© Prof. Dr. M. Kirchgeorg, Lehrstuhl Marketingmanagement, Handelshochschule Leipzig M-Commerce Surveys about Customer and Corporate Acceptance in Germany

© Prof. Dr. M. Kirchgeorg, Lehrstuhl Marketingmanagement, Handelshochschule Leipzig

M-Commerce

Surveys about Customer and Corporate Acceptancein Germany

Department of Marketing ManagementPresented by Prof. Dr. Manfred Kirchgeorg of

HHL -Leipzig Graduate School of Management (Germany)

M-Commerce-Meeting in Hong Kong

City University of Hongkong, 9. April 2000

E-Mail: [email protected]

2© Prof. Dr. M. Kirchgeorg, Lehrstuhl Marketingmanagement, Handelshochschule Leipzig

350-07 Hongkong 8.4.01

Agenda

I. Introduction: Department of Marketingmanagement (HHL)

II. Overview about results from existing studies on M-Commerce

III. Key results of an expert survey on M-Commerce in Germany

IV. Next steps


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I.

Introduction: Department of Marketingmanagement (HHL)


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• Marketing efficiency in East-German companies

• Drivers of brand erosion

• Customer focused corporate culture of start-ups

• Locational choice in shopping behavior

• E-Commerce strategies in the health care industry

• Network strategies in the health care industry

• Internet and E-Commerce usage behavior

• Institutional buying behavior of ebusiness systems

• M-Commerce market survey

• Positioning of trade fairs

• Competitive strategies of industrial regions

• City marketing and marketing of industrial regions

Overview on Research Activites of the Department of Marketingmanagement

Research Program

Marketingmanagement

(8

Environmental Management

• Success factors of closed loop value chains

• Eco-oriented service strategies

• Financial services in the circular economy

• Incentives for used car collections (EU-Altautoverordnung)

• Ecological controlling

• E-Paper

Consumer

goods

Retail and services

marketing

Services marketing

(regional focus)


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Expert interviews: M-Commerce

Secondary Research:M-Commerce usage

behavior

Development E-Commerce and M-Commerce Research

1998 1999 2000 2001

Intern. Conference 11.6.99„E-Commerce – Quanten-

sprung im Marketing“

Diploma Thesis (in cooperation with business partners)

Seminar: E-Branding (with BCG, 12snap)

Introdution of shopping boxes

Explanation of the diffusion of M-Commerce

applications

Problem of informationoverload in the Internet

E-BrandingSuccess factors of

internet start ups

Elective Course: Marketing and E-Commerce (in cooperation with SAP)

Nationwide Survey about E-Commerce usage

behavior

User Survey E-Health(project in cooperation

with netdoktor.com)

E-Commerce Strategies for E-Health

care industry

E-Commerce as a distribution

channel

Networkstrategies for E-Health

Services


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Overview on Current M-Commerce Studies

1.

2.

3.

• The Boston Consulting Group: Winning the On-Air Customer (November 2000; Focus: United States, Japan, Germany, France, Sweden; Sample: 1633 early adopters)

• GFK / Heyde AG:Mobile Shopping (February 2001; Focus: German Market; Sample: 2000 Households)

• Durlacher Research: UMTS Report - An Investment Perspective (April 2001; Focus: European Market)

• HHL, Department of Marketing: M-Commerce Perspectives - CEBIT 2001 Review (April 2001; Focus: German Market, Expert Interviews, Sample: 25 (now 14))

4.


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II.

Overview about results from existing studies on M-Commerce


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Key Results of a BCG Survey (Nov. 2000)

The survey of early and potential Mcommerce users in six countries shows widespread consumer frustration:

1. There is a big gap between what the technology can now do and what the consumer has been led to expect

2. Mobile users think the initial costs and operation fees are too high. Most want low flat fees.

3. Customers are not satisfied with mobile applications in this areas: speed, ease of typing in text, and ease of navigation

4. There is a broad concern about privacy and security. Nearly 90% of those surveyed said they want to control the type and timing of ads that are sent to their mobile devices.

5. Many m-commerce users consider the fixed-line Internet as a benchmark

Source: BCG 2000

Key issue for further research: Do not forget the customer needs!It is absolutely necessary to find out, what applications really can provide value for thecustomer.


