literature review on growth of mcommerce
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LITERATURE REVIEW
MCOMMERCE: RE-DEFINING THE CONCEPT OF PLACE
AND PROMOTION IN THE MARKETING MIX
Expectedly, todays world has moved from a person-to-person
exchange of value to a person via media to person exchange.
And more than anything, at the helm of this transformation are
the advancements in information and communication
technology, which have clearly changed the face of interactions
(Okafor, 2012). Increasingly since the turn of the millennium,
the new media of communication, especially mobile has
continued to grow in relevance across all facets of social,
economic, political, cultural, and religious life. According to
Castells (2004), the mobile and some other related
technologies which come under the category of new media,
the Internet, specifically, Web 2.0, has had its influence spread
to virtually all aspects of human endeavour, including
marketing for the purposes of this study (Castells, 2004).
The use of the new media of communication, especially mobile
for several purposes has been studied by a number of scholars
who have been interested in its reach, and importantly, the
effects of its usage, whether as a communication tool (Binuyo,
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2011) or as an information-gathering tool (Flew, 2002;
Koltringer, 2009), or for academic research (Jagboro, 2003), or
for the purpose of creating and existing in a virtual reality
(Kaplan and Michael, 2010).
As a tool for communication, the spread of web and new media
of communication, especially mobile applications (popularly on
the Web 2.0 platform) has transcended person-to-person
communication to include interactions between individuals,
between companies, companies and individuals, and between
consumers and businesses (as explained in the C2C, B2B, and
B2C models), the latter being a function on interactivity
provided by Web 2.0 platforms (Spurgeon, 2005; Preston, 2011;
Dominick, 2009). Interesting to this study would be the
penultimate model (B2C). This is primarily because with the
business-to-consumer, the concept of marketing
communication comes into play a situation where the
company interacts with the consumer for the purpose of
promoting their offerings (goods and/or services) with the
ultimate aim of either providing information, inducing positive
affective, or effecting patronage (Ray, 1975).
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The rise of the new media of communication, especially mobile
as a communication medium (with an increased capacity for
persuasion, having all the qualities of television) has arguably
changed the complexion of not only news gathering and
disseminating, but also marketing communication. This has
even given rise to the concept of social media marketing, which
has been defined as integrated marketing communication
conducted over the new media of communication, especially
mobile, given that majority of people who get on social media
actually do so through their mobile phones (Kaplan and
Michael, 2010; Mangold and Faulds, 2009).
However, before one can actually assess the contributions of
new communication technology (mobile telephony) on the
marketing mix, there is first the need to properly understanding
the marketing paradigm.
The Marketing Mix
Kalyanam and McIntyre (2002) render that the marketing mix
and also its extension as the retailing mix are conceptions
that provide a standard lexis for the marketing community. At
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first the idea of a marketing mix was somewhat contentious.
Many competing classifications were proposed, from a mix of
just two elements (the offer and the tools) (Frey 1961), to
one with three elements (goods mix, distribution mix and
communication mix) (Kelly 1962) to one with 12 elements
(Borden, 1965). Ultimately, a 4Ps description of the marketing
mix became what today is one of the most standardized and
universally accepted aspects of the marketing landscape.
Professor E. Jerome McCarthy (1960), in his textbook Basic
Marketing: A Managerial Approach, first popularised this
particular grouping. The basis for the characterisation of the
marketing mix was the very much simpler marketing world of
the 1950s when TV was just taking the country by storm as the
new marketing medium. It was a time of the masses with
mass-marketing capitalizing on mass-communication to move
mass-production through mass-distribution and mass-retailing
to the swelling masses of the post-world-war-II middle-class.
Marketing mix can therefore be said to have originated from
the single P (price) of microeconomic theory (Chong, 2003).
McCarthy (1964) offered the marketing mix, often referred to
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as the 4Ps, as a means of translating marketing planning into
practice (Bennett, 1997).
