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Mobile marketing final

  1. 1. Chapter-1LITERATURE REVIEWA study done by Heinonen & Strandvik (2003) showed that mobile channels are perceived tobe more personal than traditional and e mail channels. This creates high expectations for therelevance of marketing communication messages. A consumer expects messages to bepersonal and of high interest and this makes the disappointment greater when they getundesired messages. Mobile advertising may even step over the line of discretion and invadeconsumers’ privacy because of the personal nature of the mobile device. Li et al (2002)discusses how negative reactions like irritation arise through intrusion advertising. Thechannel influences consumer responsiveness to marketing communication by beingperceived as either disturbing or acceptable (Abernethy 1991). If the consumer considersmarketing communication via a channel as disturbing it may negatively affect the attention toand perception of the message. In contrast, the channel may also enhance the acceptance ofthe marketing communication if it is perceived as appropriate for the specific marketingcommunication. Also, some consumers may perceive the channels as neutral, i.e. it is neitherdisturbing nor accepted.Despite substantial marketing potential, research on mobile advertising and particularlythrough its most successful application, short message service (SMS) is still embryonic. In acomprehensive survey concerning consumers’ experiences of direct marketing channels inFinland it was found that consumers perceived direct marketing channels differentlycompared to each other. (Finnish Direct Marketing Association, 2002) The experiences ofmail order, Internet and email experiences were more positive compared to other directmarket channels such as telemarketing and door-to-door sales. 80 % of the respondents hadpositive experiences of mail order, 77% had positive experiences of Internet and email asmarketing channels and the corresponding number for SMS and WAP was 65%. Fortelemarketing and door-to-door sales the number of positive consumers was down to 30%and 25% respectively. Concerning satisfaction with information received, there seemed to be N.R.INSTITUTE OF BUSINESS MANAGEMENT 1
  2. 2. differences between the channels. The study also indicated that consumers have considerableless experience of SMS messages compared to mail order, Internet and email.New media in the digital economy have created potentially powerful tools for direct andinteractive marketing. Traditional marketing communication strategies have been based onthe interruption logic (Godin 1999) where the consumer is forced to momentarily payattention. Permission marketing was introduced as a new managerial approach in marketingcommunication. It has been argued that firms benefit from getting consumers’ permission tobe contacted (Marinova, Murphy and Massey 2002). Permission from the consumer wouldresolve the difficulties to get access to the consumer. Permission is, however, not necessarilya guarantee that the consumer pays attention; it is only a door opener and gives an indicationof the consumer’s potential interest areas.We believe that by using the information retrieval and filtering capabilities of mobile agentsand location information about the user, there exists a good opportunity for value-addedservices to be provided to the end-users. This also brings about a new way for cellular phoneservice providers to achieve competitive advantage by competing not only on the basis ofprice and packaging, but also on the basis of the set of value-added services that they provideto their clients. In order to overcome the input/output limitations brought about by mobiledevices, the system should be free of user’s intervention. To that end, we propose to usemobile agents for provisioning context-aware advertisements to mobile users. Schilit andTheimer first introduced the concept of context-awareness in the project Active Map inwhich they took advantage of the location concept to define the context as people, object, andthe changes that occur to them. Dey and Abowd stated that a system is context-aware if ituses context to provide relevant information and/or services to the user, where relevancydepends on user’s task.Krishnamurthy (2001) also proposes a conceptual framework for managing onlineadvertising using the permission marketing approach. Permission marketing requires theconsumer to participate in the programme by giving the permission and the information forcontinuing the relationship. The interest in this participation arises from the balance of N.R.INSTITUTE OF BUSINESS MANAGEMENT 2
  3. 3. benefits (message relevance and monetary benefits) and costs (personal information, messageprocessing costs, privacy costs) for consumers.One of the main challenges and opportunities for mobile advertising companies is tounderstand and respect the personal nature of the usage of mobile phones (Barwise & Strong2002; Heinonen & Strandvik 2003; Barnes & Scornavacca 2004; Jelassi & Enders 2004).The key is to use interactive wireless media to provide customers with time- andlocationsensitive, personalized information that promotes goods, services and ideas, therebygenerating value for all stakeholders (Dickinger et al. 2004). The mobile advertisingrelevance can be influenced by the contextualization (Kenny and Marshall, 2000; Yuan &Tsao 2003) of advertising messages. Barwise & Strong (2002) take up the flexibility, andtime-based nature but also the fact that the small screens restrict the length of the message.Barnes (2002) stresses the interactive nature of mobile advertising and the ability to usecontextual information to target the messages to individual receivers, in other words topersonalize the message. Location-aware advertising messages are creating five to ten timeshigher click-through rates compared to traditional internet advertising messages (Ververidis& Polyzos 2002).1. INTRODUCTIONInformation technology affects everything from daily life to business in the 21st century. Inbusiness environment, it shapes not only commerce but also the way in which companiesimplement their marketing strategies. Offering new marketing channels to interact withcustomers is crucial to increase sales for company. Thus, the successful application ofinformation technology to connect marketing applications is highly prominent. One of theadvances in information technology is wireless mobile communication technology thatmakes the ―anytime-to-anyplace‖ communication possible. This technology system allowsincreased mobility and extended services even to remote areas. Due to wirelesscommunication system, mobile phone users are able to access their e-mails, search, order andbuy products and services from everywhere without computers (Yen and Chou, 2000; Aungstand Wilson, 2005). Besides the Internet and personal computers, the mobile phone is the key N.R.INSTITUTE OF BUSINESS MANAGEMENT 3
  4. 4. to marketers because it is extremely popular and offers people the opportunity of mobilitynow. Through the introduction of data services, Short Message Services (SMS), MultimediaMessage Service (MMS), Mobile Internet, etc., the mobile phone is rapidly becoming aviable commercial marketing channel.Even though companies are investing heavily in mobile commerce and mobile marketing, thenature and implications of this channel have yet to be fully understood and studies need to beperformed to gain an insight into how to utilize it best (Bauer et al., 2005). Nowadays,mobile marketing adoption and acceptance is on the rise, but marketers would have littleability to consistently generate profits without a clear understanding of the elements drivingconsumer acceptance (Becker, 2005).The main objective of this study is to draw Global System for Mobile Communications(GSM) operators‟ and entrepreneurs‟ attention to new opportunities in mobile commerce andmobile marketing. Therefore, in this study, mobile commerce and mobile marketingconcepts, the importance and benefits of mobile commerce and mobile marketing, howmobile phone influences marketing and business activities and the success factors andbarriers of mobile commerce in consumer markets are explained and analyzed. The results ofthe survey conducted on 389 mobile phone users to determine consumers‟ attitudes towardsmobile marketing tools are provided. N.R.INSTITUTE OF BUSINESS MANAGEMENT 4
  5. 5. Chapter-2 Research methodologyResearch Objectives  To check the awareness of the mobile marketing on the youngsters of Ahmedabad city  To know the preference of people towards mobile marketing on the youngsters of Ahmedabad city  To check the reliability of mobile marketing on the youngsters of Ahmedabad cityResearch Design Sampling frame: all individuals between 18 years to 35 years in Ahmedabad. Sampling unit: all individuals between 18 years to 35 years in Ahmedabad Sample size: 100 respondents Sampling method: non-probabilistic convenience samplingPrimary Sources: surveyInstrument:QuestionnaireSecondary Sources: Websites , book for market research N.R.INSTITUTE OF BUSINESS MANAGEMENT 5
  6. 6. Beneficiaries 1. mobile marketers 2. students who are going to do research on mobile marketingLimitations 1. Time is short , 2. Respondents may give bias answers or may not feel questionnaire properly N.R.INSTITUTE OF BUSINESS MANAGEMENT 6
  7. 7. Chapter – 3 Industry ReviewIntroductionThe Indian Telecommunications network with 110.01 million connections is the fifth largestin the world and the second largest among the emerging economies of Asia. Today, it is thefastest growing market in the world and represents unique opportunities for U.S. companiesin the stagnant global scenario. The total subscriber base, which has grown by 40% in 2005,is expected to reach 250 million in 2007.According to Broadband Policy 2004, Government of India aims at 9 million broadbandconnections and 18 million internet connections by 2007. The wireless subscriber base hasjumped from 33.69 million in 2004 to 62.57 million in FY2004- 2005. In the last 3 years, twoout of every three new telephone subscribers were wireless subscribers. Consequently,wireless now accounts for 54.6% of the total telephone subscriber base, as compared to only40% in 2003. Wireless subscriber growth is expected to bypass 2.5 million new subscribersper month by 2007. The wireless technologies currently in use are Global System for MobileCommunications (GSM) and Code Division Multiple Access (CDMA). There are primarily 9GSM and 5 CDMA operators providing mobile services in 19 telecom circles and 4 metrocities, covering 2000 towns across the country. N.R.INSTITUTE OF BUSINESS MANAGEMENT 7
