Final report of our work for the Marketing Research Methodology class. Thanks to my teammate Romain Trochet

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Marketing Research Methodology
Expansive smartphones in China
Kevin CECILE Romain TROCHET
51500114 51500133

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Table of content
Abstract………………………………………………………………………………3
Introduction…………………………………………………………………………..4
Literature review…………………………………………………………………….6
Qualitative study methodology : data collection and sampling plan…………..8
Hypotheses and expected fundings………………………………………………9
Qualitative study : data analysis plan……………………………………………10
Expected contributions, implications, limitations and conclusion…………….11
Appendices
References………………………………………………………………….12
Questionnaire……………………………………………………………….13

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1. Abstract
The study that we are going to introduce is about the phenomenon of expansive
smartphones in China, particularly the iPhone. In fact, we noticed that almost all the Chinese
that we meet have an iPhone and we would like to understand what are the causes. Our
goal was to establish a connection between the phenomenon and the Chinese culture.
Thanks to a literature review, we found interesting articles concerning luxury in China
first, and the growth of this kind of consumption with the causes associated. Then, we
searched for articles about the iPhone un China more particularly. We wanted to know if
previous researches confirmed what we had noticed, and they did.
We chose to use a qualitative and ethnography study because our aim was to
understand the Chinese culture, so it implicates to analyze how a group works and acts.
To proceed to this study, we focused on the Chinese youth, in Wenjiang, because they are
the most representative of the phenomenon. Through in-depth interviews, we asked
questions which were general at the beginning, and more precise as the study progressed.
Finally, we asked them their point of view of the phenomenon.
The method to collect the information was to make a group interview with Chinese students,
and also ask to people in the campus or in the street.
We made hypotheses on the foundings. One of them was that due to their culture,
Chinese people want to show their standard of living thanks to a brand and its notoriety.
Another was about the trust granted to Chinese brands. They are searching for reliability so
they prefer to buy foreign and most expansive brands.
Furthermore, we thought that the features and the performance offered by expansive
smartphones could also explain the phenomenon.
The results confirmed those hypotheses. When ask them about why choosing the
specific brand Apple, what came out is the power of the brand.
For students we interviewed, the performance provides buy the smartphone is something
really important that attract them toward expansive smartphones.
We expect our study to have some research implication. It can help identify the key
elements that drive young Chinese consumer buying decision, and help marketing teams,
of foreign brands especially to adapt their products offers for the Chinese market. However,
our study can be considered for other sectors than smartphones.
In addition, this study examines the relationship between the brand perception and
value of a product. They will like a brand like Apple and consider it as a luxury brand because
of the price of their products.
We can also find research limitations. In fact, this study may be not representative of
all the Chinese people because of the sample we chose. First, geographically we choose to
interview students in Wenjiang. Secondly, an other limitation can be the sample size. Maybe
is not big enough to provide an accurate qualitative study.
The last limitation is that the researchers, us, do not have a good knowledge of
Chinese culture so we could have missed some information during the data collection.
Our findings from this study showed that the phenomenon can be explained by three
main reasons. Two are cultural, they are sensitive to the symbolic meaning of a product,
and what people think about them. The second is a generational reason, they grew up with
smartphones, internet connection everywhere, so they need the best device.

