Mobile marketing final

Chapter-1

LITERATURE REVIEW
A study done by Heinonen & Strandvik (2003) showed that mobile channels are perceived to
be more personal than traditional and e mail channels. This creates high expectations for the
relevance of marketing communication messages. A consumer expects messages to be
personal and of high interest and this makes the disappointment greater when they get
undesired messages. Mobile advertising may even step over the line of discretion and invade
consumers’ privacy because of the personal nature of the mobile device. Li et al (2002)
discusses how negative reactions like irritation arise through intrusion advertising. The
channel influences consumer responsiveness to marketing communication by being
perceived as either disturbing or acceptable (Abernethy 1991). If the consumer considers
marketing communication via a channel as disturbing it may negatively affect the attention to
and perception of the message. In contrast, the channel may also enhance the acceptance of
the marketing communication if it is perceived as appropriate for the specific marketing
communication. Also, some consumers may perceive the channels as neutral, i.e. it is neither
disturbing nor accepted.
Despite substantial marketing potential, research on mobile advertising and particularly
through its most successful application, short message service (SMS) is still embryonic. In a
comprehensive survey concerning consumers’ experiences of direct marketing channels in
Finland it was found that consumers perceived direct marketing channels differently
compared to each other. (Finnish Direct Marketing Association, 2002) The experiences of
mail order, Internet and email experiences were more positive compared to other direct
market channels such as telemarketing and door-to-door sales. 80 % of the respondents had
positive experiences of mail order, 77% had positive experiences of Internet and email as
marketing channels and the corresponding number for SMS and WAP was 65%. For
telemarketing 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

differences between the channels. The study also indicated that consumers have considerable
less experience of SMS messages compared to mail order, Internet and email.
New media in the digital economy have created potentially powerful tools for direct and
interactive marketing. Traditional marketing communication strategies have been based on
the interruption logic (Godin 1999) where the consumer is forced to momentarily pay
attention. Permission marketing was introduced as a new managerial approach in marketing
communication. It has been argued that firms benefit from getting consumers’ permission to
be contacted (Marinova, Murphy and Massey 2002). Permission from the consumer would
resolve the difficulties to get access to the consumer. Permission is, however, not necessarily
a guarantee that the consumer pays attention; it is only a door opener and gives an indication
of the consumer’s potential interest areas.

We believe that by using the information retrieval and filtering capabilities of mobile agents
and location information about the user, there exists a good opportunity for value-added
services to be provided to the end-users. This also brings about a new way for cellular phone
service providers to achieve competitive advantage by competing not only on the basis of
price and packaging, but also on the basis of the set of value-added services that they provide
to their clients. In order to overcome the input/output limitations brought about by mobile
devices, the system should be free of user’s intervention. To that end, we propose to use
mobile agents for provisioning context-aware advertisements to mobile users. Schilit and
Theimer first introduced the concept of context-awareness in the project Active Map in
which they took advantage of the location concept to define the context as people, object, and
the changes that occur to them. Dey and Abowd stated that a system is context-aware if it
uses context to provide relevant information and/or services to the user, where relevancy
depends on user’s task.

Krishnamurthy (2001) also proposes a conceptual framework for managing online
advertising using the permission marketing approach. Permission marketing requires the
consumer to participate in the programme by giving the permission and the information for
continuing the relationship. The interest in this participation arises from the balance of


benefits (message relevance and monetary benefits) and costs (personal information, message
processing costs, privacy costs) for consumers.

One of the main challenges and opportunities for mobile advertising companies is to
understand and respect the personal nature of the usage of mobile phones (Barwise & Strong
2002; Heinonen & Strandvik 2003; Barnes & Scornavacca 2004; Jelassi & Enders 2004).
The key is to use interactive wireless media to provide customers with time- and
locationsensitive, personalized information that promotes goods, services and ideas, thereby
generating value for all stakeholders (Dickinger et al. 2004). The mobile advertising
relevance can be influenced by the contextualization (Kenny and Marshall, 2000; Yuan &
Tsao 2003) of advertising messages. Barwise & Strong (2002) take up the flexibility, and
time-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 use
contextual information to target the messages to individual receivers, in other words to
personalize the message. Location-aware advertising messages are creating five to ten times
higher click-through rates compared to traditional internet advertising messages (Ververidis
& Polyzos 2002).

1. INTRODUCTION

Information technology affects everything from daily life to business in the 21st century. In
business environment, it shapes not only commerce but also the way in which companies
implement their marketing strategies. Offering new marketing channels to interact with
customers is crucial to increase sales for company. Thus, the successful application of
information technology to connect marketing applications is highly prominent. One of the
advances in information technology is wireless mobile communication technology that
makes the ―anytime-to-anyplace‖ communication possible. This technology system allows
increased mobility and extended services even to remote areas. Due to wireless
communication system, mobile phone users are able to access their e-mails, search, order and
buy products and services from everywhere without computers (Yen and Chou, 2000; Aungst
and Wilson, 2005). Besides the Internet and personal computers, the mobile phone is the key


to marketers because it is extremely popular and offers people the opportunity of mobility
now. Through the introduction of data services, Short Message Services (SMS), Multimedia
Message Service (MMS), Mobile Internet, etc., the mobile phone is rapidly becoming a
viable commercial marketing channel.

Even though companies are investing heavily in mobile commerce and mobile marketing, the
nature and implications of this channel have yet to be fully understood and studies need to be
performed 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 little
ability to consistently generate profits without a clear understanding of the elements driving
consumer 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 and
mobile marketing. Therefore, in this study, mobile commerce and mobile marketing
concepts, the importance and benefits of mobile commerce and mobile marketing, how
mobile phone influences marketing and business activities and the success factors and
barriers of mobile commerce in consumer markets are explained and analyzed. The results of

the survey conducted on 389 mobile phone users to determine consumers‟ attitudes towards
mobile marketing tools are provided.


