Mobile Marketing

Trends in Mobile Marketing and Data Mining

The number of mobile subscribers is predicted to rise up to four billion by 2018. (Moldave, 2013) With all of these new potential customers, online marketing is a growing necessity for businesses around the world and has continued to evolve as consumers change their shopping habits. Based on these ever-changing habits, new marketing opportunities have emerged, including mobile marketing. Shoppers today are on the go and checking prices on their smartphones as they shop and while retailers had frowned upon this practice in the past, they have now grown to see it as an opportunity to increase sales and profits. Many large companies are taking on mobile initiatives that are supplementing their typical marketing strategies and some have made mobile marketing the focal point of their marketing plan.

Email marketing boomed when online shopping was growing and the use of mobile devices has greatly enhanced this channel and has created a shift from email being purely an online marketing tool to a multichannel asset. Between 2010 and 2012 the email open rate has increased by 300%. (Moldave, 2013) But the newest, and more costly, wave of mobile marketing is through apps. There are apps that will compare prices, locate merchandise, save coupons, refill prescriptions and even scan a sales order before the customer even gets to the checkout line. These are marketing tools that have become part of doing business and succeeding, even for brick and mortar retailers.

According to numerous studies by Google and Deloitte "More than 40 percent of shoppers will use their mobile devices for holiday shopping this year, and almost 70 percent of all smartphone owners will shop for gifts from their iPhone or Android devices." (Somerville, 2013) With the holiday season being a central focus and imperative time for sales, it is no surprise that this is also the time when many new marketing strategies are released. It has been reported that some smartphone users check their phone up to 150 times a day and QR code use has increased by 300% from 2010 to 2011. (Moldave, 2013) These are the shoppers of the future and companies are working hard to keep up with the public's growing addiction to their mobile devices. The purpose of this paper is to explore the different marketing strategies that brick and mortar firms are using in the mobile marketing world and how consumers are reacting to those strategies.

Practical Applications

Walmart: This mega retailer has created their own app and Wanda Young, Vice President of Media and Digital Marketing at Walmart states "those who have our app are making twice as many trips to Walmart, and their spend is 40 percent more." (Johnson, 2013) Downloading the Walmart app was an indicator as to why consumers who have it are spending more; they get alerts to the best deals right on their smart phone. Walmart app users can also view ads, refill prescriptions, search walmart.com, locate the nearest store and scan items to see the current price at the store. The Wal-mart app also has an in-store mode where shoppers can use shopping lists that they create ahead of time and are guided to find their items easily in the store. Additionally, other relevant products are suggested to shoppers based on their shopping list and customers can scan their orders and keep a running tab for fast check out. (Burns, 2013) Walmart's in-store mode also helps the company as they are able to see what shoppers are buying regionally and they are able to offer deals that appeal to each specific market. (Johnson, 2013)

Walmart has also been one of the few companies to use augmented reality in their mobile marketing strategies, these efforts were focused on The Avengers and Spiderman movies. The functionality allowed customers to add their face on the characters body, or have players added to their games by using their mobile device at different areas throughout the store. Users were able to have fun while shopping and this resonated well with the consumers. (Mobile, 2012) Walmart has embraced the smartphone as a way of life for many shoppers. They have created tools for their customers to use and remained true to their typical marketing strategies as marched forward through the mobile world. The mobile marketing efforts of Walmart are paying off based on the statistics presented by Wanda Young, vice president of media and digital marketing.

Macy's: Downloading the Macy's app makes it apparent that it's creation and programming involved a sizable investment. Low end apps take approximately between $50,000 - $100,000 to create (Somerville, 2013) and the Macy's app is one of the more comprehensive and complex in this study. Features of this app include: shopping, gift registry, exclusive offers, store locater, and scan features with pricing info. In addition the Macy's app has recently been enhanced and they have added iD visual recognition technology. This allows shoppers to scan items from catalogs, magazines or billboards and purchase the items right from their mobile device. This holiday season will be the first time that any company will deliver a "seamless experience across national catalogs, print and outdoor advertising" using the visual recognition technology. (Thomas, 2013)

