1.

0 INTRODUCTION

1.1 Research Background

A mobile or cellular telephone is a long-range, portable electronic device for personal
telecommunications over long distances. In fewer than twenty years, mobile phones have
gone from being rare and expensive pieces of equipment used by businesses to a pervasive
low-cost personal item. In many countries, cell phones now outnumber land-line telephones,
with most adults and many children now owning mobile phones. In Bangladesh it’s quite
popular now and almost every university students own mobile phones. It is not uncommon for
young adults to simply own a mobile phone instead of a land-line for their residence. In our
country, where there is little existing fixed-line infrastructure, the mobile phone has become
widespread. With high levels of mobile telephone penetration, a mobile culture has evolved,
where the phone becomes a key social tool, and people rely on their mobile phone address
book to keep in touch with their friends. Many people keep in touch using SMS, and a whole
culture of "texting" has developed from this. The commercial market in SMS's is growing.
Many phones even offer Instant Messenger services to increase the simplicity and ease of
texting on phones. The university students are habituated with the cell phone culture.

The mobile phone itself has also become a fashion object, with users decorating, customizing,
and accessorizing their mobile phones to reflect their personality. Mobile phone etiquette has
become an important issue with mobiles ringing at weddings, movies, and plays. Users often
speak at increased volume which has led to places like bookshops, libraries, movie theatres,
doctor's offices, and houses of worship posting signs prohibiting the use of mobile phones,
and in some places installing signal jamming equipment to prevent usage .Transportation
providers, particularly those doing long-distance services, often offer a "quiet car" where
phone use is prohibited, much like the designated non-smoking cars in the past. Mobile phone
use on aircraft is also prohibited, because of concerns of possible interference with aircraft
radio communications, although the airline Emirates have announced plans to allow limited
cellular phone usage on some flights. All schools in our country prohibit cell phones due to
the high amount of class disruptions due to their use, and due to the possibility of
photographing someone (without consent).

1.2 Research Objectives

The broad objective of the research is;
“To understand the buying behavior of cell phones and associated perceived risk among
university students of Dhaka city.”
In the pursuit of achieving the broad objective, the research will also address the following
objectives:
a) To identify the purchase decision pattern of cell phone by the university students of
Dhaka city.
b) To identify what are key features, brand image, service of cell phone which attracted
the university students.
c) To determine the involvement of perceived risks while purchasing cell phone.

Page 1 of 19
1.3 Scope of the Research
1.3.1 Location/Geographic coverage: The research has been conducted only in Dhaka city.
The survey for the research has been conducted in several public and private universities of
Dhaka city.

1.3.2 Type of product: The type of product selected for this research is consumer durable
good, specifically cell phone. The research limits the type of product only this category and
does not include any cross-category analysis with other consumer durable goods.

1.3.3 Product: The different brand and non brand of cell phones available in our country.

1.3.4 Presentation of Findings: The findings are presented only on the basis of primary
survey conducted for the research.

1.4 Research Methodology

The research is Descriptive in nature. Other relevant issues regarding the research are briefly
presented below:

1.4.1 Source of Data: Both primary and secondary sources were used for the research
purpose. Secondary data were used for providing the theoretical background to the research
problem. Primary data was collected through household survey by using appropriate research
instrument.

1.4.2 Methods of Data Collection: The primary data for the research has been collected
through questionnaire survey. The first part of the questionnaire contained information
regarding the respondents and the second part contained the purchase related decision. The
third part is contained the product characteristics and the final part is contained the perceived
risk associated with purchasing cell phone. The questionnaires were administered through
personal interview. The secondary data was collected from different journals, books and web
sites.

1.4.3 Nature of Questionnaire: Both Close and Open-ended questions were included in the
questionnaire. The length of the questionnaire was 4 pages. The questionnaire has been
categorized into four parts. Part two, three and four included the questions specific to the
research problem. Questions in part one was specific to the demographic profile of the
respondents. The second part of the questionnaire included purchase related questions. The
third part of the questionnaire intended to measure the product characteristics of the cell
phone. The questionnaire ends with perceived risk part. The personal interview through

Page 2 of 19
questionnaire survey took fifteen minutes on average. A sample questionnaire is attached in
the appendix section.