Chapter-2
Research methodology

Research 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 city

Research 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 sampling

Primary Sources: survey
Instrument:
Questionnaire

Secondary Sources:
Websites , book for market research


Beneficiaries
1. mobile marketers
2. students who are going to do research on mobile marketing

Limitations
1. Time is short ,
2. Respondents may give bias answers or may not feel questionnaire properly


Chapter – 3
Industry Review

Introduction
The Indian Telecommunications network with 110.01 million connections is the fifth largest
in the world and the second largest among the emerging economies of Asia. Today, it is the
fastest growing market in the world and represents unique opportunities for U.S. companies
in 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 broadband
connections and 18 million internet connections by 2007. The wireless subscriber base has
jumped from 33.69 million in 2004 to 62.57 million in FY2004- 2005. In the last 3 years, two
out 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 only
40% in 2003. Wireless subscriber growth is expected to bypass 2.5 million new subscribers
per month by 2007. The wireless technologies currently in use are Global System for Mobile
Communications (GSM) and Code Division Multiple Access (CDMA). There are primarily 9
GSM and 5 CDMA operators providing mobile services in 19 telecom circles and 4 metro
cities, covering 2000 towns across the country.


Indian telecom industry –a snapshot

•India has one of the biggest telecom markets in the world. It has more GSM subscribers than
fixed-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 watch
Telecommunications September


The Key players in the Telecom Market in India

Cellular Service provider:
1. BSNL
2. Airtel
3. Vodafone
4. Reliance
5. Tata indicom
6. Spice

Subscribers

Wireless subscribers crosses 200 million mark
Tele density reaches 21.20%

The total number of telephone subscribers has reached 241.02 million at the end of August
2009 as compared to 232.87 million in July 2009. The overall teledensity has increased to
21.20% 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 8.06
million 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 million
at the end of August 2009. Circle wise wire line subscriber base of service providers is given
at following chart.


Future Plans

The 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.


GLOBAL SCENARIO

Until the 1980s the world telecommunications systems had a simply administrative structure.
The United States telephone service was supplied by a regulated monopoly, American
Telephone and Telegraph (AT&T). Telegraph service was provided mainly by the Western
Union Corporation. In almost all other countries both services were the monopolies of
government agencies known as PTTs (for Post, Telephone, and Telegraph). In the United
States beginning in 1983, AT&T agreed in a court settlement to divest itself of the local
operating companies that provided basic telephonic service. They remained regulated local
monopolies, grouped together into eight regional companies.
AT&T now offers long distance service in competition with half a dozen major and many
minor competitors while retaining ownership of a subsidiary that produces telephonic
equipment, computers and other electronic devices. During the same period Great Britain’s
national telephone company was sold to private investors as was Japan’s NTT telephone
monopoly. For telegraphy and data transmission, Western Union was joined by other major
companies, while many multinational firms formed their own telecommunications services
that link offices scattered throughout the world. New technology also brought continuing
changes in the providers of telecommunication. Private companies such as Comsat in the
United States were organized to provide satellite communication links within the country.
Around the world we are witnessing remarkable changes to the telecoms environment. After
years of debate, structural separation is now taking place in many parts of the world
including Hong Kong, New Zealand, Singapore and some European markets. Structural
separation – or at least full-blown operational separation – is required to advance the entire
industry and to create new business opportunities and innovations which will benefit our
society, our economy and ultimately our industry.

The focus is also shifting away from broadband to what it can actually achieve. Next
Generation Telecommunications better describes this new environment and is essential for
the emerging digital economy. Important services that depend on NGT include tele-health, e-


education, e-business, digital media, e-government and environmental applications such as
smart utility meters.
In order to meet this burgeoning consumer demand for NGT applications, we are seeing
increasing investment in All-IP Next Generation Networks and fibre networks. A proper
inventory of national infrastructure assets is required if we want to establish an efficient and
economically viable national broadband structure for these services. In the developing
markets, 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 our
very 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 the
telcos in their traditional markets. Over the past 10 years or so, fixed-line operators have
been affected by deregulation, a severe industry downturn, declining prices and major
inroads 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 the
submarine cable sector. In recent times there have been many cable build-out announcements
around the world, and some major systems are again being constructed. Over 25 systems are
expected to be built over the next two to three years and network upgrades are also on the
agenda for some existing systems.
It is clear that the mobile industry is also undergoing profound changes. The saturated
developed markets are forcing the industry to find new revenue streams and we are now
seeing other organizations such as media companies, content providers, Internet media
companies and private equity companies becoming involved in this market.
For the time being however, voice will remain the killer application for mobile with some
data 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 mobile
revenues will come from data.
With the Internet economy, digital media and other telecommunications activities becoming
further established, the need for modern and efficient infrastructure is becoming more
critical.


Telephony services (mobile and basic) and internet services
dominate the Indian telecom services market.

• The Indian telecom industry can be primarily divided into basic, cellular mobile and
internet services. It also has smaller segments such as radio paging services, Very Small
Aperture Terminals (VSATs), Public Mobile Radio Trunked Services (PMRTS) and Global
Mobile Personal Communications by Satellite (GMPCS).

• The mobile services in India are growing more than basic wire line services.


