MSc Marketing / MSc Marketing and Business Analysis

“Marketing Research Proposal for Lenovo smartphones”

Marketing Research

23/10/2014

Group 3:

B064541

B060897

B064516

B064536

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Contents:

1. Executive Summary ........................................................................................................ 3

2. Industry Overview .......................................................................................................... 4

3. Research Problem and Objectives .................................................................................. 5

4. Outline of Desk and Primary Research ........................................................................... 6

4.1. Desk Research ............................................................................................................. 6

4.2. Qualitative Research ................................................................................................... 7

4.3. Quantitative Research ................................................................................................. 9

5. Ethical Issues ................................................................................................................ 11

6. Timing ........................................................................................................................... 11

7. Budget ........................................................................................................................... 13

8. Credentials .................................................................................................................... 13

9. Quality control .............................................................................................................. 13

References ................................................................................................................................ 14

Appendices ............................................................................................................................... 15

Appendix 1. Global smartphone market share ..................................................................... 15

Appendix 2. Smartphone penetration in the UK from 2011 to 2017* ................................. 15

Appendix 3. Leading handset brands in the UK .................................................................. 16

Appendix 4. Lenovo’s positioning ....................................................................................... 16

Appendix 5: Moderator guide .............................................................................................. 17

Appendix 6. Smartphone survey .......................................................................................... 18

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1. Executive Summary

This paper introduces the research proposal from Excellence Marketing Research Agency

for Lenovo brand upon its entry to the UK smartphone market. The proposal describes, how the

further research led by Marketing Research Agency is going to be carried out and which

methodology is going to be used.

The smartphone industry remains to be one of the fastest growing and most competitive

industries both globally and in the UK. Companies are involved in the ceaseless pursuit and thus

need to develop innovative smartphone models in order to gain customers loyalty and increase the

sales. As for 2014 the top-3 smartphone brands according to their market share were Samsung,

Apple and Lenovo. Lenovo is a high-tech company founded in China and it’s globally known

because of its relatively inexpensive tablets and laptops. The company went into smartphone

business in 2009 and acquired Motorola Mobility in 2014.

The main purpose of this paper is to examine the UK smartphone market potential for the

Lenovo/Motorola brand and thus, several research objectives were designed. The objectives

include gathering and analysing different sorts of data: smartphone usage in the UK, information

about smartphone buyers’ behaviour and competitors’ positioning. The last objective is to define

the target market for Lenovo smartphones in the UK.

In order to accomplish the objectives, first, the desk research will be conducted. It will

include both internal and external research. Then, the more detailed qualitative research will be

carried out using focus groups. Finally, the quantitative research will be conducted by on-line e-

mailed questionnaires. Obtained data will be analyzed using SPSS software and various statistic

methods including regression and factor analysis.

The research will be created during 16 weeks and presented in the form of report.

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2. Industry Overview

The global smartphone market continues to grow year by year. The growth rate of

worldwide smartphone market reached 28,6% in the first quarter of 2014, with 84,6% market share

of devices using OS Android. Samsung accounts for 25,2% global market share, following by

Apple with 11,9% smartphone vendor share (Judge, 2014) (see Appendix 1). Although Samsung

is nowadays top-of-mind smartphone brand with the largest market share, the most popular

smartphone model in the world is Apple iPhone 5s. (ABI, 2014) After the acquisition of Motorola

Mobility, Lenovo became the third largest producer of smartphones in the world.

As for the UK market, in 2014 the smartphone penetration reached 61% of all mobile phone

users and is projected to increase to 81% in the next three years (Ofcom, 2014). Additionally, in

2017 66% of the UK population will own a smartphone (Malone, 2013) (Appendix 2). Smartphone

ownership strongly differs by age: while 88% of young people from 16 to 24 have got a smartphone,

only 14% of people in the age group 60-plus own it. Despite the fact that the senior citizens are far

away from being the most active smartphone consumers, they have a huge potential and the

greatest opportunity in terms of smartphone adoption growth, since they accumulate 57% of the

UK’s wealth and account for 25% of adults in the UK. It is expected that over-55s smartphone

penetration will increase by 25% in 2014 (Deloitte, 2014).

