Measuring willingness-to-pay for mobile phone features: a multi-region study

Measuring willingness-to-pay for mobile phone features: a multi-region study PurposeA method is proposed for handling multi-attribute judgment problems with a large number of attributes such as mobile phone features. To minimize the complication of multi-attributes and reduce the consumers’ choice task burden, this paper aims to suggest an integrated hierarchical survey design (IHSD) with the Kano model. The author compared the utility of mobile phone’s attributes for each market and for customer segment by analyzing empirical data on wear obtained from six Middle East and African countries, five Asia-Pacific countries and three European countries. Based on an IHSD of 10,200 respondents, brand, camera, memory and LTE (4G) play vital roles in all regions. In contrast, Wi-Fi, file-editor, MMS, LCD size and phone type are displayed as the least important attributes. The results of this study were successfully implemented for product planning, product development and marketing strategy in terms of price setting, features prioritizing and optimal designing for new products in the mobile phone company.Design/methodology/approachThe first step was to list all possible features with the product planning team, product development team and market research specialists. The second step divided the selected features for designing a mobile phone into subgroups based on their functional characteristics by using the Kano model. The method for classifying features was determined using Kano questionnaire. The third step incorporated a fractional factorial design for the “must-be” choice-based conjoint (CBC) (Oppewal et al., 1994) which includes two factors: whether customers required the “one-dimensional” feature or the “attractive” feature, along with the “must-be” attributes. The consumers who selected the “must-be” features could choose both the “one-dimensional” feature and the “attractive” feature groups or one of the two feature groups in no particular order. Fractional factorial design was applied to both the “one-dimensional” features and the “attractive” features for individual CBCs. Random sequences of the combinations of attribute levels were generated for each of the three types of CBC analyses (“must-be”, “one-dimensional” and “attractive”). At the same time, the fourth step conducted a survey of the individual groups for the conjoint analysis on the functional characteristics of a mobile phone. The analysis of the accumulated data obtained from all the feature groups was completed using conditional logit models as part of the fifth step. In addition, the “must-be” CBC design was linked with the “one-dimensional” and “attractive” CBC designs. The sixth step was to analyze the accumulated results obtained from all the feature groups and estimate the usefulness of each feature’s level in the context of the CBC. Based on the results of the sixth step, the importance and willingness-to-pay of each attribute were estimated in the seventh step.FindingsUse of the conjoint important score is aimed to expand the market by finding the different consumers’ needs across the regions. In detail, attributes such as “FM Transmitter”, “Touch screen” and “Health (heart rate)” are considered consumers’ new crucial needs in Europe, which would enable the product to superiorly differentiate itself from others to dominate the current market. On the other hand, it is shown that attributes such as “brand”, “mobile TV”, “external memory”, “mobile tracker” and “4G” are more important in Asia-Pacific. Therefore, if mobile manufacturers develop this sector more, it will grant mobile manufacturers the opportunity to lead the market. The only difference of the Middle East and African consumers is that “NFC” has a higher importance while the rest of the needs are very similar to those of Asia-Pacific. Regarding willingness-to-pay (WTP) among countries, the highest scoring utility, besides brand, appeared to be associated with the camera function in all countries. Especially, relatively low utility value was given in Wi-Fi and File-editer, MMS, LCD size and Phone type. In a value-based approach, the price of a product is based on the perceived valuation by the target customers. The research in the field of pricing is of ample importance. This is because price is the only element of the marketing mix that generates income. All other elements, such as advertising and promotion, product development, selling effort, distribution and packaging, involve expenditures (Monroe, 2003). Regarding among regions, the needs for 3G and the internet-related feature (WAP, Wi-Fi, etc.) in the emerging market are low compared to those for 4G and internet-related feature in the mature market. Also, the needs for productivity and advanced features, such as camera and e-mail, are lower in Asia-Pacific than in Europe. It is therefore recommended that manufactures and marketers of mobile phones should consider producing and selling phones with modern technology features that are more durable and of highly quality.Research limitations/implicationsThe integrated hierarchical survey by function with the Kano model proves to be a highly useful, efficient and accurate methodology for understanding a consumer mobile phone behavior. Although the proposed method was applied to designs of mobile phones in the emerging and mature markets, its accuracy was not compared with the traditionally used methods such as CBC, adaptive conjoint analysis and hybrid method. This is left for further areas of research.Practical implicationsThe results of this research study correspond with previous studies conducted (Pakola et al., 2010; Das, 2012; Malaasi, 2012, 2008; Dziwornu, 2013), which consider the features of mobile phone as a crucial factor in consumer buying decision in all countries. It is significant that this study made huge impact on mobile phone manufacturers in several ways. It has been converted into product development with consumer-oriented approach. The pricing policy has been changed from cost-based pricing into value-based pricing; and marketing strategy has been changed from an unsystematic function into a systematic and consistent one.Originality/valueThe proposed method with the Kano model proved to be a practical and efficient tool for decision-making, as it helped mobile manufacturers to better understand how customers evaluate and perceive quality attributes. The Kano model was used to explain how the quality attributes can be classified into mainly three categories of perceived quality: “must-be”, “one-dimensional” and “attractive”. It has lots of benefits in terms of cost and time reduction and is expected to bring a great effect into the industrial field. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Research in Marketing and Entrepreneurship Emerald Publishing

Measuring willingness-to-pay for mobile phone features: a multi-region study

Loading next page...
 