TECHNOLOGIES

Technology is very much related to the way we conduct business. Today everything that we talk
about in business, like, the way we conduct business, the way we do things, the way we deliver to the
customers, etc. is using some form of technology. Therefore, role of technology cannot be defined
because 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 GSM
phones. 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 current
digital wireless standard.
Originally a European standard for digital mobile telephony, GSM has become the world's most
widely used mobile system and is now being used in more than 100 countries. GSM networks operate
on 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 cellular
communication systems global system for mobile communications (GSM), as well as in the
3G 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 data
communication 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 a
best-effort packet switched service, as opposed to circuit switching, where a certain quality
of 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 technology
between the second (2G) and third (3G) generations of mobile telephony. It provides
moderate 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


GPRS to cover other standards, but instead those networks are being converted to use the
GSM standard, so that GSM is the only kind of network where GPRS is in use. GPRS is
integrated into GSM Release 97 and newer releases. It was originally standardized by
European Telecommunications Standards Institute (ETSI), but now by the 3rd Generation
Partnership 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, as
an extension on top of standard GSM. EDGE is considered a 3G radio technology and is part
of ITU's 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 and
can function on any network with GPRS deployed on it, provided the carrier implements the
necessary upgrade.
EDGE requires no hardware or software changes to be made in GSM core networks. EDGE
compatible transceiver units must be installed and the base station subsystem needs to be
upgraded to support EDGE. If the operator already has this in place, which is often the case
today, 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. It
should 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 channel
access method.
One of the basic concepts in data communication is the idea of allowing several transmitters
to send information simultaneously over a single communication channel. This allows
several users to share a bandwidth of frequencies. This concept is called multiplexing.


CDMA employs spread-spectrum technology and a special coding scheme (where each
transmitter is assigned a code) to allow multiple users to be multiplexed over the same
physical 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 form
of "spread-spectrum" signaling, since the modulated coded signal has a much higher data
bandwidth 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 Mobile
Telecommunications 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/s
downlink
The 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 the
improved downlink performance using adaptive modulation and coding (AMC), fast packet
scheduling at the base station, and fast retransmissions from the base station, known as
hybrid 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 to
telecommunications customers. Various types of WLL systems and technologies exist.
WLL (Wireless in Local Loop) is a communication system that connects subscribers to the public
Switched Telephone Network (PSTN) using radio frequency signals as a substitute for conventional
wires for all or part of the connection between the subscriber and the telephone exchange. It is useful
for those subscribers who are located in pockets where immediate telephone connections cannot be
provided 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).


7 WiMax
WiMax (Worldwide Interoperability for Microwave Access) is a technology designed to give
people high speed access to the net over relatively long distances. A typical WiMax system
could theoretically give users in an area three to 10 kilometers wide a 40 Mbps
connection 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 40km
away from the nearest connection. Wimax services can overcome that. One or two WiMax
base stations are enough to connect three or four villages.

The government telecoms operator BSNL is also in the process of rolling out some WiMax
services. But it is still expensive and at the moment is aimed squarely at large businesses that
need a quick-fix solution to broadband access.

8 3G TECHNOLOGIES
3G or Third Generation technology is a convergence of various Second Generation
telecommunication systems. The technology is intended for SMARTPHONES - multimedia
cell phones. Video broadcasting and other e-commerce services such as, stock transactions
and e-learning will now be made possible much faster. It offers 3 Mbps speed for
downloading, which is very high as compared to that of the 2G technology. The 3G
technology 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 the
technology 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 the
technology.


3G Technology in Indian Telecom Industry

From the time of telegraphs Indian telecom sector has witnessed an immense growth and has
diversified into various segments like, Fixed Line Telephony, mobile telephony, GSM,
CDMA, WLL etc. The telecom industry is growing at a fast pace introducing newer
technologies. Even the network operators and handset providers are also coming up with
newer value added services and advanced technology cell phones with multimedia
applications. Now it's time to welcome the much-awaited 3G Technology. Bharat Sanchar
Nigam Limited is all set to launch the technology by December 2007. Not only the network
providers but also the handset providers in India are waiting eagerly for the launch of 3G to
earn very high revenues from the value added services provided by the technology.

The technology is initially being launched on CDMA platform. The technology is being
tested over various platforms and cellular networks.

9 4G TECHNOLOGY
4G (also known as Beyond 3G), an abbreviation for Fourth-Generation, is a term used to
describe the next complete evolution in wireless communications. A 4G system will be able
to provide a comprehensive IP solution where voice, data and streamed multimedia can be
given to users on an "Anytime, Anywhere" basis, and at higher data rates than previous
generations.
As the second generation was a total replacement of the first generation networks and
handsets, and the third generation was a total replacement of second generation networks and
handsets, so too the fourth generation cannot be an incremental evolution of current 3G
technologies, but rather the total replacement of the current 3G networks and handsets. The
international telecommunications regulatory and standardization bodies are working for commercial
deployment of 4G networks roughly in the 2012-2015 time scale. At that point it is predicted that
even 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 are
projected for 4G. These objectives include: that 4G will be a fully IP-based integrated


system. 4G will be capable of providing between 100 Mbit/s and 1 Gbit/s speeds both
indoors and outdoors, with premium quality and high security.

Many companies have taken self-serving definitions and distortions about 4G to suggest they
have 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 that
some currently demonstrated technologies may become part of 4G, until the 4G standard or
standards have been defined, it is impossible for any company currently to provide with any
certainty wireless solutions that could be called 4G cellular networks that would conform to
the eventual international standards for 4G. These confusing statements around "existing" 4G
have served to confuse investors and analysts about the wireless industry.

10 HOW IS 3G DIFFERENT FROM 2G AND 4G
While 2G stands for second-generation wireless telephone technology, 1G networks used are
analog, 2G networks are digital and 3G (third-generation) technology is used to enhance
mobile 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 highlight
of 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 stock
transactions, e-learning and telemedicine through wireless communications.

