Driving factors for Adoption of Mobile Commerce Services by young adults

By: Lila Rajabion Ph.D in Management

of Information technology

Prince Mohammad Bin Fahd University

February 18th, 2009

Agenda

Introduction to Mobile Commerce Mobile Commerce Overview Research problem & objectives Literature review Theoretical model Methods Findings Analysis Recommendations Q & A

THE M-COMMERCE ALTERNATIVE

Nowadays the mobile phone - on its own or in conjunction with third party applications is used for much more than simply making phone calls. It also acts as a flexible terminal for a huge range of applications (financial or otherwise).

So the availability of information (weather forecasts, economic data, and news), e-shopping, e-ticketing, e-banking, e-brokerage and e-learning is greater than ever before, regardless of time or place. The WAP (Wireless Application Protocol) and WML (Wireless Markup Language) open standards mean the Internet's innovative solution strategies can now be applied to mobile telephony too.

Definition

Mobile commerce (M-commerce) is a type of e-commerce conducted through mobile devices such as mobile phones, personal digital assistants (PDAs) and other devices with a wireless connection. It is quite different from traditional of E-commerce.

What is M-Commerce?

M-commerce is the buying and selling of goods and services through wireless handheld devices.

M-Commerce is the process of paying for services using a mobile phone or personal organizer.

M-Commerce is the use of mobile devices to communicate, inform transact and entertain using text and data via a connection to public and private networks.

M-commerce benefit

Your Internet offerings are easier and more convenient to access. 

You get considerable flexibility while conducting business. 

Transaction and personnel costs are reduced due to widespread automation of  back-office operations. 

 For a small business could benefit from m-commerce.

Selling a product or service Improving productivity Offers many payment options Push advertising, direct marketing More efficient and extensive service offered. The Internet is going mobile

Disadvantage

Expensive cost Larger screens won’t be displayed is clear Slow speed Limited for longer message Security is not protected

Drivers of M Commerce Growth

1. Tremendous growth in telecom and consumer banking Industry.

2. Efficient transfer of data over 2.5G and 3G networks.

3. The evolution of the handheld devices incorporating WAP and now GPRS.

4. Cost of entry into mobile commerce is low for most entrants.

5. The unique features of the mobile device are user friendly and customers have been attached to mobile interfaces

6. Attracting players from all economic sectors from technology, finance, retail, media; all anticipating significant growth in m-commerce.

M Commerce

Banking services are the essence of M Commerce.

Telecom services are more accessible than banking services in emerging markets.

M Commerce

Transfer of Funds to Emerging Markets has shown a steep positive trend

FDI: Foreign Direct Investment

ODA: Official Development Assistance

Online problems?

small businesses 68% trust

newspapers and television news 58% trust

financial companies such as banks, insurance companies and stockbrokers 55% trust

charities and other nonprofit organizations 54% trust

federal government 47% trust at least most of the time

Mobile Commerce is mostly applied in

1. Mobile Banking

2. Mobile Brokerage

3. Mobile Purchase

4. Mobile Marketing

5. Mobile Parking Meters

1. Ticketing (Events, facilities, transportation e.g. , O2 UK & Ticketmaster )

2. Coupons/Vouchers (Gift vouchers, discounts, meal plans. e.g. Sainsbury Europe &

Mac Donald in Pakistan)

3. Mass Transit (Buses, airlines, subway e.g. Telia, Tele2, Telenor in Sweden/

Mobile ticketing )

4. Loyalty Cards (Air miles, Usage, Mobilink Pakistan

Source :http://www.mobilegolive.com/casestudies.htm, http://www.thelightagency.com/what4.html, www.mobilink.com, http://www.plusdial.fi/index.php?tid=59

Cash Deposits/ Withdrawals (Consumer Banking e.g. Warid Pakistan)

Remittance (International/ Local transfer of money, ‘smart padala’ / Philippines)

Account Balance (Balance Inquiry, Mini statement, Warid saudiarabia

Cash management / Credit transfer (P2P transfer of money, Warid/ Pakistan, M Pesa/ Saudi Arabia )

Credit Card/ Debit Card (Cash Transactions, Credit card charge notification through SMS, Saudi Arabia)

Monthly Payments/ Employee Payroll (Subscription/ recurring Payments, Warid Pakistan, M Pesa/ Safaricom)

1. Trading (Investments, quotes, statements, e.g. Info services)

2. Stock and Shares (Investments, quotes, statements, e.g. Stock market )

1. Retail of low price products (Groceries, Tickets etc, e.g. McDonalds & Warid - SMS based purchases)

2. Mobile phone applications (Ring tones, Wallpapers etc,.)

3. Delivery Service (Gifts, food and beverages, groceries)

4. Parking meters/ coupons 5. Traffic Tickets

• Deducting from subscriber’s calling credit.

