What's the 411? Food Social.

Shortly after I began the UBC MBA Program, I purchased my first smartphone and first tablet computer. While I had predicted that both devices would reduce my reliance on paper notes and paper-based textbooks, I would have never imagined that two years later, my internet and content consumption habits would change as significantly as they did. For example, I hardly use my laptop for e-mail or web surfing anymore. My trusty Android phone takes care of the email, while the tablet takes care of my web surfing and video content consumption. Two years ago, twitter was such a new phenomenon. While I had registered for my twitter account on my laptop back then, my smartphone is the sole device I ever use for twitter or other short messaging social media services.

And I’m not the only one to experience this change. According to Mary Meeker of Kleiner Perkins Caufield & Byers (Meeker, 2011), the mobile space of smartphones and tablets has supplanted the “traditional” laptop and desktop computer as the primary means of information consumption. As part of their presentation at the Web 2.0 Summit on October 8, 2011, Meeker stated that Smartphones  and tablets outshipped PCs in the fourth quarter of 2010! Even more impressive is that the installation of Windows, the bastion of traditional PC computer operating systems, on Internet-enabled devices fell to less than 50% in 2010 as well. Clearly, the trend towards mobile connectivity and mobile information gathering will have a profound effect on consumers, the businesses who cater to them and the marketers that provide the advertisements to attract them. It is important to understand how this trend will affect all three of these groups.

Implications for consumers

My wife is a call center agent for a major wireless provider her in Canada. During one of her calls, an older couple called in wondering why their bill was so high when all they would do was talk on the phone. It turned out that the salesperson sold them a smartphone with a dataplan. Through her deft skills in customer service, she convinced the couple to keep the phone and make use of the 3G connectivity they have available on the device. She explained that an internet-connected phone with a browser would allow them to look up the best restaurants and find out how others rated them – all on the go. They would be able to use electronic boarding passes instead losing or having to print out paper-based ones. And the most important thing – they would be able to video chat with their grandchildren in another province without having to turn on the computer and waiting for it to boot up.

More and more people are realizing the utility they can get from being connected via a mobile device such as a smartphone. According to the Meeker, Smartphones (phones with full internet connectivity) outsold feature phones (regular wireless phones with only voice connectivity) for the first time in 2010. Those with mobile devices are able to get the best deals. According to the presentation, in-store purchase abandonment amongst smartphone users  was mainly caused by the fact they could get the same item online for a better price and by the fact they could search for another store with the same item for a lower price. The trend toward mobile information consumption has transferred unprecendented purchasing power from the seller to the buyer.

Implications for businesses

Business need to understand that transfer of power. Because of the mobile, instant transfer of information, businesses can no longer rely on their potential customers not having the complete picture of information anymore. As a result, they will have to price their products to compete, or add further value to their products to justify their prices. Businesses will need to further differentiate their products they have in their stores from an increasingly global array of similar products that can be bought for a fraction of the cost.  These businesses will also need to provide a conduit of instant information accessible by mobile devices such as smartphones and tablets as well to compete. Doing so will help retailers to keep their customers from jumping ship to a cheaper online source because they have provided this information to their clients.

Implications for Marketers

According to the presentation there is still a large gap between the amount spent on creating Internet/Mobile advertisements  when compared to the amount consumed. In the USA 19% of ad spend in Internet results in a 25% consumption.  By comparison, 27% of ad Spend results in only 8% Media consumption. In the USA, the gap for Internet and Mobile consumption vs. Ad spend represents an annual $20 Billion opportunity that is continuing to grow.

Marketers should realize that targeted spending on Internet, and particularly mobile internet efforts would yield much more efficient results compared to Print, radio and TV advertisements.

Going forward

In addition to the mobile opportunity trend, the presentation outlines the global growth for mobile data and its implications in different countries throughout the world. While economic uncertainties abound, there is still much room for market penetration, particularly in developing countries to capture the increasingly powerful mobile internet connected market. By understanding trend towards a mobile internet-connected society, consumers, businesses and marketers can make the most of their hard-earned income and grab a share of that market – especially as it grows.

Main Reference:

Meeker, M. (2011). Internet Trends. Web 2.0 Summit (p. 66). San Francisco, CA: Kleiner, Perkins Caufield & Byers. http://kpcb.com/insights/internet-trends-2011

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