Macy's has also partnered with Shopkick and is piloting their partnership with the Shopkick app in their San Francisco and New York City stores. (Mello J., 2013) Once shoppers download the Shopkick app and enter one of the pilot stores the shopper is automatically welcomed to the store by the app and is instantly offered different deals and discount information. Currently the app is very generic in the deals it offers to shoppers; however, in the future there will more locational specifics sent to the shopper. For example if the shopper is in the bedding section they may be sent a discount offer on sheets. The data mining process tracks shoppers and their habits and many older millennial shoppers, who are the target audience for both Macy's and Shopkick, found the targeted advertising to be "too invasive." (Mello Jr., 2013) The Shopkick app is only in a test markets at this point and has not had a chance to have a wide spread impact on the company or their profits as of yet. Macy's has an innovative approach to mobile marketing and their way higher than expected third quarter sales may indicate the success of their mobile initiatives. (Shell, 2013)

Best Buy: SMS is the tool that has been the main focus for Best Buy. SMS is text messaging that allows the company to have direct contact with the customers. Best Buy is using SMS this holiday season in the hope that shoppers will continue to opt in to receive messages throughout the year on specials and discounts. ("Best buy banking", 2013) SMS was very popular in the early 2000's and has gone down in popularity as many customers opt out quickly because they decide that they no longer want to receive the targeted text messages. Many companies have now created apps and have mobile alerts straight from the apps themselves. Best Buy also has an app. Downloading the Best Buy app allows users simple functionality. The Shopper can view specialized deals, find store locations, shop, scan bar codes and check balances on their gift cards.

Not only has Best Buy invested in their own app and SMS marketing, they have also created a partnership, which pushed their mobile presence even further. In 2011 Best Buy partnered with Citi to launch a mobile rewards program. The app that they created allows users to easily redeem their Citi ThankYou Rewards on their iPhone, iPod touch or Android. There is an online catalog featuring Best Buy products where points can be redeemed; additionally users can redeem the points for purchases inside the Best Buy brick and mortar store. ("Citi partners", 2011)

JCPenney: The JCPenney app allows shoppers to find store locations, shop, redeem and purchase gift cards, and check availability of items in the store. In researching the mobile marketing campaigns that JCPenney has engaged in, it is apparent that they are trying a little of everything but not committing and following through with anything in particular. In 2010 JCPenney announced a new strategy for back to school shopping; they integrated social media and mobile marketing, using what they called haulers who would go shopping and post their experiences online. The company had hoped to capture the 14 to 18 year old shoppers with this initiative. (Bohan, 2010) In late 2012 JCPenney used location targeted mobile advertisements and incentives to try and get shoppers to go into the store and shop, (Johnson, 2012) and in the summer of 2013 JCPenney used their mobile database to create SMS relationships with their customers by sending coupons. (Kats, 2013)

CEO Ron Johnson left JCPenney in 2013; this reportedly was based largely on the poor sales, which was attributed to all of the changes that were made so abruptly. Loyal customers became alienated when too many tech/mobile changes happened in too short a time span. JCPenney did not commit to a type of mobile initiative and perfect it. They dabbled in several different areas and were never very successful in any of their mobile initiatives and the profits suffered for those errors. (Tode, 2013)

Walgreens: Walgreens "has acquired 72 million loyalty members in the past nine months by focusing on mobile and digital as key components to an omnichannel approach. (Johnson, 2013) Clearly their mobile and digital efforts were successful with this type of consumer response. The app touts several different ways for shoppers to interact and connect. Customers can earn points in the store, online or on their mobile devices. The Walgreens app has the common functionality of finding a store, refilling prescriptions and promotional offers; however, this app goes above and beyond in each category. They don't just have prescription refills; customers can scan their prescription to refill or transfer and they have a built in pill reminder. Walgreens customers can also use the app to create custom photo cards, collage prints, posters and canvases.

