Brand Loyalty in a Competitive Dynamic Industry: A Case Study of

Mobile Industry

By

Htat Yi Lwin Htut

52117606

January 2020

Independent Final Report

Presented to

Ritsumeikan Asia Pacific University

In Partial Fulfillment of the Requirements for the Degree of

Master of Business Administration

1

Table of Contents

Table of Contents………………………………………………………………………..1

List of Figures……………………………………………………………………………3

Certification Page…………………………………….………………………………….4

Acknowledgement………………………………………………….…………………...5

Abstract ……………………………………………………………………………........7

Chapter 1: Introduction.………………..………………………………………..….....9

1.1 Brand and Its Importance…………………………………………………...….....9

1.2 Problem Identification…………………………………………………………...11

1.3 Objectives of the Study…………………………………………………………..12

1.4 Research Questions ……………………………………………………………...12

Chapter 2: Literature Review………………………………………………………...13

2.1 Brand Loyalty…………………………………………………………………….13

2.2 Perceived Brand Quality………………………………………………………….15

2.3 Brand Trust ………………………………………………………………...….…16

2.4 Brand Communication …………………………………………………………...17

2.5 Customer Satisfaction …………………...………………………………………17

2.6 Competitive Dynamic Industry……….……………………………………….....19

2.7 Competitive Advantages of Smartphones ……………………………………….23

2.8 Brand Switching Behavior ………………………………………………………25

2.9 Brand Switching in terms of Customer Satisfaction …………………………….26

2.10 Reasons for Switching to other Brand ……………………………………….....27

2

Chapter 3: Methodology ………………….…………………………………………..29

3.1 Research Objectives ……………………………………………………...……...29

3.2 Research Methodology ………………………………………………………….30

Chapter 4: Case Study …………………………………………………………...…..32

4.1 Dynamic Smartphone Industry………………………………………………….32

4.2 Innovation in Smartphone Industry……………………………………...……...34

4.3 Maintaining Competitive Edge……...…………………………………………..35

4.4 The Correlation between Innovation and Competition ………………….……...37

Chapter 5: Discussion……………………………..………………….……………….40

5.1 Analysis of Mobile Companies …………………………………………………...40

5.2 What causes People to have less trust in BlackBerry?.............................................45

Chapter 6: Conclusion…………………….…..…...………………………..…….…..47

6.1 Recommendation………………………………………………………………...47

References………………………………………………………………..……..……...49

3

List of Figures

Figure 2-1: Utterback & Abernathy (1975) model of the innovation life cycle in the product

industry……………………………………………………………………………….......20

Figure 2-2: S-Curve with its different phases from Utterback & Abernathy (1975).........22

Figure 5-1: Global Smartphone Market Share (Q1, 2015)………………………….….....43

4

Certification Page

I, Htat Yi Lwin Htut (Student ID: 52117606) hereby declare that the contents of this

Independent Final Report are original and true, and have not been submitted at any other

university or educational institution for the award of degree or diploma.

All the information derived from other published or unpublished sources has been

cited and acknowledged appropriately.

HTAT YI LWIN HTUT

2020/01/11

5

Acknowledgment

First of all, I would like to pay my deepest gratitude to my parents for supporting me

both financially and mentally while I am studying at APU. My mother never hesitates to

support me no matter what, she is always there standing next to me although she is still

grieving for my father who has passed away 4 years ago.

Secondly, I would like to thank my research supervisor Professor YOKOYAMA

Kenji, Vice President of Ritsumeikan Asia Pacific University. He is always there whenever

I email him to get me a time slot no matter how busy he was. His responses are quick with a

positive vibe. I did not have second thoughts to choose him (without knowing him he is the

Vice President of APU until I met him in the first place in his office building) for my

research supervisor out of other plentiful of helpful professors. During the meeting of the 2nd

and 3rd time, he consistently suggested to me in consultative ways rather than commanding

me to do this and do that. Thank you very much, again and again, Professor Kenji.

Thirdly, I would like to mention my special thanks to Professor OTAKE Toshitsugu,

the Dean of MBA program in APU as well as Professor BEISE-ZEE Marian, the Associate

Dean of MBA program in APU who kindly advised and guided me to overcome my

difficulties in my hard times in APU. With their kind advice, helpful support and warm

encouragement, I could overcome my academic research hurdles in accomplishing the MBA

degree in APU, Japan.

Then, I would like to thank all of my teammates, classmates and teaching Professors

and close friends who help me any time throughout my studies, get me the best enjoyable

memories in APU. These friends were very helpful to me while I was sick, while I felt

6

helpless in the Accounting and Finance exam; they have given me some of their time taught

me with patience.

Last but not least, I would like to express my heartfelt honor to Ritsumeikan Asia

Pacific University for providing me an 80% scholarship of MBA. I believe I will not have

those opportunities without their selection and see those precious people and beautiful views

of APU, its elegant buildings, a campus with full facilities for students, kind staffs as well as

the nature of Beppu city. The experiences of being a student at APU are quite phenomenal

and were and will always be remained as a great memorial for me in upgrading myself with

higher education in Japan.

7

Abstract

Brand, itself has its logo, design, and term that differentiate from other products. The

successful brand has a strong power to retain a large number of customers in the competitive

market. Starting from the end of the 1990s, the telecommunication industry has begun to

progress rapidly as well as the emergence of mobile phone technology and so, the brand

awareness has become viral to achieve users’ trust and brand loyalty.

In the competitive mobile manufacturing market place, the particular famous mobile

products are growing rapidly such as Samsung, Apple, and Huawei, which are prioritized to

produce the latest technology-based new model handsets in the emerging market. As for

users, they are aware of the facilities provided by the companies together with the prices

since the development of technologies in the field of telecommunications has surely met the

needs of human’s daily life. Therefore, buyers want more facilities to their phones since

Information Technology today has moved beyond the mobile phones’ fundamental role of

communications based on their basic utilization for the greater impacts of social and

economic benefits. Therefore, customers have become their main assets of a firm to win the

trust and hearts of its users. The mobile phone market has become more competitive and it

is crucial to understand how a brand can create an innovative sustainable approach and

raised its loyalty.

The purpose of this paper is to propose the general model that contributes to the

contextual factors of how brand loyalty plays a role in a highly competitive dynamic mobile

industry. The findings and analysis reveal that there are higher chances of brand switching

behavior which is associated and it has become a critical issue facing mobile service

8

providers or manufacturers. To do this research, the secondary data had been collected from

various academic journal articles, official websites, reliable reports, and online resources.

Qualitative research method through case study had been used in which the

researcher could make empirical inquiry between single-case and multiple-case designs

based on the varieties of individual cases to be analyzed in this report. An illustrative single

or multiple case studies were used to identify how competitive mobile industry firms

compete to gain their loyal customers and higher market share and what happened to loyal

customers in the competitive and dynamic mobile industry since there is a rising number of

brand switching behavior among the mobile users.

Key Words: Brand Loyalty, Mobile Phone Brands, Brand Switching Behavior, Competitive

Dynamic

9

Chapter 1

Introduction

1.1 Brand and its Importance

Brands represent the voice of products and their services. Organizations name or

symbol their products as a brand to convey their messages to their customers and

demonstrate how their products and services stand out in terms of reliability from the rest of

competing brands in the market place. A particular brand needs to be well established if it

wants to be well recognized and to have loyal customers in the long term (Faullant, Matzler,

& Füller, 2008). This means repeating higher volumes of sales and stable revenues. Hence,

every company spends millions of their expenses in promoting their brand and make

customers more aware of their products and services. Effective promotion of a brand has a

strong power to raise its brand image, value, loyalty, equity and market share more precisely

and timely.

Today, it is very difficult to retain the customers and even attract them to be long

term customers due to dynamic industry and intense competitions. Most of the companies,

large or small are facing the decreasing number of brand loyalty as a result of the market

situation which gets very much mature, the advancement of technology, and higher level of

innovations, globalization, and competitions. Therefore, the organizations prioritize to focus

more and more on brand loyalty to retain their potential customers in the long term and

make them avoid leaving their brand within a short time (Hafiz, 2017). It has become one of

10

the biggest issues in the mobile phone industry which has suffered tremendously in its

saturated market.

