Vous êtes sur la page 1sur 69

Brand Loyalty Study on Motorola mobile

ITM Business School, Kharghar, Navi Mumbai, 410210

Capstone Project Report submitted to

Project guide: Prof. SANJAY SINHA,

ITM Business School, Navi Mumbai

In partial fulfilment of the requirements for the award of
Post Graduate Diploma in Management (PGDM)

Submitted by:

Kumar Saurav
Roll no: 1507

Capstone Project 2014 Page 1

I hereby declare that the project report entitled Brand Loyalty Study done by me
is an authentic work.

It has been completed and submitted by me in partial fulfilment for the requirements of the
award of Post Graduate Diploma in Management (PGDM) from ITM Business School,
Navi Mumbai only and not for any other degree, diploma, fellowship or similar titles. The
work done and empirical findings in this report are based on the data collected through
primary and secondary sources.

Date: Kumar Saurav
Place: PGDM 2012-14
ITM Business School

Capstone Project 2014 Page 2

This is to certify that this report submitted in partial fulfilment for the requirements of
the award of Post Graduate Diploma in Management (PGDM) of Institute for
Technology & Management is a result of the bonafide research work carried out by Mr.
Kumar Saurav under my supervision and guidance.

No part of this report has been submitted for award of any other degree, diploma,
fellowship or other similar titles or prizes. The work has also not been published in any

Date: Signature:

Place: Name of guide: Prof. SANJAY SINHA

ITM Business School, Navi Mumbai

Capstone Project 2014 Page 3


I would like to express my sincere gratitude to my institute ITM Business School, Navi
Mumbai for giving me the opportunity to complete my summer internship at a
preferred location.

In presenting this report I would like to heartily thank my project guide Prof. SANJAY

(ITM Business School, Navi Mumbai) for providing me with the guidance and
encouragement throughout the duration of the project.

I would also present a warm thanks to all my batch mates who filled up the questionnaire for
the study and helped me in the timely completion of this project.

Capstone Project 2014 Page 4
Table of Contents

Abstract ................................................................................................................................... 6
1. Introduction ....................................................................................................................... 7

2. History ................................................................................................................................. 9

3. Mobile Phone Market Segment ....................................................................................15

4. Top players in Mobile Market ......................................................................................16

5. Mobile Scenario today18

6. SWOT analysis.36

7. Objectives .........................................................................................................................39

8. Research Methodology ..................................................................................................39

9. Literature Review ...........................................................................................................40


11. Findings..64

13. Recommendations ...........................................................................................................65

14. Limitations ...................................................................................................................... 66

15. Bibliography .................................................................................................................... 67

16. Annexure ......................................................................................................................... 68

Capstone Project 2014 Page 5

The new millennium is not just a new beginning; it is a continuation of trends in human

behaviour that have been following cyclical patterns throughout our countrys history.

Just because we have entered a new era does not mean we have to start from scratch when

it comes to interpreting why certain consumers are loyal to certain brands, and what type

of factors influence these allegiances.

Brand Loyalty is the consumers conscious or unconscious decision, expressed through

intention or behaviour, to repurchase a brand continually. It occurs because the consumer

perceives that the brand offers the right product features, image, or level of quality at the

right price. Consumer behaviour is habitual because habits are safe and familiar. In order to

create brand loyalty, advertisers must break consumer habits, help them acquire new habits,

and reinforce those habits by reminding consumers of the value of their purchase and

encourage them to continue purchasing those products in the future.


Brand loyalty, in marketing, consists of a consumers commitment to repurchase or otherwise
continue using the brand and can be demonstrated by repeated buying of a product or
service or other positive behaviours such as word of mouth advocacy. Brand loyalty is more
than simple repurchasing, however. Customers may repurchase a brand due to situational
constraints, a lack of viable alternatives, or out of convenience. Such loyalty is referred to as
"spurious loyalty". True brand loyalty exists when customers have a high relative attitude
toward the brand which is then exhibited through repurchase behaviour. This type of loyalty
can be a great asset to the firm.

Customers are willing to pay higher prices, they may cost less to serve, and can bring new
customers to the firm. For example, if Joe has brand loyalty to Company A he will purchase
Company As products even if Company Bs are cheaper and/or of a higher quality. An
example of a major brand loyalty program that extended for several years and spread
worldwide is Pepsi Stuff. Perhaps the most significant contemporary example ofbrand loyalty
is the dedication that many Mac users show to the Apple company and its products. From the
point of view of many marketers, loyalty to the brand - in terms of consumer usage - is a key

Capstone Project 2014 Page 6

In the 21st century branding has huge importance for the development of organization not
only in the manufacturing sector but also in the services sector. Now a days consumers
thinking goes beyond the product, and they demanded more than product due to this,
manufacturers transfer its marketing activities from product development to building a
strong brand(s). The opinions in support of loyalty are easy to understand. Loyal customers
are frequently purchase the same brand, they have higher customer retention rates, commit a
higher share of their category spending to the firm, and are most likely to recommend others
to become customers of the firm.

Producer sold a goods or commodity to fulfil our core or basic need like thirst, hunger or
energy. These products did not have any identification mark of them. Therefore,
historically, most producers were unbranded. The first step towards branding a commodity
is to package it. The company enhances the value of the commodity functionality. Branding
started formally when craftsmen put trademark on their products to protect them against
inferior quality or painters started signing their art works and so on. Many years ago David
Ogilvy says that: A Brand is the consumer's idea of a product. A brand is a name, term,
sign, symbol, or design, or the combination of these, that identifies the maker or seller of the
product or services4. In others words, brand is a name, term, sign, symbol, or design, or
combination of them, intended to identify the goods and services of one seller or group of
seller and differentiate them from those of competition.

BRAND LOYALTY With the help of literature we are trying to present the
comprehensible idea of brand loyalty. Many researchers in the field of branding and
marketing construct a term of brand loyalty continuously. Brand loyalty is a deeply held
commitment to rebuy or repatronize a preferred product/service consistently in the future,
causing repetitive same brand or same-brand-set purchasing, despite situational influences
and marketing efforts having the potential to cause switching behaviour .
The American Marketing Association defines brand loyalty as:
1. The condition in which a consumer generally purchases the same manufacturer-
originated product.

2. The degree to which a consumer consistently purchases the same brand within a
commodity class.

Much of the research on brand loyalty has been developed from the marketers view and
focused on the value of customer loyalty to the firm and how loyalty should be managed.
Less work has been done on the consumer side asking why and how consumers become loyal
and remain loyal to brands8. According to Aaker brand loyalty reflects how likely a customer
will be to switch to another brand, especially when that brand makes a change, either in price
or product features. David Aaker also suggests that brand loyalty leads to brand equity, which
leads to business profitability. Aaker divides brand equity into five major asset categories:
brand name awareness, perceived quality, brand associations, brand loyalty and other
proprietary brand assets.

Capstone Project 2013 Page 7

Baldinger argues that to be a dominator in the marketplace, a firm needs only product
volume. To be a profitable market dominator, a firm needs brand loyalty10. Even just a few
years ago, many companies believed that brand loyalty was just something packaged goods
people do. Today, even in non-marketing focused businesses like electronics, business-to-
business, hotels, airline travel, finance, and even mainframe computers, firms are adopting
the principles of brand loyalty management. Aaker identifies brand loyalty as a key
determinant of brand choice and brand equity11. He notes that the brand loyalty of the
customer base is often the core of a brands equity. If customers are indifferent to the brand
and will buy with respect to features, price, etc., there is likely little equity. Researchers have
done lots of research on single dimension and two-dimensional approach of brand-loyalty
audit. In two-dimensional approach, they divided brand loyalty into attitudinal brand loyalty
and behavioural brand loyalty. Attitudinal brand loyalty means the consumers psychological
commitment to repurchasing the brand, whereas behavioural brand loyalty is concerned with
the action of repurchase.12, 13, 14. Brand and customer loyalty is a buyers overall
attachment or deep commitment to a product, service, brand, or organization15. The loyalty
concept is similar in meaning to relationship commitment, which is described by the
relationship marketing literature as an enduring desire to be in a valued relationship16.
Loyalty manifests itself in a diversity of behaviours, the more common ones being
recommending a service provider to other customers and repeatedly patronizing the
provider17. Loyalty is a major finder of long-term financial performance of firms18. This is
particularly true for service firms where increased loyalty can substantially increase
profits19. Service organizations centre on achieving customer satisfaction and loyalty by
delivering better value, an underlying source of competitive gain20. For service firms the
challenge is identifying the critical factors that determine customer satisfaction and loyalty21.
There are many advantages of brand loyalty. According to Delgado-Ballester and Munuera-
Aleman the interest in brand loyalty derives from the value that loyalty generates to
companies in terms of:
1. A substantial entry barrier to competitors,
2. An increase in the firms ability to respond to competitive threats,
3. Greater sales and revenue, and
4. A customer base less sensitive to the marketing efforts of competitors.

Further, Rowley identifies the benefits of brand loyalty as:
1. Lower customer price sensitivity,
2. Reduced expenditure on attracting new customers, and
3. Improved organizational profitability.

Caudron, however, argue that the ever-increasing proliferation of brands, price
competitiveness, and the strength of own label brands have all worked to drive down
loyalty. It has been suggested that a loyal customer is an oxymoron in todays market

Research has shown that there is a 50 percent chance that a consumer will switch from their
normal brand to a competitors brand, which is on promotion, and furthermore that two
thirds of shoppers claim to always compare prices before choosing a product 25. Repeat
customers are valued customers. And much of consumer behaviour is repetitive. Panel data
investigations have identified periodic patterns in consumer purchase and consumption. For
example, considerable inertia-like repeated purchases of the same brands are evident across
different shopping episodes. Self-report studies of the items consumers purchase reveal a
similar pattern of repetition. By estimates from these studies, a substantial proportion of
consumer purchases are repetitive. The importance of understanding repeated patronage is
illustrated by brand performance data. Market researchers have noted that repeated patronage

Capstone Project 2014 Page 8

has long-term financial and brand performance advantages, including increases in market
share for a brand, customer lifetime value, and share of wallet. These relationships between
repeated purchasing and marketing outcomes highlight the importance of understanding the
psychological factors that promote repeated purchasing. By understanding these
psychological processes, marketers may leverage important brand outcomes. What is the
psychology behind the repeated purchase or consumption of a particular brand? The
traditional answer invokes brand loyalty or some other positive brand relationship. When
people develop a fondness for particular brands and form attachments to them, these
favourable evaluations lead to repeated purchase and consumption. Often, people
repeatedly purchase and consume out of habit.

History :

The history of mobile phones charts the development of devices which connect wirelessly to
the public switched telephone network. The transmission of speech by radio has a long and
varied history going back to Reginald Fessenden's invention and shore-to-ship demonstration
of radio telephony, through the Second World War with military use of radio telephony links.
Hand-held radio transceivers have been available since the 1940s. Mobile telephones for
automobiles became available from some telephone companies in the 1940s. Early devices
were bulky and consumed high power and the network supported only a few simultaneous
conversations. Modern cellular networks allow automatic and pervasive use of mobile
phones for voice and data communications.

In the United States, engineers from Bell Labs began work on a system to allow mobile
users to place and receive telephone calls from automobiles, leading to the inauguration of
mobile service on 17 June 1946 in St. Louis, Missouri. Shortly after, AT&T offered Mobile
Telephone Service. A wide range of mostly incompatible mobile telephone services offered
limited coverage area and only a few available channels in urban areas. The introduction of
cellular technology, which allowed re-use of frequencies many times in small adjacent areas
covered by relatively low powered transmitters, made widespread adoption of mobile
telephones economically feasible.

The advances in mobile telephony can be traced in successive generations from the early
"0G" services like MTS and its successor Improved Mobile Telephone Service, to first
generation (1G) analog cellular network, second generation (2G) digital cellular networks,
third generation (3G) broadband data services to the current state of the art, fourth
generation (4G) native-IP networks.

Motorola and Bell Labs raced to be the first to produce a handheld mobile phone. That race
ended on 3 April 1973 when Martin Cooper, a Motorola researcher and executive, made
the first mobile telephone call from handheld subscriber equipment, placing a call to Dr.
Joel S. Engel of Bell Labs. The prototype handheld phone used by Dr. Martin Cooper
weighed 2.5 pounds and measured 9 inches long, 5 inches deep and 1.75 inches wide. The
prototype offered a talk time of just 30 minutes and took 10 hours to re-charge.

John F. Mitchell, Motorola's chief of portable communication products and Martin Cooper's
boss in 1973, played a key role in advancing the development of handheld mobile
telephone equipment. Mitchell successfully pushed Motorola to develop wireless
communication products that would be small enough to use anywhere and participated in
the design of the cellular phone.

Capstone Project 2014 Page 9

Early services 0G
In 1947 AT&T commercialized Mobile Telephone Service. From its start in St. Louis in
1946, AT&T then introduced Mobile Telephone Service to one hundred towns and highway
corridors by 1948. Mobile Telephone Service was a rarity with only 5,000 customers
placing about 30,000 calls each week. Calls were set up manually by an operator and the
user had to depress a button on the handset to talk and release the button to listen. The call
subscriber equipment weighed about 80 pounds.
Subscriber growth and revenue generation were hampered by the constraints of the
technology. Because only three radio channels were available, only three customers in any
given city could make mobile telephone calls at one time. Mobile Telephone Service was
expensive, costing US$15 per month, plus $.30 to $.40 per local call, equivalent to about
$176 per month and $3.50 to $4.75 per call in 2012 dollars.

AT&T introduced the first major improvement to mobile telephony in 1965, giving the
improved service the obvious name of Improved Mobile Telephone Service. IMTS used
additional radio channels, allowing more simultaneous calls in a given geographic area,
introduced customer dialing, eliminating manual call set by an operator, and reduced the
size and weight of the subscriber equipment.
Despite the capacity improvement offered by IMTS, demand outstripped capacity. In
agreement with state regulatory agencies, AT&T limited the service to just 40,000
customers system wide. In New York, NY, for example, 2,000 customers shared just 12
radio channels and typically had to wait 30 minutes to place a call.

Radio Common Carrier or RCC was a service introduced in the 1960s by independent
telephone companies to compete against AT&T's IMTS. RCC systems used paired UHF
454/459 MHz and VHF 152/158 MHz frequencies near those used by IMTS. RCC based
services were provided until the 1980s when cellular AMPS systems made RCC
equipment obsolete.