All telecom operators are waiting to launch 3G in India to cash in on revenues by providing
high-end services to customers, which are voice data and video enabled. India lags behind
many Asian countries in introducing 3G services.


The telecom subscriber base in India is likely to reach 500 million
by 2010.

• The subscriber base grew to 494.07 million (August 2009), registering a growth of
approximately 42.67 per cent over last year. It grew at a CAGR of 45.21 per cent from June
2004 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 29.83
per cent.

source : TRAI report


TRAI

TELECOM REGULATORY AUTHORITY OF INDIA

Telecom Regulatory Authority Of India, a statutory and quasi-judicial body was formed
by an Act in Indian Parliament to regulate the vast telecom sector. The necessity to form such
a regulatory body in line with SEBI, IRDA etc. was felt when the telecom sector was open to
private sector. Plainly speaking its job could be comparable to an umpires’ of a game field. It
has been given the liberty to act without the intervention of bureaucracy or some self-serving
politicians,
The skirmishes encompassing TRAI came to limelight due to conflict among various telecom
operators. That’s exactly the duty of this regulatory body, as has been entrusted with the
statutory power, umpiring on behalf of the public for smooth telecom service.
If one reviews the sequence of its orders/regulations, chronologically, to various telecom
operators and the crucial policy changes with regards to service changes, the monopolistic
and arbitrary attitude is clearly visible.
Unfortunately, It’s a matter of concern that INTER CONNECT USAGE REGIME ordered
by 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 for
public perception or operator’s opinion. If an telecom regulator of a country having almost 7


crores telephone connections could act in such a haste manner without taking into
consideration of aspects of technical feasibility, accounting, public psyche etc. into oblivion.

Though operators have the requisite expertise technically and financially to provide cheaper
telecom service, TRAI is there only to make it costlier. e.g. BSNL and RELIANCE . If they
could 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 the
public forum and parliament as well, rather than giving it a free reign to act on this way to the
tune 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 and
its 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 to
hike rather steeply, the price of calls made by users of ordinary fixed line phones to cellular
subscribers in the non-metro areas.
Even the cellular operators, whose stand was accepted by the TRAI, would accept privately
that the respondent DoT was poorly served by many of its officers and lawyers who were
entrusted with the task of representing DoT’s case.
They seemed to have cut a very sorry figure before TRAI, ignoring or not being prepared by
reading pertinent papers, such as tender documents, the clarifications offered to would-be
bidders, or the correspondence that DoT was having with the operators later. Since the tender
documents mentioned that tariffs would be the same for circles and metros, it would have
made 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 the
same as states) would be charged Rs10 per call for the same facility, if the DoT order in
question had not been quashed.


DoT had raised current rates on grounds that such charges were low and allowed users in the
circles which are much larger than metros, to make long distance calls without paying STD
charges. On the face of it, DoT is entitled to want to change this state of affairs. But in trying
to correct one injustice to itself, it managed to inflict several on the users and other service
providers.
The cellular operators lost no time in going to the courts, since TRAI did not then exist. The
courts in turn took an enlightened decision to pass the matter on to TRAI on March 3, as the
body 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 not
authorized to raise these tariffs. The judgment clearly says that the order of DoT to raise the
tariff was passed before the TRAI was formally constituted and during the said period in
question, the DoT was the sole body with the power to amend tariffs.

Mission

To ensure that the interests of consumers are protected and at the same time to nurture
conditions for growth of telecommunications, broadcasting and cable services in a manner
and at a pace which will enable India to play a leading role in the emerging global
information society. Function of Telecom Regulatory Authority of India


Functions of TRAI

1. 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 spectrum

2. 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 by
periodical survey
 Lay-down and ensure time period for providing local and long-distance circuits of
telecommunication between different service providers


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


Evolution of the industry-Important Milestones
History of Indian Telecommunications

Year

1851 First operational land lines were laid by the government near Calcutta (seat of
British power)
1881 Telephone service introduced in India
1883 Merger with the postal system
1923 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 government's Ministry
of Communications
1985 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, BSNL
2008 3-G Service is launched


Value added services

What is Mobile VAS?
A mobile value-added service (m-VAS) is the ability for cellular operators and service providers to
charge 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 , mobile
advertisements, participation in polls and contests, location based services, mCommerce (financial
transactions), Instant messaging, Infotainment services (news, weather reports, songs, recipes ),
content downloads (wallpapers, screen savers, games, ring tones), down loadable mobile
applications.

Factors driving the growth of VAS in India

The Indian VAS industry is growing at a rapid rate for various reasons. For one thing, the
Indian economy is currently booming and has a high GDP rate. Another important factor is
the availability of mobile phones and data plans at much cheaper rates. In India, VAS
services are mostly provided in monthly plans. Two or more VAS services are often
packaged together in a single set, which appeals to a lot of subscribers. Moreover, Indians
love 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


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 at
the summary (statistical reports) of the survey results of two popular services in Mobile
VAS: Internet usage and SMS (Voting for TV contests).

