Samsung: The Aspects Of Consumer Behaviour

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Samsung: The Aspects Of Consumer Behaviour

INTRODUCTION

Samsung is a South Korean conglomerate headquartered in Samsung Town, Seoul. It comprises of numerous businesses under the umbrella brand of Samsung. It was initially started as a trading company but has diversified into other sectors through the years. Samsung has been consistently successful in satisfying customer needs through its varied range of products and services.

The company generates revenues through three major business units: information technology and mobile communications (IM), consumer electronics (CE) and device solutions (DS). The IM division generated the most revenue and the DS division was the most profitable business unit. As of 2016, Samsung was the world’s second largest information technology company by revenue after Apple Inc. Samsung was also considered as one of the most valuable brands in the world.

Samsung is a fast responder to market and consumer needs and it can observed in their product diversification. The company has a broad product line which cater to different customer segments. Samsung’s flagship Galaxy S and Galaxy Note lines are the company’s high-end premium segment offerings with a focus on innovation and higher perceived brand value. The Galaxy J series and A series are the lower end units.

Samsung has been a market leader in India for over a decade. Since Apple launched its first ever smart phone in 2007, Chinese and Korean companies started to copy the technology and Samsung was the first one in doing so. Being a fast follower and an innovative company, Samsung was able to well establish itself in the smartphone category. It soon became the market leader with a 28% market share in India.

In the recent years, due to immense competition from rivals like Oppo, Xioami, Vivo, OnePlus and Motorola, Samsung’s profits have begun to decline and it has started to lose market share. In the high end segment, Samsung has tough competition from OnePlus and Apple and in the low end segment, it has competition from Oppo, Vivo and Xiaomi.

A major reason for this decline is the offerings made by these new brands. New startups like OnePlus, Xiaomi,Vivo and Oppo have started to sell good quality phones at cheaper price points. With the increasing awareness about these brands, the demand for them is also increasing. This has led to Samsung losing its market share to new entrants.

INDUSTRY OVERVIEW

The smartphone industry is one of the most competitive markets in the world. According to the International Data Corporation, shipments in India grew by an estimated 11% to about 150 million units. The growth is expected to be at 12% in 2019. The Indian smart phone industry accounts for more than 10% of the global market. The number of smartphone users in India is estimated to increase to 442.5 million by 2022.The smartphone industry has a lot of players catering to different market segments through different product lines.

Xiaomi was the market leader in the category for the entire year with a market share of 30% and 41 million units were shipped. India is now the biggest market for Xiaomi worldwide. Samsung which was ahead of Xiaomi in 2017 slipped to the second position with a market share of 25.8%. The decline in the Chinese smartphone market has made India a major destination for the Chinese companies. Other leading Chinese counterparts like Vivo and Oppo are in the third and fourth place and have been steady in this position. The smartphone industry is dependent on e-commerce for its shipments and deliveries. The new foreign direct investment policies in India, may lead to slower market development.

In the higher end segment, Samsung has tough competition from Apple and OnePlus. The Chinese smartphone manufacturer surpassed Samsung and Apple to become the fastest growing premium phone in India in 2018. It captured 40% market share in the premium segment. This remarkable growth was driven by the record shipments of OnePlus 6. Samsung captured a 34% market share with its S9 but Apple saw a decline and reached its lowest ever share of 14%. This was due to the decline in the shipments of iPhone 8 and X series. OnePlus came up with an innovative strategy to capture the customer’s attention through its word of mouth reference from its existing users and also effectively leveraged social media.

LITERATURE REVIEW

A study conducted by the Mediterranean Journal of Social sciences suggested that six major factors affect the buying patterns of smartphones. Price, social group, product features, brand name, durability and after sales services. A major deciding factor is consumer value price. Consumers buy phones that offer the best features at the lowest price. Consumer behaviour is influenced by two factors- individual and environmental. The individual factors include demographics, perception, motivation, personality, beliefs and life styles. The environmental factors include the culture, social values, reference group and family. India is a developing country and smartphone penetration has grown rapidly since 2010. A large number of national and international firms have invested in this market.

Another article published in the International Journal of Current Advanced Research studies the factors affecting smartphone purchase in Dehradun, India. Most of the employed people with income levels less than 2 lakhs are interested in getting updated with the latest technology. Most of them use their phones for basic calls, messages, camera and for other entertainment purposes. Features like display, camera, memory and battery capacity are considered highly important by more than 80% of the users. Most of them stay loyal to a brand until there is no glitch in the phone. A majority of them are open to trying new brands that offer better features at a lower price point but would prefer known brands if price-feature mix is similar.

