Editorial Board

A Refereed Monthly International Journal of Management

Factors Affecting Entrepreneurs’ Decision towards Buying a Smartphone

Author

Abstract

In today’s era communication has been much facilitated with the help of smartphones as it provides various features and functions which make one’s life easy and comfortably connected. It plays an important role in people’s life in general and entrepreneurs’ life in particular because it helps in quick information access which enables them to take quick decisions. Therefore entrepreneurs can form an attractive target segment for smart phone marketers. However, the purchase decision of smart phones is affected by various factors. This study attempts to identify such factors. Along with that, the effect of age (based on what generation are they from), gender, and the interaction between age and gender is also studied to understand the difference in buying decision towards smartphones. For this purpose the data is collected from 100 entrepreneurs on a 5- point Likert scale. The data so obtained is analysed by using factor analysis technique and F-test. Preference and social influence, brand image and attractiveness, and business utility have emerged out as most prominent factors affecting the decision for purchasing smart phones amongst the entrepreneurs.

Keywords: Factor Analysis, Preference and Social Influence, Brand Image & Attractiveness, Target Segment, Entrepreneurs, Smartphones.

Introduction

India’s smartphone market is booming and it is now more than ever that manufacturers like Apple, Samsung, and Google are focusing on the Indian market to grow further and compete against each other. In fact, the smartphone market has become extremely competitive with the introduction and steady growth seen in the local as well as Chinese manufacturers, all of whom are manufacturing low cost 4G smartphones in an attempt to help consumers move from using feature phones to affordable smartphones. A report by IDC showed that smartphone market in India has grown by 5.2 percent in 2016 and the market has been led by Samsung at 24.8%, followed by the Lenovo Group (which includes Motorola) at 8.9%.

These days there is a smartphone for everyone. Different manufacturers are coming with new and varied types of smartphone, in an attempt to reach maximum number of users. For instance, iPhones are generally considered as expensive smartphones, but as it happened in the year 2013, Apple came up with a cheaper model in their iPhone lineup, by releasing iPhone 5c. With brands like Xiaomi, Micromax, and Vivo, manufacturers have entered the market by offering smartphones with more high-end specs, but an affordable price, which in turn results in heavy competition faced by premium smartphone manufacturers.

Various studies have been conducted in the past, the results of which have helped in understanding the many factors affect an average person’s decision before they choose to buy a particular smartphone. Factors like price of the smartphone, the brand that is offering it, and even social influence that people have on the buyers, have been identified as some of the common factors across various studies in the different parts of the world. Some researchers have also attempted to study the demography of smartphone users, where most of them have taken the information from the gender and income-group of the buyers. When it comes to the preferences of entrepreneurs, we could find not any study that reflected on the specific factors that are influential in their buying decision. By this study we have tried to understand this, by also considering age, gender, and their interaction as variables.

Objectives

1. To identify the factors affecting entrepreneurs’ decision towards buying a smartphone.
2. To Study the effect of age, gender, and their interaction on perception of entrepreneurs towards buying a smartphone.

Literature Review

Karjaluoto et al. (2005) discovered that while making a choice between different brands of mobile phones, the most influential factors that affect the decision are price, brand, interface, and properties of the mobile phone. A survey conducted by Mohd Azam Osman et al (2011), in Malaysia was conducted with a purpose of understanding the usage of smartphones by consumers, and there results showed that male consumers were more practical and productivity focused in their usage of smartphones, while female consumers were more into personalizing their devices. Their results also showed that the target market is much influenced by the male and young consumers. A study done by Debadutta Das (2012) in Orissa surveyed 1200 consumers and found that people in the age group of 20-30,  in the income group of 1-3 lakhs, and most female urban consumers consider information processing capability of mobile handsets as an important factor before buying a mobile handset. The results also showed that consumers are less influenced by people’s opinions about a mobile handset, and focus more on the handset’s properties. A study conducted by Sata (2013) in Ethiopia, analyzed various factors that a consumer considers while purchasing a smartphone, and price of the device and its features came out to be the most important ones. Farshad Maghnati and Kwek Choon Ling (2013) conducted their research on students who are heavy users of smartphone apps, and concluded that return on investment and playfulness of the device has a positive relationship with the usage attitude of the consumer. Sainy (2014) showed in her study on business school students that product features, branding of the product, price, social influence, and demand of the product are crucial in determining the buying behavior among students. Sujata et al (2015) did a study on senior citizens, understanding the factors that affect their decision to purchase a smartphone. Kaushal and Kumar (2015) concluded that social groups of the consumer which includes family and friends are influential in making a decision to purchase a smartphone. They also stressed on the prestige that owning a smartphone brings to people.

Hypothesis

There is a significant effect of age, gender, and their interaction on the entrepreneurs’ decision towards buying a smartphone.