Mobile Vas in India - Statistics and Trend


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 mature
user 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)


Types of Value Added Services:

Sl. No. Type of Value Description
Added Service

1. News National, International, Business, Entertainment , Sports
News
2. Finance Stocks (NSE, BSE, NASDAQ), Forex
3. Entertainment Games, Mobile TV and Jokes
4. Travel Railways, Airlines
5. Downloads Logos, Ringtones, Caller tones etc.
6. Astrology service Personal Horoscope / Personalized prediction
7. Cricket Cricket scores, Match clippings, cricket commentary
8. Missed call alters Subscriber to get a SMS alert of incoming calls when
the subscriber’s mobile phone is switched off / not
reachable and busy
9. E-mail E-mail through SMS
10. Music on demand Dial a song
11. Contest Reality shows
12. GPRS / WAP Mobile Internet, Mobile Chat, Mobile TV
13. MMS Picture messages, picture clippings
14. Health Health tips, Beauty tips
15. M-commerce Transactions based services with multiple payment modes
and support in multiple domains like WAP, GPRS, SMS,
IVR and Web
16. Miscellaneous Devotional, Movies & Music, Fun, Navigation etc.


PORTER’S FIVE FORCES

There is continuing interest in the study of the forces that impact on an organisation or an
industry, particularly those that can be harnessed to provide competitive advantage. The ideas
and 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 on
investment that was better than the average for the industry sector (Thurlby, 1998).
As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature
of competition within it, the forces inside the industry (microenvironment) that influence the
way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s
five forces model. A business has to understand the dynamics of its industries and markets in
order to compete effectively in the marketplace. Porter (1980) defined the forces which drive
competition, contending that the competitive environment is created by the interaction of five
different forces acting on a business. In addition to rivalry among existing firms and the
threat of new entrants into the market, there are also the forces of supplier power, the power
of the buyers, and the threat of substitute products or services. Porter suggested that the
intensity 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. The
stronger the power of buyers and suppliers, and the stronger the threats of entry and
substitution, the more intense competition is likely to be within the industry. However, these
five factors are not the only ones that determine how firms in an industry will compete – the
structure of the industry itself may play an important role. Indeed, the whole five-forces
framework 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 concentrated
industries, according to this model, organizations would be expected to compete less fiercely,
and make higher profits, than in fragmented ones.


Main Aspects of Porter’s Five Forces Analysis

The original competitive forces model, as proposed by Porter, identified five forces which
would impact on an organization’s behaviour in a competitive market. These include the
following:

 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 market

Understanding the nature of each of these forces gives organizations the necessary insights to
enable 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 applied
to Indian telecom industry simultaneously.


Force 1: The Degree of Rivalry

The intensity of rivalry, which is the most obvious of the five forces in an industry, helps
determine the extent to which the value created by an industry will be dissipated through
head-to-head competition. The most valuable contribution of Porter's ―five forces‖
framework in this issue may be its suggestion that rivalry, while important, is only one of
several 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 market
Now let us understand the implication of degree of revelry in Indian telecom sector. The
dimensions of this parameter are determined by:

High Exit Barriers: In any industry, if the exit barrier is high it increases the difficulty of
any organization to leave the industry sector. So it makes any difficult to any willing to leave
company to leave the industry. The telecom industry suffers from high exit barriers, mainly
due to its specialized equipment. Networks and billing systems cannot really be used for
much else, and their swift obsolescence makes liquidation pretty difficult.

High Fixed Cost: The industry also suffers from high fixed cost which makes the entry
barrier also very high for the industry. It comes as no surprise that in the capital-intensive
telecom 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, the
threat of competitive entrants escalates. When financing opportunities are less readily
available, the pace of entry slows. Meanwhile, ownership of a telecom license can represent a
huge barrier to entry.

 6-7 players in each region
 3 out of 4 BIG-Four present in each region


Very less time to gain advantage by an innovation: Every company in this industrial sector
in investing a huge amount in research and development and marketing strategy. That is why
we see any offer launched by any company is counter attacked by other companies very
soon. This makes the industry rivalry most prominent.
Eg. Caller tunes, life time card

Price wars: The price war is really very fierce in this industry. Price war in telecom industry
has commoditized the market that branding has taken a backseat.


Force 2: The Threat of New Entrants

Both potential and existing competitors influence average industry profitability. The threat of
new entrants is usually based on the market entry barriers. They can take diverse forms and
are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost
of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not
economically feasible for an outsider to replicate the incumbents’ position. The most
common 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.


Force 3: The Threat of Substitutes

The threat that substitute products pose to an industry's profitability depends on the relative
price-to-performance ratios of the different types of products or services to which customers
can turn to satisfy the same basic need. The threat of substitution is also affected by
switching costs – that is, the costs in areas such as retraining, retooling and redesigning that
are incurred when a customer switches to a different type of product or service. It also
involves:
 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 for
telecom industry are as follows
 VOIP (Skype, Messenger etc.)
 Online Chat
 Email
 Satellite phones

All of these technologies have a huge potential, though none of the above a major threat in
current scenario. So the telecom industry has to keep a close look on these substitutes.


Force 4: Buyer Power

Buyer power is one of forces that influence the appropriation of the value created by an
industry. The most important determinants of buyer power are the size and the concentration
of customers. Other factors are the extent to which the buyers are informed and the
concentration or differentiation of the competitors. Kippenberger (1998) states that it is often
useful to distinguish potential buyer power from the buyer's willingness or incentive to use
that power, willingness that derives mainly from the ―risk of failure‖ associated with a
product's 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 the
buyer power:

 Lack of differentiation among the service provider
 Cut throat competition
 Customer is price sensitive
 Low switching costs
 Number portability to have negative impact


Force 5: Supplier Power

Supplier power is a mirror image of the buyer power. As a result, the analysis of supplier power
typically focuses first on the relative size and concentration of suppliers relative to industry
participants 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 each
of those buyers usually indicates that the market is characterized by high supplier power and at the
same 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.


