January 26, 2010

CONSUMER BEHAVIOR ON MP3 PLAYERS

INTRODUCTION

 

 

            The growth of electronic technologies has brought many changes to the society. Every country can feel the effects of the digital revolution. One of the things that digitalization has changed is the way people listen to music. Cassettes became obsolete and have been replaced by compact discs where music tracks are compressed into digital files. Then, the world witnessed the shift of music into mp3s. Music tracks are no longer stuck into copyrighted album CDs but are now downloadable from many mp3 websites across the internet. According to an International Federation Phonographic Industry (IFPI) 2006 report, some 420 million single tracks were downloaded in 2005 alone, an exclamation that the digital music industry is a force to be reckoned with in the global economy (IFPI, 2006). Of course, the digital music industry also grows toe to toe with the digital audio player or mp3 player industry. The IFPI (2006) report stated that in 2005, consumers bought over 60 million portable digital music players (worth an estimated $US 9 billion). With this growth of an industry after its development and introduction to the market a few years ago, it is interesting to determine how consumers perceive these new technologies, especially the medium (mp3 players) where digital music tracks are played. One example of a successful digital portable player brand is Apple's iPod. Today, the iPod does not stand alone as competitors gradually increase. Apple now has a wide range of competitors including Creative (Zen product range), Rio (Karma, Carbon), Sony (Network Walkman) and others (IFPI, 2005).

 

PROBLEM STATEMENT

 

 

            Today, almost every youth uses portable digital players to listen to their favorite tunes. With the growth of digital portable player manufacturers and licensed brands, consumers have a wide variety of options. One downside however is there are still those who are pessimistic about the idea of music digitalization. The IFPI (2005) 2005 report mentioned that European survey shows increasing awareness of, use of, and intentions to use, legal download services. This is a hint that consumer attitude on digital music and portable player devices are still mixed because there are other options and alternatives. Thus, investigating customer behavior on digital portable player may open the door to the consumer's perceptions on digital portable devices – on how they see it, their preference to it, how much are they willing to pay for it, is it their first music medium choice, and so on and so forth.

 

RESEARCH OBJECTIVES

 

            The aim of this study is to investigate the behavior of consumers on digital music and mp3 players. Consumers will be asked about different factors that affects their purchase of digital portable audio players or mp3 players.

 

            The following are the objectives of this study:

 

 

1.         To determine the preferences of consumers when purchasing digital portable audio players.

2.         To know if the attitude of consumers to digital products have changed.

3.         To determine if the purchase of mp3 players depends on buyer's attitude on digital music.

4.         To develop a suggestion on how mp3 players can be effectively marketed to the modern consumers.

 

LITERATURE REVIEW

 

 

Mp3s

 

 

            Mp3, also known as MPEG-1 audio layer 3, is a popular digital audio encoding and compression format invented and standardized in 1991 by a team of engineers directed by the Fraunhofer Society in Germany (Wikipedia, 2006a). The purpose of the mp3 is to greatly reduce the amount of data required to represent audio, yet still sound like a faithful reproduction of the original uncompressed audio to most listeners (Wikipedia, 2006a). This is similar to zipping a sound file but also removes any sound information that could not be heard by the human ear (Murphy, 2001). This greatly reduces the size of file, with a normal stereo CD being some 650MB and 74 minutes, whereas in MP3 format this is usually about 60MB (Murphy, 2001, Brandenburg, 2000).

 

 

            Today, mp3s have gone a long way. It has developed into a potential mass-market distribution format for music media (Fontenay et al, 1999). IFPI (2006) reported that there are now at least two million tracks and 165,000 albums available on the major services in the web. Digital music expanded rapidly to the globe, as there are now over 335 legal online music services, up from 50 two years ago (IFPI, 2006).

 

            The UK is one of the only three countries (Germany and France) in Europe that sees growth in the mp3 market. It is the fastest-growing online music market in Europe as major retail stores such as Virgin and HMV launched online and existing services like Napster and iTunes are marketing their brand heavily (IFPI, 2006). IFPI (2006) also reported that the UK saw sales of 26 million single tracks downloads during the year – a four-fold increase on 2004. Furthermore, downloads have been successfully merged into the singles charts, giving digital sales greater media and public exposure (IFPI, 2006).

