Consumer Behavior In Upgrading Smartphone

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Consumer Behavior in Upgrading Smartphone

Several factors influence consumers in their daily decisions on different products. The

smartphone is one of the electronic gadgets whose demand depends on its design and the market

trend. The behavior of consumers of smartphones is peculiar and different from the behavior of

consumers of other products. A shift in the demand curve is also influenced by several factors

which include the nature of the technology in the smartphone, the availability of close substitutes

to the smartphone and the composition of the population. In the United States, people are holding

on to their smartphones than old phones. This paper, therefore, looks at the consumer behavior

when the smartphones are upgraded.

Their preferences for the products influence consumer choices. Their decision to choose a

product is influenced by among other things the price of the product, the availability of close

substitutes, the nature of the market. In this context, the behavior of the consumer is conceived as

an exogenous variable under the existing neoclassical theory. Transaction choice is one of the

main influencers of the consumers of smartphones to continue using their smartphones and not

change the smartphones as regularly as old phone users. Deciding to upgrade a smartphone

comes at a very high transaction cost that makes consumers prefer using their smartphones rather

than upgrade them. In looking at the consumers choice on the upgrading of smartphones a clear

understanding is made based on the Pareto's principle.

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The Consumer model of deterministic model applies in the case, the deterministic model

presupposes that the consumers are guided by the prices of the commodities and in this case, the

cost of upgrading. The budget for upgrading the smartphones ranges from the low of $649 to a

budget of $ 999. The budget of repairing a phone is fixed at about $320. The comparable

advantage is, therefore, on repairing the phones as opposed to upgrading the phones. The

preferred combination of the consumer model has been presented in the indifference curve

below. X1 and X2 represents the cost of upgrading and cost of repair of the phones.

Graph 1: Budgeting line

From the sufficient model, the consumers do not have the 100% knowledge on the

decisions which they are about to make, but they end up making the decision anyway. The

consumers make decisions based on what they deem fit for them regarding the pricing and this

influence their ultimate decisions and the decisions that concern the price of the commodities.

Most of the consumers make their choices based on very simple considerations which are

determined by their abilities and their perceptions of the issues. The main economic issues that

are considered include price. However, they do not have the opportunity to interrogate issues

further.

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In the case of smartphones, the consumers have an idea of the alternatives involved and

can paint the picture of the exact alternatives that what they want but they find it impossible to

map the results of the alternatives that they have. Generally, the behaviors of the consumers are

that the benefits and the returns must always be higher than the costs that go into the processes.

The behavior of the consumers due to the smartphone upgrade can be explained using the

consumer behavior mode of sufficient models — it as the fact that consumers of the smartphones

are not engaging in the upgrade of the smartphones at a faster rate compared to the old phone

users. The cost is one of the major factors that affect the behavior of the consumers of this

smartphones. The smartphone users are also influenced by the changes in the lifestyle and the

composition of the population.

Sufficient model is one model which makes the subjects to choose the available

alternatives which themselves are better than the minimal levels but appear to be worse than the

maximum levels. In this case, the utility is the measure of satisfaction by the smartphone

consumers in the United States. The possibility of consumers, in the case of sufficient model, is

expressed by the minimally acceptable utility. This sufficient model is presented by the fact that

there is a precaution of imperfect information and the fact that there is limited rationality in the

choices that are made by the consumers.

The behavior of the consumers on upgrading smartphones depends on the available alternatives

of the consumers. If the consumers find that the available alternative is better and fits them, then

they take the available alternative of not upgrading the smartphones. However, if the consumers

find the alternative of the upgrade of the smartphone is the best, then they work towards

upgrading the smartphones. This concept is drawn, highly, from Simon's concept which

represents a sufficient model that has no expectations and has an existing adaptation.

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Consumers tend to be rational in their expenditure on different goods, the rational

behavior of the consumers appear when they make different choices. When all the factors are

held constant, Ceteris Paribas, then consumers will rush to buy goods at a lower price, cheaply.

