Introduction to the Consumer Credit Market in China

Nowadays referred to as an emerging economy, China represents a very exciting business proposition for investors around the world. The Chinese consumer market is constantly expanding. This expansion must be met by credit cards nowadays. There are millions of credit cards issued in China at present. However, the majority of these plastic cards are yet unused, seeing that the Chinese people are a conservative lot that would not easily trust in with a host of privacy issues.

What is more, the country has not by now developed a proper “credit check industry,” and neither has the banking industry invested heavily thus far in consumer education. In the absence of credit risk management, a massive “consumer credit crisis” may be in the offing. South Korea and many other examples are before China in this context. Now, if a consumer credit crisis were to hit the most populous nation in the world, it would not only hurt the economy of China, but also have an enormous impact on the global economy which relies on the cheap products and services of the emerging economy.

Moreover, a consumer credit crisis would most likely threaten the stability of Chinese society  the kind of happening that the country has had painful experiences with through its history (“800 mln,” 2005). China’s big loans market is already suffering from a huge amount of bad debts. The China Corporate Credit Risk Management Survey of 2005 showed that bad debts are constantly on the increase. In fact, one hundred percent of the survey participants had an “overdue problem” (“Corporate Credit”). This is the reason why investors are worried that the Chinese experience with credit cards would also be mismanaged and corrupted.

In terms of its new trend to increase Credit Risk in China 2 the number of credit cards issued, the country is often compared to South Korea. Pesek (2005) writes: From the ashes of the Asian financial crisis, South Korea quickly emerged as a role model for the region. It rebounded by strengthening its financial system, reducing foreign debt and reining in the conglomerates that dominate the economy. It encouraged banks to stop lending to shaky businesses, which had been a cause of the crisis. Yet efforts to restore proper risk management in its banking system backfired. When they

halted lending to the corporate sector, bankers turned their sights on households. Individual loans mushroomed, as did the number of credit cards lining consumers’ wallets. The trend proved disastrous. Soaring household debt and default rates drove the economy into recession and led to billions of dollars worth of bailouts for credit companies. Before the crisis, South Koreans had little experience managing debt, to say nothing of high-interest-rate credit card debt. The lack of sophisticated systems for checking creditworthiness complicated matters. Walking the streets of Seoul between 1999 and 2002, one confronted a barrage of hawkers handing out credit-card applications. It hardly helped that the government was encouraging credit card use with tax benefits. That drove banks and nonbank lenders to step up marketing efforts. Feeling guilty and realizing how big a problem it had on its hands, the South Korean government organized bailouts. That sent a terrible message to markets. Credit card issuers extended credit to just about anyone who wanted it, and were left with surging delinquencies as the economy slowed and households couldn’t service the debt.

Credit card companies over-leveraged to an extent that investors and regulators did not realize. Many of the loans were securitized through asset-backed securities. Most of the debt was short-term and had to be rolled over, meaning that the assets were not fully taken off balance sheets. And then, the government saved these gamblers. Only now is South Korea shaking off the effects of these blunders. At last, its economy is growing again and households are confident enough to increase spending. While Chinese demand for Korean goods is certainly a factor, so are improved consumer finances.

China must be careful to avoid a Korea-like debt meltdown. With the benefit of hindsight, China may indeed do that. Besides, there is no guarantee that Chinese will take to plastic as, say, Americans have. The increasingly affluent middle class may, but will hundreds of millions of Chinese warm up to high-interest-rate debt? Understandably, such risks aren’t deterring credit card companies. The Chinese already rank among the world’s most influential shoppers, buying more cell phones and televisions each year than U. S. consumers do. Yet Chinese demand is a small fraction of what it might be in 10 years.

Think what it would mean for issuers if even 20 percent of Chinese put two revolving credit cards in their wallet. And think of the consumption multiplier-effect that debt can Credit Risk in China 3 produce. Debt, managed responsibly, has the potential to add momentum to Chinese consumption trends. Serious consumer education, however, is needed. MasterCard International, for example, is working with banks, the media and universities to inform Chinese about the intricacies of debt management. China’s government also has a big role to play. Such concerns may be overdone, of course.

The trend could merely be part of China’s evolution toward developed-economy status. As its consumers become worldlier, credit card usage may be a sign of economic maturity. Yet if South Korea, a far more advanced economy, could get into such trouble with credit cards, one wonders about China. Will a sudden taste for debt lead to financial troubles among Chinese consumers? The risk is one more to consider when assessing China’s outlook. Today, China acts as a hotbed for foreign direct investment. But, what if a consumer credit crisis were to really hit the nation?

Indeed, this would reduce the tremendous attraction that the emerging economy currently holds in the ‘bank accounts’ of global investors. Most importantly, there is no data available on how well the Chinese government is planning to handle a credit card crisis, if and when it occurs. Although the Chinese economy competes with the United States economy for the highest consumption in the world, the emerging economy cannot legitimately be compared to the economy of the United States, and also cannot be trusted to support itself like the latter in the event of a crisis.

Hence, investors are concerned that the emerging economy could suddenly collapse because of mistakes that are made today in the Chinese credit market. After all, China has introduced credit cards as though it had known them all along! Reality is, however, that the country lacks experience in handling credit risk at this point in time. Banks would like the credit card business to fund their future growth, as well as to improve their current financial positions. At the same time, the government would like to promote consumer spending in an effort to boost the economy.

Even so, it remains a fact that the Chinese banks have no experience whatsoever with credit cards (“Credit Cards,” 2003). Credit Risk in China 4 The banks of China have millions of individual depositors. These banks were pushed into the credit card business or consumer lending only after the People’s Bank of China’s issuance in 1999 of the “Guidelines for Conducting Consumer Credit. ” The document allowed all Chinese banks to offer credit to consumers, leading to an immediate increase in consumer credit over the next few years. In the year 1997, consumer credit in China amounted to only U. S. $2. 1 billion. Four years later, the amount of consumer loans outstanding had increased to U. S. $84. 8 billion. Still, consumer credit represented only ten percent of the Chinese banks’ business at the time. Most of the outstanding loans were big business credit (“Credit Cards”). Moreover, as discussed previously, a large number of big business loans in China continue to default in our day. As a matter of fact, given the bad debt history of Chinese big business loans, it is easy to understand the concern of the investors that increasing consumer credit might somehow turn out to be a huge failure for the emerging economy.

China should have developed a better credit risk management system for its big business loans before it ventured into the credit card business. If the country had learned to manage the credit risk with big business loans, it would have been easier to manage the risk with plastic money nowadays in the hands of consumers. Today, the banks of China are known to be aggressively promoting the use of credit cards in order to support the policy of the government to increase consumption across the nation.

All the same, this “aggressive campaign” on the part of Chinese banks is still compared to the experience of South Korea after the 1997 financial crisis. Although a Chinese worker may now obtain a credit card that is ten times his monthly salary; the fears of investors are not alleviated (Chan, 2006). Credit Risk in China 5 China’s credit card industry has also received an enormous boost from the nation’s entry into the World Trade Organization. “Liberalization of the financial sector” as a result of China’s entry into the WTO has attracted a lot of attention from financial institutions worldwide.

In order to allow the global financial institutions to trust the Chinese consumer credit market, however, the nation would have to develop “an updated and comprehensive national consumer credit database” (Xu ; Liu, 2006). Xu ; Liu also suggest the “use of credit risk modeling and scoring in predicting consumer behavior. ” The government of China is presently holding conferences and inviting speakers from abroad to discuss credit risk management. According to Chan, consumer credit risk management may very well turn out to be a priority area in Chinese policymaking in the near future.

Today, China ranks behind the United States as the Number Two issuer of credit cards (Worthington et al. , 2007). According to DaCosta ; Foo (2002), unless the country “undertakes serious and timely banking reforms,” its financial institutions would remain vulnerable to enormous crises. With a population of 1. 3 billion, a consumer credit crisis in China would be a disaster. At the same time, however, business researchers insist that the banking crisis to hit China next may have to do with big business loans rather than credit cards.

Seeing that credit cards continue to represent only ten percent of the outstanding loans of banks; the credit risk related to plastic money is definitely not as huge as the credit risk that is associated with big bank loans. Besides, only three percent of the consumer spending in China is presently attributed to credit cards. Despite the fact that there were 110 Chinese institutions issuing credit cards in the year 2004, and card circulation had been estimated at roughly 714 million; the data on the Credit Risk in China 6 general lack of use of credit cards in China should serve to alleviate the fears of global investors for the most part (“Chinese Credit”). In point of fact, it may be inferred that the consumer credit market is not thus far facing a monstrous amount of credit risk anyway. Even if a banking crisis does occur, the credit card market of China may find itself insulated from disaster seeing that it is just not moneyed or important enough at present to fail miserably. Another feature of growth in the Chinese credit market since the nation’s entry into the WTO concerns automobile consumption loans.

China is expected to compete with the United States as well as Japan also in terms of the use of the greatest number of cars. Once again, in order to support the increasing consumption, the government of China has vowed to allow easy automobile consumption credit to the Chinese people. Foreign financial institutions that operate in China are required by Chinese promises to the WTO to be treated in the same way by the government as the local financial institutions are treated. Therefore, foreign financial institutions are also expected to show great interest in the automobile consumption credit market in China, especially in the coming years.

In fact, the Chinese government is banking on foreign financial institutions to get the ball rolling for the new automobile consumption credit market very soon (“China’s Auto Credit,” 2002). The Chinese government would like the credit market of the nation to function by the law of demand and supply. In order for there to be an “abundant supply” of credit throughout China, the government would like to open up information channels to distribute credit information among the potential lenders as well as borrowers. Such ‘open, credit information’ would constitute knowledge about where to get consumer credit, small loans, and big loans.

Clearly, the government would like to develop the economy of China beyond measure. At the same time, it is important for the Chinese government to develop a database on borrowers that would be made available to all lenders, both local and foreign. This database on borrowers would make it easy for the potential lenders to understand consumer behavior with regards to credit risk management. Furthermore, the economy would be able to reduce its potential losses in the credit market by a large extent through such developments.

Indeed, the Chinese government is deeply enthusiastic about further developing the economy of China. Small loans in the country are usually reserved for the poor and hardworking people, who actually represent the majority of the population. The following is a brief report on the use of a small loan by a poor Chinese farmer who has changed his standard of living, thanks to the small loan: Kong Keming, a poor farmer in Yongjing County in northwest China’s Gansu Province, is now leading a better life thanks to a loan provided by the local agricultural bank. Kong used to lead a very hard life.