Some RCC systems were designed to allow customers of adjacent carriers to use their
facilities, but equipment used by RCCs did not allow the equivalent of modern "roaming"
because technical standards were not uniform. For example, the phone of an Omaha,
Nebraskabased RCC service would not be likely to work in Phoenix, Arizona. Roaming was
not encouraged, in part, because there was no centralized industry billing database for RCCs.
Signaling formats were not standardized. For example, some systems used two-tone
sequential paging to alert a mobile of an incoming call. Other systems used DTMF. Some
used Secode 2805, which transmitted an interrupted 2805 Hz tone (similar to IMTS
signaling) to alert mobiles of an offered call. Some radio equipment used with RCC systems
was half-duplex, push-to-talk LOMO equipment such as Motorola hand-helds or RCA 700-
series conventional two-way radios. Other vehicular equipment had telephone handsets,
rotary or pushbutton dials, and operated full duplex like a conventional wired telephone. A
few users had full-duplex briefcase telephones (radically advanced for their day).

Capstone Project 2014 Page 10

At the end of RCC's existence, industry associations were working on a technical standard
that would have allowed roaming, and some mobile users had multiple decoders to enable
operation with more than one of the common signaling formats (600/1500, 2805, and
Reach). Manual operation was often a fallback for RCC roamers.

Other services

In 1969 Penn Central Railroad equipped commuter trains along the 225-mile New York-
Washington route with special pay phones that allowed passengers to place telephone calls
while the train was moving. The system re-used six frequencies in the 450 MHZ band in
nine sites.
Emergence of automated services

The first fully automated mobile phone system for vehicles was launched in Sweden in 1956.
Named MTA (Mobile Telephone system A), it allowed calls to be made and received in the
car using a rotary dial. The car phone could also be paged. Calls from the car were direct
dial, whereas incoming calls required an operator to determine which base station the phone
was currently at. It was developed by Sture Laurn and other engineers at Televerket network
operator. Ericsson provided the switchboard while Svenska Radioaktiebolaget (SRA) and
Marconi provided the telephones and base station equipment. MTA phones consisted of
vacuum tubes and relays, and weighed 40 kg. In 1962, an upgraded version called Mobile
System B (MTB) was introduced. This was a push-button telephone, and used transistors and
DTMF signaling to improve its operational reliability. In 1971 the MTD version was
launched, opening for several different brands of equipment and gaining commercial success.
The network remained open until 1983 and still had 600 customers when it closed.

In 1958 development began on a similar system for motorists in the USSR.[18] The "Altay"
national civil mobile phone service was based on Soviet MRT-1327 standard. The main
developers of the Altay system were the Voronezh Science Research Institute of
Communications (VNIIS) and the State Specialized Project Institute (GSPI). In 1963 the
service started in Moscow, and by 1970 was deployed in 30 cities across the USSR.
Versions of the Altay system are still in use today as a trunking system in some parts of

In 1959 a private telephone company located in Brewster, Kansas, USA, the S&T Telephone
Company, (still in business today) with the use of Motorola Radio Telephone equipment and
a private tower facility, offered to the public mobile telephone services in that local area of
NW Kansas. This system was a direct dial up service through their local switchboard, and
was installed in many private vehicles including grain combines, trucks, and automobiles. For
some as yet unknown reason, the system, after being placed online and operated for a very
brief time period, was shut down. The management of the company was immediately
changed, and the fully operable system and related equipment was immediately dismantled in
early 1960, not to be seen again.

In 1966, Bulgaria presented the pocket mobile automatic phone RAT-0,5 combined with a
base station RATZ-10 (RATC-10) on Interorgtechnika-66 international exhibition. One base
station, connected to one telephone wire line, could serve up to six customers.
One of the first successful public commercial mobile phone networks was the ARP network
in Finland, launched in 1971. Posthumously, ARP is sometimes viewed as a zero
generation (0G) cellular network, being slightly above previous proprietary and limited
coverage networks.

Capstone Project 2014 Page 11
Handheld mobile phone

Prior to 1973, mobile telephony was limited to phones installed in cars and other vehicles.
Motorola and Bell Labs raced to be the first to produce a handheld mobile phone. That race
ended on 3 April 1973 when Martin Cooper, a Motorola researcher and executive, made the
first mobile telephone call from handheld subscriber equipment, placing a call to Dr. Joel S.
Engel of Bell Labs. The prototype handheld phone used by Dr. Cooper weighed 2.5 pounds
and measured 9 inches long, 5 inches deep and 1.75 inches wide. The prototype offered a
talk time of just 30 minutes and took 10 hours to re-charge.

John F. Mitchell, Motorola's chief of portable communication products and Cooper's boss in
1973, played a key role in advancing the development of handheld mobile telephone
equipment. Mitchell successfully pushed Motorola to develop wireless communication
products that would be small enough to use anywhere and participated in the design of the
cellular phone.

Analog cellular networks 1G

The first analog cellular system widely deployed in North America was the Advanced
Mobile Phone System (AMPS). It was commercially introduced in the Americas in 1978,
Israel in 1986, and Australia in 1987.

AMPS was a pioneering technology that helped drive mass market usage of cellular
technology, but it had several serious issues by modern standards. It was unencrypted and
easily vulnerable to eavesdropping via a scanner; it was susceptible to cell phone "cloning;"
and it used a Frequency-division multiple access (FDMA) scheme and required significant
amounts of wireless spectrum to support. Many of the iconic early commercial cell phones
such as the Motorola DynaTAC Analog AMPS were eventually superseded by Digital AMPS
(D-AMPS) in 1990, and AMPS service was shut down by most North American carriers by

Digital cellular networks 2G

Two 1991 GSM mobile phones with several AC adapters

In the 1990s, the 'second generation' mobile phone systems emerged. Two systems competed
for supremacy in the global market: the European developed GSM standard and the U.S.
developed CDMA standard. These differed from the previous generation by using digital
instead of analog transmission, and also fast out-of-band phone-to-network signaling. The
rise in mobile phone usage as a result of 2G was explosive and this era also saw the advent of
prepaid mobile phones.

In 1991 the first GSM network (Radiolinja) launched in Finland. In general the frequencies
used by 2G systems in Europe were higher than those in America, though with some
overlap. For example, the 900 MHz frequency range was used for both 1G and 2G systems
in Europe, so the 1G systems were rapidly closed down to make space for the 2G systems. In
America the IS-54 standard was deployed in the same band as AMPS and displaced some of
the existing analog channels.

In 1993, IBM Simon was introduced. This was possibly the world's first smartphone. It was
a mobile phone, pager, fax machine, and PDA all rolled into one. It included a calendar,

Capstone Project 2014 Page 12

address book, clock, calculator, notepad, email, and a touchscreen with a QWERTY
keyboard.[20] The IBM Simon had a stylus you used to tap the touch screen with. It featured
predictive typing that would guess the next characters as you tapped. It had apps, or at least a
way to deliver more features by plugging a PCMCIA 1.8 MB memory card into the phone.

Coinciding with the introduction of 2G systems was a trend away from the larger "brick"
phones toward tiny 100200g hand-held devices. This change was possible not only through
technological improvements such as more advanced batteries and more energy-efficient
electronics, but also because of the higher density of cell sites to accommodate increasing
usage. The latter meant that the average distance transmission from phone to the base station
shortened, leading to increased battery life whilst on the move.

Personal Handy-phone System mobiles and modems used in Japan around 19972003 The
second generation introduced a new variant of communication called SMS or text
messaging. It was initially available only on GSM networks but spread eventually on all
digital networks. The first machine-generated SMS message was sent in the UK on 3
December 1992 followed in 1993 by the first person-to-person SMS sent in Finland. The
advent of prepaid services in the late 1990s soon made SMS the communication method of
choice amongst the young, a trend which spread across all ages.

2G also introduced the ability to access media content on mobile phones. In 1998 the first
downloadable content sold to mobile phones was the ring tone, launched by Finland's
Radiolinja (now Elisa). Advertising on the mobile phone first appeared in Finland when a
free daily SMS news headline service was launched in 2000, sponsored by advertising.

Mobile payments were trialled in 1998 in Finland and Sweden where a mobile phone was
used to pay for a Coca Cola vending machine and car parking. Commercial launches
followed in 1999 in Norway. The first commercial payment system to mimic banks and credit
cards was launched in the Philippines in 1999 simultaneously by mobile operators Globe and

The first full internet service on mobile phones was introduced by NTT DoCoMo in Japan
in 1999.

Mobile broadband data 3G

As the use of 2G phones became more widespread and people began to utilize mobile phones
in their daily lives, it became clear that demand for data services (such as access to the
internet) was growing. Furthermore, experience from fixed broadband services showed there
would also be an ever increasing demand for greater data speeds. The 2G technology was
nowhere near up to the job, so the industry began to work on the next generation of
technology known as 3G. The main technological difference that distinguishes 3G
technology from 2G technology is the use of packet switching rather than circuit switching
for data transmission. In addition, the standardization process focused on requirements more
than technology (2 Mbit/s maximum data rate indoors, 384 kbit/s outdoors, for example).

Inevitably this led to many competing standards with different contenders pushing their own
technologies, and the vision of a single unified worldwide standard looked far from reality.
The standard 2G CDMA networks became 3G compliant with the adoption of Revision A to

Capstone Project 2014 Page 13

EV-DO, which made several additions to the protocol whilst retaining backwards
the introduction of several new forward link data rates that increase the maximum burst
rate from 2.45 Mbit/s to 3.1 Mbit/s.
protocols that would decrease connection establishment time.
the ability for more than one mobile to share the same time slot.
the introduction of QoS flags.

All these were put in place to allow for low latency, low bit rate communications such as

The first pre-commercial trial network with 3G was launched by NTT DoCoMo in Japan in
the Tokyo region in May 2001. NTT DoCoMo launched the first commercial 3G network
on 1 October 2001, using the WCDMA technology. In 2002 the first 3G networks on the
rival CDMA2000 1xEV-DO technology were launched by SK Telecom and KTF in South
Korea, and Monet in the USA. Monet has since gone bankrupt. By the end of 2002, the
second WCDMA network was launched in Japan by Vodafone KK (now Softbank).
European launches of 3G were in Italy and the UK by the Three/Hutchison group, on
WCDMA. 2003 saw a further 8 commercial launches of 3G, six more on WCDMA and two
more on the EV-DO standard.

During the development of 3G systems, 2.5G systems such as CDMA2000 1x and GPRS
were developed as extensions to existing 2G networks. These provide some of the features
of 3G without fulfilling the promised high data rates or full range of multimedia services.
CDMA2000-1X delivers theoretical maximum data speeds of up to 307 kbit/s. Just beyond
these is the EDGE system which in theory covers the requirements for 3G system, but is so
narrowly above these that any practical system would be sure to fall short.

The high connection speeds of 3G technology enabled a transformation in the industry: for
the first time, media streaming of radio (and even television) content to 3G handsets
became possible,[24] with companies such as RealNetworks[25] and Disney[26] among the
early pioneers in this type of offering.

In the mid 2000s (decade), an evolution of 3G technology begun to be implemented, namely
High-Speed Downlink Packet Access (HSDPA). It is an enhanced 3G (third generation)
mobile telephony communications protocol in the High-Speed Packet Access (HSPA)
family, also coined 3.5G, 3G+ or turbo 3G, which allows networks based on Universal
Mobile Telecommunications System (UMTS) to have higher data transfer speeds and
capacity. Current HSDPA deployments support down-link speeds of 1.8, 3.6, 7.2 and 14.0
Mbit/s. Further speed increases are available with HSPA+, which provides speeds of up to 42
Mbit/s downlink and 84 Mbit/s with Release 9 of the 3GPP standards.

By the end of 2007, there were 295 million subscribers on 3G networks worldwide, which
reflected 9% of the total worldwide subscriber base. About two thirds of these were on the
WCDMA standard and one third on the EV-DO standard. The 3G telecoms services
generated over 120 Billion dollars of revenues during 2007 and at many markets the majority
of new phones activated were 3G phones. In Japan and South Korea the market no longer
supplies phones of the second generation.

Capstone Project 2014 Page 14

Although mobile phones had long had the ability to access data networks such as the Internet,
it was not until the widespread availability of good quality 3G coverage in the mid-2000s
(decade) that specialized devices appeared to access the mobile internet. The first such
devices, known as "dongles", plugged directly into a computer through the USB port.
Another new class of device appeared subsequently, the so-called "compact wireless router"
such as the Novatel MiFi, which makes 3G internet connectivity available to multiple
computers simultaneously over Wi-Fi, rather than just to a single computer via a USB plug-

Such devices became especially popular for use with laptop computers due to the added
portability they bestow. Consequently, some computer manufacturers started to embed the
mobile data function directly into the laptop so a dongle or MiFi wasn't needed. Instead, the
SIM card could be inserted directly into the device itself to access the mobile data services.
Such 3G-capable laptops became commonly known as "netbooks". Other types of data-aware
devices followed in the netbook's footsteps. By the beginning of 2010, E-readers, such as the
Amazon Kindle and the Nook from Barnes & Noble, had already become available with
embedded wireless internet, and Apple Computer had announced plans for embedded
wireless internet on its iPad tablet devices beginning that Fall.

Native IP networks 4G

By 2009, it had become clear that, at some point, 3G networks would be overwhelmed by
the growth of bandwidth-intensive applications like streaming media.[27] Consequently, the
industry began looking to data-optimized 4th-generation technologies, with the promise of
speed improvements up to 10-fold over existing 3G technologies. The first two
commercially available technologies billed as 4G were the WiMAX standard (offered in the
U.S. by Sprint) and the LTE standard, first offered in Scandinavia by TeliaSonera.

One of the main ways in which 4G differed technologically from 3G was in its elimination of
circuit switching, instead employing an all-IP network. Thus, 4G ushered in a treatment of
voice calls just like any other type of streaming audio media, utilizing packet switching over
internet, LAN or WAN networks via VoIP.

Mobile Phone Market segment in India:

Capstone Project 2014 Page 15

Top five players in MOBILE phone category in India :

o Revenue (2011-12): Rs. 11,925 Crore
o Revenue (2010-11): Rs. 12,929
Crore o Change: -8
o Market Share in %age: 20%
o Founder: Fredrik Idestam, Leo Mechelin
o Founded: 1865
o Products: Mobile Phone, Smartphones, Mobile Computers,
Networks o Headquarter: Espoo, Finland

o Revenue (2011-12): Rs. 7,891 Crore
o Revenue (2010-11): Rs. 5,720 Crore
o Change: 38
o Market Share in %age: 21 %
o Founded: 1977
o Industry: Telecommunications
o Products: Mobile Phones, Smart Phones, Telecommunication Systems,
MP3 Players, Laptop Computers, Tablets
o Headquarter: Suwon, South Korea

o Revenue (2011-12): Rs. 1,978 Crore
o Revenue (2010-11): Rs. 2,289 Crore
o Change: -14
o Market Share in %age: 6.3
o Founded: 1991
o Industry: Telecommunications
o Products: Mobile Phones, Smartphones, Gravity Phones, Tablets Headquarter:
Micromax House, 697, Udyog Vihar, Phase-V, Gurgaon, Haryana, India

Capstone Project 2014 Page 16

o Revenue (2011-12): Rs. 1,460 Crore
o Revenue (2010-11): Rs. 1,950 Crore
o Change: -25
o Market Share in %age: 4.7
o Founded: 1999
o Products: Smartphones, Tablets

o Revenue (2011-12): Rs. 1,327 Crore
o Revenue (2010-11): Rs. 1,004 Crore
o Change: 32
o Market Share in %age: 4.3
o Founded: 2009
o Parent: United Telecoms Limited
o Products: Mobile Phones, Smartphones, Tablets
o Headquarters: Bangalore, Noida

So as we see here, that not even in the top 5 players does MOTOROLA mobile phones
comes these days.