The brand communication and users’ satisfaction have a strong impact on brand trust

which ultimately leads to brand loyalty (Hafiz, 2017). This study is conducted to explore the

challenges of the firms or organizations in the mobile handset industries and how they

gained their strong competitive advantage to achieve loyal customers to meet their changing

demands and market share. We also argue the term that mobile handset manufacturers must

understand the factors that impact their customers loyalty towards their mobile product

brand: it is indicated by Techopedia (2019) that mobile phone industry is facing high level

of brand switching among the buyers who are more interested to buy highest market share

brand, fashionable one or most innovative ones in terms of hardware of software, iOS or

Android.

This paper clarifies how mobile phone brands have to fluctuate and declining nature

internationally based on previous studies. Many different global mobile brands used to be at

the top rating and known by all types of customers, young or old: they are LG, Nokia,

Samsung, HTC, Motorola, Blackberry and Apple (Pegoraro, 2007). However, it is found

that their market shares were not stable sufficiently to keep retain their customers. For

example: when we look at the global handset brands such as LG, Nokia, and Samsung: the

market shares were fluctuating from 2012 until 2015 while the market share of Sony,

Blackberry and HTC were declining from 2012 continuously for 3 years until 2015 (Turner,

2019). The reflection of the declining and fluctuating nature of the mobile industry is

because the manufacturer failed to sustain its market share due to the higher number of

brand switching behavior of customers in the mature market. It has been pointed out by

recent studies that mobile phone manufacturers should find a way to build brand loyalty and

11

engage their buyers and users to establish as loyal customers in the long term. The

researcher further indicated in the latter part of this report that how firms should compete for

their best core product innovation strategies and necessary activities for the highly

competitive mobile phone market.

The conceptualization of the phenomenon of brand loyalty is based on existing

customers' subjectivity in choosing mobile phone brands. The main factors preventing

theory building are lack of qualitative studies of customers’ brand switching behaviors over

their competitors’ brands which strengthen their customers' retaining strategies and brand

loyalty in a competitive dynamic industry in which it is necessary to have innovations,

competitive advantage, and better functions. Therefore, it is no matter for developed or

developing countries with a low economy, the research finds that the consumption of the

mobile phone industry is growing tremendously day by day. There are higher chances for

mobile companies to enhance their business by maintaining a competitive edge to be able to

stand out among their competitors and raise their customers' loyalty (Turner, 2019).

1.2 Problem Identification

Mobile phone users are increasing day to day and telecommunication firms have

many obstacles in terms of their branding and functioning and have strong loyal customers

(Ganesh, Arnold, & Reynolds, 2000). In the competitive dynamic mobile market places,

several mobile companies constantly develop their new products, change in technology and

design in a short period. Every competitive company makes aggressive promotions,

marketing, and advertising efforts and also practicing price reductions, value-adding and

new function additions to their products. There are top mobile handset companies like

Apple, Samsung, Huawei, and Oppo, which are regarded as top-ranking products in the

market and have possessed the highest market share globally (IDC, 2016). However, the

12

market shares of these brand companies are fluctuating and declining due to brand switching

behaviors due to the main issue that customers are not loyal to one brand anymore over

many choices of mobile brands easily comparable and available in the markets.

1.3 Objective of the Study

The objective of the study is to examine the important factors to raise brand loyalty

and avoid brand switching behavior in the competitive dynamic industry. In the mobile

industry, there are many available brands such as iPhone, Samsung, Huawei and many more

which offer the latest technology and the operating system to society. In this research paper,

the author aims to identify possibilities and factors for brand switching in the competitive

industry which are the important steps to establish brand loyalty finally in the highly

competitive mobile industry. The author also proposes the important models of innovation

such as product innovation and process innovation which should be carefully considered in

the dynamic industry.

1.4 Research Questions

This research focuses to find out the importance of the loyalty of the brand to the

organizations in a competitive industry. The case study of mobile phone brands will be used

as the research methodology. This research analyses the brand loyalty of customers towards

mobile phones and identify why higher rates of brand switching behavior have occurred and

failed brand loyalty in the mobile markets.

Last but not least, the author looks to answer the research question ‘What happened

when the brand loyalty and innovation of technology collide in the competitive mobile

phone industry?’

13

Chapter 2

Literature Review

2.1 Brand Loyalty

According to Dick and Basu (1994), brand loyalty is the commitment from

consumers to repurchase continuously and is a concept that tempted scholarly attention from

most of the marketing academics and practitioners. In today's dynamic industry and

environment, customers have more than numerous choices over branded products and

sustaining brand loyalty is paramount for the survival of the companies to maintain their

high market share. Brand loyalty, possibly, is a multi-dimensional construct revealed by

academic interest such as it has been empirically scrutinized from a brand personality

perspective, brand switching behavior, brand communities, and brand equity.

The previous empirical research papers reveal the brand loyalty that the spending

power of loyal customers is much higher than non-loyal customers. Therefore, Ganesh,

Arnold, & Reynolds (2000) argue that loyal users or buyers are considered to be the most

valuable group of customers. There are two types of brand loyalty such as behavioral loyalty

and attitudinal loyalty (Russell et al., 2007).

The theoretical phenomenon based on brand loyalty is defined as two components:

they are attitudinal loyalty and behavioral loyalty. Attitudinal loyalty happens when a

particular brand has fulfilled emotional or key functional needs are met. Customers decide

to be loyal since they trust a brand that they have a positive brand preference. As proposed

by Dick and Basu (1994), behavioral loyalty is directly related to the customers when they

continue to buy or use a particular product or service.

14

It is not enough to explain how and why brand loyalty modified up and developed.

Kabiraj and Shanmugan (2011) identified that brand loyalty is expressed as a buyer's

conscious or unconscious decision through intention or behavior to repeat their purchase a

brand continually. From the perspective of a firm or organization, higher brand loyalty of a

buyer means purchasing the same brand consistently at present and in the future, causing a

repetitive purchase their brand or same brand set purchasing nevertheless there are other

situational options and marketing efforts in the dynamic industry having the rising potential

to cause brand switching behavior. Dick and Basu (1994) stated that there may be a

possibility of positive or negative perception towards the brand based on perceived brand

quality and they decide to stay or switch to other brands that can fulfill their needs.

Aaker (1996) stated how important it is the perceived quality of consumers and how

they can make a great impact on the loyalty of the brand. Thus, companies should try to

grow as much as they can to grow the perceived quality for the public awareness of the

brand and to keep away from competitors. Dick and Basu (1994) have developed several

parameters to determine the quality of the brand towards brand-loyal customers. They are

easy to access, unique features, durability, serviceability, and brand perfume. Again, Chen

and Myagmarsuren (2011) focused on to measure the effects of how far the users and buyers

enjoy the products and effects of customer loyalty as well as the direct and indirect effect of

switching costs on customer loyalty.

Ganesh, Arnold & Reynolds (2000) developed the conceptual framework of

customer loyalty and identified that the basic concept of loyalty is the outcome of the

response or interaction between customers buying attitude which makes them purchase the

same brand in the future. If customers have trusted that brand based on their beliefs and

15

expectations, they will constantly rely on that brand no matter what happens until they

become strong loyal customers.

On top of that, Aaker (1996) agrees that brand loyalty has a strong power to make

the customer stay at a particular brand and value to the high. It can be seen that if the quality

of a brand is faithful to its users and buyers, customers will be willing to deliver their

loyalty, put their trust for the brand in return. Not only they will remain loyal customers to

their favorite brand, but also they never change their minds although there are many other

strong competitors in the market.

2.2 Perceived Brand Quality

Perceived quality can differentiate the products or services in the competitive

markets. It is the level of excellence of a product which can be recognized as quality. Aaker

(1996) identified the perceived quality of customers that it is a great positive impact on the

loyalty of the brand and its success. It has greater accomplishment to achieve the users' trust

and maintain great interaction and excitement inside the customers. According to Dick and

Basu (1994), there are measurable parameters to the perceived quality which are

serviceability, durability, performance and its excellency, durability, and ease of access

which determine quality towards loyal customers. Authur (2012) defined perceive quality as

customers' judgment towards the functionality of the product and its overall service image

or superiority.

Holbrook and Corfman (1985) argued that brand loyalty is the result of great

perceives quality which is viewed as the most important component of a brand. The

perceived brand quality not only enhances the market share of the company, but it also

overwhelms the customers' trust towards the brand to stick to the brand in the long term.

16

Kabiraj and Shanmugan (2011) defined that user knowledge and experience applied by the

time they make a purchase consist of various attributes like product benefits, reliability,

accessibility, and durability as perceived quality. Mostly, the users or buyers always attempt

to find out in a way that whether their product quality is better than their people from their

surroundings or not (Holbrook and Corfman, 1985). Aaker (1996) analyzed the differences

between perceived quality and real quality since there are often that customers are learned a

lesson from a bad image of a brand in the past and they can have less trust in the upcoming

product.

