Three Challenges in Mobile Commerce

In mobile commerce, there are three hurdles that must be overcome before a customer makes a purchase. The first is challenge is, how do we attract customers? Some people may think that there will automatically be customers waiting on line once a Web site secures a spot on an operator’s official mobile portal, but in reality this takes a lot of work. Except for some unusual circumstances, such as an introduction made via major news publications every Monday, customers will not come without some advertising.

The second of hurdle is the problem posed by small screens and the constrained input interface of mobile phones, i.e, typing on a tiny keypad. In other words, a customer may not be able to put his or her hands on the desired merchandise because of the difficulty of typing.

Yet mixing various media may be the key to bringing the customer to the purchase – a point to be covered later in this presentation. And finally, some customers may give up before making a purchase because of the complicated process of typing personal information on a cellular phone. To get around these challenges, one needs to take a look at possible solutions.

Attracting users

One way to attract users is through the “In-Shop” method. The idea here is to build a shop on the Web site that already has its own customers. For example, Cybird developed a Web site dedicated to surfers called “The Wave Legend”, which already has a membership of 100,000 people. Building a shop on that Web site, then, would mean that the shop could also potentially have 100,000 members.

Finding the desired merchandise

There are some obvious differences between mobile commerce and e-commerce. To compare, let’s take Amazon.com as an example of an e-commerce Web site:

(1) Any book can be purchased from the collection of 3 million books.

(2) Desired merchandise can be found through a search engine.

(3) Friendly recommendations increase customer willingness to make purchases.

One must remember that there are assumed conditions that set this PC-based case apart from your standard mobile experience, such as a rich media environment and easy operation using a keyboard associated with PCs. By contrast, the mobile platform, for the moment, can only carry limited merchandise and offers little search functionality for merchandise. It is very important for mobile commerce to bring the customer to the merchandise without requiring a complicated input or typing procedure. E-commerce is a closed world where the customer can be brought to the merchandise via the virtual environment on the screen. In the case of mobile commerce, however, we can identify two main strategies: one is a media mix that is “Complete-on-Screen.” The other is “Click-and-Mortar.”

Simplifying Profile Input

One way to solve the problem of inputting profiles is to provide personal information to the corresponding Web sites through a profile database. With this method, the user would register his or her personal information just one time, and only need to type in his or her user ID from that point on. It is also possible to standardize this profile database so it is available to everyone.

What is Media-Mix?

CYBIRD defines the media mix strategy as “arousing buying behavior through a combination of mobile commerce and various media (newspaper, television, radio, magazines, e-mail, etc.)”. This may not be the most accurate definition, but is useful for purposes of explanation. As mentioned before, there are two types of media mix strategies: “Click-and-Mortar” and “Complete-on-Screen”.

Characteristics of Mobile Products and Merchandise

Mobile has two characteristics: one is active and the other is passive. Mobile’s active characteristic is that it can instantly arouse buying behavior. Its passive characteristic is the hardware aspect – i.e., the small screen and unsophisticated typing interface, etc– Merchandise can be generally characterized into two categories: information appealing to logic and information appealing to senses. The logical or factual information refers to the kind of information that can be understood through words and numbers, such as information on books and CD’s. Information that stimulates the senses or physical information refers to the kind of information that can only be understood through actual touching, or perhaps even through actual use of the merchandise, such as information on automobiles and clothing.

Active characteristic of mobile

One characteristic of the cellular phone is that it is carried everywhere. Another characteristic is that it is the ultimate personal tool with a constant connection to the Internet. Based on these characteristics, the active characteristic of mobile can be said to be the timely manner the services are used in and its immediate connection to buying action.

Passive characteristics of mobile

There are two major characteristics of mobile: one involves output and the other input. Mobile’s output-related characteristics include the small screen, limited color display, and low resolving power, all which tend to lead to insufficient information. One of the agendas with mobile commerce is to calculate how it can compensate for this insufficient information. Mobile’s input-related characteristics include typing difficulty due to the lack of a large keyboard. Consequently, simplifying the typing process becomes important.