1.4.4 Scaling Technique: One scaling techniques were used in final questionnaire. Five-point
Likert scales (1 for strongly disagree to 5 for strongly agree) were used to measure product
characteristics of cell phones. Dichotomous and multiple choice questions was used in the
respondent’s information and purchase decision part.

1.4.5 Sample Plan: The sample plan covers target population, sampling frame, sampling
technique and sample size. These are presented below:

1.4.5.1 Target population:

• Elements: The sample elements for the research were the non-student Male and
Female university students.
• Sampling Units: University students.

• Extent: Dhaka City

1.4.5.2 Sampling Frame: There was no such structured sampling frame that could be
gathered conveniently.

1.4.5.3 Sampling Technique: The Non-Probability Convenience sampling technique was

used to collect the desired data for the research as there was no structured sampling frame.

1.4.5.4 Sample Size: The sample size of the research was 100.

1.5 Data Collection/Field Work

The data collection procedure for the survey took one week. The data was collected from the
university students using the final survey questionnaire.
1.6 Method of Analysis
The gathered data from the survey has been analyzed using several statistical techniques. The
demographic data has been analyzed using simple tabular presentation. Purchase decision part
has been analyzed using weighted average method. Product characteristics have been
analyzed by weighted average score and simple tabulation. Finally, the perceived risk has
been analyzed by weighted average score and simple tabulation.

Page 3 of 19
1.7 Limitations of the Research
Although the research has reached the targeted objectives, but still the overall research
processes and activities are constrained by several limitations. These are as follows:

• The sample size is small for conducting such a research. There were only 100
respondents, which seems to be too small to represent the whole population of cell
phone user university students in Dhaka city. This limitation resulted from shortage
fund and time constraint.

• Unequal distribution of respondents across different survey areas is another

limitation. More insight could be realized if the respondents were distributed equally
in all the survey areas.

• Number of cell brands is still found in the market. This limitation resulted from
unavailability of customer information and shortage of fund.

• Absence of similar research activities in the context of Bangladesh has restrained the
researcher from getting valuable insight and direction of such research activities.

• The lack of experience on the part of the researcher in conducting such research is
still another area that limits the scope of the research.

Page 4 of 19
2.0 LITERATURE REVIEW

2.1 Consumer Behavior

To better understand the choice of brand from the consumers’ perspective it is important to
have an idea of the consumers’ behavior and their view of brands. There are two different
types of consumer behavior: cognitive and experience oriented. The consumers who have
cognitive behavior are rational and logical consumers while the experience oriented
consumers have more emotional motives for buying a product. In comparison, there four
types of consumer behavior:
1. Rational,
2. Unconscious,
3. Learned
4. Social behavior
The different behaviors are characterized by the order of the three steps: knowledge, attitude
and action

Rational behavior:

If consumers have a rational behavior, they start to get some knowledge about the product and
what the market may offer. By evaluating the information they get an attitude towards the
product and finally they act; either buying the product or not. This behavior is more common
when consumers are buying expensive products like cars. (Knowledge - Attitude - Action)

Unconscious behavior:

When consumers have an unconscious behavior they start with an attitude towards the
product and the attitude comes from emotions and feelings. From the attitudes the consumers
find information about the product and from that they get knowledge. At last they have the
action, their choice. This type of behavior is common when it comes to voting for politics.
(Attitude – Knowledge- Action).

Learned behavior:

Reflexes settle the choice of product. When the consumers choose a product they do not plan
their choice; they do it by habit. This behavior usually occurs when consumers buy
newspapers. (Action – Knowledge- Attitude)

Social behavior:

When consumers have a social behavior they choose the products depending on what social
environment they live in. Their lifestyle, status and influence from others decide what product
they will buy. (Action - Attitude -Knowledge) Naturally, consumer behavior is strongly
influenced by the culture in which the consumers have been raised.

According to Kotler, Armstrong, Saunders and Wong (1999), there are more than just cultural
factors that influence consumer behavior. Other factors are: social, personal, and
psychological factors.