2.3 Brand Trust

It is rational that customers only rely on their trusted brand. There are various kinds

of empirical studies that prove that trust always has been highly regarded as one of the

paramount elements (Hafiz, 2017). The customers' point of view in a brand trust is to fully

depend on a brand to perform its functions without any failure (Hafiz, 2017). The previous

researches show that it is very vital to develop trust to sustain brand loyalty. It can also

create a win-win situation for both parties of firms and buyers.

As discussed by Hafiz (2017) that brand trust is a confidence that no party in

exchange will exploit another's vulnerability. Brand trust can achieve great attention in

marketing but also it can create a great competitive advantage when it is compared to other

brands. If the buyers have full brand trust and loyalty, there will be no worry about the

brand switching behavior of a customer. Their trust in one brand is a fundamental positive

belief in regards to the expectations of the consumers in a product or service.

17

2.4 Brand Communication

The brand communication is a bridge between the buyers/users and his or her

perception to decrease the gap in terms of product and service. It is an advantage to have

brand communication to expose the service or product to the potential audience so that they

will know what is trending in the market and fully aware of the false product. Kan (2002)

defined that brand relationship is a very useful, first and foremost tool in managing a brand

relationship. When a new product is launching, it is important to have brand communication

and an extensive advertising campaign.

It can manage the specific brand in which the companies or firms inform,

communicate, interact, teach and enrich the knowledge of their respective stakeholders

about the brand and then strengthening their values, strengths, and offerings of their

products and services (Hafiz, 2017). For instance, when we consider a brand as a person, we

try to make friends with our potential customers by offering ourselves true to them as

possible. We shall use our communications to introduce our brand and help them to get to

know us better and build a strong relationship that becomes last and loyal.

2.5 Customer Satisfaction

Customer satisfaction has a direct or indirect impact on the organization in terms of

profit based on previous studies. Also, Luo and Homburg (2007) assert that the profitability

of the firm directly comes from the purely satisfied users and it is measurable to examine

how much the customer enjoys the way of products and service is served. Empirical studies

explain that their satisfaction and trust upon the brand perform greatly in increasing

purchase repetition (Hafiz, 2017). Brand loyalty would be increased when customers

18

satisfied with the brand and brand loyalty can be measured by looking at the number of

purchases of the same brand (Kuusik, 2007). Kotler and Armstrong (2010) defined customer

satisfaction as the range to which a product’s perceived performance matches a buyer’s

expectation. Not only has that, but Arthur (2012) also asserted customer satisfaction as the

main driver information of their desire to buy in the future.

Customer satisfaction is the overall collection of their needs and expectation before

or after the purchase of the product. Once the customer feels delighted with the brand or

product, they will become loyal to that particular brand as long as they trust and satisfy with

what they get. Moreover, it can lead to the repetition of post purchasing and enforces word-

of-mouth as a psychological response to a buyer's positive evaluation of their expectations.

Therefore, the level of satisfaction can be measured right after they have used a particular

product and see whether they have repeated their purchasing of the same brand or not. The

evaluation is also a comparison between the expected performances and actual

performances.

The level of satisfaction among customers depends on the level of customers' socio-

economic status, knowledge, experience, and expectation. For instance, demands may be

different based on demographics, income level, age, and sex. Therefore, most of the

manufacturers need to know what are the needs and wants of their targeted customers based

on these characteristics. Then, formulate the products followed by updated functions based

on the information they have received. Therefore, the quality of a product or service is as

important as the integrity of the brand to attract potential buyers and old users to make them

stick to the brand in the long term. Moreover, customer satisfaction is based on the

performance of the product and service relating to the competitive market environment.

Kotler (2010) mentioned that even satisfied customers have higher chances to stick

to only one existing brand in the long term or switch to another brand as a choice of brands.

19

Being loyal to a brand or not loyal depend on many factors such as innovation, service

quality and functionality. However, in the competitive dynamic industry such as the mobile

phone industry and the fashion industry, it is very challenging to compete with other

competitors' brands and sustain brand loyalty since there are higher quantities of brand

switching behavior among the customers. As a consequence, loyal customers may

repurchase the same brand over and over again or switch to another brand occasionally.

Kotler (2010) identified that using the same brand does not necessarily mean that

they are loyal customers and their satisfaction leads to brand loyalty but the happy

customers often might turn down the same brand or turn towards other similar products

which offer the better options such as lower price or better deals (Kabiraj & Shanmugan,

2011).

2.6 Competitive Dynamic Industry

Competitive dynamic industry includes the actions and reactions such as a sequence

of attacks and competes between firms or organizations based on their performances.

According to Kuusik (2007), these actions or reactions reflect the organization's purpose to

generate superior performance concerning industry rivals. Dynamic practically means being

energetic with full of action and change with progress.

Product innovation in terms of technology should be introduced commercially to

meet the market or user needs. According to Utterback and Abernathy (1975), the idea of

innovation allows the product to be developed over time predictably with an emphasis on

product performance followed by an emphasis on product standardization and cost. They

also agree on a term that "technical change and new product proliferation have made the

20

industry extremely dynamic, even if market shares are highly concentrated in the hands of

very few companies", for instance, smartphones.

Every smartphone looks like a phone the way it looks in which it has a wide and

touch screen, an operation system, and its camera, etc. They look more or less the same in

terms of their product. Somewhere along the line of development of these products, the

design becomes the fact of standard and it is what the dynamics of innovation are about in

the dynamic industry where technology is regarded as one of the main factors. But, it is

important that how a product features change over time for innovation within the dynamic

technology-based industry. Moreover, the rate of innovation should be looked at from both

product and process perspectives. Utterback and Abernathy (1975) had launched three

phases of innovation in the market place for any products and services. They are Fluid,

Transitional and Specific Phases as shown in figure 2-1 and 2-2 below below.

Fig. 2-1: Utterback & Abernathy (1975) model of the innovation life cycle in the

product industry

Source: https://www.researchgate.net/figure/The-Abernathy-Utterback-1978-model-of-innovation-life-cycle-in-a-

product-industry_fig12_253204448

21

Fluid Phase has happened in the initial stage of launching new products and services

as an era of innovation when it is needed to show off an explosion of different and

significant design. It is the time of product innovation passing through in a company to

produce a dominant design, the area where the two lines cross each other.

After the fluid phase of product innovation or later dominant design, it starts process

innovation where most companies attempt to on their processes of improving the quality and

costs which are called transitional phase. The last phase or the specific phase is a phase in

which there is a reduction of the number of players, for those who are not strong enough to

compete to further advance their product will move to other products. Or it is the last phase

where process innovation is going down and everything is more or less standard and the

performance is not very improved after that. For instance, the classical design of the

QWERTY keyboard used in the 1870s, the basic design of that keyboard is a typical bar in

which one of the issues in that keyboard was the typewriter jammed. The whole design was

there to type slower so that it will not jam. However, the problem has been solved after 15

years although the design of the keyboard is the same since it is innovated as a more user-

friendly with a technology-based system. Therefore, it is important to understand what

phase of a specific product is in and the time to make innovation. In the fluid phase,

innovations should be welcomed and can be successful.

After the dominant design is passed, firms should focus on process innovation, but to

come up with a new design will not be a good consideration. Therefore, innovation should

be carefully considered as it goes according to the Utterback cycles where continuous

innovations should be started from the end of one cycle to the beginning of a new one for

the next product or service.

22

Fig. 2-2: S-Curve with its different phases from Utterback & Abernathy (1975)

Source: https://www.researchgate.net/figure/The-Abernathy-Utterback-1978-model-of-innovation-life-cycle-in-a-

product-industry_fig12_253204448

In Figure 2, according to the S-curve, when we look at the product performance over

time, in the beginning, they do not have much increase in the performance of the innovation

but after sometimes when the design has been set, they have rapid increase in performance,

then the curve levels off and reaches some kind of plateau. For this product area to reach

another process, it starts again and then we can have it another new S-curve on top of this

one and another S-curve, pushing the performance upwards.

S-curves can be seen in many areas when we move from one S-curve to the other S-

curve, we usually have a change in leadership in the industry. For example, in the mobile

industry, Nokia used to be the dominating company but as we move to another new type of

smartphone, "Apple" to cover that leadership. It is the typical example of how one S-curve

is replacing over another S-curve and changes in leadership. Similarly, there will be another

leadership if we move to another S-curve. However, a company like "Apple" has been really

good in trying to predict and get a time right for this kind of behavior when we talk about a

dynamic where active changes or innovation is needed for the role of technology in the

competitive industry.

