Your SlideShare is downloading. ×

Emerging theme CIM Dec 2012


Published on

How Mobile Technology changes the FMCG Retail Industry?

How Mobile Technology changes the FMCG Retail Industry?

1 Comment
1 Like
No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. The Chartered Institute of Marketing Jancis, Yap Ying Membership Number: 14392939 EMERGING THEME“How Mobile Technology changes the FMCG Retail Industry?” December, 2012 1|Page
  • 2. Table of ContentsExecutive Summary.................................................................................................................. 3Task 1: Research Sources ....................................................................................................... 4Task 2: Discussion Paper ........................................................................................................ 51. How will mobile technology impact the retail industry ............................................................ 6 The benefit and drawback of mobile technology .............................................................. 62. How mobile technologies alter the competition within the retail industry? ............................. 7 Nature of competition ...................................................................................................... 8 The changes in competition with mobile technology ........................................................ 83. Recommendation and Justification of the response to changes ........................................... 94. Prediction of skill, attitude and behavior after mobile technology adoption ......................... 10Task 3: Blog Article ................................................................................................................ 11Reference ................................................................................................................................ 13Appendices ............................................................................................................................. 14 2|Page
  • 3. Executive SummaryThere are more than 4 billion people equipped with mobile phone and many have moved fromordinary mobile phones to internet-enabled smart phones. Consumers now are using thesesmart phones to create and store shopping lists, scan product bar codes to compare productcharacteristics and access coupons and promotions (GS1 MobileCom, 2010)This discussion paper will critically evaluate how the technological environment of the Marcofactors affects the FMCG retailing industry; including supermarket, pharmacy, fast food, fashionstores etc. Specifically, the discussion will highlight on the aspect of how integrating Mobiletechnologies provide solutions that enable retailers to create new business models and newmarkets for their products.There is always unavoidable competition when new technologies are integrated andimplemented. Recommendation will be shared to guide retailers on how to response to thesechanges and what they should be equipped in order to successfully adopt the mobile ambition.These will include having the right set of the skill, attitude and behaviour of the modern marketer. 3|Page
  • 4. Task 1: Summary of various secondary research sources Source Title Merit Credibility ReliabilityBusiness Five Tips This article Business Insider received a Business Insider is aInsider For Using explained how 2009 Official Webby Honoree fast-growing business Mobile mobile for the Blog - Business site with deep financial, Technology technology helps Category! media, tech, and other To Improve retailer through industry verticals. The In-Store better flagship vertical, Silicon Retail engagement, Text 100, May 2009: Ranked Alley Insider led by Shopping incentivizing #3 Most Influential Blog - DoubleClick founders customer, product Business category Dwight Merriman and demo, increase Kevin Ryan and former loyalty and aids to top-ranked Wall Street understand the analyst Henry Blodget. customer better.Horizon Mobile This article Author works as a Principal Contents were adaptedWatching Computing: provides many Client Analyst on IBM’s from IDC, Gartner, A Horizon evidences of the Corporate Marketing yankee group, ABI Watching market growth on Development & Insights team. research and of course, 2012 Trend mobile He advises business leaders IBM. Report technology with on how to develop social the driver, marketing plans and online challenges and communities. He has also built implication that an expertise the past 10 years support my topic in researching emerging on mobile trends, technologies and technology as business opportunities. emerging trend.Know This Retailers This article Know This has been around It serves as a reference Next Big covers the pros since 1998. It provides site for hundreds of Problem: A and cons of knowledge source for college, university and Smarter mobile marketing. public libraries around Customer technology and the world was chosen by how it will be a CERN, originators of the problem for World Wide Web retailer in near Consortium, to be the future Marketing specialty area within the World Wide Web VirtualMobile Future This article Named as Los Angeles’s most Mobile storm is aStorm Mobile and highlighted on innovative companies, digital Communication Service Digital how mobile messaging powerhouse by Provider (CSP); they Marketing technology aids ford motor co. also produce white Trends for the marketer in paper, industry reports, Retailers magnifying their and webinars and ideas to maintain discuss best practices 4|Page