 

Mp3 Players

 

 

            The growth of the mp3 provided a manufacturing idea for information technology companies – the mp3 player or portable digital audio player. Mp3 players were launched in 1998, and during that time, most consumers are not familiar with digital or mp3 music (Market Research, 2004). Mp3 player, also know as Digital Audio Player (DAP), is a device that stores, organizes and plays digital music files (Wikipedia, 2006b). Mp3 players are portable so it can be carried by the user anywhere. It is also capable of storing over a hundred mp3 music tracks. This shows that advantage that MP3 players have over traditional compact disc, or CD, and cassette players. Other advantages include the ability to better manage music content and longer battery life. These advantages and the availability of digital audio and media files on the Internet may in sometime lead to the replacement of traditional CD and cassette players with MP3 players. Its advantages show that mp3s are far superior to CDs and MDs (Mini Disks) because mp3s can be networked and shared, and can be compiled or stored in large quantities (Otsuka, 2000).

 

            Kawamura (2006) stated that the worldwide market for all MP3 players is expected to grow from 36.8 million units in 2004 to 132.0 million units in 2009, representing a compound annual growth rate, or CAGR, of 29%. Wang (2005) of Parks and Associates found in his research the consumer interest on mp3 players on several countries as shown in the table below:

Figure 1: Mp3 Player Purchase Intentions by Country (Wang, 2005).

 

            The figure shows that France and China has the highest potential of consumer purchase intentions. However, UK may also potentially increase its mp3 sales. It can be seen on the graph above that those who consider purchasing mp3 players are those who already own one. Obviously, they are already exposed and well-informed and acquainted with the advantages of mp3 players. This hints that efforts in marketing and promoting mp3 and digital music should be increased with those who do not own mp3 players yet as the specific targets.

 

            According to Coco et al (2005), there are three dimensions that are relevant in the market performance of mp3 players: music fidelity, selection, and robustness. Consumers of mp3 players look for the performance of the mp3 players in terms of its sound quality when playing mp3s. Coco et al (2005) stated that consumers often compare the sound of mp3 players with the sound of CD players. Before, most consumers agree that mp3 players were inferior to CD players in terms of music fidelity. However, today, consumers are starting to agree the fidelity of mp3 players are 'fair enough' (Coco et al, 2005).

 

            Selection is also a concern for consumers and in this part, mp3s are definitely superior to any music medium (Coco et al, 2005). Coco et al (2005) explained that with large capacity MP3 players, the music is with the owner at all times (like a large collections of CDs) and easily accessible through innovative interfaces. Music collections can be easily stored within the mp3 player and a large selection of music is readily available for the user to enjoy.

            Finally, robustness of a music player is another issue for consumers. Again, mp3 players have the edge in this dimension simply because they have no moving parts to wear out (at least in flash based versions), and no risk of skipping unlike CD or MD players (Coco et al, 2005).

 

            According to the research of Coco et al (2005), the market profitability of mp3 players are not too high but still on the medium level. The buyer power is moderately in the medium level because there are lots of big retailers to deal with but some direct-web sales. Supplier is also medium because the value from hard drives, processors and other key technologies pass largely to suppliers. On the other hand, one of its advantages is its low barrier to entry mainly because of the online retail (Coco et al, 2005).

 

One of the problems in mp3 players are that there are numbers of substitutes that buyer can decide for. These are: FM Radio, CD players, cell phone games, books, portable TV (Coco et al, 2005). Furthermore, competition is high among mp3 player companies. Rivalry is not necessarily price-based but most often feature-based (Coco et al, 2005).

 

            Coco et al (2005) also stated that there are many industry dynamics that mp3 player companies can take advantage of. Basically, there is a high heterogeneity of demand, high consumer emotional involvement, and high product spillovers. Brands must also emphasize a certain touch of uniqueness, for instance, how it can be differentiated from an IPod or a walkman (Coco et al, 2005).

The IPod: A Good Example of a Successful Mp3 Player Brand

           

Sulmers (2004) reported in Newsweek that the iPod has been such a hit that one university professor stated the ratio of iPod owners in their university is 2 to 3. According Sulmers (2004), those who actually create music and those who love music are among the biggest fans of the iPod.