  8. 8. Indian telecom industry –a snapshot•India has one of the biggest telecom markets in the world. It has more GSM subscribers thanfixed-lin subscribers.•Total telecom subscribers –494.07 million (August 2009)•Teledensity –42.27 per cent (August 2009)•Addition of mobile subscribers (July–August 2009) –15.08 million•Annual growth rate of telecom subscribers (June 2008–June 2009) –42.68 per cent•Average Revenue Per User (ARPU) for GSM (as on 30 June 2009) –US$ 3.801•Telecom equipment market (2008–09) –US$ 24.99 billion2,3•Handset market (2008-09) –US$ 5.82 billion2,3•Expected mobile subscriber base (2013) –About 771 million.Sources: 1) Exchange rate as on 30 June 2009 (1 US$ = INR 48.64380) , TRAI and TRAI; 2)Average exchange rate for the year 2008–09 and TRAI;3) Cyber media; 4) Stock watchTelecommunications September N.R.INSTITUTE OF BUSINESS MANAGEMENT 8
  9. 9. The Key players in the Telecom Market in IndiaCellular Service provider: 1. BSNL 2. Airtel 3. Vodafone 4. Reliance 5. Tata indicom 6. SpiceSubscribersWireless subscribers crosses 200 million markTele density reaches 21.20%The total number of telephone subscribers has reached 241.02 million at the end of August2009 as compared to 232.87 million in July 2009. The overall teledensity has increased to21.20% in August 2009 as compared to 20.52% in July 2009.In the wireless segment, 8.31 million subscribers have been added in August 2009 while 8.06million subscribers were added in July 2007. The total wireless subscribers (GSM, CDMA &WLL(F)) base reaches 201.29 million at the end of August 2009.The wireline segment subscriber base stood at 39.73 million with a decrease of 0.16 millionat the end of August 2009. Circle wise wire line subscriber base of service providers is givenat following chart. N.R.INSTITUTE OF BUSINESS MANAGEMENT 9
  10. 10. Future PlansThe thrust areas presently are: 1. 1.Building a modern and efficient infrastructure ensuring greater competitive environment 2. With equal opportunities and level playing field for all stakeholders. 3. Strengthening research and development for manufacturing, value added services. 4. Efficient and transparent spectrum management 5. To accelerate broadband penetration 6. Universal service to all uncovered areas including rural areas. 7. Enabling Indian telecom companies to become global players.Recent things to watch in Indian telecom sector are: 1. 3G and BWA auctions 2. MVNO 3. Mobile Number Portability 4. New Policy for Value Added Services 5. Market dynamics once the recently licensed new telecom operators start rolling out 6. Services. 7. Increased thrust on telecom equipment manufacturing and exports. 8. Reduction in Mobile Termination Charges as the cost per line has substantially reduced 9. Due to technological advancement and increase in traffic. N.R.INSTITUTE OF BUSINESS MANAGEMENT 10
  11. 11. GLOBAL SCENARIOUntil the 1980s the world telecommunications systems had a simply administrative structure.The United States telephone service was supplied by a regulated monopoly, AmericanTelephone and Telegraph (AT&T). Telegraph service was provided mainly by the WesternUnion Corporation. In almost all other countries both services were the monopolies ofgovernment agencies known as PTTs (for Post, Telephone, and Telegraph). In the UnitedStates beginning in 1983, AT&T agreed in a court settlement to divest itself of the localoperating companies that provided basic telephonic service. They remained regulated localmonopolies, grouped together into eight regional companies.AT&T now offers long distance service in competition with half a dozen major and manyminor competitors while retaining ownership of a subsidiary that produces telephonicequipment, computers and other electronic devices. During the same period Great Britain’snational telephone company was sold to private investors as was Japan’s NTT telephonemonopoly. For telegraphy and data transmission, Western Union was joined by other majorcompanies, while many multinational firms formed their own telecommunications servicesthat link offices scattered throughout the world. New technology also brought continuingchanges in the providers of telecommunication. Private companies such as Comsat in theUnited States were organized to provide satellite communication links within the country.Around the world we are witnessing remarkable changes to the telecoms environment. Afteryears of debate, structural separation is now taking place in many parts of the worldincluding Hong Kong, New Zealand, Singapore and some European markets. Structuralseparation – or at least full-blown operational separation – is required to advance the entireindustry and to create new business opportunities and innovations which will benefit oursociety, our economy and ultimately our industry.The focus is also shifting away from broadband to what it can actually achieve. NextGeneration Telecommunications better describes this new environment and is essential forthe emerging digital economy. Important services that depend on NGT include tele-health, e- N.R.INSTITUTE OF BUSINESS MANAGEMENT 11
  12. 12. education, e-business, digital media, e-government and environmental applications such assmart utility meters.In order to meet this burgeoning consumer demand for NGT applications, we are seeingincreasing investment in All-IP Next Generation Networks and fibre networks. A properinventory of national infrastructure assets is required if we want to establish an efficient andeconomically viable national broadband structure for these services. In the developingmarkets, next generations telecoms will take the form of wireless NGNs (ie, LTE/WiMAX).These are some of the elements of the broader ICT revolution that is unfolding before ourvery eyes. We are right in the midst of the transition from old communications structures(mainly one-way streets) to new structures that are fully-interactive and video-based.One of the drivers behind the industry changes are the declining revenues experienced by thetelcos in their traditional markets. Over the past 10 years or so, fixed-line operators havebeen affected by deregulation, a severe industry downturn, declining prices and majorinroads by mobile services. In addition, people are drifting to other forms of communication,such as email, online chat, and mobile text messaging instead of the traditional phone.This has also led to an increased need for bandwidth, which in turn has revived thesubmarine cable sector. In recent times there have been many cable build-out announcementsaround the world, and some major systems are again being constructed. Over 25 systems areexpected to be built over the next two to three years and network upgrades are also on theagenda for some existing systems.It is clear that the mobile industry is also undergoing profound changes. The saturateddeveloped markets are forcing the industry to find new revenue streams and we are nowseeing other organizations such as media companies, content providers, Internet mediacompanies and private equity companies becoming involved in this market.For the time being however, voice will remain the killer application for mobile with somedata services included as support services and niche market services. 4G (ie, WiMAX/LTE)is the real solution for mobile data and by 2015 it is expected that the majority of mobilerevenues will come from data.With the Internet economy, digital media and other telecommunications activities becomingfurther established, the need for modern and efficient infrastructure is becoming morecritical. N.R.INSTITUTE OF BUSINESS MANAGEMENT 12
  13. 13. Telephony services (mobile and basic) and internet servicesdominate the Indian telecom services market.• The Indian telecom industry can be primarily divided into basic, cellular mobile andinternet services. It also has smaller segments such as radio paging services, Very SmallAperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and GlobalMobile Personal Communications by Satellite (GMPCS).• The mobile services in India are growing more than basic wire line services. N.R.INSTITUTE OF BUSINESS MANAGEMENT 13
  14. 14. TECHNOLOGIESTechnology is very much related to the way we conduct business. Today everything that we talkabout in business, like, the way we conduct business, the way we do things, the way we deliver to thecustomers, etc. is using some form of technology. Therefore, role of technology cannot be definedbecause it is a mindset and it happens over a period of time.The various technologies used by the Telecom Service Providers are as follows:1 GSM (Global System for Mobile Communication)GSM, first introduced in 1991, is the leading digital cellular system. It uses narrowband TDMA(Time Division Multiple Access). Eight simultaneous calls can occupy the same radio frequency.GSM simplifies data transmission to allow laptop and palmtop computers to be connected to GSMphones. It provides integrated voice mail, high-speed data, fax, paging and Short Message Services(SMS) capabilities, as well as secure communications. It offers the best voice quality of any currentdigital wireless standard.Originally a European standard for digital mobile telephony, GSM has become the worlds mostwidely used mobile system and is now being used in more than 100 countries. GSM networks operateon the 900MHz, 1800MHz and 1900MHz wavebands all over the world.2 GPRS (General packet radio service)GPRS is a packet oriented mobile data service available to users of the 2G cellularcommunication systems global system for mobile communications (GSM), as well as in the3G systems. In the 2G systems, GPRS provides data rates of 56-114 kbit/s.GPRS data transfer is typically charged per megabyte of traffic transferred, while datacommunication via traditional circuit switching is billed per minute of connection time,independent of whether the user actually is using the capacity or is in an idle state. GPRS is abest-effort packet switched service, as opposed to circuit switching, where a certain qualityof service (QoS) is guaranteed during the connection for non-mobile users.2G cellular systems combined with GPRS are often described as 2.5G, that is, a technologybetween the second (2G) and third (3G) generations of mobile telephony. It providesmoderate speed data transfer, by using unused time division multiple access (TDMA)channels in, for example, the GSM system. Originally there was some thought to extend N.R.INSTITUTE OF BUSINESS MANAGEMENT 14
