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Odvarko, Jakub - 508480 - Senior Project Thesis
Odvarko, Jakub - 508480 - Senior Project Thesis
consumer behavior
Thesis
By
Jakub Odvarko
Bachelor of Science
In
Business Administration
2016
https://elearning.unyp.cz/pluginfile.php/58141/mod_data/content/267/Odvarko%2C%20Jakub_508480_Senior%20Project%20Thesis.pdf
Acknowledgement
At first, I would like to thank Professor Starr-Glass for his guidance throughout writing process. He
has been tremendous mentor, who has been always prepared to help and offer useful advices.
Further, I would like to thank my parents for their unconditional support during my time at
I would also like to thank Barbora, for her support and patience.
These people made my studies and writing my thesis much easier. Thank you!
Outline:
1. Abstract
2. Introduction
3. History
3.1 Internet
4.4 Applications
4.6 FOMO
4.8.1 Graphs
4.8.2 Security
5. Consumer behavior
7. Conclusion
1. ABSTRACT
Research question: How smartphones and applications have changed the market and
consumer behavior?
Popularity of internet has been rising exponential since its introduction in 1989, companies
recognized potential of this behavior pretty quickly and electronic commerce established
itself as important part how to do business between customers and companies. Importance
devices, through which people were able to be online all the time.
Sales of smartphones exceeded even optimistic expectations and they were quickly
were able to expose customers to advertisement all the time and were modifying their
e-commerce more and more companies started adjusting their offer towards mobile webs
first.
Useful tool how utilize possibilities of smartphone became applications. They were created
specifically for smartphones users and enabled producers to track customers in much better
way. Via features such as location based marketing, or push notifications companies were
able to notify customers with their messages at perfect time and place.
From economical point of view, companies were investing into mobile advertisement more
On the other hand, internet in smartphones did not bring just possibility to advertise and sell
24/7. It also gave customers inexhaustible amount of choices and ability to search and share
everything within a while. It results to situation, when people base their decision more on
advices from people, than from companies. For companies it means, buying cycle is never
ending and attitude of one costumer after the purchase affects more and more people,
whether buy, or not to buy particular product. When companies want to provide good
service and affect wide scale of people, they have to incorporate customers in development
of products and listen what they want, it is the right way how to spread good perception of
company among users and also a way, where companies will enjoy increasing revenues and
Since the introduction of Internet in 1989, possibility to be online was more and more
popular among people. Amount of Internet users and time spent browsing webs were increasing
heavily. It urged companies to offer their products and services not only in their stores, but also
It affected not only interactions between companies and customers (B2C), but also
interaction among firms (B2B), customers (C2C), and enabled people to offer their ideas to
companies. (C2B).
As people seek possibility to be online more and more often and browse internet
everywhere, anytime. It leads to creation of portable devices, that would comply these
requirements.
First attempts were not so successful, while design of mobile web pages was too different
from design on their PCs. It changed in year 2007, when CEO of Apple Steve Jobs introduced
iPhone, mobile that was multifunctional and that was aimed to offer people same features as their
PCs at home.
The aim of my thesis is to explore deeply how this invention have changed the world. In
order to create reliable description, I will describe its impact from companies´ point of view and
In the first part, I will describe what companies had to change in order to fully utilize
opportunities smartphones were offering them. I will deal with changes in marketing and
advertisement and what effect new strategies of companies had on their commerce.
I will further focus on important task connected with smartphones – mobile applications,
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As a goal of this part I want to describe role of smartphones, which were not just mobile
phones anymore, but which were tools, which had higher and higher impact on the success of
businesses.
In the second part, I want to describe, that companies were not the only ones, that were
affected.
With help of description of consumer behavior tendencies, I will describe how smartphones
affected buying process, purchasing behavior factors that were influencing customers and their new
position caused by enormous amount of information and ability to interact and share opinions with
As a goal of second part I want to describe changes that companies had to take, in order to
commerce and consumer behavior, these findings I support with high amount of articles from
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3. HISTORY
3.1 Internet
In order to explain how development of smartphones changed the market I have to go back
to the past. A lot of people connect smartphone era with introduction of iPhone and they are not
entirely incorrect, however in order to understand this boom better, let me go even further to year
1989, when Sir Tim Berners Lee invented World Wide Web.
As shows table 1, it took a few years before people got used to looking for information
online, but from that time, amount of users of internet worldwide kept increasing heavily to
more than 3,6 billion users by 2016. When I take into account latest statistic of world population,
which was approximately 7,2 billion people, it means that half of the world is “online”. (Internet
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Table 1. Internet users online in millions
Note. Retrieved from Open Learn Business Studies. Copyright 2013 by Dr. Fiona Ellis-Chadwick.
It did not take long and customers had another option, not only they could look for
information online, internet became also place where companies, or customers went, when they
Purchasing and selling goods and services through electronic network, which involved some
sort of payment was designated as electronic commerce (e-commerce) and because of increasing
popularity of internet, it was becoming more and more important mediator in business interactions
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Some kind of attempts to transfer through electronic modes occurred already in 1960s, when
electronic data was interchanged on value added networks (VANs), however real boom of
electronic commerce is connected with the introduction of internet and mainly with the mid and late
Electronic commerce was firstly divided into three classes, inter-organizational (B2B), intra-
organizational (within business) and customer to business. Then, it was slightly modified according
Business to customer (B2C) - company sells to customers, there is no human interaction, purchase
Customer to business (C2B) - customer has an idea to create a project and he offers it through
Customer to customer (C2C) - online webpages that work as a marketplace, where individuals try
As shows curve at table 2 bellow, advantages of e-commerce such as wider offer, speed or
almost constant availability 24/7 outweighed disadvantages such as customers had to wait for
ordered product, or that they could not touch it and see it in front of them - from year 1996 amount
of purchasing activities through internet went steadily up quite similarly with the increasing amount
of internet users.
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Note. Retrieved from DigitalSuperHighway. Copyright 2002 by NUA Internet Studies. Reprinted
with permission.
http://www.digitalsuperhighway.com/Future/InfoSuperhighway.html.
As time went, inventors came with something even more revolutionary, devices through
which people were able to use internet wherever they want - portable devices.
Some kind of portable devices were available already in 1980s. There were phones in luxury
cars, or limousines, in late 80s businessmen used pagers, that reminded them, when they missed call
in order to call back, or than in early 90s appeared personal digital assistants (PDA). (Sailus,2014)
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In this period of time, when the first wireless telephone technology (1G), was being replaced
by the second generation (2G) there were available first ``smartphones``, mobiles that were able to
In 1992 was introduced Simon Personal Communicator from IBM, and next companies
followed, Nokia with its Nokia 9000, or Ericsson with its GS88. (Reed, 2010)
Even though they were never called smartphones and they were very distant from
smartphones as we know at this time, they had the first similarities. Besides calling, they were able
to send and receive emails, play role of personal data assistants, or enter command to fax machine.
(Taylor, 2014)
First attempts to incorporate ability to be browsing web through mobile phone were done
shortly before millennium, in 1999. Beginnings were difficult, not only navigating through press
buttons was not easy, mainly almost no web pages were set for mobile web, so in fact it was
possible to check only basic news, or emails, not mentioning that because of the rarity of web in
mobile it was quite expensive, thus not so wide scale of people was using it. (Reed, 2010)
occurred, it was an intermediate step before January 2007, when CEO of Apple, Steve Jobs
introduced iPhone and possibility of web browsing from mobile should have become something
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4. SMARTPHONES AND APPLICATIONS
Opinions on iPhone at first differed, on one side Steve Jobs, who was describing it as
something revolutionary and magical, what was 5 years ahead of any other mobile phone device, on
the other side, heads of some other companies, such as Steve Ballmer, chief of Microsoft, who was
describing it as overpriced, difficulty manageable and inutile for business people. (Arthur, 2012)
Consumers determined the winner right away, Apple sold 270 000 iPhones within the first
30 hours when they put up iPhone for sale, and predictions were to sell minimum 10 million by the
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Numbers exceeded expectations, Apple managed to sell 1.39 million iPhones within 2007
Times when mobile phones were used by majority people only for making phone calls and
sending messages were gone, by introduction of iPhone, they became multifunctional, almost
everything could be searched, shared with people all around the world, or purchased within a while,
namely 24/7.