23

Again, in the competitive dynamic industry, the competitions getting stronger

against each other by utilizing superior strategy, marketing plan, research and development,

and strengthening their competitive advantage. The action of competitive dynamics can lead

to successful actions, in which it can highly increase the performance of the firm effectively,

strengthen their reaction by their competitors which may attempt to let down the firm or

kick out from the industry. In the competitive dynamics industry, the action of competitive

advantage plays a main role for every firm. Chen and Myagmarsuren (2011) identified that

it is the analysis of how a single firm's actions affect the competitors' reactions and

performances to win in the competition and to achieve a higher market share.

2.7 Competitive Advantages of Smart Phones

In this part, the competitive advantages of smartphones are mainly based on

discussion of Jean (2017). It is not easy for a firm to maintain a competitive edge which is

also a key driver to raise the level of innovation in most of the successful businesses

(Urbancova, 2013, as cited by Jean, 2017). Most of the mobile phone manufacturers

oftentimes work on their market share to grow higher, increase profitability and sales,

maintain technological advancement on the edge as their competitive advantage over their

main competitors. Since the competition of smartphone has significantly increased over the

past years globally, there is a higher number of mobile phone users around the world who

use Android OS which is increased from 6,798.4 units to 259,306.4units between 2009 and

2014 (Cecere et al., 2015, as cited by Jean, 2017).

In 2005, Android OS has been purchased by Google and it has become a great

influence in the global smartphone market and Apple iOS has become their main and strong

competitor. Android has gained the approval of its Operation System from its head

24

manufacturers such as Samsung, Xiaomi, and Huawei to improve their browsers (Cecere et

al., 2015, as cited by Jean, 2017). Therefore, there was significant growth in the number of

apps in both iOS and Android from 396,920 in 2015 to 429,709 after a year (IDC, 2017, as

cited by Jean, 2017).

Therefore, it can be said that the main purpose and the business priority of every

organization in this competitive environment are to fight with the competitors over their

innovation of hardware and software as well as their top-rated service performances to win

the new customers. Therefore, mobile phone manufacturers mainly prioritize to promote

innovation as a key driver in their smartphone technology for their growth of the business

(Jean, 2017). After Apple has successfully launched its iOS in 2007 on iPhone, it went viral

worldwide and the success was tremendous compared to any other competitor brands. The

other smartphones were in an old fashioned and weight was heavy with the only half screen

with a large keypad. Apple’s first touchscreen and modern design have given the user and

the buyer the greatest experiences, as well as its iOS, already set the standard for future

smartphone functionality (Gilbert, 2019).

After several years, there were competition arises between the evolution of Android

OS and window smartphones in terms of their hardware and software in the market. It has

made the head manufacturers to more focus on developing their products to penetrate

through various global market segments. Among those others, Apple strives to potentially

raise their product quality by competing with other smartphones to introduce innovative

products based on advanced technologies in the competitive dynamic market. Apple seems

to have a strong competitive advantage in terms of its strategies which has high-end product

solutions such as hardware and software to strengthen its competitive advantages (Dilger,

2016, as cited by Jean, 2017).

25

2.8 Brand Switching Behavior

For a firm, the act of brand switching is a condition in which a brand loses its loyal

customers who left their brand and went to a competitor. Alternatively, customers have

changed their mind to purchase another brand(s) by leaving their usual choice. Brand

switching behavior may be temporary or sometimes it can be long-lasting. It depends on

how long the product they have switched to is last longer or switching to other brands is

harder (Kabiraj and Shanmugan, 2011). When an individual wants to buy a smartphone, it

may be noted that it is likely to ask the people from their surroundings such as their co-

workers, family members, and friends. Therefore, social factors are also known as societal

norms; again it is the value that affects the buying behavior of customers as well as their

family members.

Reference groups are the groups of people who have different influences, indirect or

face-to-face on buying behavior. Membership groups are family members, friends, co-

workers and neighbors who have a direct influence upon each other. The role includes the

activities that a person is expected to perform that shows the status of the person. Generally,

when people choose a product for themselves, they choose similar or same products that

communicate their role and status in society (Ganesh, Arnold, and Reynolds, 2000). It has

become one of the reasons they switch to other brands of the smartphone which their co-

workers or family members use. It happened because the family or friends have formed the

environment for the individuals to want the branded product(s) which acquire values and

improve their personality.

The individuals might have attached to only one brand since their childhood but

when their desires may have created the first perceptions about brands and their values

which subsequently form a habit. Then, the individuals who are in a social group that can be

attributed to wealth, education and money will be influenced by buying behaviors that

26

decide whether these persons will continue with the same brand or switch to another brand

(s) that match with their roles or status in society. Brand selection often reflects by the social

role and status of the customer since the buyers or users believe that it is important for them

to be admired by others and they are proud that they are using the expensive brand of a

product which has got most of the market share or the most trendy one (Faullant, Matzler,

and Füller, 2008).

2.9 Brand Switching in terms of Customer Satisfaction

It is known that customer satisfaction plays an important role in the profitability and

business success (Maiyaki and Sagagi, 2019). It can be said that the most successful brand

has the highest customer's attention when it comes to customer retention and brand

switching. It is a mental comparison of a customer and the concept is subjective and it has

different interpretations. There are exploratory studies that concluded that customer

satisfaction can be considered as an attitude and judgment in which the individual has their

expectations and there may be different perceptions of product which may lead to

dissatisfaction.

Chen and Myagmarsuren (2011) argued that once a customer has less trust upon the

brand of a product, the business will have a tremendous impact on a company's revenues

and profits. Customers' satisfaction related to products can be measured by the performance

of the products whether they can get most of the customers' satisfaction or not. Besides,

there are previous works of literature that argued about the customers who have the higher

product knowledge and always compare and contrast their products with their nearest family

members or co-worker’s ones in terms of functions or values. If the customers are not happy

27

with the product or service itself of a particular brand, they will look for choices that may be

competitors' brands.

There are different variables on customer satisfaction and it has become a negative

impact and important subject which can relate to marketing techniques and strategies. One

of the possible reasons for switching brand behavior is because of lacking customer

satisfaction which induces the customer to leave their brand. Therefore, investigating factors

of consumer behavior and their brand switching behavior should be carefully considered and

it is vital for every level of business (Abdelkader, 2015).

2.10 Reasons for Switching to other Brand

Switching to other brands is often happened by external reasons such as price

reductions; promotions, family or friend's advice or sometimes it is induced by internal

factors of dissatisfaction with the service or product quality or have the desire to try

something new. Switching behavior can be happened any time and should be aware of every

business and it is substantively essential for any sort of brand. It can be occurred based on

extrinsic incentives in which they attract potential buyers to change the brand through the

promotions made by the manufacturer. Abdelkader (2015) agreed that the reason for

customers switching to other brands is directly or indirectly related to marketers or products.

They just get an idea to change to another brand by the time the manufacturers or marketers

failed to provide the customers with the expected quality and satisfaction.

In the dynamic mobile phone industry, the reference group or social factors is

considered as the factor that affects customer switching most in that market. Some

customers have suffered brand fatigue means they would like to try a new product in the

market and they do brand switching. Nevertheless, after they have realized that the new

28

product they have tried is not as good as the previous product, they come back to the same

old brand that they used to have. For example, the customer tries new shampoo instead of

Dove. However, the customer may immediately decide to go back to Dove since they loved

that brand better and switch back to Dove. The customer, in this case, has done brand

switching twice, and as a Dove, the best way to avoid such switching of brands, they should

introduce new innovative products with varieties in the market which keep higher attention

of the customers (Arthur, 2012).

Moreover, in this advanced social media world, there are many influencers and

brand ambassadors who attract others to buy the as the same brand as theirs. Possibly, social

perception and word of mouth have become one of the best marketing techniques if the

product has higher quality and values among the users and buyers (Holbrook and Corfman,

2000).

29

Chapter 3

Methodology

3.1 Research Objective

In this research paper, the author aims to find out about brand loyalty in the

competitive dynamic industry. Besides, this research is conducted to observe the general

model that contributes to the contextual factors of how brand loyalty plays a role in a highly

competitive dynamic mobile industry. This paper focuses to discover how vital the loyalty

of the brand is to the firm or organization in a very competitive and changing industry and

identifies why a higher rate of brand switching behavior is occurred and failed brand loyalty

because of the advanced innovation of technology in the mobile phone market.