Last year, he built eight warehouses to grow vegetables in with a loan from the county’s agricultural bank and earned a good income at the end of the year. Like Kong, more than 150,000 families in poor areas across the province also were able to break the chains of poverty through planting vegetables, growing herbs, farming, raising livestock and opening businesses with financial assistance from the local agricultural banks. The system of small loans was introduced to China in the mid-1990s. In Gansu, the agricultural banks started to give loans to poor farmers in 1998. So far, more than 397 million yuan (US$47. 83 million) in loans have been awarded. According to local officials, most of the poor families, which have been given small loans, were able to use the money to successfully increase the amount of money they make and live a better life (“Small Loans,” 2000).

Credit Risk in China 8 Of course, China is home to a considerable number of poor farmers. The country is similarly home to a significant number of poor women. In the year 1978, there were around 250 million poor females in the nation. In 2004, the number of poor women in China had dropped to 26. 1 million. This change came about also through the new economic policies and decisions that were made during the 1990s. The decision to expand the credit market during that time included a plan to increase the number of small loans to poor women in China. Similar to the experience of Bangladesh’s Grameen Bank with micro credit – the small loans that China made available to poor women led to small business growth in the country, apart from poverty reduction from thirty percent to almost three percent. The province of Anhui in East China, for example, distributed approximately U. S. $310 million among 2. 6 million women as small loans to achieve U. S. $143 million in economic returns.

What is more, China has invited foreign funds to support its poverty reduction campaign through the granting of small loans to poor women. The country additionally believes that the poor women of China must be taught new skills in future to control poverty with greater intensity than before (“Small-sum Loans,” 2005). China’s experiences with small loans have generally been positive. There is little credit risk attached to these loans. In the Chifeng City of China where U. S. $4. 9 million had been granted in small loans to 42,300 poor women, the pay back upon maturity has roughly amounted to 99. 97 percent (“Small-sum Loans”). Despite the fact that illiteracy and corruption are rampant in the nation, given its poverty levels through modern history; the Chinese government does not have to fear the credit risk of small loans. Also according to our analysis, the government should not Credit Risk in China 9 be very concerned about the credit risk in the credit card business either, seeing that credit cards are still not used abundantly by the emerging economy.

Nonetheless, the essentiality of credit risk management systems remains. Knowing that the risks attached to small loans and credit cards are not significant enough to stop the expansion of the credit market in China; the Chinese government has planned to expand the credit market in an entirely new direction – this time to help out the unemployed persons with micro credit. The small loans thus granted would be used by unemployed people to start up their own businesses. In Shenyang, the municipal government has planned to offer U. S. $5. 5 million in small loans for this reason.

What is more, the local labor department has developed a priority list to offer small loans to everybody whose description could be found on the list, e. g. servicemen that have been transferred on to civilian work are allowed to borrow U. S. $2,500 for two years (“Small-Loan Scheme,” 2006). Although the credit risk with small loans and credit cards is thought to be quite low, analysts believe that the commercial banks of China are hesitant to grant micro credit because it is not very profitable. After all, there is a strict limit to the level of profits that can be made by granting loans to the poor and illiterate Chinese people.

Nevertheless, the government continues to assert its authority by pushing the financial institutions of the nation to support its poverty eradication program through small loans (“Small-Loan Scheme”). Indeed, China appears all set to allow its economy to grow by leaps and bounds. With the backing of countless foreign investors, the country is making economic progress all of the time. In spite of this, the experience of South Korea after the 1997 financial crisis is repeatedly brought to mind when considering the rapidity Credit Risk in China 10 of economic changes that China seems to be making in a positive direction.

It is possible that the present confidence of China would prove to be mere over-confidence, if not plain imprudence when the country does hit upon a crisis. Then again, if the Chinese banking sector were to develop a sound credit risk management system in the near future, investor confidence would not be easily turned away from China. In recent years, the China Banking Regulatory Commission has also been leading efforts to encourage commercial banks of China to offer loans to small businesses. Although these loans are not as cheap as micro credit is for the banks, offering loans to small businesses is a necessity in the emerging economy.

As a matter of fact, China is presently moving heaven and earth to become a high powered economy. For this reason, the banking regulator of China is working with the central bank to also introduce new channels of funding for small businesses. The new channels could take the form of “privately-owned small loan lenders. ” Regardless, the lenders in this section of the credit market must be prepared to deal with a credit risk that is greater than the risk of granting micro credit. Banks have experienced that seventeen percent of their outstanding moneys are with small businesses (Lei, 2006).

Hence, the credit risk of loans to small businesses is known to be greater than the risk of bad debts on credit cards and micro credit. Apparently, the credit risk of big business loans beats all degrees of risk attached to other forms of credit. Foreign financial institutions are showing interest in the credit card and the small loans markets of China because they are not as risky. Still, the investors’ concern about China remains. In particular, the global investor is responsible for answering the following concerns: Is the growth of China sustainable? ; Would the Chinese economy suddenly. Credit Risk in China 11 crash because of excessive lending in all directions at the same time? ; and  What would happen if the Chinese economy were to collapse in the near future? Naturally, investors in China must be able to deal with not only the credit risk on loans, but also the rampant corruption and illiteracy in the nation. China represents challenges for the global investor. Given the underdeveloped state of its economy, there are, in fact, unnumbered questions to be answered by the wise investor. Even so, the country is not about to back out on its commitment to boost its economy beyond belief.

Whether China fails to adequately compete with the United States, or eventually catches up with the superpower; it is obvious that the Chinese government also envisions the world’s most populous country as a potential superpower. In order to achieve its goals, however, the Chinese government would have to work on improving the regulatory environment in the nation. The introduction of reliable credit risk management practices would be a bonus in this regard. In point of fact, all investors in China are hoping for the Chinese government to better the regulatory environment for business and banking in the nation.

Conveniences that are taken for granted in the developed world – for example, solid credit risk management systems – are required on an immediate basis. At the same time, the investors are aware that the Chinese economic growth in recent times may not be able to keep up for as long as they would like. Therefore, the banking and business practices in China should be enjoyed for as long as they are in their high growth mode. Despite the fact that the Chinese credit market functions with greater credit risk than do the credit markets of the developed world; foreign investments in China continue to grow.

The Credit Risk in China 12 emerging economy is evidently making reasonably good profits for itself as well as foreign investors. China is, no doubt, playing a key role in the world economy. How long would this phase last?  One of the decisive factors in keeping China’s economy growing is the management of credit risk. Even though the new credit card business and small loans of China are not expected to hurt the Chinese economy any time soon; without a good credit risk management program, the country is still vulnerable to a banking crisis in the area of big business loans.

In the event of such crisis, the small credit market of plastic cards and micro credit would also make potential losses, given the intricate connection between the different services of commercial banks that engage in business with most types of loans mentioned in this discussion. In fact, if China fails to develop a credit risk management system now, its entire credit market could be at risk of complete closure. Commercial banks that would fail to sustain big business loans would certainly close down their credit card and micro credit services to boot. The latter are not as profitable for banks anyway.

The Chinese government’s concentration on credit card and micro credit expansion merely explains that these forms of credit are a necessity in the emerging economy which competes with the world’s business leader. Even so, the whole Chinese economy is at risk for as long as the country has not developed a sound credit risk management system.

References

  1. 800 mln bank cards in China, credit to grow within the next 2-3 years. (2005, June 15). IT Facts General. Retrieved 12 June 2007, from http://www. itfacts. biz/index. php? id=P3648.
  2. Chan, Anthony. (2006, December 22). China 2007: Five Key Risk Areas That Will Shape Policy and Outlook. Retrieved 12 June 2007, from http://www. alliancebernstein. com/investments/us/StoryPage. aspx? nid=5343;cid=42339.
  3. China’s Auto Credit Market Has Wide Appeal. (2002, April 24). People’s Daily. Retrieved 12 June 2007, from http://english. people. com. cn/200204/24/eng20020424_94661. shtml.
  4. Chinese Credit Card Market Overview. Retrieved 12 June 2007, from http://home3. americanexpress. com/corp/pc/2004/pdf/cc_market. pdf.
  5. Credit Cards: Conduits for Value Creation in Chinese Retail Banking. (2003). IBM Business Consulting Services. Retrieved 12 June 2007, from http://www- 03. ibm. com/industries/financialservices/doc/content/bin/bae_credit_cards_chinese_retail. pdf.
  6. Corporate Credit Risk Management Survey. Retrieved 12 June 2007, from http://www. coface. com. cn/en/rub04_actus/crmsurvey2006. htm.
  7. DaCosta, M. , ; Foo, J. (2002). China’s financial system: two decades of gradual reforms. Managerial Finance, Vol. 28, No. 10, pp. 3-18.
  8. Lei, Chang. (2006, January 12). Banking regulator urges increased loans. China Daily. Retrieved 12 June 2007, from http://english. gov. cn/2006-01/12/content_156305. htm.
  9. Pesek, William. (2005, May 19). South Korean credit crisis offers a lesson for China. Bloomberg News. Retrieved 12 June 2007, from http://www. iht. com/articles/2005/05/18/bloomberg/sxpesek. php.

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Creative Consumer Consultants Ltd

The removal of non-traceable costs in the income statement will direct a substantial increase in net income of all the departments concerned in this case study. Indeed, the divisions in which the highest percentage movement is outlined are those that have the greatest billing revenue. These comprise the New York and Paris Departments. This argument is sustained by the fact that the gross profit on sales of the New York division increased by 122. 22%, while that of the Paris section rose by 1,066. 67% when non-traceable expenditure are not allocated in the profit statement.

A salient objective of an organisation, that puts in practice a decentralization strategy like Creative Consumer Consultants Limited is to achieve goal congruence. Goal congruence encompasses the alignment of the individual aims of people working in the organization, namely management in line with the strategic objectives of the business enterprise. In the case at hand, the allocation of non-traceable expenditure is limiting the firm in attaining the objective outlined above. This is further compounded by the bonus scheme enacted in the organization.

This bonus system entails that office managers are rewarded a bonus income on the net income generated from operations. The main goal of such bonus is to stimulate effectiveness in the corporation. However, since non-traceable costs are apportioned to divisions on the basis of sales revenue, there is the potential risk that office managers limit the rate of orders in order to control such expense. This issue mainly applicable to the Paris department, which is presently incurring net losses of $1,000,000, materially stemming from non-traceable expenditure.