Otherwise, there are reasons where the consumers will continue to buy the goods at a very high

price including when the goods are habitual when the goods are Giffen goods, goods of

ostentation or even in the cases where the goods are basic goods that meet basic human wants.

This affects the normal demand curves. The consumers of the smartphones remain rational in

their decisions and in the process of making decisions that concern the upgrade of the

smartphones. The cost and budget involved in upgrading smartphones is a huge budget.

Therefore, any extra amount that goes into the upgrade is regarded as an extra charge that pushes

away the consumers of these smartphones according to the law of demand. In the case of the

upgrade of the smartphones, the consumers are rational enough to be guided by the costs that are

involved in the process.

Consumption, according to the sufficient model, is viewed from the point of uncertainty.

Much as the prices guide the consumers, they are also guided by different factors which are

considered to exist beyond the prices and costs of the goods. In the case of the smartphones,

most consumers are clinging on to their previous phones by working to repair their old phones

and to ensure that they repair their old phones. Most consumers are rushing to fix their old

smartphones than engage in the upgrade process. This conservationist idea is the one which

promotes the use of the old smartphones and discourages the new upgrades. In analyzing the

conservationist tendency, a look at the age of the users of smartphones reveals the preference and

choice of the consumers. The preference by age and composition of the consumers is one of the

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most important aspects that are determined before choosing whether to upgrade or repair the old

phones.

The available close substitutes also affect the upgrade of the smartphones. Smartphones

are substituted by the repaired old phone. What is considered by the decision of the consumers is

the price of the close substitutes and the use of the substitute. When the substitute is available at

a price which is lower than the existing high price of the smartphones, then the rational

consumers tend to go for the substitute of the alternative to the upgrade. The rational consumer

looks at several factors in their decision on the upgrade or their decisions on the replacement of

the phones. This behavior is also guided by what the new alternatives will have to offer when

compared to what the upgraded smartphones will have to offer.

Total utility in the case of smartphone upgrade is the concept where there is a level of

satisfaction that is developed on the upgrade of the smartphone. In the sufficient models, the

preference coefficient in utility functions is not constant. The consumers make decisions of

whether they will get satisfied with the goods that are in the market. This is part of the rational

behavior of the consumers including the consumers of smartphones. The concept of the upgrade

of the smartphones is also part of the work that is promoted by the rational thinking of the

consumers in the market.

There is a rising cost of upgrading smartphones; up to 2016 the cost was ranging from

$649 to $999. This depended on the type of smartphones that individuals had. iPhone XS went

for $990 while galaxy S9 went for $720. When consumers are budgeting for an upgrade, they

must factor in the costs that are involved. The question that consumers must answer is whether to

repair or to upgrade. The upgrade always targets phones of the same generations and not of

different generations which are prompted to be subject of repairs and not subject of an upgrade.

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The upgrade services are considered to be more costly than the repairs that are done to the

smartphones.

A shift in the demand curve of the smartphone is contributed to by the factor of close

alternatives to the upgrading process. Consumers have alternatives to the upgrade. Therefore,

they do not upgrade since they have an alternative of repairing their older phones and ensuring

that they keep the older form working and by the standards and systems that are to be maintained

in the upgraded phones. A shift in demand is caused by other factors of the demand other than

the price of the commodity, in this case, the cost of the upgrade does not lead to the shift of the

demand curve, and however, it has an impact on the movement along the demand curve. In the

demand curve below, a change in the price of the commodity, cost of the upgrade, will influence

the demand to change from D to D

Graph 2: Demand and supply curve

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The indifference curve compares the two alternatives, whether to upgrade the smartphone

or the alternative of repairing the smartphones. However, the two alternatives are guided by the

costs that go into their respective processes. In the diagram, the consumers of the smartphones

are represented by the indifference curve I

. This is the point where the consumers of the

smartphone prefer most as they can get the utility at the least cost possible. This curve shows the

indifference that exists in the consumer behaviors about the two alternatives, upgrading or

repairing of the smartphones. This leads to the indifference that is developed in the process of

getting the utility from the smartphones.

