Mobile channels and media can keep consumers as connected and interacting with a brand as they choose. By mid-2013, more than half of all online U.S. buyers had made a purchase on a mobile device, and m-commerce accounted for more than 11 percent of all e-commerce.81 Tablets are expected to overtake smart phones for mobile shopping, and one estimate says tablets will make up more than 70 percent of mobile retail sales by 2017.82
In some parts of the world, m-commerce is very well established. Asian consumers use their mobile phones as their main computers and benefit from a well-developed mobile infrastructure. Mobile ads are well accepted by consumers and relatively inexpensive for firms. In South Korea, Tesco created virtual subway stores for commuters traveling on Seoul’s underground transportation system. Interactive, lifelike store aisles with a wide range of product and brand images were superimposed on walls. Consumers could order products for home delivery by simply snapping photos with their phones.83
Millions of Japanese teenagers carry DOCOMO phones available from NTT (Nippon Telephone and Telegraph), the country’s largest mobile service provider with an ultra-high-speed LTE network. They can also use their phones to order goods. Each month, subscribers receive a bill from NTT listing the monthly subscriber fee, usage fee, and cost of all m-commerce transactions.84
M-commerce is well- established in South Korea where virtual stores have been introduced into underground subway stations.
In the United States, mobile marketing is becoming more prevalent and taking all forms. It is easy to understand how entertainment, travel, sporting events, and other time-sensitive categories can benefit from mobile phone apps, but the impact of m-commerce extends far beyond these. Consumers and companies are adapting.85 Look at Dunkin’ Donuts.86
DUNKIN’ DONUTS An early mobile marketer, Dunkin’ Donuts has refined its DD Perks program as part of its corporate goal to lead in digital mobility in the QSR (Quick Serve Restaurant) industry. The DD program was integrated into the company’s unified point-of-sales and mobile app to reward loyal customers and encourage them to visit more often and spend more on each visit. The mobile app received 3.5 million downloads in the first year alone. By constructing a purchase history and profile for customers, Dunkin’ Donuts can offer more customized and geographically targeted offers that change as customers go from market to market. The app includes a store locator feature and lets customers pay for drinks and meals with a bar code scanned at the point of sale. The company also uses Twitter to run quick, fun promotions and sweepstakes for its on-the-go customers.
1. CHANGES IN CUSTOMER AND COMPANY BEHAVIOR
Consumers are fundamentally changing the way they shop in stores, increasingly using a cell phone to text a friend or relative about a product while shopping in stores. Fifty percent of all Google searches are done on mobile phones.87 Women may use smart phones more than men in all phases of the shopping experience, making shopping lists and product wish lists, collecting coupons, and sharing photos of their purchases.88
Companies are trying to give their customers more control over their shopping experiences by bringing Web technologies into the store, especially via mobile apps. Consider these two examples:
- Although Nordstrom expected its app to be used remotely, many customers launched it while shopping in a store rather than approaching a salesperson. As one executive noted, “A lot of customers like to touch and feel and try on the merchandise, but they also want the information they get online.” Nordstrom has added Wi-Fi to almost all its stores, in part so its app will work fast.89
- American Express launched its “Link-Like-Love” social commerce program, which sends cardmembers couponless personalized offers from merchants based on their Facebook “likes” and Facebook Places checkins that are automatically redeemed through card use. Via a partnership with Foursquare, cardmembers could also automatically receive and redeem promotional offers from merchants based on their Foursquare activity.90
2. M-COMMERCE MARKETING PRACTICES
Marketers are using a number of new and traditional practices in m-marketing.
ADVERTISING AND PROMOTION Understanding how consumers want to use their smart phones is critical to understanding the role of advertising. Given the small screen and fleeting attention paid, fulfilling advertising’s traditional role of informing and persuading is more challenging for m-commerce marketers. On the plus side, consumers are more engaged and attentive with their smart phones than when they are online.91 Nevertheless, a number of m-commerce companies are eliminating ads to allow consumers to make purchases with as few clicks as possible.92
Outdoor supplier North Face targets customers with mobile promotions at parks and ski resorts as well as near its stores.
Promotions are a different story. Consumers often use their smart phones to find deals or capitalize on them: the redemption rate for mobile coupons (10 percent) far exceeds that of paper coupons (1 percent).93 For retailers, research has shown that mobile promotions can get consumers to travel greater distances within a store and make more unplanned purchases.94
GEOFENCING The idea of geofencing is to target customers with a mobile promotion when they are within a defined geographical space, typically near or in a store. The local-based service requires just an app and GPS coordinates, but consumers have to opt in. Consider these applications: 95
- Neiman-Marcus is piloting geofencing in its stores so its salespeople know when their more valuable customers are on the premises and can look at their purchase history to provide more personalized service.
- Outdoor supplier North Face uses geofences around parks and ski resorts in addition to its stores.
- Cosmetics brand retailer Kiehl’s uses geofencing around its free-standing stores and kiosks within other stores. It advertises the alerts at its cash register and on social media pages and e-mails list, and it offers customers a free lip balm for enrolling. Thousands have done so, but the company limits it texts to three per month to avoid being intrusive.
The fact that a company can pinpoint a customer’s or employee’s location with GPS technology raises privacy issues. Like so many new technologies, such location-based services have potential for good and harm and will ultimately warrant public scrutiny and regulation.
Many consumers are happy to tolerate cookies, profiles, and other online tools that let e-commerce businesses know who they are and when and how they shop, but they are nevertheless concerned when such tracking occurs in the store. When Nordstrom informed customers it was testing new technology to track customers’ movements by following the Wi-Fi signals from their smart phones, some consumers objected, leading Nordstrom to drop the experiment.96
Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.