Efficiency vs. IPA (Total Quality Management)

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Efficiencies vs. importanceperformance analysis for the leading

smartphone brands of Apple, Samsung
and HTC
a
Chun-Mei Chen & Bao-Yi Ann
Department of Business Administration, China University of

Technology, Taipei City, Taiwan
Published online: 10 Nov 2014.
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To cite this article: Chun-Mei Chen & Bao-Yi Ann (2014): Efficiencies vs. importance-performance
analysis for the leading smartphone brands of Apple, Samsung and HTC, Total Quality Management
& Business Excellence, DOI: 10.1080/14783363.2014.976937
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Total Quality Management, 2014

http://dx.doi.org/10.1080/14783363.2014.976937
Efficiencies vs. importance-performance analysis for the leading

smartphone brands of Apple, Samsung and HTC
Chun-Mei Chen and Bao-Yi Ann
Department of Business Administration, China University of Technology, Taipei City, Taiwan

This study was conducted by integrating the data envelopment analysis efficiencies of
the leading smartphone brands of Apple, Samsung and HTC in the period 2008 2013
with customer importance satisfaction analysis in Taiwans mobile market. This study
collected 450 valid questionnaires with 150 questionnaires covering each company to
measure the 7Ps marketing mix of service quality levels in the Greater Taipei
metropolitan regions. Samsung was the top ranking performer in customer
satisfaction, verifying its achievement of capturing the worlds number one
smartphone market share. Apple revealed the highest customer loyalty and enjoyed
high stickiness. The attribute of ease of use with customer high importance high
satisfaction is the common key driver for Apple, Samsung and HTC in keeping up
good work. Regression analysis is applied to test the five hypotheses which are all
supported to link the integrated relationship between efficiency, satisfaction and
loyalty. When the consumer loyalty level is higher, then the higher is the
manufacturers efficiency. When the consumer satisfaction level of the product is
higher, then the higher is the manufacturers efficiency. When the consumer
satisfaction is higher, then the higher is the loyalty as well. The findings for
management implications and how to improve their business excellence in this
sector are provided.
Keywords: efficiency; IPA; smartphone; satisfaction; Apple; Samsung; HTC
1. Introduction
The development of mobile communication from 3G technology to 4G/LTE (long-term
evolution) is specially facilitated with smartphone devices to satisfy customer demands.
The portable convenience of smartphones which are connected anytime and anywhere
through Internet transmission has become an indispensable tool for our personal daily
lives. For smartphone addicts, the latest instant messages among friend groups can be
obtained at any time and it is unnecessary to stay in front of a computer. The smartphone owners can easily find appropriate application software to empower them to
better spend their fragmented time to read e-mails, get information and play online
games. With over four billion mobile subscribers worldwide, mobile-related industries
are paid more attention than the PC industry, which is why widespread academic interest has been aroused in this smartphone study. Due to fierce market competition, most
subscribers can afford to buy smartphones subsidised by the mobile telcos which are
bundled with monthly rental and data charges. Hence, the attitudes adopted by
customers regarding decisions for owning smartphones deserve to be further explored.
This paper presents the first study to compare the efficiencies of three smartphone
manufacturers with importance-performance analysis (IPA) in order to provide
Corresponding author. Email: doris888@cute.edu.tw
# 2014 Taylor & Francis
C.-M. Chen and B.-Y. Ann
management implications for mobile telcos and manufacturers, and by academia for
further study.
The following studies are examined from diverse viewpoints on how smartphones
have spread widely to be beneficial in peoples daily lives. Martilla and James (1977) formulated the IPA, an easily applied technique for measuring attribute importance and performance to further the development of effective marketing programmes. Blake, Schrader,
and James (1978) utilised the action grid analysis to introduce IPA as a way of understanding customer needs and desires so as to make good management decisions and responding
to them. Coelli, Rao, and Battese (1998) proposed the performance measurement of efficiency and productivity analysis of firms, which convert the inputs into outputs. Gronholdt, Martensen, and Kristensen (2000) investigated the differences among 30 major
companies within various industries in Denmark (data retrieved from the European Customer Satisfaction Index), and the results were presented to improve the understanding of
how customer satisfaction affects loyalty. Matzler, Bailom, Hinterhuber, Renzl, and
Pichler (2004) confirmed the asymmetric relationship between attribute-level performance
and overall customer satisfaction by using a regression analysis with dummy variables.
Nielsen (2010) promised an explanation of why and how customer satisfaction should
be measured and analysed as well as how the results should be integrated in management
decision-making. Jeona, Kimb, and Leec (2011) applied a self-directed work team as a unit
of analysis to measure the efficiency of a total productive maintenance (TPM) implementation with consideration of the overall process of the TPM implementation based on a
three-stage data envelopment analysis (DEA) approach. Kuo, Chen, and Deng (2012) proposed the IPA Kano model as a new tool for categorising and diagnosing service quality
attributes with an example of mobile value-added service quality. Lin, Lin, and Lin (2013)
aimed to understand the users degree of importance and satisfaction towards mobile
trading by analysing the information from 132 cases for the mobile trading systems.
Lee (2014) explored the effect on a college students smartphone adoption to examine
the influence of self-innovativeness, self-efficacy and the decision-makers attitudes
towards a product. Sharabia (2014) proposed quality chain reaction methods to build a
positive long-term reputation and improved profitability for both small and large
businesses which included: a customer-focused strategy and creation of a quality
culture, emphasising the prevention process, constant improvement of work processes,
establishment of employee involvement and commitment, management support and positive leadership. Tontini, Picolo, and Silveira (2014) compared two different versions of the
IPA and the improvement-gaps analysis which was a fusion of the Kano model with IPA to
assess the possible impact of incremental innovations on customer satisfaction.
However, when the subscribers select smartphones, they often need to consider many
factors to display the different meanings for per user. As Taiwans coverage ratio of 3G
networks ranked first in the world according to the World Economic Forum stated in
April 2013, its customer importance and satisfaction in adopting a smartphone deserves
to be explored. Samsung C&T Corporation (Construction & Trading) (Samsung) has
had the largest market share in the global region and Taiwan. In 2013, HTC Corporation
was defeated by Samsung and slipped to the second competitive position of Taiwans
mobile market share. Apples iPhones are the beloved handsets for smartphone addicts
which are taken as the observed subjects of this study. Based on the above background
and motivation, the purposes of this study are included as: what are the differences
when the efficiencies of the three leading brands of smartphones are connected with the
levels of importance, satisfaction and loyalty. The structure of this paper is as follows.
The topic of Section 2 is the studied description of smartphone functions, and the
Total Quality Management
smartphone market share in the global region and Taiwan. Section 3 covers the research
materials and methods utilised including the DEA approach and the market survey questionnaires. Section 4 proposes the empirical results. Section 5 presents the discussion. And
finally, Section 6 offers the concluding remarks and recommendations for further study.
2.
2.1.
Smartphone industry analysis

