This is because the increase in the VAT sales tax is expected to lead to a rise in the rates of inflation to at least twice the level at which the Bank of England’s rates stand throughout 2011 (Thomson Reuters, 2011). With higher VAT sales taxes, smartphone manufacturers and dealers may decide to pass this cost onto consumers, resulting into higher tariffs and handset cost, which combined with rising inflation rates, may subdue the demand for smartphones in 2011 (Nickels et al, 2002).
Technological Forces: Rapid technological advances are also likely to affect smartphone manufacturers and dealers, largely by leading to an enhancement of product features which should give the manufacturers basis on which to differentiate their brands from rival brands (Arthur, 2011). According to Arthur (2011, p.1), some of the merging technologies which are likely to be introduced with a lot of impact on the smartphone market in 2011 include “dual core processors, and NFD and 3D displays.” Firms are likely to leverage on these, in order to differentiate their brands from competitor brands (Arthur, 2011).
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