Capstone Project 2014 Page 17
The Mobile Scenario Today:

First it was the t-phase (time phase), in which both the time and location used to be fixed.
This phase was in early 19s. Then came the e-phase (electronic phase) and everything was
e-tised. But still the locations where you can use e-sources were fixed. Then came the m-
phase (mobile phase) with the world of mobiles. And even the restriction on the location
domain was put off. Now you can communicate and interact with the world anywhere
anytime. This m-phase led to the development of the mobile handsets.
With 115.3 million forecasted mobile owners, INDIA ranks 3rd in the world behind only
china and USA.
Indian mobile owners are increasing as a result of cheaper call rates, cheaper handsets and
widespread availability of prepay lowering the barriers to ownership.(Even a rikshaw wala
owns a mobile today ) Relatively low GDP combined with the popularity of prepay still
exerts downward pressure on ARPU (average revenue per user) in India. 25-29 year olds
spend the most, with ARPU at over $8 per calendar month. The rising use of data services,
particularly SMS, has stemmed ARPU decline in this age group. This is not the case among
older users where ARPU is fast in decline, particularly among 35-39 year olds where we
expect the greatest churn to post-paid contracts. We are still sticking to the old concept of
chatting. In early 19 century people used to sit in veranda and talk or there used to be live
contact between people. Even today, we are still following the same concept. Only the level
of technology used has changed and is changing.

The sale of mobile handsets has increased from a minor 17.5 million in 2003-04 to 223
millions in 2010-11. Major increase have being in the year 2010-11 followed by 2009-10
with the sale of about 55 million handset.
The major amount of FDI (Foreign Direct Investment) being in telecom industry in years
from 2007-09 of about $5000 millions, which provided the major opportunities for different
companies to come in Indian market. The results of which can be seen in the following
years with the increase in number of sale of mobile handset. The FDI limit being increased
from 49% to 74% being the major reason for the increase in FDI. Some important findings :

This inflow of FDI provided in roads for many companies which started their production in

Only 5 local manufacturers in 2008 and the number stands at 28 now.

Fall in the market share of Nokia, L.G., and Motorola

Samsung Electronics Co. Ltds share rose marginally to 9.7% from 9.5%.

LGs share dropped from 7.2% to 6.4%.

Of the local manufacturers, Micromax leads the race.

There are many mobile players like Nokia, Motorola, Samsung, Sony Erission, L.G.,
HTC, Apple, Blackberry, Alcatel and many more.

Top 5 local manufactures are Micromax, Karbonn Mobiles, Spice Mobiles Ltd, Videocon
Industries Ltd and Lava International Ltd.

Capstone Project 2014 Page 18

Top markets for smartphone sales :

China is now the top market for smart phone sales, but growth is expected to be
strongest in India and Brazil.
26.5 percent smart phone shipped worldwide in 2012 are expected to sell in China,
according to estimates by IDC (August 2012).
Other analyst groups agree that China is now the largest smart phone market Canalys
(May 2012) believed China overtook the US in Q1 2012, Strategy Analytics (Nov 2011)
believed this happened in Q3 2011.
IDC believes the Chinese market is being driven by sub-US$200 Android devices
and expects prices to fall below $100 as competition, particularly from domestic
vendors, intensifies.
India and Brazil are expected to catch up and overtake the UK (Europes strongest
smart phone market) by 2016.
The IDC chart below does not include sales, but knowing that IDC (December 2012)
forecasts that global smart phone sales will be 717.5 million 2012 and that IDC (February
2012) calculates smart phone sales of 491.4 million units in 2011, you can extrapolate
sales for each country:
2011 smart phone sales for USA: 104.7 million; China: 89.9 million; UK: 26.0 million; India
10.8 million; Brazil 8.9 million; rest of world: 251.1 million.
2012 smartphone sales for China: 190.1 million; USA: 127.7 million; UK: 32.3
million; India: 17.9 million; Brazil: 16.5 million; rest of world: 332.9 million.

Top five markets by share of global smart phone sales 2011, 2012, and 2016 according
to IDC

2011 Market 2012 Market 2016 Market 2011-2016





China 18.3% 26.5% 23.0% 26.2%

USA 21.3% 17.8% 14.5% 11.6%

India 2.2% 2.5% 8.5% 57.5%

Brazil 1.8% 2.3% 4.4% 44.0%






Rest of World 51.1% 46.4% 46.0% 18.1%

Source: IDC (Aug 2012)


Capstone Project 2014 Page 19
Smartphone shipments by operating system market share

Android is the top operating system for new smart phones sold in 2011.
Canalys (February 2012): 48.8 percent of smart phones shipped in 2011, shipped with
Googles free Android OS.
Canalys points out that smart phones now outsell PCs.
Previously Nokia was the leader in smart phones, until its surprise decision to drop its
Symbian OS in 2011.

Worldwide smartphone market, by operating system, by 2011 global sales
according to Canalys
Operating System Shipments 2011 Market share 2011 Annual growth

Android 237.7 48.8% 244%

iOS 93.1 19.1% 96%

Symbian 80.1 16.4% -29.1%

BlackBerry 51.4 10.5% 5.0%

Bada 13.2 2.7% 183.1%

Windows Phone 6.8 1.4% -43.3%

Others 5.4 1.1% 14.4%

Total 487.7 100% 62.7%

Source: Canalys (Feb 2011) via: mobiThinking

Smartphone market penetration

The number of smartphones in use worldwide has now broken the 1 billion mark. With
the ITU, estimating global mobile subscriptions at 6 billion at the end of 2011,
mobiThinking calculates that global smartphone penetration is now 16.7 percent.
Strategy Analytics (October, 2012) calculates that at the end of Q3, 2012 the number of
smartphones in use worldwide reached 1.038 billion units. This time last year there were
708 million smartphones in use worldwide. Thats 46.6 percent growth rate in a year. But
growth hasnt always been that strong.
It has taken 16 years for smartphone penetration to reach 1 billion. The first major
smartphone is commonly accepted to be the Nokia Communicator in 1996 - 11 years
Apples iPhone. But Strategy Analytics believes that it will only take three years to
achieve the next billion.
Android and Apple iOS combined will account for the significant majority of the global
smartphone installed base in 2012. The former top smartphone operating system
Symbian continues to decline, following Nokias shocking decision to dump the OS in
favor of Microsoft in early 2011.
Ericsson (November 2012) forecasts smartphone subscriptions worldwide will be 1.1
billion by the end of 2012 growing to 3.3 billion in 2018. Over that time the majority of
mobile subscriptions will be for feature phones. Feature phones (and inactive)
subscriptions will remain at around 5 billion in the coming years.

Capstone Project 2014 Page 20

Smartphone market penetration by manufacturer and operating system :

Data on smart phone penetration by country, by manufacturer or operating system is not
freely available from research analysts (they save this for their paying customers). However
data from surveys conducted by ComScore suggest that in some developed markets
smartphone penetration in some countries is much higher than the global average:
ComScore (Q4 2011): In Western Europe smart phone penetration is 44.0 percent. In the
US smartphone penetration is 41.8 percent. In the Japan smart phone penetration is 17
percent. The Android operating system leads in Western Europe (31.2 percent), just ahead of
Nokias Symbian, US (47 percent) and Japan (60.5 percent), considerably ahead of
Apples iOS in all three markets.
The estimates below are based surveys conducted ComScore in Q4 2011.

Smartphone market penetration by manufacturer and by operating system,
Q4 2011, according to ComScore
USA Canada Japan Germany UK France Spain Italy

Proportion of subscribers with a smartphone, Q4 2011

41.8% N/A 17% 37.0% 51.3% 40.0% 51.0% 43.9%

Top smartphone manufacturers, by market penetration, Q4 2011

Apple RIM Apple Nokia Apple Samsung Nokia Nokia

1 29.6%









Apple Sharp






16.0% 31.2% 27.7% 22.2% 18.5% 25.2% 17.9% 15.8%

HTC Samsung Sony Eric Samsung RIM Nokia Apple Samsung
3 14.6% 11.0% 12.8% 20.3% 18.3% 15.8% 11.5% 14.1%

Smartphone operating system market share, December 2011

Android RIM Android Android Android Android Symbian Symbian
1 47% 32.6% 60.5% 33.6% 36.6% 35.4% 40.4% 52.8%

2 IOS IOS IOS Symbian IOS 26.4 IOS Android Android
30% 31.2% 33.6% 28.4% 25.2% 32.1% 17.9%

RIM Android Microsoft IOS Symbian Symbian IOS IOS
3 16% 27.8% 5.4% 22.2% 14.5% 17.0% 11.5% 15.8%

Source: ComScore (February
Survey group: 24,000

via: mobiThinking


mobiThinking note: While survey data is useful, it should be noted that these figures are
based on the responses of a few thousand people in markets of 30-330 million mobile
subscribers, and thus should only be considered as estimates of market penetration.

Capstone Project 2014 Page 21

mobiThinking note: The most remarkable statistic here (if correct) is the relatively low
penetration of smart phones in Japan, a market with some of the highest mobile Web usage
in the world. This shatters the misconception that you need a smartphone to access the
mobile Web. Companies ignore feature phone users at their peril.
mobiThinking note: Smartphone penetration in the UK and Spain seems remarkably high,
considering that smart phones were only 35 percent of handsets sold globally in 2011 and
considerably less in 2010.


The mobile phone phenomenon is unique in the histories of both the telecommunication and
consumer electronics markets. In less than a decade, people have adopted mobile phones on
a massive scale. This is about three times the size of the television or PC markets. Growth
has been fuelled by the spectacular evolution of mobile phone technologies, both in terms of
performance and miniaturization. As a result, unlike many other appliances, users change
their mobile phones on average every two years. Consequently, replacement handsets today
represent about 80% of all mobile phone purchase.

This rapid growth has been possible due to various proactive and positive decisions of the
Government and contribution of both by the public and the private sector. The rapid strides in
the telecom sector have been facilitated by liberal policies of the Government that provide
easy market access for telecom equipment and a fair regulatory framework for offering
telecom services to the Indian consumers at affordable prices.

Policy and Initiatives

Regulatory Framework: The Telecom Regulatory Authority of India (TRAI) was set up in

March 1997 as a regulator for Telecom sector. The TRAIs functions are
recommendatory, regulatory and tariff setting in telecom sector. Telecom Disputes
Settlement and Appellate Tribunal (TDSAT) came into existence in May, 2000. TDSAT
has been empowered to adjudicate any dispute

Between a licensor and a licensee

Between two or more service providers

Between a service provider and a group of consumers

hear and dispose of appeal against any direction, decision or order of TRAI

Tariffs for telecommunication services have evolved from a regime where tariffs were
determined by Telecom Regulatory Authority of India to a regime where tariffs are largely
under forbearance. TRAI intervenes by regulating the tariffs for only those services, the
markets of which are not competitive.

Universal Service Obligation Fund (USOF) exclusively for meeting the Universal Service
Obligation was established in April, 2002. The Universal Service Levy is presently 5 per
cent of the Adjusted Gross Revenue (AGR) of all telecom service providers except the pure
value added service providers like Internet, Voice Mail, E-Mail service providers etc. Indian

Capstone Project 2014 Page 22

Telegraph Act has been amended in October2006 to provide support for all
telegraph services including mobile and broadband to bridge the digital divide.

With the introduction of the Unified Access Licensing Regime, operators can offer telecom
access services to consumers in a technology neutral manner, subject to fulfilling certain
conditions. Introduction of this regime has also broken the legal/regulatory impasse between
the cellular and basic service providers. Issuance of Intra-Circle Merger and Acquisition.
Guidelines provide investors an opportunity to take stakes in existing telecom operations.

Government Initiatives: The Government has taken the following main initiatives for the
growth of the Telecom Sector;

All telecom services have been opened up for free competition for unprecedented growth

217 (Information Technology Agreement) ITA-I items are at zero Customs Duty. Specified
capital goods and all inputs required to manufacture ITA-I, items are at zero Customs Duty

Availability of low cost mobile handsets

The international Long Distance Services (ILDS) opened with effect from April 2002.
Calling Party Pays (CPP) regime was implemented with effect from 1st May

Guidelines for Unified Access Service License regime were issued in November 2003, 27
licenses out of 31 Basic Service Licenses were converted to Unified Access Service Licenses

In April 2004, license fee for Unified Access Service Providers (UAS) was reduced by 2
per cent

License fee for infrastructure Provider-II reduced from 15 per cent to 6 per cent of the
Adjusted Gross Revenue and spectrum charges between 2 to 4 per cent in June 2004

Entry fee for NLD licenses was reduced to `2.5 Crore from `100 Crore. Entry fee for
ILD reduced to `2.5 Crore from `25 Crore

Lease line charges have been reduced to make the bandwidth available at competitive
prices to facilitate growth in IT enabled services

One India plan i.e. single tariff of `1/-per minute to anywhere in India was introduced from
1st March 2006 by the Public Sector Undertakings. This tariff was emulated by most of the
private service providers also. This scheme has led to death of distance in telecommunication
and is going to be instrumental in promoting National Integration further.

The robust telecom network has also facilitated the expansion of BPO industry that
is having 500,000 employees now and adding 400 employees per day.

Annual license fee for National Long Distance (NLD), International Long Distance (ILD),
Infrastructure Provider-II, VSAT commercial and Internet Service Provider (ISP) with
internet telephony (restricted) licenses was reduced to 6 per cent of Adjusted Gross
Revenue (AGR) with effort from Jan 2006.

Capstone Project 2014 Page 23

The Governments policy is neutral on use of technology by telecom service
providers subject to availability of scarce resources such as spectrum etc.