  15. 15. GPRS to cover other standards, but instead those networks are being converted to use theGSM standard, so that GSM is the only kind of network where GPRS is in use. GPRS isintegrated into GSM Release 97 and newer releases. It was originally standardized byEuropean Telecommunications Standards Institute (ETSI), but now by the 3rd GenerationPartnership Project (3GPP).3 EDGE (Enhanced Data rates for GSM Evolution)EDGE, Enhanced GPRS (EGPRS), or IMT Single Carrier (IMT-SC) is a backward-compatible digital mobile phone technology that allows improved data transmission rates, asan extension on top of standard GSM. EDGE is considered a 3G radio technology and is partof ITUs 3G definition,[1]. EDGE was deployed on GSM networks beginning in 2003—initially by Cingular (now AT&T) in the United States.EDGE is implemented as a bolt-on enhancement for 2G and 2.5G GSM and GPRS networks,making it easier for existing GSM carriers to upgrade to it. EDGE is a superset to GPRS andcan function on any network with GPRS deployed on it, provided the carrier implements thenecessary upgrade.EDGE requires no hardware or software changes to be made in GSM core networks. EDGEcompatible transceiver units must be installed and the base station subsystem needs to beupgraded to support EDGE. If the operator already has this in place, which is often the casetoday, the network can be upgraded to EDGE by activating an optional software feature.Today EDGE is supported by all major chip vendors for both GSM and WCDMA/HSPA.4 CDMA (Code division multiple access)CDMA is a channel access method utilized by various radio communication technologies. Itshould not be confused with the mobile phone standards called cdmaOne and CDMA2000(which are often referred to as simply "CDMA"), which use CDMA as an underlying channelaccess method.One of the basic concepts in data communication is the idea of allowing several transmittersto send information simultaneously over a single communication channel. This allowsseveral users to share a bandwidth of frequencies. This concept is called multiplexing. N.R.INSTITUTE OF BUSINESS MANAGEMENT 15
  16. 16. CDMA employs spread-spectrum technology and a special coding scheme (where eachtransmitter is assigned a code) to allow multiple users to be multiplexed over the samephysical channel. By contrast, time division multiple access (TDMA) divides access by time,while frequency-division multiple access (FDMA) divides it by frequency. CDMA is a formof "spread-spectrum" signaling, since the modulated coded signal has a much higher databandwidth than the data being communicated.5 HSDPA (High-Speed Downlink Packet Access)HSDPA is a 3G (third generation) mobile telephony communications protocol in the High-Speed Packet Access (HSPA) family, which allows networks based on Universal MobileTelecommunications System (UMTS) to have higher data transfer speeds and capacity.Current HSDPA deployments support down-link speeds of 1.8, 3.6, 7.2 and 14.4 Mbit/s.Further speed increases are available with HSPA+, which provides speeds of up to 42 Mbit/sdownlinkThe High-Speed Downlink Shared Channel (HS-DSCH) lacks two basic features of other W-CDMA channels—variable spreading factor and fast power control. Instead, it delivers theimproved downlink performance using adaptive modulation and coding (AMC), fast packetscheduling at the base station, and fast retransmissions from the base station, known ashybrid automatic repeat-request (HARQ).6 WLL (Wireless Local Loop)Wireless local loop (WLL), is a term for the use of a wireless communications link as the "last mile /first mile" connection for delivering plain old telephone service (POTS) and/or broadband Internet totelecommunications customers. Various types of WLL systems and technologies exist.WLL (Wireless in Local Loop) is a communication system that connects subscribers to the publicSwitched Telephone Network (PSTN) using radio frequency signals as a substitute for conventionalwires for all or part of the connection between the subscriber and the telephone exchange. It is usefulfor those subscribers who are located in pockets where immediate telephone connections cannot beprovided due to lack of underground cable network but radio coverage is available.Other terms for this type of access include Broadband Wireless Access (BWA), Radio In The Loop(RITL), Fixed-Radio Access (FRA) and Fixed Wireless Access (FWA). N.R.INSTITUTE OF BUSINESS MANAGEMENT 16
  17. 17. 7 WiMaxWiMax (Worldwide Interoperability for Microwave Access) is a technology designed to givepeople high speed access to the net over relatively long distances. A typical WiMax systemcould theoretically give users in an area three to 10 kilometers wide a 40 Mbpsconnection to the net.This technology already deployed in some urban centres like Chennai (Madras) and Mumbai(Bombay) would overcome the need to lay expensive cables or fibre optics to villages.At the moment there is a wired backbone throughout India but many villages are 30 to 40kmaway from the nearest connection. Wimax services can overcome that. One or two WiMaxbase stations are enough to connect three or four villages.The government telecoms operator BSNL is also in the process of rolling out some WiMaxservices. But it is still expensive and at the moment is aimed squarely at large businesses thatneed a quick-fix solution to broadband access.8 3G TECHNOLOGIES3G or Third Generation technology is a convergence of various Second Generationtelecommunication systems. The technology is intended for SMARTPHONES - multimediacell phones. Video broadcasting and other e-commerce services such as, stock transactionsand e-learning will now be made possible much faster. It offers 3 Mbps speed fordownloading, which is very high as compared to that of the 2G technology. The 3Gtechnology provides for internet surfing, downloading, e-mail attachment downloading,audio-video conferencing, fax services and many other broadband applications.3G Technology was implemented in Japan for the first time in the world. Today thetechnology is serving 25 countries over more than 60 networks having its existence in Asia,Europe and USA. Video conferencing has been a major factor in the success of thetechnology. N.R.INSTITUTE OF BUSINESS MANAGEMENT 17
  18. 18. 3G Technology in Indian Telecom IndustryFrom the time of telegraphs Indian telecom sector has witnessed an immense growth and hasdiversified into various segments like, Fixed Line Telephony, mobile telephony, GSM,CDMA, WLL etc. The telecom industry is growing at a fast pace introducing newertechnologies. Even the network operators and handset providers are also coming up withnewer value added services and advanced technology cell phones with multimediaapplications. Now its time to welcome the much-awaited 3G Technology. Bharat SancharNigam Limited is all set to launch the technology by December 2007. Not only the networkproviders but also the handset providers in India are waiting eagerly for the launch of 3G toearn very high revenues from the value added services provided by the technology.The technology is initially being launched on CDMA platform. The technology is beingtested over various platforms and cellular networks.9 4G TECHNOLOGY4G (also known as Beyond 3G), an abbreviation for Fourth-Generation, is a term used todescribe the next complete evolution in wireless communications. A 4G system will be ableto provide a comprehensive IP solution where voice, data and streamed multimedia can begiven to users on an "Anytime, Anywhere" basis, and at higher data rates than previousgenerations.As the second generation was a total replacement of the first generation networks andhandsets, and the third generation was a total replacement of second generation networks andhandsets, so too the fourth generation cannot be an incremental evolution of current 3Gtechnologies, but rather the total replacement of the current 3G networks and handsets. Theinternational telecommunications regulatory and standardization bodies are working for commercialdeployment of 4G networks roughly in the 2012-2015 time scale. At that point it is predicted thateven with current evolutions of third generation 3G networks, these will tend to be congested.There is no formal definition for what 4G is; however, there are certain objectives that areprojected for 4G. These objectives include: that 4G will be a fully IP-based integrated N.R.INSTITUTE OF BUSINESS MANAGEMENT 18
  19. 19. system. 4G will be capable of providing between 100 Mbit/s and 1 Gbit/s speeds bothindoors and outdoors, with premium quality and high security.Many companies have taken self-serving definitions and distortions about 4G to suggest theyhave 4G already in existence today, such as several early trials and launches of WiMAX.Other companies have made prototype systems calling those 4G. While it is possible thatsome currently demonstrated technologies may become part of 4G, until the 4G standard orstandards have been defined, it is impossible for any company currently to provide with anycertainty wireless solutions that could be called 4G cellular networks that would conform tothe eventual international standards for 4G. These confusing statements around "existing" 4Ghave served to confuse investors and analysts about the wireless industry.10 HOW IS 3G DIFFERENT FROM 2G AND 4GWhile 2G stands for second-generation wireless telephone technology, 1G networks used areanalog, 2G networks are digital and 3G (third-generation) technology is used to enhancemobile phone standards.3G helps to simultaneously transfer both voice data (a telephone call) and non-voice data(such as downloading information, exchanging e-mail, and instant messaging. The highlightof 3G is video telephony. 4G technology stands to be the future standard of wireless devices.Currently, Japanese company NTT DoCoMo and Samsung are testing 4G communication.3G services will enable video broadcast and data-intensive services such as stocktransactions, e-learning and telemedicine through wireless communications.All telecom operators are waiting to launch 3G in India to cash in on revenues by providinghigh-end services to customers, which are voice data and video enabled. India lags behindmany Asian countries in introducing 3G services. N.R.INSTITUTE OF BUSINESS MANAGEMENT 19
  20. 20. The telecom subscriber base in India is likely to reach 500 millionby 2010.• The subscriber base grew to 494.07 million (August 2009), registering a growth ofapproximately 42.67 per cent over last year. It grew at a CAGR of 45.21 per cent from June2004 to June 2009.•Teledensity in India is still low as compared to that in some countries. As on August 2009,India had a teledensity of 42.27 per cent as compared to the previous year’s figure of 29.83per cent.source : TRAI report N.R.INSTITUTE OF BUSINESS MANAGEMENT 20