Competitors had to react, some such as Nokia still believed in their strategy and in their
strong position on the market, the others followed Apple and prepared their smartphones. Already
in November 2008 was launched first smartphone with Android operating system G1 and others
started bringing their products not so much later. When I look at table 3, it was definitely step in a
right direction, people adopted smartphones very fast, and sales went up exponential. (Arthur, 2012)
Note. Retrieved from Arstechnica, Copyright 2012 by Arstechnica. Reprinted with permission
http://arstechnica.com/business/2012/08/from-altair-to-ipad-35-years-of-personal-computer-market-
share/4/
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As can be seen on table 4. smartphones already in 2012 held more than half of the market
with smart connected devices and according to International Data Corporation, market seemed to be
Note. Retrived from Fidelityilf, Copyright 2012 IDC. Reprinted with permission.
http://www.fidelityilf.com/market_news/21Century/pdf/mobile-and-ecom.pdf
It was estimated that by 2016 2 billion people would use smartphones, which basically
meant almost every 4th person on the planet. As can be seen on the table 5, numbers are likely to
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exceed expectations again and it seems very likely that in this year smartphone users exceed
number of 2 billion by around 100 000 million users, same tendency should follow also in near
future, optimistic statistics talk even about third of the world`s population by the end of 2017 to be
owners of smartphone, however even the more ``skeptical`` ones show unequivocal tendency.
Note. Retrieved from Statista, Copyright 2016 Statista. Reprinted with permission
https://www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/
When I look one more time at the table 5 above, on one hand we can see that year on year
growth is decreasing (2014-2015 18,4%, 2015 - 16 12,9%, forecast 2016 - 17 10,4%, 2017-18
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9,05%, 2018-19 7,11%), however it does not signal decreasing popularity of smartphones, it is
simply caused, that more and more people own smartphone already, numbers still increase steadily
and it is not likely to stop in the future. Because of circumambient popularity of smartphones all
kinds of customers demand them, even companies with cheaper technological devices need to have
smartphones in their offer and therefore they become much more affordable to wide scale of people,
when there are already smartphones for less than 50 dollars, smartphones from being something
special, became something very usual nowadays and creators adopted their production towards this
Beginnings of smartphones were however not without difficulties, even though amount of
users was increasing steadily, a lot of people complained about several things about these new
technological devices.
Some of the difficulties such as smaller size of the screen, or awkward orientation without
mouse were more of a matter of time until customers got used to them, moreover these
Main problem was insufficient compatibility with an offer on websites on PCs, while ability
to be web browsing through mobile was one of the primary aims of smartphones. In 2009 more than
third of websites were not optimized for mobile devices and even when they were optimized,
people complained about difficulties with opening them and slow downloading. (Burnes, 2010)
Already in that year 2009 Luke Wroblewski, product director at Google, pointed on
increasing popularity and potential capabilities of smartphones, thus he was advising designers to
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switch from PC first strategy, when websites were firstly created for personal computers and after
Future proved him right, increasing popularity and potential of smartphones caused, they
became practically new personal computers and people were making more and more decisions from
them, thus it seemed as better place for advertisement and interaction with customers.
In order to exploit capabilities of smartphones better, companies started shifting their offer
of products and services further from desktop first strategy in favor of smartphones. This strategy
was called mobile first strategy, in other words they intended to design content of websites more in
favor of mobile platforms and give customers what they want - faster loading of webpages and
However, mobile first strategy can be better described as ``mobile equal strategy``. There
are companies such as Uber, that use only smartphone for their business and interaction with
clients, however for majority of firms, mobile first strategy does not mean, that other devices are
useless. Even when shifting strategy in favor of one device, it is understandable and efficient to
Smartphones are thought to be great tool for interaction with clients 24/7, researching and
purchasing stuff that customers are familiar with, that do not need much consideration, or profound
research, on the other hand PCs still have also their advantages, such as for example larger space of
desktop, which not only shows more content, but understandably give companies also bigger space
for advertisement and promotion, from customer`s point of view they are thought to be better for
deeper research which requires more thinking, when purchasing more expensive items, or new
PCs and smartphones should not be taken as replacements, or even competitors, actually in
order for companies to fully exploit possibilities of technologies, they should be taken as
complements, that cooperate among each other effectively, while every device is useful for
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The need to be compatible is supported by survey from ExactTargetMarketing that revealed,
for 91% consumers it is important to have access to the offer of the company across all devices.
(Iyoob, 2015)
More than 40% adults proclaimed they don't have problem to start an activity on one
device, and continue, or finish it on another one. The number goes even higher, when the research
focused on the amount of devices the person owns, 53% of people who own 2 devices are glad
when they can do the same thing on their devices, talking about people with 3 devices the
percentage was even 77% of customers who want to switch from one device to another. (Singer,
2014)
Companies nowadays need to allow customer to do same things, when they switch from one
device to another, it is crucial to make sure different devices and offer on them are compatible
together and as bonus they have to utilize features and benefits that each type of device offers them.
There are six main types of communication, how marketers interact with clients:
advertising, sponsorship, sales promotion, personal selling, public relation and online marketing (e-
There had been marketing communication through phones within online marketing already
before introduction of smartphones. Companies interacted with clients via SMS, or MMS, through
which they could send relevant marketing messages at first in form of texts, and later in form of
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Already at that time phones used first proximity systems, such as proximity bluetooth
marketing, which defined target subscribers in near geographical area and from broadcasting
stations they sent him appropriate content to catch their attention. (Rayfield, 2010)
Another marketing techniques was e.g. voice marketing, which was not very popular among
people, it is based on calling sample of people from the list that was created before and people than
hear pre-recorded message. (Smidova, 2013) (Car, Simunic and Laskarin, 2013)
With calling clients, companies could utilize the Pay Per Call in mobile marketing, that
worked on same basis as pay per click, provider paid for advertisement according to how many
times customers called the number from the advertisement. (Smidova, 2013) (Car, Simunic and
Laskarin, 2013)
new marketing strategies and further increased the importance of mobile as a marketing tool.
Innovative companies with experiences with electronic commerce saw it as a new communication
channel with high potential, how to reached the consumer. (Lamarre, Galarneau and Boeck, 2011)
Whether internet changed the way for marketers how to interact with customers,
smartphones shifted this even further. On PCs customers were online and offline, however on
smartphones they were online practically all the time, so it was big chance how to expose them
According to comScore, people on average spend 60% of their digital time on their
smartphones and check their mobile 150 times a day, it means 3.2 hours that could be used for
Simply put, smartphones changed position of mobile phones from one of the ways how to
do marketing and affect customers, to way with potential to become the most important
communication trend, which increases and makes easier two-way interaction between customer and
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For description of mobile marketing can be used abbreviation in form of fittingly word
When I focus on new marketing techniques connected with smartphones and their
usefulness for target audience preferences I have to at first mention mobile webs, mobile version of
web page that fits on a smartphone had increasing importance, in order to make it easy for people to
With mobile webs were connected also mobile banner adds. I have said earlier, PCs were
better for advertisement because of bigger screens, however companies could not resign to have
advertisement on such emerging product as smartphone was and had to modify it to fit on smaller
Next feature was Quick response barcode (QR code), which was pictured on print ads. This
code could be scanned through smartphone and client received data from the barcode. This is
interconnection of digital and print advertisement, whose advantage is, that QR codes are able to
gather a lot of data, thus client can get quickly and without need of further search appropriate
In connection with smartphones there was one feature, that surpassed in importance the
others, mobile webs were still not perfect and on smartphones they often lacked important features,
that were available on PC. It led to increasing amount and importance of mobile applications, which
were able to utilize features of smartphones and connect with customers at perfect time and place,
New features obviously lower use of previous techniques such as sending sms, or mms,
while there were suddenly better ways how to promote products and services, however they did not
make them useless, while these techniques could be still efficiently used in order to let customers
Increasing importance of mobile internet, can be also supported by the table 6 bellow, that
shows how companies realized potential opportunities and started investing in advertisement on
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internet on smartphones. These investments went sharply up, in only 3 years from 2012 to last year the
increase was by almost 50%, and by 2018 predictions speak even about almost 120% increase in comparison
to year 2012.