Smartphone functions
When you are in public areas or riding on the public transit, there are many smartphone
addicts who spend time tapping away on their phones. They are seen to focus on their
screens, without looking around and frequently touch their mobile handsets with their
fingers to enjoy portable convenience and personal entertainment. The smartphone can
be used as an MP3 music player. Smartphones can serve as a camera to satisfy the
scenery shooting needs for users daily lives and directly share with communities on the
Internet. Furthermore, smartphones have a built-in GPS positioning function and voice
searching features, users can find store locations using services such as Google Maps.
If smartphone addicts forget to bring their handsets, they feel the inconvenience and
anxious about the possibility of missing any messages. Other than offering basic voice
service, smartphones have integrated various application software bringing diversified
functions to replace old habits for digital convenience. The application software (aka
apps) are available to be downloaded for free or charged by a wide range of prices.
Shyu, Chang, and Ko (2013) suggested that multimedia entertainment manufacturers
need to focus on greater superior and convenient visual and hearing orientations, more
attentive and humanised online services, security for personal data protection, integrated
social information orientation, and personalisation orientation to satisfy customer needs.
Additionally, LINE has already become an essential phone App for many users and
they announced more than 300 million worldwide users by the end of November 2013. The
tablet and PC versions allow you and your iPhone or Android smartphone friends to
exchange free instant messages, as well as provide a broad selection of stickers/
expressions for better personal expression. Since the LINE App took 19 months to
reach 100 million users, it followed up in just over 6 months to build up their second
100 million. LINE grew from 200 million to 300 million customers in a short period
of about four months (127 days) time. LINE is increasing its diversified functions, in
addition to maps and themes to attract more people to update their software to version
3.7 and to further convert to multiple features of their interface background.
2.2.
Smartphone market share
With the development of information and communications technology application services, smartphones have been the most important medium among these handheld terminal
devices. Hence, the development of smartphone devices has become a global focus for
paying attention in related industries. The main reasons to drive significant growth for
smartphones are the improved larger screens and lower mobile subscription data rates.
As of 2013, the worldwide sales of smartphones reached 1.004 billion, which is 55.1%
of the worldwide 1.820 billion mobile phones sales. Samsung outperformed the worlds
largest market share from 19.9% in 2011 to rise to 30.3% in 2012 and 31.3% in 2013.
Apple Inc. ranked second, but the market share had shrunk to 15.3% as compared to
18.7% in the previous year. Huawei (China) jumped in their global market share to
reach third place with 4.9%. LG Electronics had improved its competitive position
Figure 1. Global smartphone market share.
ranking to fourth place for 4.8% of the global market share. Lenovo Group (China) slightly
increased to 4.5% in the global market share ranking fifth. In Q3 of 2011, HTC had
initially displayed a decent performance ranking fifth in global market share, but during
the overall year of 2013, HTC ranked 13th only garnering 1.9% of the global market
share (International Data Corporation (IDC), 12 February 2014). For the details of the
global smartphone market share, please refer to Figure 1.
By the end of 2013, Taiwans 3G total subscriber numbers were 24.772 million including 17.977 million mobile Internet users (data speeds 256 Kbps) and 6.795 million voice
users (NCC (National Communications Committee)). The market share of smartphones in
Taiwan accounted for 88% of mobile handsets (IDC, 18 March 2014). Nevertheless, the
competition for the smartphone market share has changed dramatically with time. As of
2013, Taiwans market share of smartphone brands was described sequentially as
follows. Samsung owned 28.1% of the market share to firmly win the market championship. HTC occupied the second position to achieve 20.6% of Taiwans market share.
Thereafter, Sony ranked third to own 15.5% and Apple ranked fourth to own 13.1%.
LG ranked fifth to occupy 2.6% market share and the others occupied 20.1%. (IDC, February 2014) For a description of the smartphone market share by brand in the Taiwan
market, please see Figure 2.
3.
Materials and methods
This study integrated the efficiencies of Apple, Samsung and HTC with their customer
importance satisfaction levels in Taiwans mobile market to assess their quality management and business excellence. However, the degree of one companys performance could
not be presented only based on customer satisfaction. The concept of company performance included at least two dimensions of financial results and customer satisfaction.
Hence, this study combined the DEA efficiency with the importance satisfaction analysis
to compare the business performance among three leading smartphone brands.
3.1.
DEA methodology
The study duration of the three smartphone brands is an efficiency analysis of the DEA
approach for the period of 2008 2013. This is done through the means of efficiencies
of the DEA approach to measure the output input performance of each company. The
input variables included the five variables of total assets, total stockholders equity,
Figure 2. Smartphone market share in Taiwan.
selling & administration expenses, R&D expenses and employees. The output variables
included the four variables of net sales, operating income, net income and earnings per
share. Because these three observed smartphone manufacturers are publicly listed companies, their related data and financial information are published in the annual reports on
their websites.
Charnes, Cooper, and Rhodes (1978) proposed the traditional ratio-form DEA (called
the CCR method) which is based on the pioneering work of Farrells (1957) efficiency
measure (relative efficiency). It generalises a multiple output input performance
measurement in which the ratio of the weighted outputs to weighted inputs for each observation is maximised. Each of the efficiency evaluations for the decision-making units
(DMUs) is viewed as an objective function to be maximised. There are n units or n
DMUs and each has m inputs with s outputs. If the ath DMU uses m-dimension input variables xia (i 1, . . . , m) to produce s-dimension output variables yra (r 1, . . . , s), then
the overall technical efficiency (OTE) of DMU ha can be found from the following model:
S
ur yra
Max ha = r=1
m
i=1 vi xia
(1)
subject to
S
ur yrk
r=1
1,
m
i=1 vi xik
0 , 1 ur , 0 , 1 vi ,
k = 1, 2, . . . , n,
i = 1, . . . , m,
r = 1, . . . , s,
where xik stands for the ith input of the kth DMU; yrk stands for the rth output of kth DMU;
ur and vi stand for the weights of the rth output and ith input, respectively; 1 is a positive
Archimedean number which is set to be 1024; and ha is the relative efficiency value.
Since Equation (1) involves fractional programming and is therefore difficult to solve
by numerical algorithms, Charnes et al. (1978) converted it to another output-oriented
linear programming model:

Max ha =
s
(2)
ur yra
r=1
subject to
m
vi xik
i=1
s
ur yrk 0,
m
k = 1, . . . , n,
r=1
vi xia = 1,
i=1
ur 1 . 0,
r = 1, . . . ,s,
vi 1 . 0,
i = 1, . . . ,m.
The input-oriented dual problem after conversion of Equation (2) becomes:

Min{ua 1[
m
S
ia +
i=1
s
S+
ra ]}
(3)
r=1
subject to
yra +
n
lk yrk S+
ia = 0,
r = 1, . . . , s,
lk xik S
ia = 0,
i = 1, . . . , m,
k=1
ua xia
n

k=1
+
S
ia , Sra , lk 0,
+
where ua is the OTE score of the DMU a which is equal to ha; and S
ia and Sra are the input
and output slack variables, respectively. It is worth noting that the OTE scores obtained by
either the output-oriented (Equations (1) and (2)) or the input-oriented (Equation (3)) CCR
models are exactly the same, due to the linear (constant returns to scale (CRS)) assumption
of the production function here.
3.2.
Market survey
This market survey was designed for the measurement of customer importance, satisfaction and loyalty of the respondents for the most frequently used phone models for Apple,
Samsung and HTC. The execution and response time of the questionnaires were adopted
for observation during the period from November to December 2013 in the Greater Taipei
metropolitan regions. The survey locations included the Taipei railway stations, city parks,
Taiwan University, the Fubon Life building, the Cathay life Insurance Office, the Foreign
Trade Association, the AON Insurance Brokers Co. Ltd., Wan Fang Hospital, opticians,
barber shops, office buildings, bus stations and so on. The questionnaires were summarised
for 450 respondents who had purchased and used the smartphone models from Apple,
Samsung and HTC, and each company was represented by 150 respondents, respectively.
The data collected in face-to-face interviews had a survey recovery ratio of 100%.
The demographic variables of the market survey determine how the smartphone manufacturers can affect the degree of customer importance, satisfaction and loyalty by
running the data through the SPSS 14.0 statistics software. A standardised questionnaire
was designed to measure the two dimensions of customer importance and satisfaction.
By adopting the factor analysis method, this study extracted 22 importance factors, 22 satisfaction factors and 5 loyalty factors to assess the total service quality. A scale from 1 (not
very important, very unsatisfied) to 5 (very important, very satisfied) was used to measure
the degree of customer importance, satisfaction and loyalty. For more details, please see
the appendix. The statistical methods included descriptive statistics, multiple-choice
analysis, independent sample T-tests, Pearson correlation analysis and ANOVA analysis
to conduct studies of the research variables for the correlation and differentials tests.
3.3.
Hypotheses
Regression analysis was adopted to explore the relationship between efficiency, consumer
satisfaction and consumer loyalty for this study. The five hypotheses are proposed to link
the integrated relation as below and are subject to testing:
H1: When the consumers loyalty level is higher, then the higher is the smartphone manufacturers efficiency.
H2: When the consumers satisfaction level of the product is higher, then the higher is the
smartphone manufacturers efficiency.
H3-1: When the consumers satisfaction level of the product is higher, then the higher is the
loyalty.
H3-2: When the consumers satisfaction level of the physical evidence is higher, then the
higher is the loyalty.
H4: When the consumer satisfaction is higher, then the higher is the consumer loyalty as well.
4. Empirical results
4.1. Efficiency measurement
The three leading smartphone brands: Apple, Samsung and HTC are the observed DMUs
during the period of 2008 2013. The value of the efficiency scores between 0 and 1 are
calculated through a DEA approach and a score of 1 represents an overall efficiency. This
study applied input-oriented measures to compute and produce the overall efficiencies of
VRS (variable returns to scale), CRS and returns to scale (RTS) by applying the DEAP
version 2.1 Software (Coelli). The input-oriented RTS is classified into three types of
increasing returns to scale (IRS), decreasing returns to scale (DRS) and CRS. For the strategy implications on a company, IRS indicates an increase in the invested resources, DRS
indicates a minimisation in the invested resources. CRS is meant to maintain an overall
score of 1.00 to reach efficiency. During the period 2008 2011, the input-oriented RTS
for Apple were decreasing and had been improved to reach an overall efficiency in
2012 and 2013. Samsung maintained an overall efficiency value of 1.00 in 2008, 2009,
2010, 2012 and 2013, and only registered a decline in 2011. The input-oriented RTS
for HTC were increasing in 2009, 2010, 2012 and 2013. This implies that an increase
Table 1.
DMUs
Efficiencies of three brand analysis for the period of 20082013.