• Registration of a credit card that is linked to a SIM card.

• Additional innovative methods can be introduced depending on the market

Technology

Short message service(SMS) Wireless application protocol (WAP) Bluetooth General Packet Radio Service(GPRS)

Strategic Areas of Mobile Commerce Development

MobileCommerceStrategies

International

Info Resources

R&D

ManpowerInternetTelecom

Infrastructure

ConsumerProtection

Privacy Law

E-transactionLaw

Payment Standard Issues

Authorizationand Certification

Research Objectives & questions

The objective of this study is to propose a demand model for the m-commerce, in addition to examining driving factors for adaptation of the m-commerce from young consumers perspectives. This paper explores young people’s motivations for using mobile phones. The main question that is being addressed by the study is, “what are the main driving factors that influence young adults in their decision to adopt mobile-commerce services?

A theoretical framework is necessary in order to address this research question

Theoretical framework

1st construct in the model is Technophobia relates to an individual’s unease with or unwillingness to

use technology and technologically-based product and services.

2nd construct in the model is Mental Intangibilitywhich represents the lack of clarity in one’s mind that an

individual has of an item or concept. 3rd construct in this model is Impulse Buying

Tendency. IBT has been defined as “the degree to which an individual

is likely to make unintended, immediate, and unreflective purchases (i.e., impulse purchases)

The final two constructs in the model are Trust and intention Specifically, trust relates the degree to which the customer trusts m-commerce services and intentions simply are whether or not the customer believes he/she will participate in an m-commerce transaction in the future.

Literature review on M-commerce adoption factors

22

Integrated concepts from Diffusion, adoption, uses and gratification and domestication research in order to come up with a better view and understanding of the issue. On the other hand integrated and extended the concepts of TAM using concepts from the theory of consumer choice and decision making from economics and marketing research to come up with a value-based understanding of the issue.

Literature Review

23

It is important to note the fact that empirical research in m-commerce tends to be country, sample, context, and service dependent. Each of these factors produces different set of results. For example, investigating the adoption of mobile Internet among professionals might yield a different set of conclusions compared to a group of teenagers.

Cross-cultural studies of m-commerce usage are, relatively rare; perhaps not surprising given the relative youth of this market. There have, however, been a number of cross-cultural studies into adoption of IT applications

Corritore’s Model

Credibility

Ease of Use

Risk

External Factors Trust

Perception of:

Conceptual Model

Relationship between doing E-Commerce and increasing trust of people

Literature Review

26

A comparison of critical success factors governing mobile communications diffusion in Germany and India, Fraunholz and Unnithan [2004] find significant differences between the two countries, though these are examined in terms of economic and infrastructural, not cultural, factors. Carlson et al. [1999] examine mobile phone adoption in France and the United States, and attribute the significant differences found to cultural differences.

Henten et al. [2003] compare the developments of mobile services in Europe, Japan and South Korea and suggest technology, economy, market development and structure, marketing, socio-cultural elements, and policy intervention and regulation as the factors of explanation

Research Methodology

Content review : Theoretical models, literature on Mobile commerce , trust and other relevent studies

Students interview Survey

 

Research Methodology

In order to collect the data necessary to answer the main research question, a questionnaire was developed

Consisted of three major sections. The first section collected basic demographic information about the respondents. The second section of the questionnaire measured E-Privacy Concerns and the outcome of a serious problem the respondent had suffered with using m-commerce services and transactions.

The final section of the questionnaire measured the psychological variables Mental Intangibility, Trusting Disposition, M-Commerce Trust, Technophobia, Intentions, and Impulse Buying Tendency. Each of the scales used to measure the psychological constructs, or variables, had been previously developed, tested, and validated in prior studies.