SWOT ANALYSIS

A scan of the internal and external environment is an important part of the strategic planning
process. 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) or
threats (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 firm's resources and
capabilities to the competitive environment in which it operates. As such, it is instrumental in
strategy formulation and selection. The following diagram shows how a SWOT analysis fits
into an environmental scan:

SWOT Analysis Framework

Environmental Scan

Internal Analysis External Analysis

Strengths Weaknesses Opportunities Threats

SWOT Matrix


Strengths

Here we will analyze the strengths of the telecom industry as a whole. The most important
factors 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.


 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


Chapter – 4

Introduction to Mobile Marketing Sector

1. Introduction
Marketing mobile
Marketers must remember that mobile cannot, and must not, be treated like other mass
mediums out there.
Mobile is a highly personal channel, with attendant sensitivities and double opt-in permission
requirements. So it’s not the quantity that should matter for marketers looking to incorporate
mobile into their multichannel marketing plans. It’s the quality – and that’s where mobile
excels.
While the economy could be better, that hasn’t stopped consumers from quickly shifting to
mobile many tasks that previously were conducted on computers.
The choice for marketers and ad agencies then is not to deliberate whether to have an SMS
program or mobile banner ads or a mobile Web site or a mobile coupon program or a .mobi
domain or an iPhone/BlackBerry/Android application.
Instead, the decision to be made is which one of these options – or a combination – is
relevant for the brand in its efforts to reach consumers through multiple, relevant touch
points.
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 targeted
offers, alerts and information from marketers.
A marketer without a mobile loyalty program in 2009 or 2010 will risk losing customers to
competitors who have such efforts in place


“Mobile advertising has increasingly become a two-way street, providing a link for engagement

between customers and companies,” said Bob Kraut, vice president of marketing
communications at Pizza Hut.
“Rather than simply giving customers information, companies are using mobile advertising as a way
to provide customers with meaningful brand engagement,” he said.
“In 2009, you’ll see an increase in people using mobile devices to make purchases. Mobile
advertising will give consumers a way to immediately interact with Pizza Hut by placing an order
entirely from their mobile devices.”

.


2. CONCEPTUAL FRAMEWORK

2.1. Mobile Phone, Mobile Marketing and Mobile Commerce
One of the marketers‟ demands is to be able to communicate with potential customers and to
contact them anywhere and anytime. Mobile phone made a revolutionary contribution to fulfilling

the anywhere and anytime connectivity marketers‟ wishes. Yuan and Cheng (2004) emphasize that
mobile marketing is getting increasingly popular because mobile phone is a personal device used in
marketing. Scharl et al., (2005) define mobile marketing as using a wireless medium to provide
consumers with time- and location-sensitive, personalized information that promotes products,
services and ideas, thereby benefiting all stakeholders. Shortly, mobile marketing refers to
marketing 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 a
strong impact on industries like e-commerce in general (E-Business Report, 2000) and transformed
mobile 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 to
dramatically change the way consumers make business. Mobile commerce driven by wireless
communication technology is also generating interest from marketers (Aungst and Wilson, 2005).
Therefore, the penetration of this new technology has evoked changes in advertising, retailing and
shopping in marketing, and companies wishing to make business in mobile markets should be ready
for mobile marketing and mobile commerce.

In the literature, all mobile commerce definitions are very similar. In principle, any transaction with
a monetary value conducted via mobile communication networks can be considered mobile
commerce (E-Business Report, 2000). As regards this definition, Siau et al., (2001) define mobile
commerce as a new type of e-commerce transaction conducted through mobile devices using
wireless telecommunication networks and other wired e-commerce technologies. Dholakia and
Dholakia (2004) describe mobile commerce as electronic commerce transactions carried out via
mobile phones and wireless terminals. Bai et al., (2005) simply identify as the transaction conducted
over a wireless telecommunication network, either directly or indirectly. Briefly, mobile commerce


can be understood as a business model that allows a consumer to complete all steps of a
commercial transaction using a mobile phone (DSTI/CP, 2006).

In mobile commerce, mobile marketing is increasingly prevailing and appealing to marketing for
many reasons. For example, consumers carry them every day, everywhere, and mobile phones are
almost always on (Yuan and Cheng, 2004). The forces underpinning the emergence of mobile
commerce can be summarized as (1) proliferation of mobile devices, (2) convergence of mobile
telecommunication 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 and
continued to revolutionize marketplaces by introducing new business models as well as offering
some advantages to customers, retailers and GSM operators. Even though Barnes (2002) put
forward that the diffusion of mobile commerce services are very poor so far due to high cost, slow
transmission rates, high power consumption of devices and inadequate mobile interfaces, mobile
commerce come true these days because of the wireless mobile technology developments and 3G
phones.

2.2. Mobile Commerce Businesses and Services
In 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 commerce
models are divided into B2B (business to business) and B2C (business to customer) perspectives.


B2C mobile commerce is composed of three parts: GSM operators or retailers, customers and
logistics providers. GSM operators or retailers adopt pull promotion strategy over customers
who have mobile phones in order to market and sell products and services. Customers can
order products and services via mobile phone and purchase them. Logistics providers carry
them from warehouse or store to customers. B2C perspective is just one example where this
kind of powerful information could be aggregated by a carrier or a service provider for
marketing purposes (Casal et al., 2004). B2C mobile commerce also requires a strong
relationship among customers, retailers, GSM operators, logistic providers and banks etc.
(Barutçu, 2007).
Basically, mobile commerce is a service-based business, and many business opportunities are
offered in mobile commerce. Various classification attempts have been made in the literature
to 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 current
outstanding mobile businesses in Figure 2. Funk (2005) analyzed the potential mobile service
applications and explained how mobile phone affects the business, marketing and
entertainment as seven applications; (1) multi-media mail, (2) mobile phones as portable
entertainment players, (3) mobile marketing, (4) mobile shopping, (5) navigation, (6) use in


lieu of tickets and money, and (7) mobile intranet applications. Consumers’ Attitudes
Towards Mobile Marketing and Mobile Commerce in Consumer Markets 19

Location-based mobile information and service play a significant part in B2C mobile
commerce. The vast majority of uses for location-based mobile services are likely to be
commercial, involving the provision of specific services adapted to individual profiles and
their 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 information
or 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 location
information for providing innovative location-based mobile services. These services have
gained attention as companies are facing new opportunities in offering more customized
services. The ability to identify the customer's location at a certain time is one of the most
promising applications of mobile commerce (Barnes, 2003; Pura, 2005).