Year
Input-oriented VRS
efficiency
Input-oriented CRS
efficiency
Sl
Input-oriented
RTS
0.92990
0.85918
0.89073
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
1.00000
0.94984
0.90452
0.90861
0.85217
0.87650
0.99066
1.00000
1.00000
1.00000
1.00000
1.00000
0.93281
1.00000
1.00000
1.00000
0.93171
0.92048
1.00000
0.84547
0.75306
1.17390
1.07836
1.21143
1.27534
1.00000
1.00000
1.00000
1.00000
1.00000
1.23935
1.00000
1.00000
1.00000
0.80801
0.74035
1.00000
0.62881
0.58898
Decreasing
Decreasing
Decreasing
Decreasing
Constant
Constant
Constant
Constant
Constant
Decreasing
Constant
Constant
Constant
Increasing
Increasing
Constant
Increasing
Increasing
Apple
2008
2009
2010
2011
2012
2013
Samsung 2008
2009
2010
2011
2012
2013
HTC
2008
2009
2010
2011
2012
2013
Source: This study.
in input resources can improve efficiency. The input-oriented efficiencies of the three
brands for the period of 2008 2013 are shown in Table 1:
The comparative trend of efficiencies are illustrated for the three leading smartphone
brands of Apple, Samsung and HTC during the period 2008 2013. From the overall
observed duration excluding 2011 with 0.93281, Samsung performed the best among
the three leading smartphone brands to demonstrate business excellence. Since 2009,
Apple represented growing efficiency to reach an efficiency of 1.00 in 2012 and 2013.
HTC displayed a downward trend, achieving an efficiency of 1.00 in 2008 and 2011
and then dropped to 0.84547 in 2012 and 0.75306 in 2013 to reveal a relatively weak performance. The efficiencies trend of the three smartphone brands of Apple, Samsung and
HTC for the period of 2008 2013 are illustrated in Figure 3.
4.2.
Market survey
An IPA model was applied to compare the consumers ratings of the importance of service
quality (horizontal axis) with the satisfaction of service quality (vertical axis). The assessment of the customer attitudes was used to compare the cognition of what the important
factors are when the customers consider adopting a smartphone (Importance) with their
attitudes after using their chosen smartphone (Satisfaction). The empirical results for
this section include a reliability test, frequently used functions and the monthly billing distribution for Taiwans smartphone subscribers. It also covers an IPA exploration and a satisfaction and loyalty comparison for the three smartphone manufacturers.
4.2.1.
Reliability test
For this survey there are 22 questions to measure the degrees for the two dimensions of
customer importance and satisfaction. Five questions were asked to assess customer
Figure 3. The efficiencies trend of three smartphone brands.
loyalty. The values of Cronbachs a coefficient for each question group for the customer
importance, satisfaction and loyalty were 0.923, 0.919 and 0.896, respectively. All of the
Cronbachs a coefficients for the question groups were greater than 0.8 to reach a reasonable standard. It verified that the test results of the measuring items are very credible for
this questionnaire.
4.2.2. Frequently used functions