Page 5 of 19
• The Cultural factors are what culture, subculture and social class the consumers identify
themselves to.

• The Social factors are the reference groups of the consumers, the consumers’ family and the
consumers’ role and status.

• The Personal factors are the age and lifecycle status of the consumers, in other words, the
occupation, economic circumstances, lifestyle, personality and self-concept that the
consumers have.

• The Psychological factors are the motivation, perception, learning, the beliefs and the
attitudes of the consumers.

2.2 Culture
There are more than just cultural factors that influence consumer behavior. Other factors are:
social, personal, and psychological factors ( Kotler, Armstrong, Saunders and Wong (1999).

• The Cultural factors are what culture, subculture and social class the consumers identify
themselves to.

• The Social factors are the reference groups of the consumers, the consumers’ family and the
consumers’ role and status.

• The Personal factors are the age and lifecycle status of the consumers, in other words, the
occupation, economic circumstances, lifestyle, personality and self-concept that the
consumers have.

• The Psychological factors are the motivation, perception, learning, the beliefs and the
attitudes of the consumers.

2.3 Consumer Buying Behavior

It is important to be familiar with the theories about consumer buying behavior when making
a research about choice of brand. The consumer buying behavior depends on which
intentions, attitudes, preferences, effort to commitment, and way of identifying the consumers
have.

Figure1: Buyer decision process

Source: Kotler et al., 1999, p 254

As seen in the “buying decision process-model” above, consumers are passing through five
stages in their buying decision process. Consumers are not passing all stages at every

Page 6 of 19
purchase. In routine purchases consumers usually skip some stages. In a “small” purchase,
like everyday commodities, information search and evaluation are often skipped. However,
the figure shows all the considerations consumers take when facing a new complex purchase
situation.

Need recognition is the first step in the model. Here the consumers define a problem or
something that they need. A need could be triggered either by an internal or external stimulus.
An internal stimulus is for example when you are hungry enough to need something to eat.
An example of an external stimulus is when consumers see a commercial on television, and
after that they think that the product/brand is needed. This is why it is important for marketers
to find out what stimulus most often activates interest in the brand.

Information search is the stage when the consumers start to search for information. The
information can be gathered from different sources: personal sources, commercial sources,
public sources and experiential sources. As more information is obtained, the consumers’
awareness and knowledge of the available brands increase.

Alternative evaluation is the stage where the consumers use the information to evaluate and
rank the alternative brands. Here it is important for marketers to know about the alternative
evaluation. The consumers are trying to satisfy some needs and first they are looking for
certain benefits by buying a special brand. Further on, the consumers look for the product
attributes which can be price and quality etc.
Consumers also look for salient attributes, which are things that come up in the consumers’
mind when thinking of the brand.
Purchase decision is when the consumer actually purchases the product. The consumers’
choice of brand might be affected by two factors, attitude of others and unexpected situational
factors.

Post-purchase behavior is the stage where the consumers compare their expectations with
the perceived performance. Consumers are satisfied if the expectations are the same as the
product’s performance (Kotler et al ., 1999). Regarding the first purchase of a new
product/brand, the buyer enters five different levels of adapting.

The adapting process is a psychological procedure a person goes from hearing about the
product to buying it:

1. Awareness: The consumer becomes aware of the new product, but lacks information about
it.

2. Interest: The consumers seek information about the new product.

3. Evaluation: The consumers consider whether trying the new product makes sense.

4. Trial: The consumers try the new product on a small scale to improve their estimation of its
value.

5. Adoption: The consumers decide to make full and regular use of the new product. This is
just a model and all the stages are not necessarily used when purchasing a new product; for
example, the stage “trial” is not entered when buying a car (Kotler & Armstrong, 2004).
Consumer buying behavior differs much depending on what kind of product the consumer
will purchase. There is a big difference in involvement when buying a car compared to
toothpaste. Kotler et al., (1999) have made a buying behavior model with four different buyer
behaviors.

