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monday morning manager

The mobile economy is with us, but companies are stumbling in figuring out how to be effective. Anindya Ghose, an Indian-born professor at New York University's Stern School of Business, who has been tapped as one of the management thinkers most likely to shape the future by the Thinkers50 rankings, may have some answers.

He has been studying the mobile economy on several continents, researching the factors that can point to success. He places the mobile economy at 4 per cent of global GDP and expects it to rise significantly. People spend about a quarter of their time with media on mobiles these days, but companies are spending only about 12 per cent of their ad dollars on that avenue, so growth is inevitable. "For organizations, there is a massive opportunity for monetizing mobile that they can tap into," Mr. Ghose says in an interview.

Hindering growth are four contradictions yet to be sorted out. People seek spontaneity, but are predictable and value certainty in their shopping and favour stores they are familiar with. People find advertising annoying, but they are missing out on great buys. People want choice and freedom, but are easily overwhelmed. People protect their privacy, but they increasingly use their personal data as currency.

Right now, advertisers are overwhelming prospects with messages. And they often resort to subterfuge to gain personal data rather than addressing the issue openly and offering to trade information for rewards, such as discounts and better-targeted messages. In one of Mr. Ghose's studies, for a mall in China, shoppers were offered the chance to use the mall's free WiFi as they entered, indicating where they would be shopping, in exchange for coupons and discounts. Even though they could use the WiFi without agreeing to share that data, 81 per cent did.

"I'm asking consumers to not hold back on data but share it. When consumers do that, however, companies must act responsibly," Mr. Ghose says.

In his book Tap, he identifies nine forces that are affecting the mobile economy. Asked to pick the most pivotal, he names:

  • Context: You need to understand the factors and circumstances that will determine the shopper’s decision-making. That’s not a new concept, but for mobile – when people tend to be in motion – it requires answering three questions. Why is the customer there? What does the customer want now? How is the customer feeling now? That allows you to extend the right offer at the right time with the right price.
  • Crowdedness: It helps to know whether the consumer is alone or in a crowd. Interestingly, mobile devices are a form of escape in crowds, as we get lost in our screens; so his studies showed commuters on a crowded subway train are about twice as likely to respond to a mobile offer by making a purchase as people on non-crowded trains. And the more crowded the train, the greater the increase. “If you get a targeted message, you are more likely to pay attention,” he notes.
  • Trajectory: It helps to know the path a consumer is taking so the marketer might predict (and shape) what is coming next. For example, in that study of a Chinese mall, if the person visited three high-end fashion stores in a row, a targeted offer from a similar retailer was highly effective.
  • Social dynamics: We respond differently to cues when alone, with family, or with friends. One study found that children in their “tween” years begin to replace their family members’ opinions about purchases with friends’ thoughts. Another found people are likely to spend more money when shopping with friends than family.
  • Weather: This can affect our moods and purchases in food, drink, fashion, travel and other areas. One study found that purchase likelihood increased 31 per cent in sunny weather and declined 9 per cent in wet weather. Time to purchase from receipt of a mobile ad is 42-per-cent faster in sunny weather. It might well be that variable pricing can help take advantage of these trends – higher prices for soft drinks in a vending machine on a hot day – or counter it, with discounts on wet days.

The other four forces are the location where the individual is, the time (duration of an offer, or point in the day when it is extended), the saliency of the message and the mix of technologies by which ads are sent. It's a complicated area, but one that is important for marketers to understand.

Harvey Schachter is a Kingston, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online column, Power Points. E-mail Harvey Schachter

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