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Home arrow Management arrow Strategic Management in the 21st Century. Corporate Strategy

Opportunity One: Partnerships for Satisfying Global Demand

The telephony industry was originally highly vertically integrated, with single telephone companies developing infrastructure, manufacturing consumer equipment (telephones), and providing both business and household service. This level of integration and concentration offered few opportunities for partnerships and retarded the fulfillment of consumer demand. Although the telephone was invented in 1876 by Alexander Graham Bell,46 the diffusion of this technology in the United States and other countries was dependent upon the creation of substantial infrastructure. This in turn typically necessitated either direct government investment and construction, or governments granting monopoly status to an individual firm.47 Contrary to their original purpose, these monopolies served to further slow the diffusion of telephone service in many countries. Even in the United States where limited regional competition emerged to advance the diffusion of telephones, it was not until the mid-1950s that 70 percent of U.S. families had phone service.48 In contrast, in the 25 years from 1902 to 1927, car ownership in the United States expanded from less than 1 percent of families to over 70 percent.49 This difference is even more impressive considering the relatively high price of car ownership in comparison to telephone service.

During the 27 years from 1983 to 2010, mobile phone ownership worldwide grew from less than 1 percent of individuals owning a mobile phone to more than 116 mobile phone subscriptions per 100 inhabitants in developed countries, and nearly 70 percent of individuals in the developing world having mobile phone service.50 In a worldwide population of seven billion, there are now in excess of 5.3 billion cellular phone subscriptions.51 This unprecedented scale of market penetration represents the first opportunity for marketers: meeting demand for mobile phone devices and service. Exploiting this opportunity, from either the device or the service side, requires collaboration with partners on the other side. The rapid expansion in mobile phone ownership can undeniably be attributed in part to the complex network of collaborative partnerships that distinguish this sector in contrast to the integration and autonomy that characterized the original phone industry.

Opportunity Two: Partnerships for Developing Complementary Products

Although the mobile phone industry illustrates a new model of collaboration and partnership that can rapidly quench seemingly insatiable demand, it also exemplifies how manifold marketing opportunities are created by new technologies. Similar to the development of railroads in the United States 130 years ago and the rapid penetration of automobiles 100 years ago, the global spread of mobile phones represents both an illustration of the new competitive environment and a new medium for marketers to achieve their goals. Certain technologies can present both marketing opportunities in themselves, and also serve as a medium for new marketing strategies. For example, nearly 1.6 billion mobile phone devices were sold worldwide in 2010, and sales are growing rapidly.52 This has created significant market potential for organizations that provide accessory goods and services to phone owners. To exploit this again requires that new forms of collaborative partnerships be developed. For example, consider the potential growth in mobile phone software applications. The first independently developed phone application was sold in July 2008, yet by January 2011, there had been over 10 billion downloads from Apple's Website alone, which offered over 350,000 different applications for the iPhone.53 Worldwide revenues for mobile phone applications were estimated to be $5.2 billion in 2010.54 It is projected that by 2014, there will be over 185 billion downloads of mobile phone applications, generating annual revenues that will reach $58 billion.55 In short, the mobile phone may have driven the most dramatic velocity and scale of product penetration and accessory product development in the history of marketing. This is all the more remarkable given the relatively high price of the product when compared to many other consumer goods, and the significant infrastructure needed before demand can be cultivated.

Opportunity Three: Partnerships for New Marketing Approaches

The rapid global diffusion of mobile phones offers new marketing opportunities for companies that operate in different industry sectors. Advertisements, store displays, product packages, and even billboards now frequently display a quick response code (QR), a pattern that can be scanned by mobile phones enabling consumers to directly access marketing information (via Website, phone, or video). Through partnerships with mobile phone handset manufacturers, service providers, and marketing agencies, organizations can use QRs to provide new levels of customer service and new ways of connecting with potential customers. For example, mobile phones can now be used for checking and comparing store prices, as instruments of consumer education regarding goods and services, and as methods of making electronic payments—a method that may soon eclipse or supplant debit card use in many countries. Since many mobile phones are now equipped with GPS, Wi-Fi, WiMAX, and/or Bluetooth capabilities, they can also be used in a variety of other applications that empower both consumers and marketers. For example, mobile phones can be used to track the geographic movement of owners, as a medium for advertising and sales promotion, and as devices for automatically accessing and modifying phone applications and files, all while the user is mobile.

To illustrate how the new capabilities of mobile phones can be leveraged in a synergistic manner and create new opportunities from a strategy perspective, consider the following example. Phones can automatically compile shopping lists for consumers based on existing consumer home inventory, search for available coupons on the listed merchandise, and provide directions to, and operating hours of, relevant stores nearby. Since many retailers now have in store hardware that can detect the presence and type of Smartphone a shopper possesses as well as its user history, store maps, customized messages, and targeted coupons can be sent to patrons as they enter the shopping environment. Updated messages can be sent as the shopper moves through the store, notifying them of merchandise shelf locations and promotional offers. Upon the customer's exit from the store, the phone can provide directions to his/her car, provide a summary of the shopping trip acquisitions and expenses, and convey a "thank-you" message to the consumer for their patronage. In summary, global ownership rates for mobile phones that are rapidly approaching 100 percent represent an unprecedented panorama of opportunities for marketers to reach consumers, provide exceptional customer service, and facilitate exchange.

 
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