Note retrieved from Content-loop, Copyright 2014 eMarketer. Reprinted with permission
http://www.content-loop.com/10-mobile-marketing-statistics-help-justify-budget/
4.4 Applications
As one of the features of mobile marketing I mentioned mobile applications, which however
5), thus people were online more and more often, so it was crucial to edit and optimize content
towards smartphones. In order to satisfy all interested parties companies not just had to prepare
products and services that people wanted, but prepare them also in ``packages``, that customers
At first I would like to say what is main difference between application and mobile website.
Mobile website is in general similar to the website, that can be seen on PC, however because of
smaller size of screen, design is usually slightly different than on PC, without some of additional
features.
On the other hand, applications are since beginning prepared for small touch screens.
Similarly, to websites they show content of the page, however they leverage features and simplicity
of smartphone such as navigation to particular place (location based mapping), writing down dates
connected with the service, camera to take photo and use it for further actions, or click-to call, for
dialing a phone number with just one click, to receive further information from expert after doing
initial research and many others. It is way how to maximally utilize smartphones and make easier
and faster communication with customer in order to understand them. (Mobile Apps: What
Application can be powerful tool how to create strong relationship, that will push customers
to engage with the company again and again and though it strengthens their loyalty. (Spanier, 2016)
winner``. Researches showed, 85% of smartphone users preferred applications and used them 90%
Main aspects, they appreciated were higher convenience (55%), speed (48%) and simplicity
when browsing and ability to connect different services in smartphone (40%) (Mobile Apps: What
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Table 7 bellow shows amount of downloaded apps year on year, and it can be said, that their
Su Jung Kim commented applications this way: ,,Mobile applications are the complete
changer in the way of communicating, not primarily among people but mainly in interconnection
between firm and customers. Efficient usage of applications is able to boost a company bottom line
and change the way the cards are dealt on the market and has potential to create dominance in the
Note. Retrieved from Statista. Copyright 2016 Statista. Reprinted with permission
https://www.statista.com/statistics/266488/forecast-of-mobile-app-downloads/
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4.5 Marketing through application
As I said in previous chapter, applications were very popular among users, thus it seemed as a useful
tool how to interact with the customer, in this chapter I will speak about how they affected marketing of
companies.
Companies should not care only about fact, that smartphones give customers ability to purchase all
the time, benefits that are given through applications are not connected only with direct purchase
button. Even without it, they can be beneficial and bind customer with the company, while they can
easily offer clients needed information, or navigation to particular store, information about new
There are two main features, that are connected with applications and that make it easier to
target particular customer and expose him to advertisement - location based marketing and push
notifications.
works within wider area. When customer agrees with it, location based marketing, utilizes map in
smartphone and enables companies to determine through GPS location of the particular customer,
and deliver him appropriate multi-media. It enables them to offer him content that might be useful
right at the particular moment in the particular place. Simply put, it enables marketers to send
perfect content at perfect time. (Car, Simunic, Laskarin, 2013) (Henriksveen, 2016)
Example of use of location based marketing can be connected with worldwide known coffee
company Starbucks, that through location based marketing sends its customers messages, discount
coupons to near Starbucks shops, or encourages people to check-in Starbucks, to let other people
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know they are there, as a reward customers receive discounts, loyalty points etc. (Lamarre,
When I move to push-up notifications, those are “messages”, that appear on screen of
smartphone and warn customer right away that something new connected with product, or service
happened, it keeps him updated about the new offers, coupons, new stock etc. As a result consumer
is engaged and informed about everything new, right at the moment and they do not have to wait
until customer opens and checks his email, or visits website. (Brooks, 2014)
When customer opens particular application he is alerted to the important stuff and
navigated by in-app notifications. It is beneficial for both sides, customers do not have to browse
through unnecessary elements, search for long time, thus they can focus on the most important
thinks in app, on the other hand companies are able to better bind customer to the application, while
61% of customers leave an application if they do not immediately find what they were looking for,
moreover they are able to direct customers where they want. (Deshdeep, 2015) (Feldmar, 2016)
Clients do not have to allow to be located, or to be warned by push notifications. Often they
do not want to be bothered by notifications, or they do not want to fill personal details and give it to
companies. It is right of every individual, nevertheless this situation is not beneficial for anybody,
companies do not get info about client and cannot target his preferences and tendencies, thus
customers do not receive personalized content and in fact do not fully utilize features of application.
As Daniel Joseph, co-founder of The App Business, who helps companies to develop their app
strategy, says: “The more an app knows about the user and the more of this it can pass back to ad
networks, the more precisely advertisers can target their ads and the more effective they’re likely to
Direct positive effect of applications marketing on purchases is quite hard to calculate, while
many companies do not want to expose how particular application affect their sales, therefor
specific experiment was taken by assistant professor Su Jung Kim. She and her colleagues were
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comparing sales within 3 months in 13 US states. New product on the market was in the first period
advertised traditional ways and in the second period it was offered through application. Results
showed, even though application did not have direct purchasing button, spending increased by 19%
to 48%. Deeper analyze showed, spending was directly related with extent of features they used
from the particular application, the more engaging the app was and the more they were using it, the
4.6 FOMO
Companies hear from everywhere it is mandatory to offer and promote their products and
services via applications, these opinions have its substantiation, people still download more and
more application (Table 7) and according to research of marketing experts from Ameyo, companies
that do not optimize their mobile browsing experience or introduce mobile apps are thought to
On the other hand, when I compare App store from year 2007, which was offering 500
applications and App store from current year 2016, that is offering 2 million applications, it can be
assumed, that some of those applications lack appropriate quality. (Statista, 2016)
A lot of firms without application might feel fear of missing out (FOMO) and rush to offer
clients also their app, however in order to be successful and exploit possibility of applications, they
should firstly valorize role of the particular application and whether they are able to bring quality
one.
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They have to offer customers something that provides something more beneficial for them,
it has to be more than just a promotion of the brand. Customers can choose from big number of
applications, for almost everything what customer can imagine, they cannot expect many second
chances, when they do not attract customer right away. Final product of application apart from
smooth functioning, must attract customer and engage him. (Iowa State University, 2015)
Marketers often speak about the first 7 critical seconds, when customer makes the first
critical decision, whether he is engaged or not and whether he is interested and wants to know more
information, quite similar situation applies with applications, 79% of customers reopen application
maximally once, or twice if application did not run appropriately for the first time. (Mobile Apps:
According to Su Jung Kim research more than half of downloaded apps are deleted after
one, or two uses. Companies have to take into account, even though 90% of browsing time on
smartphone, users use applications, according to ComScore, 42% of this time is “taken by big
names” such as Facebook, Instagram, Youtube etc. (Iowa State University, 2015) (Nield, 2014)
As Ms. Robinson says: ,,Applications are definitely useful tool how to increase return on
investment and improve overall brand perception, however at every stage of process companies
When bringing application with low quality, the effect is likely to be contra productive and
leads to low ratings and spread of bad perception of the company. Because of interconnection of
online world and search engines in stores, low rating of one company will in fact strengthen
competitors, whose application will appear next to the bad one, because of same search terms.