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2. Introduction
a)! Background of the study
China is the world’s largest smartphone market today, and the competition between
smartphones manufacturer is really tough.
Source: Gfk – Global smartphone sales - press release
Source: IDC (International Data Corporation)
The phenomenon that interesting us is the one concerning the purchase of expensive
smartphones by Chinese people.
Nowadays several companies such as Apple, Samsung or Sony are making more
and more expensive smartphones and even Chinese companies like Huawei or Lenovo are
taking the same path. At least once a year, twice for some of them, new generation of their
smartphones is launched with new capacities, enhanced performances and different design
details. The price is higher but in almost the full cases, this is a success for the companies,
especially in China.
The symbol of this phenomenon is Apple’s IPhone, one of the most expansive phone
on the market. Apple is described as a luxury brand among the electronic sector. They
always sell product with a high price in order to get huge margins and keep their positioning
as a premium product manufacturer. It is interesting to notice that in the first quarter of 2015,
Apple had overtaken Xiaomi market share in China and became the largest vendor of
smartphone on the Chinese market. During this period of time, Apple had 14.7 percent of
market share, surpassing Xiaomi, which had a 13.7 percent, according to market researcher
the International Data Corporation (IDC).
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b)! The problem statement / need for the study
There is a need for understanding this phenomenon within a culture-sharing group
such as Chinese students. It is important to do this research because today China is the
world largest smartphone market so every brand will focus on this country. It is now
important to understand what are the key factors that influence young Chinese people when
they want to buy a new phone
That is why, we would like to analyze the relation between a culture sharing-group
and a mature market like the smartphone. It is interesting to describe what are the motivation
that drive young Chinese people when they decide to get a new smartphone device.
Moreover, this is important for us to do this research because it is a phenomenon that
we did not notice in Europe; for us electronic devices are not considered as a luxury product.
We would like to understand the culture around us and its impact on the choice of a new
smartphone.
Furthermore, our consuming priority are different: when Chinese people may
consider that it’s a need to have an expensive smartphone to show it as a jewel, most of
European people prefer to buy a cheaper smartphone and keep money for something else.
Our research strategy is to make a qualitative study because we are looking for
details and understanding of Chinese behavior toward expansive phones.
We decided to use Ethnography approach because it is the best fit to the phenomenon that
we want to study. Indeed, we want to analyze the Chinese culture, beliefs and values that
are behind that purchasing behavior.
c)! The purpose statement
The purpose of this ethnography study is to understand the purchasing behavior
toward expansive phones for Chinese students in Wenjiang.
At this stage of the research, the purchasing behavior toward expansive phones will
be generally defined as the need for young Chinese people to buy a certain kind of
smartphone, the most expansive one.
d)! The central research question
We want to understand the impact of Chinese culture on the purchasing behavior of
the youth toward smartphone devices, particularly on IPhone.
e)! Sub-questions (issues and/or procedural)
•! We would like to check if the phenomenon we note is similar to what has already
been written in previous studies and to have the Chinese student's opinion about
it.
•! Why do they need an expansive phone?
•! Is it a real phenomenon with cultural roots or it is just a trend that will disappear?

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3. Literature review
a)! Luxury product in China
Due to the rise of value of the renminbi against euro, more and more Chinese buy luxury
products in foreign countries, such as France. The price is lower than before so they use
this phenomenon to acquire goods for whom they didn’t have the money a few months ago.
Furthermore, “a belief that luxury goods sold abroad were superior to locally sold
merchandise”1
is also a major reason, because they are searching for quality and reliability.
An other explanation is the increase of personal wealth. In fact, between 2000 and 2011,
“the wealth per adult more than tripled”2
.
Finally, a Chinese tradition can explain this phenomenon, it concerns the gift tradition. To
maintain the Guanxi, people may offer luxury goods as a proof of their attachment. It also
allow to impress the person who receives the gift. This person will want to offer a present
with at least the same money value. It creates a circle that doesn’t end. Chinese people buy
gifts to friends or family in foreign countries too3
.
This is why in 2015, China will account for more than one-third of the global market for
luxury goods.
Source : chinadaily.com.cn
As showed in the diagram, China should represent almost half of the world luxury market
within five years.
1
A. Wee Sile, Chinese still spending on luxury, just not at home,
http://www.cnbc.com/2015/10/04/chinese-still-spending-on-luxury-just-not-at-home-piaget.html,
Oct. 2015
2
Albatross Global solutions, 7 Reasons Why Chinese Luxury Consumers Prefer to Buy Abroad,
http://www.albatrossasia.com/7-reasons-why-chinese-luxury-consumers-prefer-to-buy-abroad/
3
Albatross Global solutions, 7 Reasons Why Chinese Luxury Consumers Prefer to Buy Abroad,
http://www.albatrossasia.com/7-reasons-why-chinese-luxury-consumers-prefer-to-buy-abroad/