Licence Fees 6-10 per cent of Adjusted Gross Revenue (AGR)

Foreign Direct Investment Policy:

Foreign Direct Investment (FDI) was permitted in the telecom sector beginning with the
telecom manufacturing segment in 1991 - when India embarked on economic

FDI is defined as investment made by non-residents in the equity capital of a company. For
the telecom sector, FDI includes investment made by Non-Resident Indians (NRIs),
Overseas Corporate Bodies (OCBs), foreign entities, Foreign Institutional Investors (FIIs),
American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) etc.

Present FDI Policy for the Telecom sector:

In Basic, Cellular Mobile, National Long Distance, International Long Distance, Value

Added Services and Global Mobile Personal Communications by Satellite, FDI is limited to
49 per cent (under automatic route) subject to grant of licence from the Department of
Telecommunications and adherence by the companies (who are investing and the companies
in which investment is being made) to the licence conditions for foreign equity cap and
lock-in period for transfer and addition of equity and other license provisions.

Foreign Direct Investment up to 74 per cent permitted, subject to licensing and security
requirements for the following:

- Internet Service (with gateways)

- Infrastructure Providers (Category II)

- Radio Paging Service

FDI up to 100 per cent permitted in respect to the following telecom services:

- ISPs not providing gateways (Both for satellite and submarine cables)

- Infrastructure Providers providing dark fibre (IP Category I)

- Electronic Mail

- Voice Mail

The above is subject to the following conditions:

- FDI up to 100 per cent is allowed subject to the condition that such companies would
divest 26 per cent of their equity in favour of Indian public within 5 years, if these
companies are listed in other parts of the world.

Capstone Project 2014 Page 24

- The above services would be subject to licensing and security requirements,
wherever required.

- Proposals for FDI beyond 49 per cent shall be considered by Foreign

Investment Promotion Board (FIPB) on a case-to-case basis.

In the manufacturing sector 100 per cent FDI is permitted under the automatic route.

In Basic, Cellular Mobile, paging and Value Added service, and Global Mobile

Personal Communications by Satellite, FDI is permitted up to 49 per cent (under
automatic route) subject to grant of license from Department of Telecommunications

Foreign direct investment up to 74 per cent permitted, subject to licensing and security
requirements for the Internet Service (with gateways), Infrastructure Providers (category-
II), and Radio Paging Service

FDI up to 100 per cent permitted in respect of

- ISPs not providing gateways (both for satellite and submarine cables),

- Infrastructure Providers providing dark fibre (IP Category I);

- Electronic Mail; and

- Voice Mail Mobile Phones Market In India 2011

FDI up to 49 per cent is also permitted in an investment company, set up for making
investment in the telecom companies licensed to operate telecom services. Investment by
these investment companies in a telecom service company is treated as part of domestic
equity and is not set of against the foreign equity cap.

Manufacturing - 100 per cent FDI is permitted under automatic route.

FDI is subject to the following conditions:

FDI up to 100 per cent is allowed subject to the conditions that such companies would
divest 26 per cent of their equity in favour of Indian public in 5 years, if these companies are
listed in other parts of the world.

The above services would be subject to licensing and security requirements,
Wherever required.

Proposals for FDI beyond 49 per cent shall be considered by FIPB on case to case basis.

Capstone Project 2014 Page 25

Different Tiers of Mobile Phone

1. Ultra Low-cost Mobile: Price range: Less than `1,500
Key features include: B&W screen, messaging, phonebook

2. Low- to Medium-cost: Price range: Less than `1,500 to `2,500
Key features include: coloured screen, FM radio, VGA camera

3. High-cost Mobile: Price range: Less than `2,500 to `4,000

Key features include: extendible memory, digital camera, GPRS, MP3 player

4. Smart Phones Handset: Greater than `4,000

Key features include: QWERTY keypad/touch screen, dual SIM, Wi-Fi, and 3G

The India mobile handsets market has got even more crowded and fragmented in the lower-
and mid-market segments with the entry of new players offering innovative models at
attractive price points to lure buyers. There is huge demand for feature-rich, low-cost
handsets. Of the total handset sales, the majority of sales fall in the price band of below $75.
That is where the majority of the volume is and that is where you will see the majority of the
Indian and Chinese manufacturers playing. Going forward, the market is going to grow at a
rate of 15-20% year-on-year. Low-cost devices will grab 60% of the market over the next
three to four years. People are looking for devices with greater value. That value could be in
terms of features like QWERTY keypad or touch screen etc. One can get a handset for
Rs.2,000-3,000 with features like good memory, touch screen, QWERTY, camera, dual-
SIM, longer battery life etc. The majority of Indian manufacturers are in the low-price band
and that is why market is looking quite competitive. However, if they move up the price
band, then they will face competition from global players. When the low end segment
customers go for repeat purchases, they go for low cost mobile phones with extra features. In
fact, many of them are ready to pay higher prices for these new features and vendors are
taking advantage of the psyche of the customers by adding these features.

Smart phones saw exponential growth in 2011. India already has high penetration of mobile
phones. This further increased with the success of smart phones. Smart phones are available
in all price segments, making these products accessible to every strata of the population.
India being a youth-centric country saw a surge in Android smart phone ownership. Samsung
successfully managed to increase sales of smart phones with its wide variety of models. Other
companies maintained a higher price for their smart phones.

Capstone Project 2014 Page 26

Nokia and Samsung maintained their shares at 40% and 18%. The share in feature phones
for Nokia was 42% and Samsung 18%. In smart phones Nokias share was 29% whereas
Samsungs was 21%. Both of these companies have maintained their leading positions for
over a decade. Both companies have developed an image as trusted and quality mobile
phone manufacturers.


The category is expected to see a volume CAGR of 13% over the forecast period, lower than
the review period average of 24%. The sale of mobile phones is expected to become steady
over the period of next five years. In 2011 mobile phone sales increased exponentially due
to the increased use of smart phones in the country. However, this trend is likely to slowing
down over the forecast period.

Now we focus on the Brand concept of a particular product.

.. a name, term, sign, symbol or design, or a combination of them, which is intended to
identify the goods and services of one seller or group of sellers and to differentiate them
from those of their competitors

Brand Loyalty:

Consumers commitment towards a particular brand.
Consumers constantly look for marketing activities associated with the brand.
Consumers are motivated to obtain the brand exclusively on every purchase.

Levels of Brand Loyalty:

Behavioral Loyalty- Purchase repeatedly
Attitudinal Loyalty Customer feels some devotion to the brand and prefers the
Cognitive Loyalty Brand name comes as top of the mind recall

Factors affecting Brand loyalty :

Brand Trust
Family ties
Perceived Value
Customer satisfaction
Childhood Association

Capstone Project 2014 Page 27
Company benefits from Brand loyalty :

Lowers vulnerability to competitors marketing strategies
Increases marketing communication effectiveness and reduces marketing costs
Allows company to charge higher margins
Increases the probability of success in brand extension and licensing opportunities
Makes the customers less price sensitive
Induce loyal customers to buy more of the brand than normally they do
Has more influence on purchase decisions than price promotions

Brand Motorola:

The Motorola signature with the Intelligence Everywhere brand promise consists of three
components: a solid disc emsignia, the Motorola logo type, and the words Intelligence
Everywhere Size and spatial relationships referenced on the following pages must be
followed. The Intelligence Everywhere brand promise will be presented around the world in
an English-only version. The only exception to this rule is that we will permit translation into
French-Canadian for use in Quebec and into Chinese, as translation is a legal or commercial
requirement in these countries. Artwork for translations is located on the Corporate Identity
intranet site at http://identity.mot.com.The Motorola emsignia, logotype and brand promise,
and their relationships to each other, were carefully developed to express our name and brand
image. They must not be re-created, redrawn or reconfigured under any circumstances.

Motorola, Inc. (pron.: /motrol/) was an American multinational telecommunications
company based in Schaumburg, Illinois. After having lost $4.3 billion from 2007 to 2009,
the company was divided into two independent public companies, Motorola Mobility and
Motorola Solutions on January 4, 2011. Motorola Solutions is generally considered to be the
direct successor to Motorola, Inc., as the reorganization was structured with Motorola
Mobility being spun off.

Motorola designed and sold wireless network infrastructure equipment such as cellular
transmission base stations and signal amplifiers. Motorola's home and broadcast network
products included set-top boxes, digital video recorders, and network equipment used to
enable video broadcasting, computer telephony, and high-definition television. Its business
and government customers consisted mainly of wireless voice and broadband systems
(used to build private networks), and, public safety communications systems like Astro and
Dimetra. These businesses (except for set-top boxes and cable modems) are now part of
Motorola Solutions.

Motorola's wireless telephone handset division was a pioneer in cellular telephones. Known
as the Personal Communication Sector (PCS) prior to 2004, it pioneered the "flip phone" with
the MicroTAC and, the "clam phone" with the StarTAC in the mid-1990s. It had staged
an enormously successful resurgence by the mid-2000s with the RAZR; but, lost significant
market shares in the second half of that decade. Lately, it has focused on smart phones using
Google's open-source Android mobile operating system. The first phone to use the newest
version of Google's open source OS, Android 2.0, was released on November 2, 2009 as the
Motorola Droid (the GSM version launched a month later, in Europe, as the Motorola
Milestone). The handset division, (along with cable set-top boxes and cable modems) has
since then been spun off into the independent Motorola Mobility. On May 22, 2012, Google
CEO Larry Page announced that Google closed on its deal to acquire Motorola Mobility.

Capstone Project 2014 Page 28
Company Profile:

Motorola India Pvt., Ltd. provides mobile devices, networks and enterprise solutions, and
connected home solutions. Its products and services include mobile phones and accessories;
short range business, fixed, mobile, portable, and two-way radios, as well as dispatch
consoles, repeaters, mobile data terminals, and fixed data products; communication networks,
voice and data networks, wireless broadband solutions, and mobile mesh networks
technology; and integrated voice and data solutions for field operations, in-vehicle and used
by ground fire fighters. The company also focuses on wireless infrastructure, managed and
hosted services, software development, and applied research and development on
mobility/convergence technologies. In addition, it offers an integrated end-to-end system for
the delivery of broadband services that keep consumers informed, entertained, and
connected, as well as high definition IP TV, set-top boxes, wireless modems, wire line
broadband products, and home security solutions. The company offers its solutions for
businesses, governments, service providers, public safety, and enterprise customers. It has
research and development centres in Bangalore and Hyderabad, India.


Motorola started in Chicago, Illinois as Galvin Manufacturing Corporation (at 847 West
Harrison Street)[9] in 1928, with its first product being a battery eliminator. At that time the
radio had not yet been developed for use in automobiles, but Bill Lear and Howard Gates of
Zenith made a pair; Lear designed the circuit and layout, Gates did the metal work and Lear
assembled them. Bill Lear presented Paul Galvin with the prototype, and he first dismissed it.
Later the idea was taken up by Galvin and a 200 unit production run was made. In 1930
Galvin Manufacturing Corporation introduced the Motorola radio, one of the first
commercially successful car radios. Company's founder Paul V. Galvin and investor Bill
Lear created the brand name Motorola. Galvin and Lear mulled over names for the product
on a cross-country trip and came up with "Motorola" which was a blend of "motor" and the
then popular suffix -ola used with audio equipment of the time (for example "Victrola"). The
product was such a success that Galvin changed the name of the company to Motorola.

The name "Motorola" was adopted in 1930, and the word has been used as a trademark since
the 1930s.

Many of Motorola's products have been radio-related, starting with a battery eliminator for
radios, through the first walkie-talkie in the world in 1940, defense electronics, cellular
infrastructure equipment, and mobile phone manufacturing. In the same year, the company
built its research and development program with Dan Noble, a pioneer in FM radio and
semiconductor technologies joined the company as director of research. The company
produced the hand-held AM SCR-536 radio during World War II, which was vital to
Allied communication.

In 1943, Motorola went public and in 1947, the name changed to its present name. At this
time, Motorola's main business was producing and selling televisions and radios.

In October 1946, Motorola communications equipment it has carried the first calls on
Illinois Bell Telephone Companys new car radiotelephone service in Chicago, Illinois.

Capstone Project 2014 Page 29

In 1955, years after Motorola started its research and development laboratory in Phoenix,
Arizona, to research new solid-state technology, Motorola introduced the world's first
commercial high-power germanium-based transistor. The present "batwing" logo was also
introduced in 1955 (having been created by award-winning Chicago graphic designer Morton
Goldsholl in late 1954).

Beginning in 1958, with Explorer 1, Motorola provided radio equipment for most NASA
space-flights for decades including during the 1969 moon landing. A year later, it established
a subsidiary to conduct licensing and manufacturing for international markets.

Motorola created numerous products for use by the government, public safety officials,
business instalments, and the general public. These products include cell phones, laptops,
computer processors, and radio communication devices. The Motorola RAZR line has sold
over 120 million units bringing the company to the number two mobile phone slot in 2005.

Since the 1950s, used Motorola radio equipment has been popular with amateur radio
("ham") operators. Known as "Ma Batwings," Motorola has provided little to no support to
hobbyists, who keep using these radios for years or even decades after they were taken out
of production.

The company began making televisions in 1947. The Cathode ray tube, developed by the
company in a joint venture with National Video Corporation became the industry standard. In
1960, it introduced the world's first "large-screen" (19-inch), transistorized, cordless portable
television. In 1963 it, introduced the world's first truly rectangular color TV. In 1974,
Motorola sold its television business to the Japan-based parent company of Panasonic.

In 1952, Motorola opened its first international subsidiary in Toronto, Canada to produce
radios and televisions. In 1953, the company established the Motorola Foundation to
support leading universities in the United States. In 1964, it opened its first company
Research and Development branch outside of the United States, in Israel under the
management of Moses Basin.

In 1969 Neil Armstrong spoke the famous words "one small step for [a] man, one giant
leap for mankind" from the Moon on a Motorola transceiver.

In 1973, Motorola demonstrated the first hand-held portable telephone.

In 1976, Motorola moved to its present headquarters in the Chicago suburb of
Schaumburg, Illinois.

Dr. Martin Cooper of Motorola made the first private handheld mobile phone call on a larger
prototype model in 1973. This is a re-enactment in 2007.
In September 1983, the U.S. Federal Communications Commission (FCC) approved the
DynaTAC 8000X telephone, the world's first commercial cellular device. By 1998, cellphones
accounted for two thirds of Motorola's gross revenue.[15] The company was also strong in
semiconductor technology, including integrated circuits used in computers. In particular, it is
well known for the 6800 family and 68000 family of microprocessors used in Atari ST,
Commodore Amiga, Color Computer, and Apple Macintosh personal computers. The PowerPC
family was developed with IBM and in a partnership with Apple (known as the

Capstone Project 2014 Page 30

AIM alliance). Motorola also has a diverse line of communication products, including
satellite systems, digital cable boxes and modems.