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4.7 Mobile commerce
commerce, which for the exchange of products and services uses wireless handheld devices.
(Surbhi, 2015)
Name mobile commerce might prompt, that by wireless electronic devices are meant
mobiles, however it would be incomplete, while it is connected with all devices that do not need to
Mobile commerce as a part of e-commerce has been dated already since the 90s, when
Already at that time, main advantages of mobile commerce were, that it increased
Boom of mobile commerce, however came really with the mentioned introduction of
smartphones, that started taking market ``by storm`` and made it different place. Mobile commerce
with spread smartphones and tablets was not established just as another part of electronic
It was supported by words of PhD candidate Jen Hui Wang: ,,Mobile shopping is no longer
When I show current number from Statista (Table 8), current worldwide revenue from
mobile commerce is estimated to be 429 billion US dollars in 2016, it is 337,8% growth from year
2013 and according to experts it should reach 669 billion US dollars by the end of the year 2018.
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Note. Retrieved from Statista. Copyright 2016 Statista. Reprinted with permission
https://www.statista.com/statistics/324636/mobile-retail-commerce-revenue-worldwide/
As revenue from mobile commerce was rising, importance of electronic commerce towards
commerce as a whole was rising as well and this trend is likely to continue.
When I focus on one component of revenue - sales, from next table 9, according to blue line,
share of electronic commerce sales within total sales is predicted to almost double from 2015 to
Table 9 Worldwide retail e-commerce sales and the share of total retail sales.
Note. retrieved from eMarketer, Copyright 2016 eMarketer. Reprinted with permission
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https://www.emarketer.com/Article/Worldwide-Retail-Ecommerce-Sales-Will-Reach-1915-
Trillion-This-Year/1014369
I have said apart from being able to direct purchase through application all the time, it had also
On following two graphs is shown how went up revenue from purchases directly in
applications (Table 11), but also what was the total revenue that mobile applications secured to
companies from three models of applications - payment for application, direct purchases in
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Note. Retrieved from Statista. Copyright 2016. Reprinted with permission
http://www.businessofapps.com/app-revenue-statistics/
33
Note Retrieved
http://www.businessofapps.com/app-revenue-statistics/
First idea of revenue from applications, was to earn money mainly from fee that customer
had to pay for downloading an application, because of popularity of smartphones and applications
at first it went quite well e.g. between year 2011 and 2012 revenue from selling application more
than doubled from 7,1 billion to 15,4 billion US dollars, from that time however revenue rose much
slower on average “only” by 3,9 billion US (current revenue from selling applications 27,6 billion
dollars). Paying for applications was outweighed by above mentioned in-app purchasing. It is more
efficient to let customer download application for free, and let him interconnect with the company,
expose him to advertisement and potentially encourage him to make purchases for more than he
would have made for just downloading it. (Dogtiev, 2015) (Statista, 2015)
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Efficiency of this modification of commerce strategy, can be proved by above already
mentioned table, when I calculate proportion of in app purchase revenues within worldwide mobile
app revenue, it goes up heavily - between years 2011 and 2017 it goes from proportion of 8,56% to
estimated 40,83% this year and even 48,2% by the end of next year.
2017, 48,2%)
I have said earlier smartphone is a great for buying small items, and PC for items that need
more research. It is supported by research of Mr. Wang, that showed that promotion through
smartphones worked positively on purchases of both low spenders and high spenders, but especially
on those, who spend under purchasing median. It is not bad news for companies, in fact quite
positive ones.
After lower spenders adopted the using smartphone for payments their spendings went up
and it seemed to be a powerful tool how to convert low buyers into bigger ones. Based on the
results, expert Krishnamurthy appreciated the increasing tendency by high spenders, nevertheless he
described them as loyal buyers who spend a lot of money, but their main benefit in connection with
application he saw in helping to enhance a good reputation of particular application in social media
environment, and that they influence others. However, they take into account that high average
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spending in general takes more time and deeper research, therefor it is understandable that these
On the other hand, low spenders, who buy cheaper things and do not intend to make deep
research, for them smartphones are brilliant, they create stickiness and strengthens their loyalty,
with which companies are able to offer them new and more expensive gadgets, the odds they will
be buying soon is pretty high, because it is fast and they can buy almost everything what they want
at the moment - they tend to spend more than they are used to and convert from low spender into
4.9.1 Graphs
With introduction and increasing popularity of smartphones occurred also new ways of
payments. It is understandable, because ability to purchase all the time was one of the main aspects
Firstly, on the following graphs I will show what is progression of m-commerce buyers and
their spendings through smartphones. Table 12 shows how many people purchased goods through
mobile device and table 13 how, with increasing number of m-payers, rose also revenue from
mobile payments.
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Table 12 Global number of m-commerce buyers in millions
https://www.statista.com/statistics/374623/mobile-commerce-buyers-worldwide/
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Table 13 Total revenue of global mobile payment (in billions U.S. dollars)
https://www.statista.com/statistics/226530/mobile-payment-transaction-volume-forecast/
4.8.2 Security
smartphone users and higher internet usage, but there are also other reasons. The main one is
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At first wiring money through mobile phone was received with distrust. Companies had to
change this opinion in order to fully utilize portable devices and let people buy right away.
One of the events, that definitely caused increased trust in mobile payments was the
incorporation of secure element chip (SE). It takes care of storing and processing data securely
when interacting with external devices and it prevents from unauthorized access and secures, that
When I take into account, that user needs to know several passwords, credit card/CVV
number, or that more and more smartphones require fingerprint of the user for confirmation of
particular activity mobile payments are becoming more and more reliable.
There is less and less need to carry cash or credit care, when I take into account the security,
usability, and ease of use, smartphones are able to play role of mobile wallets and next way how
Smartphones do not have to play just role of wallets. Because of Near field communication
(NFC), smartphones should not be used just for payments in exchanging money kind of way, but
should make the life of customer easier in a way that he wouldn't have to carry just a cash, but also
other types of cards, or keys. The aim is to be able to have ``in`` smartphone all types of loyalty
cards, tickets, keys, be able to get coupons, loyalty points, scan codes in the shops etc. Smartphone
will be able to use particular item and wirelessly confirm all these kinds of transactions at particular
place utilizing already mentioned proximity marketing. (Mobile and e-commerce are reshaping
According to Nicky Stafford, Global Consumer Equities, this trend is likely to rise also
because of another reason, smartphone as a payment tool is mainly used by rising generation, 93%
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of people between 18 and 29 years old, in comparison to just 38% over 65 years old. While this
trend is likely to continue as these generation matures in connection with steady technological
progress, quite likely it will be mandatory for more and more services to offer customers this kind
of wireless interaction in order to satisfy them. (Mobile and e-commerce are reshaping consumer
behavior, 2014)
Mobile payments influenced also one more interesting thing. They are one of the main
reasons that lead to expansion of smartphones all over the world. When I look at the picture bellow
(Table 14), emerging countries are understandably behind rich countries in both internet usage, or
ownership of smartphone, however rising tendency there is clear, and especially with ownership of
smartphone I can speak about sharp increase in last two years from 21% to 37% of population.