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Key Results of a GfK/Heyde Survey (2001)

0

2

4

6

8

10

12

14

16

18

20

Mui

sc C

Ds

Tra

vel

Tic

kets

Bo

oks

Sho

rt T

rip

s

Vid

eo

s/D

VD

s

Ho

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ys

Flig

hts

Flo

we

rs

So

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re

Fo

od

Ga

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s

Clo

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g

Ta

ba

cco

Bro

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Insu

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Ca

rs/M

oto

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les

Co

sme

tics

M-Commerce Transactions: Percentage of consumers willing to buy products wireless

Data in percentage

Key-results: Though a certain percentage of consumers is willing to buy products wireless, only a limited number of product categories seems to be

attractivein the consumers‘ view.

Source: GfK/Heyde AG 2001

men

women


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Durlacher UMTS Report (2001): Business vs. Consumer Applications

Source: Durlacher 2001

1. Lower volume (One To Few)

2. Greater complexity

3. Higher customization

4. Higher margins

5. Slower sales cycle

6. Strategic

7. Higher criticality

8. High need to integrate

9. Higher Servcie Requirements

10. Need for IT support

Business Applications

1. High volume (One To Many)

2. Lower complexity

3. Lower customization

4. Lower margins

5. Faster sales cycle

6. Convenience (consumer) productivity (B2B)

7. Lower criticality

8. Lower need to integrate

9. Lower service requirements

10. Need to be self configurable

Consumer Applications

Key distinctions between business and consumer applications in the M-Commerce environment

Key-results: When developing business vs. consumer applications, the highlighted key destinctions have to be taken into account in order to come up with

killer applications.


350-07 Hongkong 8.4.01Source: Durlacher 2001

Durlacher UMTS Report (2001): Winning Consumer Applications

StaticContent

DynamicContent

MobileMessaging

MobileAdvertising

M-EmergencyServices

M-Gaming &Gambling

MobileVideo

MobileAudio

MobileTailing

MobileFinance

MobilePayment

Info

Co

mm

un

ication

En

tertainm

ent

Tran

sactio

n

Consumerappls

Mobilepotential

constraints no constraints low potential high potential

Band-width

DeviceSW-

Enablers

Technology enablersLocationService

Immediacy& Mobility

Personali-sation

Market success factors


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III.

Key results of an expert survey on M-Commerce in Germany


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Design of M-Commerce Expert Survey conducted by HHL

Industry experts and decision makers in M-Commerce companies

1) Contacting M-Commerce decision makers and experts via telephone2) Conducting interviews on basis of a questionnaire in written form

02.04.2001 - 07.04.2001

Total sample size 7. April: 14 companies (total will be 25)

Interviews were conducted with companies in the following industries:

- Providers of M-Commerce products and services- Providers of M-Commerce infrastructure- Providers of consulting and capital services in the area of

M-Commerce

Target group

Sample Size

Procedure of survey

Field work

Goal of study Get insights into current M-Commerce developments and topics by reviewing CEBIT 2001 experiences


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Overview on Interviewed Companies


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Overview on Structure of Questionnaire

1.

2.

3.

General acceptance of M-Commerce in Germany• Barriers to rapid M-Commerce diffussion• Potentially successful M-Commerce products / services• Usage behavior of M-Commerce customers• M-Commerce pricing models• M-Commerce advertising models

M-Commerce companies in Germany• Competitiveness of German M-Commerce companies• Development of M-Commerce revenues in B2C and B2B markets• Share of E- and M-Commerce revenues in companies‘ total revenues

Information on interviewed company• M-Commerce product / services portfolio• Engagement in M-Commerce since when• M-Commerce revenues• Estimation on killer applications• Company size


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Socio-Demographic Information on Interviewed Companies (I)

M-Commerce portfolio 2001 (aggregated)

M-Commerce products / services 46%

Consulting / financial services 31%

M-Commerce infrastructure 23%

Engaged in M-Commerce since...