Page 7 of 19
Figure 2: Four types of buyer behavior

High involvement Low involvement

Significant Complex buying Variety-seeking

differences

Few differences Dissonance-reducing Habitual buying behavior

between behavior

brands

Source: Kotler et al., 1999, p 251

Moreover, consumers differ much individually in willingness to try new products and brands.
This has led to a classification of consumers into different groups.

Innovators are defined as the first consumers adapting to the new product.

The early adopters are the next ones.

The early majority adapt to the new product before the average consumer.

The late majority adapt to the new product only after most people already have tried it.

Finally, the laggards are the last ones that adapt to the new product. They are bound to
tradition and adapt to the new product only when it has become tradition itself. The
innovators or pioneers are adventurous. They like to try new things and are more willing to
take risks. They are often young and well educated. Further, they tend to take more advantage
of special promotions such as discounts and samples.

Sources of information: There are five primary information sources (Hawkins et al. (2005,
p. 530)) available to consumers. They are given below:
1. Memory of past searches, personal experiences and low involvement learning.
2. Personal sources, such as friends, family and others.
3. Independent sources, such as magazines, consumer groups and government agencies.
4. Marketing sources, such as sales personnel, websites and websites etc.
5. Experiential sources such as inspection or product trial.
These sources are shown in the Figure 3. Consumers decide how many and which sources of
information to use at both the macro (personal sources) and micro (specific individuals)
levels. Thus, a purchase decision requires a subset of decision concerning information
seeking.

Page 8 of 19
 Information sources for
purchase decision of a cell
phone

Internal External
Information Information

Personal Personal Market

Past Searches
Experience Contacts Information

Figure 3: Sources of Information sources preferred by the target consumers

Source: Hawkins, Consumer Behavior (2004).

2.4 Perceived Risk

The perceived risk associated with unsatisfactory product performance, either instrumental or
symbolic, increase information search prior to purchase. Higher perceived risk is associated
with increased search and greater reliance on personal sources of information and personal
experiences.
Perceived risk is a function of individual, the product, and the situation. It varies from one
consumer to another and for the same consumer from one product to another and from one
situation to another. While perceived risk varies across consumers and situations, some
products and services are generally seen as riskier than others. Like wise, perceived risk is
high for products whose failure to perform as expected would result in a high.( Hawkins et al.
(2005, p. 542))

Page 9 of 19
Part-A (Demographic information)

3.1.1 Gender

The number of male and female respondents of my survey was total 100. In total, percent of
the respondents 61% were male as against 39% percent female. The number of respondents
according to the age groups is presented in the following table.

Table 1: Gender distribution of the customers

Gender Frequency Percent

Male 61 61%
Female 39 39%
Total 100 100
Source: Primary

3.1.2 Age

Among the three groups of respondents the largest group of respondents was found in the 18-
21 age groups. The second group and third group of respondents were 30 and 33 respectively.
The numbers of respondents according to the age groups are presented in the following table.

Table 2: Age distribution of customers

Age Frequency Percent

18-21 37 37%
21-24 30 30%
24-27 33 33%
Total 100 100
Source: Primary

3.1.3 Gross family income

Family income is one of the important indicator cell phone purchasing patterns. Based on the
survey findings, the income distribution of the respondents are categorized into four groups.
The largest income group of the respondents was in the 21000-30000 Taka (monthly) bracket.
The second large group was in the 40000 Taka above bracket. The third large group was in
the 31000-40000 Taka above bracket. The fourth large group was in the 31000-40000 Taka
above bracket. The number of respondents according to the age groups is presented in the
following table.

Page 10 of 19
Table 3: Gross family income

Gross Family Income/month Social Class Frequency Percent

Below TK 20,000 Middle Class 15 15%

Between TK 21,000 – TK 30,000 Upper Middle Class 30 30%
Between TK 31,000 – TK 40,000 Middle Upper Class 21 21%
Above TK 40,000 Upper Class 34 24%

Source: Primary

3.1.4 Type of Institution

In my research I was targeted the university students. There two types of university found in
the education system of Bangladesh. The number of respondents according to the type of
institution is presented in the following table.

