Smart way to choose smartphones
The article shows a good illustration of how information cascades affects the consumer behavior in smartphone markets. The article describes how newly released iPhone 5 has exceeded Galaxy S III, which has been released for more than several months, in terms of Web traffic volume. The article quotes from the advertising network Chitika for the possible explanation for this tremendous growth to be the iPhone 5’s “record-breaking sales numbers and 4G speeds.” The article also analyzes that the Galaxy S III sales growth decreased upon the release of new iPhone 5. The article further explores the battle between the two competing companies and their marketing strategies. Apple claims the iPhone to be the “best smartphone” while Samsung points out Apple’s shortcomings compared to its products. How consumers react to the new launch of Apple’s iPhone 5 and the shift of the purchasing trend all ties into the phenomenon called information cascades.
Information cascades refers to the phenomenon that consumers imitate the purchasing behaviors of other consumers based on information. Before iPhone 5’s release, sales growth of Galaxy S III was 15% but it dropped to 8% upon release of iPhone 5. This fact implies that, before the iPhone 5 was released, the positive feedback of the consumers and the purchasing trend of Galaxy S III probably influenced the other consumers to imitate the purchase. However, upon the new launch of iPhone 5, the sales growth rate of Galaxy dropped because now the positive feedback of the users of iPhone 5 is the more recent and more interesting to the possible buyers of smartphones because these possible consumers have already heard of Galaxy. Now that more consumers start to buy the new iPhone, other possible consumers also consider getting the iPhone based on information cascades. Also, now that people pre-order iPhone and start getting them and as positive feedback for the iPhone further increases and consumers keep buying the new iPhone, information cascades further affects the possible buyers to lean towards iPhone. There are both pros and cons for each company’s product, and it is difficult to conclude that one item is superior to the other. Therefore, the consumers’ purchase decision to buy one product depends on personal judgment/preference of the item which are naturally affected by several external factors such as other consumers’ review and purchasing trends as well as the advertisement of the company. As illustrated in the article, the companies compare and highlight their products’ features as compared to those of the other companies so that the consumers get enough information to get not only from other consumers but also from the company itself.