  21. 21. TRAI TELECOM REGULATORY AUTHORITY OF INDIATelecom Regulatory Authority Of India, a statutory and quasi-judicial body was formedby an Act in Indian Parliament to regulate the vast telecom sector. The necessity to form sucha regulatory body in line with SEBI, IRDA etc. was felt when the telecom sector was open toprivate sector. Plainly speaking its job could be comparable to an umpires’ of a game field. Ithas been given the liberty to act without the intervention of bureaucracy or some self-servingpoliticians,The skirmishes encompassing TRAI came to limelight due to conflict among various telecomoperators. That’s exactly the duty of this regulatory body, as has been entrusted with thestatutory power, umpiring on behalf of the public for smooth telecom service.If one reviews the sequence of its orders/regulations, chronologically, to various telecomoperators and the crucial policy changes with regards to service changes, the monopolisticand arbitrary attitude is clearly visible.Unfortunately, It’s a matter of concern that INTER CONNECT USAGE REGIME orderedby the same agency is being reviewed again by itself within two month’s of it’s enforcement.It could have been reviewed before it has been implemented or could have been kept forpublic perception or operator’s opinion. If an telecom regulator of a country having almost 7 N.R.INSTITUTE OF BUSINESS MANAGEMENT 21
  22. 22. crores telephone connections could act in such a haste manner without taking intoconsideration of aspects of technical feasibility, accounting, public psyche etc. into oblivion.Though operators have the requisite expertise technically and financially to provide cheapertelecom service, TRAI is there only to make it costlier. e.g. BSNL and RELIANCE . If theycould offer cheaper telecom services them, TRAI should not prevent them in the name of’PREDATORY PRICING ’.It’s appropriate time to review the role of TRAI and other Statutory Regulatory bodies by thepublic forum and parliament as well, rather than giving it a free reign to act on this way to thetune of certain players.On April 25, 1997, the recently constituted Telecom Regulatory Authority of India (TRAI)gave its first judgment -- a landmark one, delivered with speed and style. This judgment andits no-nonsense approach could well set the stage for things to come.TRAI quashed DoT’s (Department of Technology) order of January 29, which had sought tohike rather steeply, the price of calls made by users of ordinary fixed line phones to cellularsubscribers in the non-metro areas.Even the cellular operators, whose stand was accepted by the TRAI, would accept privatelythat the respondent DoT was poorly served by many of its officers and lawyers who wereentrusted with the task of representing DoT’s case.They seemed to have cut a very sorry figure before TRAI, ignoring or not being prepared byreading pertinent papers, such as tender documents, the clarifications offered to would-bebidders, or the correspondence that DoT was having with the operators later. Since the tenderdocuments mentioned that tariffs would be the same for circles and metros, it would havemade sense for DoT to seek legal advice on how to correct a mistake, if that is what it was.An appeal to TRAI could perhaps have been recourse, as the body is in charge of tariffs.Fixed line users pay local call rates when they dial a cellular number in the four metros(Calcutta, Chennai, Delhi, and Mumbai). But users in the circles (which are typically thesame as states) would be charged Rs10 per call for the same facility, if the DoT order inquestion had not been quashed. N.R.INSTITUTE OF BUSINESS MANAGEMENT 22
  23. 23. DoT had raised current rates on grounds that such charges were low and allowed users in thecircles which are much larger than metros, to make long distance calls without paying STDcharges. On the face of it, DoT is entitled to want to change this state of affairs. But in tryingto correct one injustice to itself, it managed to inflict several on the users and other serviceproviders.The cellular operators lost no time in going to the courts, since TRAI did not then exist. Thecourts in turn took an enlightened decision to pass the matter on to TRAI on March 3, as thebody had been formally constituted by then.TRAI took a few weeks to give its judgment and ruled against the Department of Telecom.The body was not persuaded about the justness of DoT’s order.Nor was TRAI particularly impressed by the operator’s contention that DoT was notauthorized to raise these tariffs. The judgment clearly says that the order of DoT to raise thetariff was passed before the TRAI was formally constituted and during the said period inquestion, the DoT was the sole body with the power to amend tariffs.MissionTo ensure that the interests of consumers are protected and at the same time to nurtureconditions for growth of telecommunications, broadcasting and cable services in a mannerand at a pace which will enable India to play a leading role in the emerging globalinformation society. Function of Telecom Regulatory Authority of India N.R.INSTITUTE OF BUSINESS MANAGEMENT 23
  24. 24. Functions of TRAI1. Recommendatory Functions Need and timing for introduction of new service provider Terms and conditions of licence to a service provider Revocation of license for non-compliance of terms and conditions of license Measures to facilitate competition and promote efficiency in the operation to facilitate growth in industry Technological improvement in services by service providers Inspection of type of equipment used by service provider Efficient Management of available spectrum2. Mandatory Functions Ensure compliance of terms and conditions of license Fix the terms and conditions of their inter connectivity between service providers Ensure Technical compatibility and effective inter-connection between different service providers. Regulate arrangements for sharing of revenues amongst service providers Lay-down the standards of QoS to be provided by service provider,ensure this byperiodical survey Lay-down and ensure time period for providing local and long-distance circuits oftelecommunication between different service providers N.R.INSTITUTE OF BUSINESS MANAGEMENT 24
  25. 25. 3. Other functions Levy fees and other charges as determined by regulations Perform administrative functions as entrusted to it by Central government or as per TRAI act Notify in Official Gazette the service rates and message rates within and outside India N.R.INSTITUTE OF BUSINESS MANAGEMENT 25
  26. 26. Evolution of the industry-Important MilestonesHistory of Indian TelecommunicationsYear1851 First operational land lines were laid by the government near Calcutta (seat of British power)1881 Telephone service introduced in India1883 Merger with the postal system1923 Formation of Indian Radio Telegraph Company (IRT)1932 Merger of ETC and IRT into the Indian Radio and Cable Communication Company (IRCC)1947 Nationalization of all foreign telecommunication companies to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the governments Ministry of Communications1985 Department of Telecommunications (DOT) established, an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system)1986 Conversion of DOT into two wholly government-owned companies: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in Metropolitan areas.1997 Telecom Regulatory Authority of India created.2000 DoT becomes a corporation, BSNL2008 3-G Service is launched N.R.INSTITUTE OF BUSINESS MANAGEMENT 26
  27. 27. Value added servicesWhat is Mobile VAS?A mobile value-added service (m-VAS) is the ability for cellular operators and service providers tocharge a premium price for the services (beyond voice conversation) they offer to their subscribers(mobile users). Some of the services include: SMS (text messages), MMS (multimedia messages) ,USSD (interactive menu based services) ,CRBT (caller ring back tone), video streaming , mobileadvertisements, participation in polls and contests, location based services, mCommerce (financialtransactions), Instant messaging, Infotainment services (news, weather reports, songs, recipes ),content downloads (wallpapers, screen savers, games, ring tones), down loadable mobileapplications.Factors driving the growth of VAS in IndiaThe Indian VAS industry is growing at a rapid rate for various reasons. For one thing, theIndian economy is currently booming and has a high GDP rate. Another important factor isthe availability of mobile phones and data plans at much cheaper rates. In India, VASservices are mostly provided in monthly plans. Two or more VAS services are oftenpackaged together in a single set, which appeals to a lot of subscribers. Moreover, Indianslove to participate in SMS contests of reality bites, SMS contests and other digital services.At present, VAS revenues are mostly from SMS services, but when 3G services finally get N.R.INSTITUTE OF BUSINESS MANAGEMENT 27
  28. 28. out of their red tape, an increase in the general usage of VAS is anticipated.Early 2009, survey was conducted for mobile users based on various demographics (gender,age, education, income ). Mobile users are spread across all parts of India. Take a look atthe summary (statistical reports) of the survey results of two popular services in MobileVAS: Internet usage and SMS (Voting for TV contests).Mobile Vas in India - Statistics and Trend N.R.INSTITUTE OF BUSINESS MANAGEMENT 28
  29. 29. VAS in India: Past, Present and Future VAS constitutes 7% of total telecom revenue for Indian operators. SMS constituted 55% of VAS revenue in 2006 [P2P/A2P/P2A, A = Application, P=Person), the growth was majorly driven by reality shows like Indian Idol/Kelloggs/KBC etc. Digital music (including CRBT and ringtones) constitutes 35% of VAS revenue. CAGR of 44% (2007 – 2010), VAS revenues will reach USD 2,744 mn (926mn $ by 2007): This is dependent on several factors like regulatory (e.g. number portability) and non-regulatory factors.Growth acceleration will begin in 2009, as various challenges are overcome, size of matureuser base increases, and telco focus on high end user VAS heightens Bollywood and Cricket is the killer content - though no significant investment has gone beyond developing local apps or even content/services. Revenue share between telcos & content providers / aggregators is 70:30, substantially more skewed in favor of telco than in other countries - further aggravated by lack of payment mechanisms. SMS/IVR/Music downloads/Internet Apps/Search will see an upsurge; limited growth of UGC and M-Commerce Almost half of Indians use ULCH (Ultra Low Cost Handsets) N.R.INSTITUTE OF BUSINESS MANAGEMENT 29
  30. 30. Types of Value Added Services:Sl. No. Type of Value Description Added Service1. News National, International, Business, Entertainment , Sports News2. Finance Stocks (NSE, BSE, NASDAQ), Forex3. Entertainment Games, Mobile TV and Jokes4. Travel Railways, Airlines5. Downloads Logos, Ringtones, Caller tones etc.6. Astrology service Personal Horoscope / Personalized prediction7. Cricket Cricket scores, Match clippings, cricket commentary8. Missed call alters Subscriber to get a SMS alert of incoming calls when the subscriber’s mobile phone is switched off / not reachable and busy9. E-mail E-mail through SMS10. Music on demand Dial a song11. Contest Reality shows12. GPRS / WAP Mobile Internet, Mobile Chat, Mobile TV13. MMS Picture messages, picture clippings14. Health Health tips, Beauty tips15. M-commerce Transactions based services with multiple payment modes and support in multiple domains like WAP, GPRS, SMS, IVR and Web16. Miscellaneous Devotional, Movies & Music, Fun, Navigation etc. N.R.INSTITUTE OF BUSINESS MANAGEMENT 30