Goi (2009) opines that the marketing mix is not a scientific
theory, but merely a theoretical charter that recognises three
basic decision making managers make in configuring their
offerings to suit consumers needs. The tools can be used to
develop both long-term strategies and short-term tactical
programmes (Palmer, 2004). The proportions in the marketing
mix can be altered in the same way and differ from the product
to product (Hodder Education, n.d). The marketing mix
management paradigm has dominated marketing thought,
research and practice (Grnroos, 1994), and as a creator of
differentiation (Van Waterschoot, n.d) since it was introduced
in 1940s. Kent (1986) refers to the 4Ps of the marketing mix as
the holy quadrupleof the marketing faithwritten in tablets
of stone. Marketing mix has been extremely influential in
informing the development of both marketing theory and
practise (Mller, 2006).
The main reasons the marketing mix is a powerful concept are:
It makes marketing seem easy to handle, allows the separation
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of marketing from other activities of the firm and the
delegation of marketing tasks to specialists; and - The
components of the marketing mix can change a firms
competitive position (Grnroos, 1994). The marketing mix
concept also has two important benefits. First, it is an important
tool used to enable one to see that the marketing managers
job is, in a large part, a matter of trading off the benefits of
ones competitive strengths in the marketing mix against the
benefits of others. The second benefit of the marketing mix is
that it helps to reveal another dimension of the marketing
managers job. All managers have to allocate available
resources among various demands, and the marketing
manager will in turn allocate these available resources among
the various competitive devices of the marketing mix. In doing
so, this will help to instil the marketing philosophy in the
organisation (Low and Tan, 1995).
Elements of the marketing mix: product, price, place
(distribution) and promotion, have been highlighted severally.
And while elements like product, price and promotion has been
largely documented, place which is concerned with the
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distribution of product from point of manufacture to point of
purchase may have been overlooked. It can be argued that
even if the best possible promotions are undertaken for a
product which meets consumers needs and is fittingly priced
for the said targeted consumers, if the product is not available
for purchase, then marketing would have failed, because
consumers needs will still not be met, which is the entire
purpose of marketing (Kotler, 2003).
MOBILE TELEPHONY IN THE MARKETING MIX
The relationship between the Mobile telephony and marketing
efforts cannot be underemphasized, especially since the world
is shifting to that platform. In a technological determinist
stance, Mangold and Faulds (2009) argue that the Mobile
telephony has significantly ushered in a new epoch in IMC
having heralded a switch in processes from traditional to new
media, in this case, mobile telephony. The impact of the
interactions among consumers in the social media space on the
development and execution of marketing activities and
strategies is illustrated by the following points:
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Mobile telephony has become a mass media vehicle for
consumer-sponsored communications. It is now the top-
choice media for consumers at work and the second most-
consulted media at home, in most urban areas in Nigeria,
especially with the advent of Internet-enabled phones and
most recently, the BlackBerry and other smartphone
products such as Android-enabled phones.
Consumers are turning away from the traditional sources
of advertising: radio, television, magazines, and
newspapers. Consumers also consistently demand more
control over their media consumption. They require on-
demand and immediate access to information at their own
convenience (Rashtchy et al., 2007; Vollmer & Precourt,
2008).
Consumers are turning more repeatedly to various mobile
telephony applications to conduct their information
searches and to make their purchasing decisions
(Lempert, 2006; Vollmer & Precourt, 2008).
The mobile telephone, and its applications such as social
media, is observed by consumers as a more reliable
source of information regarding products and services
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than corporate-sponsored communications transmitted via
the traditional elements of the promotion mix (Foux,
2006).
The number of global mobile phone owners in 2003 reached 1.3
billion (Kumar, 2004) with the highest rates of growth occurring
in China (Minomo and Masamura, 2004). According to the
Nielsen Media Research survey (Hong Kong mobile phone,
2006), the highest mobile phone penetration rate was found in
Hong Kong (96%), followed by South Korea (93%), the UK
(92%), Singapore (89%), and Australia (87%). The U.S. market
for mobile phones included 185 million users (Smith, 2005) and
was predicted to reach 75% of the population, or about 236
million users, by 2010 (Wallace, 2005); while in Nigeria, after
about 12 years of the introduction of the mobile phone, there
are almost as many subscribers as the 160 million Nigerians
alive (NCC, 2013).