The leading mobile phone brands in the UK in 2014 were Apple, Samsung, Sony, HTC,

Nokia, LG, Motorola, Blackberry and Huawei (Appendix 3). In 2013, Samsung was the mobile

phone market leader with 33,7% market share, while Apple and Nokia had 19,6% and 14,8%

respectively.

There are opportunities to buy a phone from broadband operators either with or without a

contract, from retailers or to order them online. Approximately 37% of mobile users in the UK

purchased their devices online in 2013 (Nielsen, 2013).

Lenovo is one of the fastest growing tech companies in the world (Lenovo, 2014). It was

established in China in 1984 but after purchasing the IBM computer business in 2005, the company

realized that even the Chinese market is too small for its ambitions. In 2009, company also started

developing the smartphone business. Now Lenovo is going to launch its smartphones in the UK

using the potential of its newly purchased Motorola Mobility brand. Motorola already has a long

history in the UK, while Lenovo is only known as a relatively cheap but technologically advanced

tablet and laptop brand (for more details see Appendix 4).

In September 2014, Lenovo announced two brand new smartphone flagman models Vibe

Z2 and Vibe X2 with intention to start sales in October and sell them for 425$ (263£) and

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390£ (242$) respectively. Lenovo smartphones belong to the accessible smartphone category – the

prices vary from 40 to 263£ with only one model exceeding this price range (Lenovo Vibe Z2 Pro

for 560$ or 345£). The acquisition of Motorola provides a great opportunity for Lenovo to

penetrate into the UK market but prior to entry, an advanced research of the UK smartphone market

should be conducted.

3. Research Problem and Objectives

The main research problem for Lenovo is the examination of brand’s potential in UK

smartphone industry. Thus, some objectives from our agency were proposed.

1. To gather information about smartphone usage in the UK.

Detailed information about smartphone usage in the UK will be gathered. It will include

smartphone ownership information, market size and growth rate, distribution of smartphones sold

in UK by different brands across the years, dynamics of smartphone purchases and many other

statistics.

2. To find and analyze the information about British smartphone consumers’ purchase behavior.

Information about smartphone buyer behavior in the UK will be studied. It will include the facts

about most popular smartphone features and applications for different age groups, preferences in

OS, design and brands. Thus, knowledge about mobile data usage and cellular data networks

preferred by the UK citizens will be provided.

3. To analyze the competitors’ strengths and weaknesses.

Information about key competitors’ positioning, strengths and weaknesses will be collected and

carefully analyzed.

4. To define the target segment for Lenovo in the UK smartphone industry.

Ultimately, by analyzing the data received from accomplishment of two first objectives and by

conducting practical research related to attitude of potential customers towards Lenovo

smartphones, the target segment for the company in the UK should be identified.

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4. Outline of Desk and Primary Research

4.1. Desk Research

Purpose

As part of our proposal for Lenovo smartphones, we are going to conduct a secondary

research before moving to our primary research. The reason for doing so, is to gather a large

amount of data concerning the smartphone market and to gain a general idea of what is the

reaction of customers to the smartphones brands. Moreover, it presents an opportunity for

longitudinal analysis. Therefore, we will collect relevant information on Lenovo brand and its

competitors, as well as we will define any kind of changes in consumer behavior and predict

purchasing decisions on smartphones. More specifically, we aim to manage internal and

external research that are going to answer main research questions mentioned above.

Procedure

First, we will do internal research. Regarding the internal part, records from previous

marketing research that Lenovo has conducted will help us to understand the customers’

attitude towards the Lenovo brand in total and the positioning that it has on the market (see

Appendix 2). For instance, it can be found if the image that consumers in the UK already have

for the brand is that of a good quality products or good after-sale service. Additionally, internal

reports such us the financial or accounting reports about Lenovo smartphones in other markets

can show us what is the volume and the value of smartphone sales in previous years.

Information about the results from Lenovo’s marketing strategies and product reviews on

Lenovo smartphones are going to be selected and analyzed from our team so as to determine

what are the strengths and the weaknesses of the Lenovo smartphone.

As for the external research, the official statistics from National Statistics Bureau will

lead us to discover parameters of the UK population, such as the number of people, their age,

income, occupation, gender, etc. (Bradley, 2010). Hence, we will have an image of the users

of the smartphones and some demographic characteristics of them.

