1 Trends Assessment “Mobile Applications” October 3, 2012HT-344 Hospitality and Tourism Marketing and Sales By: Jordan Flasch, Josh Gehring, and Lauren Flory
2BackgroundTo understand how the mobile applications have changed our industry and are causing anorganizational shift we must first look at how the mobile applications came to be. The mobileapplication has been around since the dawn of twentieth century but has not risen to fame untilthe last ten years. Before major iOS systems were used in smart phones most mobile applicationswere found in small arcade games, calculators, and computer editors. A mobile application issimply computer software built to help the user preform one simple specific task.Up until 1983 the smartphone also known as a mobile application or operating device wasunheard of because of a specific lack of available technology. The Motorola DynaTAC 8000X isdebatably the first commercially available phone that incorporated a mobile interface and basicmobile applications. Its retail cost was $3,995 dollars not including high monthly fees andunreliable service. The reason for communication companies to invest in such a device isbecause there was a proportional shift in growth of technology at the time and consumers wantedmore mobility, choice, and opportunities that only technology held. Themanufacturer’scorporation was the major group that looked to expand value content to its consumers and givefreedom to developers to create new application for a growing future trend. First timeapplications like Snake, Tetris, and Pong started to appear on mobile devices leading consumersto look at communication differently. This information overflow is what pushed mobiletechnology into the next age when businesses started to realize the potential of mobileinformation.By the late 1990’s mobile consumers wanted more from their mobile devices. With theprogression and growth of the World Wide Web a foreseeable connection between the twowould be made. The bridge between the two was finally made with the creation of WirelessApplication Protocol (WAP). WAP allowed the breakdown of HTTP internet Web sites whichhad full color and used text, images, and various other media. This breakdown allowed mobiledevices to connect and display simplified Web sites to mobile consumers. However, WirelessApplication Protocol was not a stable and compatible system for the growth of Web usage and itslimitations began to show. WAP had been replaced by more modern and compatible systems thatsupported computer interfaces and Web design such as Windows mobile and Linux.Case StudiesThe power of these new iOS systems helped lead to modern mobile devices that give usersunlimited freedom, choice, and mobility. With this continuous growth of consumers, businessesstarted to use mobile applications such as Mobile Web pages and sales applications to sell theirservices and products. This generation of the late 1990’s is the consumers of today that look tospeed and mobility to conduct their business, unlike earlier generations that connected throughpersonal interactions which are now starting to disappear. Businesses such as Delta and BritishAirways are using mobile ticketing to sell tickets to mobile users that allow faster mobility andsales as well as instant baggage checking through mobile phones. Hotels are using instantbooking and restaurants use mobile reservations and menu viewing outside the restaurant. InEurope mobile applications have allowed customers to order groceries from their mobile devicesand have them delivered right to the front door. Juniper Research estimates by 2014 the direct
3and indirect revenues from sales of mobile applications will total $25 billion dollars, which is alot of consumers that businesses should be selling products to. Apple reports that theApplication store sold $1,782,000 in the 2010 fiscal year and Apple projects this number togrow within the coming year. Mobile devices have changed the way we use applications toincrease our own mobility, functionality, and freedom. With consumer’s desire to be everywhereat one time businesses and consumers must connect through technology. Businesses inside andout of hospitality industry change the way they market new items and ideas for a growing digitalage.“The IT future lies in more personalized approach” says Victoria Moores of Air TransportWorld (ATW) magazine. In her article Victoria Moores talks about how the Airline industry ismaking a Herculean organizational shift in its marketing approach to consumer’s sales onsmartphones. SITA director Nigel Pickford’s research shows that after 2015 airlines marketingsales will be brought in by two ways, first through website and second though smartphoneapplications. The reason for this shift in sales approach is because of the costumers themselves,“Passengers have an insatiable appetite to have more control, more personalization” NigelPickford ATW article. By 2012 airlines plan to spend a total of 1.65% of total revenue to be putback into IT instead of other departments because of the increase in Smartphone directed sales.Channels for direct sales beyond 2015 are estimated to be 81% by website and 70% from smartphone applications; these two sales forms are estimated to become dominate in the future. Mostairlines agree that traditional direct sales like kiosks are either dying or have already died and thetime frame to join the growing smart phone application trend is closing. With the informationcollected from the article and other sources, airlines have a golden opportunity to jump on thenew information age trend of mobile applications, but they must act fast to beat the curb andwork together. The only way airlines could really improve their direct sales is to put morerevenue into their IT department instead of waiting until the last minute to jump on board with anew trend. This trend can be seen from a long ways away so why hold onto older less successful.Major Airlines should drop old