The dramatic increase in mobile phone usage has produced a
new avenue for marketing applications and services (Tsang et
al., 2004). Pramis (2013) holds that currently, the number of
mobile phone users stands at about 6 billion, and that by 2014,
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there will more mobile phones than there are humans; while
the ITU (2013) gives the figures to stand at 6.8 billion. The
future of m-commerce has great potential as the mobile phone
market remains a great untapped marketing medium (Jackson,
2004).
Furthermore, the ITU (2013) posit that mobile-broadband
subscriptions have climbed from 268 million in 2007 to 2.1
billion in 2013. This reflects an average annual growth rate of
40%, making mobile broadband the most dynamic ICT market.
In developing countries, the number of mobile-broadband
subscriptions more than doubled from 2011 to 2013 (from 472
million to 1.16 billion) and surpassed those in developed
countries in 2013. Africa is the region with the highest growth
rates over the past three years and mobile-broadband
penetration has increased from 2% in 2010 to 11% in 2013.
Saidi (2008) argues that despite the fact that increased usage
of mobile phones and the rapid developments in mobile
communication technologies present a surge for m-commerce,
and while m-commerce has been implemented in many
countries in both the developed and developing world, it
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remains an unexploited area in some African countries, for a
number of reasons.
Mobile commerce (m-commerce) is the involvement of the
delivery of products and services via wireless technologies to
enable e-commerce activities at any time and location. (Yeo
and Huang, 2003). It consists of business and consumer
transactions that use mobile phones and can be recognized as
a complement to e-commerce (Kumar, 2004). The global m-
commerce revenues are expected to increase to 88 billion
dollars by 2009 (Mort and Drennan, 2004).
Obe and Balogun (2007) discuss mCommerce in the Nigerian
context. They associate the rise in the use of mobile phones as
being contributory to the growth and penetration of
mCommerce in the country, adding that with mCommerce, the
concept of distribution within the context of marketing has
changed considerably. They also make the argument that the
development of wireless Internet also served to reinforce the
implications that mobile telephony has had, and will continue to
have, on the development of communication and its correlated
activities including marketing.
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The mobile world opens up numerous possibilities beyond the
typical realm of communication activities (Gorlenko and
Merrick, 2003). Worldwide, mobile users are increasingly
accepting phones as multipurpose devices, which can be used
to send text messages, take pictures, surf the web, download
ring-tones, and play games (Smith, 2005). Some marketers are
starting to see the mobile phone as a potential marketing
medium and consequently are seeking ways to tap into this
burgeoning opportunity. For example, Samsung and Nokia have
provided digital video broadcast handheld (DVB-H) by mobile
phones which can deliver up to 50 TV channels (Colleen, 2007).
British Telecom sent Short Message Service (SMS) text
messages to their individual customers announcing a sale at a
specific store, which created a mad rush to the store (Swartz,
2001). AOL created a mobile search service that includes
yellow pages and a shopping search (AOL Rolls out New AOL
Mobile Search Services, 2005). McDonalds and Dunkin Donuts
have sent text message coupons to mobile users (Freedman,
2005). Various current applications for m-commerce include
ubiquitous communication (e.g. e-mail, short message service),
content deliveries (e.g. health-related to messages, pill
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reminders), entertainment services (e.g. music download,
gaming, gambling, sports scores), location-based services (e.g.,
finding nearby facilities/services, transportation information,
tour guides), movie and concert ticketing, sending store and
restaurant discount coupons, shipment tracking, comparison
shopping, banking, and payments (Palenchar, 2004; Xu and
Gutierrex, 2006; Yuan and Zhang, 2003).
One of the more popular categories of services currently under
heavy demand is location-based services (LBS), which relate
spatial and temporal information that describe moving objects
(Lee, 2007). It tracks the location information of moving objects
per time unit, stores them into databases, and handles users
queries based on the stored location information. For example,
by utilizing GPS capabilities, the LBS allows customers to find
optimal routes to their destinations. They can obtain detailed
maps and real-time alerts on traffic conditions, and information
about highway services like gas, food, and lodging. (Rao and
Minakakis, 2003). Other LBS examples include the E911
service, which allows for tracking the location of mobile users in
an emergency (Frenzel, 2006); and Dodgeball and Twitter,
social networking systems that send text messages to the
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mobile users about where their friends are located (DeJean,
2007; Gibbs, 2007). The value customer place on mobile
services would increase if customers could retrieve time and
location specific information (Mort and Drennan, 2004).
