Literature Review on growth of mCommerce

7/29/2019 Literature Review on growth of mCommerce

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LITERATURE REVIEW

MCOMMERCE: RE-DEFINING THE CONCEPT OF PLACE

AND PROMOTION IN THE MARKETING MIX

Expectedly, todays world has moved from a person-to-person

exchange of value to a person via media to person exchange.

And more than anything, at the helm of this transformation are

the advancements in information and communication

technology, which have clearly changed the face of interactions

(Okafor, 2012). Increasingly since the turn of the millennium,

the new media of communication, especially mobile has

continued to grow in relevance across all facets of social,

economic, political, cultural, and religious life. According to

Castells (2004), the mobile and some other related

technologies which come under the category of new media,

the Internet, specifically, Web 2.0, has had its influence spread

to virtually all aspects of human endeavour, including

marketing for the purposes of this study (Castells, 2004).

The use of the new media of communication, especially mobile

for several purposes has been studied by a number of scholars

who have been interested in its reach, and importantly, the

effects of its usage, whether as a communication tool (Binuyo,

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2011) or as an information-gathering tool (Flew, 2002;

Koltringer, 2009), or for academic research (Jagboro, 2003), or

for the purpose of creating and existing in a virtual reality

(Kaplan and Michael, 2010).

As a tool for communication, the spread of web and new media

of communication, especially mobile applications (popularly on

the Web 2.0 platform) has transcended person-to-person

communication to include interactions between individuals,

between companies, companies and individuals, and between

consumers and businesses (as explained in the C2C, B2B, and

B2C models), the latter being a function on interactivity

provided by Web 2.0 platforms (Spurgeon, 2005; Preston, 2011;

Dominick, 2009). Interesting to this study would be the

penultimate model (B2C). This is primarily because with the

business-to-consumer, the concept of marketing

communication comes into play a situation where the

company interacts with the consumer for the purpose of

promoting their offerings (goods and/or services) with the

ultimate aim of either providing information, inducing positive

affective, or effecting patronage (Ray, 1975).

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The rise of the new media of communication, especially mobile

as a communication medium (with an increased capacity for

persuasion, having all the qualities of television) has arguably

changed the complexion of not only news gathering and

disseminating, but also marketing communication. This has

even given rise to the concept of social media marketing, which

has been defined as integrated marketing communication

conducted over the new media of communication, especially

mobile, given that majority of people who get on social media

actually do so through their mobile phones (Kaplan and

Michael, 2010; Mangold and Faulds, 2009).

However, before one can actually assess the contributions of

new communication technology (mobile telephony) on the

marketing mix, there is first the need to properly understanding

the marketing paradigm.

The Marketing Mix

Kalyanam and McIntyre (2002) render that the marketing mix

and also its extension as the retailing mix are conceptions

that provide a standard lexis for the marketing community. At

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first the idea of a marketing mix was somewhat contentious.

Many competing classifications were proposed, from a mix of

just two elements (the offer and the tools) (Frey 1961), to

one with three elements (goods mix, distribution mix and

communication mix) (Kelly 1962) to one with 12 elements

(Borden, 1965). Ultimately, a 4Ps description of the marketing

mix became what today is one of the most standardized and

universally accepted aspects of the marketing landscape.

Professor E. Jerome McCarthy (1960), in his textbook Basic

Marketing: A Managerial Approach, first popularised this

particular grouping. The basis for the characterisation of the

marketing mix was the very much simpler marketing world of

the 1950s when TV was just taking the country by storm as the

new marketing medium. It was a time of the masses with

mass-marketing capitalizing on mass-communication to move

mass-production through mass-distribution and mass-retailing

to the swelling masses of the post-world-war-II middle-class.

Marketing mix can therefore be said to have originated from

the single P (price) of microeconomic theory (Chong, 2003).

McCarthy (1964) offered the marketing mix, often referred to

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as the 4Ps, as a means of translating marketing planning into

practice (Bennett, 1997).

