econometrics project factors affecting consumer purchase price of iphone

So our team posed a question: With the current situation, are there any external factors that can affect consumers’ decisions on purchase price of iPhone?. Previous research on the subje

HANOI UNIVERSITY

FACULTY OF MANAGEMENT AND TOURISM

ECONOMETRICS PROJECT FACTORS AFFECTING CONSUMER

PURCHASE PRICE OF IPHONE

[COURSE: ECONOMETRICS] Tutor: Mrs Nguyen Thi Van Anh Group 2 - Tut 2 Nguyễn Thị Ngoc Ánh -ID:1804040020 Tăng Việt Cường - ID: 1804040023 Phạm Ngọc Khánh Linh - ID: 1804040068 Tống Phương Linh - ID: 1804040070

Hanoi, April 29 2022

ECONOMETRICS PROJECT - PEER EVALUATION FORM

TASK GIVEN MARK

Tăng Việt Cường 1804040023 70%

Tống Phương Linh 1804040070 100%

TABLE OF CONTENT

ABTRACT 1

I Introduction 1

II Literature reviews 1 1 Dependent variable: 1 2 Independent variables: 1 II Methodology 3 1 Definition of population 3 2 Sampling method 3 3 Regression model 3

IV Data analysis and result 5

2 Interpretations: 6

4 Assumption verification 10 4.1 Multicollinearity 10 4.2 Heteroscedasticity test 11 4.3 Autocorrelation 12 V Recommendation 13

REFERENCES 19

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ABTRACT

Nowadays, smartphones are indispensable for every individual There are many mobile phone manufacturers but in this project we will focus on individuals using iPhone With the impact of the COVID-19 epidemic, the economy as well as personal income plummeted, we wanted to see if there are any factors that affect the amount of money users spend to buy iPhone We did a survey with 128 subjects of which 102 were iPhone users From there, we can draw conclusions whether there are really any factors that affect consumers’ choice to pay for an iPhone

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I Introduction

With the rapid development of the 4.0 technology revolution, people's lives are now associated with smart and advanced technologies that make their lives become more convenience, typically smartphones Until now, smartphones have been considered as indispensable items of each individual because of their compactness and convenience in use, users can use their phones to connect with surrounding relationships surroundings, society as well as the world Especially under the impact of the COVID-19 pandemic in recent years, the number of mobile phone users has increased due to the need to study, work as well as entertain online during the time of social isolation Consumers have many different choices in owning a smartphone because there are many smartphone manufacturers with diverse product lines such as Samsung, Apple, Huawei, Xiaomi, etc However, according to observations as well as information research, we can see that Apple is one of the most used and most popular phone companies in Vietnam, loved by users of all ages However, due to the impact of the epidemic, most of the economic ground has been reduced, the income of individuals is also affected quite heavily, all expenses have to be cut, and people tend to saving more but nevertheless the demand for electronic devices is still increasing at this time So our team posed a question: With the current situation, are there any external factors that can affect consumers’ decisions on purchase price of iPhone? So in this project, our team will explore what factors influence consumers’ choice to for price to buy iPhone

II ‘Literature reviews

Justus & Heimeshoff (2011), found that price has an influence on consumers’ decisions, this is also the reason why most of these price discrimination strategies are used in most retailers around the world Previous research on the subject of the consumer purchase price of iPhone often approached the theoretical framework mainly on consumer behavior, useful maximization theory, and brand value theory Within the limits of this analysis, the author also selectively inherited the model of the factors that induce consumer purchase price of iPhone and therefore proposed the research model with 4 factors, namely as follows: (1) product features, (2) perceived value, (3) social influence, (4) the aesthetic value considered to be consistent with the research topic

1 Dependent variable:

The reference price, according to Ghorban and Tahernejad (2012), has a considerable impact on customers’ brand preferences It is due to consumers’ lack of comprehension of the brand Specifically, in order to calculate iPhone prices that don't deviate from the fact that there are other smartphone brands with similar prices, this report will only measure the factors that influence the consumer purchase price of iPhone and sample all ages using iPhone

