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IT for Management: On-Demand Strategies for

Performance, Growth, and Sustainability


Eleventh Edition
Turban, Pollard, Wood

Chapter 8

Retail, E-Commerce, and Mobile Commerce


Technology
Learning Objectives (1 of 5)
Copyright ©2018 John Wiley & Sons, Inc. 2
Retailing Technology: Consumer Demands

• Keeping Up With Consumer Demands and Behavior


o A dizzying array of new technologies are exciting and
unproven.
o Adoption is vital, but budgets are limited.
o Consumers are demanding, price-conscious, and easily
swayed by competitors.
o Overly aggressive marketing leads to financial ruin, but risk
aversion loses out to competition.

Copyright ©2018 John Wiley & Sons, Inc. 3


Retailing Technology: Consumer Behavior (1 of 3)

• Trends and Changing Behavior


1. Empowered Price Sensitivity: Consumers have always been
concerned about price. In today’s retail environment, the
consumer is more empowered than ever to find the lowest price
available for a product.
o Using the Web and mobile technology, consumers can look up
information about alternative products and prices from a
variety of local and online retailers using a mobile device.
Retailers need clear strategies to respond to the empowered
consumer by price matching or finding ways to offer greater
value.

Copyright ©2018 John Wiley & Sons, Inc. 4


Retailing Technology: Consumer Behavior (1 of 3)

• Trends and Changing Behavior


2. Nonlinear Search and Influence Patterns: The path by which
consumers pursue purchases today is often varied and
unpredictable. In simpler times, consumers were largely
influenced by mass media advertising that drove them to brick-
and-mortar stores for purchase.
o While things were perhaps never quite that simple,
consumers today are influenced by a range of new
communications channels including social media, mobile ads,
e-mail, search marketing, and other digital communications.

Copyright ©2018 John Wiley & Sons, Inc. 5


Retailing Technology: Consumer Behavior (1 of 3)

• Trends and Changing Behavior


3. Channel Hopping: increased communication channels through
which consumers can now purchase products (traditional
retailers, online, and via mobile devices and apps) called social
commerce.

Copyright ©2018 John Wiley & Sons, Inc. 6


Retailing Technology: Consumer Behavior (1 of 3)
• Trends and Changing Behavior
For instance, Dell sells millions of dollars of refurbished
computer equipment each year through its @delloutlet
Twitter account. The manner in which consumers use
each channel varies.
• Some consumers will use a brick-and-mortar store to
gather information about a product but purchase it
online. Others will do their research online but prefer to
purchase the product through a traditional retailer.

Copyright ©2018 John Wiley & Sons, Inc. 7


Retailing Technology: Consumer Behavior (1 of 3)
• Trends and Changing Behavior
• Some may plan to purchase the product at a store, but
if they find that the product they want is not available,
they will buy it from their mobile device while in the
store. The many combinations of shopping channel,
communications channel, and stage of the shopping
process are enormous and make strategic planning a
challenge.
• Modern retailers will increasingly rely on data analytics
to distinguish patterns or trends in consumer shopping
behavior across channels to identify the best ways to
satisfy customer needs.
Copyright ©2018 John Wiley & Sons, Inc. 8
Retailing Technology: Consumer Behavior (2 of 3)

• Consumer Demands and Behavior


4. Digital Immigrants, Natives, and Dependents: Retailers have
long been aware of the difference between digital immigrants
and digital natives.

Copyright ©2018 John Wiley & Sons, Inc. 9


Retailing Technology: Consumer Behavior (2 of 3)

• Consumer Demands and Behavior


o Digital natives: First generation to have grown up surrounded
by digital devices (i.e., computers, smartphones, digital
cameras, video recorders, etc.) and Internet connectivity.
o They are comfortable using technology to move easily
between various retail channels to optimize their purchasing
on price, convenience, and desire for instant gratification.