This allocation problem will therefore refrain Creative Consumer Consultants Limited in attaining goal congruence and be effective as top management necessitates. In fact the premise of the joint allocation problem stems from the concept that each department benefiting from a joint action should share the non-traceable cost, leading to the aforementioned problem. The allocation of non-traceable costs to the profit statements of the section also imposes a demotivating effect on office managers.

If the performance of the section will not be penalized from non-traceable costs, which are usually outside the control of office managers, such management will strive to work harder to enhance the billings revenue, which will ultimately increase the net profit of the section and lead the attainment of the bonus. This will thus enable the main objective of the company, which is goal congruence. A suitable pricing technique, such as transfer pricing should be adopted in Creative Consumer Consultants Limited in order to further stimulate goal congruence.

If pricing decisions are left unattended in the hands of departmental managers, there is the potential risk that a low price sufficient to cover the traceable expenditure is selected with the aim to penetrate the market. This will be conducted with the sole objective to boost the bonus. Therefore this agency cost may direct towards a weak financial performance for the organization. This also stems from the fact that non-traceable expenditure is neglected in the pricing decision.

Therefore it is critical that top management consistently monitors the prices charged and adopt a good pricing technique like the above mentioned in order to enhance that attainment of goal congruence. For example, let us hypothetically assume that a 10% bonus is provided on the department’s profit made and all the sections were capable to reach a profit of $16,000,000. The reduction of the non-traceable costs, which are similar to the case presented and bonus expenditure would lead to the net income portrayed below:

  1. Total Divisional Profit $16,000,000 Non-Traceable Consulting Costs $10,000,000 Non-Traceable Other Costs $ 2,500,000 Manager’s Bonus ($16,000,000 x 10%) $ 1,600,000 Overall Net Profit $ 1,900,000 Such computation portrays that even though divisional managers increased the total division profits by $500,000 ($16,000,000 – $15,500,000), the overall net income for Creative Consumer Consultants Limited will be $1,100,000 lower ($3,000,000 – $1,900,000).
  2. The above computation therefore further highlights that non-traceable costs should still play some importance in the decision making process of management. This thus requires the need of developing and maintaining appropriate cost systems to ensure that the aforementioned problems are mitigated. References: Drury C. (1996). Management and Cost Accounting. Fourth Edition. New York: International Thomson Business Press. Lucey T. (2003). Management Accounting. Fifth Edition. Great B

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When Consumer Is ‘Smart’ King

Table of contents

The world is at an inflection point where the way businesses interact with consumers, understand their user behavior, and create customer stickiness are seeing a 360° change. Among these businesses, the ones growing by leaps and bounds are in fintech space proving detrimental to traditional banking system. Clearly, next five years will be very exciting for digital businesses.

Learning from Consumers

There is the incipient trend of the learning economy emerging from the sharing economy that gave birth to businesses like Uber and Lyft. In the learning economy, the businesses that will come up will be radically different where the consumer andmarketer will have to learn from each other to create a wonderful experience. This means that companies will have to be dynamic about the way they interact with the consumers. Hence, the consumer will add a lot of learning to a business’s product proposition. 

If businesses were thinking so far that they passively use technology to mine consumer data, that will not happen. It will be a two-way process wherein the consumer will going to give businesses as many data points which will allow for mapping consumers’ habits.

“That’s how dynamic the creation process of customer identity is going to be for which businesses will have to become integrated into what the consumer believes in and what his/her beliefs are. As angel investors we have our ear to the ground to find future trendsetting entrepreneurs and invest in them. So for us trends are emerging from the ground,” says Chandni Jafri, CEO, Mumbai Angels.

Om Manchanda, CEO of pathology chain Dr Lal PathLabs echoes the significance of learning
directly from consumers. He maintains, “I reached out directly to patients, andcreated the brand’s  consumer preference. In our case the basis for that was delivering reports on time with quality and accessibility of the brand by the consumers.”

With the digital making its way, consumers have been using online channel to make an informed decision to buy a product, however the purchase happens eventually offline. This means consumers want to understand the right product and the best deal available for that product. “Brands have to be very
careful while making their online strategy as not just an e-sale strategy. Online medium is not just a sales channel. It is a very powerful and critical marketing channel even if your product doesn’t get sold through this channel,” says Prashant Tandon. Founder and CEO, 1mg – online pharmacy based in Gurgaon.

The ‘E’ Connect 

Branding often comes last in the to-do list of entrepreneurs launching their start-ups, at least until they are through with product development. Entrepreneurs essentially improve lives of people by solving their problems. The act of improving consumers’ lives is in itself the first step of branding. “Branding means
responding to a consumer need. Hence entrepreneurs should begin with branding as early as possible  instead of after developing the productat an advanced stage which is actually advertising not branding,” says Sameer Desai, Chief Strategy Officer, Seagull Brand Launch Centre. The format for branding is
to co-create it with customers for which entrepreneurs should have a consumer panel. They should continuously take their feedback of whether the product is solving their problem in the right way across different stages of product development – right from brainstorming the idea to launching it. “Branding is
a scientific process. Taking consumer feedback regularly will help entrepreneurs avoidending up being a  me-too product, slightly faster and cheaper than the existing product,” adds Desai.

There always has to be a line between product and brand. Products are always built on rationales while brands always have an emotional connect with consumers. On the surface, Uber is simply a cab-hailing service but for Uber itself, it is a personal cab and personal chauffeur provider to its consumers who wantsto be driven around instead of driving. “Brands are about emotional connect instead of just a good name, logo and packaging. Kodak is not around today because they thought that they are in the business of photographic films instead of preserving memories. Today no one buy these films. Had they thought of putting a phone in their cameras instead of smartphone makers today putting cameras in their phones, Kodak could have survived,” maintains Desai.

Banking 2.0

The onslaught on fintech start-ups on banks is quite clear when it comes to lending, payments, and personal finance on both B2B and B2C sides. It might just happen that banks over the time ends up becoming nothing more than just a repository of money, bereft of any financial services to offer. Technology is driving change in the fundamental access to banks’ products and fundamental change in consumer behavior. However banks, before it’s too late for them have realized the undergoing revolution.

“Banks today are no more just about withdrawalsand deposits. They are experiencing a similar revolution that retail sector Today banking has become very nimble which is also the need of the hour. In fact banks are trying to co-create solutions for consumers by partnering with start-ups. It is not unlikely to say that banks are becoming the new fintech businesses competing with any fintech start-up,” says Bipin Kaul, Zonal Head – Business Banking, IDFC Bank.

Even as banks sits on humongous amount of customer data but whether they are able to mine and analyze that data innovatively can be questioned because of their complex structure. However Kaul argues, “As a basic exercise in all banks, through tools like customer relationship management, banks can gauge customers’ transaction patterns, what kind of product they require etc. So data mining happens not just to enhance sales but also to pre-empt and prevent if anything wrong is happening.”

(This article first appeared in the Indian edition of Entrepreneur magazine (September 2016 Issue)

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Chances of not meeting consumer expectations is the biggest challenge of e-commerce

Online furnishing and home decor industry has seen dynamic changes over the years. From industry magnate like Kishore Biyani buying out Fab Furnish in an all-cash deal while companies like Furlenco, Rentomojo and  taking a slice of the emerging trend of “sharing economy.”

Home design and decor has also gained immense popularity as not only the rich but also the millennials and middle-incomed working professionals  now have access to high-quality furnishing and decor items and are ready to spend on these items.

Entrepreneur India spoke to Alok Duggal, Founder & COO, Homestudio.com, to understand the future of the e-furnishing space and where he sees his company in this domain.

“This domain has not evolved along with the changed needs of the Indian consumer”

“Today Indian consumers are much aware and are exposed to the global trends and have new expectations as per our research seeking modern and different solutions that match their lifestyle. The ease of selecting the international product with warranty along with hassle free maintenance is what gave birth to Homestudio,” he said.

Alok’s career took him to multiple cities. The challenge of getting furniture while changing houses always made him think why someone is not providing a one stop solution for affordable branded furniture. The company sees India as a nascent market in this category. Despite an external veneer of some old and new players in the category, it still operates as an unorganised sector, he adds.

Homestudio.com is an omni-channel startup offering global home solutions in the furniture category that are aligned to the new Indian urban lifestyle. The company secured its  first round of funding from Bren Corporation in December 2015 and complete 500+ installations and average ticket size is more than INR 80,000 per product.

How big is the online furnishing business in India? Where do you stand in the market?

Chances of not meeting consumer expectations are the biggest challenge of e-commerce. One needs to understand that most of the times e-commerce works with the predictable and tried & tested products/brands. But for new categories and products which the consumers have not had a before- hand experience, especially furniture; the bridge between imagination and reality can be vast.

Thus, small furniture are easy to sell but not the large ones. This is where we come in creating a repeat buying trend and its working for more than 60% of our customers. They are buying wardrobes / beds and room solutions online. Consumer expectations and product reality must be in sync. 

“We are bringing a unique concept to the market. We all understand it is a huge market on paper. But we are creating a complete new subcategory in this space without any parallels in the market. For the first 12-18 months we are not going to measure our performance just on a financial metric. There are millions of existing consumers ready for replacement of their current products and thousands of new apartments that are coming up every day. Our primary target at this stage is number of households which will experience our solutions, whether it is a single unit or the complete home solutions.”

Alok did not comment on becoming an acquisition target nor gave the company any sort of valuation for its business.

Homestudio would be taking the concept of omni channel to 5-6 locations in 2017. It will not only be online, but the company will set up experience zones and service centres in those cities so wherein they can provide an end to end solution to its customers just like the way they are doing it in Bangalore . Secondly in 2017, the company is planning to introduce more products with latest style and trends to live up with the Indian demand.

 

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Nalyzing the Impact of Product Placement on Consumer Culture

Analyzing the impact of product placement on consumer culture. Product placements are one of the advertising campaigns. The purpose of advertising is to inform and to alter the attitude of consumers toward product. Recently, the researchers recognize that consumer’s attitude toward the advertisement would affect the attitude toward products or brands. In other words, consumers tend to generate positive brand attitude and purchase intension toward the advertisement they like. Memory refers to the ability to recall the massage after watching the advertisement once.

Since the purpose of advertisement is to sell, the product must leave some impression before purchase behavior thereafter. The advertisement that cannot be remembered would not be recalled at the subsequent time point when the purchase decision is made. Therefore, whether the consumer could remember the advertisement is one of the measurements of the effectiveness of advertisement. At some point in time it was thought that attitude is the human recognition, assessment, emotional experience, and behavior tendency toward specific things or value.