In 1986, Motorola invented the Six Sigma quality improvement process. This became a
global standard. In 1990, General Instrument Corporation, which was later acquired by
Motorola, proposed the first all-digital HDTV standard. In the same year, the company
introduced the Bravo numeric pager which became the world's best-selling pager.

In 1991, Motorola demonstrated the world's first working-prototype digital cellular system
and phones using GSM standard in Hanover, Germany. In 1994, Motorola introduced the
world's first commercial digital radio system that combined paging, data and cellular
communications and voice dispatch in a single radio network and handset. In 1995
Motorola introduced the world's first two-way pager which allowed users to receive text
messages and e-mail and reply with a standard response.

In 1998, Motorola was overtaken by Nokia as the world's biggest seller of mobile phone

On September 15, 1999, Motorola announced it would buy General Instrument in an $11 billion
stock swap. General Instrument had long been the No. 1 cable TV equipment provider,
supplying cable operators with end-to-end hybrid fiber coax cable solutions. This meant that GI
offers all cable TV transmission network components from the head-end to the fiber optic
transmission nodes to the cable set-top boxes, now at the availability of Motorola.

In June 2000, Motorola and Cisco supplied the world's first commercial GPRS cellular
network to BT Cellnet in the United Kingdom. The world's first GPRS cell phone was
also developed by Motorola.

In 2002, Motorola introduced the world's first wireless cable modem gateway which
combined a high-speed cable modem router with an ethernet switch and wireless
home gateway.

In 2003, Motorola introduced the world's first handset to combine a Linux operating system
and Java technology with "full PDA functionality".

In June 2005 Motorola overtook the intellectual property of Sendo for $30,000 and paid
362,575 for the plant, machinery and equipment.

In June 2006, Motorola acquired the world-class software platform (AJAR) developed by
the British company TTP Communications plc.

In 2006, the firm announced a music subscription service named iRadio. The technology came
after a break in a partnership with Apple Computer (which in 2005 had produced an iTunes
compatible cell phone ROKR E1, and most recently, mid 2007, its own iPhone). iRadio has
many similarities with existing satellite radio services (such as Sirius and XM Radio) by offering
live streams of commercial-free music content. Unlike satellite services, however, iRadio
content will be downloaded via a broadband internet connection. As of 2008, iRadio has not
been commercially released and no further information is available.

Capstone Project 2014 Page 31

In 2007, Motorola acquired Symbol Technologies, Inc. to provide products and systems for
enterprise mobility solutions, including rugged mobile computing, advanced data capture,
and radio frequency identification (RFID).

January 2011, Motorola splits into two separate companies, each still using the word
Motorola as part of their name. One company, Motorola Solutions (using a blue version of
the Motorola logo), is based in the Chicago suburb of Schaumburg, Illinois and concentrates
on police technologies, radios, and commercial needs. The other company, Motorola
Mobility (using a red logo), is based in the Chicago suburb of Libertyville, Illinois and is
the mobile handset producer.

August 15, 2011, Google announced that it would purchase Motorola Mobility for
about $12.5 billion.[19] On November 17, 2011, Motorola Mobility stockholders
voted overwhelmingly to approve the proposed merger with Google Inc.[20]

May 22, 2012, "Google Inc. (NASDAQ: GOOG) announced today that the acquisition of
Motorola Mobility Holdings, Inc. (NYSE: MMI) has closed, with Google acquiring MMI for
$40.00 per share in cash." ($12.5 billion) from the Google Press Announcement,

Divisional Products:
Enterprise Mobility Solutions: Headquarters located in Schaumburg, Illinois; comprises
communications offered to government and public safety sectors and enterprise mobility
business. Motorola develops analog and digital two-way radio, voice and data
communications products and systems, mobile computing, advanced data capture,
wireless infrastructure and RFID solutions to customers worldwide.

Home & Networks Mobility: Headquarters located in Arlington Heights, Illinois;
produces end-to-end systems that facilitate uninterrupted access to digital entertainment,
information and communications services via wired and wireless mediums. Motorola
develops digital video system solutions, interactive set-top devices, voice and data modems
for digital subscriber line and cable networks, broadband access systems for cable and
satellite television operators, and also wire line carriers and wireless service providers.

Mobile Devices: Headquarters located in Libertyville, Illinois; currently the least
prosperous arm of the firm; designs wireless handsets, but also licenses much of its
intellectual properties. This includes cellular and wireless systems and as well as integrated
applications and Bluetooth accessories.

Split :

On March 26, 2008, Motorola's board of directors approved a split into two different publicly
traded companies. This came after talk of selling the handset division to another corporation.
These new companies would comprise the business units of the current Motorola Mobile
Devices and Motorola Broadband & Mobility Solutions. Originally it was expected that this
action would be approved by regulatory bodies and complete by mid-2009, but the split was
delayed due to company restructuring problems and the 20082009 extreme economic

On February 11, 2010, Motorola announced its separation into two independent, publicly
traded companies, effective Q1 2011. The official split occurred at around 12:00 pm EST on
January 4, 2011. The two new companies are called Motorola Mobility (owned by Google;

Capstone Project 2014 Page 32

cell phone and cable television equipment company) and Motorola Solutions (NYSE: MSI;
Government and Enterprise Business). Motorola Solutions is generally considered to be
the direct successor to Motorola, Inc., as the reorganization was structured with Motorola
Mobility being spun off.

Motorola Mobility deal by Google:

In fact, according to the filing, Google senior vice president Andy Rubin first reached out to
Motorola Mobility in early July 2011 to discuss the purchase by some of Googles
competitors of the patent portfolio of Nortel Networks Corp., and to assess its
potential impact on the Android ecosystem

Google boosted its offer for Motorola Mobility by 33% in a single day in early August, even
though Motorola wasnt soliciting competing bids. The aggressive bidding by Google
showed that the search giant was under considerable pressure to beef up its patent portfolio to
protect its promising Android franchise from a growing number of legal challenges.

According to the filing, Google and Motorola began discussions about Motorolas patent
portfolio in early July, as well as the intellectual property litigation and the potential impact
of such litigation on the Android ecosystem.

Although the two companies discussed the possibility of an acquisition after the initial
contact by Mr. Rubin, it was only after Motorola pushed back on the idea of patent sale
that the acquisition talks picked up steam.

The turning point came during a meeting on July 6. At the meeting, Motorola CEO Sanjay
Jha discussed the protection of the Android ecosystem with Google senior vice president
Nikesh Arora, and during that talk Jha told Arora that it could be problematic for Motorola
Mobility to continue to as a stand-alone entity if it sold a large portion of its patent portfolio.

In connection with these discussions, the two companies signed a confidentiality and
non-disclosure agreement that allowed Google to do due diligence on the companys
patent portfolio.

On July 21 and 23, Jha met with Arora and Rubin to discuss strategic options between
the two companies, agreeing to continue to discuss a potential sale.

On July 27, Motorola pushed the sale idea even harder when it requested that Google
expand its confidentiality agreement to cover due diligence relating to a possible acquisition
of Motorola.

Google got the message. The next day, Mr. Jha, Mr. Arora and Google chief legal officer
David Drummond met to discuss the terms of an acquisition of the whole company. Arora
and Drummond talked price for the first time, telling Jha that Google was considering an
offer in the range in the high $20s or low $30s.

On August 1, Google sent Motorola a letter offering the company $30 a share, and requested
a response by August 4. The same day Motorola hired Qatalyst Partners and Centerview as
its advisors.

Capstone Project 2014 Page 33

On August 5, Motorola, advised by Qatalyst Partners, rejected the offer and suggested
$43.50. Qatalyst Partners suggested to Drummond that Google increase its price to $43.50 a

On Aug 9, Arora came back with an offer of $37 a share over the phone to Jha. Jha told
Arora that he would be prepared to recommend that its board consider accepting an offer of
$40.50 or higher.

Later that day, Google responded with a new offer of $40 a share.

On August 14, Motorola director Daniel Ninivaggi told the board that Carl Icahn, a
large shareholder of the company who had urged Motorola to explore alternatives to its
patent portfolio, would support the proposed merger without a voting agreement.

On the morning of August 15, the two companies entered into a merger agreement at
the offered price of $40.

On November 17, Motorola Mobility stockholders approved the proposed merger
with Google Inc.

Competitive Analysis of Motorola :

Forces and Trends

Trend: WiMax

Description of trend:

In the industry environment, Worldwide Interoperability for Microwave Access (WiMax) is
very important to Motorola. WiMax is an Institute of Electrical and Electronics Engineers
(IEEE) standard designated 802.16e-2005 (mobile wire-less). With WiMax cell phones will
no longer be tied to cellular networks.

WiMax has the potential to replace a number of existing telecommunications infrastructures
(WiMax, 2007). WiMax has the potential of replacing cellular networks, copper wire
networks used by telephone companies, and the coaxial cable infrastructure use by cable TV
while offering Internet Service Provider (ISP) services.

Relevance of trend:

Broadband wireless access (BWA) and in particular WiMax is being implemented
worldwide. The relevance of WiMax to Motorola is that the companya?s leading
competitors, mainly Cisco Systems and Nokia in the communications equipment business is
working to provide WiMax technology to a mobile society. Mobile phones with WiMax
technology is slated to
start showing up for consumers to purchase in 2008. The introduction of WiMax for cellular
phones could also potentially impact Motorola performance in the cell phone business. It is
also a sound strategy for

Capstone Project 2014 Page 34

Motorola to be aware of what their competitors are doing. This trend is also relevant to
Motorola because WiMax will reduce the need for wireline equipment, especially in homes.
Wireline equipment is primarily used for Internet access and e-mail.

Motorola strategic adaptability:

Motorola has made some progress with WiMax technology. Motorola has had many first in
the industry and will adapt seamlessly to the trends
seen with WiMax. Motorola is a provider of the WiMax chips and can make alliances with
other providers to integrate WiMax into more cell phones offered by companies like

According to the Datamonitor, a successful players will continue to invest in research, and
maintain a diverse technology portfolio, in
order to maintain revenues in the face of changing end-user requirements (Datamonitor,

Force: Barriers of entry to new competitors (WiMax)

Description of force:

In the industry environment, one of the recognized forces is the threat of new entry.
Although there are many rivals in the industry environment, they are not the only ones that
pose a threat to firms in the industry. The possibility that new firms may enter into the
industry has a huge effect on competition. The entry and exit of new firms are shaped by
characteristics that help define whether or not this threat is strong. In theory, any firm should
be able to enter and exit a

market, and if free entry and exit exists, then profits always should be nominal. However,
industries possess characteristics that protect the high profit levels of firms in the market and
inhibit additional rivals from entering the market? (Porter, 2006).

Relevance of force:

Threat of new entry is a competitive force that poses a challenge to Motorola. Although the
company has a good reputation and good stock market value; there are other major
competitors out there and new entrants. There is however barriers to entry put in place in
this industry, that prevents new entrants from coming in. The economies of scale barrier
deter entry by forcing the aspirant either to come in
on a large scale or to accept a cost disadvantage? (Pearce & Robinson, 2004). Companies in
this industry are expected to come in a large scale or accept a cost disadvantage.

Costs to entry for WiMax are low relative to cellular technology. The costs to entry are expected
to drop rapidly once there are more certified equipment manufacturers. If ISPs, communities and
municipalities were to implement networks the costs to entry associated with infrastructure
could be overcome by new entrants. Over time, as the WiMax technology

Capstone Project 2014 Page 35

matures, the barriers posed by operations and support will be removed due to improvements
in network monitoring and customer service. The real barrier to entry will be caused by
large well capitalized companies form a large presence of form alliances.

Motorola strategic adaptability:

Motorola will have continued understanding of the external environment in an effort to
strategically focus the company as internal processes to take advantage of the industry
structure and to create competitive advantage. Motorola will continue its use of roadmaps to
drive innovation and growth. The internal view of strategy can be represented by use of the
balanced scorecard strategy map (Norton and
Kaplan, 2000).


Strong focus on WiMax
Strong brand
Robust manufacturing capabilities

Declining cell phone market share

Weak profitability

Poor customer concentration
Separate mobile devices segment
Strategic acquisition
New contract wins

Research in Nanotechnology


Intense competition

Environmental health and safety laws
Credit ratings



Technology (Samsung mobile)

Unique Products (Samsung mobile)

Strong Management (Samsung mobile)

Supply Chain (Samsung mobile)
Brand Name (Samsung mobile)


Weak Supply Chain (Samsung mobile)

High Staff Turnover (Samsung mobile)
Weak R&D (Samsung mobile)

Capstone Project 2014 Page 36

Online Presence (Samsung mobile)

Weak Management (Samsung mobile)
Customer Service (Samsung mobile)


New Products (Samsung mobile)

Innovation (Samsung mobile)

New Technology (Samsung mobile)
New Services (Samsung mobile)

International Expansion (Samsung mobile)
Emerging Markets (Samsung mobile)


Intense Competition (Samsung mobile)

Intl Competition (Samsung mobile)

Mature Markets (Samsung mobile)

Volatile Revenue (Samsung mobile)

Substitute Products (Samsung mobile)

SWOT analysis of Nokia:


Nokia worlds largest producer and manufacturer of cell phones as well as has
the largest distribution network around the world.
It is also known for the Creativity, Innovativeness, durability & reliability.
It has very good financial position, higher return on equity (ROE), return on
assets (ROA) and net profit margins (NPM)
Nokia leads the global cell phone industry

Nokia dominates the world cellular industry because it has the Strong R & D

Nokia also possessing the all fashion strategies and four style new generation
characteristic from manufacturers
It has diverse work force and advanced technology.

It has declared its profits had dropped by 40 % in 2010.

Nokia mobile phones prices are higher as compare to the prices of china mobiles

Nokia presence in the US cellular industry is very low and in Japan it has very
weak position.
In India Nokia has few service centres and very appalling after sales service

Capstone Project 2014 Page 37

In Japan Nokia closed the mobile handset distribution and also canceled the
distribution of E71 handset due to low market preference.

In 2011, the global cell phone industry expected to grow by double digits

Today, Asia-Pacific mobile phone industry is one of the fastest-growing industry
in the world.
Developing countries like China, Bangladesh, India and Pakistan has

enormous demand potential.

Nokia had a 50-50 joint venture with Siemens of Germany

Youth wants the stylish aesthetics, fashionable handsets, it drive the new market for

Consumers are becoming more complicated in the choice of handset due to new
styles by china mobiles.
Difficult for sellers to differentiate their products and retain loyalty.
Nokia is facing very strong price pressure from china and other mobile producers
Nokia is losing global market share after the arrival of several Chinese producers
In the Asia/Pacific emerged competitive forces.
Apple, RIM and the other different sellers have created strong pressure for Nokia.