The respondents of this survey who adopted flat rates for mobile Internet service were the
majority and accounted for 64.2% of those surveyed, while those that did not use flat rates
for mobile Internet services accounted for 35.8%. The percentages of the frequently used
functions of smartphones in the Taiwans market are as follows. First is the browsing the
Internet which accounts for 21%. Next is using LINE messenger which occupies 20.3%.
The third is using photography which accounts for 11.8%. Afterwards, listening to music
accounts for 10%, retrieving information occupies 9.5%, playing games accounts for
8.8%, checking/updating community websites accounts for 5.6%, location/map searches
occupies 4.5%, sending/receiving e-mails accounts for 4.3%, transmitting pure SMS
(short messages) accounts for 3.3% and others account for 1%. The percentages of the frequently used smartphone functions are shown in Figure 4.
The respondents of this survey had phone numbers from mobile telcos which were as
follows: 39.2% were subscribers of Chunghwa Telecom, 28.8% were subscribers of
Taiwan Mobile Cooperation, 27.4% were subscribers of FarEasTone, 3.4% were subscribers of TransAsia Telecom, 1% were subscribers of Vibo Telecom Inc. and 0.2% purchased retailing cards sold in 7-ELEVEn. For the overall satisfaction level of mobile
telcos, the respondents were very satisfied and accounted for 5.8%. Satisfied customers
accounted for 41.8%. The common satisfaction level accounted for 43.8%. Dissatisfied
customers accounted for 7.2% and very dissatisfied customers accounted for 1.4%. The
consideration factors to adopt smartphones brands are sequentially included as follows:
the exterior appearance of handsets accounted for 27.3%, the price accounted for
10
Figure 4. Percentages of frequently used smartphone functions.
25.8%, the brand reputation accounted for 24.9%, the camera resolution accounted for
15.2% and the others accounted for 6.9%.
4.2.3.
Importance-performance analysis
The emphasis on the differential analysis for the attributes of mobile phones from the
viewpoints of consumer importance and satisfaction, and how to improve the service qualities are all important issues for these mobile manufacturers. The average portfolio analyses for the different degrees of customer importance and satisfaction are described
below.
4.2.3.1. Apple. The four quadrants which describe the analysis of customer importance
and satisfaction are illustrated in Figure 5:
(1) Keep up good work (Quadrant I: High Importance, High Satisfaction):
Quadrant I is labelled Keep up good work. The key drivers of keeping up good work for
the high Importance high Satisfaction level are included in the attributes for enabling
more convenient living (1), interface functions (2), innovation image (3), multi-functions
(4), attractive appearance of smartphones (5), diverse needs (6), ease of use (7), price level
(8) and total service attitude of the smartphone retailers (22). Ease of use (7) is the key
driver of the customer high Importance high Satisfaction. The executives of Apple should
ensure that the company keeps up their good work.
(2) Concentrate here (Quadrant II: High Importance, Low Satisfaction):
Quadrant II is labelled Concentrate Here. The attributes that fall into this quadrant represent key areas that need to be improved as top priorities for a company. The top priorities
for Apple are to concentrate their resources on increasingly improving services to satisfy
customer needs as follows: the customer can afford to buy a smartphone (9), providing satisfactory repair service (14), providing satisfactory content services introduction (15),
immediately reply on the phone repair status (16), after-sales service (18), battery
duration (19), dealers can properly handle the handsets (20), and functional operation
11
Figure 5. Customer importance and satisfaction analysis for Apple.
and value-added services (21). The attribute of battery duration (19) with high importance low satisfaction is the most critical issue for Apple to be improved upon.
(3) Low priority (Quadrant III: Low Importance, Low Satisfaction):
Quadrant III is labelled Low priority. The poor performance of Low Importance Low
Satisfaction is apparently not a problem, as the attributes are relatively unimportant.
The attributes of low priority for Apple are involved with promotional tactics (10), promotional or preferential schemes (11), introduction of poster or DM (12) and convenient
locations to buy (13). The attribute of introduction of poster or DM (12) in this quadrant
is the lowest priority in low importance low satisfaction for Apple.
(4) Possible overkill (Quadrant IV: Low Importance, High Satisfaction):
Quadrant IV is labelled possible overkill. There are no attributes to be displayed in this
quadrant.
4.2.3.2. Samsung. The four quadrants which describe the analysis of customer importance and satisfaction are illustrated in Figure 6:
Quadrant I is labelled Keep up good work. The attributes of keeping up good work are
included for enabling more convenient living (1), interface functions (2), innovation image
(3), multi-functions (4), attractive appearance of smartphones (5), diverse needs (6), ease
of use (7), and total service attitude of the smartphone retailers (22). Ease of use (7) is the
key driver of customer high importance high satisfaction, and the managements focus
for Samsung is to ensure that the company keeps up their good work.
Quadrant II is labelled Concentrate Here. The attributes that fall into this quadrant represent key areas that need to be improved with top priority. The top priorities for the
12
Figure 6. Customer importance and satisfaction analysis for Samsung.
attributes of concentrate here need to be improved are as follows: price level (8), the customer can afford to buy a smartphone (9), providing satisfactory repair service (14), providing satisfactory content services introduction (15), immediately replying on the phone
repair status (16), personal attitude for the repair services (17), after-sales service (18),
battery duration (19), dealers can properly handle the handsets (20) and functional operation and value-added services (21).
Quadrant III is labelled Low priority. The poor importance satisfaction is apparently not
a problem as they are relatively not as important to the customers. The attributes of low
priority with low importance low satisfaction are included as promotional tactics (10),
promotional or preferential schemes (11), introduction of poster or DM (12), and convenient locations to buy (13) which are attributes of low priority. The attribute of introduction of poster or DM (12) is the lowest priority of the low importance low satisfaction
quadrant.
(4) Possible Overkill (Quadrant IV: Low Importance, High Satisfaction):
Quadrant IV is labelled possible overkill. There are no attributes to be displayed in this
quadrant.
4.2.3.3. HTC. The four quadrants which describe the analysis of customers importance
and satisfaction are illustrated in Figure 7:
Quadrant I is labelled Keep up good work. The attributes of keeping up good work are
included for enabling more convenient living (1), interface functions (2), multi-functions
13
Figure 7. Customer importance and satisfaction analysis for HTC.
(4), attractive appearance of smartphones (5), diverse needs (6), ease of use (7), providing
satisfied content services introduction (15), functional operation and value-added services
(21) and total service attitude of the smartphone retailers (22). Ease of use (7) is the key
driver of customer high importance high satisfaction, and the focus of the HTC executives is to ensure that the company keeps up their good work.
Quadrant II is labelled Concentrate here. The attributes that fall into this quadrant represent key areas that need to be improved with top priorities. The top priorities for the attributes of concentrate here need to be improved including price level (8), the customers can
afford to buy a smartphone (9), providing the satisfactory repair service (14), immediately
reply the phone repairing status (16), personal attitude for the repaired services (17), aftersales service (18), battery duration (19), dealers can properly handle the handsets (20). The
attribute of battery duration (19) with high importance low satisfaction is the most critical issue for HTC to be improved upon.
Quadrant III is labelled Low priority. Poor importance satisfaction is apparently not a
problem as they are relatively not as important to the customers. The attributes of low priority for HTC are included for promotional tactics (10), promotional or preferential
schemes (11) and introduction of poster or DM (12). Their poor performance is apparently
not a problem, as they are relatively unimportant. The attribute of promotional tactics
(10) is the lowest priority of the low importance low satisfaction for HTC.
(4) Possible overkill (Quadrant IV: Low Importance, High Satisfaction):
Quadrant IV is labelled Possible overkill. The attributes of innovation image (3) and
convenient locations to buy (13) are low importance high satisfaction for the customers.
14
Both attributes are relatively unimportant to the customers but HTC is in a position for
possible overkill.
The attribute of ease of use (7) with customer high importance high satisfaction is
the common key driver for Apple, Samsung and HTC in keeping up good work. It deserves
to be mentioned that the attribute of battery duration (19) had a high importance for the
customers, but Apple and HTC offer a relatively lower satisfaction level which is the issue
of most concern to be improved. In addition, the attribute of providing satisfactory repair
service (14) has high importance for the customers, but Apple offers relatively lower satisfaction in this factor and it needs to be improved by the management executives. The
attribute of introduction of poster or DM (12) is the least priority of low importance
low satisfaction for Apple and Samsung. The attributes of innovation image (3) and convenient locations to buy (13) fall into the quadrant of low importance high satisfaction
and are relatively unimportant to the customers, but HTC is in a position to have a possible
overkill for the two attributes. In conclusion, the strategy implications outlined from the
above four quadrants encourages the executives of Apple, Samsung and HTC to reconsider
adjusting their business strategies to cope with the market fierce competition.
4.2.4. Regression analysis (efficiency, satisfaction and loyalty)

Regression analysis was applied to integrate the relationship between efficiency, consumer
satisfaction and loyalty. For M1 in Table 2, the statistical results for the Loyalty variable to
the Efficiency variable had displayed a significant predictive effect (b 0.11, p , .05). It
means that when the Loyalty level is higher, then the Efficiency level for the smartphone
manufacturers is also higher. Hence, H1 was supported.
Table 2.
Regression analysis for efficiency, satisfaction and loyalty.