By using new browsers and other mobile applications, the new range of mobile technology
offers the Internet „in user pocket‟ for which the users possibilities are endless, including


banking, booking or buying tickets, shopping and real-time news (Barnes, 2002). When using
the mobile Internet, mobile phone users reach all web pages via 3G mobile phone without
computer. Therefore, Funk (2004) described the key technological trajectories and their
potential effect on the expansion of mobile Internet applications. The advanced mobile
Internet technologies make the phone a portable entertainment player, a new marketing tool
for retailers and manufacturers, a multi-channel shopping device, a navigation tool, a new
type of ticket and money, and a new mobile intranet device.

2.3. Mobile Marketing Tools

Mobile advertising, mobile sales promotion, mobile entertainment and mobile shopping stand
out 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 advertising
sends 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‟ time
and money compared to browsing content. SMS and MMS messages are main mobile
advertising systems. SMS has become a technological buzzword in transmitting B2C
messages to such wireless devices as mobile phones. Many brands and media companies
include text message numbers in their advertisements to enable interested consumers to
obtain more information. This mode of advertising takes advantage of valuable channels of
wireless communication to enhance customer relationships, and to carry out direct marketing
and promotional activities (Frolick and Chen, 2004). Moreover, MMS has provided more
visual and active messages. Marketers can benefit from the use of photos, music, logos and
animation, videos by advertising to consumers' mobile phones. SMS and MMS advertising
are expected to achieve higher response rates than that of e-mail or television because all
advertisements 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 effect
on sales. Mobile coupons in sales promotion play a vital role, and marketers can predict a higher


usage of mobile compared to their paper-based equivalents. Mobile coupons boast at least three
advantages: (1) targeting based on mobile phone numbers, (2) time sensitivity, and (3) efficient

handling by scanning the coupon‟s bar code at the point of sale (Scharl et al., 2005). Thousands of
Japanese retailers, restaurants, manufacturers, and other companies employ the mobile Internet to
send 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 on
slow nights, thus creating a form of dynamic pricing (Funk 2005).
(iii) Mobile Entertainment: The mobile phone has become an important media and entertainment
platform. In the mobile entertainment industry, there are lots of entertainment services like
listening music, playing games, gambling, watching television, video and sport matches etc., which
have set a stage for an explosion of mobile entertainment industry.

(iv) Mobile Shopping: Mobile phone is an exciting tool to expand customers‟ shopping options after
the Internet. At first, mobile phone can seem like a scary place to shop; however, mobile phone
users can go online to buy just about Consumers’ Attitudes Towards Mobile Marketing and Mobile
Commerce in Consumer Markets 21 anything their need or want. Used properly, mobile shopping is
a new easy, practical, and economical shopping tool. The sudden growth of mobile shopping has

placed mobile retailers at consumers‟ fingertips, and allowed mobile phone users to purchase
nearly anything they desire without ever leaving their houses and offices.

2.4. Success Factors and Barriers of Mobile Commerce and Mobile Marketing

There seem to be a good many issues that require attention from both the practitioner and
academic worlds in mobile commerce and mobile marketing. Researchers from several
countries gathered at the Fourth International Conference on Telecommunications and
Information Markets to discuss some of the issues regarding e-commerce and mobile
commerce in July 2001 (Dholakia, 2004). The fact that mobile commerce is not mature
brings many challenges to mobile commerce adopters. Integrating content, software and
hardware design and reconfiguring an effective business model to implement mobile
commerce 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,


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 awareness
and understanding of the benefits provided by them. While it is possible to use the mobile
phone itself to purchase products, the small screens and keyboards make it difficult to search
for products. Because the small screen and keyboard make it demanding to search for
products via a search engine, a large number of the products purchased with a mobile phone
are selected from personalized mail services that provide information on a specific type of
product, 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 special
software like recommender system or intelligent on-line purchasing advisors should be
developed in order to recommend or advice products and services on a one-to-one basis.
Recommender systems of automated product recommendation acquire customers'
preferences and recommend products accordingly on a one-to-one basis in real time at a
lower cost (Yuan and Cheng, 2004). Intelligent online purchasing advisors will assist buyers
in specifying their product requirements, searching for product information and selecting the
best supplier (Bai et al., 2005).

2.5. Mobile Marketing Strategy

Mobile marketing strategies and tools are directed at the mobile target market/markets to
enhance or change their buying behaviors and overcome barriers of mobile commerce. In
order to successfully market products and services via mobile phone, marketers and retailers
should gain an insight into mobile phone users‟ attitudes, perceptions, characteristics, and
shopping patterns. For example, Tsang et al., (2004) investigated consumer attitudes toward
mobile advertising and the relationship between attitude and behavior. The results of their
survey indicate that consumers generally have negative attitudes toward mobile advertising
unless they have specifically consented to receive the advertising messages. Therefore, in


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 Figure
3 (Bourke, 2006).
Figure 3: Stages of Mobile Marketing Strategy

Briefly, mobile marketing managers should determine target customers and understand their
demographics characteristics to develop successful mobile marketing programs and strategies .