unproductive methods of sales and use their resources to powerup future investments in new technology.In a world where technology is continuously changing businesses face the challenge of adaptingto advancements being made. It seems the United States is always on the go so; one thing youcan count on is people having cell phones. Cell phones now more than ever have become part ofpeople’s everyday lives. With smartphones people can download software updates andapplications in only minutes for a variety of services and needs. With the continuous rise on cellphone reliance, phones can be used as a huge marketing tool for many companies andbusinesses. On the contrary phones can also act as a tool that turns people away from yourbusiness.Looking for ways to help people with services and needs has become extremely easy forsmartphone owners. For example, if on a trip looking for somewhere to stay users can simplydownload an application with consumer ratings and compare costs of the nearby hotels. HotelTonight is a trending application being downloaded. On this application one can view ratings andprices on hotel rooms. Not only can they find information on the hotel but in many instances thisapplication provides a promotional code for a room at a discounted price. After viewing anddeciding on the right hotel a person can book a room in seconds by two simple clicks of a button
4or screen. Hotel Tonight and other applications has become a huge tool for people looking forhotel services. With good service and reviews this can be a great thing for hotels looking forcustomers. Ratings are viewable by the time they were posted from most recent written review tooldest written review. This means that one slip up by a hotel staff can turn into a bad reviewturning away potential customers the very next day. This puts a lot of pressure on hotels tomaintain a good service level. Having good reviews and service and this tool is a great marketingtool for a hotel or other hospitality properties. Having bad reviews and service can mean losing agreat amount of business. This kind of marketing for the hospitality industry is based onconsumer’s perceptions of hotels.Hotels can also market by making their hotel’s services accessible through consumer’ssmartphones or tablets. Having tasks easily done by smartphone such as ordering room serviceor calling a maid to clean a room is greatly appreciated by most consumers. Companies such asIntercontinental Hotel and Holiday Inn have been experimenting and trying to implement usingsmartphones as room keys. Being a guest where this is available would make some guests feel alittle uneasy about the security of the room and belongings because of people finding ways toopen rooms that may not be theirs through their smartphone. An application called LodgeNetallows guests of a hotel to use their smartphones as remote controls. Not only does thisapplication act as a remote but also as a channel guide with channel listings and scheduledprogramming, a tool that can be very useful when not knowing what number your favoritechannel is. You can also preview and rent pay-per-view movies through this application.According to an article in USA today 40% of consumers aged 18 to 34 would rather use their cellphone then a remote control. The article later goes on and describes that 2,000 hotels across theUnited States have updated and adapted their services to allow the LodgeNet to be accessible attheir hotels. People enjoy using their smartphones away from home because they feel a personalconnection to their phones in a place that they are not used to staying routinely. Hotels need tomaintain to adapt their way of doing business to support smartphones because consumersappreciate being able to use their phones to accomplish tasks. Whether it is actually easier topick up your phone then a remote control is irrelevant because either way consumers simplythink that it is cool that they can use their cellphone for the tasks mentioned earlier.Although there are many applications with consumer handled marketing, there are ways forhotels to market their business the way they want it to be perceived. It seems that almosteverybody has an application called Pandora which allows people to search for music by genreof music or even by artists. The way an application such as Pandora makes money is by havingadvertisements after every three or four songs. People are forced to listen to these advertisementsin order to keep listening to the current station they are on. Advertisements are kept short sopeople actually listen to the message instead of turning on a different station. Most people willlisten to motel 6’s “we’ll leave the light on” slogan then to take the time to choose a differentstation that would potentially take more time then actually listening to the advertisement. Insteadof relying on good consumer reports hotels and other companies can advertise on applications inthe entertainment industry. Most of the entertainment applications make their money off ofselling time slots for advertisements or having an advertisement show on screen for a certainamount of time. People really enjoy these types of applications and don’t mind thatadvertisements may take them away from their game or music of a short amount of time. Anapplication can also be a form of advertisement. Domino’s pizza has an applicationwhere you