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b)! Iphone in China
Apple's biggest IPhone market. This is how China is seen by the American company,
the country which represents “20% of IPhone units”4
all around the world.
Several reasons, recent or old, can explain this phenomenon. First of all, since a few
years, China attends a development of its middle-class. “I've never seen as many people
coming into the middle class as they are in China”5
told Tim Cook, Apple's CEO. Increasingly
high incomes allow people to purchase devices more expensive than before.
The second principal reason is more recent: it concerns the 4G. Chinese people want to
participate in data exchanging on the Internet, therefore they need to accede to networks
and download data faster. Moreover, only a few recent smartphones can use 4G, including
the IPhone 6.
Moreover, Apple began a partnership with China Telecom, the biggest phone provider in
China.
A recent study shows the preferred brands for gifting.
Apple is in 6th position, just behind brands like Louis Vuitton
or Chanel.
In addition, world-known luxury brands such as Dior or Rolex
are behind the American company.
Source : slideshare.net
4
C. Auffray, iPhone 6s : la Chine donnera un coup de pouce aux ventes d'Apple,
http://www.zdnet.fr/actualites/iphone-6s-la-chine-donnera-un-coup-de-pouce-aux-ventes-d-apple-
39824902.htm, Sept. 2015
5
S. Tibken, China passes US to become Apple's biggest iPhone market,
http://www.cnet.com/news/china-passes-us-to-become-apples-biggest-iphone-market/, Apr. 2015

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4. Qualitative study methodology: data collection and sampling plan
Our data collection will be founded on made in-depth interview and observations. The
group we want to study is the Chinese youth, because we think they are the more
representative group to explain the phenomenon, they grew up with smartphones and
nowadays this generation is called “Generation Y”, in reference 3 to the headset.
Moreover, the researchers (my colleague and I) are students so we can do good
observations since we are immersed among Chinese student, we are able to observe them
in their every day life.
For the in-depth interview we plan to make group interviews and also interview people
alone, in fact we want to interview more than 20 people. In order to gather the maximum
data and made an accurate marketing study to understand a culture sharing-group like
Chinese students and draw a cultural portrait, we need to listen to a large number of people.
We build a questionnaire that we spread by email to Chinese classmates and their
friends. We start by making close-question to identify the profile of each respondent, then
we have several open-question in order to let them express their thoughts, feelings, point of
view about our research topic. We plan to ask them about their personal experience with
phones, their point of view about that phenomenon, why did they buy this one instead of a
cheaper one, if they earn money themselves or not, who bought the phone (them or parents,
boyfriend, girlfriend...) and when (birthday or when the smartphone was launched...). But
more important we ask them open-questions to understand the Chinese influence toward
their purchasing behavior, and how they perceive smartphones nowadays and also let them
have hindsight about their own culture.
We did a group interview with 6 Chinese students, it is different from the
questionnaire, because they can debate with each other, agree and disagree about what
one person is saying.
Moreover, we did observations, we went to a retail store, China Mobile in Wenjiang
close to the campus near East Gate. We wanted to observe at first if the retailers really put
forward Apple’s IPhone, regarding sales promotion and above all point-of-sale display. And
that would mean that there is a real demand by Chinese students because the main
customers of that store seems to be Chinese students.