Copyright ©2018 John Wiley & Sons, Inc. 10


Retailing Technology: Consumer Behavior (2 of 3)

• Consumer Demands and Behavior


o Digital immigrants: older, and although they are increasingly
comfortable with technology, they fundamentally view retail
channels as separate and distinct.
o They are much less likely than natives to incorporate mobile
technology into their shopping behavior.

Copyright ©2018 John Wiley & Sons, Inc. 11


Retailing Technology: Consumer Behavior (2 of 3)
• Consumer Demands and Behavior
o Digital dependents: represent the emerging generation of young
people who are growing up in a world of broadband
connections, constant connectivity, and related technology and
become uncomfortable if they do not have access to it.

Copyright ©2018 John Wiley & Sons, Inc. 12


Retailing Technology: Consumer Behavior (2 of 3)
• Consumer Demands and Behavior
o Digital dependents: This generation will place even
greater demands on retailers, expecting to use
technology to accomplish all facets of the shopping
experience. Brick-and-mortar retailers will continue to
play an important role in the lives of this generation,
but they will expect in-store shopping to be fully
integrated with the technology they have come to
depend on.

Copyright ©2018 John Wiley & Sons, Inc. 13


Retailing Technology: Consumer Behavior (3 of 3)

5. Need for Convenience


o Economic and social factors lead to more stressful lives.
o Consumers look for products and shopping channels that
reduce the impact on time and financial resources.
o An increasing demand to satisfy immediate gratification and
desirable goods and services.

Copyright ©2018 John Wiley & Sons, Inc. 14


The Omni-Channel Retailing Concept

o As businesses learn about the full potential of mobile and


other digital technologies, the distinction between the newer
channels and in-store retailing is beginning to blur.
o While most businesses currently operate their e-commerce
and mobile channels separately from the traditional retail
channel, it is expected that strategies integrating the customer
experience across channels will emerge, resulting in what the
National Retail Federation (2011) refers to as the omni-
channel retailing approach.

Copyright ©2018 John Wiley & Sons, Inc. 15


The Omni-Channel Retailing Concept

Figure 8.3 Retail strategy is evolving toward an omni-channel approach


(adapted from National Retail Federation, 2011).
Copyright ©2018 John Wiley & Sons, Inc. 16
Retailing Technology
1. Describe the factors that influence consumer shopping
behavior today.
2. What does the concept of digital native, digital
immigrant, and digital dependent help us to understand
about people’s use of technology during shopping
activities?
3. Why are retailers likely to view technology as both a
blessing and a curse?
4. Describe how an omni-channel retailer is likely to be
different from a traditional, single-channel retailer?

Copyright ©2018 John Wiley & Sons, Inc. 17


Learning Objectives (2 of 5)
Copyright ©2018 John Wiley & Sons, Inc. 18
Business to Consumer (B2C) E-commerce

• Purchasing Online
o The most well-known B2C site is Amazon.com, whose IT
developments received U.S. patents that keep it ahead of
competition.
o Broader selection, lower prices, and easy searching and
ordering are featured through e-commerce.
o Electronic Wallet (e-wallet ): a software application that can
store encrypted information about a user’s credit cards, bank
accounts, and other information necessary to complete
electronic transactions.

Copyright ©2018 John Wiley & Sons, Inc. 19


Business to Consumer (B2C) E-commerce:
Amazon Model
• Amazon
o Invested hundreds of millions of dollars in warehouses
designed for shipping small packages to hundreds of
thousands of customers.
o Designed One-Click shopping, highlighted by the e-wallet,
allowing order status viewing and order fulfillment
modifications.
o Numerous patentable e-commerce designs provide continued
competitive advantage.

Copyright ©2018 John Wiley & Sons, Inc. 20


Business to Consumer (B2C) E-commerce:
Online Banking
• Online Services
o Electronic fund transfer (EFT): transfer of funds from one bank
account to another over a computerized network.
o Transaction cost reduction is significant: banks pay $.02 for
online versus $1.07 at a physical branch.
o Investment options and loan rates online easily undercut
those of many brick-and-mortar (conventional) banks.