It was also thought that attitude is a predetermined stance of a continuous and either positive or negative reactions that is acquired through learning. Some also though that attitude is the combination of concepts, belief, motivations, or habits related to a specific object. One of the author thought that attitude is a mental tendency through learning and is a long-lasting assessment toward things. It was said that the attitude is a long term judgment, emotional feelings, and behavior tendency of like or dislike toward object of concept.

The importance of brand attitude is the proxy for researcher to estimate the purchase intention and behavior of consumers. Most they believe that the depicted that the better attitude of an individual hold toward a brand, the more likely he would use the product. On the other hand, the less positive attitude, the less likely he would use the product. In the measurement of advertisement effect, the attitude the consumer hold is a good indicator of whether or not he would purchase the product in the future.

The purpose of marketing personnel is to persuade the consumer to hold a positive attitude to a product and to establish a better image to the consumer. “In developing the integrative framework on audience response to product placements, Balasubramanian, Karrh and Patwardhan (2006) organized their results and outcomes around the hierarchy-of–effects model, including cognition, affection and conation. In the study, ‘cognition’ referred to memory-related measures such as recognition and recall, ‘affection’ referred to positive or negative attitudes, and ‘conation’ referred to purchase intention and purchase behavior.

The framework is being adopted in this study to interpret result findings. ” “This is a quote from Ronald Grover Firms like Propaganda are in a sweet spot right now. TV audiences are fragmenting, and more and more viewers are skipping through commercials and heading to the Web. Advertisers, their budgets tight in a slack economy, see product placement as one of the most efficient ways to put their brands and products in front of large numbers of people. Blockbuster movies are particularly attractive because they reach an international audience of hundreds of millions—in the cinema and on DVD.

Blockbusters are Propaganda’s specialty. ”Advertisers and marketers is effected by the product placement due to they are not selling their ads for money. They are just telling you about them. The product place is selling the ad for money. In the long run the cost of product placement will not pay in the long run. For product placement you have to pay for an advertisement. I don’t think no one would want to pay for an ad. Most of the ads not are shown on TV with any cost. Product placement and branded entertainment are not mere trends.

There are various economic, technological and social transformations propelling “advertainment,” the merger between the advertising and entertainment industries, and they do not show signs of abating anytime soon. 6 Rather, it has been predicted that product placement expenditures will increase at a compounded rate of about fifteen percent per annum. ” One of my TV shows have impacted me by shorted TV shows due to they are advertising ads on that show a lot.

References

http://www.businessweek.com/magazine/content/09_28/b4139068367113.htm?chan=magazine+channel_what%27s+next http://www.cardozoaelj.net/issues/08/lee.pdf

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Freedom vs. Restrictions on Consumer Behavior

In capitalistic system, consumers have the complete freedom regarding their consumption. Consumers are at full liberty to buy whatever products and services they choose and are able to afford. It is the consumers who dictate what are to be produced and in what quantities. This is referred to as ‘sovereignty of consumers’. The consumer is the dictator in such an economy. In socialist countries, the economic planning regarding ‘what to produce’ and ‘for whom to produce’ comes under the purview of the Central Planning Authority.

The goods and services are distributed among the people through the government agencies. All the decisions regarding the production of goods and services and distribution of end products are not based on individual tastes and preferences, but on national goals. Existence vs. Non-Existence of Price-Profit mechanism: In a market economy, efficiency in the economy is achieved only through profit-motive and there is no existence of price-control system in such an economy. When the prices rise, profits will usually follow suit, and the rising profit would induce the producers to expand their business.

Herein lies the existence of ‘invisible hand’ of price-profit mechanism which always maintains a balance between consumer’s demand and producers’ supply. Here, the price plays a major role in determining the equilibrium of demand and supply of products and services. The United States, Britain, France etc. can be regarded as capitalistic or market economies. On the other hand, in centrally planned economies, owing to government’s ownership and control on the production procedures, the price system ceases to provide an automatic control mechanism over the economic operations.

The elimination of the price system replaces the motive of private profit by that of social gain. In fact, social gain forms the basis of socialistic or centrally planned economy. Such an economy is based on the ideal of equal opportunities for all, equal distribution of income and wealth etc. The USSR was an example of such an economy. At present, China can be regarded as the best example of a centrally planned economy. Conclusion In fact, virtually all the economies are, to some extent, mixed in nature.

This is because, no socialistic economy is devoid of some private ownership, and capitalist economies invariably possess some Government-regulated enterprises. Even in the United States and Britain, both private and public sectors exercise their control over the functioning of the economy. However, while the capital planning has brought about an amazing development in some European countries in the last fifty years, the remarkable success and miraculous achievement brought by central planning in several Asian countries has strengthened the people’s confidence and interest in it.

Thus, it may be concluded that the private and public sectors should not be looked upon as two distinct entities within a same country; they are and must function as an integrated portion of the same organism.

References

Market Economy, Answers. com, http://www. answers. com/topic/market-economy Mitra, J. K. Economics, An Introduction to its Basic Principles, 1968 Mukherjee, S. Nature and Functions of the Economic System, Modern Economic Theory, Ed. 3, Wishwa Prakashan, London, 1996, pp. 50-53 Capitalist Economy, University of Minnesota, http://www1. umn. edu/humanrts/edumat/sustecon/others/capitalist. htm

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Packaging on Consumer Buying Behavior

Consumer Attitude Toward Mobile Marketing INTRODUCTION Starting from background of the research area and why this study is important, this section of the study will continue with necessary definitions of the terms which will be used in this research. Additionally, this section will present problem discussion to enlighten the reader about current situation of the study area. Finally outline of the thesis will be shown to inform the reader about what will be encountered in the upcoming chapters of this study.

BACKGROUND After high penetration of the internet, mobile broadband subscription rate also increased dramatically. Subscriptions of mobile broadband outnumbered the subscriptions of broadband by 2008, which is indicating tremendous potential for mobile internet (International Telecommunication Union, 2009). Another research conducted by ITU (International Telecommunication Union, 2010) shows that 90% of the world population has internet access, and 80% of people who is living in rural areas also have internet access.

Different reasons are playing a role in rise of mobile devices usage, according to Grant et al. , (2007) Improvements in mobile technology, and integration of data, video and audio context in one mobile device absolutely increased the usage of mobile devices. Flexibility in communication and information sharing became possible with improvements in mobile technology and integration of internet and computing in to mobile medium (Siau et al. , 2005). The possibility of reaching the information anytime and anywhere triggered the improvements of mobile devices lately (Deans, 2005).

Grant also states that potential of interaction with consumer, target marketing and managing consumer relationship made mobile devices especially important channel for marketers (Grant et al. , 2007). Mobile services and marketing has become powerful source for marketing communication and distribution (Nysveen et al. , 2005). Backed up marketing activities with mobile devices provide companies an opportunity to directly communicate with consumers anytime, anywhere (Haghirian et al. , 2005).

Internet has been used as an effective channel by companies for building and managing consumer relationship (Deans, 2005). With the mobile internet, marketing opportunities are defined by different authors like Ahonen, (2002) that when mobile internet subscriptions outnumber the broadband subscriptions mobile internet will have the larger potential audience. Marketing potential of the mobile devices also found by Friedrich et al. , (2009) as, probably mobile medium have more potential * Mobile Technology

Certainly mobile technologies have a very crucial and important impact on today’s businesses (Haghirian et al. , 2005). As a result mobile technologies are providing many opportunities for marketing activities, especially direct communication opportunity with consumers anytime, anywhere (Haghirian et. al. , 2008). Latest improvements in an area of internet and wireless technology during the late 1990s paved the way for unique telecommunication service mobile internet (Okazaki, 2005). According to Siau et al. (2005) Mobile technology holds great strategic importance, and it is integrating internet and computing into wireless environment, and improving the communication, information sharing and interworking. Even mobile phones and assistive networks seem to be dominant mobile commerce providers, other technologies and devices will probably have important role in mobile commerce soon (Balasubramanian et al. , 2002). For instance, there are new devices that combine mobile phones and personal digital assistants’ (PDA) features in one device (ibid). Guo et al. , 2010: “Mobile communication devices, such as cell phones, laptops, PDAs, etc. have provided people with new approaches to accessing web contents, emails, instant messaging, and commerce services in a convenient and flexible fashion which fully takes the advantages of mobility and timeliness of mobile communication technologies. ” More information about mobile technology will be provided in chapter 2 (3G, Wi-Fi, Bluetooth, Software and Technology, SMS & MMS) * Electronic Commerce and Electronic Marketing Definitions of electronic business, electronic commerce, and internet commerce are gathered together under the same roof, and threated as the same term as electronic commerce (Elliot, 2002).

Electronic commerce defined by Turban et al. , (2006): “The process of buying, selling, transferring, or exchanging products, services and/or information via computer networks, including the internet. ” (p. 4). Providing interactive environment and personalizing the content of message enabling powerful digital marketing channel (mobile devices and internet) to interact with consumers (Strandvik et al. , 2006). There are four categories of electronic commerce identified, which are business-to-business (B2B), business-toconsumer( B2C), peer-to-peer (P2P) and consumer-to-business (C2B) as it shown in figure 11 (rayport et al. 2004) in next page. And B2C defined by Rayport as electronic commerce refers to exchanges between businesses and consumer. Business originating from… Business Consumers B2B| C2B| B2C| P2P| And selling to…Business Consumer FIGURE 1: Four categories of electronic commerce. According to Strauss et al. , (2006): “Electronic marketing, is the use of information technology in the process of creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stakeholders”.

Chaffey et al. , (2009), also adds that electronic marketing is part of the digital marketing and have more aspects than internet marketing (wireless media, email) such as electronic CRM (Customer relationship management) and digital customer data management. * Mobile Commerce and Mobile Marketing Business experts are estimating potential of mobile world without time and place boundaries (Balasubramanian et al. , 2002). Widespread usage of mobile phones accelerated the growth of usage of mobile devices to conduct mobile commerce (Xu, 2007).

Haghirian et al. , (2005), (p. 32c): “In a mobile world, these activities (process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges that satisfy individual and organizational goals) are performed via mobile devices, such as cellular phones and pagers, cordless telephones, personal digital assistants, two-way radios, baby crib monitors, wireless networking systems, global positioning systems (GPS) based locators and maps”.