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5. Hypotheses and expected foundings
In our opinion, Chinese people buy expansive smartphones due to several reasons.
The first one is the growing of the luxury industry general in the country since a few
years. It incites people to make more and more costly purchases. Moreover, the drop of
value of the renminbi against euro during the few last months allow them to buy luxury
products in a lower price than in China, when they go abroad.
Moreover, in our opinion an other reason for which so much students like us have
that type of devices concerns the Chinese culture. It means that they first care about what
they look like and how they are felt by each other. This is a group phenomenon because
almost every Chinese acts according to the image they give. They want to show that they
can have the last generation of the most successful smartphone, whatever the price. to They
really care about what people around them think so they could do everything to give a
positive though.
One of our hypotheses is that Chinese young people are attracted to expansive
smartphones because of the features offered by those kind of devices. In fact, this
generation of smartphone user are born with internet, this is a part of their daily life. So, they
need to buy one of the best smartphone in the market in order to get the best user-
experience, the fastest internet connection, the best processor the play the latest
videogames etc.
Another hypotheses is that Chinese young people don’t really need to buy expansive
smartphones but they want to buy good phones made by foreign brands. And unfortunately
those smartphones are very expansive. First of all, for the brand name, some brands are
really well known and convey messages, like Apple or Samsung for example. Some Chinese
brand are starting to produce expansive phones, for example Huawei or Lenovo.
With this ethnography study we have some expected foundings. Indeed, we expect
our study to show the impact of the Chinese culture on the current purchasing behavior of
the Chinese youth. It would be interesting if our qualitative study would be able to show that
the phenomenon we are studying is not ready to stop soon because it is really linked to the
Chinese culture. We think that at least 80% of the participant to our study don’t earn money
by themselves and they received the phone by their family for a special occasion.
Consequently, we think that they choose to buy expansive phone because of the brand and
its notoriety to prove things to the other students, show their standard of living.

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6. Qualitative study: data analysis plan
The data analysis plan is to make a non-statistical study because of the qualitative
approach we chose to undertake.
Thanks to our data collection plan, we were able to collect a lot of information, different
information that we need to analyze.
First of all, we identified the profile of the people we interviewed and their background
with expansive smartphone. For 60% of the interviewees the expansive smartphone is the
first phone they ever had. And among the 40% who already had an expansive smartphone
before, 72% said that their previous phone was cheaper.
This figures show us that a huge amount of them really wanted to get a more expansive
phone, that confirm the phenomenon we observe here in China.
An other interesting figures about Chinese students, 86% of them don’t earn money by
themselves so the expansive smartphone was buy by their parent (70%). So we noticed that
their parents are involved in the purchasing act, their point of view matters when they need
to get a new smartphone.
When ask them about why choosing the specific brand Apple, what came out is that
they really like Apple because of the power of the brand. The brand image of Apple is very
good in China and they like the message provide by that foreign brand. Chinese are very
sensitive to the symbolic meaning of a product. What message this product can convey.
For students we interviewed, the performance provides by the smartphone is
something really important that attract them toward expansive smartphones. They want to
pay the price to have the best in terms of quality product or operating system speed, fastest
internet connection and a very good user-experience.
During the data collection we understood that their purchasing behavior regarding expansive
smartphones influence by aspects of the Chinese culture.
One of this cultural values is “Mianzi” and because of that value they need to have an amount
of prestige, pride, respectability. And especially among students, this “Mianzi” can be
express with an expansive smartphone to show around, with a brand consider as luxury on
it.