What are the reasons for it? The first has been already mentioned - creation of cheaper
smartphones that are affordable to wider scale of people, the second is that despite lower
sophistication, caused by lack of real legacy networks or systems, mobile payments are very useful
for them. In a lot of emerging countries, they face problem with insufficient access to banking
systems. Through mobile phones customers can solve this difficulty by simply depositing, paying,
wiring, or withdrawing of money. It also helps to establish more transparent markets, where prices
of services and products are set and written and therefor it is easier to communicate them in real
terms. (Poushter, 2016) (Mobile and e-commerce are reshaping consumer behavior, 2013)
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Table 14 Technology usage % rate emerging economies vs. Advanced economies
Note. Retrieved from Pewglobal. Copyright 2015 by PEW RESEARCH CENTER. Reprinted with
permission. http://www.pewglobal.org/2016/02/22/smartphone-ownership-and-internet-usage-
continues-to-climb-in-emerging-economies/
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5. CONSUMER BEHAVIOR
In order to understand how smartphones and applications changed not only technological
devices, but also behavior of customers, I have to at first focus on consumer behavior in general.
In the past, companies did not take the study of consumer behavior too seriously. According
to marketing experts as much as 85% of what had been published under the rubric of consumer
psychology prior to 1968 was for the companies rather low level, or questionable worth at most.
Nowadays the importance is significantly increasing and it is mandatory area of study for
companies in order to understand the market. (Jacoby, Johar and Morrin, 1998)
Importance of consumer behavior was described by authors of the book Consumer Behavior
- Building Marketing Strategy, Mr. Hawkins and Mr. Mothersbaugh: ,,All marketing decisions are
based on assumptions and knowledge of consumer behavior.`` (Krishnan, Santhi and Sekeran, n.d.)
organizations and the processes they use to select, secure, use, and dispose of products, services,
experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and
It can be defined a bit easier, consumer behavior can be described as study of individuals,
Creating a quality product is obviously important, however it is just one step towards the
goal of attracting potential customer and gaining money by selling them product. We live in the
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world where, due to the technological development of many firms, differences among products are
getting smaller and smaller. There are so many different kinds of products and so many different
kinds of brands, when company wants to effectively promote their product, push the customer
towards buying it, and try to bind them to the brand, they have to look also on the behavior and
tendencies of their potential customers and set marketing towards it. In order to better understand
them and their actions, they have to start looking at selling not only from economical point of view,
but take into account also psychological and sociological aspects. (Brosekhan, A., Velayutham, M.,
We, as the customers, make many decisions and choices among products every day such as
what food will we eat, or what clothes will we wear and many others. These decisions are, in our
minds, spontaneous and routine, however marketers have to try to find out connection among them
and predict our most likely future choices and behavior. (Study of marketing: Consumer Behavior,
2014)
In order to create something more than just another product, something what will offer
companies have to try to distinguish product from the products of competitors according to
preferences of the customers and connect the brand as much as possible with the client. Ability of
producers to emphasize and fulfill customers` demands and satisfaction, quicker than the
competitors, while keeping quality high, will determine whether their business will succeed, or not.
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5.2 Buying process
purchase itself, it is just one stage of buying process. Companies have to care also about the steps
that lead to, or influenced purchase, and also care and try to stay in touch with customer after
purchase, it is mandatory in order to get feedback and evaluation, by which they can better predict
Division of purchasing behavior was firstly introduced by John Dewey, already in year
1910, later it was modified by one of the biggest authority in the world of marketing Mr. Phillip
Kotler, who divided the buying decision process into 5 stages: (Choibamroong, n.d.) / (Kotler,
1) Need recognition,
2) Information search
3) Evaluation of alternatives
4) Purchase decision
NEED RECOGNITION
Recognition of the particular need is often proclaimed to be the most important step of
whole buying process. Without recognition of the need, no purchase can be made, the potential
customer at first must have motivation to fulfill some of his desires. (Johnston, 2016)
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Motivation of customer can be divided on conscious and unconscious. Conscious motivation
is based on some previous experience, or knowledge and customer exactly knows what he wants
and why he wants it. On the other hand, unconscious motivation theory is based on teachings of
Sigmund Freund and says, that customer knows what he wants, however he doesn't know why, he
functional and nonfunctional. The functional is based on rational part of the individual and
motivates him to get what he wants according to what he can ``afford``. Non-functional beyond is
based on his social and emotional feelings and motivates the individual to get what he would like
Motivation comes from all around, it can be stimulated internally such as hunger, or thirst,
Even though companies cannot control everything, understanding what motivates people
INFORMATION SEARCH
Amount of ways how to get information are nowadays very wide, people can get
information from their family, friends, advertisement, or they can just experiment.
Even though creating quality product is obviously crucial for long-term cooperation between
companies and customers, companies have to also realize, that nobody knows everything and
nobody is able to find all appropriate information. People see so much advertisement around them
every day and are influenced all the time, that attention of customers becomes quite selective, and
to a lot of advertisement they are almost ``blind``. Therefor most important aspects of beginning of
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buying process is creation of positive perception and brand awareness of particular brand, which is
positioned as a vital first step in building the bundle of associations which are attached to the brand
in memory. Marketers have to make sure, that people are aware of the brand and try to enhance
feeling that this particular product will satisfy them. (Brosekhan, A., Velayutham, M., & Phil, M.,
n.d.)
They have to take into account selective retention, which describes companies in order to
catch attention of customers cannot just come with frequent advertisement, they have to bring
something new and innovative what invokes attention and especially retains in customer`s head.
Next goal is to create selective exposure, which means customers attach name of brand and
associates it with particular desire, or event. It is positioned as one of the biggest advantages against
the competitors, when customers search for options and evaluate alternatives.
When I move a little bit back to motivation from companies, according to professor Brown,
with successful utilization of selective retention and exposure, companies are able to work with
awareness of need, and even invoke motivation by the customer unconsciously, such as make them
hungry, when they see particular commercial etc. (Rani 2014) (Brown, 2008)
EVALUATION OF ALTERNATIVES
I am not saying, that customers are some kind of robots, that can be manipulated to
whatever marketers want. Of course, they will choose certain product according to many relevant
criteria such as quality, price, features, popularity etc. which will satisfy them the most, however in
nowadays world where differences are smaller and smaller among products and services,
purchasing behavior is also affected heavily by customer perception, which product they feel will
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PURCHASE DECISION
When customer finally picks a product or service that satisfy him the most, sellers are not
winners yet.
Customer can still modify, avoid or postpone his decision. Some factors such as
unanticipated situational factors, e.g. loss of job and thus not having the money they cannot control.
On the other hand, final purchase can be also disrupted by attitude from others and this
As said Philip Kotler: ,,Final purchase decision may be ‘disrupted’ by two factors: negative
feedback from other customers and the level of motivation to accept the feedback.`` No product will
satisfy everybody on the planet, however general feedback is possible to be coordinated when
companies interact with the clients but not only before and during the purchase but also after as I
With the purchase interaction between companies and customers should not end. In fact, it is
stage, that can enhance customer to return back, thus purchasing cycle to be repeating again.
From monitoring of post purchase behavior companies get feedback and evaluation how
satisfied the client was. It enables them to understand his behavior patterns, which helps them
towards forecasting the likely future tendencies of the customers and by it, they should be able to
improve their own decision making process. Moreover, it also makes it easier for companies to
offer the client new products, or to be able to promptly settle possible problems and show them that
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The goal is to create strong relationship between customers and company that is called
stickiness, which consists from 3 components: ease of gathering and understanding marketing
It is thought to be the strongest driver for purchasing, while ``sticked`` customers have
tendency to keep returning not only to brands and retailers they trust, but also to brands they feel
they are much more connected with, to products that have much higher personalization for the
By stickiness, companies do not try to attract only the particular customer, but all people
around him. When perception about brand of one person is good, companies by binding one person
gain to some extent free advertising channel towards the friends of the person that will be to
There is a marketing proverb content is the king, but context is an ace. The better
understanding of customers and their tendencies in particular situation, the easier it will be to offer
something new.
