The ubiquity of mobile phones in people's live
Mobiles phones have had a huge impact on people's live over the last few years. They developed from luxury devices that where more ore less "mobile" to the one thing most important to many people. They seem to give people sort of personal freedom in letting them do "what" they want "whenever" and "wherever" they want to. This new found ubiquity has basically changed people's perception of space and time and the possibilities seem endless. This new found individual power is also reflected in the immense variety mobile phones appear in the market. They are part of each person's personality and act as an extension of their character.
It looks like the mobile phone is the one device that is continuously replacing other devices as it becomes more and more functional. Some examples are wristwatches, diaries, alarm clock, reminder, calculator, music player, digital camera, GPS and even the laptop by enabling the user access to the internet. Using just one device for so many tasks safes the user a lot of time and extends the reach of that person enormously. Today, mobile phones can be used 24 hours, 7 days a week for a range of reasons. These might be safety reasons, networking, pure entertainment, socializing, business and much more. Maslow's hierarchy of needs is a good example of how the mobile phone has become part of our personality as it is able to address all these needs up and down Maslow's pyramid around the clock. (...). From a business perspective there are huge opportunities to connect with customers on an individual level in order to better understand and address their needs and adjust their actions accordingly.
3.2 The mobile industry in numbers
The number of mobile phones worldwide has reached 4.6 billion and is expected to increase to five billion this year http://www.cbsnews.com/stories/2010/02/15/business/main6209772.shtml
Furthermore, the number of mobile broadband subscriptions worldwide is expected to exceed one billion this year. There were around 600 million such subscriptions at the end of 2009, it added. That data show how fast the adoption of mobile phones grows around the globe. Especially in developed countries, the use of mobile phones is more than 90%, thus the ubiquity of mobile phones is real and not just a simple saying. And with more people having mobile phones compared to any other communication devices, businesses have to realise the benefits in adopting mobile phones in their business strategy.
Whereas personal computers are replaced all 3.5 years, mobile phones on the other hand have a replacement life cycle of only 21 months (http://www.kinzna.com/PC/kinzna-access.html)
In developed countries where two mobile phones per person are not an exception that results in an actual replacement rate of 11.5 months. That in turn leads to a rapidly adoption of new technology in the mobile phone market. A very good example of this fast technology adaption is the use of camera phones. Mobile phones with an inbuilt camera were introduced only 10 years ago in 2000 and it is expected that 1.3 billion camera phones will be sold in 2012. http://www.infotrends.com/public/Content/Press/2008/07.29.2008.html
Text messaging is another phenomenon of the mobile phone industry. According to SMS Feedback Online (2010) text messaging is by far the most commonly used mobile phone service around the globe, with "72% of all mobile phone users worldwide or 1.9 Billion out of 2.7 billion phone subscribers at end of 2006 being active users of the Short Message Service" (http://www.smsfeedback.com.au/facts.htm). That number is a huge target market for businesses wanting to communicate with potential consumers via text messaging in more personalized way.
3.3 Mobile phones: revolutionary devices
Since the mainstream introduction of mobile phones in the 1990s mobile phones are innovative wireless communication technologies. Altough mobile phones have still remained primarily communication devices but they undergo improvements and advancements constantly. New features and functions are fitted at an immense pace and today, a mobile phone is much more than "just" voice communication with another person. It has become a multifunctional device that can be used for much than just talking to someone. As mentioned earlier a lot of mobile phones are already equipped with a camera and the diffusion of camera phones happens very quickly. These camera phones in combination with internet access have the potential to be used as a bar code scanner which in turn offers great benefits for business and consumer. It enables the product manufacturers and packaging companies to link information of the product to a bar code. This can highly improve a consumers shopping experience. It enables the shopper to compare the price of the product online with the help of an application that is running on the mobile phone like shopsavvy for example. If the product is found cheaper elsewhere it can be ordered and paid online if shopsavvy is linked to a registered Paypal account(....)
Moreover the mobile phone can be used to provide additional information of the product via the bar code scanner on the mobile phone like nutritional information or product ratings. It is even possible to offer linked information like recipe ideas, complementary products, product demo videos, coupon offers etc. According to Mobile Barcode Innovations (2010) "barcodes can be found on virtually any package around the world", meaning that the barcode technology enables companies to easily control and deliver marketing content targeted at consumers (http://mobile-barcode.tmcnet.com/topics/mobile-barcode-innovations/articles/80324-augme-enables-interactive-mobile-phone-barcode-scanning-consumer.htm
Furthermore, the manufacturers of mobile phones have already developed RFID chips for handsets that can transform cell phones into electronic wallets. That enables users to exchange electronic money via the mobile phone in a secure way since mobile devices contain microprocessors, thus they can offer additional layers of security.
The idea is that you bring your phone within close range of a NFC (near-field communication) reader and it acts just like the credit card or debit card people use at the moment. A mobile-payment-enabled phone is linked to abankor credit-card institution just like it is linked to a phone-service provider http://electronics.howstuffworks.com/nfc-phone.htm
Mobile phones are quickly becoming a melting pot where various technologies meet and fuse and create applications that are valuable for consumers and businesses worlwide. The mobile phone of the future will be a tool that allows people to communicate, connect, transact and innovate (white paper). As usage irresistibly raises, mobile phones can revolutionise the exchange of digital information about things in the "real" world.
can become agents of change, instruments that facilitate connecting things in the physical world to information about these things in the digital world (...).