 

Sample Size

The target sample was 150 young adult (18-30) mobile phone users in Saudi Arabia and Iran. Young adults were selected to create a cohesive m-commerce culti-unit in each country, and because consumers under 30 have been found to be faster adopters of mobile services in general [Lee et al. 2002].

200 questionnaires were distributed in Saudi Arabia and Iran using the convenience sampling method. 80 and 95 questionnaires were collected in Iran and Saudi Arabia respectively.

 

Respondents were asked to rate the importance of a range of factors influencing their decision to adopt a new m-commerce service using a five-point scale where 1 "very unimportant" and 5 "very important".

Series of questions regarding to 5 categories were asked .

Research Findings

Research Findings

 

The adoption rates of communication services are the highest of the four categories in both Saudi Arabia and Iran Adoption rates for transaction services are slightly higher in the Saudi Arabia.

Adoption rate for information services are slightly higher in Saudi Arabia

Iranaian young adult in general show a higher propensity to adopt the entertainment services rather than the transaction and information services.

Research findings

Research Findings

Research Findings

  We did not find significant differences between the Saudi Arabia and Iran in identifying important factors influcenring adaptation and usage of m-commerce services

We find that in Iran usage of SMS services are a little bit higher than in Saudi Arabia . However, in terms of browsing the mobile internet are significantly low in both countries and it might be related to the factors related to infarastucture , availability of services and cost of the service. Further research is required to disentangle the effect of these factors.

Research Findings

For the consumer personal demographic characteristics, Chang (2000) found that gender, monthly allowance, and the education level are significantly impacted by consumers’ attitudes toward the m-commerce services.

Our data also measured these characteristics and it was found that females and males do not differ in terms of their concerns about E-Privacy.

Research Findings

In terms of E-privacy , it was found that Iranians are less concerned about the privacy and does not think it has a great impact on adaptation of m-commerce .

The highest mean from all these factors was the trust factor, which respondent from both countries viewed as an important influence on adoption and usage of m-commerce services.

Limitation and future research

In both Iran and the Saudi Arabia students constituted a significant part of the sample; while students are likely to be enthusiastic adopters of m-commerce, their relatively low income may influence the nature of the services which they adopt.

The numbers of respondents adopting some m-commerce services was extremely small and this precluded much statistical analysis. Larger samples in both culti-units would have been helpful in overcoming this problem

Conclusions and recommendations for future research

This study proposes a framework that helps to understand how key determinants impact consumers’ usage for the mobile commerce services.

The framework, as shown in Figure 4, is consisted with several different predicator variables: (a) technophobia, (b) E-privacy , (c) Trust (d) impulsive buying e) mental intangibility . These predicator variables are domain variables which directly impact consumers’ perspectives on intention to use, and adopt mobile commerce.

Conclusions and recommendations for future research

For the future interested studies, the present study provides a model to indicate relationships among all key variables. Some new variables, such as content richness and real-time reach, content creditability, and social influence , technological requirement that have not been examined by previous studies, can provide new directions for interested studies.

For greater insights, interested researchers from different countries should work together on validating and modifying existing and new models in their respective cultures. Such comparative studies would highly help and develop the research area as well as assist national and multinational corporations in the market to better customize their efforts and strategies.

ECONOMIC IMPACT

PROMOTING AND ENCOURAGING A

CASHLESS SOCIETY

• Over 80% of cash outside

the banking

sector

PROVIDING A SECURE AND COST EFFECTIVE MEANS OF PAYMENT

TRANSACTIONS

• Current payment systems does not provide adequate

security• The risk of cash

transactions• Expensive and out

of reach for most of our people

•

And convenience

of making those

payments • Remove the inconvenience

associated with current payment

mode by providing

alternative but integrated channels

Conclusions & recommendations for future research

Final Thoughts 41

The M-COMMERCE of today MUST carry the following

features:

It must be Secure It must be convenient It must be cost effective it must be Quicker and easier delivery It must Drives economic system towards cashless environment It must work for Low value transactions (example < $ 10) It must work with High transaction volumes It must be user friendly for users who have phobia of using the

Technology

Thank You

THANK YOU