Commonly mobile commerce is considered as part of the electronic commerce (Lian et al. , 2010). Currently there is no formal agreement of definition of mobile commerce, but widespread acceptance of mobile commerce is the use of mobile devices to interact with consumers and transactions that takes place on private or public networks (Balasubramanian et al. , 2002). By taking advantage of technology and applications, mobile internet become advantageous subsidiary channel for traditional electronic commerce, which is indicating big potential (Wang et al. 2010) Current improvements in mobile technology resulted in widespread usage and different functions of mobile devices, the mobile medium has turned into a powerful marketing channel, which allowed businesses to set up electronic presence alongside with their consumers without time and place boundaries (Toker et al. , 2010). The Mobile Marketing Association, (2008) defines mobile marketing as “The use of wireless media as an integrated content delivery and direct response vehicle within a cross-media marketing communications program. ” Anyway, it is important to clarify mobile marketing and mobile advertising (Leppaniemi et al. 2004). Hence Leppaniemi et al. , (2004) defines mobile advertising as “Any paid message communicated by mobile media with the intent to influence the attitudes, intentions and behavior of those addressed by the commercial messages. ”(p. 93-97) which can be also inferred from definitions mobile advertising is part of mobile marketing. After stating two types of mobile advertising which are push and pull advertising, Leppaniemi et al. , (2004) explains it as following: Leppaniemi et al. , (2004): “Advertising that is “pushed” to the users’ devices is generally used in conjunction with mobile advertising.

Push advertising may be unsolicited such as special promotions delivered by SMS to users within the context of an existing customer relationship, or it may be solicited where users agree to have certain services or promotions pushed to them at certain times (sponsored sports score alerts, for example). Pull advertising, on the other hand, is defined as an advertising that is attached to content or services that users request or “pull” to themselves. For instance, when a customer requests the local weather from mobile service provider, the content of the response, including any related advertising, is pull advertising. (p. 93-97) The increasing growth in the area of mobile commerce gives new dimensions to interactive marketing (Okazaki, 2009). Direct interaction with consumers is possible via mobile marketing without time and place boundaries (Dickinger et al. , 2005). Personal nature of the mobile phones provide an opportunity to understand buying habits and trends of individual consumers which is impossible in PC environment, that’s why marketers should see mobile internet as a powerful medium (Keefe, 2008). * Attitude According to Antonides et al. (1998), “Attitude is the individual predisposition to evaluate an object or an aspect of the world in a favorable or unfavorable manner. ” (p. 197) More information about consumer attitude will be provided in chapter 2, with focus on marketing activities. PROBLEM DISCUSSION Lehmann et al. , (1998): “The most important phase of any research is the definition of the problem to be addressed. ” Large variety of media channels increased the competition for drawing the attention of the consumer (Strandvik et al. , 2006). Mobile medium especially changing the marketing dynamics and pointing consumer needs and interests (Friedrich et al. 2009). In order to take advantage of mobile devices to establish marketing efficiency, it is important to understand how consumers perceive mobile advertising (Haghirian et al. , 2005). Mobile marketing allows marketers to immediately track success of their campaign and provide an opportunity to be more precise about place and how advertisements are conveyed to the consumers (Keefe, 2008). Mobile marketing is the only individual medium that enables interactive, direct interaction without time and place boundaries (Leppaniemi et al. 2004).

According to Haig, (2002) The fact is that mobile phones are the most individual device we own and it is possible to interact and target individually (ibid. ). High potential of innovative and creative mobile marketing indicates that it is extremely important to understand and gain deeper knowledge in consumer behavior in mobile commerce medium (Haghirian et al. , 2008). Because of the innovativeness, consumer’s reactions toward mobile marketing become critical for the success of mobile commerce (ibid). To improve the personalization of the advertising, behavioral advertisers are profiling the mobile consumers and tracking them (King et al. 2010). Personalized advertising is adding more value and improving experience for consumers (Dickinger et al. , 2004). Mobile phones have started to commercialize (Wei et al. , 2010). Latest improvements in communication technology opened the way for mobile advertising to be crucial component of marketing mix (Leppaniemi et al. 2004). Mobile marketing is gaining popularity with improvements in wireless technology and widespread usage of smart phones (Sun et al. , 2010). Despite the fact that mobile marketing increases quickly Haghirian et al. (2005) stated that Potential consumers didn’t have opportunity to express their feeling toward mobile marketing. According to Leppaniemi et al. 2004, even though a lot of research conducted in the area of mobile advertising, only few of these researches delivered useful knowledge to this area. Roach, (2009), (p. 124-138): “The fast pace of development within the mobile commerce industry has brought about a new field of academic research, in which studies have examined the variety of factors influencing the acceptance of mobile phone marketing from both consumer and organization perspectives.

The current literature remains largely inconsistent and fragmented. ” There is an accelerating growth of the articles in an area of mobile marketing since 2005, after some time it is stabilized around 42% per year (Toker et al. , 2010). The distribution of articles by year is shown in Figure22. FIGURE 2: Distributions of articles by year. Even though correlation between attitude towards mobile advertising and mobile marketing adoption is indicated, there are several different research investigating the attitude and outcome of it (Toker et al. , 2010). According to Soroa-Koury et. al. (2010) there is probably a positive correlation between positive attitude towards mobile advertising and eagerness to accept mobile advertising. Consumers’ mobile marketing experience and usage frequency of mobile marketing is also another important issue. Some mobile device users may have experienced the mobile marketing, some may have not. One type of usage segmentation is ? Volume Segmentation? and it is explained by Goldsmith et al. , (1999) as; Volume segmentation combines two different factor (frequency of use and usage rate) to divide market into three different categories which are: heavy users, light users and nonusers.

In order to understand the relation between frequency of usage and attitude Solomon, (2007) uses the ABC model of attitudes in order to draw attention to relation between components of ABC model of attitudes and usage segments: Solomon, (2007): “Most researchers agree that an attitude has three components: affect, behavior, and cognition. Affect refers to the way a consumer feels about an attitude object. Behavior involves the person’s intentions to do something with regard to an attitude object. Cognition refers to the beliefs a consumer has about an attitude object.

We can remember these three components of an attitude as the ABC model of attitudes. All three components of an attitude is important, but their relative importance will vary depending on a consumer’s level of motivation with regard to the attitude object, whether they are light or heavy users, and so on. ” (p. 237) General idea about internet advertising is rather entertaining or informative (Tsang et al. , 2004). Although the difference between internet advertising and general advertising is known, it is unclear how consumers feel about mobile advertising and the relation between attitude and behavior (ibid).

There is a big potential for marketers, but there is still lot to learn about mobile marketing by investigating it further (Haghirian et al. , 2005). It is found that younger people are faster than older people about adoption of new technology (Leek et al. , 2009). Consequently highest usage of mobile phone is the 18- 29 years old age group (ibid). Researches indicate that mobile phone is the most common way of communication among young people who uses email more than traditional voice calls (Okazaki, 2009).

As technology behind mobile phones improves more and increase their capacity to download and store video and music content, they are going to become more popular for young people (Grant et al. , 2007). As a result the reason why young people use mobile phones and how they use is topic worthy for researchers (ibid). The purpose of the research is to bring light and create understanding of consumers’ attitude formation toward mobile marketing, that’s why the following research problem is formulated: How is the young consumers’ attitude toward mobile marketing? RESEARCH PURPOSE AND RESEARCH QUESTIONS

Based on the problem discussion above to accomplish purpose the research is focusing on different factors that affecting consumer attitude toward mobile marketing. Basic aim of the research questions is to understand the effect of each factor on consumer attitude toward mobile marketing, whether positive or negative. Therefore; to increase awareness about the factors that influencing consumer’s attitude toward mobile marketing among young consumer;. Starting from available theories and models, the study will try to find important variables that affect consumer attitude toward mobile marketing.

In order to understand the effect of content on attitude toward mobile marketing with the focus on youth generation, first question is formulated to analyze further if consumer form a positive or negative attitude when content is considered. R. Q. 1: How content of mobile marketing play a role in formation of attitude toward mobile marketing? The main aim of the second question is to investigate further of the effect of personalization of mobile marketing on consumer attitude towards mobile marketing. In order to understand the effect of this variable on consumer attitude, second question is formulated as following: R. Q. : How personalization of mobile marketing play a role in formation of attitude toward mobile marketing? The study conducted by Soroa-Koury et al. , 2010 found that perceived usefulness of mobile marketing predicted attitude towards mobile marketing, whereas perceived ease-of-use of mobile marketing did not predict attitude towards mobile marketing. However situation may differ in mobile marketing context, hence the following hypotheses are developed: H. 1: Perceived usefulness has a positive effect on consumer attitude towards mobile marketing. H. 2: Perceived ease-of-use has a positive effect on consumer attitude towards mobile marketing.

RESEARCH HYPOTHESIS Hypothesis 1: Perceived Usefulness Analysis of hypothesis 1 “Perceived usefulness has a positive effect on consumer attitude towards mobile marketing. ” is presented for each case separately. Male All five of the male respondents agreed on that usefulness of mobile marketing has an positive impact on their attitude toward it, and they are more open to useful mobile marketing activities. According to Soroa- Koury et al. , (2010) perceived usefulness of mobile advertising predicts attitude toward it and positively influences consumer attitude towards mobile advertising.

During the interviews all of the respondents found different reasons to feel that mobile marketing is useful, their reaction towards useful mobile marketing was having positive feelings toward it. Female All five of the female respondents also stated different motivations to find mobile marketing useful. Usefulness of mobile marketing is directly correlated to reaction toward it, and all of the respondents underlined that usefulness of mobile marketing generates positive feelings towards provider and mobile marketing activity.

At this point findings of Soroa-Kory et al. , (2010) with responds of interviewees are matching. * Hypothesis 2: Perceived Ease-of-Use Analysis of hypothesis 2 ? Perceived ease-of-use has a positive effect on consumer attitude towards mobile marketing is presented for each cases separately. Male During the interviews perceived ease of use not found to be as important as usefulness of mobile marketing. All of the respondents agreed on that easiness of mobile marketing doesn’t necessarily creates positive attitude towards it. In accordance with Soroa-Kory et al. (2010) findings which is implying that perceived ease-of-use is not predicting consumer attitude toward mobile advertising, respondents also agreed that perceived ease-of-use is not effecting consumer attitude in a positive way and not a merit to measure consumer attitude toward mobile marketing. Apart from that one of the respondent doesn’t find mobile marketing easy to use while four of the respondent found mobile marketing easy to use and interact with. Female Three out of five respondents highlighted that mobile marketing is not easy to use and interact with.