Before bringing something new to the market, every company and its marketers should do
marketing mix about particular product, or service and look at it from view of 4Ps, which was
introduced by marketing professor E. Jerome Mccarty. Ps stand for terms Product, Price, Place and
Promotion and it helps them to define their marketing options and set their strategy towards the
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Product - Producers have to honestly consider how good particular product is, but also how
customers perceive the quality of the brand. Whether this is it what customers want and what will
satisfy them. In these section, companies think about wide scale of aspects about intended product,
Price - When company has a comprehensive idea about the product, next aspect they have to
consider is pricing, but not only price for which they intend to sell particular product and
developing cost. They have to also consider, who will be target customers and what are their
financial opportunities, how profound researches they will do and how risk averse they will be.
They have to take into account how often and to what extent will be demanded discounts, and how
will potential customers react to change of prices in general. All these findings have to be again
compared to prices of competitors in given area. Answers on all these questions will show
companies for which price they are able to sell particular item and whether it can be worth it.
Place - Next aspect companies have to consider is place where they want to sell it and
consider distribution routes from company to customer. Before introducing new product they have
to think about situation in particular city (area), whether they are introducing something brand new,
or whether there are companies that produce something similar, afterwards they have to consider
where there are places where they can sell it and whether target group of customers is big enough,
or significant enough that demand will be sufficient and it will be worth producing it. While
researching of target group in particular area, they also should try to estimate assumed level of
innovativeness, it tells producers how likely will customers give chance to new product and how
Promotion - Last but not least aspect to consider is way, how will they promote their
products and services in order to make people aware of product and secure it good perception. From
this point of view, they have to consider aspects such as which channels influence customers the
best, whether live, or online, whether they have to change their promotion methods because of
seasonality in particular area, and whether they will be able to overcome promotion of competitors.
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(Donthu and Gilliand, 1996).(Brosekhan, A., Velayutham, M., & Phil, M., n.d.) (The Marketing
Company might have brilliant idea, but when they do not consider just one part of this
process, it might ruin all others, while they might be than creating perfect product e.g. for price, that
Of course it is not easy in reality to create product which people want, make them aware of
it, put it at place that is visited regularly and set the price at level, when customers are willing to
buy while, company enjoys profit, nevertheless by analyze from 4Ps perspective and looking for
appropriate answers on above mentioned question, it will definitely increase chances, that producers
will be able to distribute not just right content, but will be able to be offer it at the right time, place,
with appropriate price and through most effective channel to the customer. (Singer, 2014)
I have already spoken about perception and brand awareness and their importance for
choosing a product, now I would like to apply it on different types of purchasing behavior. In
previous chapter I described stages of purchasing process, it should be however said, that every
importance of particular purchase for individual, thus not every time customers go through all 5
Understandably every customer is different and what is expensive for one customer, might
be cheap for the other, however in order to determine initial strategy for different products,
purchasing behavior may be split into impulse buying, routine behavior, limited decision behavior
first 3 stages and simply buy product right away when they see it, such as e.g chewing gum at cash
machine. Customers do not plan these purchases and do not do any research before buying it.
Quite similar are purchases that can be described as routine response behavior, they are done
automatically with just limited amount of information and very little planning. People purchase
these kind of items according to what they have locked in head (selective exposure) and what they
perceive is best from them (what they feel from the past) (such as ordering specific drink for lunch,
These purchases typically, because of their low price and with it connected low risk, require
Somewhere between low and high level of involvement are located purchases described as
limited decision making. Customers have some perception and do have some information about
particular product, or service. Before they purchase, they seek for a few options and spend at least
some time with research, but not as thorough, or as time consuming, as with a higher priced item.
These purchases such as buying clothes, or ordering a taxi are not done by majority of people such
regularly as for example ordering coke for lunch, so they make some kind of prior research,
however for majority of people it is still not such a big purchase and the averse towards the risk is
still quite low. Offer of these things is very wide, therefor perception and brand awareness still play
crucial role.
When I get to products, that usually require the highest amount of involvement from
purchases such as buying a car, or house, these are called extensive decision behavior. These
usually include the highest amount of thinking, selective exposure and retention don't play as big of
a role as for the previous types, while customers tend to go through all stages of above mentioned
buying process, spend most time with profound research and discuss and evaluate all alternatives
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Nevertheless, as I have already said, nobody is able to go through all information, even here
customers have some perception and awareness and choose only from certain brands. Even though
high involvement product involves highest amount of research, customers also want to buy good
brand name, when they are spending a lot of money. That is why perception of customers is crucial
also here, when we consider how small differences are among products with similar prices
nowadays. (Consumer Behavior: How People Make Buying Decisions, n.d.) (Brown, 2008) (Chand,
n.d)
Customers are affected by many external and internal factors and they act in some kind of
way towards them according to their personality. Marketers try to gather information and react
towards them, companies cannot control all the factors, while they might change within a second,
however understanding of customer’s personality let them predict, and to some extent control the
Basic questions, by which marketers try to define the dimensions of buyer behavior and
according to which they schedule the promotion and advertisement can be summarized by questions
such as:
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What are criterias for their choice?
(Fratu, 2011)
Factors influencing customers can be divided into three main categories - personal,
When I start with the personal ones, those are the information about the person such as e.g.
opinions etc. In different parts of life customers have different tendencies and preferences,
researches try to gather as many habits and characteristics as possible and try to analyze what kind
of person the customer is and make predictions about his tendencies and future steps. (Fratu, 2011)
(Rani, 2014)
The second ones are social factors. Those are important for consumer behavior research,
because nobody is shaped just by himself, but also by the area he comes from.
unchallengeable that family and surroundings of each individual has huge impact on the individual
and they set up preferences and values that often go with the person for the rest of his life.
People that influence consumers` decisions are called reference groups. These reference
groups usually change during life, those can be parents, family, friends, colleagues, or sometimes
even people person admires such as celebrities. For marketers it is important to analyze which
people influence purchasing process of customer and what role do they play, because they are the
ones who mostly affect one of the most important part of buying process, the pre-purchase phase
The third category is psychological. In this category, the consumer behavior study focuses
on such aspects as state of mind, social ambiance around him, what is self-image of the customer,
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how he sees himself, what motivation leads him towards purchase, whether he makes decisions for
his own self-realization, or whether he does it because of some kind of prestige and he wants to be
Often for the analyze is used the well know Maslow hierarchy of needs, which consists of
physiological, safety, love and belonging, esteem and self-actualization needs. (Brown, 2008)
According to Maslow, every time person fulfills one need, he moves up to another one in
the hierarchy, while the previous one no longer motivates him. (McLeod, 2007)
By analyze at what level of hierarchy is the consumer, the marketers are able to find out
what are reasons and motivation behind the purchase. (Brown, 2008)
I have already suggested proper interaction leads to better understanding of the market,
knowing what customers want and analyze factors that lead him towards buying process, make it
easier for companies to determine what kind of services and products are demanded. The goal of
researches is to find out how to satisfy the highest possible proportion of target customers, gain
advantage over the competitors and thus increase the value of the company. Therefor I should also
mention what kind of researches can be used in order to find out appropriate information.
At first, research methods are divided on primary and secondary ones. In the primary
research method approach, companies have to do the research by themselves. In the secondary
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research method approach, research has been already done by someone else and companies may
Against practices I will start with secondary research method approach. Benefits against the
primary method are definitely lower cost and time consumption. They do not have to spend time
and money for purpose of attracting customers, while data are already available and they just have
On the other hand, advantages of primary research methods are, particular company has
all the control over the research, it is able to do research on the specific task they are looking for,
and address appropriate questions. It allows them to choose appropriate group of people, place, or
time, and they do not have to detect relevancy of other researches that might have brought different
Most usual tool for primary research are surveys - questionnaires, where respondents choose
from given choices, or should finish sentence according to their preferences. The advantage of
surveys is that companies can get basic opinions of wide scale of people, on which companies can
start to build up strategy for promotion. On the other hand, there are also disadvantages, with given
choices customers might not explore themselves properly, on the other hand infinity possibilities of
finishing sentences might be hard to analyze for marketers, in order to get valid information
(Perner, n.d.)