 

According to Sawhney (2004), when IPod was released by Apple in 2001, it was not the first in the business. However, the key to the IPod's success was that Apple was the first to take into consideration what consumers really want. Based on Apple's research, they found that people want to take all their music with them, but they want personal music players to be unobtrusive. So, IPod was made as small as a deck of playing cards and build it to hold 1,000 songs. Added with its other unique design and traditional Mac color, IPod became an instant blockbuster (Sawhney, 2004).

 

The Importance of Customer Behavior

 

The success of IPod is basically an example of how important it is to have knowledge about consumer behavior. Several consumer behavior researches testified to this. Wong (2000) argued that a customer evaluates a product or a service. Such action is based on the customer's reaction from the using the product or service, which means that the product or service should leave a good perception to the customer to consider him or her satisfied (Wong, 2000). Frederick and Salter (1995) explained that it can be ensured that a customer is satisfied by taking into importance the customer value package, which includes: price, product quality, service quality, innovation, and corporate image. Others also stated the importance of maintaining or establishing a uniqueness of the product, while also understanding customers and what pleases them (Denton, 1993). Customers should also understand the product and be allowed to set their own standards in order to be satisfied (Frederick and Salter, 1995). Furthermore, customers also like their requests to be processed quickly or taken into consideration (Frederick and Salter, 1995).

 

Consumer behavior is defined as: "The activities that people engage in when selecting, purchasing, and using products and services so as to satisfy needs and desires…" (Wilkie, 1990). Wilkie (1990) continued: "…such activities involve mental and emotional processes, in addition to physical actions". There are many factors that determine these activities, and the product is just one of them. There are some frameworks that helps explain customer behavior are brand orientation model, and integrated framework for cross-cultural consumer behavior. Others, on the other hand, are expressed through demographic research, such as the relationship of gender on consumer behavior. These models and studies are not only applicable to fashion retail but also to consumer behavior in general products.

 

RESEARCH STRATEGY AND METHOD

 

 

            This research adopted the research philosophy of positivism because the aim of the study is to answer several research questions, which are mentioned earlier in this paper. This research philosophy allows the study to revolve with an observable social reality in order to come up with law-like generalisations similar to those produced by the physical and natural scientists (Remenyi et al, 1998), and in this tradition, the researcher becomes an objective analyst, coolly making detached interpretations about those data that have been collected in an apparently value-free manner (Saunders et al, 2003).

 

Design

 

 

            The research design is exploratory because it intends to explore the behavior of consumers to mp3 player products through survey. This research is also cross-sectional because of limited time. This research is a study of a particular phenomenon (or phenomena) at a particular time. (Saunders et al, 2003) Accordingly, cross-sectional studies often employ the survey strategy, and they may be seeking to describe the incidence of a phenomenon or to compare factors in different organizations.

 

            The study can also be considered descriptive because the objective is to portray an accurate profile of persons, events or situations, and may be an extension or a forerunner to a piece of exploratory research, a research that tries to establish causal relationship between variables. (Robson, 2002; Saunders et al, 2003) Accordingly, with the descriptive research, it is necessary to have a clear picture of the phenomena on which a researcher wishes to collect data prior to the collection of the data. (Saunders et al, 2003). In this study, the phenomenon to be investigated is the customer behavior on mp3 players.

            On the other hand, Saunders et al (2003) said project tutors are often wary or work that is too descriptive, and they will want a researcher to go further and draw conclusions from the data gathered; nevertheless, description in management and business research has a very clear place, although, it should not be thought of as an end in itself, but only as a means to an end. (Saunders et al, 2003).

 

The survey method, on the other hand, will be used for data collection. Surveys are conducted to gather data from the field in order to generalize results from a sample to a larger population. (Commonwealth of Learning, 2000) The primary purpose and advantage of surveys is generalization of the results (Commonwealth of Learning, 2000). Usually, surveys are interested in gathering data from many than in obtaining intensive, detailed information from a few individuals; therefore, it is seldom for a survey to consist of one or very few individuals (Commonwealth of Learning, 2000).