  • 5. the uniqueness guiding the digital trend.The Point Retailers This article Articles produced are from Founders background inof sale Unite to covers mobile industry experts in the point of business automation andNews Compete in payment and its sale business and from the point of sale starts in the Mobile potential payment retail industry early 1980s when he Payments gateway wrote point of sale Wars proposal. software to run his own business.Retail Pro Mobile This article is Retail Pro is a global leader in It covers bother quality technology produced after Point of Sale, Store and quantities content in enhances Motorola Operations, and Back-Office evidences. the Solutions annual software applications for the shopping Holiday Shopping specialty retail industry. For experience Survey over 25 years, they have economized retail business processes.Business to How Mobile This article Business to Community has Author is deeply versedcommunity Is Changing highlighted the been awarded the most in digital strategy and Retail changing valuable publication in 2012 by media including search Marketing shopping DTA engine marketing, and Buying behaviour and organic search Behavior how location optimization, social based marketing media, web analytics and coupon affect it. data mining. Also, he is the industry recognised conference speaker. 5|Page
  • 6. How will Mobile Technology changes the FMCG Retail Industry?1. The Emerging Mobile Technology Trend in RetailingWith the advancement of the technologies today, there is a rapid increase in expectation of howtechnological applications can be used by businesses. It is essential for businesses today tokeep up with the latest technology such like mobile technology in order to stay competitive.Nickerson (2011) shared that smartphones are rapidly transforming the retail landscape andblurring the lines between online and in-store customer experience. The retail industry will see amajor transformation from the basic “brick and mortar” in shopping centres and malls to thehands and homes of consumers via mobile technology and its use in changing the shoppingexperience. Mobile services are, therefore, no longer exclusive to larger retail chains, withpowerful financial strength. It will be how the retailer makes the mobile service workable for theirregular and recurrent customer.1.1. Evidence of how Mobile technology enhanced shopping experienceA decade ago, it was the E-Commerce that everyone tried to be part of. Today, the new “musthave” is mobile technology for businesses. It is becoming the new channel for retailer to extendtheir reach. Many retailers generate greater revenues through incentivizing in-store purchasewith mobile initiative and this has improved sales (Ray, 2011). This evolutionary strategydesigns innovative shopping experiences that are not just about immediate sales; it will also beabout creating opportunities to facilitate impulse buying, up-selling and cross-selling.According to Chamberlin (2011), the explosion of devices, network capacity, applications,video, mobile transactions and Machine to Machine (M2M) deployments will grow to matchglobal demand. Such demand increases alongside with the growing number of smartphone user;having millions of shoppers now engaging with retailers via mobile devices like the Iphone,Blackberry and Samsung Galaxy. With these engagements, brands now have greateropportunities to listen, understand, and react to customer feedback through the mobile channel(Ray, 2011).This emerging trend creates an ideal opportunity for the FMCG retail businesses to extendtheir service with more value added experience that bring convenience to the next level;such like the mobile wallet improving transaction time (appendix 1A) and innovative shoppingexperience (appendix 1B).1.2. The drawback of implementing mobile technologyRetail Pro (2011) shared that although its crucial how retailers use mobile technology and itshould only be used where it make senses. Integrating new devices just because they are thelatest and greatest will not necessarily improve the shopping experience. It all comes down tothe implementation.High level of comparison with accessible information: With mobile technology, consumersare empowered to access information to compare price right at their fingertip and this willincrease their purchasing power (Christ 2010). They can now easily get exposed to flaws of thebrand through reviews and viral warnings or finding another alternative that can be a substitute.Redundancy of employee: Through many readings, it has been said that technology willreplace labour worker; considering just the mobile wallet and how powerful it can be. A good 6|Page
  • 7. example will be having self-checkout counters to improve transaction and conveniences for theconsumers (appendix 1B). This will hence lead to overstaff and redundancy of employees.Security challenges: Consumer are concern on how this upcoming mobile technology protectstheir data and privacy when retailer will have the need to access the data for targetingpromotion purpose; are the data used appropriately or misused for other purposes? Thechallenge facing retailers is how to make the new, more responsive systems of the future workwith creaking legacy infrastructure (Leroy, 2012).1.3. The Potential of the changesA recent study from the Munich Maximillans University suggests customized mobile promotionand marketing can greatly change consumers’ choices at the point-of-purchase (Adelson, 2012).As part of the mobile technology, the rising usage of location-base marketing has created agreat impact in consumer buying behaviour; they have become more value conscience andmake more informed decision.Mobile technology will be the new trend that will stay on till another futuristic device comes intoexistence. Cunningham (2012) shared that Merchant Customer Exchange (appendix 1C) hashigh hopes for its product and its ability to compete with mobile payment giants. Whatever thefuture holds, these news makes it clear that mobile technology trend will be the new mega trend.2. How mobile technologies alter the competition within the retail industry?The next task is to attempt and analyse the competitive landscape of the mobile technology inthe retail sector. ‘‘What makes your business unique? What is your competitive edge?’’ Theseare the question every retail businesses have to solve. But, before knowing your competitiveedge, you must know your competitor (Waters, 2012).2.1. Nature of competition in retailingTypically, regardless how well retailing businesses position themselves, they do have to facethe basic nature of the competition in the market. The Office of Fair Trading by LondonEconomics (1997) identified four dimensions of horizontal competition between retailers:• Pricing- it is one of the key concerns for the retailer to set the right price to target the rightpeople. Naturally, consumers are attracted to ‘sale and promotion’ and that is where theretailers know they are involved in price war every single day. To ensure that they are not at thelosing end, retailers have to study the market with research and analyse which pricing strategymost fit their target audiences; skimming, premium, penetration, value-base etc.• Location – Having the right size and location for a retailing business does not mean betterfinancial returns. The rising competition from one era to another is putting pressure on retailersin existing malls to refurbish as the competition heats up. Consumers do seek conveniencewhen it comes to the need of travelling to get something and retailers will always hope to reachout to them at their convenience; often, the high traffic locations are oversupply with competitoror vice versa. Thus, new channels like cyberspace could bring new opportunities• Product and selection – to ensure that consumer always get what they want from the retailstore; retailers have to pamper their consumer with the range of selection as well as itsavailability in-store. A financial astute practice is having the right amount of liquidated asset 7|Page
  • 8. available by not keeping too much stock. Having a physical space to keep up to selection andavailability can be disobliging. Other stocks can be sold via online, mobile transactions.• Retailer service – quality of the customer services offered do play an important role ingrowing the brand equity. Retailers need to consider innovative ways to improve retail serviceand experience and the type and source of technology can be a good method to improve theoverall retail experience in and out of the retail outlets.All of the competition dimension can be easily solve as long as retailer has a strong group offunding and investor. But, what will be the break-through when mobile come on board?2.2. The changes in competition with mobile technologyAshdown (2012) shared that the mobile business model is no longer the preserve of the largerretail chains; as brands of all shapes and sizes are now able to cash in on the operational profitsand exceptional marketing opportunities that mobile services can offer. When mobile technologygets in place with the retailers, there will be an expecting shift in the buyer power that will affectthe dimensions of horizontal competition between retailers leading to a lower barrier of entry.Based on the 5 force model by Michael E. Porter, these are the areas of critical analysis ofchanges in competition:Buyer Power: ComScore recently reported that two-thirds of all smartphone owners compareproducts and prices, searching for coupons, taking product pictures or locating a retail store viatheir mobile phone (Rao, 2011). With the accessibility of information, consumers are nowempowered in buying and hence, increasing the buying power. Retailers have to improve theirstrategies in order to have a competitive advantage over their competitors.In the past, consumer visit ‘brick and mortar’ retail giant such like Wal-Mart and Tesco topurchase their shopping goods. Today, we are talking about Amazon, EBay and Gmarket whoare the top few e-commerce retail giant in the market for the last decade and they are movinginto mobile as well (Rao, 2011). Many of these new competitors have mobile applications toassist consumers in buying anytime, anywhere. For instance, Tesco Homeplus opened a virtualgrocery store in a South Korea subway station; consumer can now purchase grocery whilewaiting for the train (Bergen, 2011). This injects a new wave of shopping experience consumeexpect and hence, increase competition among retailers to meet these new expectations.Having all these expectation ahead, retailers have to be mindful that:  Pricing now becomes more sensitive as consumers grow into a wiser spender; they compare and comment more before and after purchase respectively.  The increase in show-rooming has shown that location might not matter as much as before. Consumers now get to access purchase right in their hand or from home. This may create competition for the popular shopping centres and malls.  Product selection will definitely improve since retailers do not need the item to be physically there. Moreover, over the decades consumers are used to purchasing item over the internet and now, it just got easier with mobile technology. This also suggests why show-rooming is increasing.Barrier of entry: Considering the above issues, the barriers of entry are expected to reducewhen retailers adopt the mobile ambitions (Ashdown, 2012). Today, it is feasible that anyretailer can operates a viable mobile proposition with adequate amount of subscribers 8|Page