Dependent variables
Efficiency
Independent variables
Satisfaction
Product
Price
Promotion
Place
Process
Physical evidence
People
Satisfaction (2nd order)
Loyalty
Total R2
Adjusted R2
F value
M1
0.11
0.115
0.093
5.212
Loyalty
M2
M3
0.19
0.01
0.01
20.10
0.01
0.04
20.02
0.51
20.01
0.022
20.010
0.094
0.17
20.066
0.313
0.159
2.037
0.396
0.386
41.325
M4
0.49
0.243
0.242
144.05
Notes: n 450. The values in Table 2 are standardised regression coefficients. Efficiency was the average for the
six years range of 2008 2013. Satisfaction (2nd order): first find the average of the seven sub-dimensions
(product, price, promotion, place, process, physical evidence and people) of the satisfaction level, and then
calculate the average of the seven dimensions.
p , .05.
p , .01.
p , .001.
15
For M2 in Table 2, the statistical results for the Satisfaction product level variable to
the Efficiency level displayed a significant predictive effect (b 0.19, p , .001). It
reveals that when the Satisfaction product level is higher, then the efficiency level for
the smartphone manufacturers is also higher. Therefore, H2 was supported.
In addition, according to M3 in Table 2, the statistical results for the Satisfaction
product variable (b 0.51, p , .001) to the Loyalty and Satisfaction physical evidence
variable (b 0.17, p , .01) to the Loyalty variable had both displayed significant predictive effects. It displays that when the Satisfaction product level and the Satisfaction physical evidence levels are higher, then the loyalty level for the smartphone manufacturer is
also higher. Hence, H3-1 and H3-2 were supported.
Finally, according to M4 in Table 2, the Satisfaction (2nd order) variable to the Loyalty
variable displayed a significant predictive effect (b 0.49, p , .001). It revealed that
when the Satisfaction level is higher the loyalty level for the smartphone manufacturer
is also increased. Hence, H4 was supported.
4.2.5.
Satisfaction and loyalty comparison
For the purpose of improving quality management, the viewpoints of the 7Ps marketing
mix including product, price, promotion, place, process, physical evidence and people are
adopted to explore the degree of customer satisfaction. The 7Ps marketing mix of service
quality effectively targeted the right group of people, with the right products and services,
at the right time and place, which all leads the enterprises to achieve its business goals of
realising substantial and increased profits. Among the seven dimensions of product factors
to estimate the satisfaction degree of three smartphone brands, the rating of ease of use
for Samsung and Apple were the same at 4.09. Samsung was superior to Apple for the
other six product dimensions rating of enabling for more convenient living, interface functions, improving innovation image, multi-functions, attractive appearance of smartphones
and how to satisfy the customers diverse needs. However, HTC performed with the lowest
level of customer satisfaction for the seven dimensions of product factors among the three
smartphone brands. For more details, please refer to Figure 8 and the appendix.
Figure 8. Satisfaction-product comparison of three smartphone brands.
16
Regarding the price level, Apple iPhones were relatively more expensive than the
smartphones of the other two brands, but the level of satisfaction was the highest. The
factors of price level and if the customers can afford to buy a smartphone as well as customer satisfaction level for HTC were the lowest among the three brands. However, the
promotional tactics and promotional or preferential schemes of satisfaction level for
Samsung were the highest among the three brands. It provides a reference for Apple
and HTC to improve their product promotional strategies. The satisfaction level of
places distribution including convenient locations to buy, provision of convenient repair
services and especially for the introduction of a poster or DM for Apple were the worst
among the three brands. It revealed that Apple needs to improve on the issues of promotional schemes and the distribution of retailing location to promote its market share.
For a comparison of satisfaction-price/promotion/place of the three smartphone brands
please see Figure 9 and the appendix.
The satisfaction level of the service process of immediately replying regarding the
phone repair status for HTC is the lowest among the three brands. Additionally, the satisfaction degree of battery duration of physical evidence factors for the three smartphone
brands are all relatively lower than the other factors, Apple is the lowest with only a
3.22 rating, displaying the worst satisfaction. For the overall service attitude of the smartphone retailers, the customer satisfaction for Samsung ranked the highest among the three
smartphone brands. This also provides evidence why Samsung quickly garnered first
in market share for the global and Taiwan markets. For more detail, please refer to
Figure 10 and the appendix.
For Apple customers, despite the above-mentioned shortcomings of garnering the
worst satisfaction, the five dimensions of customer loyalty level were ahead of the other
two brands. It provided evidence that iPhone diehard fans are not likely to migrate to
other competitors based on any promotional programmes. Samsung ranked second and
HTC ranked third in terms of the five dimensions of customer loyalty level. For the customer intention of recommending the smartphones to their families and friends, HTC customers displayed the lowest wishes among the three brands. This showed that it is easier
for the HTC customers to be affected by promotional programmes which are provided by
Figure 9. Satisfaction-price/promotion/place comparison for brands.
17
Figure 10. Satisfaction-process/physical facilities/person comparison of three brands.
the competitors to migrate to other manufactures. The comparison of customer loyalty for
the three smartphone brands is shown in the Figure 11 and the appendix.
Moreover, according to the feedback from the survey respondents, HTC displayed a
higher after-sale failure rate of smartphone handsets while Apples iPhone revealed a relatively lower after-sale failure rate among the three brands. For strengthening customer purchasing motivation, decreasing the after-sale failure rate is an important issue for HTC to
improve upon.
Figure 11. Comparison of customer loyalty for three smartphone brands.
18
5. Discussion
5.1. Study approaches
As Apple and Samsung combined are close to commanding 46.6% of the global smartphone market share in 2013, while HTCs smartphone sales decline, how this impacts
Taiwans export performance deserves further study. Wang, Chang, and Chen (2014)
stated that service quality was regarded as the key factor in obtaining a competitive advantage, but the voice of customers was generally fuzzy and non-quantitative which often
leads to errors in the measurement of service quality. Hence, the data were collected in
face-to-face interviews for the purpose of acquiring the customers actual desires and
thoughts to mitigate the weakness of the market survey. The IPA is only intended to
measure the importance of customer pre-cognition and the satisfaction of customer
post-attitudes. Nevertheless, the construct of performance for one company to indicate
business excellence should be reviewed from both dimensions of financial input/output
and customer satisfaction/loyalty. Furthermore, regression analysis was applied to integrate the relationship between efficiency, satisfaction and loyalty, and then the positive
relationships were all supported.
5.2. Product and pricing strategies
In terms of pricing strategies, Apple positions itself as a high-quality smartphone manufacturer which combines its advantages of hardware and software facilities. Apple did
not follow a wave of low-price handsets strategies such as when the Mainlands Xiaomi
brand had introduced low-price handsets into the market. Apple introduced new highlevel smartphones to create more profit, and provided lower selling prices for the old
smartphone models. When the newly released high-level smartphones of Samsung and
HTC were introduced into the market, their price levels fall quite quickly after a few
months. Apple iPhones are more expensive than the other two brands but the decline in
their price points are very limited.
Samsung has always kept its Android smartphones at a lower price than Apples iOS
iPhone to maintain a certain gap for sustaining its market competitive advantage. Nevertheless, the sales volume of Samsung Galaxy is not as expected possibly due to market
saturation of high-level handsets and the fierce competition of low-level handsets
coming from Chinas Xiaomi machines in Q2 2014. In the global sales volume among
the leading smartphone brands Samsung was the only manufacturer to decrease its sales
volume and to further decline its profits. According to Samsungs financial report, the
global market share for Samsung had declined from 32.5% in Q2 2013 to 25% of the
same period in 2014.
HTCs strategy is to provide a series of cost-effective products including a price
greater than US$557 for high-level handsets, US$500 for medium high-level handsets,
and even a price of US$150 for market entry-level styles to maintain a considerable
market share. However, the low-level brands such as Chinas Xiaomi handsets which imitated iPhones in their functions and appearance for only US$240 250, provided lowerlevel handsets at a price point of US$133 which has attracted the attention of global
budget-limited consumers and eroded the low-level handset market.
5.3.
