With its iPhone, Apple successfully created a lucrative product family that enabled its entry into the crowded mobile phone market. In the short span of three years, Apple’s iPhone has passed RIM (BlackBerry) as global smartphone shipments reached 77 million units in the 3rd quarter of 2010. According to the report, Apple’s iPhone sold 14.1 million handsets, while RIM moved to 12.1 million, despite RIM (Blackberry) being in the market 5 years ahead of Apple’s iPhone. (M. Martin. 2010) This shows a 91% growth of handsets sold over the same quarter last year. The iOS usage in US is 18 million devices in a population of 309 million for 3.45% penetration. Compared to US, in Singapore, there are 480,950 devices in a population of 4 million for a penetration of 8.08%. Such a high penetration rate shows there is a high demand and iPhone appeals strongly to Singaporeans. (N. Mawston. 2010.)
In Singapore, before the official launch of iPhone, Singaporeans were offering to pay premium prices for unlocked, warranty-free sets in the grey market. (Alfred, S. 2007.) After its official launch in Singapore, SingTel reports a robust demand for Apple iPhone 3G with over 170,000 activations in September quarter. (MacDailyNews, 2008)
IPhone is definitely an instant hit with Singaporeans, with Singapore being one of iPhone 3G’s most enthusiast Asian countries (Budi, P. 2008) It is not just the share of market that iPhone owns but being first in the mind of consumers that make it such a hit in Singapore and worldwide.
Consumers purchase decision refers to a series of decisions made by the consumers which are subjected to their deeply held values and attitudes and their perception of the purchase before establishing a willingness to buy. (Manoj, P., P. Flora and A. Gupta. 2010)
The decision making process could be influenced by factors such as social, personal and psychological. (Rowley, 1997) Social factors refer to reference groups, family, role and status while personal factors include lifestyle, economic situation, occupation, age, personality and self concept. Consumers are often influenced by their role and status as each person possesses different roles and status in the society depending on individual’s occupation. Age and life-cycle have a great impact on the consumer buying behaviour as consumers change the purchase of goods and services with the passage of time. Meanwhile, psychological factors such as perception, motivation, beliefs and attitudes could affect the way consumers perceive about the importance of the purchase and the way they identify with the brand. (A, Shah. 2010)
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Therefore, the main gist of this study is to increase iPhone’s competitive advantage by identifying what key attributes consumers look for and what is it that makes iPhone more sought after in the mobile market compared to other smartphones. To narrow down the scope of study, Singapore has been selected as a representative of Asia. According to a recent survey by mobile advertising network Greystripe, Singapore is number six on its list of iPhone-using countries, ahead of much bigger markets like Japan and Hong Kong. Furthermore, Singapore is considered to be one of the most technology advanced countries in Asia. (Jimmy, Y. 2009) To understand which factors influences consumers’ purchase decision, five hypotheses are examined.
Consumer & Social Factors on iPhone
The first sub variable would be families, friends and colleagues as they strongly contribute to a person’s choice of mobile phone. This includes interaction with various membership, reference, and organizations. A person often buys an item because it fulfills the desire to be acknowledged for it by family, peers and other people he is related to or affiliated with. Another social factor that impacts buying the iPhone is peer pressure; the consumer buys the handset because everyone else is getting it and talking about it. Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles. As more individuals base their decisions on “what most people already did” (what is most popular), this becomes a social phenomenon.
The consumers also tend to perceive that they can get more reliable products and guides when following the majority because significant information is readily available in various venues. From forums discussing the various iPhone concerns to first-hand experiences of families, friends and colleagues, social and consumer forces contribute strongly to the purchase of an iPhone. Social factors differ from cultural factors in that they involve smaller groups that affect an individual’s values and outlook when it comes to consumer behavior.
The second sub variable we’ll be looking into would be the reference group. Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics). The reference group has a great impact on the consumer behavior because reference group are the one who serves as a point of comparison for an individual in the formation of either general or specific values, attitudes, or behavior. You bring your reference group with you for the following reasons: To get information or advice, to satisfy the expectations of others and to be like a certain type of admired person a consumer identifies with and wants to join.
If you have ever dreamed of being a professional player of basketball or another sport, you have a reference group. Marketing professionals are aware of this. That’s why, for example, Nike hires celebrities such as Michael Jordan to pitch the company’s products.