Moreover, we are planning to gather data from competitors’ annual reports in the UK

market. We will analyze the research findings from other agencies and organizations in the UK

such as Mintel, Euromonitor etc. This allows us to figure out if there is a market opportunity

in the UK for Lenovo smartphones (Bryman & Bell, 2011).

Consequently, the data collected from desk research will guide us to the proper

implementation of a qualitative research.

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4.2. Qualitative Research

Purpose

Based on the desk research, qualitative research will focus on deeper understanding

people's attitudes towards smartphones in general, investigate customers’ opinions about different

brands in various segments. Later, the results from qualitative research will be analyzed in order

to develop a quantitative survey. We chose the focus groups as a principle qualitative method.

Justification of using the focus groups

There are two main reasons for using the focus groups. First of all, the dynamic discussion

used in focus groups, allows us to collect a diverse set of views about participants' experiences

with smartphones. Secondly, unlike the other techniques such as in-depth interviews, the

moderator simply guides the discussion process in an informal atmosphere and therefore, the

participants are more willing to express their realistic opinions and exchange views. As a result,

new ideas might emerge.

Population and sampling

As people age, their wants and needs are constantly changing. So we will divide the market

into 5 segments according to the age since they have similar psychographic and behavioral

characteristics (see table 1). Moreover, reliable research agencies, such as Euromonitor also group

the population similarly.

Table 1. Focus groups divided by age

(Age) 13-17 18-24 25-34 35-54 55+

Group1 Group3 Group5 Group7 Group9

Group2 Group4 Group6 Group8 Group10

Additionally, using the quota sampling, we will chose 7 participants for each focus group for

all the 10 groups. The group members will be chosen regarding the following criteria:

Both men and women should be involved

Non-acquaintance of the members within a group

Different occupation and social status

Difference in educational level

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After the completion of focus groups, the in-depth interviews may take place to acquire more

precise and specific information from those, who had the most interesting and useful opinions. We

can conduct a maximum number of 5 in-depth interviews because of the budged constrains.

Procedure

The focus group discussion is going to be conducted in a special venue equipped with recording

devices, while the moderator will control the time. The detailed outline of the focus group

procedure is presented in the Table 2, while the specified moderator guide can be referred in

Appendix 5.

There are five principle sessions that will be discussed deeply in the discussion stage. If

the participants do not mention the vital topics, the moderator will lead to these significant sessions:

Motives behind purchase behavior

Most popular smartphone activities

Purchase channels

Attitudes towards different brands

General ideas about the Lenovo brand

Table 2. Detailed agenda of focus group process

Step 1

Scene settings: one round table, U-shaped seating arrangements and

independent quiet room, video camera

Material preparation: notepad and pen or pencil, flip chart and

markers, cards (or badges, stickers) for writing participants’ names on,

watch or clock, question guide

Step 2

Begin at 10am

(10 minutes)

Introduction about the research team and roles

Ground rules

The principle topics

Step 3

(10 minutes)

The opening topic

Step 4

(80 minutes)

Five important sessions

Step 5 Summing up (end the discussion and gratitude for participation) and

reimburses expenses.

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The steps of the analysis of the qualitative research data include:

1. Transcription of video recordings

According to the notes that the moderator has taken during the interviews, the most relevant parts

with our objectives are going to be reviewed from the videos. At this stage, we will interpret not

only the verbal cues, but also the body language of the participants.

2. Coding of the transcripts

After assembling the data, the goal is to use coding so as to categorize the information and reduce

the amount of data. The goal of the data assembly is to reduce the number of the data and to collect

the most important ones.

3. Organizing the coded transcript into particular themes

4. Displaying the themes in the form of charts

5. Drawing conclusion to describe patterns and provide explanation.

4.3. Quantitative Research

Purpose

Online questionnaires will be developed based on information obtained from focus groups.

The purpose of online questionnaire is to measure how widespread the attitudes are on the target

population.

Justification of using online questionnaires

There are three reasons for using online questionnaires instead of postal and telephone

questionnaires. Firstly, online questionnaires are speed and cost effective. Online questionnaires

eliminate the costs of paper, postage, and data entry, as well as other administrative costs. Besides

that, the incremental cost of reaching additional respondents is minimal and this allows us to reach

larger samples at lower cost. Additionally, online questionnaires can be delivered and collected

from respondents in a short period of time and therefore, it is more time efficient.