Battery duration issue
As for Apple and HTC, the attribute of battery duration is of high importance for their
customers but offers relatively lower satisfaction, which should be improved as a top
19
priority for the two companies. The longer battery duration has been a common expectation for the smartphone addicts, and smartphone manufacturers need to focus on this
aspect. In the future, it is likely that after charging the battery once, the battery duration
will be longer than one day so that people will no longer need to carry around an extra
battery charger for normal use.
5.4. Satisfaction and loyalty issue
The empirical results represented that Apple had the highest evaluation in customer
loyalty to verify that its customers tend to have a higher degree of adhesion. It also displayed that the iPhone lovers were less influenced by the competitors who adopt a
pricing war with a series of promotional strategies to persuade subscribers to migrate to
their smartphone brands. Samsung has been continuing to improve their smartphone
battery duration, enlarged their smartphone screens, and introduced a series of innovative
handsets to appeal to the global smartphone addicts. Samsung was the top ranking performer in customer satisfaction and the total service attitude of the smartphone retailers of
this market survey to verify its achievement as the worlds number one smartphone brand.
For Apple, the lack of repair centres established in Taiwan might be due to the limited
market economic size. The smartphones in need of repair during the warranty period in
Taiwan are sent to Singapore to be maintained and repaired. Therefore, the attribute of
providing satisfactory repair service was of high importance for Taiwans customers,
but Apple offered relatively lower satisfaction. This needs to be improved with top
attention.
However, HTCs degree of customer satisfaction and loyalty were the lowest among
the three smartphone manufacturers. In addition, the attributes of innovation image
and convenient locations to buy with low importance high satisfaction were relatively
unimportant for HTCs customers, but HTC was in a position to be in a possible overkill
which is a subject to be changed. For strengthening the competitive advantage of their
market position, there is still significant room for HTC to improve from the viewpoints
of quality management.
6.
Concluding remarks
This paper presents the first study to integrate the efficiencies of Apple, Samsung and HTC
through a DEA approach with the application of customer IPA. The DEA method based on
the input-oriented measurement was employed to compare the relative efficiency and the
observed DMUs which are associated with Apple, Samsung and HTC for the period
2008 2013. In 2008, Apple displayed a downward efficiency, and gradually improved
its efficiency to reach 1.00 in 2012 and 2013. Excluding 2011, Samsung outperformed
the others with an efficiency value of 1.00 in 2008, 2009, 2010, 2012 and 2013 to
verify its worlds and Taiwans largest smartphone market share. However, HTC represented a downward efficiency of 0.84547 in 2012 and 0.75306 in 2013 to achieve the
lowest efficiencies among the three smartphone brands. This deeply correlates with
HTCs weakest level of customer satisfaction and loyalty among the three brands to
impact the enterprises business excellence.
This study collected 450 valid questionnaires with 150 questionnaires covering each
company to measure the 7Ps marketing mix of service quality levels in the Greater
Taipei metropolitan regions. The statistics indicated that Cronbachs alpha value was
greater than 0.8, which displayed a high degree of credibility for the questionnaire. For
20
the importance satisfaction analysis, the attribute of ease of use with high importance
high satisfaction was the common key driver to keep up good work for Apple, Samsung
and HTC. Samsung was the top ranking performer in customer satisfaction to verify its
achievement as the worlds and Taiwans number one smartphone brand. Apple revealed
the highest customer loyalty and enjoyed high stickiness. HTC had been ranked with the
top five global smartphone market share in the 3rd quarter of 2011. However, HTCs efficiency declined since 2012 and this was reflected in its global market share dropping out of
the top 10 by the end of 2012.
The regression analysis was applied to explore the relationship between efficiency, satisfaction and loyalty. The five hypotheses have been testified and all are supported. The
result of regression analysis between efficiency, satisfaction and loyalty displayed a positive relationship. When the consumers loyalty level is higher, then the higher is the smartphone manufacturers efficiency (H1). When the consumers satisfaction level of the
product is higher, then the higher is the smartphone manufacturers efficiency (H2).
When the consumers satisfaction level of the product is higher, then the higher is the
loyalty (H3-1). When the consumers satisfaction level of the physical evidence is
higher, then the higher is the loyalty (H3-2). When the consumer satisfaction is higher,
then the higher is the consumer loyalty as well (H4).
Among the seven dimensions of product factors to describe the satisfaction degree, the
ratings of ease of use for Samsung and Apple were the same. But for the other six product
factors, Samsung was superior to Apple. Nevertheless, HTC performed with the lowest
level of customer satisfaction for the seven dimensions of product factors. The satisfaction
levels of promotional strategies and places distribution for Apple are the lowest among the
three brands. The satisfaction degree of battery duration for three smartphone brands are
all relatively lower than other factors, especially for Apple. The longer battery duration has
become a common expectation for smartphone addicts, and smartphone manufacturers
should pay attention to resolving the problem. The loyalty level for Apple iPhones is
ahead of Samsung and HTC. In terms of the five dimensions of customer loyalty, the
iPhone diehard fans will not easily migrate to other competitors.
According to the market survey respondents, the frequency in using smartphone functions included surfing the Internet, using LINE and taking photos, which account for
approximately 53.1% of the respondents. When the customers adopt a new smartphone,
the consideration factors include the exterior appearance, which accounted for 27.3% of
the respondents. The next was the price which accounted for 25.8%, the third was the
brand reputation which accounted for 24.9% and finally was the camera resolution
which accounted for 15.2%. The findings of this study are very important for the smartphone manufacturers to design new handsets in order to satisfy the customers needs
and meet future market challenges. This paper also illustrated the comparative advantages
and disadvantages of the three leading smartphone brands to provide the reference of the
strategies alliance for the mobile telcos. Since Sony and LG have increased their market
share in Taiwans mobile market, adding the two manufacturers into the observed samples
allowed room for improvement in this paper as well as opportunities for future research.
Acknowledgements
We would like to thank the Editors and the anonymous referees of Total Quality Management &
Business Excellence for their constructive reports and very useful suggestions. Responsibility for
any remaining errors is that of the authors. It is also stated that no competing financial interests
exist for this study.
21
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22
Appendix
Customer importance satisfaction level
Questions on the
level of importance
satisfaction of
No. 7P service quality personal smartphone
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Product 1
Enabling more
convenient living
Product 2
Interface functions
Product 3
Improving
innovation image
Product 4
Multi-functions
Product 5
Attractive
appearance of
smartphones
Product 6
To satisfy the
customer diverse
needs
Product 7
Ease of use
Price 1
Price level
Price 2
The customers can
afford to buy a
smartphone
Promotion1
Promotional tactics
Promotion2
Promotional or
preferential
schemes
Promotion3
Introduction of
poster or DM
Place 1
Convenient locations
to buy
Place 2
Providing convenient
repair service
Process 1
Introducing the
satisfactory
content services
Process 2
Immediately reply
regarding the
phone repair status
Process 3
Retailers attitude for
the repair services
Process 4
After-sales service
Physical evidence 1 Battery duration
Physical evidence 2 Dealers can properly
handle when
buying a
shortcoming
handset
People 1
Retailing servers
could teach the
functional
operation and
value-added
services
Importance
Apple
Satisfaction
Samsung HTC Apple Samsung HTC
4.24
4.27
4.09
4.07
4.10
3.87
4.20
3.80
4.23
3.92
3.99
3.74
3.95
3.73
4.02
3.83
3.72
3.65
4.37
4.12
4.35
4.20
4.11
3.81
4.02
3.95
4.03
4.01
3.77
3.71
4.21
4.19
3.99
4.01
4.06
3.88
4.37
4.01
4.06
4.31
4.06
4.13
4.14
4.05
4.04
4.09
3.76
3.65
4.09
3.57
3.66
3.88
3.40
3.51
3.33
3.47
3.50
3.55
3.39
3.55
3.35
3.49
3.44
3.63
3.33
3.52
3.19
3.55
3.35
3.21
3.36
3.37
3.55
3.66
3.57
3.49
3.59
3.61
3.99
3.98
4.13
3.41
3.56
3.57
4.05
4.06
4.08
3.56
3.61
3.61
4.13
4.11
4.21
3.61
3.58
3.47
4.20
4.19
4.17
3.58
3.67
3.59
4.31
4.20
4.26
4.14
4.10
4.26
4.21
4.19
4.24
3.61
3.22
3.57
3.67
3.51
3.58
3.57
3.31
3.59
3.97
4.02
3.97
3.55
3.61
3.61
(Continued)
23
Appendix Continued.
Customer importance satisfaction level
Questions on the
level of importance
satisfaction of
No. 7P service quality personal smartphone
22
People 2
No. Questions on the