More precise information and opinions of potential customer companies may receive from
focus groups. As the name prompts, it is a group, composed of small sample of people (usually 8-
12) that discuss and share their opinion on products, or services that are being introduced by the
moderator of the discussion. Disadvantage over surveys is obviously the smaller size of sample that
may not give relevant info, so focus groups sessions should be repeated several times, on the other
hand with good moderator, who prevents creation of some kind group leader, who will influence
others, and is able to enhance conversation, focus group is effective for companies in questions of
creating something new, or modifying existing products and services, while moderators can observe
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spontaneous reaction of people, tendencies how they choose, what aspects do they look for, what do
they compare and can ask additional questions based on answers of respondents etc. (Perner, n.d)
When company has already reached client, very useful way how to gain information about
him are the data gained through the membership. By introducing to the client the possibility to be
connected with the company, marketers can gain a lot. By filling up questionnaire the marketers
receive a lot of personal information - age, educational level, demography, shopping list at the
particular company etc. from which they can make assumption what kind of customer this will be.
Apart from that, they also receive contact and it allows them to start building a connection between
them and client, enables them to promote new services and products, inform them about special
offers and discounts and be able to promptly settle possible dissatisfaction. (Perner, n.d)
I have said, primary research methods are more expensive, it is not connected only with cost
spend on marketers, or preparing researches, companies have to realize, the more information they
want, the more they have to offer to clients. Customers are more likely to answer surveys, attend
focus group session or became a part of loyalty program when it is connected with some kind of
Online research methods and advent of smartphones made primary research method in many
ways easier, majority of people are accessible all the time, therefore it is no surprise that response
on mobile offers is 10 times higher than print offers. Use of internet enables companies redirect
customers to appropriate question and offer them more personalized content very fast. (Mehra,
From internet and research data they are able to get many information about interests and
preferences of everybody, and track their journeys and tendencies in order to target them.
Companies that are able to collect and exploit the unstructured data the best have advantage, and are
in very strong position to understand what consumers want and therefor they are on step closer to
the purchase (Mobile and e-commerce are reshaping consumer behavior, 2013)
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6. IMPACT OF SMARTPHONES AND APPLICATIONS ON
CONSUMER BEHAVIOR
In the previous chapter I have spoken about consumer behavior in general, now I would like
to move forward towards how consumer behavior was affected by changes connected with
introduction of smartphones, with them connected applications and how companies had to react
With the increasing popularity of smartphones, two new consumer behavior trends showed
up, nomophobia and access over ownership need. Nomophobia can be described as a need of
costumers to have their mobile all the time, access over ownership points on the fact, that being
online all the time has higher importance for people than need to posses something. (Marie and
Grybs, 2013)
the old orders on the market. Not only from the technological side, but also changed position of
customers. Even though they were still the same people, it could be said, this technological
development put much higher power into their hands, and with that fact companies had to adjust to
When I use words from the analyze from company Deloitte, how technologies changed
consumer behavior, customer became more of professional shoppers. Smartphones and ability to
use internet all the time does not bring only the ability to purchase all the time and ability for
companies to expose them towards advertisement, it also allows customers to look for inexhaustible
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amount of information and options, get reviews, compare, share experiences with others etc. There
are websites, where people discuss, rate and compare products, websites which compare prices and
Those are not companies anymore who set up conditions unreservedly. The amount of
choices and speed within they can get them, give customers ability to choose. When one firm does
Table 15. Consumers` most trusted source of information on products and services
http://raconteur.net/business/is-marketing-really-the-future-of-sales
Increasing influence of customers on purchases can be seen from the table 15. Because of
online information everywhere companies are not the main source of information anymore. They
are not the most trustful ones, either in terms of looking for the best offer, and quite surprisingly not
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In comparison to traditional commerce, electronic commerce and mobile commerce do not
safe just time of customers, they allow them also search for more possibilities how to make good
choices. Attractive advertisement is not everything, while current tendency of people, is to look in
the smartphone and look for the experience of others, those are the most trusted sources nowadays.
Reference groups, in other words people that affect customer, are extended significantly by
anonymous people on the internet whose review the person read. According to Deloitte research
81% of people read reviews online and check ratings of application. These reviews are trusted by
84% of customers, in comparison to just 42% readers, who find digital banners reliable. (Singer,
It is obvious, that perception and (brand awareness) are not shaped mainly by traditional
channels such as media, or advertisement anymore, but mainly by opinion of other people, who are
discussing and rating online. Importance of interaction with customers pre, and post purchase
became, in era when they are online all the time, is even more important than before and buying
process (need recognition, information search, evaluation of alternatives, purchase decision and
post purchase behavior), because of increased interconnection among people, is never ending cycle.
When companies are dealing with one person that makes a purchase, they are potentially dealing
with wide scale of people around the person, who will be influenced by his perception in real, but
mainly in online world, where his opinion will be taken by many readers as a truth and will guide
them. Therefor it is mandatory for companies to study and understand customers at even deeper
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6.3 Interaction with clients
As I have said before, selling is just one part of the process, in order to maintain revenues
and profits with steadily increasing tendency, in nowadays age when power and possibilities of
customers are high and competition is all around, they have to achieve the interconnection with the
customers and be transparent towards them. In order to achieve that, companies have to invest into
capabilities that help them to get information and facilitate the interaction between customer and
company.
Those capabilities can have different names in different companies, but the most usual is the
Social customer relationship management (CRM), that focuses on developing relationships with
customers, tries to attract their attention and target them with an offer.
There should be management that focuses on content, and prepare strategies how to
introduce services and products to the clients. As I have said, they cannot focus on just selling and
describing what company`s products can do, customers can find all these information online, thus
selling is not just economic anymore, they have to focus on deeper relationships with customer. The
more interaction and availability customers will percieve, the more transparent particular company
will look and because of positive perception the more sought it will be. (Ryals, 2016)
Due to the fact that people are online through their smartphones and applications fast
majority of the time, these are great tools how to interact with clients and engage them on regular
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basis, thus it is no surprise that responses to mobile offers are estimated to be 10 times higher than
On one side it is true, that because of endless offer of online information and reviews, and
because of declining trust in information from companies customers tend to prefer pull info, instead
of push info, and companies should be careful, in order not to bother potential clients, on the other
hand, smartphone is not TV channel, where commercials are put on the screen without desire of
customers, when downloading application customer allows receiving push type of notifications, so
they expect to receive these kind of messages and push type of marketing should not be met with
negative response.
When company manages to attract customer and make him download app, it is much easier
to track consumer behavior and set strategy according to it, such as send him personalized content
according to his activity. Even though applications target wide scale of people, at some point they
are able to switch to one to one communication and track individual ``journey``. Frequent
customers and be more specific in their campaigns and make them more efficient with greater
Smartphones emphasizes also role of social sites to extent, that they are one of the main
ways for companies how to promote themselves to a lot of people (possibly at no cost), and interact
It is reported that 66% of customers spend most of their application online time browsing on
social media such as Facebook, Twitter, Instagram etc. Therefor apart from analyzing e-commerce
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and m-commerce, companies have to analyze also commerce on social platforms - s-commerce.