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7. Expected contributions, implications, limitations and conclusion
We expect our study to have some research implication that is to say conclusive
statement for further research. It can help identify the key elements that drive young Chinese
consumer buying decision. Because our findings concern the phenomenon we observe
regarding expansive phones in China, and especially iPhone. However, our study can be
considered for other sectors than smartphones since the cultural aspects we put out can
influence the purchasing behavior toward other products.
In addition, this study examines the relationship between the brand perception and
value of a product. Our analysis would be able to show in what extent Chinese youth link
their brand image to the price of a product itself. That means that they think that an
expansive phone like the Apple’s iPhone is consider as a luxury brand making luxury devices
because they only made expansive smartphones but Chinese people won’t have the same
image of a brand making cheaper phones like Huawei, Sony, etc. They will like a brand like
Apple and consider it as a luxury brand because of the price of their products.
This is an interesting implication because it is different from Europe and especially
France. Because in this country the price of smartphones doesn’t influence the brand image.
For example, Samsung is a very popular brand, with a similar luxury brand image than Apple
and Samsung is Apple best competitor in French people mind. However, it is the leader in
the French smartphone market and they have this position thanks to their cheaper phones.
There is another kind of implication, the practical implication. That is to say implication
that we could imply in work situation. To begin with, our study can help marketing teams of
smartphone companies to adapt their product offer and marketing for the Chinese market.
In fact, the Chinese is very particular and there are a lot of cultural differences between
China and western countries. Therefore foreign brands can find in our study useful
information about those cultural differences that influence their purchasing behavior. This
qualitative study we did uses an ethnographic approach that analyzes the Chinese culture,
beliefs and values that are behind their purchasing behavior. With those findings they can
provide more precise marketing-mix to sale smartphones in the Chinese market, and above
all if they are targeting young customers.
We can also find research limitations. In fact, this study may be not representative of
all the Chinese people because of the sample we chose. First and foremost, geographically
we choose to interview students in Wenjiang, it could have been better if we had young
Chinese that are in other place in Sichuan or in Mainland China. Even if some students we
interviewed are not originating from Wenjiang or Chengdu.
Secondly, an other limitation can be the sample size. Maybe is not big enough to provide an
accurate qualitative study.
The last limitation is that the researchers, us, do not have a good knowledge of
Chinese culture and its particularities when we started this study. Consequently, we could
have missed some information during the data collection, our findings could have been more
accurate with a previous knowledge of Chinese culture.
To conclude, that phenomenon is not ready to stop because it is really influenced by
Chinese culture. It appears that Chinese youth are really desire to buy expansive
smartphones, for three main reasons. Two are cultural, they are sensitive to the symbolic
meaning of a product, and what people think about them. And they care about the power of
the brand regarding smartphones. Secondly it is like more a generational reason, they grew
up with smartphones, internet connection everywhere, so they need the best device, to have
the best user-experience.

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References
- Albatross Global solutions, 7 Reasons Why Chinese Luxury Consumers Prefer to Buy
Abroad, http://www.albatrossasia.com/7-reasons-why-chinese-luxury-consumers-prefer-to-
buy-abroad/
- A. Wee Sile, Chinese still spending on luxury, just not at home,
http://www.cnbc.com/2015/10/04/chinese-still-spending-on-luxury-just-not-at-home-
piaget.html, Oct. 2015
- S. Tibken, China passes US to become Apple's biggest iPhone market,
http://www.cnet.com/news/china-passes-us-to-become-apples-biggest-iphone-market/,
Apr. 2015
French articles :
- C. Auffray, iPhone 6s : la Chine donnera un coup de pouce aux ventes d'Apple,
http://www.zdnet.fr/actualites/iphone-6s-la-chine-donnera-un-coup-de-pouce-aux-ventes-
d-apple-39824902.htm, Sept. 2015
- C. Auffray, l'Iphone ne faiblit pas en Chine assure Tim Cook,
http://www.zdnet.fr/actualites/l-iphone-ne-faiblit-pas-en-chine-assure-tim-cook-
39823890.htm, Aug. 2015
- P-Y Dugua, Les profits d'Apple dopés par le succès de l'iPhone en Chine,
http://www.lefigaro.fr/secteur/high-tech/2015/04/28/32001-20150428ARTFIG00025-les-
profits-d-apple-dopes-par-le-succes-de-l-iphone-en-chine.php, Apr. 2015
- T. Pontiroli, Apple aura imposé l'iPhone en Chine sans toucher à ses marges,
http://pro.clubic.com/entreprises/apple/actualite-751115-iphone-6-chine.html, Jan. 2015
- J. Pruvost, La Chine, premier marché de l’iPhone,
http://www.liberation.fr/futurs/2015/01/26/la-chine-premier-marche-de-l-iphone_1189328,
Jan. 2015