All of the respondents underlined the fact that easiness of mobile marketing is essential and not an extra, consequently outcome of easiness doesn’t found to be positive by respondents. Findings of Soroa-Kory et al. , (2010) also approves that easiness of mobile marketing is not necessarily predicts the consumer attitude. During the interview one of the respondent highlighted that easiness is not carrying as LITERATURE REVIEW The previous chapter provided background and problem discussion to the study area of this thesis. This chapter will present the review of earlier studies and literature related to this research purpose.

Aim of this chapter is to deliver relevant literature about mobile marketing and attitude towards it. Firstly attitude patterns of the consumers towards mobile marketing will be presented, and secondly mobile marketing enabling technologies will be described. Finally review of the theories concerning the factors that affecting mobile marketing will take place. * Enabling Technologies & Types of Mobile Marketing Improved technology in mobile devices allowed us to surf the internet, find the location with GPS (Global Positioning System), tweet with friends or chat with them, watch movies and play games and so on (Liu et al. 2010)?? This part of the study will deliver information about technology that making mobile marketing possible and present types of current mobile marketing applications. * 3G and Wi-Fi The term 3G is one of the latest broadband mobile communication system that uses internet and variety of multimedia communications (Bao, 2010). Zeng et al. , (2009) explains the benefits of 3G by stating that; 3G enabled better data and voice transfer rate, and it is providing various different services like web browsing, video conferencing, e-commerce applications (Video, voice communication, online media, Mobile TV and etc. and personalized information services. Large variety of 3G mobile services transformed mobile devices from traditional voice phones to entertaining, life and business media (Yang, 2010). When we compare surfing on the internet via computer with via 3G there is some advantages of 3G can be seen like without time and place limitations, which are becoming an opportunity for mobile commerce to go further (Zeng et al. , 2009). And if special services can be introduced to people, it can accelerate the improvement of mobile commerce (ibid. ).

These days Wi-Fi is becoming more and more popular way to connect to the internet, people are taking advantage of connecting to internet without wires in hotels, at the university campus, in the office, and Wi-Fi is becoming synonymous with WLANs (wireless local area networks) allowing access to the internet (Hayes et al. , 2009). Currently Wi-Fi is available through wide range of mobile devices as a default function (Henry et al. , 2002). Wi-Fi hotspots are providing free internet access to everyone who is carrying a device with Wi-Fi function (ibid). * Mobile banner advertising

Developments in mobile screen technology increased the resolution and provided an opportunity for advertisers to implement higher quality images and banners on mobile devices (Mobile Marketing Association, 2007). Consequently advertisers can produce more efficient advertisements with higher quality, richer and bigger (ibid). Example of mobile banner advertising is shown in Figure 43 in next page. FIGURE 4: Example of Mobile Banner Advertising. * Location based marketing Location based services are tried to be produced by many marketers; the main value proposition is the location (Becker et al. 2010). However, location is not the main goal it is an instrument that empowering the services like mapping, advertising and search to be more valuable (ibid). Location-based services are very beneficial for local advertising campaigns: for example consumer may receive short message about the nearest restaurant or bus station with directions (Dickinger et al. , 2004). Location-based advertising utilizes the location by using individual consumers to target consumer in particular location (Tsang et al. 2004). Location based advertising is time sensitive in a way that advertisement can be sent to signed up client when this client pass through a certain point of purchase (Dickinger et al. , 2004). By tracking mobile devices technical address it is possible to detect local position of the user in the environment of mobile commerce (Lee et al. , 2007). As an example Telia (Swedish company), one of the biggest telecommunication company in Europe, applied real-time SMS game by using mobile devices osition to allow users to interact with each other while playing (Dickinger et al. , 2005). Contextual marketing is also possible with location based marketing. Example for contextual marketing, information or coupon about a specific product can be sent to consumer via mobile device while consumer is in the department store to buy specific product (Lee et al. , 2007). * Bluetooth According to Groten et al. , (2009): “Bluetooth is a radio interface for short-range connections between electronic devices” (p. 1134-1138).

If Bluetooth is enabled, any user with a mobile device can download rich content like graphics, video, sound, wallpaper, text, and software (Leek et al. , 2009). Interaction within mobile devices is possible via Bluetooth, mobile devices can connect to other mobile devices with Bluetooth if it is in range (Groten et al. , 2001). * Bluetooth wireless proximity based marketing The proximity path is the use of Bluetooth to interact with consumers which is called proximity marketing, or the local delivery of the content to mobile devices (Becker et al. 2010). The Bluetooth path is the usage of Bluetooth on mobile devices as a communication channel (ibid). Bluetooth technology provides a powerful opportunity for marketers to use location specific areas to reach consumers with rich content, and it is also cheaper and less complex than SMS (Short message service) and MMS (Multimedia message service) (Leek et al. , 2009). Bluecasting is the use of Bluetooth for mobile marketing purposes (Becker et al. , 2010). According to Becker et al. (2010) Bluetooth marketing can be explained as the placement of Bluetooth access point in any public place like airport, train station or any live event, and when consumer walks by this device and the Bluetooth is enabled on mobile device access point request automatically request interaction with mobile device. If user accepts the request Bluetooth access point sends rich content like game, ringtone sound, picture or any other form of content to users phone (ibid). As an example of this, rock group Coldplay (English famous rock group) used Bluetooth marketing when launching the new album X&Y, 20,000 people ownloaded content like sample tracks and clips from main rail terminals in London for two weeks (Tsiandar, 2006). * Software and Technology Mobile applications are available for mobile devices like enterprise digital assistants, mobile phones and personal digital assistants (PDA) (Ho et al. , 2010). Latest advances in mobile technology let mobile phones to have big memories, convenient internet connections and faster processers (Liu et al. , 2010). Lately mobile application market improved dramatically, number of content providers, application developers and advertisers increased which improved the mobile services and or functions (Ho et al. 2010). Example for large mobile application platforms are Google Android Market, Microsoft Windows Market, BlackBerry Application World, Nokia Ovi and Ovi Store etc. (ibid). Ho et al, (2010): “Mobile communication follows the development trend of internet, users can link with mobile software stores through internet, and download all kinds of applications, which has provided human beings with more diversified information application forms, and gradually changed people’s living habits and operation mode. It is indicated by research reports that growth rate of global smart phone in 2010 is as high as 78. %, showing that smart phone gradually becomes the mainstream in mobile phone market. Smart phone has the function of installing applications, provides users with more diversified mobile value-added services and will change the use habits in the future” (Ho et al. , 2010). * Application marketing Mobile applications can be used to create rich software experiences for consumers and can be provided to mobile devices like Ipad or smartphones (Becker et al, 2010). Mobile applications are similar to computer programs which are installed on mobile devices, and applications can serve in many ways like bank account balances, games (ibid).

Mobile applications can be used for branding and advertising purposes and can be sold to get money (Becker et al. , 2010). According to Mobile Marketing Association, integrating advertising into mobile applications generates new revenue streams for service providers, application developers and distributors. Mobile telecommunication companies already started to provide mobile television and digital video services in many places (Ograd, 2006). Mobile television is also another type of application that holds great potential for advertising, Ograd, 2006 explanes the mobile TV as:

Mobile TV will provide users an experience that they are already familiar with traditional broadcast television, and allow them to choose content (Ograd, 2006). With several multimedia options like camera, music player, radio and video recorder mobile TV will offer more interactive, active and individual experience than traditional broadcast TV (ibid). * QR Codes Another type of mobile marketing is Quick Response (QR) codes which is defined by Hirakawa et al. , (2009) as a matrix code (or two-dimensional bar code).

Flat surface advertising like paper and cyber media already become popular around the world (Hirakawa et al. ,2009). New method of flat surface advertisement is developed which is cooperating with URLs or QR codes (Quick response code) (ibid). Figure 54 in next page shows the example of QR code. FIGURE 5: Example of QR code. * Interactive Voice Response Interactive voice response is providing and option to send or receive voice calls with people and communicating with them without any live person is involved on the other side of the communication (Becker et al. , 2010). * SMS ; MMS

Short Message Service (SMS) defined by Taylor et al. , (2008) as a service enabling to send and receive short messages (up to 160 caracter) via mobile phones. According to Dickinger et al. , (2004) SMS is first and most prosperous type of mobile data transmission. MMS (multimedia message services) is the improved version of short messaging service which allows users to send combined video, sound and pictures (Okazaki, 2005). * SMS ; MMS marketing Personal nature of the mobile phones accelerated the usage rate of SMS and MMS in many parts of the world as a marketing channel (Taylor et al. 2008). Even tough MMS is used less than SMS, rapid growth in mobile technology will increase the rate of usage of music, videos, sounds and visuals in near future (ibid). SMS marketing can provide advantages like lower cost than other media channels, since the main expanse is buying mobile phone numbers (Dickinger et al. , 2004). According to Dickinger et al. , (2004) there are several different types of text messaging applications exists which are; information services, mobile couponing, mobile CRM (customer relationship management), branding, entertainment and product launches.

Mobile couponing is one type of specific promotion tool wich integrates classic couponing with mobile communications (Wehmeyer et al. , 2005). “Advertising funded information services include news, weather, traffic, market rates, horoscopes, or songs just played on the radio” (Dickinger et al. , 2004, p. 159-173). User may pay little or nothing for this kind of services and information (ibid). Companies are changing their focus from mass marketing media to more targeted personal media and replacing them with more personalized media (Leppaniemi et al. , 2008).

CRM is supported by text messages by allowing registered consumers to receive newsletters, special discounts, prizes and coupons (Dickinger et al. ,2004). According to Dickinger et al. , 2004 mobile marketing is such a tool that enables branding. Wella, one of the world’s leading cosmetic company, with special campaign they sent SMS messages to registered consumers with a kiss and consumers positive feelings about this campaign resulted in word of mouth by forwarding messages to friends (Dickinger et l. , 2004). Entertainment included marketing activities are capable of increasing the customer loyalty and add value (ibid). Attitude Attitude is a major factor in information systems and marketing researches (Tsang et al. , 2004). Attitude is outcome of what we say, feel and know (Mooij, 2005). For Solomon, (2009) “Attitude is a lasting general evaluation of people (including oneself), objects, advertisements or issues. ” (p. 237) It is important to highlight that attitude toward mobile advertising refers to consumers’ attitude toward advertising in general rather than one specific type of advertisement (Haghirian et al. , 2008). Our feelings about product advertising are directly effecting how we feel about the product itself (Solomon, 2009).

