ONLINE ADVERTISING AND CONSUMERS’ PERCEPTION ON PURCHASE DECISION OF SMARTPHONES

ONLINE ADVERTISING AND CONSUMERS’ PERCEPTION ON PURCHASE DECISION OF SMARTPHONES

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ABSTRACT

Advertising as a profession and a field of study explains the reason why it cannot be underestimated. However, advertising in the 21st century has gone beyond making use of the traditional sources of the media to create awareness about product services, goods and ideas to prospective consumers. The advent of the new media has solidified the relevance of the internet in advertising. This research exercise examined online advertising and consumers’ perception on purchase decision of Smartphones. The study examined the general level of exposure which consumers had towards online advertising. The attention, awareness and perception level of consumers towards Smartphone brands advertised online was being checked as well. The relevance of Gibson’s theory of direct perception and the AIDA model was used in backing up the study.

In this study, the descriptive survey research design was adopted making use of the quantitative research method to accurately establish the relationships between the variables considered in the study. Residents of Lagos State from Agege and Ikeja Local Government Areas were the accessible population for this study. The multi-stage sampling technique was used because more than one sampling method was combined in order to arrive at a finite representative sample size for the study. Validated questionnaires were distributed and data was being gathered, analysed and interpreted making use of frequency counts, mean, standard deviation, tables and charts.

This study adopted five objectives and three hypotheses. Eight hundred and sixteen (816) copies of the questionnaire were administered. Majority of the attendants were females and young individuals. It was deduced from this study that pricing, features, brand preferences, social Influence as important factors which contribute to the purchase decision of Smartphones being advertised online. The study also revealed that majority of the respondents pay less attention to online advertisements but are attracted to the graphic quality of advertised contents on social media which is also a form of online advertising. Overall, the study found out that the new media is capable of influencing consumer’s choice of purchasing Smartphones being advertised online. This research work made it evident that it becomes mandatory for and strategic for Smartphone manufacturers, vendors and marketers to adopt online advertising through social media.

It was concluded that Smartphone manufacturers, vendors and marketers need to identify online platforms that would enhance user interactivity with the potential for consumer online Smartphone advertisement customized exposure. This study proffered recommendations to Smartphone manufacturers, marketers, and vendors about the appropriate utilization of online advertising for Smartphones; with a view to improving the contents of online adverts of Smartphones as well as making use of the best platform for new media advertising to boost the purchase of Smartphones.

Keywords: Online Advertising, Awareness, Smartphone, Perception, Purchase Decision.


CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The practice of advertising creates a positive and maximum potential for any manufactured product to be seen as an existing brand being made known to the general public otherwise, such a product will not sell. Advertising is capable of drawing the attention of customers to any kind of product, service and brand and this is done by making use of the media sources to persuade potential consumers or customers to buy the advertised product.

Advertising informs potential customers of an advertised product and it spells out the functions and features of the product. Good advertising is necessary as it creates a demand for the product which is being advertised.  Advertising may even create a brand identity for a product or series of products as well as creating an image surrounding a product, so that customers feel that they need it. Advertising can promote a new product and increase sales of existing products. The entire function of advertising is a determinant factor in developing the perception of diverse consumers either in appositive light or in a negative about an advertised product and this in turn determines the final purchase action or purchase decision made by consumers.

 Advertising is a non-personal form of communication usually paid for, designed to be persuasive about products, services or ideas by identified sponsors through various media (Belch & Belch, 2004; Dzisah & Ocloo, 2013; Nwankwo, Aboh, Obi, Agu, & Sydney, 2013). According to Balakrishnan & Kumar (2011), advertisements are designed to appeal to different types of audience for the purpose of information dissemination about products and services so as to bring about positive consumer perception and purchase decision. It helps to deliver carefully prepared messages to target audiences thus facilitating marketing programs of the products and services of organizations (Zipporah & Mberia, 2014). The practice of advertising is very important as it helps in building a reputable and positive image about a brand or service in the sight of heterogeneous consumers. Advertising uses various sources of the media in reaching out to the target audience which advertising messages are being designed for. The professional practice of advertising is extended towards the radio, television, newspapers and magazines. Other sources of advertising include public speaking, door hangers and flyers, event sponsorship and word-of-mouth advertising.