  31. 31. PORTER’S FIVE FORCESThere is continuing interest in the study of the forces that impact on an organisation or anindustry, particularly those that can be harnessed to provide competitive advantage. The ideasand models which emerged during the period from 1979 to the mid-1980s (Porter, 1998)were based on the idea that competitive advantage came from the ability to earn a return oninvestment that was better than the average for the industry sector (Thurlby, 1998).As Porters 5 Forces analysis deals with factors outside an industry that influence the natureof competition within it, the forces inside the industry (microenvironment) that influence theway in which firms compete, and so the industry’s likely profitability is conducted in Porter’sfive forces model. A business has to understand the dynamics of its industries and markets inorder to compete effectively in the marketplace. Porter (1980) defined the forces which drivecompetition, contending that the competitive environment is created by the interaction of fivedifferent forces acting on a business. In addition to rivalry among existing firms and thethreat of new entrants into the market, there are also the forces of supplier power, the powerof the buyers, and the threat of substitute products or services. Porter suggested that theintensity of competition is determined by the relative strengths of these forces.The nature of competition in an industry is strongly affected by suggested five forces. Thestronger the power of buyers and suppliers, and the stronger the threats of entry andsubstitution, the more intense competition is likely to be within the industry. However, thesefive factors are not the only ones that determine how firms in an industry will compete – thestructure of the industry itself may play an important role. Indeed, the whole five-forcesframework is based on an economic theory know as the ―Structure-Conduct-Performance‖(SCP) model: the structure of an industry determines organizations’ competitive behaviour(conduct), which in turn determines their profitability (performance). In concentratedindustries, according to this model, organizations would be expected to compete less fiercely,and make higher profits, than in fragmented ones. N.R.INSTITUTE OF BUSINESS MANAGEMENT 31
  32. 32. Main Aspects of Porter’s Five Forces AnalysisThe original competitive forces model, as proposed by Porter, identified five forces whichwould impact on an organization’s behaviour in a competitive market. These include thefollowing:  The rivalry between existing sellers in the market  The power exerted by the customers in the market  The impact of the suppliers on the sellers  The potential threat of new sellers entering the market  The threat of substitute products becoming available in the marketUnderstanding the nature of each of these forces gives organizations the necessary insights toenable them to formulate the appropriate strategies to be successful in their market (Thurlby,1998). We will examine these concepts as described by Porter’s 5 force model and as appliedto Indian telecom industry simultaneously. N.R.INSTITUTE OF BUSINESS MANAGEMENT 32
  33. 33. Force 1: The Degree of RivalryThe intensity of rivalry, which is the most obvious of the five forces in an industry, helpsdetermine the extent to which the value created by an industry will be dissipated throughhead-to-head competition. The most valuable contribution of Porters ―five forces‖framework in this issue may be its suggestion that rivalry, while important, is only one ofseveral forces that determine industry attractiveness.  This force is located at the centre of the diagram  Is most likely to be high in those industries where there is a threat of substitute products; and existing power of suppliers and buyers in the marketNow let us understand the implication of degree of revelry in Indian telecom sector. Thedimensions of this parameter are determined by:High Exit Barriers: In any industry, if the exit barrier is high it increases the difficulty ofany organization to leave the industry sector. So it makes any difficult to any willing to leavecompany to leave the industry. The telecom industry suffers from high exit barriers, mainlydue to its specialized equipment. Networks and billing systems cannot really be used formuch else, and their swift obsolescence makes liquidation pretty difficult.High Fixed Cost: The industry also suffers from high fixed cost which makes the entrybarrier also very high for the industry. It comes as no surprise that in the capital-intensivetelecom industry the biggest barrier to entry is access to finance. To cover high fixed costs,serious contenders typically require a lot of cash. When capital markets are generous, thethreat of competitive entrants escalates. When financing opportunities are less readilyavailable, the pace of entry slows. Meanwhile, ownership of a telecom license can represent ahuge barrier to entry.  6-7 players in each region  3 out of 4 BIG-Four present in each region N.R.INSTITUTE OF BUSINESS MANAGEMENT 33
  34. 34. Very less time to gain advantage by an innovation: Every company in this industrial sectorin investing a huge amount in research and development and marketing strategy. That is whywe see any offer launched by any company is counter attacked by other companies verysoon. This makes the industry rivalry most prominent.Eg. Caller tunes, life time cardPrice wars: The price war is really very fierce in this industry. Price war in telecom industryhas commoditized the market that branding has taken a backseat. N.R.INSTITUTE OF BUSINESS MANAGEMENT 34
  35. 35. Force 2: The Threat of New EntrantsBoth potential and existing competitors influence average industry profitability. The threat ofnew entrants is usually based on the market entry barriers. They can take diverse forms andare used to prevent an influx of firms into an industry whenever profits, adjusted for the costof capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or noteconomically feasible for an outsider to replicate the incumbents’ position. The mostcommon forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:  Economies of scale: In telecom industry the economies of scale exists from the supplier side. That is why companies try to increase their subscriber base at drastic rate.  Distribution channels: Distribution channels are also providing a major determining factor. These channels are not loyal to any company and competitors can easily access them and make out work for them.  Customer Switching Costs: Customer switching cost is very low, as cost of new connection is really low. And new connection offers more benefits to the customers. N.R.INSTITUTE OF BUSINESS MANAGEMENT 35
  36. 36. Force 3: The Threat of SubstitutesThe threat that substitute products pose to an industrys profitability depends on the relativeprice-to-performance ratios of the different types of products or services to which customerscan turn to satisfy the same basic need. The threat of substitution is also affected byswitching costs – that is, the costs in areas such as retraining, retooling and redesigning thatare incurred when a customer switches to a different type of product or service. It alsoinvolves:  Product-for-product substitution (email for mail, fax); is based on the substitution of need;  Generic substitution (Video suppliers compete with travel companies);  Substitution that relates to something that people can do without (cigarettes, alcohol).Now let us discuss this concept for telecom industry. The potential major substitutes fortelecom industry are as follows  VOIP (Skype, Messenger etc.)  Online Chat  Email  Satellite phonesAll of these technologies have a huge potential, though none of the above a major threat incurrent scenario. So the telecom industry has to keep a close look on these substitutes. N.R.INSTITUTE OF BUSINESS MANAGEMENT 36
  37. 37. Force 4: Buyer PowerBuyer power is one of forces that influence the appropriation of the value created by anindustry. The most important determinants of buyer power are the size and the concentrationof customers. Other factors are the extent to which the buyers are informed and theconcentration or differentiation of the competitors. Kippenberger (1998) states that it is oftenuseful to distinguish potential buyer power from the buyers willingness or incentive to usethat power, willingness that derives mainly from the ―risk of failure‖ associated with aproducts use.  This force is relatively high where there a few, large players in the market, as it is the case with retailers a grocery stores;  Present where there is a large number of undifferentiated, small suppliers, such as small farming businesses supplying large grocery companies;  Low cost of switching between suppliers, such as from one fleet supplier of trucks to another.In the context of Indian telecom industry we can say that the following points influence thebuyer power:  Lack of differentiation among the service provider  Cut throat competition  Customer is price sensitive  Low switching costs  Number portability to have negative impact N.R.INSTITUTE OF BUSINESS MANAGEMENT 37
  38. 38. Force 5: Supplier PowerSupplier power is a mirror image of the buyer power. As a result, the analysis of supplier powertypically focuses first on the relative size and concentration of suppliers relative to industryparticipants and second on the degree of differentiation in the inputs supplied.The ability to charge customers different prices in line with differences in the value created for eachof those buyers usually indicates that the market is characterized by high supplier power and at thesame time by low buyer power.In the drawback of Indian telecom industry the following should be kept in mind:  Large number of suppliers: The industry basically has a large number of suppliers, which helps them to choose from a lot of options. So they try to select the best option to deliver the value to the customers and to have a competitive advantage from their competitor.  Shared tower infrastructure: Technology has helped them to share the tower infrastructure. This basically helps them to reduce the initial investment a lot.  Limited pool of skilled managers and engineers especially those well versed in the latest.  Medium cost of switching since changing their hardware would lead to additional cost in modifying the architecture.  Overall influence on the industry – medium. N.R.INSTITUTE OF BUSINESS MANAGEMENT 38