General public attitude toward advertising has been a main concern and focus for a long time (Tsang et al. , 2004). Consumer attitude toward mobile marketing has been popular among different researchers, especially focusing on mobile advertising (Tsang et al. , 2004; Xu, 2007; Haghirian et al. , 2008; Brackett et al. , 2001; Dickinger et al. ,2005). According to Shavitt et al. , (1998), even tough old studies show that there is an unfavorable manner toward advertising among consumers; some researchers found that there is favorable view of advertising.

However, situation in mobile marketing and advertising may differ. According to Dickinger et al. , (2004) mobile marketing is “Using interactive wireless media to provide customers with time and location sensitive, personalized information that promotes goods, services and ideas, thereby generating value for all stakeholders” (p. 159-173). According to Xu, (2007) it can be expected that mobile advertising is more valuable for consumers when considering location based services and time sensitive events.

Xu, (2007) also stated that personalization of mobile content can change the negative attitude of the public toward advertising. * Factors That Affecting Consumer Attitudes This part of the study will present current theories and models in the relevant literature to discuss different variables that playing a role in consumers attitude toward mobile marketing. The effect of personalization and content on attitude toward mobile marketing will be presented (Xu, 2007). Xu’s model of factors contributing to Attitude and intention toward mobile advertising is shown in Figure 65 below.

Entertainment Informativeness Intention Attitude Irritation Creditability Personalization FIGURE 6: Factors Contributing to Attitude and Intention toward Mobile Advertising. * Personalization and Content According to Xu, 2007 by personalizing the mobile advertising message consumer attitude can be improved. There is a direct correlation between content (Informative, irritation, credibility and entertaining variables of the content), of mobile marketing and personalization with consumer’s overall attitude (ibid). * Personalization

Mobile commerce holds a great potential for personalization, because of the nature of mobile devices they provide personal information of users (Lee et al. , 2003). Personalized advertising improve the experience for companies and consumers (Dickinger et al. , 2004). By allowing mobile advertising providers to collect data about demographics and location of the consumers, personalization improves the quality of mobile commerce and turns it into important medium (Xu, 2007). The impact of the message can be increased by personalizing the message (Dickinger et al. 2004). Success of the target marketing is based on well-structured and maintained databases (ibid). Marketers are gaining the advantage of personalization of the message and collecting consumer feedback and their choices, this is improving customer relation by enabling companies to communicate with them in very individual way (Haghirian et al. , 2005). Personalization of the message is not only making consumer more favorable about the mobile advertising, it is also improving the consumer attitude by turning unfavorable attitude to favorable attitude (Xu, 2007).

It is obvious that privacy concerns of the consumer is crucial and must be taken into account (Taylor et al. , 2008). Permission for personal information can be gathered but in some situations this information may be gathered without consumers will (Wei et al. , 2010). Barnes and Scornovacca, 2004 as cited in Leek et al. , 2009, personalized marketing messages are adding value to information service, and there is also a potential of decreasing the negative reaction of the consumer. * Content There are several researchers argue the importance of content in mobile marketing (Leppaniemi et al. 2004; Dickinger et al. , 2004; Haghirian et al. , 2005; Xu, 2007; Rebello et al. , 2009). According to Xu, 2007 personalization, entertainment and informativeness are the attributes of content that have positive effect on overall attitude, but irritation has negative impact on overall attitude. Attributes of the content is defined by Haghirian et al. , 2005 as entertainment, informativeness, credibility and irritation. According to Leppaniemi et al. , 2004 content of the message is crucial in all type of advertising and it is also valid in mobile advertising.

In order to communicate properly and efficiently with consumers, underlying factors of mobile advertising must be identified (ibid). Information and entertainment are found to be the most important acceptance attributes of mobile marketing (Bauer et al. ,2005). * Entertainment Customer loyalty can be increased with entertainment services, furthermore extra value can also be created for costumers (Haghirian et al. , 2005). Informative and entertaining messages with creativity is holding potential to generate positive attitude toward mobile marketing activity among consumers (Bauer et al. 2005). Entertainment of the mobile advertising message is highly important (Haghirian et al. , 2005). According to Tsang et al. , 2004 Entertainment is the most important attribute of the content that has an impact on overall attitude. Loyalty of the consumer can be increased with entertainment services and extra value for the customer can also be created with entertainment services (Haghirian et al. , 2005). Research conducted by Tsang et al. , 2004 found that entertainment is the major attribute that affects consumer attitude towardmobile advertising. Informativeness Assuming the mobile platform as a relatively new marketing channel, marketing centered activities like content and information sharing are main motivations for consumer acceptance of mobile marketing (Sultan et al. , 2010). The user needs easy access to the information that he or she is looking for (Haghirian et al. , 2005). The main difference between personalized mobile marketing with informativeness is that personalization highlights the individual preferences and adjusted to personal needs and interests (Xu et al. , 2007). * Credibility

Advertisement credibility is defined by Lutz et al. , 1989 as how consumers perceive the brand is truthful and believable, which mentioned in the advertising. Credibility of the advertisement should be considered as an important variable when determining the attitude toward advertisement; in addition to that attitude towards advertisement and mood should be ignored when considering the impact of them on attitude toward advertisement (ibid). There are no academic findings about the impact of the credibility that delivered to mobile devices (Haghirian et al. , 2005). * Irritation

According to Haghirian et al. , 2005 Confusion among consumers may cause negative reaction toward mobile advertising. Complex mobile advertising message can cause irritation among consumers, and this disturbance decrease the value of the advertising for consumers (ibid). According to Tsang et al. , 2004 there is a negative relation between attitude toward mobile advertising and irritation. * Perceived Usefulness and Ease of Use Several different researchers found that there is a powerful relation with user behavior and perceived usefulness and perceived ease-of-use (Davis, 1989).

Perceived ease-of-use and perceived usefulness are important variables when considering consumer adoption process of technologies (Soroa-Koury et al. , 2010). From different perspectives, perceived ease-of-use and perceived usefulness are significantly influential on consumer’s decision to adopt information technology (Davis, 1989). Theoretical model of Soroa-Koury et al. , (2010) shown in Figure 76 below. FIGURE 7: Theoretical model. Perceived usefulness Misperceptions Pluralistic Ignorance False consensus False uniqueness Attitude toward Mobile Advertising

Perceived Ease of use Intention to Adopt Mobile Advertising FIGURE 7: Theoretical model. Individuals’ acceptance is explained by Davis, 1989 with Technology acceptance model, and main drivers of this model are perceived usefulness and perceived ease-of-use. Perceived usefulness and perceived ease of use are examined by Soura-Koury et al. , 2010 as predictors of attitude towards mobile advertising. * Perceived usefulness Perceived usefulness is defined by Davis, 1989 as “The degree to which a person believes that using a particular system would enhance his or her job erformance. ” (p. 319-339) There is a positive correlation between perceived usefulness of mobile commerce and consumer satisfaction in mobile commerce environment (Lee et al. , 2007,). The study conducted by Soura-Koury et al. , (2010) also found that perceived usefulness is one of the key variable for prediction consumer attitude toward mobile advertising. * Perceived ease of use Perceived ease-of-use Is the evaluation of the user of how easy for him or her to interact with technology or particular information system (Zhiping, 2009).

Perceived ease of use, in contrast, refers to “the degree to which a person believes that using a particular system would be free of effort” (Davis, 1989, p. -319- 339). It is also claimed by Davis, 1989 easier applications have bigger potential to be accepted by users. RESEARCH METHODOLOGY This chapter will deliver information about research methodology, and selected type of research will be presented which suits best to this study. This chapter will start with defining the purpose of the study and continue with describing the research approach.

After that this chapter provides information about: Which strategy is chosen for this study, sample selection methods, how the information will be gathered for research, and analysis method and quality aspect of the study. * Research Purpose According to Chisnall, (1997) there are three main commonly accepted research design techniques listed as descriptive, exploratory and casual. These classified methods differ depending on research questions, research purpose, certainty of hypothesis that are presented and data collection method that employed (Aaker et al. , 2004).

When seeking insights to general problem of the research and relevant variables exploratory research technique is commonly adopted (Aaker et al. 2004). According to Lehmann et al. , (1998) exploratory research is used to identify basic information about the research area and formulating the hypothesis. Exploratory researches are focuses on identification of main nature of the research problems and formulation of hypothesis (ibid). “Descriptive studies, in contrast to exploratory research, stem from substantial prior knowledge of marketing variables” (Chisnall, 1997).

Descriptive research is largely used in marketing research studies (Aaker et al. , 2004). The main aim of descriptive research is to search for different aspects of the market environment (ibid). According to Lehmann et al. , (1998) descriptive studies are playing a bridge role between exploratory and casual studies. This type of studies is assuming the different variables as known facts and hypothesis are of general (ibid). Casual studies investigates the market behavior and evaluation of the relationships and interactions of market behavior and factors that affecting them (Chisnall, 1997).

For instance the relationship between demand elasticity and the degree to which advertising efforts may affect the sales (ibid). Casual studies are assuming not only the different variables, they are also assuming that how is the relation between them (hypothesis) (Lehann et al. , 1998). The purpose of this study is to seek insights in to the study, hence it is exploratory, but this research also aims to test different hypothesis which makes it partly casual.

Since casual studies concerned with hypothesis, and exploratory studies are good for seeking insight into general problem and investigatingthe relation between different variables to gain deeper understanding, this research is primarily exploratory and partly casual. * Research Approach There are different choices of research approaches are available, either the qualitative or quantitative research approach. Qualitative data is most used method when collection method of the study uses or generates non-numerical data (Saunders et al. d, 2007). one main purpose of the qualitative research is to seek insights into research problems (Hair et al. 2006). By asking questions to relatively small samples of respondents and observing respondents behaviors, qualitative data mainly focuses on collection of primary data with details (ibid). Qualitative data was perceived by different authors and researchers as less powerful and pure than quantitative data some time ago (Lehmann et al. , 1998). But recently, advantages of qualitative data is taking attention like cost saving feature, and realization of that truth is not necessarily correlated to size of sample made qualitative research more popular for marketing research (ibid).

According to Lehmann et al. , (1998): “Exploratory research tends to be qualitative and is very important in that it prevents preconceived notions from excluding potentially useful results” Since purpose of this study is to provide deeper understanding of the relation between consumer attitude and factors that effecting attitude, qualitative research approach found to be more convenient. Because qualitative research is more useful in terms of providing insights to research problem as Lehmann et al. , (1998) mentioned. * Research Strategy According to Saunders et al. (2007) there are several types of research strategy exists, which are presented as: survey, case study, grounded theory, experiment, archival research, and ethnography. “Case studies are exploratory research that involves intense investigation of one or a few past problem situations that are viewed as similar to the researcher’s current problem situation” (Hair et al. , 2006). According to Hair et al. , (2006) If case study strategy is employed in research it requires in-depth examination of the facts of interest. These facts could be salesperson, customer, store, market area, film, and so on (ibid).