Online advertising is the application of internet capabilities to the process of carefully packaging non-personal communication messages to specific audience in order to engender positive perception and purchase decision of products and services (Tavor, 2011). Online advertising ensures wider coverage because it has a very wide interconnection of individuals, businesses and organizations with huge processing capabilities overcoming geographical boundaries (Ducoffe, 1996). Tavor (2011) observes that the Internet has become a major source of information and has to some extent replaced old media such as the radio, television and the newspaper; this has occurred because the Internet gives the advantage of access to current information and mass dissemination of information. These factors according to Tavor (2011) have jointly contributed to ensuring that over 700 million people world-wide use the internet daily for important activities such as information search and product/service purchase.

In addition, the ubiquity of internet connection has brought about a diversion of companies’ and businesses’ attention towards the online advertisement platform. Consequently, many companies advertise their products and services online. According to Tavor (2011), online advertising is preferred because it commands a daily audience that is greater than the sum of the entire historical audience of traditional media and it offers interactivity, colorfulness and information currency which ultimately leads to either local or international purchase or products and services.

Kotler (2001) points out that perception involves someone selecting, organizing, and interpreting information and inputs such in order to create a meaningful picture of the world and that each customer perceives the world differently, and perceptions are manifested as attitude. Exposure to advertisements irrespective of the advertising source through which the advertised message is being communicated to consumers has a significant impact in building up the perception of consumers towards an advertised brand. Consumer perception refers to the process by which a consumer selects, organizes, and interprets information and stimuli inputs to create a meaningful picture of the brand or the product (Blank, 2013). Consumer perception is an advertising concept that encompasses a customer's impression, awareness or consciousness about an advertised brand and products with relevant information about its offerings. Consumer perception is typically affected by advertisingreviewspublic relationssocial media, personal experiences and other channels

According to Blank (2013), Consumer perception applies the concept of sensory perception to marketing and advertising. Just as sensory perception relates to how humans perceive and process sensory stimuli through their five senses, consumer perception pertains to how individuals form opinions about companies and the merchandise they offer through the purchases they make. Merchants apply consumer perception theory to determine how their customers perceive them. They also use consumer perception theory to develop advertising strategies intended to retain current customers and attract new ones.

Kazmi (2012) posits that consumer usage and buying of any product largely depend upon their perception about the product. The author identified accessibility, availability, and quality, durability regular supply of product and mode of payment as the most important factors that influence consumer perception. Similarly, Wollenberg and Thuong (2014) asserts that brand perception is a term used to describe how consumers experience a particular brand of product; perception can be seen as reality, so brand perception can be seen as real customer’s views based on what was promised. Customers’ perception helps to increase customers’ level of satisfaction which leads to brand loyalty and increases the chance of product repurchase.

McCoy, Everard, Galletta and Polak (2004) found that advertisements on an online platform such as websites could bring about negative or positive perception. This is because it might negatively influence intention to return; however retention of website information was higher when advertisements were in-line or when advertisements were not congruent with website content. However, contrary to expectations, intentions to return were not affected by advertisement placement, while retention of site content was not affected by the existence of advertisements, and intrusiveness of advertisements was not affected by advertisement congruence.

CCS Insight (2014) observes that the global Smartphone market has gone through a high growth rate in recent years, with shipments rising by 40 percent in 2013 which surpassed the 1 billion unit threshold and a forecast of Smartphone shipments of 1.89 billion units by 2018. This development has increased competition in the Smartphone industry to the extent that Apple has redefined their hardware business model while Samsung has scaled its operations; and the barriers to entry have reduced because of the increased adoption of the Android operating system and many design platforms (CCS Insight, 2014). The increased competition among Smartphone manufacturers has brought about a reduction in the market share of notable Smartphone manufacturers. This contributes to the reason why notable Smartphone makers are investing huge in marketing and advertising Smartphone brands via the internet.