Capstone Project 2014 Page 38

Identify the product market segment & prospective consumer

Formulating questionnaire to apply statistical tool & conclude research

To study & the Loyalty Sales Percentage

Better utilization of resources of brand

To compare the various company in the mobile phone segment & study how

customer have perceived them.


Research Method :Descriptive Research

Sampling Tool : Questionnaire

Sampling Method : Convenience Sampling

Sample Size : 200

Data Collection : Primary & Secondary data
Statistical Tool Used : SPSS

Capstone Project 2014 Page 39
Literature Review:

Brand Loyalty:

Brand loyalty is the ultimate goal a company sets for a branded product. Brand loyalty is a
consumers preference to buy a particular brand in a product category. It occurs because
consumers perceive that the brand offers the right product features, images or level of quality
at the right price. This perception becomes the foundation for a new buying habit. Basically,
consumers initially will make a trial purchase of the brand and, after satisfaction, tend to form
habits and continue purchasing the same brand because the product is safe and familiar.

There are three main reasons why brand loyalty is important:

Higher Sales Volume The average United States company loses half of its customers
every five years, equating to a 13 percent annual loss of customers. This statistic illustrates
the challenges companies face when trying to grow in competitive environments. Achieving
even 1percent annual growth requires increasing sales to customers, both existing and new,
by 14 percent. Reducing customer loss can dramatically improve business growth and brand
loyalty, which leads to consistent and even greater sales since the same brand is purchased

Premium Pricing Ability Studies show that as brand loyalty increases, consumers are
less sensitive to price changes. Generally, they are willing to pay more for their preferred
brand because they perceive some unique value in the brand that other alternatives do not
provide. Additionally, brand loyalists buy less frequently on cents-off deals; these promotions
only subsidize planned purchases.

Retain Rather than Seek Brand loyalists are willing to search for their favourite
brand and are less sensitive to competitive promotions. The result is lower costs for
advertising, marketing and distribution. Specifically, it costs four to six times as much to
attract a new customer as it does to retain an old one.




Asia Pacific Journal of Research in Business Management; Jun2011, Vol. 2 Issue 6, p158-
169, 12p


Every business around the world needs profit for survival and growth. The profit of a
company comes from the excess of revenue over expenditure. A Brand is a name or
trademark connected with a product or producer. Brands have become increasingly
important components of culture and the economy, now being described as "cultural

Capstone Project 2014 Page 40

accessories and personal philosophies". Brands are valued for the equity; they add
value. Everyone in the marketing profession agrees that brands can add substantial
value. The study of brand equity is increasingly popular as some marketing
researchers have concluded that brands are one of the most valuable assets that
companies possess. To study the problem effectively, car industry is chosen taking
into the account the emergence of many new brands of the car product in the recent
past. The brand strength depends on the perception of customers. Satisfied and loyal
customers indicate positive perceptions of brand. The results of the study shows that
brand preference and brand loyalty play an important role in creating brand equity.
These components of brand equity must be coherent in their actions so that
consistent image of the firm is realized and valued by customers.


Kiyani, Talat Mahmood

Niazi, Mohammad RazaUllah Khan
Riffat Abbas

khan, Imran

Interdisciplinary Journal of Contemporary Research in Business; May2012, Vol. 4 Issue 1,
p489-502, 14p, 1 Diagram, 2 Charts


The study is based on a sample of automobile users in twin cities of Pakistan. The results
reveal that both the independent variables customer satisfaction and brand trust have a
significant positive impact on customer loyalty. However customer satisfaction is the most
important aspects of customer loyalty beside other variables in automobile sector of Pakistan.
Therefore companies must focus on a more comprehensive approach towards relationship
marketing that includes customer satisfaction, which will result in retaining current customers
and generation of positive word of mouth. The purpose of the present study is to examine the
effect of brand trust and customer satisfaction on customer loyalty. Data were collected
through self-administered questionnaire from 131 customers from twin city
(Islamabad/Rawalpindi) of Pakistan. Results from the survey showed that the relationship
between brand trust and customer loyalty is positive and also there is a positive relationship
between customer satisfaction and customer loyalty. This study aims to test the relationship
which has never been explored before.

Capstone Project 2014 Page 41

Is loyalty driving growth for the brand in front? A two-purchase analysis of car
category dynamics.

Bennett, Dag
Graham, Charles

Journal of Strategic Marketing; Dec2010, Vol. 18 Issue 7, p573-585, 13p, 5 Charts

Marketers are often exhorted to grow brand share through increased loyalty. To investigate
this proposition, we report on an extension of the two-purchase analysis technique to a
dynamic category of infrequently bought goods, new cars in Thailand. This analysis
captures market structure quite well, and reveals that brand-share growth comes not from
unusually high loyalty but from first time customers attracted to large brands in line with the
duplication of purchase law.

A Conceptual Analysis of Brand Loyalty as Core Dimension of Brand Equity


Ovidiu Ioan MOISESCU

Source :

Aaker, David A.(1991), -Managing Brand Equity: Capitalizing on the value of Brand Name,
The Free Press, New York.


Nowadays when product quality increases, when competing brands are becoming more
substitutable, brands become more consistent, Brand loyalty becomes the key success factor
of any company. Generally speaking product quality is high, differentiation is generally low,
and the consumers are increasingly price sensitive while the array of brands facing customers
is increasing. The similarity between the competing brands and the increasing array of
competing brands, combined with the increased cynicism towards advertising, has resulted
consumers being more price sensitive and rarely loyal towards a single brand. In markets
with little differentiation, customers can be ambivalent towards brands as a result, they buy
different brands. Today most customers include several brands in their preferred brand set.
There are however some brands towards which customers show intense sole loyalty, and
these brands often have brand communities- groups of customers whose common theme is
usage of a particular brand. Brand managers must be conscious of the fact that the more
integrated the consumer is into this community, the more loyal towards consuming the brand.

A successful Brand strategy must be based on creating brand loyalty. For achieving, this goal,
loyaltys relationship with other descriptive dimensions of brand equity must be clearly set

Capstone Project 2014 Page 42

out, while target customers must be classified on loyalty basis. The marketing mix must be
then shaped according to the classification.

Furthermore, certain rules generally apply while managing Brand Loyalty, along with
specific tactics and strategies established after the detailed analysis of the particular
situation a brand has or its actual or potential client has.

Finally, managing brand loyalty meaning periodic assessment of results obtained through
specific strategies and of the levels of brand loyalty among customers, considering both
functional and emotional perceived aspects related to the brand.



DR. RAMESH KUMAR MIRYALA (*Professor, Swami Ramananda Tirtha Institute
of Science & Technology, Nalgonda)


ZENITH International Journal of Multidisciplinary Research Vol.1 Issue 2, June 2011, ISSN
2231 5780


This research set out to explore the possible impact of brand image customer loyalty and
commitment, and to evaluate these in the light of customer behavior towards selected brands
within the Indian mobile phone market sector. Following outcomes from review of literatures
and conceptual frameworks relating to brand image, customer loyalty and commitment, two
hypotheses were generated and further assessed using previously developed and tested
research instrument on brand image, customer commitment and loyalty. The outcome from
the study suggests that effective study of the impact of brand image on customer loyalty and
commitment in Non-western environment is possible, but should be approached as
individual/independent variables in that each variable tends to show strong independent on
each other and yet highly dependent upon brand image as a customer with low level loyalty
may express high level commitment towards a brand or market offering. The outcome also
supports the assumptions that brand image has positive impact on customer loyalty and

The study and its finding was identified as indeed fundamental as previous researchers have
conducted less research on the impact of brand image on the variables explored in this research
and with evidence of lack of substantive empirical study on the subject within developing
economy like India. The study was seen as urgent and relevant. To show evidence of
dependability, the study not only measured items suitability and usability, but also linked its
findings with similar study on brand image and other components like customer perceived quality
and satisfaction and draws an empirical conclusion that brand image has positive

Capstone Project 2014 Page 43

impact on customer perceived quality, satisfaction, loyalty and commitment. This study is,
therefore, a contribution to and an addition/consolidation of an existing knowledge. The study
was advanced by exploring the impact of brand image on key customer behavioral variables.

The approach employed in this study made the exploration of a study of this kind possible in
that the study not only acknowledged the lack of available common definition of the concepts
discussed, but also acknowledged the difficulties in its measurement and thereafter employed
a quantitative approach that logically developed assumptions for the study of various issues
within the study. Following the results from this study, therefore, one can conclude that brand
image can positively influence customers perceived quality on a market offering and also
boost customer satisfaction, loyalty and commitment towards a market offering. It is also
evident that these variables have strong association to and with brand image. This implies
that a good brand image is that which impacts positively on this entire customer variable:
customer satisfaction, loyalty, perceived quality and commitment to a market offering and
not necessarily on one or few of the variables. This, therefore, represents the degree of the
relevant of this study, that a good brand image must positively impact on customers loyalty
and perceived quality and should also influence to a greater degree the extent to which
customers perceives a market offering and express satisfaction to such offering for long-term
delight and sustainable profit.

Personality Variables and the Consumer Decision Process




Journal of Marketing Research

Vol. V (February 1968), 50-7


Study of one product cannot come close to validating a theoretical framework this broad.
However, the results obtained in analyzing the coffee purchase data of the J. Walter
Thompson panel lend substantial credence to the thought that the discouraging results in
previous studies may have been caused by the way the data were analyzed, not by the
variables' inherent deficiencies. For explaining relative loyalty to a family's favourite brand,
personality variables were formed to have negligible practical value. However, when trying
to discriminate the brand choice of people most likely to have perceived high performance
risk and to have high specific self-confidence, personality variables were very useful. Though
this filtering and classification system has indicated which gross grouping of variables would
account for the action of which group of people, it does not predict the specific, most useful
variables. To predict which personality variables lead to the purchase of Chase and Sanborn
coffee by people with high performance risk for coffee and high confidence in their ability to
judge coffees, for example, would require a careful study of brand personality. To predict

Capstone Project 2014 Page 44

which personality variables are important would require a study of the images engendered
by the taste, package, advertising, distribution pattern, and history of Chase and Sanborn
coffee. But, this article tried to devise a way of looking at the purchase decision that shows
which gross grouping of variables is important for which people. Thus it could be
determined whether the number of people responding to that grouping of variables justifies
the detailed investigation. Although the age of the panel data analyzed makes further
analyses less meaningful, it does not detract from the apparent power of the methodology.

Further Research:

These initial results make it highly desirable to consider means for more fully testing the
examination of the purchase decision proposed here. A meaningful test would require
purchase information and perception of risk information for several product categories from a
random sample of consumers. The products should be chosen so that the degree of
performance risk, social risk, and specific self-confidence is likely to vary among products.
Scores on questions indicating these three perceptions should be combined with information
on personal system, social system, structural and risk-reducing variables to yield a prediction
of brand behaviour. The derived prediction would be compared with actual purchases of the
consumer over time. Assuming substantial component of the variation in consumer brand
choice is accounted for by those predictive equations, it would have wide spread practical
application. If consumers really wish to turn to risk reducing information sources when
specific self-confidence is low, this information would be valuable to consumer service
organizations. They could determine the limited number of product categories that a
substantial number of people considered as having high-perceived performance risk and
about which they had low specific self confidence. The consumer organization could then
concentrate at these points of maximum usefulness. However, even if completely validated,
the thinking proposed in this article will not be applicable to all marketing questions. This
paper only proposes a way of indicating what can be expected given the settings on the
perceived performance risk, perceived social risk and specific self-confidence filters as they
exist at one point in time. The article neither indicates how the settings got to be as they are,
nor how to induce change.

Empirical developments in the measurement of involvement, brand loyalty and
their relationship in grocery markets


Journal of Strategic Marketing ISSN 0965254X print/ISSN 14664488 online 2003
Taylor & Francis Ltd
DOI: 10.1080/0965254032000159072

Brand loyalty in grocery markets, unlike durables or the financial services, is never likely to
be absolute. It will always be a relative behaviour since consumers tend to purchase from a
portfolio of brands (Uncles, Ehrenberg and Hammond, 1995). The future challenge to
marketing management within mature grocery markets will be to manage this consumer

Capstone Project 2014 Page 45

loyalty on a more proactive basis across all the product categories where they are represented.
Whilst manufacturers have clearly understood the importance of consistency and quality to
help remove the threat of adverse functional consequences among users, problems can still
occur, even among the most seasoned of competitors. For example, the launch of Persil
Power by Levers in the 1990s has-been acknowledged by its management as a very
expensive mistake, both in terms of write-off costs and brand loyalty among loyal users
(Gilchrist, 1995). Conversely, the search for superior functional product performance must
remain the most successful risk reduction strategy and long-term loyalty builder that brand
management can pursue, provided it is also recognised by consumers.

The observation of quite discrete involvement profiles between the product categories now
tested should not be surprising in the light of Kapferer and Laurents earlier findings (1984).
This means that Mittal and Lees model and its adaptation for grocery markets, cannot be
regarded as fully specified since this implies the presence of permanent relations between
variables(Joreskog and Sorbom, 1988, 1989; Bagozzi, 1980). Both sets of results underline
the point that the sources of involvement are not necessary conditions for involvement to
exist but they may, individually, be sufficient conditions. Thus, Mittal and Lees models
should really only be regarded as conceptual since it requires adaptations in specific market
conditions. This does not in any way diminish the true specificity of the simplified model
identified here. However, the question of its general applicability in grocery markets
remains unanswered.


Gholamreza Jandaghi, Ph.D.
Professor, University of Tehran, Iran
E-mail: jandaghi@ut.ac.ir
Razieh Nafari Mehranjani
M. A., Management, University of Shahid Bahonar Kerman, Iran
Mahdi Nik Seresht
M. A., Management, University of Shahid Bahonar Kerman, Iran
Ali Mokhles
M. A., Management, University of Shahid Bahonar Kerman, Iran

Australian Journal of Business and Management Research Vol.1 No.6 [152-158] | October-

In a research by Kim and Hyun (2010) in industrial markets, the impacts of various factors
including price, after sale services, promotions and sale channel on customers conceived
quality and the final impact on brand loyalty were studied. The results show that concerned
factors have a positive impact on quality and quality also has a suitable impact on brand. In
present study, three aspects including companys image, employees trust (customers trust
to employees behaviour) and companys trust are considered in addition to traditional brand
image aspect and their impacts on service conceived quality and finally on customers
loyalty in Asia Insurance Company are investigated.