Secondly, online questionnaires allows more accurate data capture compared to postal and

telephone questionnaires. Data entry is automated with online questionnaires thus researcher does

not need to enter data manually and therefore avoiding errors in data. Furthermore, researcher can

review up-to-the-minute sample size counts which postal and telephone questionnaires could not

offer.

Lastly, online questionnaires allows personalized and flexible questioning. The presence

of automatic skipping when using filter questions ensures respondents only answer sections of the

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questionnaire relevant to their previous answers. In addition, online questionnaires can prompt

respondents when questions were unanswered and therefore reduce nonresponse rate. These

features are not available in postal questionnaires.

Population and Sampling

The target population of this quantitative research is all UK residents above the age of 13

years old. Sampling frame will be obtained from UK census 2011 (National Statistic, 2014). Quota

sampling will be used in data gathering. The reason for using quota sampling is to ensure various

age groups in the UK population are proportionally represented in the sample (Zikmund and Babin,

2010). Besides that, quota sampling is one of the most cost efficient and realistic technique that

researchers can use (Bryman and Bell, 2011). We have decided to categories the sampling frame

based on age groups. We also decided to distribute 4250 online questionnaires in total as it is

deemed as the most appropriate number taking budget into consideration. Moreover, it is known,

that the average response rate for online e-mail surveys is 20% and therefore we will have

approximately 850 completed questionnaires. Number of people to be interviewed within each

category will be based on the demographics of UK population as specified by Index Mundi (2014)

(see Table 3).

Table 3. Sample Size

Age Percentage of total population Number of samples

13-17 2.11% 89

18-24 13.26% 564

25-34 26.32% 1118

35-54 27.79% 1181

55+ 30.53% 1298

Total 100% 4250

Age 0-12 years old are not within the scope of this research. Therefore, the percentage of

population was adjusted and assumptions were made.

Procedure

The questionnaire will probe the following:

What are the key motives for purchasing a smartphone?

What are the most popular characteristics of smartphones?

What are their attitudes towards different smartphone brands?

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The questionnaire will be organized into thematic sections. A mix of open and closed

questions will be used and it aims to gather nominal, ordinal, interval and ratio measurements. In

particular, interval and ratio measurements will be the main focus as it allows deeper statistical

analysis. The questions will be pre-coded and be hosted on Qualtrics.com (see Appendix 6 for

sample questionnaire). The maximum duration of the questionnaire will be up to 7 minutes.

Five pilot questionnaires will be conducted to ensure context and face validity. Modifications will

be made in response to feedback before the questionnaire go live. The questionnaires will be sent

to participants through emails with URL-embedded. Participants will be asked to click on the URL

and they will be directed to the online questionnaire. As a form of encouragement for people to

participate, respondents will be given incentives for participation. Excellence Marketing Research

Agency will consult and discuss with Lenovo on what kind of incentives will be given.

Data gathered will be analyzed using SPSS software. Statistic techniques such as

descriptive statistics, regression, factor analysis and cluster analysis will be used. Regression

analysis will be used to study the relationship of dependent variable (Lenovo smartphone sales)

and independent variables (smartphone features). Exploratory factor analysis will be used to

confirm the dimensionality of existing scales. In this research, applying factor analysis to the

smartphone scale will reveal the dimensions underlying the importance of smartphone features.

Therefore, deeper understanding of smartphone shoppers will help to improve the effectiveness of

the marketing-mix.

5. Ethical Issues

Due to the sensitivity of personal and commercial information, researchers will take all

necessary steps to ensure that the data will be collected in accordance with the Data Protection Act

1998. At the beginning of the questionnaire, participants will be notified that their participation

will be completely voluntary and no sensitive or offensive questions would be asked. Participants

will also be notified that they reserve the right to pull out at any stage. All information obtained

would remain anonymous and confidential.

6. Timing

Regarding the process of our research project and the demands of the Lenovo Company,

we have designed a timetable where we have estimated how long does each activity take (see

table 4). By using week numbers but not exact dates we are ensuring the flexibility of the

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project. Moreover, we decided to approach the timeframe as ‘concurrent phased research’ so

as to save more time by running different activities in parallel rather than ‘end to end’(Bradley,

2010, p51). The Gantt chart shows perfectly how these activities are going to be implemented

in parallel and cross each other.