Copyright ©2018 John Wiley & Sons, Inc. 21


Business to Consumer (B2C) E-commerce:
Recruiting
• Employment
o Job openings, résumés, and applications can be
transmitted or completed 24/7, 365.
o Job seekers use social media network contacts
(LinkedIn).
o Over 95% of employers use LinkedIn to identify
prospective candidates.
o Online reputation of both job seeker and employer
can be researched and/or built.

Copyright ©2018 John Wiley & Sons, Inc. 22


Business to Consumer (B2C) E-commerce:
Retailing Issues (1 of 3)
• Resolving Channel Conflict
o When regular wholesalers (on-ground) and retailers
(on-line) avoid direct online distributors.
o May limit B2C efforts not to sell directly.
o May force collaboration with existing distributors.
o Sellers that are click-and-mortar companies, such as Levi’s or
GM, face a conflict with their regular wholesale and retail
distributors when they avoid those distributors by selling
online directly to customers. (These distributors are other
businesses that carry the company’s product.)

Copyright ©2018 John Wiley & Sons, Inc. 23


Business to Consumer (B2C) E-commerce:
Retailing Issues (1 of 3)
• Resolving Channel Conflict
o This situation is called channel conflict because it is a conflict
between an online selling channel and physical selling
channels. Channel conflict has forced some companies to limit
their B2C efforts or not to sell direct online.
o An alternative approach is to try to collaborate in some way
with the existing distributors whose services may be
restructured. For example, an auto company could allow
customers to configure a car online but require that the car be
picked up from a dealer, where customers could also arrange
financing, warranties, and service.

Copyright ©2018 John Wiley & Sons, Inc. 24


Business to Consumer (B2C) E-commerce:
Retailing Issues (1 of 3)
• Conflicts within click-and-mortar organizations
o Online sales may impact offline operations
o Companies may separate online from traditional
divisions, but this may increase expenses and reduce
synergies.
o When an established company sells online directly to
customers, it creates conflict with its own offline
operations.

Copyright ©2018 John Wiley & Sons, Inc. 25


Business to Consumer (B2C) E-commerce:
Retailing Issues (1 of 3)
• Conflicts within click-and-mortar organizations
o Conflicts may arise in areas such as pricing of
products and services, allocation of resources (e.g.,
advertising budget), and logistics services provided
by the offline activities to the online activities (e.g.,
handling of returns of items bought online).
o To minimize this type of conflict, companies may
separate the online division from the traditional
division. The downside is that separation can increase
expenses and reduce the synergy between the two
organizational parts.
Copyright ©2018 John Wiley & Sons, Inc. 26
Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
• Managing Order Fulfillment and Logistics
o Online sales force the need to design systems to accept and
process huge volumes of small orders, physical delivery
including labeling.
o Online retailers face tough order fulfillment and logistics
problems when selling online because of the need to design
systems to accept and process a huge volume of small orders,
to physically pick items from warehouse shelves and put them
into boxes, to be sure that the correct labels are applied, and
to accept returns.
o The return process is referred to as reverse logistics.

Copyright ©2018 John Wiley & Sons, Inc. 27


Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
• Viability and Risk of Online Retailers
o The dot.com era bankrupted many pure online retailers due to
cash flow, customer acquisition, order fulfillment, and
demand forecasting problems.
o Low entry barriers intensify competition!

• How long to operate while losing money?


• How to finance operating losses?
o Many pure online retailers went bankrupt in the dot.com era,
the result of problems with cash flow, customer acquisition,
order fulfillment, and demand forecasting. Online
competition, especially in commodity-type products such as
CDs, toys, books, or groceries, became very fierce due to the
ease of entry into the marketplace.
Copyright ©2018 John Wiley & Sons, Inc. 28
Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
• As Porter’s (2008) five competitive forces model
explains, low entry barriers intensify competition in an
industry. So a problem most new and established online
retailers face is to determine how long to operate while
you are still losing money and how to finance those
losses.
• Porter's Five Forces is a business analysis model that
helps to explain why various industries are able to
sustain different levels of profitability.

