Research Update: The Effects of Adding <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Mobile Initiatives for Increased Brand Satisfaction<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Michael Becker, CTO, iLoop Mobile Inc., September 12, 2005

Prepared for the Mobile Marketing Association

Mobile phones are no longer used simply for personal and business voice communication. In recent years there have been significant advancements in mobile networks, mobile phones, content, applications, consumer privacy regulations, and related technology and standards. These advancements have led to the rise of the Mobile Channel, a multi-faceted interactive network by which companies provide communication, personalization, information and entertainment services to an individual’s mobile phone through various mobile delivery technologies. Today, these technologies include SMS (text messaging), picture messaging (multimedia messaging), mobile internet (WAP), mobile email, Bluetooth, and interactive voice response. In addition to the delivery of mobile services, there is a growing worldwide trend to leverage the Mobile Channel for marketing purposes that includes lead generation, branding, customer relationship management, customer retention, and more. Despite all the attention that has been given to the advent of the Mobile Channel by the popular press, analysts, application providers, and other industry practitioners there are still many unanswered questions as to how to most effectively take advantage of this new channel. There is a dearth of scholarly research in the field to date, yet this will soon be remedied. A growing field of academics around the world have turned their attention to the subject of how to effectively use the Mobile Channel for consumer and business marketing. In recent years there have been a number of instructive studies focusing on raising and answering the necessary what, why, how, how many and how much questions regarding mobile marketing. This article reviews one of these studies.

Due to the embryonic stage of the industry, most studies are qualitative in nature. These studies attempt to identify prevailing theory and to develop theoretical frameworks and definitions that can be used to help understand the Mobile Channel. They also search to find appropriate strategies and tactics to use it effectively. Many of the latest works have focused on the mobile value chain and ecosystem, integrated marketing, wireless advertising, location based services, permission marketing and best practices to name a few. There have been fewer empirical quantitative studies, but those that have been published have helped our understanding of the Mobile Channel significantly. One such empirical study comes from the February 2005 issue of the Journal of Service Research titled “Mobilizing the Brand, The Effects of Mobile Service on Brand Relationship and Main Channel Use,” by HerbjØrn Nysveen, Per Pedersen, Helge ThorbjØrnsen, and Pierre Berthon. This study is especially timely, given that brands are presently struggling with a difficult challenge, their target customers are becoming harder and harder to reach, due to, among other things, the fragmenting of market segments and the general decline of advertising effectiveness in traditional media (TV, radio, newspaper, magazine, and related print).

The authors of this mobile branding study analyzed three Norwegian brands that are currently employing mobile services, and set out to determine if the brand’s use of the Mobile Channel through SMS and MMS initiatives has had an effect on customer brand satisfaction, consumer response, business competitiveness, and increased use of the brand’s traditional marketing channels. The three businesses include FINN, Norway’s largest newspaper and Internet classified service; TV2, a TV Broadcasting company; and Big Brother, a reality TV show airing on TV-Norge. Norway is one of the most mature mobile markets in the world, with penetration rates exceeding 100% (RCR News 2005). Despite the fact that the Norwegian and U.S. markets differ in mobile maturity, the conclusions of the Norwegian study are extremely valuable and it is important that U.S. brands understand their findings. U.S. consumers may not have as much experience with mobile value added services as their Norwegian counterparts, but they are not far behind. Mobile adoption rates in the U.S. are rising quickly. In the last six years the United States has seen a 56% increase in the adoption of mobile phone services, and a 1000% increase in SMS usage in the last two years. Today there are nearly 194 million mobile subscribers (CTIA 2005), roughly 66% of the population (US Census Bureau 2005). With US consumers adopting mobile phone services, brands need to learn from successful mobile markets like Norway.

After conducting and analyzing the results of online surveys promoted on each of the Norwegian brands’ web sites the authors’ research concludes that users of mobile services demonstrate greater brand satisfaction, loyalty, and participation in traditional marketing channels. They show that the mobile channel is an important complement to the brand’s marketing mix and overall competitiveness. The authors’ overall conclusion is that the addition of permission based SMS services to a brand’s existing marketing strategy in traditional media channels enables brands to maintain an on-going relationship with the customer, and gave the brand the opportunity to become an important part of the customer’s daily lives. They also infer that brands can expect higher customer response rates, and more repeat purchases on existing marketing channels (e.g. Internet) from their SMS services users vs. non-SMS services users.

Another important conclusion of this study is that the Mobile Channel has not yet established itself as a standalone channel, and is early in its growth potential. Nysveen and his collegues note that in this early stage, the Mobile Channel lacks the ability to deliver the complete range of services and messages from brands due to “limited bandwidth, media paucity, lack of standardization, and so on...” (Nysveen et al. 2005). As is supported by their findings, the authors go on to discuss that presently the Mobile Channel is best used as an additional component to traditional media channels such as TV, radio, newspapers, Internet, email, magazines, etc. By using the Mobile Channel in this way, brands can expect to generate greater value from their customers.

The Nysveen, Pedersen, ThorbjØrnsen and Berthon study has made a significant contribution to our understanding of the mobile channel, and highlighted key beneficial effects brands can reap from integrating it into their over all marketing mix. The mobile phenomenon is growing and exerting significant influence on business, government, and society at large. It is a field of study worthy of additional attention, especially as the Mobile Channel matures with the convergence of technology, content, and standards. It is important that brands realize the importance of the emerging mobile channel, and start incorporating mobile offerings and services into their strategies in order to secure their long-term success.

References

CITA. (2005, 10/Sept.). CTIA - The Wireless Association. Retrieved 9/10/05, from http://www.cita.org.

Mintel. (2005, May). The Consumer. In Mobile Phones - US. Mintel Reports.

Nysveen, H., Pedersen, P., Thorbjornsen, H., & Berthon, P. (2005, February). Mobilizing the Brand. Journal of Service Research, 7(3).

RCR News. (2005, August). Global Penetration Rates. RCR News. Retrieved 9/10/05, from http://www.rcrnews.com/docs/random/globalpene05.pdf.

US Census Bureau. (2005, 10/Sept.). Census Bureau Home Page. Retrieved 9/10/05, from http://www.census.gov/.

*****

This is the first in what is intended to become a monthly column dedicated to identifying and

discussing the latest trends in research pertinent to the mobile space. Please direct your

questions, comments, and suggestions for future topics to [email protected].