3. The future of mobile marketing
As Mobile Marketer’s Outlook 2009 proves, marketers understand the need to integrate
mobile 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 content
on mobile phones, along with exchanging SMS text messages, shopping for products and
services, checking email, playing games, conducting mobile banking transactions and
searching for retail locations or driving directions.
Indeed, the mobile channel’s use as a location-enabling tool is quickly becoming evident to
brands, ad agencies, retailers and, most importantly, consumers.

MOBILES ALLOWS YOU TO USE VARIOUS TOOLS & ITS UNIQUE
FACTORS

• 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-coupon

Mobile 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


“Compared to traditional media and wired Web advertising, mobile
is claimed to typically deliver better ROI.”

How to budget for a mobile marketing campaign
The most important factor for marketers to keep in mind is the goals of the campaign and
which mobile channels are best suited to attain those goals. About the only consensus in the
mobile industry on this topic is that there are many variables to consider and that costs range
widely depending on the scale and complexity of the campaign.
Many industry insiders claimed that a basic mobile campaign can be launched for much less
than 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,‖ said
Edward 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 be
launched for a few hundred dollars – excluding the cost of the common short code – and that
a basic mobile Web/WAP campaign can be launched for several thousand dollars.


Mobile marketing in INDIA
India – 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 700
million 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


 Reported by Telecom Regulatory Authority of India

Entertainment dominates mobile internet consumption in India


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 country's 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: Babycenter.com, March 2008


From advertising to invertising

Though mobile is a powerful tool for targeting consumers, marketers have been cautious
about tapping this medium since it often intrudes into the consumers' private space. Besides,
the National Do Not Disturb (NDND) Registry of telecom regulator TRAI (Telecom
Regulatory Authority of India) seeks to curb unsolicited commercial communications
(UCCs). The NDNC Registry is a database of telephone numbers of subscribers who do not
want to receive UCCs.
As they tap on this growing medium, SMS marketing companies must also overcome
spamming. To do this, they have created various platforms designed to satisfy the needs of
both advertisers and consumers.
According to Saxena, there are two ways to ensure no messages are sent to subscribers on the
NDNC Registry.
"One, we insist on scrubbing the messages with the NDNC list. Two, subscribers explicitly
opt-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 every
month telling you what's new. You can also opt-out of this service.
This concept, known as invertising or invited-advertising, seeks to prohibit spam.


Chapter – 5
Analysis
1. I decide to purchase on the basis of advertisements

Here it can be analyzed that majority people are neutral but we can see that 28 % people are
agree with the statement. So gives clear idea that some how advertisement do effect on the
mind 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.


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 frequently

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 that callers call them on the frequent basis and
ask for the feed back or something as reminder for the purchasing


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 of
question 1 and question 5 are almost same respond. So it can be clear those respondents are
truly aware about the filling questionnaire
6. Mobile is more than just means of communication

Majority are fully agreed with the statement because they think that mobile phone can be use
for entertaining perspective. And today most of the teenagers use mobile for that perspective
only as camera facilities are also available.


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 or
not. It is cross checked with the 3rd question. So it can be said that majority of respondents
had given true respond. As the ratio is almost same for both the statements.

8. I always give response to sms

Here it can be analyzed that respondents like to delete the sms are rarely read it on the
immediate basis. As they read the sms only when they get time .only students do the
immediate respond to sms.


Q1. Do you have registered for DND ( do not disturb service ) ?

Ho : Preference for the DND registration is independent on the occupation at the
significance level of 0.05
H1 : Preference for the DND registration is dependent on the occupation at the
significance 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


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.


Q2. Do you use GPRS ?

Ho : GPRS usage is independent on the occupation at the significance level of 0.05
H1 : 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


Chi-Square Tests

Asymp. Sig. (2-
Value df sided)




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.


Q3. Do you use internet ?

Here it can be analyzed that the internet users are same at all the levels and it is not
dependent on the occupation. As internet usage is must for every individual today. By this
question it also can be conclude that internet users not only use internet for the registration
on the web-sites like MY-TOADY. They register with sms also which gives revenue to both
marketer as well as service provider.


Q 4. Do you have 3G enabled mobile phone?


Ho : 3G enabled mobile usage is independent on the occupation at the significance level
of 0.05
H1 : 3G enabled mobile usage is dependent on the occupation at the significance level of
0.05

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)




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 any
other age group as in Gujarat 3G service is not yet started so many people do not have that
mobile 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.


Q5. Which sites you have registered ?


Here it can be analyzed that sms-gupshup is more famous and subscribed by many than any
other sms providing and mean of the sms-gupshup is 0.42 which is highest among all the
other sites and the second highest is mytoday site which has 0.37 mean. As the skew ness in
all the graphs is at right hand side in all the graphs. Which shows that it is far from the mean
means selected is less than not selected in all.

Q6. How do you currently react on receiving
mobile advertising through sms ?

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

mobile_advertising_through_ 92 1.00 3.00 1.7391 .69329
sms

Valid N (listwise) 92

Here it can be analized that the more number of people like read the sms but rarely try to
follow it. Mean is 1.7931 which suggests that the average is fall near by the 2nd option which
is selected by many.


Q7. Recall of the brand increase if you get sms
on mobile

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

recall_increase 92 1.00 3.00 2.0000 .81200

Valid N (listwise) 92

 Here it can analysed that people are not much aware that whether the recall is
increased or not. Here the mean is 2.0000 which suggest that recall do not increase by
mobile marketing.
 As many respondents has selected can’t say option which suggests they are not aware
whether recall increases or not.


Mobile marketing final

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