Defining the characteristics of purchases according merchandise type

It is possible to identify various types of merchandise according to their physical information and factual information and thus put them into three categories. The first category is the “Complete-on-Screen” type. This segment has little physical information and emphasizes factual information. There is basically no need to actually see or feel the merchandise, and so this is a kind of merchandise lends itself to being purchased by the user directly from their mobile screen. More specifically, these can be financial products, books, CD’s, travel products, tickets for events, etc.

The second category is the Complete-on-Screen type of media mix. This type emphasizes physical information and has little factual information. This category includes clothing, accessories, gifts, and toys. It also overlaps with the kind of merchandise found in mail order catalogs. This kind of physical, information-oriented merchandise can be purchased by looking at the merchandise via media such as catalogs and magazines.

The last category is the Click-and-Mortar type of media mix. This type emphasizes both physical information and factual information, and the user will not make a purchase unless he or she has had the chance to see and feel the merchandise, as well as to examine the cost and value and other relevant factual aspects. This is a kind of purchasing pattern, in which the customer is first aroused and then is led to make a purchase. For example, the user may select the “Phone to” number on their handset screen that dials a representative and enables them to find out more about the merchandise, and after looking at the merchandise in a magazine or other media, will then make the purchase.

Rating the effectiveness of media mix

Informational characteristics of mobile, mass media, and the PC platforms

Let us now think about the informational characteristics of mobile, the mass media, and PCs, and about the relative influence of these forces. In impulsive buying, there is a strong visual influence. This is because the visual effect makes the customer think “I want it” the minute he or she sees the merchandise. A search function means that we can put a whole line-up of merchandise in front of the customer. The capacity for immediate action arouses the actual purchasing action; information reach helps cover more people; richness of information enhances the customer’s sense of trust; and personalized information builds the motivation behind the purchase.

The comparison of these elements in terms of the mobile, print media, and PC platforms. You can see that while mobile has poor visual and search functions, it is particularly excellent in terms of capacity for immediate action and personalized information. Mobile reaches an ultimate level in terms of personalized information, since almost everyone has one cellular phone. On the other hand, among the various media, newspapers and magazines have the richest visual information, and television probably has double the visual effect. The various media are superior in terms of information reach as well. Radio is superior in terms of information reach and outdoor advertising. PCs have a lot of strengths overall, but is not strong in terms of its capacity for immediate action. In drawing up a media-mix strategy containing all of these elements, we can sort the elements out as follows: mobile+newspaper/magazine (paper media)＝Complete-on-Screen Type; mobile+television (the image medium)＝Click-and-Mortar Type; and mobile+outdoor advertising＝Localized Click-and-Mortar Type.

The complementary effect of mobile and the various media

The various print media generally have rich visual effect and information and great information reach. With mobile commerce, a customer can instantly move to a buying action and receive personalized information. A disadvantage with the various print media is that there is ultimately a gap somewhere between reading the information and the actual buying action. The disadvantages of mobile commerce include the visual problems and typing. Based on these analyses, we can conclude that the best strategy for shifting consumer behavior from “Emotion” to “Motion” is a mobile media mix strategy that combines the advantages of mobile with the advantages of the various media.

CYBIRD Case Studies

The above matrix, which combines physical information with factual information, has been applied to CYBIRD clients. Travel agencies and Convenience stores we have supported are Click-and-Mortar types of media mix. A large-scale mail order club represents a Complete-on-Screen variety of media mix.

Convenience Store Client

One of our clients is a well-known convenience store, which launched web-based service in February 2001. It has 430,000 members, and the service is a mix of postcards, electronic commerce, and mobile. The first thing Cybird did was launch a diverse marketing campaign that built membership through posters in the shops, brochures, pamphlets, a LC screen for POS registers, and background music (BGM). The membership consequently picked up very quickly.