  • 9. Although competition may seems to heat up with the adoption of mobile technology, retailbusinesses can take this opportunity to work into a cost efficient expansion or work toward adifferentiation strategy with the aid of mobile application. In the future, it will be about theuniqueness of the mobile application that attracts and entices purchase from consumers and notjust the physical product display at the retail outlets3. Recommendation and Justification of the response to changesThe combination of smarter and more demanding shoppers with economic downturn ispresenting retailers with one of the most challenging retail scenarios in recent years (Oracle,2010). It is important for retailers to affirm their stand on which positioning strategy theyshould apply before entering the market. It is recommend that retail businesses look into theinternal aspect of positioning using the Treacy and Wiersema (1995) Value Discipline Theory aswell. This will help in building a stronger competitive advantage over the others.According to Treacy and Wiersema (1995), every market is divided into these three genericsegments disciplines; operational excellence, customer intimacy and product leadership.Retailers must choose to follow one of the value disciplines while striving for reasonable levelsof performance in the other two in order to maintain the competitive advantage over theircompetitor (Simister, 2011).Source: key for retailers that want to get closer to their customers and be welcomed by them is toset up a mechanism that allows them to do that. Thus, in response to the changes, retailershould work toward ‘Customer Intimacy Value (CIV)’ while keeping a balance for the other twodisciplines. This will help to better manage the customers when the buyer power increases.Having more focus on the customer intimacy value, retailers get to neutralise the upcomingcompetition through a better reach and range of service, cycle time and product identification.(Matthews, 2012) defined CIV as the following:Customer intimacy should base around the market segment that value customised productsand close relationships with the following principles:  Having a full range of services available to serve the customers on demand. This may involve in having a wide range of services available from other suppliers when notice is short. 9|Page
  • 10.  Have a corporate philosophy that resulting business practices which encourage deep customer insight and create an innovative thinking about how to improve the customer’s situation.Injecting the above principles, the table below shares what ‘Customer Intimacy Value’ canprepare retailers during the changes and how it will help the retailers in near future: CIV principle How? Values gained will help in… Make use of Advertisements with Offers and ‘Know your customer’, give mobile coupons in both search and display them what they want; Offers Reach and to drive consumers into your stores and and promotion. range keep them there while they are comparison (Barza, 2011) shopping. “Retailers need to have a cross-platform Higher engagement with the strategy which includes tablets” customer Test and redesign experiences specifically for different types of devices. This is to ensure appropriate coverage. Help customer find stores that are near Drives more business them with store location integrated in display campaign. Improving the time between awareness of customer need and delivery as well as product or service development time. Efficiency Cycle time For example: The inventory database can be accessed on hand as it enables store associates to determine in seconds if an item a customer wants is in stock and where it is located. The ability to identify new products or The Availability of Product services required by customers; meeting customised products and identification demand servicesAngrove (2010) shared that now retailers are not opening as many new stores, they arefocusing on productivity within existing stores. They are starting to think like marketers andacting like merchants.The slowdown in economies has been relatively prolong, thus it is vital for businesses to takesome steep learning curve in improving the situation. One such learning is the value ofcustomer data and its vital importance for retention, cross-selling and up-selling (Oracle, 2010).Generally, to excel in customer attention and customer service, retailers need to be mindful thatit is essential to know the customer preferences and behaviour when dealing with them. Onlythen can the retailer be viewed as trusted by its customers and its communications welcomedas a ‘good friend’. Tools like segmentation, targeting and positioning can be improved with thisstrategy. 10 | P a g e
  • 11. 4. PredictionIn this technological age, marketers need to be adaptive and ever ready for the emergingtechnologies that will affect their future marketing campaign and efforts planning. It is predictedthat after mobile technology, the expected new technologies like facial recognition and gesturesensor etc. are the upcoming trends.Below are some of the key drivers for mobile technology adoption:Be innovative with mobile application – There is an increment in the time consumers spentonline and mobile can become the “glue” that ties physical products and stores to the digitalworld. Retailer should use current data available to create a mobile application that will bring abrand new shopping experience to their customer. They need to learn how compel theircustomer through the creation of experience that is not just useful, but personal, fun, andoptimized for mobile devices (Verizon Business, 2011)The ability to analyse and utilise data generated – With the compelling content, it shouldbuild a stronger loyalty. Retailer will understand what motivates their customer throughevaluating the data collected.Customer relation excellence – Through innovative cloud and mobility advancement, retailershould attain the ability to build a sustainable relationships with their customer based onpersonal preferences and social networks (Verizon business, 2011). Most importantly, retailermust fully respect customer rights for privacy, preference and informed consent.With all these abilities prepared, retailers will be all set to meet this emerging trend of mobiletechnology. 11 | P a g e