< 1/2 year 25%1/2 - 1 year 25%1 - 2 years 25%> 2 years 0%not engaged 25%

M-Commerce portfolio 2001 (detailed)1)

Email 31%

SMS 54%

General information 39%

Personalized information 46%

Location-based information 23%

Surfing / browsing 8%

Auctions 15%

Brokerage 8%

Mobile Banking 8%

Shopping 15%

Health care 8%

Entertainment 23%

Chats, newsgroups 15%

1) Only companies offering M-Commerce products / services

Totalnumber

Sample Size 14

Share(in %)

Company size (in terms of total revenues)

<2 Mio. DM 20% 2 to 10 Mio. DM 10%10 to 25 Mio. DM 20%25 to 100 Mio. DM 20%> 100 Mio. DM 30%

Total number

Sample size 14

Share(in %)


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Question 1: Which of the following factors constitute a barrier to a rapid expansion of M-Commerce?

Barriers to Rapid M-Commerce Diffussion in Germany

very large no barrier barrier at all

1 2 3 4 5 6

Key results: Especially the high complexity of handling mobile devices as well as their

limited screen size are seen as major barriers for rapid M-Commerce

diffussion.

average standard deviation n=14

Low demand for mobile products / services

High cost of services

Concerns about data security

Concerns about payment systems

High complexity of handling mobile devices

Limited screen size of mobile devices

Slow speed of service

Political / legal barriers

3,4

2,8

3,9

3,1

2,5

2,6

3,1

4,2

1,5

1,4

1,1

1,1

1,2

0,9

1,5

1,1


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Email

SMS

General information (e.g. news, sports)

Personalized information (e.g. news, sports)

Location-based information (e.g. restaurants, shopping, cultural activities)

Surfing / Browsing

Auctions

1 2 3 4 5 6


2,2

2,1

3,2

2,0

2,3

4,0

4,2

1,4

1,0

0,7

0,7

1,1

1,2

1,2

very good poor

Question 2: How do you evaluate the likelihood of firms achieving a satisfactory level of turnover for the following M- Commerce services?

Potentially successful M-Commerce Products and Services (I)

Key results: Communication applications like email and SMS as well as information applications with high value for consumers are deemed to have high

potential of success.


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Brokerage

Mobile Banking

Shopping (e.g. books, CDs, software)

Health care (e.g. Monitoring)

Entertainment (e.g. games, gambling)

Chats, newsgroups

very good poor

1 2 3 4 5 6


Question 2: How do you evaluate the likelihood of firms achieving a satisfactory level of turnover for the following M- Commerce services?

Potentially successful M-Commerce Products and Services (II)

3,2

3,0

3,8

4,2

2,6

3,6

1,2

1,3

1,4

1,1

1,7

1,4

Key results: Other potentially successful applications are especially seen in the area of

entertainment.


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very high minimalimportance importance

1 2 3 4 5 6

Save time

Flexibility of usage regarding time

Flexibility of usage regarding location

Get up-to-date information

Kill time


Question 3: How do you rate the relative importance of the various motivations of both current and future consumers of M-Commerce products / services?

0,9

0,7

0,8

1,3

1,5

2,4

1,9

1,6

2,5

2,4

Usage Behavior of M-Commerce Customers (I)

Key results: Consumers go wireless because of the high level of flexibility mobile devices

offer.


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1 2 3 4 5 6

Access specific applications available only with a mobile device

Communicate more efficiently and effectively

Enjoy lower prices and and cost savings

Get personalized information and services

Have fun and entertainment


1,4

1,2

1,3

1,1

1,1

3,2

3,1

3,6

2,5

1,9

very high very lowimportance importance

Question 3: How do you rate the relative importance of the various motivations of both current and future consumers of M-Commerce products / services?

Usage Behavior of M-Commerce Customers (II)

Key results: Entertaining oneself and having fun are also highly valued characteristics of

mobile commerce.


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1 2 3 4 5 6

Flat rate

Usage charges by duration of usage

Usage charges by data volume

Free service that includes ads


1,4

3,7

3,2

3,2

very high very lowpreference preference

Question 4: Evaluate which of the following M-Commerce pricing models consumers prefer and to what extent.

Customers‘ view on M-Commerce Pricing Models

Key results: The only feasible pricing model seems to be offering a flat-rate access to

M-Commerce products and services.