As mentioned before, two companys brand and brand image aspects are achieved through
external marketing processes and customers trust to employees behaviour and customers

Capstone Project 2014 Page 46

trust to managerial policies and operations are achieved via interactional marketing activities.
Finally, through field studies and data analysis, it was concluded that brand image and
companys image have a well and direct impact on service conceived quality of Asia
Insurance Company and H1 and H2 were supported while employees trust and companys
trust have no significant relationship to service conceived quality. Therefore, H3 and H4 are
refused. Put it differently, one can conclude that in Asia Insurance Company, external
marketing activities impact on service conceived quality while interactional marketing
activities have no special impact. In the meantime, it is clearly obvious that service conceived
quality also impacts positively and directly on the Insurance Company customers loyalty but
its impact is trivial. So, H5 is supported. Past researches show that there is a direct
relationship between trust and loyalty in B2B and B2C (Erdem and Swait, 2004). Studies by

Brodie et al (2008) in an airline indicated the positive impact by brand image, companys image
and employees trust on service conceived quality. It means that there is homogeneity on the
confirmation of H1 and H2 among the findings of researches at Asia Insurance Company and
concerned airline. However, in researches on airline, H3 namely the positive impact of
employees trust on service conceived quality is supported while it is refused in
Insurance Company. In the meantime, a research by Brodie et al (2009) shows that the impact
of service conceived quality on customers loyalty is indirect and as a mediator factor,
customers conceived value highly impacts on customers loyalty. In another study by
Sirdeshmukh et al (2002), the positive impact of the first three factors (brand image, companys
image and employees trust) on service quality are confirmed while companys trust on service
conceived quality is negative. Finally, one can say that by increasingly application of service
activities in companies and institutes, the need to devise branding strategy for proper services on
loyalty customers value process is well understood and tangible. These views are compatible
to the insights of contemporary authors like Woodruff (1997), Srivastava et al (1999), Rust et al
(2004) and all people who have emphasized on customers value and loyalty as the key resource
of competitive advantage. However, in other studies such a study by Gounaris et al (2003) in
Athenian banks, the impacts of other aspects except than service brand quadruple aspects on
service conceived quality are examined. These factors include face-to-face communication, staff
relations and market-orientation. The results show that except than face-to-face communication,
other factors have important and determining impacts on service conceived quality of Athenian
banks (Gounaris et al, 2003).

Overall, one can conclude that service conceived quality and customers loyalty are not
only impacted by customers conception of brand and there are paramount factors that can
impact on them. Anyhow, the impacts of brand aspects on services are fully observable and
non-negligible and it is now highly discussable in service organizations particularly
competitive arenas as a vital factor.

The positive impact on brand image and companys image on service conceived quality are
too important due to the fact these two service brand aspects are highly impacted by external
marketing as well as the importance of external marketing and throughout campaigns for
insurance company via radio, TV and other mass media. In one hand, since most insurance
companies are similar in terms of provided services, one can distinguish the special brand of
Asia Insurance in terms of special discounts, discounts on simultaneous usage of several
types of insurance, etc. On the other hand, increasing the accessibility to services through
opening further affiliated branches and full explanations of insurance services that are
typically varied and detailed in guiding brochures and notebooks lead into customers
awareness and finally into a separated mindset and a positive and effective service brand for
the company.

Capstone Project 2014 Page 47
The Impact of Culture on Brand Loyalty - A Study of the Young Affluent Chinese

Dr Frauke Mattison Thompson, Nottingham University Business School China
Alex Newman, Nottingham University Business School China
Dr Martin Liu, Nottingham University Business School China

Aaker DA. Managing brand equity. New York, NY: The Free Press; 1991.
Aiken LS, West SG. Multiple regression testing and interpreting interactions. Newbury Park,
CA: Sage; 1991.
Alden DL, Steenkamp J-BEM. Batra R. Brand positioning through advertising in Asia,
North America, and Europe: the role of global consumer culture. J Mark 1999;63(1):7587.
Anderson E, and Sullivan M. The antecedents and consequences of customer satisfaction for
firms. Manage Sci 1993;12(2):125-143

Before the introduction of economic reforms in 1978, situational constraints such as a lack
of viable alternatives or limited convenience evoked only spurious loyalty by Chinese
consumers towards brands. However, this has changed with an influx of foreign direct
investment and the rapid development of the domestic industry. Over the last two decades
intense market competition has resulted in a proliferation of brands in the Chinese market. In
the face of such competition marketers have begun to recognize that in order to attract and
retain Chinese customers they need to find effective means by which to secure their brand
loyalty (Fournier and Yao, 1997). In developing suitable strategies for the Chinese market
organisations must realise that they may not simply adopt the same strategies as they do in
Western cultures to evoke brand loyalty. Such strategies could potentially be ineffective in
China due to cultural differences, which have been found to have significant effects on
Consumer attitudes and behaviour (Yoo, 2009). For example, in collectivist cultures, such as
China, in-groups influence purchasing behaviour much more than in individualistic cultures
(Wong and Ahuvia, 1998).

This study contributes to the literature in two ways. First, it examines the factors which
determine brand loyalty of Chinese consumers. Specifically, it investigates the relative
influence of perceived quality, perceived value and trust on their attitudinal loyalty. Second,
the moderating effects of culture on the relationship between brand loyalty and its
antecedents are examined. Recent reviews of the marketing literature suggest that the cultural
value orientations of individual consumers may play an important role in determining how
theyreact to brands (Soares et al., 2006). In particular, the processes by which the collectivist
orientation of the consumer affects their brand loyalty are investigated in this study.
Brand Loyalty
The concept of brand loyalty is at the centre of the marketing strategy of any organization as
it is a measure of the commitment by a consumer to repurchase a brand (Aaker, 1991). It is
vital for organizations in the face of highly competitive markets with increasing
unpredictability and reducing product differentiation (Fournier and Yao, 1997) and brings
with it benefits such as greater sales and revenues, increased profitability, a customer base
that is less sensitive to the marketing efforts of competitors and substantial barriers to
entry(Delgado-Ballester and Munuera-Aleman, 2001). For the purposes of this study,
attitudinal loyalty is chosen as the focus as it has been found to be the key predictor of a
brands purchase and repeat patronage (Uncles et al., 2003).

Capstone Project 2014 Page 48
Culture and Marketing
Numerous studies have discussed the choice of dimensions most appropriate for
conceptualizing and operationalising culture (Bond, 1987; Hofstede, 1991; Schwartz,
1994;Steenkamp, 2001). Hofstedes framework however, is the most widely used and
incorporates four cultural dimensions: 1. Individualism/collectivism, 2. power distance, 3.
masculinity/femininity and 4. uncertainty avoidance (Hofstede, 1980). Of the four cultural
dimensions, individualism/collectivism has received the greatest attention in the
literature(Triandis, 1995), especially in the context of Asian Confucian-based cultures such as
China, which are highly collectivistic in nature (Hofstede and Bond, 1988). Collectivism
refers to the tendency of individuals to view themselves as being interdependent with others
in society. Collectivists typically place greater concern on the consequences of their
behaviour for people in the same social group, exhibit conformity, and show a willingness to
sacrifice personal interests for group welfare (Holt et al., 1994; Nakata and Sivakumar,
2001). Furthermore, collectivism supports the creation of long-term buyer-seller relationships
which in turn supports the creation of loyalty behaviour (Yoo, 2009).

Decomposing Brand Loyalty: Exploring the Effect of Teenage Status and Gender
on Brand Loyalty


Guest ;Howard and Sheth; Jacoby; Sheth; Jeuland; Andrews and Srinivasan; Yim

Aaker, David A. (1991), What is Brand Equity?, Managing Brand Equity, New York: The
Free Press, 1-33.
Andrews, R. L., A. Ainslie, and I. S. Currim (2002), "An empirical comparison of logit
choice models with discrete versus continuous representations of heterogeneity," Journal
of Marketing Research, 39 (4), 479-87.
Boush, D.M., M. Friestad, and G.M. Rose (1994), "Adolescent Skepticism toward TV
Advertising and Knowledge of Advertiser Tactics," Journal of Consumer Research,
21 (June), 165-175.
Brown, G.H. (1952), Brand Loyalty: Fact or Fiction?, Advertising Age, June, 53-55.
Bucklin, R. E. and S. Gupta (1992), "Brand Choice, Purchase Incidence, and Segmentation
- an Integrated Modeling Approach," Journal of Marketing Research, 29 (2), 201-15.

The soft drink category is one, which seeks loyalty due to the mere frequency in which many
(especially teenagers) consume soft drinks. These findings, in addition to building to the
marketing literature, have important implications for managers interested in adopting loyalty-
building strategies to increase market shares of their products, and to encourage brand-
switching from competitors.
Teenagers are thought to be a brand loyal segment for a number of reasons. Teenagers are
involved in purchase decisions, they are targeted frequently by marketing communications
efforts, and they use brands to become influencers and trendsetters.
Brand loyalty is often considered in conjunction with creating long-term relationships with
customers, or the acquisition of regular customers, in lieu of the traditional goal of short-term
sales. Our assessment of brand loyalty, although richly explored in the marketing literature,
indicates that the defined boundaries of brand loyalty have evolved over time.

Capstone Project 2014 Page 49

Brand loyalty emerged in the marketing literature as a consistent preference for a given
brand. Yet, this basic definition did not satisfy Brown (1952), who included past purchase
behaviour as an important indicator of brand loyalty. Ten years later, stochastic modelling
(largely based on purchase history) was used to determine brand loyalty (Feuhn 1962).
Such stochastic model analyses (e.g., Jeuland 1980) often consider brand loyalty as a long-
term choice probability within a product class. Since then, brand loyalty has been
consistently recognized in the marketing literature as a function of conditional probability.


Megan E. Lodes, Siena College

Beard, Fred K. "College Student Attitudes Toward Advertising's Ethical, Economic, and
Social Consequences." Journal of Business Ethics 48 (2003): 217-28. ProQuest. Siena
College, Loudonville. 14 Mar. 2009 <http://proquest.umi.com>.

Beirne, Mike, and Neil Howe. "Generation Gab." Brandweek June & july 2008: 16+.
WilsonWeb. Siena College, Loudonville. 14 Mar. 2009 <http://vnweb.hwwilsonweb.com>.

Bennett, Rebekah and Rundle-Thiele, Sharyn. A Comparison of attitudinal loyalty
measurement approaches. Journal of Brand Management, 9(3). (2002): 193-209

Byron, Ellen. "At the Supermarket Checkout, Frugality Trumps Brand Loyalty." The Wall
Street Journal [New York City] 6 Nov. 2008, Eastern ed., sec. D: 1. Proquest. Siena
College, Loudonville.

The majority of research that has been conducted on Generation Y has actually proclaimed
Generation Y to be a misnomer, as it indicates that Generation Y is merely a continuation of
Generation X. Instead, researchers today prefer to call the generation born since 1982 as the
Millennials (Beirne and Howe, 2008). Starting in 2000, when the Millennials began attending
college, they began to be studied by researchers and marketers to determine the generations
overriding characteristics. Millennial college students are the most racially and ethnically diverse,
as enrollment of women and minorities has increased while enrollment of white students has
decreased (DeBard, 2004). Millennials make long-term plans, believing they are capable of
accomplishing anything. However, Millennials expect high grades to mark their achievement but
will only do what is expected of them to get those high grades (DeBard, 2004). While older
generations lament the ever-increasing usage of technology by the Millennials, this technology is
just a tool used by Millennials to fulfill their desire of being part of a community (Beirne and
Howe, 2008). Millennials are also considered to be sheltered and both expect and want rules to be
clearly communicated and properly enforced (DeBard, 2004). It is evident that Millennials like to
follow rules, as violent crime by teens has fallen by 70%, teen pregnancy and abortion has fallen
by 35%, and consumption of tobacco and alcohol is lower than ever before. Millennials believe in
the benefits of community service, participating in elections, and working for companies that give
back to the community (Beirne and Howe, 2008). Unfortunately, it has also been found that
Millennials are studying

Capstone Project 2014 Page 50

less and are not as concerned about important issues, such as the environment or race
relations (Sax, 2003).
Because Millennials are wealthier than previous generations, marketers understandably want to
learn how to market to this generation. While Millennials are trusting of certain authority, they
are skeptical of advertising that is targeted to them (Kapner, 1997). Because Millennials value
products for their necessity to their lives, they dislike advertising because it often causes them to
buy things they do not need. Millennials question the truth in advertising and believe marketing
to be misleading. They believe that advertising leads to higher product price, which conflicts
with their desire for the lowest price possible (Beard, 2003). Even though Millennials are
wealthier than previous generations, they describe themselves as
poor college students, so marketers should not position their products as a luxury if they
want Millennials to buy it (Phillips, 2007).
Research that has been completed on Millennials and the concept of brand loyalty has
resulted in two conflicting theories. The first is that Millennials are not brand loyal
consumers. A study done by K. Ritchie showed that they are less brand loyal than previous
generations due to the constant bombardment of promotions (Ritchie, 1995). Phillips (2007)
stated that Millennials believe themselves to be reasonable, price-oriented consumers who are
not influenced by an attraction to a certain group of brands. Millennials value price and
features as the most important attributes of a product, instead of brand name. Millennials
want products that match their lifestyle or personality, which is why brand is of almost no
importance (Caplan 2005).
The second is that Millennials are brand loyal consumers. Brands will become bigger than
ever, as Millennials identify the idea of a big brand as being a return to community.
Millennials are loyal to brands whose products not only provide for the individual but also for
the community as a whole (Beirne and Howe, 2008). Millennials are committed to a brand as
long as it provides for their needs (DeBard, 2004).

Marketers are trying to do as much as they can to preserve brand loyalty. Marketers have
attempted to create an emotional attachment with their customers, believing that once
customers become attached, they will not switch to another brand, regardless of price
(Hamilton, 2009). Unfortunately, consumers are more likely than ever to become brand
switchers, especially to private labels, as they look for lower-price alternatives to what they
normally purchase. Customers are abandoning brand loyalty and experimenting with different
but cheaper brands. It seems that grocery store items are most affected by brand switching;
products ranging from food, paper goods, and personal-care items are victims of either brand
switching or being purchased less frequently, as shoppers stretch out the use of these products
for as long as possible (Byron, 2008). While the sales of luxury items has decreased
somewhat, it seems that luxury items have the most brand loyal consumers. Consumers are
willing to save up their money for these luxuries; they justify paying top prices for these
items by saving and reducing spending on other lower-priced items (Heher, 2009). It appears
that the best and most innovative brands have been or will continue to be able to hold their
value, despite the current recession (Hamilton, 2009).