Consumers respect these people and often ask their opinions before they buy goods and services. An information technology specialist with a great deal of knowledge about computer brands is an example. These people’s purchases often lie at the forefront of leading trends. Social perception in turn plays a big part.
Personal factors can affect the consumer behavior, thus influencing brand recall and creating brand awareness. In the case example of the “iPhone”, we will be able to dive and ascertain the list sub variable contributing to the Personal factor as independent variable. It is important to look into Independent factors as it does considerably influence on the choice of a consumer when purchasing iphones over the rest of other smartphone.
Age is a contributing sub-variable of the Personal factor. There are different needs and wants based on the age group of the consumer. Apple had successfully marketed “iphone” to the consumer reaching out to everyone of the age group. Apple had done it by apps personalizing; to suit ones needs and wants. Ultimately, making iphone an irresistible “want” for the consumer out there. Based on Synovate survey, the prominent age group that top mobile ownership in Asia is none other than the youth (age: 12 -16). Singapore ‘s youth top the chart to own mobile phone. Personal ownership of mobiles has increased from 80% to 85% in Singapore. (Figure taken from Synovate survey 2010). The Young (20 -35) are the targeted age group with high disposable income on (http://blog.vavia.in/tag/high-disposable-income/) as they tend to use their smartphones in replacement to their PC for mobility. The Young are goal-oriented; they want to get the live and latest news on the go. In parallel, a research had also been done on which smartphone owners have highest credit card balances. The Apple’s iphone tops the chart basing on survey result done by Pageonce Inc, in 2010.
In regards to last factor; Economic Situation, which is one of the contributing sub variables to Personal factors. Economic Situation variable is dependable on a person’s economic situation which will affect their product choice. The Iphone might not be considered as affordable for everyone especially accompanied with or without by the required data plan. With the United States going into recession, spending power by the US consumer had been stagnant. Nevertheless it does not stop the consumer from purchasing iphone outside of US. In actual fact, 75 per cent of iPhone sales are now overseas and sales soared in particular in the Asia Pacific region. In China, Hong Kong and Taiwan, Apple recorded iPhone sales of $1.3 billion (£84 million), up 200 per cent. (http://www.manchesterwired.co.uk/news.php/53776-Apples-iPhone-sales-deemed-staggering-exceed-expectations). This is the result of ASIA’S economy booming. Asia will be about 50 per cent larger in five years, making up more than a third of world output. In fact in 20 years’ time, Asian economic output will exceed that of the Group of Seven major industrial economies – the United States, Japan, Britain, France, Germany, Canada and Italy (according to International Monetary Fund, IMF). In view of this, it makes Apples iphone market shares increase extensively leading to successful brand recall outside of the USA. Even in countries like Singapore, where the majority of Singaporeans fall in the middle class tier with substantial income. Apple iphone is therefore considered inexpensive and consumer had been responsively welcoming to the launch of Apple iphone in Singapore.
From the above analysis, we can see the 3 main sub-variable contributing to Personal factors thus resulting to successful and impressive high brand recall to Apple’s iphone. With the high brand recall for Apple, it further leads to the creation of brand awareness. The creation of brand awareness is the main foundation of any product’s life cycle in target markets. In fact, brand awareness has influence on buying behaviour of a buyer. Based on the above research done on Apple iphone, the consumer indeed had a complete understanding of the brand; allowing them to acknowledge and accept the brand (Apple).
Psychological factors are the intrinsic nature within the consumers, base on past experiences and collective knowledge, which influences their decision to act and purchase a product. The psychological factors are further categorized into the individual’s motivations, perceptions, and beliefs and attitudes.
Motivation as we know it is the driving force which causes us to achieve goals. In purchasing an Iphone, it falls on the higher levels of the Maslow’s hierarchy of needs such as “Love and belonging”, “Esteem”or “Self-Actualization” respectively as the bottom levels – “Physiological needs” and “Safety needs” have to be fulfilled in order to pay a premium for a Smartphones such as an Iphone (A. Maslow, 1943). Further studies such as article “The Envy Premium in Product Evaluation” conducted have shown that motivation for consumers to be willing to pay a premium price for products occurs when it elicits their envy (N. van de Ven, M. Zeelenberg, & R. Pieters, 2010). Research from Tilburg University, Department of Social Psychology and TIBER (Tilburg Institute for Behavioral Economics Research) has concluded that the more people compare themselves to someone who is superior, the higher the envy premium they are willing to pay for. However, the research has also shed light on people willing to pay more for products only when they are motivated by a positive, benign form of envy. While on the other hand, if someone has a malicious envy on another person who is thought to be undeserving then this will evoke a desire to “pull down” the other person. For example, in the same research conducted, people who felt maliciously envious of someone with an iPhone were more likely to pay more for a BlackBerry. Hence, if envy is a genuine cause for motivation to brand recall, Apple and other consumer products retailers should consider advertisements that display a positive outlook of envy rather than a negative and competitive one.