Copyright ©2018 John Wiley & Sons, Inc. 29


Porter’s Five Forces Model

Copyright ©2018 John Wiley & Sons, Inc. 30


Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
1. Competition in the Industry
• Refers to the number of competitors and their ability to
undercut a company. The larger the number of
competitors, along with the number of equivalent
products and services they offer, the lesser the power
of a company. Suppliers and buyers seek out a
company's competition if they are able to offer a better
deal or lower prices. Conversely, when competitive
rivalry is low, a company has greater power to charge
higher prices and set the terms of deals to achieve
higher sales and profits.
Copyright ©2018 John Wiley & Sons, Inc. 31
Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
2. Potential of New Entrants Into an Industry
• A company's power is also affected by the force of new
entrants into its market. The less time and money it
costs for a competitor to enter a company's market and
be an effective competitor, the more an established
company's position could be significantly weakened. An
industry with strong barriers to entry is ideal for existing
companies within that industry since the company
would be able to charge higher prices and negotiate
better terms.

Copyright ©2018 John Wiley & Sons, Inc. 32


Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
3. Power of Suppliers
• It is affected by the number of suppliers of key inputs of
a good or service, how unique these inputs are, and
how much it would cost a company to switch to
another supplier. The fewer suppliers to an industry, the
more a company would depend on a supplier. As a
result, the supplier has more power and can drive up
input costs and push for other advantages in trade. On
the other hand, when there are many suppliers or low
switching costs between rival suppliers, a company can
keep its input costs lower and enhance its profits.
Copyright ©2018 John Wiley & Sons, Inc. 33
Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
4. Power of Customers
• The ability that customers have to drive prices lower or
their level of power is one of the five forces. It is
affected by how many buyers or customers a company
has, how significant each customer is, and how much it
would cost a company to find new customers or
markets for its output. A smaller and more powerful
client base means that each customer has more power
to negotiate for lower prices and better deals.

Copyright ©2018 John Wiley & Sons, Inc. 34


Business to Consumer (B2C) E-commerce:
Retailing Issues (2 of 3)
5. Threat of Substitutes
• Substitute goods or services that can be used in place
of a company's products or services pose a threat.
Companies that produce goods or services for which
there are no close substitutes will have more power to
increase prices and lock in favorable terms. When close
substitutes are available, customers will have the
option to forgo buying a company's product, and a
company's power can be weakened.

Copyright ©2018 John Wiley & Sons, Inc. 35


Business to Consumer (B2C) E-commerce:
Retailing Issues (3 of 3)
• Identifying Appropriate Revenue Models
o Early dot.com model:
• Generate enough revenue from advertising to keep the
business afloat until customer base critical mass is reached.
• Too few dotcoms were competing for too few advertising
dollars
• Advertising went to a select group of sites (AOL, MSN, or
Yahoo)

Copyright ©2018 John Wiley & Sons, Inc. 36


Business to Consumer (B2C) E-commerce:
Retailing Issues (3 of 3)
• Identifying Appropriate Revenue Models
o Many pure online retailers went bankrupt in the dot.com era,
the result of problems with cash flow, customer acquisition,
order fulfillment, and demand forecasting.
o Online competition, especially in commodity-type products
such as CDs, toys, books, or groceries, became very fierce due
to the ease of entry into the marketplace.
o As Porter’s (2008) five competitive forces model explains, low
entry barriers intensify competition in an industry. So a
problem most new and established online retailers face is to
determine how long to operate while you are still losing
money and how to finance those losses.

