone brand that is known
6 to integrate easily with all pc operating system. Jainarain, 2013
I would rather choose a smartphone brand that is easy to
7 use, thereby allowing me to perform task faster. Jainarain, 2013
I would rather choose a smartphone brand that has
8 different sizes over one that has standard size. Jainarain, 2013
I like to know what smartphone makes good
Peer Influence 1 impressions on my friends. Sang Yup Lee, 2013
It is important that my friends like the brand of
2 smartphone I’m using. Sang Yup Lee, 2013
I achieve a sense of belonging by purchasing the same
3 smartphone that my friends purchase. Sang Yup Lee, 2013
I will as the opinion from my friends when buying a
4 smartphone. Sang Yup Lee, 2013
Purchase
Intention 1 I intend to buy a smartphone in near future. Ling, 2011
Rio,Vazquez &
I will consider the brand of the smartphone before I
2 purchase it. Iglesias, 2001
Ching Fu & Yu Ying,
I will consider my friends' recommendations when
3 buying a smartphone. 2008
I search for latest features about smartphones from time
4 to time. Tom & Kristin, 2005
Hyuk Jun & Margaret,
I always talk about smartphones with my friends before
5 buying a smartphone. 2008

Table 3.8.1, Survey 2016, References of variables

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3.9 Data Processing

According to Malhotra (2010), data processing refer to the process that guided by
preliminary plan of data analysis which come from the data analysis. In this research, data
processing consists of few steps, questionnaire checking, data editing, data coding, data
transcribing and data cleaning.

3.6.1 Questionnaire checking

In this process, researchers will ensure the completeness and quality of the research by
eliminating those unacceptable questionnaires. This step must be taken after the
questionnaire is done. Research supervisor checked and correct the questionnaire.

3.6.2 Data Editing

Data editing refer to a process that will increase the precision and accuracy of the
questionnaire. Researcher requires identifying the incomplete, inconsistent or ambiguous
responses (Malhotra, 2010). The process is done to minimize the number of error occur in
the survey (Stinson & Fisher, 1996). The data editing provides treatment for those
unsatisfactory responses such as assigned missing value and eliminated error record in the
return to obtain better and accurate information

3.9.1 Data Coding

Data coding is refer to assigning a code to represent each answer in the questionnaire
(Maholtra, 2012). The data coding can be categorize in numerical numbers or any other
characters. For example, 1 represent strongly disagree; 2 represent disagree; 3 represent
neutral; 4 represent agree and 5 represent strongly agree. Data coding is used for the purpose
to minimize the chance of errors and increase the reliability of data.

3.9.2 Data Transcribing

According to Maholtra (2010), data transcribing is the process of transferring coded data
from the survey questionnaire into the computer. After the collected data was transferred
into the computer, Statistical Project of Social Science (SPSS) software was run to obtain
results.

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3.9.3 Data Cleaning

Data cleaning is a process of data checking runs by the computer (Malhotra et al. 2010).
Statistical Project of Social Science (SPSS) is computer software that runs data cleaning
process to make a thorough and extensive checking towards the data collected. The purpose
of data cleaning is to identify any unreliable data or exceeding value.

3.10 Data Analysis

Statistical package for the Social Science (SPSS) by International Business Machine (IBM)
is a software tool to complete the tasks. SPSS process the data collect from the survey,
increase the result in structure method and solve issues. SPSS are giving prompt and
effective data management, offer better outcome and giving broad range of choices for
researcher to analyze quantitative data. On the other hand, SPSS helps researcher in
calculations of data, saving their times in working, prevent of making certain mistake that
happen during the process.

3.10.1 Reliability Analysis

Reliability Analysis is the calculation of measures scale reliability (IBM). Reliability is


help researcher to understand and study the measurement scales properties and items
that assemble the scales (IBM, n.d.). In addition, it provides information about the
connection between individual items in the scale.

3.10.2 Frequency Statistics

Frequency is a measure of how many times a particular data is repeated throughout an


investigation study. Frequency statistics helps represent the data obtained in graphical
form. The graphical representation includes histograms, bar graphs, pie charts and
frequency table. Frequency and percentages of each variable is calculated in order to
tabulate the data into frequency distribution tables and into graphical representations.
By converting the data into graphical representations, it is easier to compare and
contrast the value obtained by each variable in the study. The graphical representations
can be constructed and used to explained based on the readers intuition and
constructive motivation.(Robert W.Jernigan, 2008)

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3.10.3 Pearson Correlation Coefficient

Pearson’s correlation coefficient was used to examine the direction and strength of the
relationship among the variable in this study. It ranges from value of -1 to +1. The
higher the correlation coefficient indicated the stronger the relationship between the
independent variables with the dependent variable. Positive one means a perfect linear
relationship and negative one represent perfect negative relationship. Correlation
coefficient that range from 0.2 to 0.3 indicated weak relationships, 0.4 to 0.6 shown
moderate relationships. The result of 0.6 and above showed a strong relationship.
Result of zero means there is no relation between the variable.

The purpose of this report is to test the relationship between independent variable
which is brand image, product feature, price and peer influence with consumer
purchase intention. The outcome is important for smartphone industry to further
understand the students’ purchasing intention and also help them to improve their
business strategies.

Pearson’s correlation coefficient was used when the variables were measured using
interval or ratio scales. In this study, both dependent and independent variables were
measured in likert scale method that is an interval scale.

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3.11 Plan of study

Week

19th-20th

21th-22th
11th-12th

13th-14th

15th-16th

17th-18th
9th-10th
5th -6th

7th -8th
1st-2nd

3rd-4th
Task
1
2
3
4
5
6
7
8
9
10
11

Time spent (by weeks)

Tasks

1. Study about smart phone industry


2. Identification of research problem and scope
3. Referring Literature Review
4. Developing Research Objectives, Research Hypothesis & Significance
5. Developed Conceptualization
6. Research Design and Methodology
7. Submit the initial research proposal
8. Preparing research questionnaire
9. Collect data and information
10. Data presentation , analysis and discussion
11. Complete the research report

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CHAPTER FOUR – DATA PRESENTATION, FINDINGS AND
DISCUSSION

4.0 Introduction

This chapter mainly focuses on data analysis and discussion. The findings and the data
obtained are calculated statistically, and the findings are recorded into table form. In
addition, in order to make the representation of data easier to be understood, the findings are
illustrated graphically. The graphical representations of the data include pie chart and bar
graphs. The data is further analyzed using various statistical measures such as Cronbach’s
Alpha, Pearson Correlation Analysis. And then reviews the summaries of statistical
analysis, discussion of major findings, managerial implications of study, limitation of study
and recommendation for future research.

4.1 Descriptive Analysis

4.1.1 Respondent Demographic Profile

The researchers have distributed 150 sets of survey questionnaire to the respondent. There
are 34 sets of questionnaire is fault replied, blank and missing by respondent. Researcher
utilized the remaining 100 sets of survey questionnaire to make data analysis.

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4.1 Sample Profile of the Study

4.1.1 Gender Composition

Figure 4.1.1.1, survey 2016, Gender Composition


Source: Survey Data ,2016

BASIC INFO.

Cumulative
Frequency Percent Valid Percent Percent

Valid MALE 52 50.5 52.0 52.0

FEMALE 48 46.6 48.0 100.0

Total 100 97.1 100.0


Missing System 3 2.9
Total 103 100.0
Table 4.1.1.2, Survey 2016, Gender Composition

The figure 4.1.1.2 shows the customer sample composition by the gender. Here the
52 percent of the sample consists of male.

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