The factors are both internal and external. The product, features, prices are not the only deciding factors but other factors like brand perception, loyalty, peer group, social status and lifestyle also influence the buying pattern. Samsung has seen high loyalty among the middle-aged and older aged segments and also caters to their life style and social status through their high-end devices. On the contrary students and young working professionals are more influenced by their peers and phone features play a major role in decision making. With the advent of technology and increasing importance of e-commerce sites, consumers have many portals to gain knowledge about the sector. Various views, opinions and reviews are taken into consideration before making a purchase.

EXTERNAL INFLUENCES

Culture is the beliefs of human societies and their roles, behaviour, values, traditions and customs. During depth interviews conducted it surfaced that Indian consumers look for value for money and hence prefer best quality available at the lowest price. These consumers also consider the resale value and the availability and cost of components. They value warranty and after sale service.

Demographic- Consumers are influenced by their life cycle stage. Young professionals are in a good economic circumstance and hence they prefer to spend more money on a Smartphone. Young population from economically weak background buy products that they can afford whilst saving aside some from their salary. Youngsters these days want latest technology available at the lowest price and this has affected their buying behaviour as well. They are automatically attracted towards attractive things and smart phones are the attraction of modern age. The older population however try to get the best at the lowest price and prefer trusted brands even if they have to compromise on features. ocial status

Social class of a consumer is identified by a wide set of variables which includes income, profession, wealth, education and family background. Group of people share similar social and economic condition. Hence, social class has a powerful impact on consumer’s purchase Intention. Society is classified into seven different groups- upper uppers, lower uppers, upper middles, lower middles, working class, upper lowers and lower lowers.

Being a part of society, every individual wants to be recognized and belong to a group and hence make purchase decisions accordingly.

Reference group and Family- From the depth interviews conducted, for male participants it seemed that social factors didn’t affect them much in purchasing their Smartphone. Most of them agreed that they made independent decisions while buying their smart phones. They just checked the features of the Smartphone in the internet or the stores and made their final decision independently. Just opposite to male participants, most female participants agreed that their decisions were influence by their friends and family. For older generation, mostly the children were the decision makers.

Marketing activities have influenced buying decisions to a great extent. However, the well-informed tech savvy generation prefer to ensure the marketing claims to be correct. Features such as look, camera quality, display, battery backup are the most sort out features and hence brands capitalizing on them have successfully been able to attract customers increasing their brand recall. Slice of life advertising has also helped them capture consumer’s attention.

INTERNAL INFLUENCES

Perception refers to the different ways in which an individual can sense external information Smartphones in general are perceived to be highly essential these days and are also considered to fulfil the social needs of people. Consumers perceive smartphones as a status symbol. In the case of Samsung, the higher end phones are perceived to be high quality but there are different perceptions about the mid range and lower end devices. Young individuals perceive the low end phones to be not value for money.

Motivation- A need turns into motivation when there is sufficient level of intensity. Motivation can lead to goal-oriented behaviour. In the case of smartphones, high end smartphones are aspirations of many people, especially youngsters. With everyone in the society owning a smartphone, it becomes a necessity thus leading to motivation to own one.

Personality encompasses a person’s traits. People usually buy products to enhance how they feel about themselves and communicate the same to the outside world. Smartphones are also products that can help explain a person’s traits. People tend to associate themselves with the traits of the smartphone. For example, iPhone is considered to be extravagant and innovative and people tend to associate themselves to these traits of the product.

Attitude is a way of thinking. Attitude in case of smartphones can be related to usage of the phone. Various consumers have different notions about smartphones. For few they are mere entertainment devices and for few they are personal assistants that are needed on a regular basis. A majority of the users use it for calling, messaging and entertainment purposes. Few use it for office related work.

METHODOLOGY

Before proceeding on to data collection, it was vital to decide the type of study to be undertaken to analyse the opinions and perceptions of the consumers. We decided to proceed with Qualitative data analysis to capture varied perceptions and opinions among different categories of consumers. We have followed a step wise approach to collect primary data and analyse it to gather insights

1. Defining target respondents

Samsung phones are used by customers from various demographics and psychographics. Users, non-users and lapsers were considered for the study. In order to understand the perception of different kinds of customers, users were categorized based on demographics (Income, age and gender) as follows-

(a) Low Income –women- housewives or working (>25 years)
(b) Low Income- men -working (>25 years)
(c) High Income – men – students/young working professionals (18-30 years)
(d) High income- men- workin g (>30 years)
(e) High income – women – students /young working professionals (18-30 years)
(f) High income- women -working/ housewives (>30years)

Both Samsung and non Samsung users were interviewed.