  39. 39. SWOT ANALYSISA scan of the internal and external environment is an important part of the strategic planningprocess. Environmental factors internal to the firm usually can be classified as strengths (S)or weaknesses (W), and those external to the firm can be classified as opportunities (O) orthreats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.The SWOT analysis provides information that is helpful in matching the firms resources andcapabilities to the competitive environment in which it operates. As such, it is instrumental instrategy formulation and selection. The following diagram shows how a SWOT analysis fitsinto an environmental scan:SWOT Analysis Framework Environmental Scan Internal Analysis External Analysis Strengths Weaknesses Opportunities Threats SWOT Matrix N.R.INSTITUTE OF BUSINESS MANAGEMENT 39
  40. 40. StrengthsHere we will analyze the strengths of the telecom industry as a whole. The most importantfactors are:  Technology is advanced and easy to implement: For telecom industry the technology is really advanced and more and more investment is done on technology to get world class infrastructure and knowhow to put in this field. Recently the telecom sector is going to add 3G spectrum as its latest up-gradation.  Management Team has prior experience: The management team controlling Indian telecom sector in really efficient. Thank goes to the IITs which produce world class engineers. So Indian telecom sector has abundance of technological knowhow.Weakness The weaknesses of the Indian telecom sector are as follows.  High Cost of Infrastructure: The infrastructure cost of telecom industry is very high.  Low customer retention power: The customer retention power for telecom industry is really low and the customer changes their service provider company very soon.Opportunity  Population: The population of India is really an opportunity of telecom service providers, as the number of population without telecom service is also very high. The industry has to target India’s huge population to grow. N.R.INSTITUTE OF BUSINESS MANAGEMENT 40
  41. 41.  Changing Population psychograph: Population psychograph is also changing. Previously telecom service was thought as an emergency service, now it has become an essential part of life in our country.  Increased Penetration Level: All the organizations of the industry are trying to increase their penetration level, in other word to increase the tele-density of the country. The urban Indian population gives a real growth prospect to the industry.  FDI: The foreign direct investment in telecom has been hiked up from 49% to 74%. This move is positive for the sector, as it requires investments of Rs 700 –900 million over the next 5 years. FDI inflow by 2004 was 9950.94 cores in telecom. Countries like Europe, Korea, and Japan telecom are likely to enter India, as India is seen as fastest growing telecom market in world.Threats The treats to the industry are the following:  Government Policies – Government may provide licenses to many foreign operators, which may already have pose a threat for the existing players in the industry.  New Technology can change the market dynamics: A lot of new technologies are coming. Then even have the potential of changing the entire industry dynamics or even create substitute of the telecom services existing. Some of the examples are follows:  VOIP (Skype, Messenger etc.)  Online Chat  Email  Satellite phones N.R.INSTITUTE OF BUSINESS MANAGEMENT 41
  42. 42. Chapter – 4 Introduction to Mobile Marketing Sector1. Introduction Marketing mobileMarketers must remember that mobile cannot, and must not, be treated like other massmediums out there.Mobile is a highly personal channel, with attendant sensitivities and double opt-in permissionrequirements. So it’s not the quantity that should matter for marketers looking to incorporatemobile into their multichannel marketing plans. It’s the quality – and that’s where mobileexcels.While the economy could be better, that hasn’t stopped consumers from quickly shifting tomobile many tasks that previously were conducted on computers.The choice for marketers and ad agencies then is not to deliberate whether to have an SMSprogram or mobile banner ads or a mobile Web site or a mobile coupon program or a .mobidomain or an iPhone/BlackBerry/Android application.Instead, the decision to be made is which one of these options – or a combination – isrelevant for the brand in its efforts to reach consumers through multiple, relevant touchpoints.Smart marketers and agencies will think like smart fishermen: fish where the fish are.Consumers have already moved to mobile, and are staying there for a long time.Marketers should focus this year and next on using mobile – especially SMS and applications– to build databases of consumers who have opted in not once but twice to receive targetedoffers, alerts and information from marketers.A marketer without a mobile loyalty program in 2009 or 2010 will risk losing customers tocompetitors who have such efforts in place N.R.INSTITUTE OF BUSINESS MANAGEMENT 42
  43. 43. “Mobile advertising has increasingly become a two-way street, providing a link for engagementbetween customers and companies,” said Bob Kraut, vice president of marketingcommunications at Pizza Hut.“Rather than simply giving customers information, companies are using mobile advertising as a wayto provide customers with meaningful brand engagement,” he said.“In 2009, you’ll see an increase in people using mobile devices to make purchases. Mobileadvertising will give consumers a way to immediately interact with Pizza Hut by placing an orderentirely from their mobile devices.”. N.R.INSTITUTE OF BUSINESS MANAGEMENT 43
  44. 44. 2. CONCEPTUAL FRAMEWORK2.1. Mobile Phone, Mobile Marketing and Mobile CommerceOne of the marketers‟ demands is to be able to communicate with potential customers and tocontact them anywhere and anytime. Mobile phone made a revolutionary contribution to fulfillingthe anywhere and anytime connectivity marketers‟ wishes. Yuan and Cheng (2004) emphasize thatmobile marketing is getting increasingly popular because mobile phone is a personal device used inmarketing. Scharl et al., (2005) define mobile marketing as using a wireless medium to provideconsumers with time- and location-sensitive, personalized information that promotes products,services and ideas, thereby benefiting all stakeholders. Shortly, mobile marketing refers tomarketing activities and programs performed via mobile phone in mobile commerce.The rapid growth of mobile phone has also come up with a new term: mobile commerce. It has astrong impact on industries like e-commerce in general (E-Business Report, 2000) and transformedmobile commerce into a major driving force for the next wave of e-commerce (Liang and Wei,2004). The growth and use of mobile commerce as an emerging technology has the potential todramatically change the way consumers make business. Mobile commerce driven by wirelesscommunication technology is also generating interest from marketers (Aungst and Wilson, 2005).Therefore, the penetration of this new technology has evoked changes in advertising, retailing andshopping in marketing, and companies wishing to make business in mobile markets should be readyfor mobile marketing and mobile commerce.In the literature, all mobile commerce definitions are very similar. In principle, any transaction witha monetary value conducted via mobile communication networks can be considered mobilecommerce (E-Business Report, 2000). As regards this definition, Siau et al., (2001) define mobilecommerce as a new type of e-commerce transaction conducted through mobile devices usingwireless telecommunication networks and other wired e-commerce technologies. Dholakia andDholakia (2004) describe mobile commerce as electronic commerce transactions carried out viamobile phones and wireless terminals. Bai et al., (2005) simply identify as the transaction conductedover a wireless telecommunication network, either directly or indirectly. Briefly, mobile commerce N.R.INSTITUTE OF BUSINESS MANAGEMENT 44
  45. 45. can be understood as a business model that allows a consumer to complete all steps of acommercial transaction using a mobile phone (DSTI/CP, 2006).In mobile commerce, mobile marketing is increasingly prevailing and appealing to marketing formany reasons. For example, consumers carry them every day, everywhere, and mobile phones arealmost always on (Yuan and Cheng, 2004). The forces underpinning the emergence of mobilecommerce can be summarized as (1) proliferation of mobile devices, (2) convergence of mobiletelecommunication networks and Internet, (3) transition to 3G (Third Generation Mobile System),and (4) the emergence of broad set of highly personalized location applications and services (Sadeh,2002). Therefore, mobile commerce has attracted growing attention over the last few years andcontinued to revolutionize marketplaces by introducing new business models as well as offeringsome advantages to customers, retailers and GSM operators. Even though Barnes (2002) putforward that the diffusion of mobile commerce services are very poor so far due to high cost, slowtransmission rates, high power consumption of devices and inadequate mobile interfaces, mobilecommerce come true these days because of the wireless mobile technology developments and 3Gphones.2.2. Mobile Commerce Businesses and ServicesIn addition to e-commerce, mobile commerce creates new marketplaces among producers,distributors, retailers and customers anywhere and at any time. seen in Figure 1, mobile commercemodels are divided into B2B (business to business) and B2C (business to customer) perspectives. N.R.INSTITUTE OF BUSINESS MANAGEMENT 45
  46. 46. B2C mobile commerce is composed of three parts: GSM operators or retailers, customers andlogistics providers. GSM operators or retailers adopt pull promotion strategy over customerswho have mobile phones in order to market and sell products and services. Customers canorder products and services via mobile phone and purchase them. Logistics providers carrythem from warehouse or store to customers. B2C perspective is just one example where thiskind of powerful information could be aggregated by a carrier or a service provider formarketing purposes (Casal et al., 2004). B2C mobile commerce also requires a strongrelationship among customers, retailers, GSM operators, logistic providers and banks etc.(Barutçu, 2007).Basically, mobile commerce is a service-based business, and many business opportunities areoffered in mobile commerce. Various classification attempts have been made in the literatureto classify existing and possible mobile commerce services like commerce, shopping,entertaining, advertising, information service and personal interaction (Schnicke, 2002).According to Leem et al., (2004), the B2C mobile commerce is subdivided into commerce,intermediary and information models, and subcategories of B2C models represent the currentoutstanding mobile businesses in Figure 2. Funk (2005) analyzed the potential mobile serviceapplications and explained how mobile phone affects the business, marketing andentertainment as seven applications; (1) multi-media mail, (2) mobile phones as portableentertainment players, (3) mobile marketing, (4) mobile shopping, (5) navigation, (6) use in N.R.INSTITUTE OF BUSINESS MANAGEMENT 46