Copyright ©2018 John Wiley & Sons, Inc. 37


Business to Consumer (B2C) E-commerce:
Planning
• Online Business and Marketing Planning
o Build the marketing plan around the customer, rather than on
products.
o Monitor progress toward the one-year vision for the business
in order to identify when adjustments are needed, and then
be agile enough to respond.
o Identify all key assumptions in the marketing plan. When
there is evidence that those assumptions are wrong, identify
the new assumptions and adjust the plan.
o Make data-driven, fact-based plans.

Copyright ©2018 John Wiley & Sons, Inc. 38


Business to Consumer (B2C) E-
commerce Review
1. Describe how digital content and services can lead to
significantly lower costs.
2. Why does channel conflict sometimes occur when companies
sell their products through both traditional and online channels?
3. How has Amazon maintained its competitive edge?
4. Describe some of the ways that Ally Bank has become one of the
most successful direct banks in the industry today.
5. Explain why retail banking has become one of the least trusted
industries by consumers since the early 2000s.
6. List three online marketing planning recommendations.

Copyright ©2018 John Wiley & Sons, Inc. 39


Learning Objectives (3 of 5)
Copyright ©2018 John Wiley & Sons, Inc. 40
Business to Business (B2B) E-commerce
and E-procurement
• Business-to-business (B2B) Markets
o The buyers, sellers, and transactions involve only organizations
o B2B comprises about 85 percent of e-commerce dollar volume
o Enterprise forms electronic relationships with distributors,
resellers, suppliers, customers, and other partners
• Business models for B2B applications:
o Sell-side marketplaces
o E-sourcing (the buy-side marketplace)

Copyright ©2018 John Wiley & Sons, Inc. 41


Business to Business (B2B): Sell-side Marketplaces

• Sell-Side Marketplaces
o Where organizations sell their products or services to other
organizations from their own private website or from a third-
party site.
o Creates greater competition for sellers (a buyer advantage)
o Similar to B2C model, but the ‘C‘ is an organization.
• Amazon Business
• Alibaba wholesaling Chinese products
• Dell Computer auctions through eBay
• Overstock.com for obsolete of excess assets

Copyright ©2018 John Wiley & Sons, Inc. 42


Business to Business (B2B): Sell-side Marketplaces

• Sell-Side Marketplaces
o There are basically two types of e-commerce: direct and
marketplace. In direct e-commerce, organizations sell their
products or services to other organizations from their own
private website or one managed by a third party.
o This model is similar to the B2C model in which the buyer is
expected to come to the seller’s site, view catalogs, and place
an order. In the B2B sell-side marketplace, however, the buyer
is an organization.
o Marketplace e-commerce takes place on websites where the
products of many different companies can be purchased.

Copyright ©2018 John Wiley & Sons, Inc. 43


Business to Business (B2B): Sell-side Marketplaces

• Sell-Side Marketplaces
o The marketplace model creates much greater competition for
the companies that sell their products on the site and
therefore creates an advantage for buyers. For this reason,
some sellers prefer the direct model.
o A recent introduction of a B2B marketplace website is
Amazon Business.
o Alibaba is a wholesaling e-commerce site that primarily sells
products from Chinese manufacturers to other companies
around the world.

Copyright ©2018 John Wiley & Sons, Inc. 44


Business to Business (B2B): E-sourcing

o E-sourcing refers to many different procurement methods that


make use of an electronic venue for identifying, evaluating,
selecting, negotiating, and collaborating with suppliers.
o The primary methods are online auctions, RFQ (request for
quote) processing, and private exchanges.
o E-sourcing also applies to many other secondary activities,
which add to the cycle time and transaction costs when
performed using traditional methods.
o Secondary activities include trading partner collaboration,
contract negotiation, and supplier selection.

Copyright ©2018 John Wiley & Sons, Inc. 45


Business to Business (B2B): E-procurement

• Corporate procurement (corporate purchasing):


transactional elements of buying products and services
for operational and functional needs.
• Direct procurement: buying materials to produce
finished goods.
• Indirect procurement: buying materials for daily
operations.
• E-procurement: reengineered procurement using e-
business technologies and strategies.