Goi (2009) opines that the marketing mix is not a scientific

theory, but merely a theoretical charter that recognises three

basic decision making managers make in configuring their

offerings to suit consumers needs. The tools can be used to

develop both long-term strategies and short-term tactical

programmes (Palmer, 2004). The proportions in the marketing

mix can be altered in the same way and differ from the product

to product (Hodder Education, n.d). The marketing mix

management paradigm has dominated marketing thought,

research and practice (Grnroos, 1994), and as a creator of

differentiation (Van Waterschoot, n.d) since it was introduced

in 1940s. Kent (1986) refers to the 4Ps of the marketing mix as

the holy quadrupleof the marketing faithwritten in tablets

of stone. Marketing mix has been extremely influential in

informing the development of both marketing theory and

practise (Mller, 2006).

The main reasons the marketing mix is a powerful concept are:

It makes marketing seem easy to handle, allows the separation

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of marketing from other activities of the firm and the

delegation of marketing tasks to specialists; and - The

components of the marketing mix can change a firms

competitive position (Grnroos, 1994). The marketing mix

concept also has two important benefits. First, it is an important

tool used to enable one to see that the marketing managers

job is, in a large part, a matter of trading off the benefits of

ones competitive strengths in the marketing mix against the

benefits of others. The second benefit of the marketing mix is

that it helps to reveal another dimension of the marketing

managers job. All managers have to allocate available

resources among various demands, and the marketing

manager will in turn allocate these available resources among

the various competitive devices of the marketing mix. In doing

so, this will help to instil the marketing philosophy in the

organisation (Low and Tan, 1995).

Elements of the marketing mix: product, price, place

(distribution) and promotion, have been highlighted severally.

And while elements like product, price and promotion has been

largely documented, place which is concerned with the

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distribution of product from point of manufacture to point of

purchase may have been overlooked. It can be argued that

even if the best possible promotions are undertaken for a

product which meets consumers needs and is fittingly priced

for the said targeted consumers, if the product is not available

for purchase, then marketing would have failed, because

consumers needs will still not be met, which is the entire

purpose of marketing (Kotler, 2003).

MOBILE TELEPHONY IN THE MARKETING MIX

The relationship between the Mobile telephony and marketing

efforts cannot be underemphasized, especially since the world

is shifting to that platform. In a technological determinist

stance, Mangold and Faulds (2009) argue that the Mobile

telephony has significantly ushered in a new epoch in IMC

having heralded a switch in processes from traditional to new

media, in this case, mobile telephony. The impact of the

interactions among consumers in the social media space on the

development and execution of marketing activities and

strategies is illustrated by the following points:

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Mobile telephony has become a mass media vehicle for

consumer-sponsored communications. It is now the top-

choice media for consumers at work and the second most-

consulted media at home, in most urban areas in Nigeria,

especially with the advent of Internet-enabled phones and

most recently, the BlackBerry and other smartphone

products such as Android-enabled phones.

Consumers are turning away from the traditional sources

of advertising: radio, television, magazines, and

newspapers. Consumers also consistently demand more

control over their media consumption. They require on-

demand and immediate access to information at their own

convenience (Rashtchy et al., 2007; Vollmer & Precourt,

2008).

Consumers are turning more repeatedly to various mobile

telephony applications to conduct their information

searches and to make their purchasing decisions

(Lempert, 2006; Vollmer & Precourt, 2008).

The mobile telephone, and its applications such as social

media, is observed by consumers as a more reliable

source of information regarding products and services

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than corporate-sponsored communications transmitted via

the traditional elements of the promotion mix (Foux,

2006).

The number of global mobile phone owners in 2003 reached 1.3

billion (Kumar, 2004) with the highest rates of growth occurring

in China (Minomo and Masamura, 2004). According to the

Nielsen Media Research survey (Hong Kong mobile phone,

2006), the highest mobile phone penetration rate was found in

Hong Kong (96%), followed by South Korea (93%), the UK

(92%), Singapore (89%), and Australia (87%). The U.S. market

for mobile phones included 185 million users (Smith, 2005) and

was predicted to reach 75% of the population, or about 236

million users, by 2010 (Wallace, 2005); while in Nigeria, after

about 12 years of the introduction of the mobile phone, there

are almost as many subscribers as the 160 million Nigerians

alive (NCC, 2013).