Purchase decision is a thoughtful, on-going process that is carried out to ensure eventual satisfaction. Consumers are rational beings and as such apply a systematic process of information utilization for making accurate decisions. This explains why online advertisements of Smartphones become a key factor in either building or collapsing the purchase decision of Smartphone brands by consumers. Purchase decision could also mean meeting target customers' needs and increasing their positive perception (Shareef, Kumar & Kumar 2008).  Lay-Yee, Han and Yin-Fah (2013), assert that Smartphone purchase decision is influenced by brand concern, convenience concern, dependency concern, price concern, product feature concern and social influence concern which determine whether advertised Smartphone brands online would be eventually purchased or not. Furthermore Christopher, John and Sudhahar (2014) discover that peer influence affects the purchase decision of Smartphone users when they come across advertised Smartphones online. This study is poised to studying the role of online advertisements on consumers’ perception and purchase decision of Smartphones. The purchase decision of various Smartphone brands by prospective consumers in Nigeria would be measured based on the effectiveness of the online advertisement of Smartphones which consumers are exposed to on daily basis thereby strengthening the relevance of this study.

1.2       Statement of the Problem

The social significance attached to certain Smartphone brands has qualified Smartphone ownership to be a status making factor. The social influence being driven by Smartphone ownership alongside advertised contents of Smartphones online contributes to the eventual purchase of Smartphones (Kotler & Armstrong, 2010). With the mobile subscriber base pegged at over one hundred million (Nigerian Communications Commission, 2016), Nigeria seems to be an attractive market for Smartphones. This is evident in the number of different Smartphone brands available in the country. Some of which are Samsung, Apple, Infinx, Techno, Lenovo, Blackberry. The significance of Smartphones for consumers lie the variety of applications present on the Smartphones that allow individuals to perform different activities efficiently (Altena, 2012), even leading to a state of dependency on Smartphones. Thus, Smartphone ownership and the usage of certain Smartphone brands have come to be associated with a level of social status and social significance.

The rapid increase in the number of Nigerians with internet subscription translates to the maximum possibility of an average internet user in Nigeria being exposed to online advertisements of Smartphones which in turn plays a key role in influencing the perception and purchase decision of Smartphones. (Nigerian Communications Commission, 2016) Smartphone marketers continuously invest huge budgets in advertising their brands in order to increase awareness and purchase among consumers. In a bid to maximize visibility for their brands, Smartphone marketers are incorporating online advertising into their strategy (Nielsen 2013). This is in consideration of the fact that more consumers spend time on the internet. Therefore, it becomes imperative to question the return of online advertisements on the investment of Smartphone makers.

Too many advertised messages being displayed at the same time creates a shift in attention by consumers (Miller 2004). This becomes a check to the effectiveness of Smartphone brands advertised online. Consumers’ perception is being determined by the contents of smartphone brands advertised online. The developed perception is what determines the eventual outcome of purchase decision by consumers. The high level of investment into advertising by Smartphone manufacturers raises certain questions such as: do consumers pay attention to Smartphone online advertisements? Do the features of Smartphones displayed in Smartphone online advertisements influence consumer perception and purchase decision? Does the budget in online advertising for Smartphone online advertisement reflect positively on consumers’ perception and purchase decisions? Thus, this study intends to examine the role of online advertisement on consumers’ perception and purchase decision of Smartphones.

1.3       Objective of the Study

The general objective of this study was to examine the role of online advertising in consumers’ perception and purchase decision of Smartphones. The specific objectives are to:

1.                  examine consumers’ level of exposure to online advertisements;

2.                  ascertain consumers ‘awareness level of Smartphone brands advertised online;

3.                  explore the extent of consumers’ attention towards Smartphone online advertisements;

4.                  explore consumers’ perception (price, features, quality, durability, class) of online advertised Smartphones and

5.                  determine what relationships exist between perception (price, features, quality, durability and class) and purchase decision of online advertised Smartphones.