Copyright ©2018 John Wiley & Sons, Inc. 46


Business to Business (B2B): E-procurement
Goals
Strategies and solutions linked to e-procurement have two basic
goals:
1. Control costs The first goal is to control corporate spending.
Organizations want to spend intelligently for procurement
activities to maximize the value of their spending, that is, to
ensure that money spent to procure items results in procuring
the right products at the best value.
Corporate e-procurement constitutes a substantial portion of an
organization’s operational spending.

Copyright ©2018 John Wiley & Sons, Inc. 47


Business to Business (B2B): E-procurement
Goals
For example, it is common for large manufacturing organizations
to spend millions of U.S. dollars procuring products and services.
Organizations thus design e-procurement systems to facilitate
and control overall procurement spending.
2. Simplify processes: The second goal is to streamline the
procurement process to make it efficient. Inefficiencies in the
procurement process introduce delays in ordering and receiving
items and tax internal resources.

Copyright ©2018 John Wiley & Sons, Inc. 48


Business to Business (B2B): E-procurement
Goals
The two goals of cost control and streamlining can be met
in three ways:
1. Streamline the e-procurement process within an
organization’s value chain. Doing so reduces the number
of employees needed to process purchasing, reduces the
procurement cycle time to order and receive items, and
empowers an organization’s staff with enough
information about the products and services to enable
them to make intelligent decisions when procuring

Copyright ©2018 John Wiley & Sons, Inc. 49


Business to Business (B2B): E-procurement
Goals
2. Align the organization’s procurement process with
those of other trading partners, which belong to the
organization’s virtual supply chain. Alignment can be
achieved by automating the process from end to end,
including trading partner’s systems, and simplifies the
buying process. This enables suppliers to react efficiently
to buyers’ needs.
3. Use appropriate e-procurement strategies and
solutions. Organizations analyze spending patterns in an
effort to improve spending decisions and outcomes.

Copyright ©2018 John Wiley & Sons, Inc. 50


Business to Business (B2B): Electronic Data
Interchange (EDI)
• Electronic data interchange (EDI) systems are typically
set up by large companies for the efficient procurement
of products from an assortment of established vendors.
While EDI technologies predate large scale use of the
Internet, most EDI systems now use the Internet as the
primary method of transmitting data. EDI systems are
designed as a way to efficiently exchange documents,
eliminating many of the costs associated with
processing paper documents.

Copyright ©2018 John Wiley & Sons, Inc. 51


Business to Business (B2B): Electronic Data
Interchange (EDI)
• As such, they lend themselves to buyers and suppliers
that need to convey information to each other in the
form of purchase orders, invoices, bills of lading,
customs documents, shipping status documents,
payment documents, and so on. While EDIs use the
Internet for data transmission, they are not accessible
to the public. Instead, only approved or authorized
vendors are given access to a company’s EDI system.

Copyright ©2018 John Wiley & Sons, Inc. 52


Business to Business (B2B): Electronic Data
Interchange (EDI)
Exchanges are sites where many buyers and sellers conduct
business transactions.
They may be public or private, depending on whether or not
they are open to the public.
The two most common types of B2B online exchanges are
vertical and horizontal exchanges.

Copyright ©2018 John Wiley & Sons, Inc. 53


Business to Business (B2B): Electronic Data
Interchange (EDI)
• Public and Private Exchanges
o Vertical exchanges serve one industry along the
entire supply chain (automotive, chemical,
manufacturing, etc.).
o Horizontal exchanges serve many industries using the
same products or services (office supplies, cleaning
materials, bearings, etc.). Also called Maintenance,
Repair, and Operations (MRO) supplies.