The increased use of mobile phones has increased the use of
advertisements, especially through short messaging services
(SMS). This has come to be known as mobile advertising (Tsang
et al., 2004). Procter & Gamble has made an agreement with
cell phone carriers such as Cingular, Verizon, Sprint, and T-
Mobile to market their products and develop marketing
campaigns for cell phones (Smith, 2005). Companies like Sony,
Disney, Coca-Cola, Heineken, and Ford are also beginning to
invest in mobile advertising (Kilby, 2006). They are hiring
mobile marketing partners to assist in promotion of their
products via mobile phones (Britvic plots expansion of mobile
marketing activity, 2006).
The mobile-assisted shopping application is another growing
area in m-commerce. Consumers can obtain marketing
information about different products and their relative costs via
their mobile phones in order to make informed decisions in real
time (Mort and Drennan, 2002). A report by the Japanese
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economy, trade, and industry ministry and ECOM found that m-
shopping is popular among young Japanese women and was
worth 5 billion in 2004, a 25% increase from 2003 (McCurry,
2006).
Mobile payment services promote m-shopping. For example,
mobile users can register their credit card numbers, and these
numbers are saved in their mobile phones to be used for
purchases (Phone me the money, 2003). In 2005, Mastercard
International announced that it would be providing its issuing
banks with the technology needed for payment enabled
phones, and Motorola conducted a pilot test using Mastercard-
enabled phones with its employees (Phone payments
advance, 2005). Various other mobile services include m-
learning, which uses the mobile phone to facilitate learning for
young adults and teens (Mobile phones switch young people
on to learning, 2003), and mobile banking, which allows
mobile users to make bank payments or withdrawals (Kumar,
2004). Oracle (2011) also agree. They state that The mobile
channel continues to grow as a connector of other sales
channels among all age groups in the U.S. Consumers are
starting to use their mobile devices to comparison shop, seek
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product ratings and reviews, and to search for coupons. There
are also indications that consumers are using their mobile
devices more frequently for shopping purposes while standing
in a physical store. 48 percent of consumers across all age
groups are using their mobile devices to research or browse
products and services. This is up from 37 percent in a
consumer benchmark survey commissioned by ATG in July
2010, and 27 percent in a consumer cross-channel survey
taken in November 2009. Mobile music services are also
increasing in popularity, as are single- and multi-player game
services (Srivastava, 2005).
Bigne, Ruiz and Sanz (2005) highlight the increasing
importance of mCommerce when they argue that the increased
mobile usage of recent years is a clear example of the systems
growth, significance and the opportunities it offers as an
independent sales channel and it therefore merits special
attention from researchers.
While published work on M-commerce applications and
technologies and the different mobile operators and their
services is becoming more abundant and representative
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(Barnes 2002, Buellingen and Woerter 2004; Coursaris and
Hassanein 2002; Dholakia and Dholakia 2004; Figge 2004;
Gerstheimer and Lupp 2004; Lehrer 2004; Leung and Antypas
2001; Kumar and Zahn 2003), there is a lack of literature on
the profile of users who buy products/services through the
different mobile operators and on the analysis of the factors
which most influence shopping behaviour and the processes of
adopting M-commerce (Coursaris and Hassanein, 2002; Luarn
and Lin, 2004; NG-Kruelle et al., 2002; Wu and Wang, 2004;
Yang, 2005). There is also a dearth of literature on the extent
to which this trend has spread in countries which have Internet
penetration concerns like Nigeria and other developing
countries; climes where issues such as scepticism and distrust.
The few that are available however state that with Nigeria for
instance, the major constraints include: economic conditions
such as the widespread poverty; low bandwidth and poor data
services available; carrier companies lack of interoperability;
people apathy and distrust for mCommerce; amongst others.
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