0,7

1,6

1,8

1,7


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1 2 3 4 5 6

Location-based advertising

Ads in exchange for discount pricing

Only information they request


3,1

3,1

2,4

very high very lowacceptance acceptance

Question 5: In the context of M-Commerce, what forms of advertising do you believe will be accepted by customers and to what extent?

Customers‘ view on M-Commerce Advertising Models

Key results: The overall acceptance of advertising in the wireless environment is expected

to be limited. Advertising on request seems to be slightly more attractive.

1,4

1,0

1,0


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Offering innovative products

Delivering high value to customers

Technological advantage

Highly qualified personnel

Global market position

Customer orientation

much much better worse

++ + o - --


Question 6: Compare German M-Commerce companies with international competitors, with respect to the following aspects.

Competitiveness of German M-Commerce Companies

2,8

3,4

3,0

2,6

3,1

3,1

1,2

1,2

1,3

0,7

0,9

0,8

Key results: German M-Commerce companies seem to be ready to face global competition.

Only regarding the delivered value to customers they lack slightly behind.


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Expected Future M-Commerce revenues in B2C and B2B Markets

50

150

250

350

450

550

650

750

2000 2001 2002 2003 2004 2005

Question 7: Based on the current level, outline how you believe M-Commerce turnover in the B2C and B2B areas will develop over the coming years.

M-Commerce Revenues(in %)

Key-results: B2C as well as B2B revenues are expected to grow at comparable rates in the coming years. Growth rates seem to be a bit more „down to earth“

compared to estimates several months ago.

Index 2000

B2C

B2B

n=12


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Share of E- and M-Commerce Revenues in Companies‘ Total Revenues (I)

Question 8: Estimate the shares of total turnover that E-Commerce and M-Commerce transactions willtake over from B2C and B2B companies in the years 2003 and 2005.

Key-results: Overall, E-Commerce revenues seem to stabilize at around 20% of total revenues in 2003, whereas M-Commerce revenues are expected to significantly incline until 2005.

Old economy companies

19% 19%

3%

12%

E-Commerce2003

E-Commerce2005

M-Commerce2003

M-Commerce2005

B2C

E-Commerce2003

E-Commerce2005

M-Commerce2003

M-Commerce2005

B2B

19%

24%

5%

9%

n=10


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Share of E- and M-Commerce Revenues in Companies‘ Total Revenues (II)

Question 9: Estimate the shares of total turnover that E-Commerce and M-Commerce transactions willtake over from B2C and B2B companies in the years 2003 and 2005.

Key-results: In the „new“ economy, E-Commerce and M-Commerce revenues are expected to reach significantly higher shares in companies‘ total

revenues.

New economy companies

62% 61%

18%

31%

E-Commerce2003

E-Commerce2005

M-Commerce2003

M-Commerce2005

B2C

E-Commerce2003

E-Commerce2005

M-Commerce2003

M-Commerce2005

B2B

62%68%

21%

30%

n=10


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Potential M-Commerce Killer Applications

Killer applications (in descending order of importance)

• Entertainment

• Location based services

• SMS / unified messaging

• Email

• Financial products / brokerage

• Games

• Travel services

• Transactions

• Internet access

Question 14: What products / services do you believe could develop into so-called „killer application“?

Key-results: It seems to hold true that applications covering needs in the entertainment, communication and individualized information area could become

highly successful.


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IV.

Next steps


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Customer Focus

Research

Identification of customers‘ needs and wants in the wireless world as

prerequisite for developing successful M-Commerce products and services.

Future Research Design

Analysis of usage beahvior:- which services do they use- what are they willing to pay- etc.in cooperation with corporate partners (IMS, 12snap, Lufthansa...)

Analysis why they do not buyM-Commerce products / services:- what are usage barriers- how attractive are offered services- etc.in focus group interviews

Identification of means-end-chains:

- what are the underlying

reasons for going wireless

- what are general values

and motives

Identification of means-end-chains:

- what are the underlying

reasons for going wireless

- what are general values

and motives

Early Adopters Late Adopters

Exi

stin

g

pro

du

cts

/ se

rvic

esU

nid

en

tifi

edp

rod

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s /

serv

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Documents

© Prof. Dr. M. Kirchgeorg, Lehrstuhl Marketingmanagement, Handelshochschule Leipzig M-Commerce Surveys about Customer and Corporate Acceptance in Germany