Get ready for mobile commerce

By Suluh Tripambudi Rahardjo

Over the next three or four years, (telecom companies in Europe) will invest more than US$300 billion bringing together the two hottest technologies of the moment: the mobile telephone and the Internet...

The Economist, October 2000

JAKARTA (JP): The wireless revolution (WAP, i-mode, GPRS, 3G) is being considered a more fundamental change in the way we do business than yesterday's Internet.

Mobile phones and all handheld devices are the primary gadgets for a customer-driven business revolution. And mobile data service is coming to be a new promising business opportunity.

Analysts say people will use their mobile phones more for gathering data than for chatting in the next three to five years. Users will not only need information services but also 24/7 transaction capabilities.

They want to be able to shop, make payments and do all sorts of business whenever and wherever they want.

Mobile Commerce (m-commerce) then becomes a new keyword. M- commerce is about customers paying for contents and services.

From getting the latest in soccer news in Europe, playing with manga cartoons in Japan, doing stock transactions in US to recharging prepaid accounts in Indonesia.

Operators in this new business can charge for contents and services in their monthly bill (e.g. NTT DoCoMo).

Or when collaborating with banks or other financial institutions, mobile phones can be used as a "wallet" to buy soft drinks, parking or cinema tickets, or recharge prepaid accounts.

However, questions still abound.

Do m-commerce and the activities around it represent a true business transformation?

Which business strategies and telecom firms are creating lasting value and customer satisfaction? Are there really any new rules? What are the best practices?

Douglas Lamont in his book, Conquering the Wireless World (2001), suggests a new marketing concept within the wireless Internet industry.

First, the marketers must teach themselves and their customers how to use mobile phones for m-commerce (and wireless Internet) purposes, as operators (and content providers) introduce mobile data services (WAP to 3G-based).

Second, marketers should adjust their new 4Ps (product, price, promotion and place) marketing strategy as they watch how customers actually use miniature information appliances to enhance their lifestyles.

Finally, marketers should put together a new marketing organization in which providers become members of an open-ended wireless alliance.

Combined with traditional financial rules from the venture capital market, Prof. Lamont ensures the marketers will gain profit from m-commerce.

But how? Of course, it is not easy. From the marketing point of view, it needs value creation and value delivery tasks.

The value creation consists of product marketing, promotion marketing and price marketing. While, value delivery task includes segmentation, targeting and positioning.

Product marketing

Together with incoming sophisticated mobile phones (GPRS handsets), the marketers will introduce unique interactive contents to m-commerce customers.

The customers see the end result as miniature information appliances that incorporate location awareness, voice and data communications, and transaction capabilities.

Then, introduction of new 3G-based mobile phones permits customers to transmit voice and data communications, and complete and secure m-commerce transactions quickly.

It is recommended to upgrade the contents/services on a continuous basis, to capture the network economies of the wireless Internet.

Promotion marketing

The objective of this activity is to create or promote new market space that provides customers with value-added intangible product attributes.

Let's see the alliance of NTT DoCoMo - AOL Japan. Marketers pushed DoCoMo's i-mode service and AOL's "Buddies List" throughout Japan, and later into the whole world.

Within three to five years, the users will be of sufficient size to pull that alliance of connections and contents through the alternative channel of distribution now known as the wireless Internet. Eventually, it will replace the current wired Internet.

It is recommended to put together an entrepreneurial network that includes all players: operators, content providers, various service providers and infrastructure providers. Then, grow to capture the scale economies of the wireless Internet.

Price marketing

Marketers offer both commodity and higher value-added prices as marketing managers divide m-commerce customers into those who do virtually everything online and those who prefer personal services from operators, contents and financial service providers.

The more personal they get, the higher the fees one has to pay.

Marketers should organize viable value propositions around price transparency. Combining various contents and services with affordable technology, in the right industry and target market is needed to capture scope economies for the wireless Internet.

Segmentation

Basically, segmentation is a strategy to understand the market structure (Rhenald Khasali, Membidik Pasar Indonesia, 1998). Marketers can do it using different approaches: demographic, psychographic, cohort, or technographic approach.

The main objective is to get comprehensive customers' data, including more focused information on values and lifestyles, and then translate them into marketing knowledge about customers.

The marketers should realize that the customers do take functional, tangible product attributes for granted.

They understand that all providers will match prices and quality. So, dazzle customers with information that stimulates their interest in improved lifestyles. It will work!

Targeting

The customers desire intangible product attributes. Marketers must use all their promotional methods to convince customers that they will enjoy their wireless Internet's experiences.

So, provide customers with new kinds of experiences that can be delivered on a timely basis.

That can be done through mixing and matching customers' marketing knowledge (from segmentation task) and translating them into knowledge about the experiences of target groups.

For example, marketers will understand that "Supli" teenagers in Japan are girls who drink near-water and want manga cartoons on their i-mode mobile phones.

Positioning

The main objective of positioning is to win customers' mind share.

So, the marketers must do a real option analysis of alternative m-commerce investment and decide which to pursue, postpone or terminate. Then, translate these results into knowledge about actionable positioning.

Marketers must use all their managerial skills of risk analysis, financial skills of investment analysis, and marketing skills of 4Ps strategy analysis to convince customers they will enjoy the wireless Internet's lifestyles.

The price does matter here. So, provide them with, on a timely basis, new experiences at an attractive, value-based cost.

Closing

Besides the above structured marketing method, every marketer must always remember that any successful venture has more to do with execution than brilliant vision.

They should use m-commerce technology to create value that is consistent with the core goals of the corporation and the national aspiration of the home country. This is how marketers can create and deliver value in the new wireless world.

Financial Times in its Dec. 12, 1999 edition wrote: The battle lines are drawn and the big guns are moving into position. Over the next few years ... the mobile commerce winners and losers will be decided.