Methodology

SAMPLE: The selected sample for this study is of 100 entrepreneurs in the city of Indore, Madhya Pradesh. Out of all the entrepreneurs, 89% are currently using a smartphone. 78% were male respondents and the remaining 22% were women.

Understanding how much educated these entrepreneurs, we found out 51% of our sample has completed their graduation, and 43% have a master’s degree. Others haven’t received any college education.

We have considered age as a depending factor in our study and the demographic details submitted by the entrepreneurs revealed that 59% are aged between 21 and 35 years (i.e. Generation Y or ‘millennial’), 38% of entrepreneurs are aged between 36 and 51 years (i.e. Generation X), and only 3% are aged between 52 and 70 years (i.e. Baby Boomers).

TOOL: We designed a questionnaire of 44 items to do this study, and the data was collected on a 5-point Likert scale. The reliability is 0.82.

Results and Interpretation

Factors affecting entrepreneurs’ decision towards buying a smartphone:

From the factor analysis the data obtained from the respondents showed that entrepreneurs’ decision towards buying a smartphone depends on seven factors out 44 attributes. These are as follows-

The first factor comprises of twelve variables as put up in Table-1. The highest factor loading is 0.790, whereas the lowest is 0.408. The variables are associated with the entrepreneurs’ preference in longer battery life, high-end processor, and suggestions from friends and family among many other. Hence, we have named it Preference and Social Influence.

Table-1

The second factor comprises of eight variables as shown in the table-2. The highest factor loading is 0.776 whereas the lowest is 0.332. The variables are associated with the entrepreneurs’ perception towards aesthetics of the smartphone, the status symbol it enjoys, and the brand it belongs to among many others. Hence, we have named it Brand Image and Attractiveness.

Table-2

The third factor comprises of five variables as shown in the table-3. The highest factor loading is 0.676 whereas the lowest is 0.398. The variables are associated with the entrepreneurs’ ability to utilise his smartphone in business activities as the associated variables are promotion of business and maintaining customer relationships among others. Hence, we have named it Business Utility.

Table-3

The fourth factor comprises of six variables as put up in the table-4. The highest factor loading is 0.668 while the lowest is 0.510. The variables are associated with entrepreneurs’ decision to buy the smartphone from a retail shop or online, and whether they buy extra accessories with it. Hence, the fourth factor is Buying and Spending Pattern.

Table-4

The fifth factor comprises of five variables as shown in table-5. The highest factor loading is 0.782 and the lowest is 0.269. The variables are associated with budget, and highly specific phone features based on individual preference. Hence, factor 3 is Budget and Specific Preference.

Table-5

The sixth factor comprises of four variables as shown in table-6. The highest factor loading is 0.640 and the lowest is 0.454. The variables are associated with entertainment, and convenience the smartphone offers. Therefore it is named as Media Consumption and Convenience.

Table-6

The seventh factor comprises of four variables as shown in table-7. The highest factor loading is 0.628 and the lowest is 0.507. The variables are associated with functionality and use of online backup for data, among others. Hence, we have named it as functionality and internet usage.

Table-7

Effect of age, gender, and their interaction on perception towards buying a smartphone:

It can be seen in the Table-8 that the F value of 0.009 for age, 0.625 for gender, and 0.746 for interaction between gender and age is not significant. This indicates that age, gender, and their interaction did not produce significant effect on perception of entrepreneurs towards buying smartphones. Therefore, the hypothesis namely, there is significant effect of age, gender and their interaction on perception entrepreneurs towards buying smartphones is rejected.

Table-8

Discussions:

As the number of startups are increasing every year, with more people taking on the challenges of entrepreneurship after quitting their jobs, or right after (even during) college, their use of technological resources has expanded in many ways. These days, buying a smartphone that can functionally do everything, has a lot of features to boast, and offers great value for money remains as one of the important decisions people have to take (Sata, 2013).

Based on our findings, preference and social influence has emerged out as the most important factor entrepreneurs consider while making a decision towards purchasing a smartphone, which isn’t surprising as these days the options people have while choosing a smartphone are plenty with so many features at disposal to choose from, ranging from different capacity batteries, iOS vs. Android, expandable storage, and so on. With that being said, the purchasing decision has much to do with the social influence, inclusive of family and friends (Kumar and Kaushal, 2015) towards making the purchase of smartphone as small business owners often maintain a close relationship with their peers.

Entrepreneurs are also influenced by what brands they can trust while purchasing the device (Karjaluoto, 2005). Samsung has the lion’s share of the market (as reported by IDC India), and is also regarded as one of the more trusted brands with reliable products compared to others. Entrepreneurs also pay attention to the aesthetic appeal of the smartphone, which goes beyond functionality of the device.

The study also helped us understand entrepreneurs’ use of smartphone in the functioning of business and connecting with clients and customers. This is due to the technological advancements we have seen in last decade, which has made it easier and more effective for entrepreneurs to promote their business. Furthermore, entrepreneurs display a predictable behavior pattern before purchasing a smartphone. A lot of them buy extra accessories like protection covers, 3^rd party headphones, and some even go on to purchase extended warranty, which is reasonable as they want to keep using the smartphone for longer periods.