Brand loyalty is necessary as a priority and it is always treated as the priority for

researchers in the market. They, first of all, targeted potential customers and make them

loyal by giving extraordinary services and product quality. According to Kabiraj and

Shanmugan (2011), loyal customers of a brand are considered as one of the most valuable

groups for firms or organizations. Therefore, customers' feelings towards the product of the

brand are as important as their revenue. Dick and Basu (1994) stated that it is insufficient to

explain how and why brand loyalty is developed and modified up since it is paramount to

retain regular customers not to switch the other brand easily. Moreover, the attitudinal

components got more recommendations or support from the author Kabiraj and Shanmugan

(2011), who also define brand loyalty as ‘the conscious or unconscious decision of the

buyers or users, show through their intention of buying or behavior, to purchase that brand

continually’.

30

On the other hand, the brand loyalty can be described as a ‘deep dedication to buy or

patronize the same product or service for more than 2 times consistently in the future, which

makes customers buying repeatedly to the same brand or different products of the same

brand, despite situational influences and marketing efforts causing the possibility to affect

brand switching behavior’. Kaplan and Haenlein (2010) asserted that it is more or less likely

to have positive or negative perception of the customers towards the brand but it should be

aware that negative perception or lack of quality control, as well as lack of innovation, may

lead to lose the image of that specific brand and lose customers' trust. In this research paper,

the author focuses to answer the research question of 'why do people stop being loyal to the

product in the dynamic industry like mobile phone markets which have many available

options with advanced and innovative functions and operating system, fashionable design

with vibrant color'.

3.2 Research Methodology

To answer the research question at its best, the author uses a qualitative research

method through a case study that fully provides comprehensive tools for an academic

researcher like us to learn and analyze complex phenomena within their contexts. The

approach has been applied correctly to comprehend the boundaries of the cases in depth.

The case study method can be studied holistically or analytically, organically or entirely by

repeated measures, and the benefit of using a qualitative case study method is that it draws

attention to the question of what we specifically can be learned about the chosen case and

able to analyze as it goes. According to Kan (2002), a case study can be regarded as a

general term for the exploration of an individual, group or phenomenon. A case study as a

31

type of qualitative research is a comprehensive description of an individual case and its

analysis.

Since there are reasons of limited time and budget, it is unaffordable to collect

primary data from others to exactly have insight or certainly gain accurate information about

brand loyalty in the dynamic industry. However, under this circumstance, this report

approaches to utilize other reliable sources of secondary data such as marketing journals and

academic journal articles, documentaries, official websites and reports of the mobile

companies, etc. to save much time and money, and the author tries at best to make sure all

the resources are true and reliable and achieve the authentic solution.

32

Chapter 4

Case Study

4.1 Dynamic Smartphone Industry

Nowadays, everyone is using the smartphone globally whether teenagers or elderly

people. Anyone has quite overwhelmed and impressed by smart or touch phones since they

are very trending and available in different price ranges from affordable price too expensive

one (Keller, 1993). The mobile phone industry has an increasing number of risks and has the

nature of dynamic since the top brand who leads in the market can be toppled off by other

mobile brand competitors within a short period. Not only that, in the smartphone industry, a

huge and global brand can be failed any time or irrelevant in the market if they cannot beat

their competitors over innovation or slowing down on their technological advancement

towards further steps because of ever-growing technological development (Park and Chen,

2007). For instance, there was a downfall story of mobile phone brands that were being

beaten by other strong brands that advanced in their functions and OS. Nokia which used to

be the dominating brand in the mobile phone market and quickly overtaken by latecomer

Apple (iPhone) when it was launched during the late 2000s.

In 2007, the very first iPhone was released and since then the new iPhone models

were consistently produced annually. On the other hand, Nokia once again attempted to

catch up with the iPhone to win the market share again by venturing into touchscreen

technology and it was released in 2010 which is about 3 years late. The first touch phone

released by the company is Nokia N8 and Nokia’s previous touch screen smartphone was

N85 which was released in 2008 with limited functions touchscreen interface (Alexander,

2014). As a consequence, their market share price becomes declined as there was a decline

in market performance. Likewise, there were other leading brands such as Motorola,

33

Siemens and Blackberry which were suffered in the brutal and challenging industry as they

were not able to catch up with the advancement of the technology and innovation in their

designs, and functionality. Schwartz (2013) agreed that the smartphone has become useful

to people and it is more than a mobile since it can perform more than dialing to someone to

communicate. It has an advanced mobile operating system (OS) which is the combination of

features of computer OS with telephonic capacity and provides a platform for many features

(Jean, 2017).

Smartphones, by the late 2000s, had become trending as a global phenomenon.

Then, billions of smartphones were used globally and by the year 2013, the sales of global

smartphones were extremely exceeded than regular mobile phones (Peter, 2013, as cited by

Jean, 2017). Again, Cecere et al., 2015, as cited by Jean (2017) said that the mobile phone

industry is very competitive and dynamic since it is a mixed component of technology and

information for users and buyers. For instance, once the smartphones are released globally

around 2012, there were 4G connectivity, motion sensors, NFC capabilities (near-field

communication), etc.

On the other hand, the smartphone industry was easy to fail or engulf by strong

manufacturers who enter the field as a newcomer because every smartphone manufacturer

innovates or create better than each other by using their competitive advantages. In the year

2019, Apple is one of the prominent brands in the smartphone industry and was being

trusted by most of the users and buyers as a reliable brand with its advanced technology.

But, it is not regarded as dominating brand in the mobile phone market because Apple

which is produced by American multinational technology company has very strong

competitors mainly from companies from Asia such as Korea, Japan, and China: they are

Samsung, Sony, Huawei, Xiaomi, and Oppo, etc. (IDC, 2017).

34

4.2 Innovation in Smart Phone Industry

The smartphone manufacturers nowadays always emphasize to highly boost the

quality of their products in terms of their functioning and services to satisfy the customers

and fulfill their demands. Since there are many advanced and overwhelming competitors,

innovation in the smartphone industry has become one of the main key drivers to win the

market in the first place the grow the business.

In innovation strategy, there are classified into two main types: horizontal and

vertical which are practically implemented by the most successful manufacturers of the

smartphone. In horizontal innovation strategies, it has included operating system (OS)

capacity and advanced product features; and at the same time, the vertical innovation

strategy has involved the application technology or product knowledge. The benefits of

innovation have led the smartphone industry to work on the strategies and make the

customers hard to choose in the mobile phone industry (Goodwin, 2016). To give an

example, horizontal innovation includes the size of the phone, ring tone, the design, the

screen size, and colors and storage capacity while vertical innovation has to deal with a data

connection and processing power.

The innovation has led to a more technology-based mobile phone since more

people's daily life become more reliable on smartphone devices than traditional hand phones

to make a call (Jean, 2017). Therefore, based on the innovation strategies, manufacturers

have not only to innovate the design and screen size of the phone but also they try to step up

on continuous technological advancements in smartphones for the convenience of customers

and show off their innovation, these include the transition from 1G up to 4G connectivity as

a vertical innovation at present and 5G in future.

35

There were also significant improvements in their horizontal innovation such as the

thinner design in their phone and reduction in weight, longer battery life as well as more

cameras (dual cameras or now more) in one phone with different megapixels (Research in

China, 2009). There are different types of customers who like horizontal innovation

strategies especially women who like to use more cameras than any other applications but

for those who like more application and data usage and connections as well as sophisticated

games, Operating Systems (OS), fingerprint, or voice command recognition technologies

especially for men are more likely to purchase with those functions which are in vertical

innovation strategies. Thus, having innovation and unique products of a firm has become the

core strategy for manufacturers and central characteristics of the smartphone industry (Jean,

2017).

4.3 Maintaining Competitive Edge

Smartphones replaced normal mobile handsets in the emerging market and they have

become the fastest-growing market segment in the mobile phone industry. Also, it should be

noted that there are many smartphone brands in the market but the activity of innovation

among firms are still needed to produce a dominant design as well as the specific

technology with advanced features. There were important and necessary milestones like

mobile internet services, which also regarded as one of the vital triggers for communication.

Therefore, the developers utilize different strategies that are innovative and different from

their main competitors, but the strategies and their main objectives differ from country to

country. For instance: the companies from U.S and Europe were highly concentrated on a

more high-end market in which it has more demand for innovative software (Cecere et al.,

2015).