2. Data collection

Both primary and secondary data was collected for the study. After defining the required target respondents we approached one or more customers from each of the defined segments to understand their perception about smartphones. Nearly 20 customers who were both Samsung and non Samsung users were interviewed. Some of the below mentioned aspects were covered while interviewing the respondents.

Current phone owned by them
Major features that they look for while purchasing a phone.
Influencers while making a purchase.
Major functionalities used in the phone
Perception about Samsung and other competitors like Vivo, Oppo, Xiaomi, Apple.
If Samsung users, then the feature that makes them repurchase the brand again.

Respondents were also asked various questions based on the answers given by them.

3. Analysing the data collected

The recordings that were collected from the field were transcribed to text to analyse the patterns. Keywords mentioned by the respondents was coded to summarize the data and make it easier for analysis. The below graph shows importance of each feature while purchasing a phone. (20 respondents were interviewed)

4. Insights:

The following insights were recorded using deductive reasoning technique

Majority of the smartphone users in the above 35 age category with high disposable incomes have been using either Samsung or iPhone for a very long time.
Majority of the women above 40 years and men above 50 years of age and with high or medium disposable incomes have been brand loyalists of Samsung and would prefer to continue with the brand.
Very few in the above-mentioned categories are aware of other brands and their purchase decisions are influenced by family (mostly children), friends, online reviews or reviews by store owners.
Among the low-income groups, price point is a major concern. Customers buy phones that offer maximum features at the lowest possible price point. Brand loyalty in this case is very low. Awareness about others brands is less and purchase intention is heavily based on reviews by peers or store owners.
Majority of the young working professionals with higher disposable incomes, prefer phones with good quality, specifications and innovative features and wouldn’t mind paying a premium for the same. They are influenced by their lifestyle, society and peers.
Young working professionals with lower disposable incomes and a majority of students aspire to have good quality phones with innovative features but are not willing to pay a premium for the same. Brand loyalty is low and they switch to phones that offer the best specifications at a reasonable price and consider brand name as an added benefit.

RECOMMENDATIONS

Based on the above behavioural insights we have come up with the following recommendations.

Ten years ago, when smartphones were launched, creating awareness about product features and price was important and Samsung was highly successful in doing so. Hence it emerged as a market leader.
But in the current scenario, customer demands have changed and they demand more innovative features at affordable prices. Samsung should limit its product portfolio and release fewer phones to cater to different categories. The J series can have two phones to cater to the lower end, the A series for the mid-range users and Note and S series to cater to the higher end users.
The J series phones should be provided with maximum features at affordable and competitive prices. This can help them capture their users who have now shifted to Oppo, Vivo and Xiaomi. The A series phones should have good quality features bundled with reasonable innovation. This can help them capture customers who aspire to have higher end phones but cannot afford to do so. This can also help them capture customers who are moving towards OnePlus. The S series should be bundled with innovative and sought-after features and can be priced at a premium.
Apart from product portfolio changes, they should also concentrate on improving their communication strategy. Each of the offerings should be clearly communicated to the users. A majority of the lapsers are young working professionals and students. They also form a major part of the influencers. They should be targeted through digital platforms through a creative communication strategy for lower end and mid-range phones. The strong brand image associated with Samsung should be leveraged.

These strategies will not only help in increasing the sales but also help Samsung regain its lost spot in the Indian smartphone market.

REFERENCES

Durmaz, Y., Celik, M. and Oruc, R., 2011. The impact of cultural factors on the consumer buying behaviors examined through an empirical study. International Journal of Business and Social Science, 2(5), pp.109-114.
Amrit Mohan.., 2014. Consumer Behaviour towards Smartphone industry in Indian Market. DublinBusinessSchool Publications.
Mesay SataShanka, 2013..Factors affecting consumer behaviour of mobile phones- Mediterranean Journal of Social sciences.
P V SreeVyshnavi., 2016. Factors affecting mobile phone purchase in towns. International Journal of Current Advanced research.
https://www.idc.com/getdoc.jsp?containerId=prAP44856419
http://www.businessworld.in/article/Xiaomi-Ringing-In-Success/27-12-2018-165601/
https://www.dnaindia.com/business/report-what-to-expect-from-the-smartphone-industry-in-2019-2702583
https://economictimes.indiatimes.com/topic/Indian-smartphone-market
https://www.livemint.com/technology/gadgets/indian-smartphone-market-grew-by-10-annually-in-2018-report-1549642282575.html