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1. Introduction
In April 1973, the first handheld mobile phone was created by Dr. Martin Cooper, a Motorola research and executive; this first handheld mobile phone weighed 2.5 pounds, 9 inches long, 5 inches deep and 1.75 inches wide; talking time was 30 minutes and needed 10 hours to be re-charged.
Through the development in the past 40 years, innovative technology has improved the way we communicate with our family and friends. Today, mobile phones have become an integral part of our lives. According to comScore, Inc., the most popular function among U.S. mobile subscribers is making text messages at 68.6 percent; followed by web browsing at 38.6 percent, application downloading at 37.3 percent, social networking at 27.3 percent, playing games at 25.7 percent, and listening to music at 17.9 percent [1].
In 1993, the first smartphone IBM Simon was introduced, and then the first Nokia’s smartphone was released in 1996 [2 & 3]. Ever since that, the innovations of smartphone continue to be developed; and the increasing smartphone growth has led the mobile phone market into a whole new competition. Kevin Restivo, senior research analyst with IDC's Worldwide Quarterly Mobile Phone Tracker, stated on his twitter account that “mobile phone users around the world are turning in their 'talk-and-text' devices for smartphones as these devices allow users to perform daily tasks like shopping and banking from anywhere. The growth trend is particularly pronounced in emerging markets where adoption is still in its early days. As a result, the growth in regions such as Asia/Pacific and Latin America will be dramatic over the coming years” [4].
Indeed, smartphone companies have tried adding more functions to the smartphone for
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encouraging users to shift from mobile phones to smartphones. Marketing researchers Pitt et al. (2011) stated that smartphone is not just a simple mobile phone; rather it has an extensive data storage capacity and processing power. Today, new smartphone models weigh around 140-250 grams which can be fitted into our pocket easily and very light to be carried around.
Smartphone is our personal digital assistant (PDA); a mini version of our personal computer which allows us to operate data storage, memo program, e-mails and web browsing easily.
Smartphone has moved the data processing power to in the hands of mobile users, who can use the mobile device irrespective of time and space (Pitt et al., 2011). A recent Google study on the mobile movement indicates that the most common of smartphone usage is browsing the internet at 81 percent, researching at 77 percent, and watching videos at 48 percent. On this study, it also finds that 72 percent of smartphone users consume other media through their smartphones; and 93 percent owners use their smartphones at home [5].
Taiwan has been booming in the smartphone market over the last few years, this increasing growth has generated more smartphone demands and more competitions. According to the International Data Corporation (IDC), smartphone usage in Taiwan’s overall mobile phone market was only 3% in 2004; but the rapid growth has jumped to 9% in 2008, 12% in 2009, and 25% in 2010 [6]. In 2012, Nielsen research in Taiwan conducted a smartphone study and the result indicates the ownership of smartphone in Asia Pacific has reached to another high level; 67% of mobile phone users in Korea own smartphones, 66% in China, 65% in Australia, 58% in Hong Kong and 50% in Taiwan (Table 1.1). This rapid growth has resulted in more smartphone choices offered by smartphone companies as they are trying to attract more customers and increase their market share; more phone functionalities will be added, data plan cost will be reduced and more competitive selling prices to be offered. The smartphone
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ownership number will only grow up a lot of more in the coming future, and the International Data Corporation (IDC) forecasts smartphone vendors will ship nearly 1 billion by the end of 2015 [7].
1.1. Problem Background
Thanks to the fast growth of the mobile communication market and innovative technology, the smartphone demand is increasing every year; and the future global smartphone shipment is predicted to be nearly 1 billion in 2015 [5]. In spite of the potential growth in the future is large, only the companies provide the products meet with consumers’ satisfactions would become the leading brands in the industry.