(Mehra, 2014)
When I use Facebook as symbol of social sites, that is the most used mobile application
nowadays, it was introduced in year 2006, and now it has now it has almost 1,8 billion active users
worldwide. I do not want to discuss what is bigger finding whether social sides or smartphones, or
applications, again those are not competitors, those are complements, and especially from
smartphones` and applications` point of view, complements that can be used not only very
When we consider how important opinions of others in this ``smartphone`` era are, how
many people are on social sides, and how often they are online, it can be said social media
revolutionized the way business operates and communicates with consumers and has huge impact
Not only it is another platform how to analyze people opinions and get feedback on products
and services pretty quickly, but it is also great platform where they can promote themselves, their
special offers, news, recommend new products either through fan page, or with higher efficiency
through sponsored page, that will target customers based on their actions and preferences on social
sites. When they achieve to build fan community, they have another channel, that will promote
company`s products further. (Mobile Apps: What Consumers Really Need and Want, n.d.).
Similarly, to applications interaction and advertisement through social sites do not seem so
to users and their preferences, what they see on their social platforms and it is easy to ensure to
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6.4 Utilization of consumers` power
At the beginning of this chapter I showed on the graph how important are the reviews from
others for customers. When I consider how important ``vox populi`` is, the best scenario, for
everybody`s happiness, companies` and also customers`, is to incorporate customers already in the
developing process, make customers not only critics, but also creators.
By effective interaction customers become presumers, those are customers who are willing
to interact with the company and being research. In ideal scenario, loyal customer is part of
creating, funding and afterwards also promoting process through people around him. (Marie and
Grybs, 2013)
When I cite Mr. Krishnamurti: ,,The more opportunities you give a customer to interact with
a retailer, the more the value of the retailer goes up and the more the sales revenue from that
encouraging them to interact in order to see what is bad and what is good in advance.
Even though comments and ratings are beside family most trustful source of information
and 81% of people read them, amount of people who actively contribute to discussion with their
ideas and advices slightly exceeds 33%. It basically means that one of the most important channel
for companies, that could tell them what people really want and which determines perception of the
company heavily, does not work as well as it could, it leads to situation that consumers do not get
what they want and companies do not sell as they could, therefor they have to focus on encouraging
Importance of comments and ratings was supported by another experiment of Su Jung Kim,
when she examined how they affect sales. It is no surprise that positive comments had positive
effect on purchases and vice versa, more important is declining tendency of purchases, where there
63
were no discussion and ratings about given product, while people had no responses from channel
It is in interest of companies to encourage people post about them, make respondents out of
viewers, in order to know what people want and to increase awareness of the brand, that initiate
other towards purchase. Any deleting of bad comments is contra productive, sales will still decline
In chapter Consumer behavior, I wrote, that nobody wants to do things for free, as responses
are becoming more and more important, companies have to treat customers in some kind of way in
order to encourage them towards posting and sharing. Even thought it might cost something such as
coupons, or discounts from time to time to time, they at firstly receive appropriate information what
customers want and it will be easier to provide it, secondly they work on the perception and
transparency of the company, because they show they really care about what customers desire.
Fact, that customers realize their strong position and expect bonuses for their interaction was
further examined by Su Jung Kim, which focused on how people react to interaction with the
company in case of inconvenience. The prompt response, before even solving problem technically
is the mandatory first step for all kinds of customers in order to show company cares, next steps in
order to satisfy customer however changed with the level of engagement of particular customer, the
viewers of comments were satisfied with just an apology and solving the problem, however the
more engaged the customer was, the more he expected from the company, in form of some kind of
compensation and deeper explanation in order to regain their trust, nevertheless as I have said, those
are the customers that company can benefit the most from, even when it is more expensive. (Iowa
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7. CONCLUSION
Opinion on smartphones at first differed, for example chief of Microsoft Steve Ballmer was
describing it as overpriced, difficulty manageable and inutile for business people. However, sales of
iPhones were exceeding all expectations and proved wrong all these oppugners
Some companies followed Apple with introduction of their smartphones and it was
definitely step in right direction, when is taken into account, that within two year sales of
In the first part of my work I focused on changes, that these devices brought on the market.
Other devices such as PCs still had their advantages such as size of the screens, that were better
platforms for profound research, or they offered bigger space for advertisement, however popularity
of smartphones and amount of time people spent on them, urged companies to shift their online
offer more in favor of these new devices - computer first strategy was exchanged for mobile first
Being online all the time, meant customers were able to purchase all the time. In order to
fully utilize the possibility of purchasing via smartphones, it was mandatory to convince people,
that payments are conducted in a safe way. With incorporation of secure element chips and other
safety devices such as passwords and fingerprints smartphones established themselves as more and
more popular way of payment, moreover they did not play just role of wallets, with Near Field
Communication customers, it was possible to use mobile phones as keys, cards, or tickets in more
While smartphones were in fact becoming new personal computers, on which people are
online all the time, it seemed to be more than just another way how to do marketing, it seemed to
65
have potential to become the most important communication tool, while it was perfect place how to
Companies had tried to use mobile phones as a source for their marketing and advertising
activities already before, through SMS, MMS, or blueetooth they tried to inform and target
With help of smartphones, companies targeted clients at first through mobile webs and
connected mobile banner adds, which were however outweighted by increasing popularity of
applications, which were thought to be complete changer in way of interconnection between firms
and customers and enhanced clients to be engaged more with the particular company.
Applications were from the beginning created to fit on smartphones and leverage their
features - their popularity kept increasing from the beginning. Majority of people considered them
From marketing point of view, two main factors of success of applications were push
When customer agreed with being notified, companies were allowed to inform client at
perfect place at right time. Even though applications targeted wide scale of people who downloaded
them, they were able to swap to one-to-one communication and track individual journey of client,
set strategy according to it and send personalized content according to his preferences.
Another useful marketing tool became in-app navigation. This tool was beneficial for both
sides – client found immediately important information, on the other hand companies were able to
Understandably people did not have to agree to be notified, however this decision was not
beneficial for anybody – companies did not have information of clients, and customers got less
personalized content.
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Not having an application for business was thought to mean turning away third of potential
clients, however companies had to take into account that boom of applications caused that more and
more firms were eager to offer their products and services through this form, thus competition was
becoming tougher.
In order to utilize possibilities of applications, it must have been good one, even though
people spent 90% of their browsing time on applications, 42% of this time was taken by small
amount of applications such as Facebook, Youtube etc, thus free market space was not
inexhaustible.
On the other hand, the better and the more engaging application was, the more people were
willing to spend. Companies understood this and amount of money investing in mobile
advertisement was increasing heavily. (8,76 billion US 2012 and 45.85 billion US 2015)
Correctness of these investments can be seen from impact of smartphones on area of mobile
commerce, between years 2013 and 2016 worldwide revenue from mobile commerce has increased
commerce with smartphones did not establish themselves just as another part of e-commerce, they
Being online all the time gave people ability to constantly check opinions of other people,
rate various products, look for inexhaustible amount of information – they became professional
shoppers.
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Their position towards companies changed, constant advertisement from everywhere
caused, people did not believe it unconventionally anymore, especially when they could within a
while search in their smartphone and look for experiences of other customers.
Companies could not look at interaction with people just from economical point of view,
they had to try to incorporate customers in developing process - It was a way how to get
information what customers really wanted. Reference groups, because of interconnected world,
widened, happiness of one, meant positive promotion channel towards many people, who were in
touch with particular customer in real, but from that time also online world, thus buying process
with customers, and searched how to attract customers among inexhaustible amount of choices,
how to create advertisement that would stick in heads of customers, who would afterwards connect
Companies had to try to interact with customers as much as possible and gather as many
information as possible either from application, web sites or from social sites. Understanding clients
enabled them to optimize content almost immediately according to wishes of customers and be
Companies that are able to create stickiness between them and customers and which are able
to collect and exploit feedbacks from customers the best, have advantage and are one way closer to
the purchase.
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