۱- Introduction

۲- Literature review

۳- Model specification

۴- Empirical analysis

۵- Conclusion

References

Abstract

Brand loyalty and interest have significant impacts on consumers’ smartphone choices. What about brand loyalty and interest of smartphone in South Korea where Samsung originates from? This study investigates brand loyalty and interest and how they are affected by the satisfaction of innovative peers in South Korea. An asymmetric discrete choice model with reference-dependent preferences is applied for the analysis. The estimation results show that in South Korea the brand is the most important attribute of smartphone and Apple is the strongest in brand loyalty. Whether consumers who are currently owners of Apple smartphones continue to maintain the same brand in their next purchasing depends not only on their brand loyalty but also on the satisfaction of their highly innovative peers who currently own the Apple. On the other hand, Samsung’s brand loyalty is lower than that of Apple, but the brand interest is the highest. Additionally, in all smartphone brands, satisfaction with smartphone brands owned by innovative peers has a significant impact on consumers’ interest.

Introduction

The global smartphone market is expanding rapidly, and it is expected that 5.9 billion people will own smartphones by 2025 (GSMA, 2018). This amounts to 71 percent of the total world population, and experts have speculated that smartphone distribution will surpass that of computers due to portability and versatility functions (Deloitte, 2017). In terms of smartphone ownership, South Korea ranks the number one worldwide, constituting nearly 96 percent of the total population (Poushter et al., 2018). Despite the high penetration rate, the number of smartphone users has steadily increased in South Korea (Ministry of Science and ICT, 2018), and smartphone manufacturers are releasing new products at shorter intervals, abbreviating the consumer replacement cycle (Lee, 2014). This results in more intensified competition in the smartphone market. Additionally, smartphone manufacturers have been striving to increase consumer satisfaction regarding products and services in an effort to increase their market share (Chen et al., 2016). In addition to non-functional attributes like brand and price, smartphones consist of various functional attributes, including screen size and central processing unit (CPU). In the early stages of smartphone production, manufacturers focused on enhancing battery, resolution, CPU, and other core technology that made up the device (Verganti, 2011), which led to smartphones within a similar price range achieving similar functional capacity. Henceforth, manufacturers attempted to gain a competitive edge in the market by offering mobile payments, location-based services, and other added functions, or by enhancing them further (Oliveira et al., 2016), but these added functions could be imitated with ease, and differentiating effects were shortlived. As a result, most of the manufacturers’ recent efforts have been on non-functional attributes such as fashionable appearance and aftersales service (Chen et al., 2016).