The dramatic increase in mobile phone usage has produced a

new avenue for marketing applications and services (Tsang et

al., 2004). Pramis (2013) holds that currently, the number of

mobile phone users stands at about 6 billion, and that by 2014,

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there will more mobile phones than there are humans; while

the ITU (2013) gives the figures to stand at 6.8 billion. The

future of m-commerce has great potential as the mobile phone

market remains a great untapped marketing medium (Jackson,

2004).

Furthermore, the ITU (2013) posit that mobile-broadband

subscriptions have climbed from 268 million in 2007 to 2.1

billion in 2013. This reflects an average annual growth rate of

40%, making mobile broadband the most dynamic ICT market.

In developing countries, the number of mobile-broadband

subscriptions more than doubled from 2011 to 2013 (from 472

million to 1.16 billion) and surpassed those in developed

countries in 2013. Africa is the region with the highest growth

rates over the past three years and mobile-broadband

penetration has increased from 2% in 2010 to 11% in 2013.

Saidi (2008) argues that despite the fact that increased usage

of mobile phones and the rapid developments in mobile

communication technologies present a surge for m-commerce,

and while m-commerce has been implemented in many

countries in both the developed and developing world, it

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remains an unexploited area in some African countries, for a

number of reasons.

Mobile commerce (m-commerce) is the involvement of the

delivery of products and services via wireless technologies to

enable e-commerce activities at any time and location. (Yeo

and Huang, 2003). It consists of business and consumer

transactions that use mobile phones and can be recognized as

a complement to e-commerce (Kumar, 2004). The global m-

commerce revenues are expected to increase to 88 billion

dollars by 2009 (Mort and Drennan, 2004).

Obe and Balogun (2007) discuss mCommerce in the Nigerian

context. They associate the rise in the use of mobile phones as

being contributory to the growth and penetration of

mCommerce in the country, adding that with mCommerce, the

concept of distribution within the context of marketing has

changed considerably. They also make the argument that the

development of wireless Internet also served to reinforce the

implications that mobile telephony has had, and will continue to

have, on the development of communication and its correlated

activities including marketing.

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The mobile world opens up numerous possibilities beyond the

typical realm of communication activities (Gorlenko and

Merrick, 2003). Worldwide, mobile users are increasingly

accepting phones as multipurpose devices, which can be used

to send text messages, take pictures, surf the web, download

ring-tones, and play games (Smith, 2005). Some marketers are

starting to see the mobile phone as a potential marketing

medium and consequently are seeking ways to tap into this

burgeoning opportunity. For example, Samsung and Nokia have

provided digital video broadcast handheld (DVB-H) by mobile

phones which can deliver up to 50 TV channels (Colleen, 2007).

British Telecom sent Short Message Service (SMS) text

messages to their individual customers announcing a sale at a

specific store, which created a mad rush to the store (Swartz,

2001). AOL created a mobile search service that includes

yellow pages and a shopping search (AOL Rolls out New AOL

Mobile Search Services, 2005). McDonalds and Dunkin Donuts

have sent text message coupons to mobile users (Freedman,

2005). Various current applications for m-commerce include

ubiquitous communication (e.g. e-mail, short message service),

content deliveries (e.g. health-related to messages, pill

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reminders), entertainment services (e.g. music download,

gaming, gambling, sports scores), location-based services (e.g.,

finding nearby facilities/services, transportation information,

tour guides), movie and concert ticketing, sending store and

restaurant discount coupons, shipment tracking, comparison

shopping, banking, and payments (Palenchar, 2004; Xu and

Gutierrex, 2006; Yuan and Zhang, 2003).

One of the more popular categories of services currently under

heavy demand is location-based services (LBS), which relate

spatial and temporal information that describe moving objects

(Lee, 2007). It tracks the location information of moving objects

per time unit, stores them into databases, and handles users

queries based on the stored location information. For example,

by utilizing GPS capabilities, the LBS allows customers to find

optimal routes to their destinations. They can obtain detailed

maps and real-time alerts on traffic conditions, and information

about highway services like gas, food, and lodging. (Rao and

Minakakis, 2003). Other LBS examples include the E911

service, which allows for tracking the location of mobile users in

an emergency (Frenzel, 2006); and Dodgeball and Twitter,

social networking systems that send text messages to the

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mobile users about where their friends are located (DeJean,

2007; Gibbs, 2007). The value customer place on mobile

services would increase if customers could retrieve time and

location specific information (Mort and Drennan, 2004).