Table 4. Timing layout

Activity Week

Desk research 1- 4

Qualitative fieldwork 4-7

Qualitative/desk research available 8

Quantitative questionnaire development 9

Pilot 10

Quantitative stage (n=4250) 11-13

Data preparation 13-14

Produce tables 15

Presentation 16

Final report 17

Table 5. Gantt timing

Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Desk research

Qualitative fieldwork

Write and approve recruiting guide. Identify

source for recruiting participants

Write and approve interview guide or

moderator’s guide.

Conduct focus groups

In-depth interviews

Qualitative/desk research available

Quantitative researh

Identify lists for participation

Quantitative questionnaire development for

online interviews

Pilot (n=5)

Quantitative stage (n=4250)

Data preparation

Produce tables

Presentation

Final report

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7. Budget

The fees charged for the Lenovo Company are based on the techniques that will be used

during the qualitative and the quantitative research. In more details the budget of £40,000 is

going to be divided into the focus groups, in depth interviews and online questionnaire by email.

Nevertheless, we reserve the right to adjust the fee and date of completion should any

assumptions prove to be incorrect or changed (Bradley, 2010).

Table 6. Budget allocation

Methods of research Description Fee

Qualitative research 10 Focus Group discussions of 7 interviewees

£2000 per group

£20,000

Qualitative research Maximum 4 In depth interviews

£600 per individual

£3,000

Quantitative research Online questionnaire delivered to 4,250 users of the

Internet

£4 per questionnaire emailed

£17,000

Total £40,000

8. Credentials

Excellence Marketing Research Agency is known for its high quality researches and superb

customer satisfaction. Its employees are graduates from top 50-world business schools with great

relevant working experience. Thus, research conducted by the Marketing Research Agency may

be considered as highly appreciated.

9. Quality control

All the moderators for focus group interviews and in-depth interviews are part of Excellence

Marketing Research Agency team and therefore are great specialists in their field of work.

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References

ABI. 2014. Samsung and Apple devices dominate smartphone device model top 20 [Online].

Available: https://www.abiresearch.com/press/samsung-and-apple-devices-dominate-

smartphone-devi [Accessed 21/10/2014].

Bradley, N. 2010. Marketing Research: Tools and Techniques, England, Oxford University

Press.

Bryman, A. & Bell, E. 2011. Business Research Methods 3rd edition, New York, Oxford

University Press.

Deloitte. 2014. The Deloitte consumer review [Online]. Available:

http://www.deloitte.com/assets/Dcom-

UnitedKingdom/Local%20Assets/Documents/Industries/Consumer%20Business/uk-cb-

consumer-review-edition-7.pdf [Accessed 22/10/2014].

Judge, S. 2014. Smartphone market research [Online]. Available:

http://www.smartphonemarketresearch.com/xiaomi-becomes-worlds-5th-largest-smartphone-

vendor-in-q2-2014/ [Accessed 20/10/2014].

Lenovo. 2014. About Lenovo [Online]. Available:

http://shop.lenovo.com/gb/en/shop/?cid=gb:sem|se|google|845751236|uk_brand_en|UK+IIP_

Lenovo_Brand_Direct+%28exact%29|109958447&ef_id=VEg6RwAABNrrCT2F:20141022

231415:s [Accessed 22/10/2014].

Malone, I. 2013. UK mobile insight report [Online]. United Kingdom. Available:

http://weareapps.com/MobileInsightsReport.pdf [Accessed 21/10/2014].

Mundi, I. 2014. UK Demographics [Online]. Available:

http://www.indexmundi.com/united_kingdom/#Demographics [Accessed 22/10/2014].

Nielsen. 2013. The mobile consumer [Online]. Available:

http://www.nielsen.com/content/dam/corporate/uk/en/documents/Mobile-Consumer-Report-

2013.pdf [Accessed 22/10/2014].

Ofcom. 2014. Media facts and figures [Online]. Available: http://media.ofcom.org.uk/facts/

[Accessed 20/10/2014].

Zikmund, W. G. & Babin, B. J. 2010. Exploring Market Research, China, Cengage Learning.