2 Independent variables:

From this base, we will examine what are the main factors influencing the consumer purchase price of the iPhone

a Product features

Product features are an attribute of the product to meet the level of satisfaction of consumers’ needs and desires through the ownership of the product and the way the product is used One of Apple's identified core competencies in product innovation (West & Mace, 2007) Apple has exploited this key ability to create extremely effective and usable mobile devices from a technological standpoint The iPhone has once again succeeded by focusing on personal use while remaining technologically enticing to both personal and professional users (Liao, 2008) One key differentiating aspect that the iPhone holds which provides a level of exclusivity from other mobile phone brands is its software iOS is the name of the operating system that runs on today's iPhones (Steele & Provazza, 2018) It has a simple interface that users can travel through, which appeals to the ordinary mobile device user

HI: There is a positive relationship between product features and consumer purchase price of iPhone

b Perceived value

Kolter and Kelly (2006) defined the perceived value proposition as a set of benefits that the company brings to customers to meet their needs, which is a combination of products, services, information, and experience The customer's willingness to pay for the product stems from consumer perceptions of the perception of benefits and value, which is key to predicting consumer purchasing behavior (Monroe and Krishnan, 1985) Thaler (1985) also considers perceived value to be an important premise affecting consumers’ intention to spend money as it is a component of transactional utilities and acquisition utilities

H2: There is a positive relationship between perceived value and consumer purchase price of iPhone

ce Social impact

According to Rashotte (2007), social influence is about changing emotions, attitudes, thoughts, and behaviors, being intentionally or unintentionally influenced by others Today people can access social networks online through popular apps such as Facebook, Twitter, Instagram, Zalo, They can find not only iPhone-related information but can also receive product reviews and reviews from other users who are currently using the iPhone Britt (1966) argues that consumers often seek advice and opinions from their friends and they tend to trust and shop according to relationships or friends who have purchased or used the product before H3: There is a positive relationship between social influence and consumer purchase price of iPhone

d Aesthetic value

Aesthetic value was added as another construct that could determine the purchase behavior of smartphones among undergraduate students This was adopted from the study carried out in Thailand by Leelakulthanit and Hongcharu (2012) In the Nigeria Smartphone market, competition is fierce among the market leaders like Samsung, BlackBerry, HTC, and Nokia, and it is getting fiercer with the entrance of other Smartphone manufacturers like Tecno, and Solo, Gaga, LG, Gionee, Infinix, and others In this kind of keen competition, it is crucial for firms to make use of all their sources of competitive advantage, including design (Murtzin,

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cited in Leelakuthanit & Hongcharu, 2012) In the same vein, Schmitt and Simonson (as cited in Leelakuthamit & Hongcharu, 2012) stated that in a rising competitive market, manufacturers believe that styling or changing the physical appearance and presentation of products could encourage the customer to purchase the product

H4: There is a positive relationship between aesthetic value and consumer purchase price of iPhone

Ill Methodology 1 Definition of population

There are two methods of data collection and analysis: qualitative research and quantitative research Each of these forms of research has its purposes and techniques, both of which are important for obtaining a variety of different types of information Since the sample collection method is an online survey, we chose quantitative research for our report According to Babbie (2010), quantitative methods emphasize objective measurements and mathematical assessments or statistics of data obtained through polls, questionnaires, and surveys, or by using computer tools to control previously measured data The results are valuable, reliable, and generalized to a larger population, which is the main benefit of this approach As a result, quantitative research is an excellent way to examine assumptions

We will show our data collection processes and final conclusion-making processes on the estimated regression function of the factors that influence the consumer purchase price of iPhones of all ages The research population is about product features, perceived value, social impact, and aesthetic value of consumers After then, consider how these variables interact or influence one another

2 Sampling method

The target audience for this study was people who had used iPhones, and who acted as respondents In the analysis, we decided to apply online surveys through google form on social networking groups and garnered 128 responses, including 102 iPhone users The survey is designed as a multiple choice so that respondents can easily choose any suitable answer Survey results are analyzed with Eviews data analysis software and Excel statistical software to present the collected data

3 Regression model

Based on the purposes mentioned, we will use the applications of Econometrics for this project to examine the link between product features, perceived value, social influence, and aesthetic value of consumers Assuming that all the variables in this project are distributed standard, we have built a linear regression model with four variables:

Assuming linear regression model:

Price =B0 + B1*(Product features) + B2*(Perceived value) + B3*(Social influence) + f4*(Aesthetic value) + u

In which:

Price: the prices consumers are willing to pay to buy an iPhone (under 5 million, from 5-10 million VND, from 10-15 million VND, from 15-20 million VND, over 20 million VND) Product features: product features of iPhone trusted by users (security, unlock, apps, operating system, fast charging, capacity)

Perceived value: the reason the buyer chooses to use the iPhone (brand, price, favorite, trust, class expression)

Social influence: Consumers are aware of the various forms in which an iPhone product may be found (media ads, popularity, family, friends)

Aesthetic value: the aesthetic value of the iPhone through the perception of consumers (modern, compact, colorful, multi-color screen)

4 Procedures for testing

Testing restriction on variables: Run the estimate equation on Eviews with all four independent variables and remove the insignificant ones

Individual partial coefficient test (t-test): We use this test to check whether an individual regression coefficient (in the multiple linear regression models) is significant or not by using a T-test to see whether each slope coefficient differs from zero or not; in another way, to test the significance of each coefficient having an impact on our dependent variables

Testing the overall significance of all coefficients: F-test, in which HO: 2 = 0, B3 = 0 (all variables have no effect), and H1: B2 4 0 or B3 40 (at least one variable has an effect), is chosen The overall significance test can save time and be more effective as it offers a more comprehensive and wider vision of the impact of all variables that appear in our regression model

Testing functional form of regression model: Choosing the best-fit model.R2 (coefficient of determination), and C.V (coefficient of variance) are applied when trying with lin-lin, log-log, and semi-log The highest R2- “Goodness of Fit” can construct a more preferred equation Error — checking test:

@ Multicollinearity: This is an error in functional relationships existing among independent variables

e Heteroscedasticity: Heteroscedasticity generates errors and mistakes in the procedure of building a regression model, therefore, there are ways to check whether this phenomenon exists or not

e Autocorrelation: using the Durbin-Watson test and High-order correlation test for testing autocorrelation error in the regression model

*Level of significance: Since scientists have found that an alpha level of 5% is a good choice that balances those two types of error, we decided to choose the level of significance of 5% (0.05)

IV Data analysis and result 1 Descriptive statistic: *Statistics of survey results

a Gender to participate in the survey

@ Nam @ N& @ Khac

As can be seen from the pie chart, the participating gender was almost female who own iPhone

b Ages to participate in the survey

@ 18-22 @ 22-30 @ 30-40 @ Trén 40

@ 13

Since the iPhone does not have the concerned age group, we recognize all ages are appropriate for this survey

c Number of users to participate in the survey

@ Co @ Không

As the chart shows, in the sample of 128 survey fillers, 80% of which use iPhone

d Price ranges to purchase an iPhone

® Dưới 5 triệu @ Từ 5-10 triệu @ Tw 10-15 triệu @ Tir 15-20 triéu @ Trén 20 triéu

We have provided multiple price ranges; however, it is clear that iPhone are mostly purchased with the price from Smillion to 10million (29.4%), above 20million (24.5%) and from 10million to 15million (21.6%)

2 Interpretations:

Based on the EViews’ result, we have the linear multiple regression model: Price = B1 + B2*(Product Features) + B3*(Perceived Value) + BA*(Social Impact) + B5* (Aesthetic Value) +c

In which:

Price (The dependent variable): The price range that one purchases an iPhone Product Features: Apple’s product features

Perceived Value: 1Phone’s perceived value

Social Impact: Social impact on decisions to buy an iPhone Aesthetic Value: Aesthetic value of the iPhone product c: The random error

3 Exploratory Analysis

a Descriptive statistics for the decisions to buy iPhone by consumers Product | Perceived Social Aesthetic Features Value Impact Value Mean 4.656863 2.362745 1.549020 2.127451 Median 5.00 2.00 1.00 2.00 Maximum 10.00 5.00 3.00 4.00 Minimum 1.00 1.00 1.00 1.00 Std Dev 2.503444 1.167117 0.765952 1.096092 Skewness 0.431697 0.728582 0.963702 0.562094 Kurtosis 2.676730 2.865280 2.381723 2.003546 Jarque-Bera 3.612291 = 9.101281 17.41290 9.591054 Probability 0.164286 0.010560 0.000166 0.008267 sum 475.0000 241.0000 = 158.0000 217.0000 Sum Sq Dev 632.9902 137.5784 59.25490 121.3431 Observations 102 102 102 102

Table 1: Descriptive statistics for all variables