  • 12. Task 3: Blog Article for technology is reshaping the retail world!December 7, 2012 by Jancis YapMobile represents a fundamental shift in consumerbehaviour and retailers must move quickly to exploitit, says John Milliken the managing director ofMobile Money Network.With the booming number of smartphone creationand users, consumer now has higher demand foreverything around them. It has always been thecase since ‘marketing’ was born, the reach andconvenience are what many shoppers have beenseeking till date and how many businesses go allmiles to accommodate and strive a difference. Source: mobile-technology-has-been-revolutionized-today.htmlToday, there is a mobile phone in everyone’s pocket; this medium offers a level of directengagement and reporting that any traditional medium just can’t match. Most importantly, itprovides the mobility convenience to the consumer.Cisco IBSG Market Watch conducted a survey in thirteen countries consumers, and mentionthat the emerging markets are ready to use their mobile devices to improve their shoppingexperience. They have asked the consumer about their usage of mobile phone when they are atin the store (Figure 1.) and the secure service they may use (Figure 2.). 12 | P a g e
  • 13. From the above, we should see that with all the potential services made available for theconsumer, the competition level will definitely hit another peak. Retailer need to be ready for theupcoming competition if they are mobile ambitious.I have prepared a discussion report to further evaluate this emerging mobile technology trend.The report analyse on the aspect of how integrating Mobile technologies provide solutions thatenable retailers to create new business models and new markets for their products. Theanalysis covers the following advantages to retailers: - Facilitating impulse buying - Extend services for value added experience - Upselling and cross-sellingIn additional, the report highlighted on how the new technology, changes the buyer power whichwill eventually alter the nature of the retailing competition. To remedy this issue, arecommendation of using Value discipline strategy is shared for further action.For further information on my discussion paper, please click here to download a copy. 13 | P a g e
  • 14. ReferenceAdelson J., 2012, ‘How Mobile Is Changing Retail Marketing and Buying Behavior’, B2C,Accessed on 13 October 2012, <>Ashdown J., 2012, ‘Retail brands check out mobile services’, Retail digital, Accessed on 23October 2012, <>Barza A., 2011, ‘Mobile Insights: Retailers, are you reaching one of your biggest opportunities –mobile users?’, Google blog, Accessed on 8 November 2012,<>Bergen J., 2011, ‘Korea’s Tesco reinvents grocery shopping with QR-code “stores”’,,Accessed on 20 October 2012, <>Chamberlin B., 2012, ‘Mobile Computing: A HorizonWatching 2012 Trend Report’, HorizonWatching, <>Nickerson R., 2011, ‘OpinionLab Advisory: Five Tips for Leveraging Mobile Technology to DrivePositive Brick-and-Mortar Shopping Experiences’, Accessed 6 October 2012,<>Christ P., 2011, ‘Retailers Next Big Problem: A Smarter Customer’,, Accessedon 6 October 2012, <>Cunningham K., 2012, ‘Retailers Unite to Compete in Mobile Payments Wars’, Point of Sales,Accessed on 18 October 2012, <>Montgomery J., 2011, Future Mobile and Digital Marketing Trends for Retailers, Mobile storm,Accessed on 7 October 2012, <>Leroy J., 2012, ‘Beyond Mobile, Part 1: Surviving the Shattered Future’, informit, Accessed on13 October 2012, <>Office of Fair Trading Report, 1997, ‘Competition in Retailing’, London Economics, Accessed on1 November 2012, <>Oracle, 2010, ‘Renew Focus on the Customer Experience’, 2010 Oracle Retail CrosstalkConference, Accessed on 26 October 2012,<>Swartz J.,2012, ‘Why shopping will never be the same’, USA Today, Accessed on 8 October2012, <> 14 | P a g e
  • 15. Ray R., 2011, “Five Tips for Using Mobile Technology to Improve In-Store Retail Shopping”,Business Insider, Accessed 13 October 2012, <>Retail Pro, 2011, “Retailers speak: Mobile technology enhances the shopping experience”,Accessed on 13 October 2012,<>Rao L., 2011, ‘The Threat And Opportunity Of Mobile: How Physical Retailers Can Fight BackAgainst Amazon’, Tech Crunch, Accessed on 20 October 2012,<>Simister P., 2011, ‘Value Disciplines & Differentiation’, Differentiate your business, Accessed 24October 2012, < >Vance J., 2011, ‘Mobile Cloud Computing: 5 Key Trends’, Datamation, Accessed on 6 October2012, <>Verizon Business, 2011, ‘The Near Future of Retail: Meeting the Demands of the MobileConsumer’, <http://>Wood A., 2010, ‘Customer intimacy: who is achieving it and who needs work?’, Customer Think,Accessed on 9 November 2012,<> 15 | P a g e
  • 16. APPENDICES 16 | P a g e
  • 17. Appendix 1ASources: http://gplus.comAppendix 1B – The making of “Scan and Go”Source: 17 | P a g e
  • 18. Appendix 1C – Who is MCX?Source: 18 | P a g e