Price is considered as another important factor based on the studies of many other researchers (Mesay Sata, 2013; Sainy, 2014), and our results consistent with theirs. Entrepreneurs set a certain budget before taking the buying decision, but we also discovered that entrepreneurs have a number of specific preferences as well. For instance, a dual SIM card capacity in a smartphone would not be much important for an average consumer as most of them have just one contact number, but entrepreneurs rate the importance of dual SIM capacity much higher to, mostly to keep a personal and business contact number separate.

People often use their smartphones for entertainment and media consumption as there are so many applications to download from app stores to keep person from getting bored (Farhad Maghnati and Kwek Choon Ling, 2013). Same is the case with entrepreneurs as they consider their smartphones as a good source of entertainment, with bigger screen phones being a hit. This also requires the smartphones to be highly functional to use and have decent internet connectivity. Entrepreneurs tend to see the importance of such factors while purchasing the smartphone as they want to be connected with their clients and customers on-the-go, and use safer and more reliable methods of backing up their data online using cloud based applications such as Google Drive and Dropbox.

When studying the effects of age, gender, and their interaction, the results were surprising and not what we predicted initially. We segregated the sample of entrepreneurs as per the different generations they belong to. Our assumption was that entrepreneurs belonging to different generations would have different perception towards buying a smartphone when compared to each other. However, no such difference was found. This could be because the way technology is affecting our lives these days, everyone is able to adapt to it and grow with it. Entrepreneurs see the importance of smartphone in their lives and therefore show a consistency when it comes to the perception towards buying the smartphone, through all the age groups that we studied.

Previous studies have shown difference in perception of male and female consumers towards the factors that influence the usage of smartphones (Mohd Azam Osman et al, 2011). Our study has shown no significant difference in the perception of male and female entrepreneurs which indicates that male and female entrepreneurs’ perception towards buying a smartphones remains unchanged, contrary to the results obtained from previous studies.

Conclusion:

Based on our results, we conclude with seven factors being influential in entrepreneurs’ decision to purchase the smartphone. The more prominent factors indicate towards preference and social influence, brand image and attractiveness, and business utility an entrepreneur looks into while making a purchasing a smartphone. Along with that, budget, buying and spending pattern, media consumption, and functionality of the smartphone have emerged as important factors. Furthermore, to fulfill the secondary objective of our research which required us to study the effect of age, gender, and their interaction on perception of entrepreneurs towards buying a smartphone, the data that we obtained did not show any significant difference, which indicates that entrepreneurs’ perception towards buying a smartphone remains unchanged irrespective of their age, gender, and the interaction between the two.

References:

Das, D. (2012, September). A empirical analysis of consumers’ buying behaviour towards mobile handsets with a special reference to mobile handset as a means of processing information- a study in coastal belt of Orissa. Indian Journal of Research, 1(9), 107-111.

Heikki Karjaluoto, Jari Karvonen, Manne Kesti, Timo Koivumäki, Marjukka Manninen, Jukka Pakola, Annu Ristola, Jari Salo. (2005). Factors Affecting Consumer Choice of Mobile Phones: Two Studies from Finland. Journal Of Euromarketing, 14(3), 59-82.

Joshi Sujata, Arindom Roy, Dikshit Thakkar, Anish Banik, Gagan Deep Arora, and Pallav Parashar. (2015, February). Conceptual Paper on Factors Affecting the Attitude of Senior Citizens towards Purchase of Smartphones. Indian Journal of Science and Technology, 8(S4), 83-89.

Ling, F. M. (2013). Exploring the Relationship between Experiential Value and Usage Attitude towards Mobile Apps among the Smartphone Users. International Journal of Business and Management, 8(4), 1-9.

Osman, M. A. (2011). Consumer Behaviors toward Usage of Smartphone in Malaysia. 2011 International Conference on Software and Computer Applications, (pp. 158-164). Singapore.

S.K. Kaushal, Rakesh Kumar. (2016, June). Factors Affecting the Purchase Intension of Smartphone: A Study of Young Consumers in the City of Lucknow. Pcific Business Review International, 8(12), 1-16.

Sainy, M. (2014, January-April). BUYING BEHAVIOR OF SMARTPHONE AMONG B SCHOOL STUDENTS. Bauddhik, 5(1), 24-35.

Sata, M. (2013, October). Factors Affecting Consumer Buying Behavior of Mobile Phone Devices. Mediterranean Journal of Social Sciences, 4(12), 103-112.

Indian Smartphone Market Ends 2016 With A Modest 5.2 Percent Annual Growth, But With A Chinese Flair: IDC India: http://www.idc.com/getdoc.jsp?containerId=prAP42304317