Table 4: Frequency distribution of the type of institution

Type of Frequency
institution
Private 50
Public 50
Tolal 100
Source: Primary.

Page 11 of 19
PART-B (Purchase decision)

3.2.1 Sources of information

There are several sources of information in the purchase decision process. But I have tried to
focus on the major sources of information those are truly help the consumer. The weighted
average of sources is presented in the following table.

Table 5: Information sources

Sources of information Weighted average

Past searches 2.68
Personal experiences 3.32
Marketers 3.22
Personal contacts 3.72
Independent groups 3.71
Experiential 3.66
Source: Primary

Figure 4: Sources of information

Source: Primary

3.2.2 Point of purchase

Page 12 of 19
 Purchase decision executed in several places. The table indicates that a large number of
respondents purchased cell phones from Brand cell phones provider outlet. The second large
portion of respondents purchased their cell phone from the Dealer’s outlet. The third largest
portion of respondents purchased their cell phones from the any kind of sales outlet. Rest of
the respondents purchased from the abroad. The number of respondents according to the age
groups is presented in the following table.

Table 6: Purchase decision where made

Purchase decision where made Frequency

Brand set provider’s outlet 36
Any sales outlet 22
Dealer’s outlet 33
Abroad 9
Source: Primary

3.2.3 Brand Preferences

The total respondents of research were 100. Among them 24 respondents were chosen Nokia
as a preferred brand. Nineteen respondents were chosen Sony Erickson, 16 respondents were
chosen Siemens, 15 were chosen Samsung, 13 were chosen Motorola and rest of the 4
respondents were chosen Others brand.

The number of respondents according to the age groups is presented in the following table.

Table7: Frequency of preferred brands

Name of the brand Frequency

1.Nokia 24
2.Motorola 13
3.Sony Erickson 19
4.Samsung 15
5.Siemens 16
6.LG 9
7.Others 4
Source: Primary

Figure 5: Pie chart of preferred brand Cell phone purchased by the university students

Page 13 of 19
Source: Primary
This pie chart gives a overview which brand of cell phone preferred by the university
students.

PART-C (Product Charateritics)

3.3.1 Product characteristics

Cell phones have features beyond sending text messages and making voice calls—
including camera, video, Internet browsing, music (MP3) playback, personal
organizers, e-mail, built-in cameras and camcorders, ringtones, games, radio, Push-to-
Talk (PTT), infrared and Bluetooth connectivity, call registers, ability to watch
streaming video or download video for later viewing, video call and serve as a
wireless modem for a PC.

The product characteristics are the combination of product features, brand image, service
durability and so on. I have included the following things they are given below:

1. Brand image:
2. Features-
a) Gaming facility
b) FM radio
c) MP3/MP4
d) Memory extension facility
e) Video recording and sharing
f) Internet accessibility
3. Smart outlook
4. Comparative value added price
5. User friendliness
6. Durability or longevity
7. After sales service
8. Warranties

Above are the product characteristics observed by the consumers while making a purchase
decision. The field survey of research indicates that while purchasing cell phone the
university students prefer the internet accessibility facility. In table 8, the highest weighted
average lies in the internet accessibility feature. The second highest weighted average lies in
the video recording and sharing features. The third highest weighted average lies in the smart
outlook category. The weighted average of the above product characteristics are shown in the
following table.

Page 14 of 19
Table8: The weighted average of Product characteristics
Weighted
1 2 3 4 5 Average
Brand Image 20 20 21 8 31 3.1
Gaming Facility 4 32 20 40 4 3.08
FM radio 34 11 18 15 22 2.8
MP3/MP4 player 20 31 6 31 12 2.84
video
recording/sharin
g 11 11 51 5 22 3.16
Memory
extension 31 19 12 13 25 2.82
Internet 16 15 27 14 28 3.23
Smart outlook 13 16 34 13 24 3.19
Value added
price 8 21 49 7 15 3
User friendliness 12 40 9 25 14 2.89
Durability 25 16 24 7 28 2.97
After sales
service 9 37 12 38 4 2.91
Warranties 11 24 19 42 4 3.04
Source: Primary

