Risk-Averse Consumers Toward High Involvement Product (Smartphone Case)

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Abstract
In highly competitive markets with increasing unpredictability and decreasing product differentiation, brand loyalty is a central element of marketing strategies and tactics. Brand loyalty generates benefits like substantial entry barriers to competitors, better ability to respond to competitive threats, greater sales and revenues and the customer’s lower sensitivity to marketing efforts of competitors. In the context of product and brand management, a number of studies have shown various effects of risk aversion on consumers’ decision making. This conceptual paper aims to discuss about how risk-averse consumers behave in choosing particular brand in smarthphone market and how that risk aversion lead to the brand loyalty, brand trust and brand affect.

Keywords: consumers, brand, smartphone, risk aversion, brand trust, brand affect, brand loyalty.

Introduction

The more sophisticated technology development makes people more depend to technology. Today, it seems that people cannot go everywhere without their cell phone. Behind its major functions as communication tools, recently cell phone has grown to be an important element of people life. By using cell phone, people can do their business via email, mobile banking and even searching information. Nowadays, cell phone technology has developed become smartphone, cell phone that offers sophisticated features with ability and connectivity like computer. Smartphone enables the users to install and run new application as they want and need, smartphone is also provided with big and strong memory, wide screen and outstanding performance. Actually, smartphone is classified into several groups that based on its software application: Symbian OS, Windows Mobile, RIM (Blackberry) and Android. The total global mobile phone and smartphone market is expected to be worth $341.4 billion by 2015 while smartphone revenue will account for 75.8% of the overall mobile handset revenue at $258.9 billion in the same year (marketsandmarkets.com). Smartphones are currently witnessing high growth due to a host of factors, including lower product cost, improved handset design and functionalities, the expansion of global mobile email and browsing services, the emergence of 3G and 4G network technologies, the rising competition among mobile carriers, and the standardization and upgrades of operating systems. The competition in the smartphone market place is at the peak and vendors are finding it difficult to maintain their market shares. Market leader Nokia has lost considerable market share over the past two years; to a market share of 32.8% in Q3’10 from 42.6% in the same quarter two years ago. Apple, on the other hand, gained 211% market share in Q3’09 over Q3’08 and then lost approximately 15% market share in same quarter in 2010 under the growing popularity of Android operating system and more number of devices switching to it (marketsandmarkets.com). HTC (from Taiwan) and Samsung (from South Korea) joined the Android popularity wave and are now the clear beneficiaries. Samsung gained 316% market share in Q3’10 over Q3’09 while HTC gained 160% market share during the same period. The global market for smartphones operating systems (OS) is dominated by Europe with a 37% market share. Asia-Pacific follows with a share of 31%, accounted for mainly by Japan, Korea, China, and India. Symbian is the most popular mobile OS in Europe and Asia, while Blackberry OS dominates the North American OS market. IPhones mobile OS has shown a high growth rate in the North American market in last two years, and is expected to have a double digit growth rate in next few years as well. Here is the table that shows five worldwide smartphone and their market share till 2011: Table 1.1 Top Five Worldwide Smartphone Vendors, Shipments, and Market Share Calendar Year 2011 (Units in Millions) Vendor| FY 2011 Shipment Volumes| FY 2011 Market Share| FY 2010 Shipment Volumes| FY 2010 Market Share| Year Over...
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