Beliefs and attitudes play a great deal of influence over consumer buying behaviour (K. Callwood, 2010). Consumers often block information that conflicts with their beliefs and attitudes, and they tend to selectively retain information or even distort the information that was given to them to make it consistent with their previous beliefs of the product. However the question here is what constitutes to the collective beliefs and contributes to create the attitudes for Iphone and its brand Apple? In article “The brand attitude formation process of emotional and informational ads”, research has shown that ads using an emotional ad format will heightens positive feelings and reduces negative feelings and enhanced thoughts about credibility of the ad, which in turn affected ad attitudes and brand attitudes. While on the other hand, for ads that uses an informational ad format will enhance evaluative thoughts about the credibility of the ad thus enhancing positive feelings and reducing negative feelings (C. Yoo and D. MacInnis 2005). From this we understand that through the influence of advertising can directly affect consumer brand attitudes and beliefs. We also note that several studies have shown that word-of-mouth (WOM) communications also has a strong influence on the consumer’s beliefs and attitudes towards the products and its brand. In article, “Effects of Word-of-Mouth and Product – Attribute Information on Persuasion: An Accessibility – Diagnosticity Perspective” has conducted experiments on the effects of word-of-mouth (WOM) communications to see whether it causes specific attribute information on product evaluations. It was found that although a face-to-face WOM communication was more persuasive than a printed ad and a strong WOM effect was found, but this effect was reduced or eliminated when a prior impression of the target brand was available from memory or when extremely negative or opposing attribute information was presented to the target audience (P. M. HERR, F. R. KARDES and J. KIM, 1991). Hence, it is highly possible that beliefs and attitudes plays a key role as a sub variable in influencing the psychological aspects of an individual to brand recall and make the decision to purchase an Iphone.
Consumers make all sorts of associations from their prior knowledge and experiences to form a unique meaning and understanding to themselves known as Perception. If a company positions itself as a low cost retail store, the consumer perception will be that everything that comes from that store is cheap and subconsciously, poorer quality (K. Callwood, 2010). To the cost conscious consumers, pricing strategy to brand perception is very important and it affects the way consumers will value the product and will pay the price that was set for it (K. Pierre, 2010). With a premium price set for Iphone, it can be assumed that Iphone will be of a better product quality as shown in the article “Pricing Depends on varying Factors and not Value: Pricing Strategies Have Promotional and Profit Maximization Goals” which states that Premium Pricing is when a product is priced at a high price to give an impression of high value and that this price has no relation to production and marketing costs. The intention here is to create a prestige value that status-conscious customers seek (G. Thachappilly, 2009). Positive exposure of a consumer product or brand will also influence consumer’s perception as shown in article “Brand Perception is Everything”. We learnt that by measuring the purchase equivalent value of a brand’s exposure, which is determined by the frequency and exposure of news mentions and social dialogue, can determine the impact on Perception value as measured by assigning positive value to positive mentions and negative value to negative mentions (M. D’Antonio, 2011). We noted from the article that Apple, Google, Microsoft, Yahoo, and Ford have topped the Impact list as they have generated the largest exposure online and reached the most consumers thus creating and generating the most positive impact on the consumer perception of their brands, placing them the top of mind in terms of brand recall and awareness.
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Summing up all of the sub variables aforementioned, we can very clearly see these factors affecting consumer behaviour indeed plays a big part in creating brand recall as well as brand awareness. With a strong brand recall comes with greater brand awareness and this works especially well to our advantage since iPhone is a tangible product. Taking all these into consideration, product acceptance level would then increase. This will in turn boost the consumer’s preference and affect their buying decision when purchasing an iPhone.
Table 1. Independent and dependent variables
In view of the independent variables selected, the hypotheses of interest are as follows:
H1: Social factors influence brand recall
H2: Personal factors influence brand recall
H3: Psychological factors influence brand recall
H4: Brand recall influence brand awareness
H5: Brand awareness influence consumers’ preference for iPhone
Table 2. Categorisation of sub-variables
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