/lp/emerald-publishing/measuring-willingness-to-pay-for-mobile-phone-features-a-multi-region-KBG3unOcML
Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1471-5201
DOI
10.1108/JRME-02-2016-0003
Publisher site
See Article on Publisher Site

Abstract

PurposeA method is proposed for handling multi-attribute judgment problems with a large number of attributes such as mobile phone features. To minimize the complication of multi-attributes and reduce the consumers’ choice task burden, this paper aims to suggest an integrated hierarchical survey design (IHSD) with the Kano model. The author compared the utility of mobile phone’s attributes for each market and for customer segment by analyzing empirical data on wear obtained from six Middle East and African countries, five Asia-Pacific countries and three European countries. Based on an IHSD of 10,200 respondents, brand, camera, memory and LTE (4G) play vital roles in all regions. In contrast, Wi-Fi, file-editor, MMS, LCD size and phone type are displayed as the least important attributes. The results of this study were successfully implemented for product planning, product development and marketing strategy in terms of price setting, features prioritizing and optimal designing for new products in the mobile phone company.Design/methodology/approachThe first step was to list all possible features with the product planning team, product development team and market research specialists. The second step divided the selected features for designing a mobile phone into subgroups based on their functional characteristics by using the Kano model. The method for classifying features was determined using Kano questionnaire. The third step incorporated a fractional factorial design for the “must-be” choice-based conjoint (CBC) (Oppewal et al., 1994) which includes two factors: whether customers required the “one-dimensional” feature or the “attractive” feature, along with the “must-be” attributes. The consumers who selected the “must-be” features could choose both the “one-dimensional” feature and the “attractive” feature groups or one of the two feature groups in no particular order. Fractional factorial design was applied to both the “one-dimensional” features and the “attractive” features for individual CBCs. Random sequences of the combinations of attribute levels were generated for each of the three types of CBC analyses (“must-be”, “one-dimensional” and “attractive”). At the same time, the fourth step conducted a survey of the individual groups for the conjoint analysis on the functional characteristics of a mobile phone. The analysis of the accumulated data obtained from all the feature groups was completed using conditional logit models as part of the fifth step. In addition, the “must-be” CBC design was linked with the “one-dimensional” and “attractive” CBC designs. The sixth step was to analyze the accumulated results obtained from all the feature groups and estimate the usefulness of each feature’s level in the context of the CBC. Based on the results of the sixth step, the importance and willingness-to-pay of each attribute were estimated in the seventh step.FindingsUse of the conjoint important score is aimed to expand the market by finding the different consumers’ needs across the regions. In detail, attributes such as “FM Transmitter”, “Touch screen” and “Health (heart rate)” are considered consumers’ new crucial needs in Europe, which would enable the product to superiorly differentiate itself from others to dominate the current market. On the other hand, it is shown that attributes such as “brand”, “mobile TV”, “external memory”, “mobile tracker” and “4G” are more important in Asia-Pacific. Therefore, if mobile manufacturers develop this sector more, it will grant mobile manufacturers the opportunity to lead the market. The only difference of the Middle East and African consumers is that “NFC” has a higher importance while the rest of the needs are very similar to those of Asia-Pacific. Regarding willingness-to-pay (WTP) among countries, the highest scoring utility, besides brand, appeared to be associated with the camera function in all countries. Especially, relatively low utility value was given in Wi-Fi and File-editer, MMS, LCD size and Phone type. In a value-based approach, the price of a product is based on the perceived valuation by the target customers. The research in the field of pricing is of ample importance. This is because price is the only element of the marketing mix that generates income. All other elements, such as advertising and promotion, product development, selling effort, distribution and packaging, involve expenditures (Monroe, 2003). Regarding among regions, the needs for 3G and the internet-related feature (WAP, Wi-Fi, etc.) in the emerging market are low compared to those for 4G and internet-related feature in the mature market. Also, the needs for productivity and advanced features, such as camera and e-mail, are lower in Asia-Pacific than in Europe. It is therefore recommended that manufactures and marketers of mobile phones should consider producing and selling phones with modern technology features that are more durable and of highly quality.Research limitations/implicationsThe integrated hierarchical survey by function with the Kano model proves to be a highly useful, efficient and accurate methodology for understanding a consumer mobile phone behavior. Although the proposed method was applied to designs of mobile phones in the emerging and mature markets, its accuracy was not compared with the traditionally used methods such as CBC, adaptive conjoint analysis and hybrid method. This is left for further areas of research.Practical implicationsThe results of this research study correspond with previous studies conducted (Pakola et al., 2010; Das, 2012; Malaasi, 2012, 2008; Dziwornu, 2013), which consider the features of mobile phone as a crucial factor in consumer buying decision in all countries. It is significant that this study made huge impact on mobile phone manufacturers in several ways. It has been converted into product development with consumer-oriented approach. The pricing policy has been changed from cost-based pricing into value-based pricing; and marketing strategy has been changed from an unsystematic function into a systematic and consistent one.Originality/valueThe proposed method with the Kano model proved to be a practical and efficient tool for decision-making, as it helped mobile manufacturers to better understand how customers evaluate and perceive quality attributes. The Kano model was used to explain how the quality attributes can be classified into mainly three categories of perceived quality: “must-be”, “one-dimensional” and “attractive”. It has lots of benefits in terms of cost and time reduction and is expected to bring a great effect into the industrial field.

Journal

Journal of Research in Marketing and EntrepreneurshipEmerald Publishing

Published: Oct 15, 2018

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off