Figure2: Product characteristics

Source: Primary

Page 15 of 19
PART-D( Perceived risk &Attitude towards the risks)

3.4.1 Perceived risk &Attitude towards the risks

The perceived risk is the important phenomenon when consumers are made their decision.
The following perceived risks are considered in my research

1. Physical risk(Side effects of cold remedy, injury on a bicycle, electric shock from
hairdryer and unwanted radiation from cell phone).
2. Financial risk (finding that the warranty does not cover microwave woven).
4. Functional risk( an aspirin product does not get rid of headaches very well).
5. Physiological risk( My friends might think these sunglasses look wired on me; I won’t
feel confident wearing this type of sunglasses). Peter et al. (2005, p.71-72)

Above are the probable risks faced by the consumers while purchasing cell phone. The
university students are my sample in this research. So the risks are considered carefully when
I prepared the questionnaire for the field survey.

The following table indicates that weighted average of perceived risk. If graphically present
the perceived risks then we can see what kind of risk is much while purchasing cell phone.

Table 9: The perceived risk involved while purchasing cell phone

1 2 3 4 5
Hearing Weighted
Problem 18 13 20 27 22 Average
Unwanted
Radiation 20 23 24 21 12 3.22
Worth its cost 4 38 33 14 11 2.82
Warranty
Coverage 22 18 24 23 13 2.9
Social Status 27 13 10 20 30 2.87
Personality 13 23 15 25 24 3.13
Security risk 8 19 38 23 12 3.24
Repairing risk 7 31 26 24 12 3.12
Time risk 25 16 17 19 23 3.03
2.99
Source: Primary

Page 16 of 19
Figure 3: The perceived risk at a glance

Source: Primary

3.4.2 Risk handling Procedures:

There are several risk handling procedures, there are given below:

1. Seeking Information: The consumer while made a purchase decision they are seek
information about the product or service. In the literature survey I have discussed the
information sources of purchase decision where the sources clearly define. The survey of
research has been indicated that independent groups is a favorable source information
2. Brand Image: Brand image is a important tools when consumers try to reduce the risk
while purchasing cell phone.
3. Store Image.
4. Seeking Reassurance/Warranty: Consumers are seeking warranty while they made
purchase decision.

Page 17 of 19
4.0 CONCLUSION

More and more students are buying cell phones every now and then. They are going through
this decision making process. At each step of the buying process, they might lose customers,
if they do not consider their actual needs. Marketers should support the students no matter
where they are in the decision-making process. They should address their needs and concerns
at every point. Understanding the decision-making process, and how specific they engage
with specific phone, is a prerequisite for any marketers with an ambition to turn students into
customers.

5.0 RECOMMENDATIONS

5.1 Recommendations
Cell Phone should change their strategy to low-cost provider strategy. They can give an effort
to form collaborative partnership with the dealers and outlets, who would exclusively sell
only phone for students. With the increase of number of dealers and outlets, commission paid
to each can be improved, so the every customer remains satisfied.
Attractive TV, newspaper advertisements should be made with further information with the
intention that, the target audience is properly informed about the available unique features
offered by cell phones and its perceived risks. The target audience would get fascinated that
would help them to select cell phone as a youth product.

Page 18 of 19
List of References

Books

1. Kotler, P., & Armstrong, G. (2004) Principles of marketing. (10 edn), New Jersey:
Prentice Hall.

2. Kotler, P., Armstrong, G., Saunders, J., & Wong, V. (1999) Principles of marketing.
(2 edn) England: Prentice Hall.

3. Hawkins, D., Best ,R., Coney K., (2005).Consumer Behavio(9dn). New York: Mc
Graw-Hill.

4. Saunders, M., Lewis, P., & Thornhill, A. (2003) Research methods for business
students. (3 edn) England: Prentice Hall.

5. Peter, J., & Olson, J. (2005).Consumer Behavior and Marketing Strtegy(7dn). New
York: Mc Graw-Hill.

6. Malhotra, N. K. (2006). Marketing Research: An Applied Orientation (7th Edition).

New Delhi: Prentice –Hall.

Page 19 of 19