3.4 Drivers of Mobile Commerce
The introduction of the internet and e-commerce in the 1990s revolutionised the way businesses communicate with consumers and the general approach towards business strategy. M-commerce allows e-commerce businesses to develop beyond the traditional limitations of the fixed-line personal computer, increasing the overall market for e-commerce. M-commerce has a unique value proposition that provides more convenient personalised access to goods and services anytime and anywhere (ubiquity) and therefore offers interaction with customers on a wider scale. (Durlacher Research, 2002; Newell and Lemon, 2001). M-commerce is not a substitute for the traditional e-commerce but it should be rather seen as a new and a much more powerful way to communicate with customers. It offers benefits compared to e-commerce in terms of five key characteristics: ubiquity, convenience, personalization and localization.
A smart phone offer users the ability to benefit from services, receive information and perform transactions independent of his location on a real-time basis.
Therefore, advantages presented from this ubiquity of information and constant access to commerce will be extremely essential to applications where the time factor is very important (...).auction platforms, betting companies or stock market information are examples where companies could provide alert notices and realise the benefits of real-time information for their customers (...).
Consumers want convenience, which is big driver for mobile commerce. People do not want to be affected by place or time to pursue their e-commerce activities. Time is of enormous value in today's fast-paced environment and if mobile commerce can somehow speed up a person's day or save some time for him or her it will increase loyalty on their side. They could take care of online transactions if offered by their bank or go online shopping while stuck in a traffic jam for example. Taking this idea a step further, mobile commerce could help businesses to reach customers that were until now hard to get in touch with and thus increase their customer-base.
Personalization has always been one of the major goals of any marketing strategy in order to advertise tailor-made information for individual customers. Since mobile phones are an extension of a persons' personality it makes them the perfect device to achieve this goal. A fashion store for example, would be able to target all females within a specific age-group (15-25) who are within walking distance (500m) of that store. They could send them the latest bargains of their store to get them inside the shop and therefore improve the firm's performance.
The limitations of a mobile phone with regards to online browsing make it also very important that the information that is sent to the customer is as individual and relevant as possible. According to a research (Durlacher Research, 2000) there is a negative relationship between the possibility of an online transaction with a mobile phone and the time needed to find the way through an online commercial by various clicks. That means that companies will be more successful if they can provide such personalized information that the customer is able to gain the relevant information straight away without unnecessary hassle.
Knowing the physical location of the Internet user at a particular moment creates a important benefit for m-commerce over wired e-commerce in that products and services can be matched to the customer's location (textbook). This is called Location-based marketing and works with the help of GPS. The uses of mobile devices attached with this technology grow rapidly in numbers (...). Companies making use of that technology can send information linked to the location of customers and their preferences (textbook). Therefore combining the attributes of localization and personalization could really revolutionise the way companies target their customers. For example, if a person goes to the local Woolworth supermarket the company would be able to send specific promotional information on preferred products to the mobile phone of the customer. Since the adoption of technology within mobile phones happens very quickly and GPS is becoming a standard feature in many mobile phones, localization-based and personalized advertising via mobile phones will soon be a must for companies if they do not want to lose their competitive edge. Besides all the benefits just mentioned the integrity of the user should not be violated. There is a fine line between information/advertising perceived as useful or perceived as spam. If companies cross that line they could lose loyal customers instead of gaining new ones.
The mobile phone can become the one device that connects the physical and virtual world. Probably the most supportive fact for that argument is that mobile phones have massive adoption globally as mentioned above. Although broadband use on mobile phones is still comparatively new, a lot more people have mobile phones compared to personal computers or laptops. That in turn means that instant internet access via mobile phones will sooner or later overtake that of personal computers and laptops (....). From a business and customer perspective it means that it is more than likely that mobile phones will connect companies and customers on a huge scale more easily than it was possible in the past and allow companies to take advantages of the unique possibilities of mobility (...)
In order to picture all these drivers, the person from above is still stuck in a traffic jam, thus incapable to access usual e-commerce. Given that time is very valuable, the person may perhaps use their mobile phone (instant connectivity) in order to check their current bank account balance (convenience). Meanwhile the person gets a reminder to pick up the car from a mechanic (ubiquity). And just before the cars keep moving again the person also receives a customised advertisement of a new golf club (personalization) available at a golf store he is just passing by (localization).
3.6 challenges for businesses
Mobile commerce is a rising market especially with the enormous growing numbers of mobile phones in mind. However, besides all the opportunities in this fast growing market there are also some key challenges which have to be overcome by businesses in order to realise the benefits.
For example, businesses should not rush into mobile commerce without strategically planning this move. Services that are offered to customers via mobile phones should be related to the unique aspect of mobility. That means it would only make sense to invest in mobile advertisement for example if it would not be possible to do the same advertisement via usual e-commerce and a fixed line. For that reason it will be essential for business strategies that are created for mobile commerce applications to put emphasize on distinguished attributes rather than usual e-commerce strategies (Barnett, Hodges & Wilshire, 2000; Datamonitor, 2000).
Since mobile phones are still less user-friendly in terms of internet browsing for example, it is crucial to success that businesses provide their consumers with easy-to-access information. The ease of use is an important part in order to achieve a wide consumer adaption. Consumers have to be convinced that they really benefit form mobile commerce and that mobile commerce makes a difference compared to the traditional use of e-commerce.
Moreover, companies have to understand that it is important how to best integrate mobile commerce in their existing business model. For example, retailers and manufacturers have to consider that mobile commerce means providing a service and not only product and goods. Their current business model might not be suited for offering mobile commerce services as it requires other resources, different knowledge, and maybe even a different internal structure. On the other hand, with the right business model that allow them to integrate mobile commerce in their core business, companies could gain competitive advantages over other similar companies not benefiting from mobile commerce.