36

The ability of every business or firm which attempted to maintain their competitive

edge is a main driver to meet their success Most of the successful manufacturers of the

smartphones industry continuously implement their cycle of innovation to sustain their

growth of market share and technological edge over competitors and raise their brand image

and identity (Abdelkader, 2015). Since different smartphones are utilized by all the users

globally, the mobile phone market has been considered globally and yet it significantly has

the impact of globalization. The global mobile companies such as Samsung, Xiaomi, and

LG are presented Globally especially in Asia and the price range varies from very low to

highest based on the levels of the users. Based on the levels of demographics, levels of

income as well as customers’ taste, and the instability of the political situation, the market

are not equivalent in those areas and sometimes there are significant barriers in selling large

quantities.

However, for those individual companies, there are opportunities if they enter the

global markets for their business growth and operate globally. However, there are many

global large companies which own largest market share may be the biggest barriers for them

to enter in that International market. However, to gain continuous business growth, the

mobile phone business should naturally operate internationally than enjoying in the home

market and operate most effectively (Cecere et al., 2015, as cited by Jean, 2017). Nowadays,

there was a higher demand for smartphones globally which makes the market more dynamic

and makes the market place more competitive. The demand of the users and customers

become higher and they made a significant measurement between the manufacturers based

on their software, hardware, operation systems, market shares, and their investment in their

research and development (Jean, 2017).

37

The competition in the mobile phone industry has focused not only on their handsets

and other functions but also on their Operation System oftentimes. The number of

applications (apps) available from iOS and Android rose from 396,920 to 429,709 in 2016

(IDC, 2017). For Apple, the company’s strategies are to mainly produce innovative new

products and technologies as their competitive advantage to differentiate themselves in the

market.

4.4 The correlation between Innovation and Competition

In the mobile market, there is a huge positive relation between innovation and

competition which is driven by advanced technology or goods that can shake the buyers’

excitement and it also establishes a hierarchy between the competing firms (Eslami and

Lakemond, 2016). Therefore, the innovations and competitions in the mobile phone industry

lead to the formation of trust and loyalty for all types of users and buyers in which they will

believe in their products that will consistently compatible with their likes and expectations

(Jean, 2017).

Pekovic et al., 2016, as cited by Jean (2017) argued that the life cycle of a product

can be influenced by its competitors that mainly focused to be the market leader and

improving their market share and net profits globally. However, he also said that in general,

for a company to boost its global market share and net profit, the products or services should

be more invested in their R&D more importantly and produces better products innovatively

and competitively than those competitors in the market.

Nowadays, Apple is one of the strongest brands as well as a very prominent brand.

However, it is very competitive and risky to maintain market share and brand loyalty

although it is very successful at its place (Jean, 2017). Immediately, the brand can face

numerous problems the next day and fail to their competitors such as Samsung, Sony,

38

Huawei, Xiaomi and Oppo since they are getting very stronger and took a tremendous space

in the market (Jean, 2017). These brands have very strong loyalty from their customers

mostly in Asia such as Malaysia, Myanmar, Thailand, and China since they are

manufactured various models with affordable prices for all kinds of users from different

levels (Kaplan and Haenlein, 2010).

Samsung was the leading mobile brand in Malaysia, which is a Korean brand, took

up to 25.85% of the market share in the local market. Then Apple 21.57% is in second place

and Huawei with 12.62% in third place. But Globally, Huawei smartphone brand engulfed

Apple in the market share during the first quarter of 2019 shown by the statistics by

Counterpoint research. Google banned Huawei because of the U.S.-China trade war and the

company is no longer be utilizing the android mobile operating system (Global Stats, 2019).

The ban on Huawei by Google services has delayed the global launch of their

flagship phones release, the Mate 30, but the sales of the brand were sold tremendously

inside China, moving a million units in the first week up to three million units in a second

week. Apple's market share was not doing well since 2015 because Huawei is improving at

a higher rate since its functions, designs, and OS are as superior as Apple. After the U.S.-

China war and Google ban, Huawei currently is developing its Operating System which is

called Hong Meng OS in China and Oak OS (Turner, 2019).

The competition and innovation of the mobile industry become intense and it is not

sure that even today’s dominating brand or prominent brand can be the biggest failure or can

disappear in a market if the manufacturer of the product cannot chase the up-to-date market

demands and ongoing trends in future demands. There was an example of the BlackBerry

brand which broke down very immediately for being not able to catch up with the buyers’

taste and market trends. The customers were quite loyal to their brand in those times, but,

39

unfortunately, they were not loyal to BlackBerry anymore due to its inability to catch up

with current and future trends and then they switched to another brand (s) as an alternative.

BlackBerry, the Canadian phone maker had finally left out of the smartphone market

as the share of BlackBerry in the smartphone market fell to as low as 0.3% in 2016. It is

kind of interesting why BlackBerry (BB) had lost its way in the mobile market although the

company sold 50 million phones in the year 2011 (IT Pro Team, 2014). However,

unfortunately, the situation has become upside down although the BB phone used to be one

of the top brands which have the highest earnings up to 84% a year.

At the same time, Apple has got most of the market share in the market. BlackBerry

had consequences of errors in its vision and marketing strategies and failed to catch up with

Apple and Google (Bea, 2013). BlackBerry in the first place was failed to predict what

consumers’ needs and wants as well as the potential competitors in the market. As a second,

the company was not aware of the “app economy” which drove Apple and Google-based

devices to be a hit in the mobile market. Thirdly, BB never realized to be more innovative

and that smartphones would evolve more than communication devices and can become to

create environmental hubs.

The BlackBerry never paid attention to make changes to attract consumers to taste

periodical since these are many more choices in the market with attractive products and

prices. But, BB insisted to stick on manufacturing phones while QWERTY keyboards no

matter what. After it has started introducing a new touchscreen device, it seems like

everything was too late since the device was not as innovative enough as iPhone and

Android. Those Phones are more powerful than BlackBerry in product functioning such as

browsing the web, sending emails and more user-friendly operating systems (CBC News,

2013).

40

Chapter 5

Discussion

5.1 Analysis of Mobile Companies

In a broad and challenging business atmosphere, every firm or organization is

striving hard to perform to be unique in their products and services better than their

competitors. The organizations attempted to create a brand name for their products which

has become one of the important resources that can hardly be imitated and provide

competitive advantages. According to Ambler et al (2002), brand, legally is completely an

attribute, which purpose is to judge the product and its quality of origin and differentiate

from the competition. Although the brand itself is not sure to offer the competitive

advantage of the enterprise in the market, if they can offer uniqueness, manage the brand

very well and offer good brand experience, reflecting its identity, it can have to achieve a

great image that leads to a customer who loyal to the brand.

According to Rungie and Laurent (2012), brand loyalty is related to behavioral

expression and a consistent response over time to time. Also, it can lead to purchasing the

same product more than two or three times as a positive reaction towards that brand. Yet, in

the dynamic industry like the mobile industry, there are many new products with different

functions that are more actively updated to keep coming in the market from different

countries such as China which are manufacturing with varieties of functions with cheaper

prices. To overview the mobile industry, there are increasing numbers of competitors which

makes the competition more intense since they elaborate their product better than others: for

example, the leading smartphone market leaders are more competitive in hardware

manufacturing whilst the leading brand like Apple have mostly rely on their iOS software as

their main strength in the mobile market (Jean, 2017). Therefore, the smartphone trend,

41

nowadays, has become very unpredictable for the manufacturers and even the users cannot

expect who is going to be the next market leader as the market is very dynamic. But, they

importantly understand that they need to be remained competitive and innovative based on

their strengths and weaknesses.

The hardware manufacturers should emphasize on their hardware research and

development while software developers should mostly focus on upgrading OS and

developing new content through innovation (Jean, 2017). Despite improvements in each of

the strength of hardware and software, current smartphones are a combination of both

hardware and software. Therefore, manufacturers must be aware of focusing on both

components to be competitive and convince these customers who expect both hardware and

software innovations (Kuusik, 2007).

Based on the regression analysis of being innovative and competitive in the mobile

market, it is because these companies want to be the top market leaders and attract as many

customers' attention and their trust as they can. Therefore, customers' satisfaction and their

brand experiences are vital in determining whether they will loyal to that brand for the long-

term or not. Aaker (1996) argued that brand loyalty reflects how likely a customer will be to

switch to another brand, especially when that brand makes a change, either in their pricing

or product features. Holbrook and Corfman (2000) agreed on a term that the elements of

being loyal to a product and its brand are a deep commitment or attachment to the specific

brand, service, and organization. Thus, customers’ satisfaction and their positive

experiences are as important as the main factor and the companies should be aware of what

they are expecting from that brand to keep it as a long-term customer.