Case study strategy have good ability to answer questions starting with ? why?? , ? what?? and ? how?? , and case studies are also good at answering questions like ? how? and ? what? (Sounders et al. , 2007). Because of this reason exploratory and explanatory researches most often employ case study strategy (ibid). According to Sounders et al. , (2007): “A case study strategy can incorporate multiple cases, that is, more than one case. The rationale for using multiple cases focuses upon the need to establish whether the findings of the first caseoccur in other cases and, as a consequence, the need to generalize from these findings.

Case study strategy can be very worthwhile way of exploring existing theory. ” (Sounders et al. , 2007) Case study is employed in this study as main research strategy. Since research questions of this study starts with how and case study deals very well with ? How?? questions, case study found to be most appropriate strategy for this study. Exploratory research approach of this study also requires case study as main strategy. In order to improve the quality of the research, the study incorporates with multiple cases, which are male case and female case. Sample selection Probability sampling is mostly used in cases of survey-based research techniques where it requires interferences from sample about the general population to answer research question(s) or objectives (Sounders et al. , 2007). Whereas non-probability sampling has ability to provide information-rich case study that explores the research question (ibid). Hence non-probability sampling is chosen as sampling strategy in this study. Purposive or judgmental sampling is one of the non-probability sampling that identified by Sounders et al. 2007 and described as it gives an option for researcher to use their judgment to choose cases which is most appropriate for researcher to answer research question and met the objectives of study. Research targets are exchange students and master student who are studying at Lulea university of Technology and who have experience in using mobile devices and aged between 18- 29. Master and exchange students are coming all around the world, by choosing respondents among exchange students and master students; this study is trying to collect broader data without restricting respondents to one particular country.

After starting to collect data ten students found to be sufficient to meet with research objective. Five male and five female respondents has chosen among students to be interviewed, which makes the number of respondents of each case equal. * Data Collection Interview is defined by Chisnall, (1997) as: “Interview is concerned with a purposeful exchange of meanings, and it is this interaction between interviewer and the respondent which contributes so much to the success of the interview” (Chisnall, 1997).

Valid and reliable data can be collected through interview which helps researcher to answer research questions and meet with research objectives (Sounders et al. , 2003). Hence this study employs interview technique to collect data, by doing so as Sounders et al. , 2007 stated, interview technique can be very handy in answering question ? how? and highlight on exploring ? why? this method found to be most appropriate technique, since this study aims to answer ? how questions. Required data has been collected by using semi-structured interviews. According to Sounders et al. (2003) in Semi-structured interviews have different types of themes and questions to be answered during the interview, and these may differentiate from interview to interview. In order to explore relationship between different variables in exploratory study semi-structured interviews may employed (ibid). Following Table 27 shows different types of interview in each of main research categories. As it can be seen from Table 2 below: Semi-structured interview technique suits best to this study by providing precise data for exploratory and explanatory research. One arrow in the table 2 means less frequent and wo arrows mean more frequent. ExploratoryDescriptiveExplanatory* Structured| | * | * | Semi-Structured| * | | * | In depth| * | | | TABLE 2: Uses of different types of interview in each of the main research categories. * Analysis Four dominant analytic techniques stated by Yin, 1994 which are: pattern-matching, explanation building, time series analysis, and program logic models. Each one of those technique is appropriate for bot single and multiple-case studies (ibid). For case study analysis, one of the most appropriate strategy is to use pattern-matching logic (Yin, 1994).

For case studies which are explanatory, there may be correlation between patterns and dependent or independent variables of the research (ibid). According to Sounders et al. , 2003: “The process of qualitative analysis generally involves the development of data categories, allocating units of studies’ original data to appropriate categories, recognizing relationships within and between categories of data, and developing and testing hypotheses to produce well-grounded conclusions” (Sounders et al. , 2003). In order to approve validity of the assumption gathered data from sample and mean of sample is calculated (Aaker et al. 2004). Within case and cross case analysis will be employed in this study to reduce the data and compare the data. Comparison between male (case 1) and female (case 2) respondents will be presented during the cross case analysis. Youth generation chosen as main target group, and for mobile marketing personalization found to be one of the concerns. But it is also important to understand if there is any difference between any gender to be more precise in personalizing the message and targeting the consumer. Finally findings of the analyses will be presented. Validity and Reliability “Reliability and validity are crucial aspects of research practice and the importance of these criteria should be full recognized by all who are engaged in survey work of any kind” (Chisnall, 1997). Reliability and validity are not completely separate terms, these terms are interconnected and in some degree they overlap with each other (Chismall, 1997). According to Sounders et al, (2007): ? Reliability refers to extend which your data collection techniques or analysis procedures will yield consistent findings? (Sounders et al. 2007). Taking as more as operational steps in research is the most common way to handle reliability problem (Yin, 1994). All the processes of research (questionnaires, interviews etc. ) conducted under control of supervisor of this research Hakan Perzon. Before conducting the interview on main respondent group, questions are tested on two representative respondents to improve structure and layout of the questionnaire. According to Sounders et al. , 2007 validity is about the reality of findings, whether the findings are actually what they seem to be.

Documentation of the fieldwork when conducting qualitative research is highly important in establishing validity effectively, which allow others to examine and check the validity of the research process (Hair et al. , 2007). Hence during the interviews, all the answers and opinions of respondents will be saved in written format to be able to establish validity. Respondents are chosen among students that have prior experience in using mobile devices that enables them to have appropriate knowledge in research area, extra information is also provided to respondents to enlarge their idea about mobile marketing.

To prevent misperception of mobile marketing and mobile advertising, respondents are also informed about this situation. Average time spend on each interview was around 50 minutes. CONCLUSIONS Based on analysis and finding, variables of content have different effect on consumer attitude. Some of the variables carry more importance than other variables and some of them have negative effect on attitude. For instance informativeness of mobile marketing perceived by both of the cases as most important factor in content of mobile marketing, whereas entertainment and credibility found to be less important than informativeness.

Irritation of the content is negatively correlated to overall attitude toward mobile marketing. It is highlighted by respondents that dominant irritation factor of mobile marketing message is permission. It can be concluded from findings that reaction toward disturbance is mainly negative whereas positive feelings generated positive outcome. Collected data from both of the cases shows that permission is very crucial in mobile marketing especially in personalized messages. Collected data bout permission, privacy and personalization is indicating that if permission is granted privacy must be assured for consumers to feel comfortable about personalized mobile marketing activities. Unpermitted mobile marketing activities that taking place without consumers will is creating inconvenience among consumers, and reaction toward this type of marketing messages are mostly negative. REFERENCES [1] Aaker D. A. ; Kumar V. ; Day G. S. ; Marketing Resarch (Eight edition), John Wiley ; Sons, Inc. , 2004 [2] Antonides G. nd Fred van Raaijd,Consumer behavior: A European Perspective, John Willey ; Sons Ltd. , (1998), pg. 197, 555 [3] Balasubramanian, S. , Peterson, R. A. and Jarvenpaa, S. L. , Exploring the Implications of MCommerce for Markets and Marketing, Journal of the Academy of Marketing Science 30(4), pp. 348 – 361. 2002 [4] Barnes, S. J. , and E. Scornovacca. “Mobile Marketing: The Role of Permission and Acceptance. ” International Journal of Mobile Communications, 2, 2, 128-39, (2004) [5] Bauer Hans H. , Stuart J.

Barnes, Tina Reichardt, Marcus M. Neumann, driving consumer acceptance of mobile marketing: a theoretical framework and empirical study, Journal of Electronic Commerce Research, VOL. 6, NO. 3, (2005) [6] Becker M. , Arnold J. , Mobile Marketing For Dummies, Wiley publishing Inc. (2010) [7] Bao Xin-ren, 3g based mobile internet in china: A service marketing research, Management and Service Science (MASS), 2010 International Conference, (2010) [8] Brackett Lana K. , Benjamin N. Carr, Jr. , Cyberspace Advertising vs. Other Media: Consumer vs. VIature Student Attitudes, Journal of advertising research, (2001) [9] Chaffey D. , Fiona Ellis-Chadwick, Richard Mayer, Kevin Johnston, Internet Marketing: Strategy, Implementation and Practice (Fourth edition), Pearson Education Limited, (2009) pg. 9 [10] Chisnall P. M. , Marketing Research (Fifth edition), Peter M. Chisnall, (1997) [11] Davis, F. D. , perceived usefulness, perceived ease of use, and user acceptance of information techlonogy, MIS quarterly 13(3), pg 319-339, (1989) [12] Deans P. Dancade, E-commerce and M-Commerce Technologies, IRM Press (an imprint of Ideal GroupInc. , (2005) pg. 1-32 [13] Dickinger A. , Jamie Murphy, Arno Scharl, Diffusion and success factors of mobile marketing, Elsevier B. V. (2004) p. 159-173 [14] Dickinger Astrid, Arno Scharl, Jamie Murphy, Diffusion and success factors of mobile marketing, Electronic Commerce Research and Applications 4 (2005) 159–173 [15] Dickinger Astrid, Parissa Haghirian, An Investigation and Conceptual Model of SMS Marketing, Proceedings of the 37th Hawaii International Conference on System Sciences, (2004) [16] Elliot S. Electronic commerce: B2C Strategies and Models, John Wiley ; Sons Ltd, 2002 pg. 2 [17] Friedrich R. , Florian Grone, Klaus Holbling, Michael Peterson, The march of mobile marketing: New Chances for Consumer Companies, New Opportunities for Mobiie Operators, Journal of the Advertising Research March 2009 [18] Goldsmith Ronald e. , and Stephen W. Litvin, Heavy users of travel agents: A segmentation analysis of vacation travelers, Journal of travel research, vol. 8, november (1999) [19] Grant I. , Stephanie O? Donohoe (2007), Why young consumers are not open to mobile marketing communication, International Journal of Advertising, 26(2), pp. 223–246 [20] Groten, D. ; Schmidt, J. R. ; Bluetooth-based mobile ad hoc networks: opportunities and challenges for a telecommunications operator, Vehicular Technology Conference, (2001), (p. 1134-1138)

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