  47. 47. lieu of tickets and money, and (7) mobile intranet applications. Consumers’ AttitudesTowards Mobile Marketing and Mobile Commerce in Consumer Markets 19Location-based mobile information and service play a significant part in B2C mobilecommerce. The vast majority of uses for location-based mobile services are likely to becommercial, involving the provision of specific services adapted to individual profiles andtheir location (Casal et al., 2004). Using the information on the users identity, position,access time, and profiles, GSM operators or retailers can offer the users optimal informationor services, which are contextually relevant to them at the point of need (Liang et al., 2004)and the resulting customers‟ location data can be used for direct marketing (Casal et al.,2004). To this date, GSM operators have been most interested in the use of locationinformation for providing innovative location-based mobile services. These services havegained attention as companies are facing new opportunities in offering more customizedservices. The ability to identify the customers location at a certain time is one of the mostpromising applications of mobile commerce (Barnes, 2003; Pura, 2005).By using new browsers and other mobile applications, the new range of mobile technologyoffers the Internet „in user pocket‟ for which the users possibilities are endless, including N.R.INSTITUTE OF BUSINESS MANAGEMENT 47
  48. 48. banking, booking or buying tickets, shopping and real-time news (Barnes, 2002). When usingthe mobile Internet, mobile phone users reach all web pages via 3G mobile phone withoutcomputer. Therefore, Funk (2004) described the key technological trajectories and theirpotential effect on the expansion of mobile Internet applications. The advanced mobileInternet technologies make the phone a portable entertainment player, a new marketing toolfor retailers and manufacturers, a multi-channel shopping device, a navigation tool, a newtype of ticket and money, and a new mobile intranet device.2.3. Mobile Marketing ToolsMobile advertising, mobile sales promotion, mobile entertainment and mobile shopping standout as the critical elements in mobile marketing and mobile commerce.(i) Mobile Advertising: A key component of mobile marketing communication is advertising,either in a push or pull mode. After obtaining the consumer‟s permission, push advertisingsends relevant but not explicitly requested text and video messages. Quah and Lim (2002)argue that the push model will dominate mobile advertising since it saves consumers‟ timeand money compared to browsing content. SMS and MMS messages are main mobileadvertising systems. SMS has become a technological buzzword in transmitting B2Cmessages to such wireless devices as mobile phones. Many brands and media companiesinclude text message numbers in their advertisements to enable interested consumers toobtain more information. This mode of advertising takes advantage of valuable channels ofwireless communication to enhance customer relationships, and to carry out direct marketingand promotional activities (Frolick and Chen, 2004). Moreover, MMS has provided morevisual and active messages. Marketers can benefit from the use of photos, music, logos andanimation, videos by advertising to consumers mobile phones. SMS and MMS advertisingare expected to achieve higher response rates than that of e-mail or television because alladvertisements can be sent personally.(ii) Mobile Sales Promotion: Sales promotion is one of the promotional mix including coupons,discounts, rebates, free samples, gifts and incentive items in order to observe an immediate effecton sales. Mobile coupons in sales promotion play a vital role, and marketers can predict a higher N.R.INSTITUTE OF BUSINESS MANAGEMENT 48
  49. 49. usage of mobile compared to their paper-based equivalents. Mobile coupons boast at least threeadvantages: (1) targeting based on mobile phone numbers, (2) time sensitivity, and (3) efficienthandling by scanning the coupon‟s bar code at the point of sale (Scharl et al., 2005). Thousands ofJapanese retailers, restaurants, manufacturers, and other companies employ the mobile Internet tosend discount coupons, conduct surveys, and offer free samples to registered users via mobile mail.For example, many restaurants use these mobile-based coupons to offer temporary discounts onslow nights, thus creating a form of dynamic pricing (Funk 2005).(iii) Mobile Entertainment: The mobile phone has become an important media and entertainmentplatform. In the mobile entertainment industry, there are lots of entertainment services likelistening music, playing games, gambling, watching television, video and sport matches etc., whichhave set a stage for an explosion of mobile entertainment industry.(iv) Mobile Shopping: Mobile phone is an exciting tool to expand customers‟ shopping options afterthe Internet. At first, mobile phone can seem like a scary place to shop; however, mobile phoneusers can go online to buy just about Consumers’ Attitudes Towards Mobile Marketing and MobileCommerce in Consumer Markets 21 anything their need or want. Used properly, mobile shopping isa new easy, practical, and economical shopping tool. The sudden growth of mobile shopping hasplaced mobile retailers at consumers‟ fingertips, and allowed mobile phone users to purchasenearly anything they desire without ever leaving their houses and offices.2.4. Success Factors and Barriers of Mobile Commerce and Mobile MarketingThere seem to be a good many issues that require attention from both the practitioner andacademic worlds in mobile commerce and mobile marketing. Researchers from severalcountries gathered at the Fourth International Conference on Telecommunications andInformation Markets to discuss some of the issues regarding e-commerce and mobilecommerce in July 2001 (Dholakia, 2004). The fact that mobile commerce is not maturebrings many challenges to mobile commerce adopters. Integrating content, software andhardware design and reconfiguring an effective business model to implement mobilecommerce requires careful study and decision making (Wu and Hisa, 2004). Therefore,developing a successful mobile commerce system needs to meet a variety of success factors, N.R.INSTITUTE OF BUSINESS MANAGEMENT 49
  50. 50. including process supports, functional capability, implementation, marketing (Bai et al.,2005) and improving trust.Major barriers to mobile commerce and mobile marketing are the mobile web browsers,technological skills, perception of risks and traditional shopping culture, lack of awarenessand understanding of the benefits provided by them. While it is possible to use the mobilephone itself to purchase products, the small screens and keyboards make it difficult to searchfor products. Because the small screen and keyboard make it demanding to search forproducts via a search engine, a large number of the products purchased with a mobile phoneare selected from personalized mail services that provide information on a specific type ofproduct, which the user has registered for (Funk 2005) On the other hand, security,tangibility, and the lack of experience are also main barriers of mobile commerce (Fenech,2002). Therefore, Yuan and Cheng (2004) and Bai et al., (2005) suggested that specialsoftware like recommender system or intelligent on-line purchasing advisors should bedeveloped in order to recommend or advice products and services on a one-to-one basis.Recommender systems of automated product recommendation acquire customerspreferences and recommend products accordingly on a one-to-one basis in real time at alower cost (Yuan and Cheng, 2004). Intelligent online purchasing advisors will assist buyersin specifying their product requirements, searching for product information and selecting thebest supplier (Bai et al., 2005).2.5. Mobile Marketing StrategyMobile marketing strategies and tools are directed at the mobile target market/markets toenhance or change their buying behaviors and overcome barriers of mobile commerce. Inorder to successfully market products and services via mobile phone, marketers and retailersshould gain an insight into mobile phone users‟ attitudes, perceptions, characteristics, andshopping patterns. For example, Tsang et al., (2004) investigated consumer attitudes towardmobile advertising and the relationship between attitude and behavior. The results of theirsurvey indicate that consumers generally have negative attitudes toward mobile advertisingunless they have specifically consented to receive the advertising messages. Therefore, in N.R.INSTITUTE OF BUSINESS MANAGEMENT 50
  51. 51. order to develop mobile advertising messages and mobile marketing mix (product, price,promotion place) mobile marketers should ask and answers some questions as seen in Figure3 (Bourke, 2006).Figure 3: Stages of Mobile Marketing StrategyBriefly, mobile marketing managers should determine target customers and understand theirdemographics characteristics to develop successful mobile marketing programs and strategies . N.R.INSTITUTE OF BUSINESS MANAGEMENT 51
  52. 52. 3. The future of mobile marketingAs Mobile Marketer’s Outlook 2009 proves, marketers understand the need to integratemobile into their multi-channel branding, customer acquisition and customer retention plans.Top of the trends list is the consumer’s growing comfort with consuming news and contenton mobile phones, along with exchanging SMS text messages, shopping for products andservices, checking email, playing games, conducting mobile banking transactions andsearching for retail locations or driving directions.Indeed, the mobile channel’s use as a location-enabling tool is quickly becoming evident tobrands, ad agencies, retailers and, most importantly, consumers.MOBILES ALLOWS YOU TO USE VARIOUS TOOLS & ITS UNIQUEFACTORS • Click-to-call :- Call the call center • Click-to-video :- Watch the video on your phone • Click-to-participate :- Contest to win goodies or generate leads • Click-to-download :- Download branded/paid/unpaid mobile content • Click-to-SMS :- SMS yourself or your friends address or m-couponMobile Has unique form factors • Screen is small – less is better than more • Not all phone are same – use 80:20 rule • Phone and computer are different – – @symbol – Long drop-down – Field validations N.R.INSTITUTE OF BUSINESS MANAGEMENT 52