Walgreens has also partnered with Sparkfly to have real time discounts through their PRIMP app. Customers can scan or search for products and then they will receive review, videos for how to use the product, coupons and other offers. This app also provides individual customer transaction data to the company and can target future offers base don spending habits. There is also enough data collected to calculate RIO on the ad spend. (Tode, 2013) Caroline Van Sickle, founder and CEO of PRIMP stated "early results show mobile playing a huge part in product discovery." (Tode, 2013) This trend is only going to push more sales because once the marketing is tailored to the specific shopper, there is a great chance for new product discovery.

Data Collection and Tracking

Companies like Walgreens, who are tracking market data, tracking spending and evaluating what individual customers are willing to pay for a product are the new norm this holiday season. This in depth tracking is done not only on in store purchases, but also online and mobile purchases as well. Some consumers feel that this tracking is an invasion of privacy and that they could possibly be discriminated against based on their spending habit, home price, or any other detail that a company may find in their data warehouse. Retailers combat this claim with promises of better, more relevant deals for the shoppers. Obviously marketers have been collecting data on shoppers since the first sales transaction took place. However, the technology today has made the data so much more personal that it is hard for consumers to accept. (Flaherty, 2013)

Data is the key to marketing and marketers are trying any angle that they can to get more information about the customers. Data collectors are using a variety of methods to collect information to fuel the marketing machine. There are now so many experimental ways to track customers spending habits that are being experimented with. Drawbridge is a company that claims that they can link a shopper's laptop to their mobile device by tracking and analyzing online movements. There are other companies called data brokers who collect and sell information about shoppers base on their online habits and cross-referencing that information with public information like property tax information and court documents. There are also other experimental technologies that sense the signals put off by cell phones, or track movement to evaluate the interest in different aisles or areas of the store. Shopperception is another experimental product that uses the technology that the Xbox Kinect uses, the motion tracking, to evaluate customer movements through out a store. (Flaherty, 2013)

Consumer Reactions

Based on the practical applications noted in this study, it is obvious that consumers have responded to many company apps by increasing their purchases. One of the new waves of mobile marketing is functionality mixed with information. The mobile marketing game is no longer just about ads, locating stores and navigating to the online site. Retailers are creating functionality into their apps like prescription refills, photo ordering and in store maps. The retailers are then leveraging these areas to promote other products and incorporate and promote their loyalty programs. (Moldave, 2013) Companies need to find a way to make their app relevant to users; they need to create an app that integrates with traditional in store shopping and online shopping.

Successful apps will be well made with minimal programming issues or crashes and will offer unique functionality to users. Users were forgiving in the programming of apps when this marketing tool was first emerging. However, skimming through the reviews of mobile apps in an app download store proves that users are no longer as lenient as they once were. Users want apps that work on their specific platform, whether it is Andriod or iPhone companies need to make their attention equal towards both platforms. App users have left several reviews regarding apps that perform at a level that is below their expectations. That may be an app that force quits frequently or an app that has frequent error messages or slow load times. Companies need to ensure that their app is up to user standards to remain relevant to their customers.

There is minimal data published publicly regarding the success of different mobile marketing campaigns that companies invest in. The stock market however, may give some insight as many retailers are acutely focused on expanding and perfecting their mobile marketing.

Figure I clearly shows the large impact that effective marketing and mobile marketing can have on a company's stock performance. Companies that are able to able to positively impact their customers and enhance the shopping experience are also that companies that are performing at or above expectations. The one company in this study that had a poor performing was also the company that did not have a clear direction in their mobile marketing plan and did not have follow through with the projects that they embarked on.

Conclusion

Mobile marketing is not the future; it is already here in full force, as can be seen by the large investments that companies are making in their mobile marketing efforts. Companies who are unfocused and not able to grasp on and harness the potential of mobile marketing, like JCPenney, have a high potential to be left behind and in a position that they may never be able to recover from. Consumers are interacting with businesses and shopping in a whole new way. The smartphone has changed our everyday life and how we shop. Consumers have a positive reaction when apps have functionality, offer deals and have a direct plan, as seen from the last 2 years stock market data. The smartphone has also changed how products are marketed and how companies collect and analyze market data. The type and quantity of data that can be sourced from online and mobile sources is immense. These large amounts of data and market information create an opportunity for brick and mortar retailers to create apps with the functions that their customer base is interested in and to send promotions directly to consumers base don their habits.