According to the press release of International Data Corporation (IDC), Nokia is eliminated from the list of top 5 leading smartphone vendors in 2012; the first time Nokia does not make it to the list since the inception of IDC’s Mobile Phone Tracker in 2004 [8]. American business magnate Mr. Warren Buffett once said “Your premium brand had better be delivering something special, or it’s not going to get the business”. The competition of smartphone market has changed dramatically since Apple introduced the first iPhone at the Macworld Conference & Expo in 2007; Apple iPhone created many new innovations for other smartphone manufacturers to follow; for example, iPhone was the first smartphone introduced true touch-focused function [9].
Today, the smartphone market has dominated by Apple and Samsung; however, Samsung’s global market share was only 3.3 percent which was behind HTC and listed as the fifth place based on the survey of the International Data Corporation (IDC) in 2009 [10] (Table 1.2). The recent IDC press release states that Samsung has become the new leading smartphone vendor
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contributing 22.7 percent global smartphone shipments; and this market share percentage is almost 10 percent more than Apple’s 13.8 percent and double more than HTC’s 10.3 percent [8] (Table 1.3).
Based on these IDC reports, the biggest challenge for smartphone companies nowadays is to find out the key factors that effect on customer satisfaction; because customer satisfaction can decrease complaints and increase loyalty (Gronholdt et al., 2000; Johnson et al., 2001); and customer satisfaction can have an important impact on customer’s repurchasing behavior (Anderson and Sullivan, 1993). Furthermore, Aaker (1997) proved that loyal customers can help companies to have higher market share and reduce the operating cost.
1.2. The Importance of Research
Globalization has changed the way how smartphone companies operate their business today;
it allows consumers have more smartphone choices from all over the world easily. For smartphone producers, globalization also means more competitions to compete with; and more difficulties to keep customers retention. With technology improving at a fast pace, smartphone producers are facing the challenges to keep up with customer needs and distinguish themselves from the competitors. Bendapudi and Berry (1997) argued that if a company offers differentiated services that are difficult for a competitor to match or to provide with equivalents, or if few alternative competitors exist in the market, customers tend to remain with the existing company. In addition, Marchand (2003) claimed that companies that do not offer services in keeping with the technological trend ultimately end up losing the client to a competitor that does offer the service.
In today’s challenging economy and competitive business world, every successful company
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knows the importance of customer retention. Loyalty is often interpreted as actual retention (Gustafsson et al, 2005), and many empirical studies have pointed out that two factors impact on customer loyalty are to delight customers (Lee, Lee, and Feick, 2001; Oliver, 1999) and to deliver superior value derived from excellent services and quality products (Parasuraman and Grewal, 2000). Keeping your customer happy is more cost effective than finding new customers because it costs five times more to acquire a customer than to retain a customer (Keiningham T., Vavra T., Aksoy L. and Wallard H., 2005). In addition, Emmett and Mark (2002) found out that a 2% increase in customer retention has the same effect on profits as cutting costs by 10%; and a 5% reduction in customer defection can increase profits by 25–
85% (Frederick and Sasser, 1980).
Reichheld (2001) believes the longer customers stay in relationship with the company, the more value the company generates. Therefore, the most important task and challenge for the smartphone producers now is finding the factors that meet with customer satisfaction and increase the customer loyalty. In addition, many marketing researches have pointed out that brand image, customer expectations, perceived quality and perceived value have strong influences on customer satisfaction (Aaker, 1991; Rory, 2000; Anderson et al., 1994; Clemes et al., 2008; Cronin et al., 2000). These factors are all the antecedents in Taiwan Customer Satisfaction Index (TCSI); therefore, Taiwan Customer Satisfaction Index (TCSI) will be present as the measurement to evaluate the relations.
1.3. Purpose
The purpose of this study is to use Taiwan Customer Satisfaction Index (TCSI) to find out the key factors that affect the customer satisfaction of smartphone users; and analyze how to improve the current smartphone products and services to fulfill the customer satisfaction.
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Another purpose of this research is to provide Taiwanese smartphone brands and companies with a reference to make improvements based on the result of this study.
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