The increased use of mobile phones has increased the use of

advertisements, especially through short messaging services

(SMS). This has come to be known as mobile advertising (Tsang

et al., 2004). Procter & Gamble has made an agreement with

cell phone carriers such as Cingular, Verizon, Sprint, and T-

Mobile to market their products and develop marketing

campaigns for cell phones (Smith, 2005). Companies like Sony,

Disney, Coca-Cola, Heineken, and Ford are also beginning to

invest in mobile advertising (Kilby, 2006). They are hiring

mobile marketing partners to assist in promotion of their

products via mobile phones (Britvic plots expansion of mobile

marketing activity, 2006).

The mobile-assisted shopping application is another growing

area in m-commerce. Consumers can obtain marketing

information about different products and their relative costs via

their mobile phones in order to make informed decisions in real

time (Mort and Drennan, 2002). A report by the Japanese

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economy, trade, and industry ministry and ECOM found that m-

shopping is popular among young Japanese women and was

worth 5 billion in 2004, a 25% increase from 2003 (McCurry,

2006).

Mobile payment services promote m-shopping. For example,

mobile users can register their credit card numbers, and these

numbers are saved in their mobile phones to be used for

purchases (Phone me the money, 2003). In 2005, Mastercard

International announced that it would be providing its issuing

banks with the technology needed for payment enabled

phones, and Motorola conducted a pilot test using Mastercard-

enabled phones with its employees (Phone payments

advance, 2005). Various other mobile services include m-

learning, which uses the mobile phone to facilitate learning for

young adults and teens (Mobile phones switch young people

on to learning, 2003), and mobile banking, which allows

mobile users to make bank payments or withdrawals (Kumar,

2004). Oracle (2011) also agree. They state that The mobile

channel continues to grow as a connector of other sales

channels among all age groups in the U.S. Consumers are

starting to use their mobile devices to comparison shop, seek

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product ratings and reviews, and to search for coupons. There

are also indications that consumers are using their mobile

devices more frequently for shopping purposes while standing

in a physical store. 48 percent of consumers across all age

groups are using their mobile devices to research or browse

products and services. This is up from 37 percent in a

consumer benchmark survey commissioned by ATG in July

2010, and 27 percent in a consumer cross-channel survey

taken in November 2009. Mobile music services are also

increasing in popularity, as are single- and multi-player game

services (Srivastava, 2005).

Bigne, Ruiz and Sanz (2005) highlight the increasing

importance of mCommerce when they argue that the increased

mobile usage of recent years is a clear example of the systems

growth, significance and the opportunities it offers as an

independent sales channel and it therefore merits special

attention from researchers.

While published work on M-commerce applications and

technologies and the different mobile operators and their

services is becoming more abundant and representative

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(Barnes 2002, Buellingen and Woerter 2004; Coursaris and

Hassanein 2002; Dholakia and Dholakia 2004; Figge 2004;

Gerstheimer and Lupp 2004; Lehrer 2004; Leung and Antypas

2001; Kumar and Zahn 2003), there is a lack of literature on

the profile of users who buy products/services through the

different mobile operators and on the analysis of the factors

which most influence shopping behaviour and the processes of

adopting M-commerce (Coursaris and Hassanein, 2002; Luarn

and Lin, 2004; NG-Kruelle et al., 2002; Wu and Wang, 2004;

Yang, 2005). There is also a dearth of literature on the extent

to which this trend has spread in countries which have Internet

penetration concerns like Nigeria and other developing

countries; climes where issues such as scepticism and distrust.

The few that are available however state that with Nigeria for

instance, the major constraints include: economic conditions

such as the widespread poverty; low bandwidth and poor data

services available; carrier companies lack of interoperability;

people apathy and distrust for mCommerce; amongst others.

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Literature Review on growth of mCommerce

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