           

The study will be based on quantitative research. This is chosen because it can provide statistical evidences of data that can be used to generalize consumer behaviors specifically. Quantitative method basically allows the research problems to be conducted in a very specific and set terms (Frankfort-Nachmias & Nachmias, 1992). This will basically make analysis of data easier and faster. A quantitative research also specifies both the independent and the dependent variables under investigation (Matveev, 2002). In the case of this study, the independent variable is the consumers of mp3 players while the dependent variable is their behavior when buying or purchasing mp3 players.

 

Administration of the Questionnaire

 

 

A pre-test of the questionnaires will be conducted to 10 samples so as to validate if its contents are okay and can actually answer the research questions of the study. If ever the questionnaire is not suitable as the pre-analysis show, it will be immediately modified. The suggestions of the 10 pre-test samples will also be considered in the modification. The pre-test samples will not be included in the actual set of respondents.

 

The questionnaires will be administered to respondents through email or personal contact. The questionnaires will contain an introduction that explains clearly the purpose of the study. The questionnaire also contains clear instructions so as the respondents are well-guided throughout their encounter with it.

 

Survey Instrument

 

A self-administered structured questionnaire, or the type of questionnaire that is usually completed by respondents (Saunders et al, 2003) will be used in the study. This questionnaire will have two sections: the first part intended to acquire the demographic profile of the respondents, and the other section comprised of a set of attitude statements that intends to determine the level of agreement or disagreement using a five-point Likert scale. The equivalent weights for the answers were:

 

Range                                                Interpretation

            0.00 – 1.49                                        Strongly Agree

1.50 – 2.49                                        Agree

2.50 – 3.49                                        Undecided

3.50 – 4.00                                        Disagree         

4.50 – 5.00                                        Strongly Disagree

 

In the Likert technique, the degree of agreement or disagreement) is given a numerical value ranging from one to five, thus a total numerical value can be calculated from all the responses (Underwood, 2004).

 

The questionnaire design to be used is semi-structured. Accordingly, semi-structured interviews provide the researcher the opportunity to 'probe' answers, which can be done in instances where there is a need or want for the interviewees to explain further or build on their responses, and this is important if one is adopting a phenomenological approach, where the researcher is concerned to understand the meanings that respondents attribute to various phenomena, as interviewees may use words or ideas in a particular way, and the opportunity to probe these meanings will add significance and depth to the data obtained and may also lead the discussion into areas that had not been previously considered but which are significant for understanding and may help in addressing research questions and objectives (Saunders et al, 2003).

Samples

 

            This study will survey ordinary people who are music enthusiasts or those who refer listening to music as one of their hobbies. Samples will be collected through convenience sampling. Convenience sampling is chosen because the general music enthusiast population is broad and difficult to identify. Convenience sampling will make data sampling faster and easier.

 

            The target population is 1500 music enthusiasts. The plan is to spot potential respondents on record stores or on musical concerts. The search for respondents will take place within London, specifically on record stores and music bars or music hotspots.

 

Data Analysis

 

 

The responses to questions will be analyzed by determining their corresponding frequency, percentage and weighted mean. The following statistical formulas will be used:

 

1.       Percentage – to determine the magnitude of the responses to the questionnaire.

            n

% = -------- x 100        ;           n – number of responses

            N                                 N – total number of respondents

 

2.       Weighted Mean

            f1x1 + f2x2  + f3x3 + f4x4  + f5x5

x = ---------------------------------------------  ;

                        xt

where:             f – weight given to each response

                        x – number of responses

                        xt – total number of responses

 

TIMETABLE

 

 

April

May

June

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

 

1

  2

3

4

5

6

7

8

9

10

11

12

 

Problem

Identification

 

 

 

 

 

 

 

 

 

 

 

 

 

Literature

Review

 

 

 

 

 

 

 

 

 

 

 

 

 

Research

Design

 

 

 

 

 

 

 

 

 

 

 

 

 

Choice of

Methodology

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

Sources

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

Collection

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

Writing up

Draft

 

 

 

 

 

 

 

 

 

 

 

 

 

Editing

 

 

 

 

 

 

 

 

 

 

 

 

 

Final

Document

 

 

 

 

 

 

 

 

 

 

 

 

 

Binding of

Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Gantt Chart

 

 

 

 

References:

 

Best, John W. (1970). Research in Education, 2nd Ed. Englewood Cliffs, N.J.: Prentice Hall, Inc.