Capstone Project 2014 Page 51

The following techniques have been used to carry out this research:

Chi square test

One way ANNOVA test

Correlation Test

Chi Square Test:

1. The first Chi Square test was conducted between the variables Mobile Brand
Preference and Price sensitivity to find out any association between these
two variables. The following hypothesis was formulated:

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square

4 .598
Likelihood Ratio 3.445 4 .486
Linear-by-Linear Association .489 1 .484
N of Valid Cases 203

a. 3 cells (30.0%) have expected count less than 5. The minimum expected count is .55.

H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent variable


Since the value of sig. is 0.598 ie greater than
so, there is no significant relationship between

0.05 hence NULL hypothesis is accepted
Mobile Brand Preference and Price

Capstone Project 2014 Page 52

2. The 2nd Chi Square test was conducted between the variables Mobile Brand
Preference and Sex to find out any association between these two variables.
The following hypothesis was formulated.

Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Pearson Chi-Square

4 .395
Likelihood Ratio 4.102 4 .392
Linear-by-Linear Association 2.303 1 .129
N of Valid Cases 203

a. 2 cells (20.0%) have expected count less than 5. The minimum expected count
is 1.37.

H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent



Since the value of sig. is 0.395 ie greater than 0.05 hence NULL hypothesis is
accepted so, there is no significant relationship between Mobile Brand Preference
and Price sensitivity.

3. The 3rd Chi Square test was conducted between the variables Mobile Brand
Preference and Age to find out any association between these two variables.
The following hypothesis was formulated.

Chi-Square Tests

Asymp. Sig. (2-
Value df sided)
Pearson Chi-Square

12 .812
Likelihood Ratio 9.996 12 .616
Linear-by-Linear Association .004 1 .948
N of Valid Cases 203

a. 14 cells (70.0%) have expected count less than 5. The minimum expected
count is .03.

Capstone Project 2014 Page 53
H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent



Since the value of sig. is 0.812 ie greater than 0.05 hence NULL hypotheses is
accepted so, there is no significant relationship between Mobile Brand Preference
and Age.

4. The 4th Chi Square test was conducted between the variables Mobile Brand
Preference and Family Income to find out any association between these
two variables. The following hypothesis was formulated.

Chi-Square Tests

Asymp. Sig. (2-
Value df sided)
Pearson Chi-Square

12 .706
Likelihood Ratio 8.991 12 .704
Linear-by-Linear Association 1.293 1 .256
N of Valid Cases 203

a. 8 cells (40.0%) have expected count less than 5. The minimum expected count is
H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent



Since the value of sig. is 0.706 ie greater than 0.05 hence NULL hypotheses is
accepted so, there is no significant relationship between Mobile Brand Preference
and Family Income

Capstone Project 2014 Page 54

5. The 5th Chi Square test was conducted between the variables Mobile
Brand Preference and Occupation to find out any association between
these two variables. The following hypothesis was formulated.

Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Pearson Chi-Square

4 .823
Likelihood Ratio 1.522 4 .823
Linear-by-Linear Association .045 1 .832
N of Valid Cases 203

a. 2 cells (20.0%) have expected count less than 5. The minimum expected count is
H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent



Since the value of sig. is 0.823 ie greater than 0.05 hence NULL hypotheses is

accepted so, there is no significant relationship between Mobile Brand Preference

and Occupation.

One Way Annova Test:

1. The 1st One Way ANNOVA test was conducted between the variables
Mobile Retail Outlets and Age to find out any association between
these two variables. The following hypothesis was formulated.

95% Confidence Interval for Mean


Mean Std. Deviation Std. Error Lower Bound Upper Bound Minimum Maximum
18-25 175 3.77 1.090 .082 3.61 3.93 1 5

23 3.78 .902 .188 3.39 4.17 2 5

2 2.50 .707 .500 -3.85 8.85 2 3
36 and Above

3 2.67 1.528 .882 -1.13 6.46 1 4

203 3.74 1.082 .076 3.59 3.89 1 5

Capstone Project 2014 Page 55

Sum of Squares Df Mean Square F Sig.
Between Groups 6.743 3 2.248 1.945 .124
Within Groups 229.937 199 1.155
Total 236.680 202

H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent



Since the value of sig. is 0.124 ie greater than 0.05 hence NULL hypotheses is

accepted so, there is no significant relationship between Mobile Retail Outlets and


2. The 2nd One Way ANNOVA test was conducted between the variables
Premium and Family Income to find out any association between
these two variables. The following hypothesis was formulated.

95% Confidence Interval for Mean
N Mean Std. Deviation Std. Error Lower Bound Upper Bound Minimum Maximum
Below 3 LPA

23 2.96 .976 .204 2.53 3.38 1 5
3-6 LPA

75 3.01 .979 .113 2.79 3.24 1 5
7-10 LPA

53 2.75 .959 .132 2.49 3.02 1 5
Above 10 LPA

52 3.23 1.148 .159 2.91 3.55 1 5

203 3.00 1.027 .072 2.85 3.14 1 5

Sum of Squares Df Mean Square F Sig.
Between Groups 6.010 3 2.003 1.926 .127
Within Groups 206.985 199 1.040

Total 212.995 202

Capstone Project 2014 Page 56
H0- There is no significant dependence of the dependent variable on the independent


H1- There is a significant dependence of the dependent variable on the independent



Since the value of sig. is 0.127 ie greater than 0.05 hence NULL hypotheses is accepted
so, there is no significant relationship between Premium and Family Income.

Correlations Tests:

1. The 1st Correlation Test was conducted between the variables Phone Up
gradation and Customer Care to find out any correlation between these two
variables. The following hypothesis was formulated.

Descriptive Statistics

Mean Std. Deviation N
Phoneupgrade 3.96 .979 203
Customercare 4.04 1.187 203


Phoneupgrade Customercare
Phoneupgrade Pearson Correlation 1

Sig. (2-tailed) .000

N 203 203
Customercare Pearson Correlation

Sig. (2-tailed) .000

N 203 203

**. Correlation is significant at the 0.01 level (2-tailed).
H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.372 ie not very close to 1, hence NULL
hypotheses is accepted so, there is no correlation between Phone upgradation and
Customer Care.

Capstone Project 2014 Page 57

2. The 2
Correlation Test was conducted between the variables Mobile
Retail Outlets and Digitised Store to find out any correlation between
these two variables. The following hypothesis was formulated.

Descriptive Statistics
Mean Std. Deviation N
Mobileretailoutlets 3.74 1.082 203
Digitisedstore 3.66 1.023 203
mobileretailoutlets Digitisedstore
mobileretailoutlets Pearson Correlation 1

Sig. (2-tailed) .000
N 203 203
Digitisedstore Pearson Correlation

Sig. (2-tailed) .000
N 203 203

**. Correlation is significant at the 0.01 level (2-tailed).
H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.444 ie not very close to 1, hence
NULL hypotheses is accepted so, there is no correlation between Mobile
Retail Outlets and Digitized Store

Capstone Project 2014 Page 58

3. The 3
Correlation Test was conducted between the variables Graphic
User Interface and Mobile Accessories to find out any correlation between
these two variables. The following hypothesis was formulated.

Descriptive Statistics
Mean Std. Deviation N
GUI 4.07 1.005 203
mobacessories 4.02 1.076 203
GUI mobacessories
Pearson Correlation 1

GUI Sig. (2-tailed) .000
N 203 203
Pearson Correlation .434

mobacessories Sig. (2-tailed) .000


203 203

**. Correlation is significant at the 0.01 level (2-tailed).

H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.434 ie not very close to 1, hence NULL

hypotheses is accepted so, there is no correlation between Graphic User Interface

and Mobile Accessories

4. The 4

Correlation Test was conducted between the variables Large
Screen and Customer Care to find out any correlation
between these two variables. The following hypothesis was
Descriptive Statistics

Mean Std. Deviation

Largescreen 3.96 1.073 203
Customercare 4.04 1.187 203

Capstone Project 2014 Page 59

largescreen Customercare
Pearson Correlation 1

Largescreen Sig. (2-tailed) .000
N 203 203
Pearson Correlation

Customercare Sig. (2-tailed) .000
N 203 203

**. Correlation is significant at the 0.01 level (2-tailed).

H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.316 ie not very close to 1, hence
NULL hypotheses is accepted so, there is no correlation between Large
Screen and Customer Care

5. The 5
Correlation Test was conducted between the variables Premium and
Mobile Accessories to find out any correlation between
these two variables. The following hypothesis was formulated.

Descriptive Statistics
Mean Std. Deviation N
Premium 3.00 1.027 203
mobacessories 4.02 1.076 203

Premium mobacessories

Pearson Correlation

1 -.040
Premium Sig. (2-tailed) .569
N 203 203

Pearson Correlation

-.040 1
mobacessories Sig. (2-tailed)


N 203 203

Capstone Project 2014 Page 60
H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is -0.040 ie not even near close to 1, hence
NULL hypotheses is accepted so, there is no correlation between Large Screen
and Customer Care

6. The 6
Correlation Test was conducted between the variables Phone
Up gradation and GUI to find out any correlation between these two
variables. The following hypothesis was formulated.

Descriptive Statistics
Mean Std. Deviation N


3.96 .979



4.07 1.005



Pearson Correlation 1

Phoneupgrade Sig. (2-tailed) .000


203 203

Pearson Correlation

GUI Sig. (2-tailed) .000
N 203 203

**. Correlation is significant at the 0.01 level (2-tailed).

H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.316 ie not very close to 1, hence NULL
hypotheses is accepted so, there is no correlation between Phone Up gradation
and GUI.

Capstone Project 2014 Page 61
7. The 7
Correlation Test was conducted between the variables
Digitized Store and Large Screen to find out any correlation
between these two variables. The following hypothesis was formulated.

Descriptive Statistics
Mean Std. Deviation N
Digitisedstore 3.66 1.023 203
largescreen 3.96 1.073 203
Digitisedstore largescreen
Pearson Correlation 1

Digitisedstore Sig. (2-tailed) .000
N 203 203

Pearson Correlation

Largescreen Sig. (2-tailed) .000


203 203
**. Correlation is significant at the 0.01 level (2-tailed).

H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.329 ie not very close to 1, hence NULL
hypotheses is accepted so, there is no correlation between Digitized Store and

Large Screen.

Capstone Project 2014 Page 62
8. The 8
Correlation Test was conducted between the variables Large Screen
and Phone Up grade to find out any correlation between these two variables.
The following hypothesis was formulated.

Descriptive Statistics
Mean Std. Deviation N
largescreen 3.96 1.073 203
Phoneupgrade 3.96 .979 203
largescreen Phoneupgrade
Pearson Correlation 1

Largescreen Sig. (2-tailed) .000
N 203 203
Pearson Correlation .248

Phoneupgrade Sig. (2-tailed) .000


203 203

**. Correlation is significant at the 0.01 level (2-tailed).
H0- There is no significant correlation of the dependent variable on the independent


H1- There is a significant correlation of the dependent variable on the independent



Since the value of Pearson Correlation is 0.248 ie not very close to 1, hence
NULL hypotheses is accepted so, there is no correlation between Large Screen and
Phone Up grade.

Capstone Project 2014 Page 63

Motorola have lost large chunk of its customers. The competitors are gaining
market share fast.

Motorolas phones have become obsolete in the market now, especially in terms
of smart phone category.

The more young population demands for more stylish feature in their Motorola

With the questionnaire used as a tool to perform the research, people have
preferred around 50% where, Samsung is chosen among the options. After that
Nokia and Apple comes first in their mind while buying.

Consumers agree and strongly agree that every mobile handset company should have
their own retail outlets. Around 47 % of them agree.

Consumers prefer user friendly graphical user interface (GUI) while buying any
smart phone. Around 38% of the consumers prefer that.

Consumers think and agree to that mobile phone up gradation should be done to
retain customers for a specific brand. Around 44 % of the consumers think that.

Consumers think and agree to that to improve "Brand Loyalty", should a mobile
handset company have their own "digitized" store. Around 38% agree to that.

Consumers think and agree to that Customer Services does play an important role to
improve the Brand Loyalty. Around 50% of that agree to this.

Consumers also prefer Large Screen and Mobile Accessories more with
a particular mobile brand.

Capstone Project 2014 Page 64

To improve the Brand Loyalty of Motorola mobiles especially, they do need to work

on increasing the no. of retail outlets for their brand.

Motorola mobile phones need to improve their smart phones as well.

Better Customer Care services are needed to improve the Brand Loyalty for Motorola.

Better GUI services and more digitized stores for their mobile phone outlets will also
help to improve the Brand Loyalty.

Mobile accessories without needing to pay the premium on their mobile phones can
also help them to improve their brand loyalty.

Consumers through the study are found that they are price sensitive, so Motorola
also needs to keep in mind about that aspect too.

Constant mobile phone up gradation is need of the market as well for the company to
retain their customers and in a way helps in improving the brand loyalty.

Capstone Project 2014 Page 65


Sample size - The number of the units used in study is small, so the chances of error
increase. And the sample selected for the study is the convenience sample, so
sample does not represent the population being studied.

Longitudinal effects - Time to investigate a research problem and to measure change
or stability within a sample is constrained due to the time provided to conduct the
research. So not able to carry research to wider extent.

Area under study-Area under study is very small. The area chosen for the study is
based on convenience. Survey is basically done on youth. So, I am not able to capture
opinion based on various psychology factors like age, area.
Geographical constraint of carrying the research only in Navi Mumbai, Kharghar

Broad research topic- The topic is very broader so, I am not able to capture it. I
have laid down specific objectives and carry research accordingly

Capstone Project 2014 Page 66

Market Research text & cases on Brand Loyalty

Market Research with SPSS Alvin C. Burns and Ronald F. Bush

Websites and Links:





Capstone Project 2014 Page 67


Following is the questionnaire used in the study:

Brand Loyalty Study for MOTOROLA mobiles:

Which of the following mobile handset brand while buying comes first in your mind? *
For the following questions choose from the options on the likert scale:

Disagree Neutral Agree Strongly agree


Do you believe
that every
mobile handset
should have
their own retail

I prefer user
graphical user
(GUI) while
buying any
smart phone?

Do you think
mobile phone
up gradation
should be done
to retain
customers for a
specific brand?

To improve
Loyalty", should
a mobile
company have
their own

Do you prefer
to pay a

Capstone Project 2014 Page 68

Disagree Neutral Agree Strongly agree


premium for a
newly released
smart phone :

Do you believe
Care services",
play an
important role
while buying
any mobile
handset brand?

Do you prefer
to have mobile
that comes
along with any
smart phone :

I prefer to use
a smart phone
having a large
screen :
Are you price sensitive?

1 2

Yes No

Sex :

1 2

Male Female

Age :
26- 30
36 and above
Family Income:
Below 3 LPA
3-6 LPA
7-10 LPA
Above 10 LPA
Occupation :

Capstone Project 2014 Page 69