The sufficient model postulates that the choices are made by the consumer results from

their rational nature. They make their choices from different alternatives that they have and

different substitutes that exists for the products. In the case of the smartphones, the alternative to

the upgrading of the smartphone is an improvement of the phones through the repair; this

represents the major alternative of the upgrading of the phones. The relationship indicates that

the article applies the main concepts of the sufficient model. The sufficient model also agrees

with the fact that people can make decisions that are based on what they can achieve but are also

influenced by other decisions.

From the article, the shifts have been necessitated by the available close alternatives and

the higher costs that are involved in making of the process of upgrading. The alternative that is

available and is acting as the close substitute is the repair of the old phones. Some repairs centers

are increasing according to the article, the mushrooming of the repair shops at a cheaper cost

ensures that most people have access to the alternatives and the huge costs of upgrading which is

perceived as a burden to most of the consumers of the smartphones.

Graph 3: Consumer Model, indifference curve.

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The application of the sufficient model to the case of smartphones come from the central

idea of the sufficient model in that in the sufficient model; the consumers have the power to

choose the alternatives. In the case of the smartphones, the consumers are also presented with

two alternatives, whether to upgrade their smartphones or to upgrade their old phones. The two

alternatives are presented in a manner that has the possibility of defining the utility that is

obtained in the process. To utilize the outputs, the costs are monitored, and the costs are also

considered.

The high costs of upgrading which also affects the consumers of the smartphones are also

a contributor to the movements along the demand curve. Rationally, consumers make decisions

that are guided by the prices of the commodities. When the costs are higher, then they tend to

buy less while when the costs are lower the purchase is higher. The level of income also

determines the level of disposable income and the purchasing power that the consumers have.

The higher the level of income then there is a possibility of the disposable income being higher

and in the process strengthening the purchasing power of the individuals. In this case, the

purchasing power is the ability of the consumers to upgrade their smartphones and have the latest

running software.

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From the article, it is clear that costs guide consumers. The higher the costs of upgrading

the smartphones the lower level at which the consumers upgrade their smartphones. However,

other factors also play out. The behavior of the consumers is also guided by the fact that there

are close substitutes and the alternatives which tend to play out in the process of ensuring that the

smartphones are improved. Upgrading of the smartphones, however, is not a fixed alternative for

the consumers. The consumerism behavior is such that the level of satisfaction determines the

preferences that are obtained in the goods. The level of satisfaction is measured in utility is an

important aspect of mapping the behavior of the consumers of different products.

Just like from the main idea of sufficient model, consumers do not have the opportunity

to interrogate issues. Further, they make decisions that are based on the simple considerations. In

the case of the article, the consumers have made their decisions based on the simple

consideration of the price. They did not interrogate issues further to determine the impact of

upgrading. Once they have considered that it is expensive to upgrade, then they migrated to the

alternative which is to repair the old phones. This is also part of the consumers, according to the

sufficient model, that has been brought out in the case of the upgrading of the smartphones.

In conclusion, consumer behaviors are determined by several factors that include the

price of the products, the availability of close substitutes, and the availability of the disposable

income. Smartphone upgrade also influences the behavior of consumers in different ways. The

cost is at the center of ensuring that the smartphones are upgraded. However, according to the

sufficient model, consumers may at times act based on simple considerations. The consumers

need not have 100% information on the products to prompt their actions. In the case of

upgrading the smartphones, consumers have placed the cost of the upgrade to be at the center of

their decisions. The demand and supply of the smartphones, in the context of smartphone

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upgrade, has been affected by the availability of alternatives in the form of phone repairs as there

are also phone repair shops that are increasing in number. In the end, the indifferent curves show

that the alternative which is preferred by the consumers is one of the repairs.

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