Copyright ©2018 John Wiley & Sons, Inc. 54


Business to Business (B2B) E-commerce and
E-procurement Review
1. Briefly differentiate between the sell-side
marketplace and e-sourcing.
2. What are the two basic goals of e-procurement?
How can those goals be met?
3. What is the role of exchanges in B2B?
4. Explain why maverick buying might take place
and its impact on procurement costs.

Copyright ©2018 John Wiley & Sons, Inc. 55


Learning Objectives (4 of 5)
Copyright ©2018 John Wiley & Sons, Inc. 56
Mobile Commerce
• Mobile Commerce, or M-Commerce:
o The buying or selling of goods and services using a wireless,
handheld device such as a cell phone or tablet (slate)
computer.
• Mobile E-Commerce
o The use of a wireless handheld devices to order and/or pay for
goods and services from online vendors.

Copyright ©2018 John Wiley & Sons, Inc. 57


Mobile Commerce: Retailing & Marketing

• Mobile Retailing
o The use of mobile technology to promote, enhance, and add
to value to the in-store shopping experience.
• Mobile Marketing
o A variety of activities used by organizations to engage,
communicate, and interact over Wi-Fi and
telecommunications networks with consumers using wireless,
handheld devices.

Copyright ©2018 John Wiley & Sons, Inc. 58


Mobile Commerce: Competitive Advantage
• M-commerce provides competitive
advantage
• In-Store Tracking
o Tracking a customer’s movement
through a retail store through
mobile technology to optimize
shopping experiences.
• Quick Response (QR) Codes
o Customers scan the QR code
containing a link to an Internet
webpage.
o Easier alternative to typing a URL
address into a mobile browser.

Copyright ©2018 John Wiley & Sons, Inc. 59


Mobile Entertainment Expanding
• Most notable are music, movies, videos, games, adult
entertainment, sports, and gambling apps.
• Apps can track sporting news, record workout times,
record heart rates, analyze a person’s golf swing.
• The iTunes Store, Google, and Amazon continue to be
leading distributors of digital music, movies, TV shows,
e-books, and podcasts.
• Mobile device improvements are predicted to increase
video clips, movie, and television use on/through
mobile devices toward $20 billion.
Copyright ©2018 John Wiley & Sons, Inc. 60
Mobile Travel Services
• Mobile Payment Systems
o In 2016, 38.4 million Americans
will have used a mobile phone
to purchase goods or services
at least once in the last six
months
o Proximity mobile payments,
based on RFID technology, will
increase to $314 billion by 2020
• Mobile Phone used for:
o Online shopping or
o Payment for traditional
purchases

Copyright ©2018 John Wiley & Sons, Inc. 61


Mobile Social Networking
• Facebook added mobile access in recent years to stay
competitive.
• Snapchat is completely app-based.
• Occurs in virtual communities, offering users to access
their accounts from a smartphone or other mobile
device.
• Primary driver of growth in the mobile app industry.

Copyright ©2018 John Wiley & Sons, Inc. 62


Mobile Commerce App Features
• Location-Based Marketing
o Advertising using mobile GPS systems to determine user
locations.
o Structured as mobile social media games to elicit consumer
information and ratings for special attention or discounts from
retailers.
• Augmented Reality (AR)
o Apps that utilize a special technology to create computer-
generated graphic superimposed images based on where/how
a user points their phone or camera.

Copyright ©2018 John Wiley & Sons, Inc. 63


Mobile Search
• Almost 60% of all Internet searches are conducted from
a mobile device
• Over half of all web traffic comes from mobile devices
• As a result, Google and other Internet search engines
now use the performance of a company’s mobile
website as part of the criteria for ranking listing in
search results

SEO specialists must now focus on a set of new factors for


optimizing websites for mobile search.