 

Brandenburg, K. (2000). Mp3 and AAC Explained. Fraunhofer Institute for Integrated Circuits FhG-IIS A, Erlangen, Germany

 

 

Coco, G., Cook, J., Stevens, R. and Tompsett, A. (2005). How to be a Player: Making Money as Portable Music Device Manufacturer. Unpublished Material

Commonwealth of Learning. (2000). Manual for Educational Media          Researchers: Knowing your Audience. Vancouver, Canada: Commonwealth Educational Media Centre for Asia (CEMCA).

 

Creswell, J.W. 1994. Research design. Qualitative and quantitative approaches. Thousand Oaks, California: Sage.

 

Denton, D.K. (1993), "Total customer satisfaction: the next step", Industrial Management, 35 (6)18-21.

 

Fontenay, E. de, Fontenay, S. de, Kibbi, R. and Shulman, S. (1999). MP3: Digital Music for the Millennium? (online). Available at: www.taggin.com [Accessed: 03/20/06]

Frankfort-Nachmias, C., and Nachmias, D. (1992). Research methods in the      social sciences (4th ed.). New York: St. Martin's Press.

Fredericks, J.O., and Salter, J.M. (1995), "Beyond customer satisfaction", Management Review, 84(5), 29-33.

International Federation Phonographic Industry (2005). IFPI05: Digital Music Report (online).  Available at: http://www.ifpi.org/site-content/library/digital-music-report-2005.pdf [Accessed: 03/21/06].

International Federation Phonographic Industry (2006). IFPI06: Digital Music Report (online). Available at: http://www.ifpi.org/site-content/library/digital-music-report-2006.pdf [Accessed: 03/21/06].

Kawamura, C. (2006). Actions. Zhuhai, China

Market Research (2004). Emerging Technologies – Mp3 Players. Farmington, CT.

Matveev, A.V. (2002). The Advantages Of Employing Quantitative And       Qualitative Methods In Intercultural Research: Practical Implications From       The Study Of The Perceptions Of Intercultural Communication        Competence By American And Russian Managers. New York: Russian             Communication Association.

Murphy, C. (2001). Getting to know MP3s: MP3 Players. Linux Magazine, 2001 Issue, pp.104-107.

 

Otsuka, A. (2000). Creating a Ubiquitous Networking Market: Information Appliances. Nomura Research Institute Paper No.4.

 

Remenyi, D., Williams, B., and Swartz, E. (1998). Doing Research in Business   Management: An Introduction to Process and Method. London: Sage.

 

Robson, C. (2002). Real World Research, 2nd Ed. Oxford: Blackwell.

 

Saunders, M., Lewis, P. and Thornhill, A. (2003). Research Methods for Business         Students, 3rd Ed. London: Prentice Hall Financial Times.

 

Sawhney, M. (2004). Insights into Customer Insights. Kellogg School of Management, Unpublished Paper.

 

Sulmers. C. (2004). iPod Nation; In just three years, Apple's adorable mini music player has gone from gizmo to life-changing cultural icon. Newsweek, July 26 Issue, 2004.

 

 

Underwood, M. (2004). The Likert Scale. In Communication Studies, Cultural Studies, Media Studies (CMMS) Infobase. Available at: [www.cultsock.ndirect.co.uk/MUHome/cshtml/index.html]. Accessed: [03/20/06].

 

Wang, H. (2005). Digital Music and Portable MP3 Players. Parks Associate White Paper. Dallas Texas.

 

 

Wikipedia (2006a). MP3 (online). Available at: http://en.wikipedia.org/wiki/MP3 [Accessed: 03/21/06].

 

Wikipedia (2006b). Digital Audio Players (online). Available at: http://en.wikipedia.org/wiki/Mp3_players [Accessed: 03/21/06].

 

Wilkie, W. (1990). Consumer Behaviour. New York; Wiley

 

Wong, A. (2000), "Integrating supplier satisfaction with customer satisfaction", Total Quality Management, 11(4-6), S826-9.


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