However, as mentioned before, customer satisfaction can mediate or change between

products to products based on several reasons such as product quality, customer reference

group, and brand switching behavior. The main reasons for brand switching behavior are

42

because there are many choices in the mobile phone industry as alternative options to

maximize the product function at its most based on pricing and the quality. Therefore, brand

loyalty may be varied depends on the customers' social status, product quality and

promotions that the other brands are offering.

Kan (2002) stated that higher loyalty of the customer to that brand increases the

satisfaction of the customers and enforces the repurchasing behaviors. It can also be said

that the performance of the product and services meet the expectations of the buyer and

users. For example, very high loyal customers of the Samsung brand users are delighted

with the functions of the phones, hardware, software, style and fashion looks (size, color,

and design), user-friendliness, simplicity with its usefulness, and its frequent innovation

which offer their customers different feelings about their products and attached to the brand

that they have trusted for long term and never consider to switch to the other brand.

Similarly, customers who have brand loyalty to Apple products have their preference

features in iPhones such as designs and features, unbeatable security which is hard to hack,

software and hardware integration, very secure and updated applications as well as its

battery life. This is why Apple and Samsung are dominating the smartphone market because

they have greater competitive advantages worldwide than other brands over the years.

43

Fig. 5-1: Global Smartphone Market Share (Q1, 2015)

Source: https://www.forbes.com/sites/greatspeculations/2015/07/14/reasons-why-nokia-may-be-planning-to-re-enter-the-

smartphone-business/#25c7c7ad44e9

When we look at figure 3 above, Samsung has possessed higher market shares

globally in the year 2015 than the Apple brand but that does not mean that brand loyalty and

sales will be affected significantly since Apple has its strong users worldwide as previously

mentioned. In the smartphone market, the iPhone is being ranked as No.1 overall brand

loyalty and Apple had 74.6% trade-in brand loyalty so far in 2019. Samsung had 63.9% in

brand loyalty and ranked 2nd place overall and globally, Google had 51% trade-in brand

loyalty and stay in third place. Then, LG 40.7% and Motorola 37.9% were filled in the 4th,

5th and 6th place. Although they have their percentage of brand loyalty, their loyal customers

switch to other brands for some reasons such as 12.8% of I Phone owners moved to

Samsung, 17% of Samsung owners moved to iOS device 10.1% of Google smartphone

owners moved to an iOS device (Turner, 2019).

44

On the other hand, using the same brand for the long term does not necessarily mean

that they are loyal to one particular brand for many reasons. It depends on the individual's

behaviors whether they will remain to one brand or switch to another brand often.

Sometimes, the brand switching behavior is influenced by social factors like the family

members, roles and status of each member in society. It affects their buying behaviors and

like they were being suggested to try a particular brand as a change. For example, some

customers switch from I phone to Samsung, they were being suggested by a friend who

started using the Samsung who likes Samsung's new hardware such as voice command or

megapixels of the camera functions as well as their motion features (motion-activated

services while iPhone has none of them).

Since mobile phone usage become more than a mobile device in this world,

consistency and steady improvements are needed to increase the profit and its brand image

in the dynamic industry. As a sequence, the smartphone manufacturers must carefully

operate based on their core strategies as well as their strengths and weaknesses before

penetrating the market. Bearing the sense in mind, extensive knowledge of advanced

technology and manufacturing the products accordingly within the mobile industry get to

become a tremendous advantage.

The companies should have competitive competencies and expertise to overcome the

barriers to a new or current market as a starting point. It is necessary to practice good market

strategies and continuous financial support to motivate them to produce creative products

(Steve, 2015, as cited by Jean, 2017). To raise the customers' loyalty, it is necessary not only

to raise marketing strategies but also they should develop and continually deliver quality

products to the users as the best leader in the market (Kuusik, 2007).

45

Moreover, in the dynamic and competitive industry of mobile products, the market is

considered to be unsaturated or unstable, so there is a risk of being failed within a short time

frame. In a product life cycle, the maturity stage is of paramount and probably the most

competitive time for a product although every stage of the product life cycle is as important

as they are. The companies, at this stage of the life cycle, should carefully consider

improving the product or doing modification to the product to give the customers new tastes

and stay on a competitive advantage. If not, within 4 stages of a short time, new entrant may

enter forcefully into the competition and engulf the whole space to lead the market. The

potential customers, in that case, may have less trust in the brand and they will never

consider repurchasing it in the future.

5.2 What Causes People to Have Less Trust in BlackBerry?

The company’s lateness to adopt new operating systems and new offers was a huge

failure while Android and Apple phone makers introduced their physical looks and

functioning systems. BlackBerry wasn’t fast enough to create the technical and physical

forms in terms of competing in the market and impress the consumers. Also, the focus on

the consumer wasn't enough like Apple and Android phone makers. Those companies are

more focused on consumers than focusing on the enterprise. Those two companies sold

billions of phones with affordable prices and the product quality is a top-notch level and its

worth to pay. Nevertheless, for BlackBerry, they are more focused to sell their products

through IT sources of big corporations, and they had less focus on any other market

segments. Therefore, they missed to keep up or catch up with the consumers in the current

marketplace and future potential trends.

46

The consumers think the BB device did not look as cool and smart as smartphones

although BlackBerry was positioned as a professional tool (Kaiser, 2013). The use of email

on their device was not as user-friendly as Google and Apple phones in 2008. Moreover,

BlackBerry did not do the right application such as Facebook, YouTube, and Viber until it

was very late. They were insisted only on a small portion of apps available while other

smartphones became a huge trend able to install any kind of applications that we want.

Games, Navigation, Travel, Entertainment apps were amazingly proposed by smartphones

while BlackBerry was insisted on their OS (Schwartz, 2013).

47

Chapter 6

Conclusion

To conclude, the mobile handset industry is one of the clearest examples of ever-

changing and dynamic with ups and downs. Based on the analysis presented in this paper, it

is claimed that many important components are necessary to have great brand experiences

and maintain its brand loyalty in the long term whether the manufacturing company is the

leader of the market or not. Since higher brand loyalty increases customer satisfaction and

decreases brand switching, the manufacturers of the mobile handset must be aware of

prioritizing marketing strategies as well as branding and pricing strategies but also

innovation in the system of technology as the main factor as well. It is undeniable that

market-driven firms are constantly strived to build and maintain brand loyalty amid

competitions, especially in the mobile industry.

6.1 Recommendation

In the competitive dynamic industry or challenging business world, the product

quality plays an important role and it is undeniable that the brand itself must offer the best

of competitive advantage and innovation strategies to achieve higher brand loyalty.

Therefore, the literature further reveals that it is paramount to improve product quality and

its services which can enhance customer loyalty as well as customer retention since it is one

of the most influential predictors for being loyal to one brand in the long term. Most of the

business manufacturers and producers facing brand switching behaviors of their loyal

customers since there are many business competitors and their strategies become higher to

be the market leader and they should be aware of how to retain their buyers to be loyal

48

which is one of the most important factors to gain higher market share, especially in the

mobile market. Although the companies know the mobile phone users are not limited to

using their brand only, there are also many rooms to be considered to improve if they want

to remain as a top brand in the market: such as technological advancement and modification

in the phones or handsets since the smartphone has become a human's necessity in this

modern-tech world nowadays. Besides, it is not only limited to communicate with friends or

family but also significantly offers features like luxury facilities of the camera, data storage,

multimedia and supporting operating systems.

Since mobile users are mostly the young and middle-aged groups of people, they are

demanding for technological advancements with varieties of different financial

backgrounds. Furthermore, the mobile phone industry has a nature of fast-changing with the

unsaturated market; the mobile companies should be aware of their user’s switching

behavior and understand the length of the product life cycle which is short. As a company,

innovation and providing a competitive advantage is the best way to improve profitability

by knowing the importance of loyalty and how it is greatly related to the success of the

companies.

In this paper, it is discovered that how smartphone manufacturers implement their

innovation strategies for continuous competitive advantage in the global market as well as

how they are creating vertical and horizontal innovations (hardware and software

development) in their designs and features across the industries of three top mobile

manufacturers such as Samsung, Apple, and Huawei.