5can make your pizza. The application sees how fast you can make the correct type of pizza andcompare scores with friends. Most time these types of applications are for ages 4-12. Kids loveeasy fun applications and so do parents because it distracts the kids for acouple of hours, but italso if a form of advertisement.Interview Results“To stay ahead you need an understanding of your customers and how they use the statedtechnologies,” stated Jeff Bruss, president of Cole Publishing. Cole Publishing is a publishingfirm that is out of Three Lakes, Wisconsin, has eight publications, and serves some 275,000readers in the district. These publications reach readers from more than 50 countries around theworld, and attract more than 12,000 visitors to their annual Pumper & Cleaner EnvironmentalExpo International. The publishing company also offers 7 online digital offerings which includenews, equipment, directories, and more. When asked if the increase of smartphones havechanged the marketing strategy for the company Jeff replied with a definite answer. He repliedwith, “Right now approximately 15% of our web traffic comes through mobile devices and thathas doubled each of the past 3 years. It is estimated that by 2014 mobile web use will surpassdesktop usage. So staying on top of that trend ensures the company is not left behind like thosecompanies in the 1990s that failed to embrace the Internet.” Jeff feels it is important for thecompany brands to be available and seen on social media sites. He said it is so important for theirbrands to interact in social media that the company has a dedicated Social Media Director. TheSocial Media Director keeps Twitter, Facebook, Google+, and Pinterest updated with their latestphotos, stories, and news. He also expressed that Facebook is currently their number tworeferrer, only behind organic Google searches. Since smartphones are becoming popular,applications such as Facebook, Twitter, and Pinterest are easily accessible. There are over600,000 applications to choose from in the Apple’s iTunes App Store. Social media applicationshave helped companies to get their names out in more locations and provide referrals back tocompany’s websites. Although Jeff believes that smart phone applications will not last long hebelieves that at this point social media is a trend that needs to be kept up to date. 50% ofFacebook visits are by mobile and during this year 6 billion iOS applications are expected to bedownloaded and 8 billion Android applications are expected to be downloaded.As the interview continued the question, would you consider creating an application for the tradeshow for such things as check-ins, updates, etc. Jeff replied with “Yes, we have, but you have tolook at your demographics and do a cost-benefit analysis. Our demographic is older, less tech-savvy. As that demographic changes (and it is) we will look more closely and begindevelopment. More than likely though we would opt for a mobile web solution over native.” Inthis case Jeff believes that mobile web will outlast native applications in the business world andwill prove more cost-effective for both big and small companies. 88% of iPhone users use theirphone to surf the internet where only 75% download applications. He gave the following reasonas to why he believes this by using an airline boarding check application, “If you are flyingUnited, are you going to go to the application store, search for a United application, download it,launch it, put in your flight number, get the information, then keep that application until the nexttime you fly United? Or perhaps would it make more sense to access United.com and do thesame thing? Now next time say you fly Northwest, it is the same process to download a nativeapplication and store it on your phone? I submit this would only be a smart option for frequent
6flyers on consistent airlines.” In Jeff’s opinion developing a native application for a group ofpeople who may or may not even have smart phones is a waste of resources. He explained thatthe shelf life for most applications is less than 30 days, then never accessed again; therefore it isnot a worthwhile investment either. Cole Publishing has a mobile website for their Pumper andCleaner Expo that has an exhibitor search tool, a schedule of events for the expo, a link toconnect to Facebook and Twitter, and an interactive map to direct attendees and exhibitors to thetradeshow in Indianapolis, IN. When asked if Cole Publishing has ever considered an applicationfor the company or annual expo Jeff stated the following, “Native is best utilized for recurringevents that require consistent user interactions, provide entertainment, or provide timelyinformation, and their company is better suited for the mobile web, where people are searchingto fulfill a need, be its products or information.”Looking at the overall picture of smart phones and applications Jeff believes that these deviceswill continue to impact the future of the business landscape. He said, “Especially as just in timeinteractions, mobile payments, location awareness, and other items that start to develop andevolve.” In the end Jeff believes that the mobile web will outlast native applications in thebusiness world. Mobile applications currently have better usability than mobile sites, butforthcoming changes will eventually make a mobile site the superior strategy. So what the futureholds, only time will tell, but it seems that mobile applications will be a short trend and mobileweb sites will be the next.
7SourcesApple. Apple: increase App Store revenue by 70% in 2012. N.p.: Boy Genius Report (BGR), 2012. N. pag. Web. 28 Sept. 2012. <http://www.bgr.com/2012/09/21/app-store-revenue- 2012-ios-6-apple/>.Bruss, Jeff. "Marketing Assessment Interview." Message to the author. 1 Oct. 2012. Web. 2 Oct. 2012.Clark, John F. Theory and Practice of Mobile Applications. N.p.: John F. Clark, 2011. 1-25. University of Kentucky, School of Journalism and Telecommunications. Web. 2 Oct. 2012. <http://www.uky.edu/~jclark/mas490apps/History%20of%20Mobile%20Apps.pdf>."Facts and Figures." We are Apps. N.p., 2011. Web. 1 Oct. 2012. <http://weareapps.com/app_facts.html>.“Last-minute hotel deals. Tonight.” Hoteltonight. Web. Oct. 2. 1012.“New app turns smartphone into a hotel room TV remote control.” USAtoday. Barbara Delollis, Web. Jan. 1. 2012.Reisinger, Don. Mobile app revenue set to soar to $46 billion in 2016. N.p.: CNET, 2012. N. pag. Web. 2 Oct. 2012. <http://news.cnet.com/8301-13506_3-57379364-17/mobile-app- revenue-set-to-soar-to-$46-billion-in-2016/>.