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Appendices

Appendix 1. Global smartphone market share

Appendix 2. Smartphone penetration in the UK from 2011 to 2017*

*-predicted value

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Appendix 3. Leading handset brands in the UK

Appendix 4. Lenovo’s positioning

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Appendix 5: Moderator guide

Introduction

My name is ________and I’m the moderator today. My job is to keep the discussion flow smoothly

and make sure it covers several aspects of the topics. The purpose of this discussion is smartphones.

As you will see, there are no right and wrong answers here, we just want to hear your personal

viewpoints. You can say whatever you want related to the topic, we would appreciate any opinions.

Ground rules

1. Duration: This session will last for about 1 hour and 40 minutes

2. Transparency: There are observers in other room who are watching the live streaming of this

discussion.

3. Courtesy: One person is speaking at one time; we want to respect everyone.

4. Confidential research: nobody's name will be mentioned on any material, and we will use the

alias name.

Participation introduction

1. Please take a few minutes to talk to the person seated next to you.

2. I want to ask you to introduce the person who you just know and talk about their hobbies, name,

interests and so on.

Opening topics

1. Which mobile phone you are using now?

2. How long have you been using this phone?

3. Which phones did you use before?

Main sessions

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1. What motivates you to change your phone?

2. What kind of activities do you prefer to perform on your smartphone?

3. Where have you bought your phones?

4. Which smartphone brands are you familiar with?

5. What do you know and how do you feel about Lenovo?

Summing up

Thank you very much for taking part in the focus group discussion. You have provided valuable

information for our research.

Appendix 6. Smartphone survey

Dear madam/sir,

Your opinion is very important to us. Please take the time to complete our survey regarding

smartphones, it will take no more than 7 minutes.

Please, follow the link below:

URL: http://www.emrc.com/surveys/smartphone-market-in-the-uk

After completing this survey, you will have a chance to win a prize sponsored by Lenovo.

Your participation is entirely voluntary. This questionnaire would not ask any offensive or

sensitive questions. All data gathered would remain confidential and participant details would

remain anonymous in accordance with the Data protection Act 1998.

Thank you very much for your time and your great help.

Should you have any enquiries about the study, please do not hesitate to contact me:

j.lewis@emrc.co.uk

Best wishes,

J. Lewis

Senior marketing analyst,

Excellence Marketing Research Company

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Screening Question

S1. Do you have a smartphone?

Tick one box

(1) Go to Question 1

(2) Go to Question 2

Smartphone Shopping Behaviour

In this section I would like you to answer some questions about your smartphone shopping

behaviour

Q1. What is your current brand of smartphone?

Brands Tick (Tick=yes, Blank=No,

tick 5 – extra field

appears)

Apple (1)

Samsung (2)

Sony (3)

Nokia (4)

Other (5)

(extra field) Please, specify your current

smartphone model

Q2. Are you going to buy a smartphone in the next 6 months? Tick one box

Yes (1)

No (2)

Yes

No

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Q3. Where did you buy your smartphone? Tick one box

Retail stores (1)

Carrier retailer (2)

Online shops (3)

Others (4)

Please specify here__________

Q4. What price are you willing to pay for a smartphone? Tick one box

Below £100 (1)

£100-£160 (2)

£161-£220 (3)

£221-£300 (4)

£301-£500 (5)

£501 and more (6)

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Your Attitudes to smartphones that you buy

Q5. How important is it that the smartphone you buy have the following features: (Tick for

each feature)

Q6. Which source of information affects your intention to purchase smartphone?

(Tick for each category)

Categories No

effect

(1)

Little

effect (2)

Moderate

(3)

Some

effect

(4)

Big

effect

(5)

Family and friends

recommendations

Customer online review

Professional online review

Advertisement

Retail staff recommendation

Features Not at all

important

(1)

Somewhat

important

(2)

Moderately

important

(3)

Important

(4)

Very

important

(5)

Big screen size

Affordable price

Long battery life

Good camera quality

Stylish design

Fast operating system

Good after sales

service

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Personal details:

In this section I would like you to answer some questions about yourself

Q7. Your gender (Tick one box)

Female

Male

Q8. What is your age segment? (Tick one box)

13-17 years old

18-24 years old

25-34 years old

35-54 years old

55+ years old

Q9. Which of the following categories best describes your annual household income before

taxes?

(Tick one box)

Less than £10000

£10000 - 20000

£20001 - 45000

More than £45000