Other campaigns included concert campaigns of ELT, a popular artist, which was apparently very effective in increasing new membership. Because a great number of new memberships were young people, we pushed mail to these members about how to make reservations for Hikaru Utada and Ayumi Hamazaki CDs, and we found this to be highly effective. We also offered a ticket reservation service on the convenience store website, as part of a concert campaign for the popular rap group Dragon Ash. This seemed to lead to increasing new memberships as well. The campaign was launched on both i-mode and PC-based home pages, and the utility factor was 7 to 3, respectively. There is a difference in the absolute customer numbers for i-mode and PC home pages, and so the utility factor of i-mode was probably even higher than this.

This convenience store’s media-mix strategy is to pursue a click & mortar method. When an application is made via a mobile or e-commerce site, the merchandise is received at the shop nearest to the customer. In this way, the Web site and existing shop are made not to compete against each other but rather to work in harmony together. This is a strategy that is highly compatible with this convenience chain’s “EC Franchise System.”

The media-mix method described here works through initiating membership registration through background music-based promotions and brochures in the shops, and then through informational magazines such as “PIA” and television commercials. Second, a customer places orders via the convenience store Web site, and then receives the merchandise at a registered branch of the convenience chain. An obvious effect is that having the members visit the shops arouses additional purchase impulse. The convenience store also pushes email to customers to provide special sales and promotional information

Case Study: Travel Agency

The travel agency commerce site we supported provides information on travel merchandise and was launched in April 2001. First, the Web site is composed of reading contents such as columns and fresh information from foreign correspondents. Second, it has a search menu for discount air tickets and package tours. Lastly, the Web site is made up of a menu of push-type content, including a travel information mail magazine and ticket information that offers discount rates for tours left over due to cancellations.

The flow of mobile commerce using the advertising term AIDMA + R works by drawing the customer’s attention through marketing via “AB Road” and other magazines. The customer’s interest is aroused as the customer confirms more detailed information via the mobile phone. The customer’s desire and motive is covered as the customer calls the “Phone to” number and talks to a sales person, if necessary. Customer action is encouraged as the customer confirms the map of the shop on the mobile phone screen, and then confirms and purchases the merchandise at the shop. For customer reaction, information can be delivered via mail magazines, arousing further purchase impulses. To apply AIDMAR to a conventional advertising process, there is necessarily a gap somewhere between attention and interest. With the “Click-and-Mortar” type of media mix, where the gap lies somewhere between the customers’ interest and their motive, the bridge is the mobile platform. This is the kind of system that brings the customer to the shop in a seamless manner, and this is where we can identify the strength of mobile commerce.

Mail Order Club

Another interesting case is a major mail order retailer that provides an example of the “Complete-on-Screen” type of media mix. This company already has several hundred-thousand members, and by combining the Web and i-mode, the mobile platform’s function becomes taking the order for merchandise. Its mail order catalog has an order number for each piece of merchandise. Purchases can be made by inputting the order number on the Web site. This is an advantage in that a customer can make a purchase the minute he or she feels the urge. Moreover, since the inventory can be checked on the Web site, there won’t be a situation where the customer receives a “no inventory” notification several days after the order is mailed out, like what can happen with existing order-by-postcard systems. This should translate into fewer lost opportunities for customer purchases. This shows how a cellular phone can be effective as an ordering terminal. The mail order vendor tries to arouse purchasing by issuing special direct mailings to its members.

Conclusion

Cybird offers planning/development/application services for mobile contents and mobile commerce. In terms of planning, Cybird offers comprehensive services ranging from mobile consulting and planning, to assisting and evaluating/giving feedback on business operations. In terms of developing, the company provides design system services to build stable management. In terms of application, the company offers system management/supervision services, communication carrier/user response, data maintenance, customer service response, informational report, etc. Because new mobile terminals tend to emerge in rapid succession, Cybird carefully monitors new terminal releases.

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