8InterviewJeff Bruss; President of Cole Publishing 1) I understand one of Cole Publishing’s main principles includes providing extraordinary personal service, how important is it for employees to interact with customers through social media?I don’t know that it’s necessary for employees to interact with customersas much as our brandsmust interact. In fact, it’s so important that our brands interact that we hired a dedicated SocialMedia Director. She keeps Twitter, Facebook, Google+ and Pinterest updated with our latestphotos, stories and news. This helps our SEO efforts, gets our name out in more locations andprovides referrals back to our sites. Facebook is currently our number two referrer, behind onlyorganic Google searches. 2) How many social media websites are employees expected to be connected to?Employees are kept in the loop from our SM Director. She aggregates and sends pertinentcontent to the employee it pertains to. They are expected to be connected wherever possible. 3) Do you feel that social media websites are making an impact on the company?Absolutely, see answer to question 1. 4) Another of Cole Publishing’s main principles includes constantly striving for improvement. Is social media and mobile web sites an area to look to improve?You shouldn’t interpret our website “mission statement” so closely. Of course we are alwayslooking to improve, who isn’t? Yes, social media is certainly one of those avenues. 5) Has the increase of smart phones changed the marketing strategy for Cole Publishing? If so, how?Without a doubt. Right now approximately 15% of our web traffic comes through mobiledevices and that has doubled each of the past 3 years. It’s estimated by 2014 that mobile web usewill surpass desktop usage. So staying on top of that trend ensures the company isn’t left behindlike those companies in the 1990’s that failed to embrace the Internet. 6) I know Cole Publishing has a mobile web site for the Pumper and Cleaner Expo, have you ever considered a cell phone application for the company or expo?Native apps have been considered, but we don’t deliver information that would be best formattedfor native. Native is best utilized for recurring events that require consistent user interactions,provide entertainment, or provide timely information –Angry Birds, the weather, maps,Facebook/Twitter native, etc. Our business model isn’t that of say, a daily newspaper that mightbe better suited to a native application. We concentrate on mobile web, where people aresearching to fulfill a need, be it products or information. 7) Airlines are offering cell phone applications for electronic check-ins, mobile boarding passes, notifications about flight status, and so on. Would you consider using such an
9 application for the trade show?Yes, we have, but you have to look at your demographics to do a cost-benefit analysis. Ourdemographic is older, less tech-savvy. As that demographic changes (and it is) we will look moreclosely and begin development. More than likely though we’d opt for a mobile web solution overnative. 8) Looking at the overall picture of smart phones and applications, do you believe these devices will continue to impact the future of the business landscape?Absolutely. Especially as just in time interactions, mobile payments, location awareness andthings like that start to develop and evolve. 9) How do you believe the trend itself with change moving forward? Is it worth getting involved in?What trend, smartphones? Not sure I understand this question. 10) What do you think will be needed to stay ahead of competitors in the area of cell phone applications and social media?To stay ahead you need an understanding of your customers and how they use the statedtechnologies. For example, creating a native app for a group of people who may not even havesmartphones is a waste of resources. Furthermore developing a native app, when the shelf life formost apps is less than 30 days, then never accessed again, is not a worthwhile investment either.I believe the mobile web will outlast native apps in the business world and prove more cost-effective for both big and small companies. You used a boarding check as an example earlier... Ifyou’re flying United, are you going to go to the app store, search for a United app, download it,launch it, put in your flight number, get the info, then keep that app until next time you flyUnited? Or perhaps would it make more sense to access United.com and do the same thing? Nownext time say you fly Northwest, same process to download a native app and store it on yourphone? I submit this would only be a smart option for frequent flyers on consistent airlines,hence my opinion on web surpassing native in the business environment.Regarding social media, you have to stay on top of what’s trending. We may be early onPinterest, but it’s hot right now. The social media landscape changes rapidly and you need to beready. Today’s 300 pound gorilla may be Facebook, but tomorrow’s might be something else. Asyour professor states, you only need to look at MySpace to see how quickly the tide turns.Facebook is in a mature stage at this point and is struggling with monetizing on the mobileplatform, perhaps the end is near? Hard to tell, but that’s why we try to stay on top of all socialas best we can.Hope this helps Lauren, let me know if you need anything else!