  53. 53. “Compared to traditional media and wired Web advertising, mobileis claimed to typically deliver better ROI.”How to budget for a mobile marketing campaignThe most important factor for marketers to keep in mind is the goals of the campaign andwhich mobile channels are best suited to attain those goals. About the only consensus in themobile industry on this topic is that there are many variables to consider and that costs rangewidely depending on the scale and complexity of the campaign.Many industry insiders claimed that a basic mobile campaign can be launched for much lessthan an online, print or television effort.―Surprisingly, SMS alert, WAP mobile Web site, mobile banner ad campaigns and pre-roll/post-roll mobile video ad campaigns are not as expensive as one would think,‖ saidEdward Lang, senior vice president/general manager of mobile for Playboy Media Group,Los Angeles.Another industry executive claimed that a bare-bones SMS/text alert campaign can belaunched for a few hundred dollars – excluding the cost of the common short code – and thata basic mobile Web/WAP campaign can be launched for several thousand dollars. N.R.INSTITUTE OF BUSINESS MANAGEMENT 53
  54. 54. Mobile marketing in INDIAIndia – Essential Facts• Over 700 million people below the age of 30! – First internet experience for this generation will be through the mobile –• 350 million+ mobile phone users estimated to double to over 700million in 3 years! – 8 to 10 million new users added a month• Mobile internet users outnumber broadband users by 19 to 1 – 38 million mobile internet users as of Oct 2008 – Mobile internet users doubled in the last 12 months• Most of the handsets sold in India are internet enabled• India is the largest consumer of mobile internet in Asia N.R.INSTITUTE OF BUSINESS MANAGEMENT 54
  55. 55.  Reported by Telecom Regulatory Authority of IndiaEntertainment dominates mobile internet consumption in India N.R.INSTITUTE OF BUSINESS MANAGEMENT 55
  56. 56. Why mobile advertising in India is a winning bet • Mobile enjoys a higher market penetration than fixed internet – In emerging markets like India the mobile phone, rather than the PC, is the primary connected device • This gives mobile a great opportunity for being one of the main advertising mediums, especially in a more digital future • Catalysts for industry growth – Dropping data charges – Increasing recognition amongst agencies – Advertisers increasingly focused on measurability – Increasing capabilities of mobile devices – Better connectivity and user experience Mobile marketing statistics The future of mobile marketing is bright. Very bright. 200+ million Americans carry mobile phones—over half of the countrys population Cell phones are used by over 3.1 billion people globally 40% of major brands have deployed text messaging (SMS) campaigns 18% of major brands have deployed multimedia messaging (MMS) campaigns Source: Airwide Solutions independent survey of 50 brand name companies The global mobile advertising market will be valued at over $16 billion by 2011 In August 2007, nearly 40 million US consumers received SMS advertisements, and 12 percent responded to them Source: M:Metrics, Common Short Codes: Cracking the Mobile Marketing Code A survey of 2,400 moms reveals that the single most important tech gadget in their lives is the cell phone (23%), followed by the Internet (21%) and the digital camera (19%) Source:, March 2008 N.R.INSTITUTE OF BUSINESS MANAGEMENT 56
  57. 57. From advertising to invertisingThough mobile is a powerful tool for targeting consumers, marketers have been cautiousabout tapping this medium since it often intrudes into the consumers private space. Besides,the National Do Not Disturb (NDND) Registry of telecom regulator TRAI (TelecomRegulatory Authority of India) seeks to curb unsolicited commercial communications(UCCs). The NDNC Registry is a database of telephone numbers of subscribers who do notwant to receive UCCs.As they tap on this growing medium, SMS marketing companies must also overcomespamming. To do this, they have created various platforms designed to satisfy the needs ofboth advertisers and consumers.According to Saxena, there are two ways to ensure no messages are sent to subscribers on theNDNC Registry."One, we insist on scrubbing the messages with the NDNC list. Two, subscribers explicitlyopt-in to any service or messages. This has been pioneered by us," Saxena said. For instance,if you buy something from a retail store and want to be updated on this product, you "invite"information from the store on new arrivals and it will send multiple SMS messages everymonth telling you whats new. You can also opt-out of this service.This concept, known as invertising or invited-advertising, seeks to prohibit spam. N.R.INSTITUTE OF BUSINESS MANAGEMENT 57
  58. 58. Chapter – 5 Analysis 1. I decide to purchase on the basis of advertisementsHere it can be analyzed that majority people are neutral but we can see that 28 % people areagree with the statement. So gives clear idea that some how advertisement do effect on themind set of consumer 2. I do not respond to tele-callers Here it can be analyzed that majority is with the option of agree and majority are strongly agree also so most of the people do not like to respond tele-callers at all. N.R.INSTITUTE OF BUSINESS MANAGEMENT 58
  59. 59. 3. I always seek detailed information before purchasing any product. Here it can be analyzed that majority are strongly agree with this statement that they seek full information before purchasing 4. I get angry if caller calls frequentlyHere it can be analyzed that majority is with the option of agree and majority are stronglyagree also so most of the people do not like that callers call them on the frequent basis andask for the feed back or something as reminder for the purchasing N.R.INSTITUTE OF BUSINESS MANAGEMENT 59
  60. 60. 5. Advertisement is the best source to decide to buy any product.Here it can be analyzed that majority are agree and neutral so by the cross checking ofquestion 1 and question 5 are almost same respond. So it can be clear those respondents aretruly aware about the filling questionnaire 6. Mobile is more than just means of communicationMajority are fully agreed with the statement because they think that mobile phone can be usefor entertaining perspective. And today most of the teenagers use mobile for that perspectiveonly as camera facilities are also available. N.R.INSTITUTE OF BUSINESS MANAGEMENT 60
  61. 61. 7. I check full details before buying any new product.Here this statement is asked for the verification of the respondent is giving true respond ornot. It is cross checked with the 3rd question. So it can be said that majority of respondentshad given true respond. As the ratio is almost same for both the statements. 8. I always give response to smsHere it can be analyzed that respondents like to delete the sms are rarely read it on theimmediate basis. As they read the sms only when they get time .only students do theimmediate respond to sms. N.R.INSTITUTE OF BUSINESS MANAGEMENT 61
  62. 62. Q1. Do you have registered for DND ( do not disturb service ) ?Ho : Preference for the DND registration is independent on the occupation at thesignificance level of 0.05H1 : Preference for the DND registration is dependent on the occupation at thesignificance level of 0.05 DND * Occupation Crosstabulation Count Occupation student Business man Employee Total DND yes 0 4 4 8 no 49 11 32 92 Total 49 15 36 100 N.R.INSTITUTE OF BUSINESS MANAGEMENT 62
  63. 63. Chi-Square Tests Asymp. Sig. (2- Value df sided) Pearson Chi-Square 11.836a 2 .003 Likelihood Ratio 13.241 2 .001 Linear-by-Linear Association 4.101 1 .043 N of Valid Cases 100 a. 3 cells (50.0%) have expected count less than 5. The minimum expected count is 1.20. Out of the 100 respondents 92 have not registered for the DND as they like to know various schemes through mobile marketing. And they also want that they are interested in the calls coming from the service provider. In the hypothesis chi-square calculated is 11.836 but tabulated is .103 so hypothesis is rejected. So it also can be analyzed that preference of registration to DND is dependent on the occupation of the person. N.R.INSTITUTE OF BUSINESS MANAGEMENT 63
  64. 64. Q2. Do you use GPRS ?Ho : GPRS usage is independent on the occupation at the significance level of 0.05H1 : GPRS usage is dependent on the occupation at the significance level of 0.05 GPRS * Occupation Crosstabulation Count Occupation student Business man Employee Total GPRS yes 22 10 18 50 no 27 1 14 42 Total 49 11 32 92 N.R.INSTITUTE OF BUSINESS MANAGEMENT 64
  65. 65. Chi-Square Tests Asymp. Sig. (2- Value df sided) Pearson Chi-Square 7.737a 2 .021 Likelihood Ratio 8.863 2 .012 Linear-by-Linear Association 1.405 1 .236 N of Valid Cases 92 a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 5.02. Here it can be analyzed that students are the most users of GPRS than others. Here chi-square tabulated is 0.103 and which is lesser than calculated which is 7.737 so it is rejected at the significance level of 0.05. So the analysis says that GPRS usage is dependent on the occupation. N.R.INSTITUTE OF BUSINESS MANAGEMENT 65
  66. 66. Q3. Do you use internet ?Here it can be analyzed that the internet users are same at all the levels and it is notdependent on the occupation. As internet usage is must for every individual today. By thisquestion it also can be conclude that internet users not only use internet for the registrationon the web-sites like MY-TOADY. They register with sms also which gives revenue to bothmarketer as well as service provider. N.R.INSTITUTE OF BUSINESS MANAGEMENT 66
  67. 67. Q 4. Do you have 3G enabled mobile phone? N.R.INSTITUTE OF BUSINESS MANAGEMENT 67
  68. 68. Ho : 3G enabled mobile usage is independent on the occupation at the significance levelof 0.05H1 : 3G enabled mobile usage is dependent on the occupation at the significance level of0.05 third_generation * Age Crosstabulation Count Age 18-23 24-29 30-35 Total third_generation Yes 12 6 7 25 No 42 17 8 67 Total 54 23 15 92 Chi-Square Tests Asymp. Sig. (2- Value df sided) Pearson Chi-Square 3.563a 2 .168 Likelihood Ratio 3.298 2 .192 Linear-by-Linear Association 2.985 1 .084 N of Valid Cases 92 a. 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.08.Here it can be analyzed that the age group of 30-35 are using 3G enabled mobile than anyother age group as in Gujarat 3G service is not yet started so many people do not have thatmobile phone. As business men use that phone because they want facilities like video-conferencing. And also like to use internet so that they can send e-mail and download files. N.R.INSTITUTE OF BUSINESS MANAGEMENT 68
  69. 69. Q5. Which sites you have registered ?N.R.INSTITUTE OF BUSINESS MANAGEMENT 69