1.4       Research Questions

1.                  What is the level of consumers’ exposure to online advertising?

2.                  To what extent are consumers aware of Smartphone brands advertised online?

3.                  To what extent do consumers pay attention to online advertisements?

4.                  What is consumers’ perception (Price, features, quality, durability, class) of Smartphones?

5.                  What relationship exists between perception (price, features, quality, durability, class) and purchase decision of Smartphones?

1.5       Hypotheses

The following hypotheses were tested with 0.05 level of significance:

H1:       Consumers’ exposure to online advertising significantly influences awareness of   Smartphone brands advertised online.

H2:       Attention to online advertisements significantly influences perception (price, features, quality, durability and class) of different Smartphone brands

H3:       Consumers’ perception (price, features, quality, durability and class) of Smartphones significantly influences purchase decision of Smartphones

1.6       Significance of the Study

This study unraveled the impact of online advertisements on consumers’ perception and purchase decision of Smartphones. Consumers’ awareness about Smartphone brands facilitated by online advertisements either builds up or discourages their perceptions and purchase decision because consumers have access to the metrics that are individually important them. This study would increase the knowledge of Smartphone makers about the Nigerian market, as it immensely contributed to concretely exposing the current perceptions and purchase decision trends of their products as being viewed by Smartphone consumers. Furthermore, Smartphone manufacturers at the international level now have an insight into features and factors that are most important to majority of the Smartphone users which they may harness in order to develop a comprehensive Smartphone specification plan to suit majority of the Smartphone consumers in Nigeria which may represent the standard that Smartphones may need to meet before they are being allowed to import or manufacture in the country.

Moreover, the relevance of this study centered on assisting advertising practitioners, marketers and Smartphone manufacturers and vendors towards embracing online advertising as this research captured how online advertisements determines the level of consumers’ perception and purchase decision of Smartphones.

1.7       Scope of the Study

This study investigated online advertisement on consumers’ perception and purchase decision of Smartphones. In the context of this study, Smartphones were not specifically limited to specific brands. This study investigated perception from the perspective of price, features, quality, durability and class, while factors that influence purchase decision was limited to price, features and social influence. This study was conducted among Lagos residents in Ikeja local government and Agege local government, between September and December 2016. In the context of this research work, the category of the respondents that was used for the purpose of this study were individuals ranging from the category of the youths to the adults who were Smartphone users with a considerable level of access and exposure to the Internet, excluding minors.

1.8       Operational Definition of Terms

Online Advertising: This refers to activities carried out on electronic platforms that are powered by the internet and are used to consciously make potential consumers aware of particular brands.

Brand Awareness: This is a process of increasing a consumers’ state of information about a brand. It will be measured by developing scales that will require respondents to state their level of awareness of Smartphone brands. In the context of this study, the level of brand awareness by consumers would be determined by the available choices of the smartphone brands which the Smartphone customers are being exposed to via online advertisements.

Purchase Decision: This is an activity carried out by a consumer to take ownership of a Smartphone brand advertised online by Smartphone makers. In the context of this study, consumers’ purchase decision of Smartphone brands advertised online will be measured and determined by the extent to which information about advertised smartphones online influence consumers purchase decision.

Perception: This explains the impression which is being created on the mind of various consumers about the quality and features of Smartphone brands they are exposed to via online advertisements. Consumers’ perception in the context of this study is the combination of price, features, quality, durability and class. Therefore, perception of consumers towards smart phone brands advertised online will be measured and determined by the extent to which price, features, quality, durability and class affects consumers’ perception before an advertised smartphone is being purchased.

Smartphones: They are mobile phones with the functional capability of a computer system with the ability to access the internet and conveniently run downloaded applications.






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