Copyright ©2018 John Wiley & Sons, Inc. 64


Mobile Commerce Review
1. Describe some of the ways that people are using mobile devices
to shop for products and services.
2. What are some ways in which traditional brick-and-mortar
retailers can use mobile technology to enhance a customer’s in-
store shopping experience?
3. List the types of mobile entertainment available to consumers.
4. List some ways that travelers and travel-related businesses are
using mobile technology.
5. How are companies using QR codes to promote products and
services to mobile consumers? Why are QR codes not as popular
in the U.S. as they are in Asia and other parts of the world?
6. Explain why the mobile gaming market represents such a
lucrative market opportunity.
Copyright ©2018 John Wiley & Sons, Inc. 65
Learning Objectives (5 of 5)
Copyright ©2018 John Wiley & Sons, Inc. 66
Mobile Transactions and Financial Services
• Hotel Services and Travel
o Airline QR boarding passes and
SMS flight updates
o Google Maps widely used for
automobile navigation
o Travel planning with roadside
assistance, Wi-Fi hotspots, and
recommendations
o Hotel guest reservations, bill
checking, and local services

Copyright ©2018 John Wiley & Sons, Inc. 67


Mobile Payment Systems (1 of 2)
• Charge to Phone Bill with SMS Confirmation
o Uses secure PIN through SMS to validate payment (like
Zong.com).
• Augmented Reality (AR)
o Apps that utilize a special technology to create computer-
generated graphic superimposed images based on where/how
a user points their phone or camera.

Copyright ©2018 John Wiley & Sons, Inc. 68


Mobile Payment Systems (2 of 2)
• Transfer of Funds from Payment Account Using SMS
o Phone sends SMS to transfer payment through third party
(Obopay.com, PayPal.com)
• Mobile Phone Card Reader
o Phone attached device allows credit card swipe (Square.com,
Paypal.com)
• Micropayments
o Transactions involving small sums of money (vending
machines, parking meters)
• Mobile Bill Payments
o Payments made directly from cell phone (Western Union,
Citibank, HDFC Bank in India)
Copyright ©2018 John Wiley & Sons, Inc. 69
Mobile Banking Services
• Natural extension of online banking
• Uses combination of mobile media channels
o (SMS, mobile Web browsers, customized apps)
• Common services include account alerts, balance
information, branch location, bill pay, funds transfers
and verification
• Mobile banking benefits seem to outweigh potential
security threats.
• Increasing mobile banking likely means increased
targeting of mobile financial activities.
Copyright ©2018 John Wiley & Sons, Inc. 70
Mobile Banking Security Risks
Cloning Duplicating the electronic serial number (ESM) of one phone and using it in
second phone, the clone. This allows the perpetrator to have calls and other transactions
billed to the original phone.
Phishing Using a fraudulent communication, such as an e-mail, to trick the receiver into
divulging critical information such as account numbers, passwords, or other identifying
information.
Smishing Similar to phishing, but the fraudulent communication comes in the form of an
SMS message.

Vishing Again, similar to phishing, but the fraudulent communication comes in the form
of a voice or voicemail message encouraging the victim to divulge secure information.
Lost or stolen phone Lost or stolen cell phones can be used to conduct financial
transactions without the owner’s permission.

Copyright ©2018 John Wiley & Sons, Inc. 71


Mobile Transactions and Financial Services
Review
1. What are the two basic technologies used for mobile banking and
financial services?
2. Why have e-wallets not been widely adopted and what will makers of
e-wallets need to do to make this payment method more attractive to
consumers?
3. What are the most common types of mobile banking activities
consumers perform?
4. What are the most common security risks associated with mobile
banking?
5. Describe some of the mobile payment systems currently available to
merchants and consumers.
6. What is a micropayment and why is it beneficial to consumers and
businesses that mobile payment systems can process these types of
transactions?
Copyright ©2018 John Wiley & Sons, Inc. 72
Copyright
Copyright © 2018 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Act without the express written permission of the
copyright owner is unlawful. Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies
for his/her own use only and not for distribution or resale. The Publisher assumes no
responsibility for errors, omissions, or damages, caused by the use of these programs or
from the use of the information contained herein.

Copyright ©2018 John Wiley & Sons, Inc. 73

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