49

References

Aaker, D. A. (1996). Measuring Brand Equity across Products and Markets. California

Management Review, 38(3), 102–120.

Abdelkader, A. (2015). Integrating Smartphone Talking Applications, Trust, Switching Cost

and Customer Switching Behavior in the Mobile Phone Market. International Journal of

Customer Relationship Marketing and Management, 6(1), 17–34.

Alexander, M. (2014, April 30). Samsung, Apple, Huawei, and LG all Lose Market Share as

Lenovo Increases. Retrieved November 16, 2019, from

https://www.androidheadlines.com/2014/04/samsung-apple-huawei-lg-lose-market-share-

lenovo-increases.html.

Ambler, T., Bhattacharya, C. B., Edell, J., Keller, K. L., Lemon, K. N., & Mittal, V. (2002).

Relating Brand and Customer Perspectives on Marketing Management. Journal of Service

Research, 5(1), 13–25.

Arthur, C. (2012). The history of smartphones: timeline. Retrieved November 31, 2019, from

https://www.theguardian.com/technology/2012/jan/24/smartphones-timeline.

Bea, F. (2013, October 29). Huawei's third-largest global smartphone manufacturer in Q3

2013. CNET Asia. Retrieved from http://asia.cnet.com/huawei-third-largest-global-

smartphone-manufacturer-in- q3-2013-62222833.htm.

CBC News (2013) BlackBerry sale on hold, but Fairfax to invest. Retrieved November 15,

2019, from http://www.cbc.ca/news/business/blackberry-sale-on-hold-but-fairfax-to-invest-

1.2355324.

Cecere, G., Corrocher, N., & Battaglia, R. D. (2015). Innovation and competition in the

smartphone industry: Is there a dominant design? Telecommunications Policy, 39(3-4), 162–

175.

Chen, C. F., & Myagmarsuren, O. (2011). Brand equity, relationship quality, relationship

value, and customer loyalty: Evidence from the telecommunications services. Total Quality

Management & Business Excellence, 22(9), 957-974.

Dick, A. S., & Basu, K. (1994). Customer loyalty: toward an integrated conceptual framework.

Journal of the academy of marketing science, 22(2), 99-113.

Dilger, D. E. (2016). Apple's competition is going to have a tough year in 2016. Retrieved

November 2019 from https://appleinsider.com/articles/16/01/09/apples-competition-is-going-

to-have-a-tough-year-in-2016.

Eslami, M.H, Lakemond N. (2016) Knowledge integration with customers in collaborative

product development projects. Journal of Business & Industrial Marketing 31(7): 889-900

50

Faullant, R., Matzler, K., & Füller, J. (2008). The impact of satisfaction and image on loyalty:

the case of Alpine ski resorts. Managing Service Quality: An International Journal, 18(2),

163–178.

Ganesh, J., Arnold, M. J., & Reynolds, K. E. (2000). Understanding the customer base of

service providers: an examination of the differences between switchers and stayers. Journal of

Marketing, 64(3), 65-87.

Gilbert, B. (2019). It's been over 12 years since the iPhone debuted - look how primitive the

first one seems today. Retrieved November 9, 2019, from

https://www.businessinsider.com/first-phone-anniversary-2016-12#there-was-no-app-store-

when-the-iphone-launched-that-means-no-instagram-no-pokmon-go-no-third-party-apps-thats-

all-the-best-stuff-5

Global Stats. (2019) Operating System Market Share Worldwide. Retrieved November 15,

2019, from https://gs.statcounter.com/os-market-share

Goodwin, R. (2016). The history of mobile phones from 1973 to 2008: The handsets that made

it ALL happen. Retrieved November 15, 2019, from

https://www.knowyourmobile.com/retro/the-history-of-mobile-phones-from-1973-to-2008-the-

handsets-that-made-it-all-happen-d58/

Hafiz, M.W.R (2017) Effect on Brand Loyalty in Mobile Phone Purchasing (A Case Study in

Bahawalpur in Pakistan). Journal of Public Administration and Governance, 7 (1), 106-112

Holbrook, M. B., & Corfman, K. P. (2000). Quality and value in the consumption experience:

Phaedrus rides again. Perceived quality, 31(2), 31-57.

IDC (2017). Smartphone vendor market share. Retrieved November 15, 2019, from

http://www.idc.com/prodserv/smartphone-market-share.jsp

IT Pro Team, (2014). BBM for Windows Phone beta app now available. Retrieved November

10, 2019, from https://www.itpro.co.uk/mobile/19964/bbm-app-android-and-iphone-gets-

update.

Jean, A. T. (2017). An Analysis of the Impact of Innovation on the Competitiveness of

SmartPhone Manufacturers. International Journal of Management Research & Review, 7(9),

872–892.

Kabiraj, S., & Shanmugan, J. (2011). Development of a conceptual framework for brand

loyalty: A Euro-Mediterranean perspective. Journal of Brand Management, 18(4), 285-299

Kaiser, T. (2013). Report: BlackBerry Q10 sales looking dismal. DailyTech. Retrieved

November 13, 2019,

from:http://www.dailytech.com/Report+BlackBerry+Q10+Sales+Looking+Dismal+/article332

76.htm

Kan, W. H. (2002). The Study of Relation between Product Value, Brand Trust, Brand Affect

and Brand Loyalty. Unpublished master thesis, Tamkang University, Taiwan.

51

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and

opportunities of Social Media. Business Horizons, 53(1), 59-68.

Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based brand equity.

the Journal of Marketing, 1-22.

Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson Education.

Kuusik, A. (2007). Affecting customer loyalty: Do different factors have various influences on

different loyalty levels? The University of Tartu Faculty of Economics and Business

Administration Working Paper, (58-2007).

Lam, S. K., Ahearne, M., Hu, Y., & Schillewaert, N. (2010). Resistance to brand switching

when a radically new brand is introduced: A social identity theory perspective. Journal of

Marketing, 74(6), 128-146.

Luo, X., Homburg, C. (2007). Neglected outcomes of customer satisfaction. Journal of

Marketing, 71(2), 133-149

Maiyaki, A. A., & Sagagi, M. S. (2019). Factors Influencing Brand Switching Behavior of

Mobile Phone Users and the Mediating Effect of Customer Satisfaction: A Literature

Review. Journal of Education, Society and Behavioral Science, 1(11).

Park, Y. V., & Chen, J. V. (2007). Acceptance and adoption of the innovative use of a

smartphone. Industrial Management & Data Systems, 107(9), 1349–1365.

Pegoraro R. (2007) Apple‘s iPhone Is Sleek, Smart and Simple. Retrieved November 16

from:http://www.washingtonpost.com/wp-

dyn/content/article/2007/07/04/AR2007070401329.html

Pekovic S, Rolland, Gatignon H. Customer orientation and organizational innovation: the case

of environmental management practices. Journal of Business & Industrial Marketing 2016;

31(7): 835–848

Peter, S. (2013) Smartphones now outsell ‘ dumb ‘ phones. News NZ.

Research in China, (2009) Global smartphone market & industry chain report, 2008-2009.

Retrieved November 9, 2019, from https://www.prlog.org/10192174-global-smart-phone-

market-industrychain-report-20082009.html

Rungie, C., & Laurent, G. (2012). Brand Loyalty vs. Loyalty to Product Attributes.

Quantitative Marketing and Marketing Management, 423–444.

Russell-Bennett, R., McColl-Kennedy, J. R., & Coote, L. V. (2007). Involvement, satisfaction,

and brand loyalty in a small business services setting. Journal of Business Research, 60(12),

1253-1260

Schwartz, K. (2013). BBM for Android and iPhone surpasses 20 million downloads. ITPro.

Retrieved November 10 from https://www.itpro.co.uk/mobile/19964/bbm-app-android-and-

iphone-gets-update

52

Steve, J. (2015). Innovation at Apple, Seeking Alpha.

Techopedia (2019). What is a Smartphone? - Definition from Techopedia. Retrieved

November 9, 2019, from https://www.techopedia.com/definition/2977/smartphone

Turner, A. (2019). Smartphone Brand Loyalty During Online Trade-In 2019. Retrieved

November 13, 2019, from https://www.bankmycell.com/blog/smartphone-brand-loyalty-

during-trade-in-2019/.

Urbancova, H. (2013). Competitive Advantage Achievement through Innovation and

Knowledge. Journal of Competitiveness, 5(1), 82–96.

Utterback, J. M., & Abernathy, W. J. (1975). A dynamic model of process and product

innovation. Omega, 3(6), 639–656.