level of customer
loyalty
23 The overall rating
of my
smartphone
brand is good
24 I would recommend
my smartphone
brand to my
relatives and
friends
25 Maintaining a
positive opinion
when talking
about my
smartphone
26 Will purchase the
same smartphone
brand in the
future
27 Not influenced by
the other brands
promotions to
consider
migrating
Importance
Apple
Satisfaction
Samsung HTC Apple Samsung HTC
Total service attitude

4.11
of the smartphone
retailers
Apple
Samsung
4.20
HTC
3.98
3.88
3.60
3.81
3.67
3.40
3.79
3.68
3.53
3.84
3.75
3.51
3.77
3.65
3.40
4.13
3.71
3.82
3.72

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Efficiencies vs. importance-performance analysis for the leading

Chun-Mei Chen and Bao-Yi Ann

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Department of Business Administration, China University of Technology, Taipei City, Taiwan

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# 2014 Taylor & Francis

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C.-M. Chen and B.-Y. Ann

Total Quality Management

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Smartphone industry analysis

Smartphone market share

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C.-M. Chen and B.-Y. Ann

Figure 1. Global smartphone market share.

Materials and methods

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Figure 2. Smartphone market share in Taiwan.

C.-M. Chen and B.-Y. Ann

linear programming model:

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The input-oriented dual problem after conversion of Equation (2) becomes:

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Total Quality Management

C.-M. Chen and B.-Y. Ann

Efficiencies of three brand analysis for the period of 20082013.

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Figure 3. The efficiencies trend of three smartphone brands.

4.2.2. Frequently used functions

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C.-M. Chen and B.-Y. Ann

Figure 4. Percentages of frequently used smartphone functions.

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Figure 5. Customer importance and satisfaction analysis for Apple.

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C.-M. Chen and B.-Y. Ann

Figure 6. Customer importance and satisfaction analysis for Samsung.

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Figure 7. Customer importance and satisfaction analysis for HTC.

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C.-M. Chen and B.-Y. Ann

4.2.4. Regression analysis (efficiency, satisfaction and loyalty)

Regression analysis for efficiency, satisfaction and loyalty.

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Satisfaction and loyalty comparison

Figure 8. Satisfaction-product comparison of three smartphone brands.

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