Business Level Strategy – How Retailers Are Integrating Mobility

In Business Skills, Marketing Plan, Marketing Strategy by Tarun GuptaLeave a Comment

Rise of Smartphones: Is It Time To Revisit Your Business Level Strategy?

Business level strategy is defined as integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. Business level strategy must be so defined that it must take care of the changing business environment. Cost leadership, differentiation, focused low cost, focused differentiation and Integrated low cost/differentiation strategies are cited as the five different business level strategies. Smartphones with their enormous capabilities facilitate differentiation business level strategy. As smartphones improve efficiency of processes in the value chain, it also facilitates the implementation of other types of business level strategy.

Smartphones have become ubiquitous and have started to significantly influence the business operations across the globe. Today, the smartphones are used in all areas of business and investments in mobile technologies are now part of the marketing plan and business level strategy of virtually every company. But in order to leverage the power of mobility solutions to obtain maximum gain, it is important to have the right mobile strategy which is aligned to your business level strategy. The right mobile strategy is the one which gives maximum value to the end consumer using the power of mobile technologies. Thus, it is highly imperative that the mobile strategy is aligned with your business level strategy. Only when your business level strategy is defined according to the changing consumer needs, your business can provide real value. And today’s consumer wants everything on his finger tips.

According to a study compiled by Nielsen Informate Mobile Insights on smartphone incidence in India there are currently 51 million smartphone users in urban India. This number is even more significant when read along with rate at which this market has grown – by 89 % from 2012. A major impediment for the growth of the smartphone market was its high price. But, many new companies use the business level strategy of offering low priced phones which can compete with the major mobile suppliers in terms of features and quality. The recent move by the leading smartphone manufacturing company, Apple, to price its iPhone4 at around Rs. 15,000 gives a clear indication that even the major corporations are ready to enter the price war. The growth is not just happening in the metros. The Tier I and Tier II cities are also registering high growth. Thus, economic factors have contributed to a large extent to the acceptance of smart phone among the population and this need to be considered while setting the business level strategy of a company.

Perceptions about smart phones have changed from status accessory to a utility in the minds of customers. In addition to this, there are several other factors which augment the sales growth of smart phones in India. “Bring your own device” is yet to catch up as a concept in corporate India but the tech savvy start-ups have started to encourage their employees to use smart devices to increase their productivity. Despite the apprehension that smart phones negatively impact the work environment, many companies also take this as an opportunity for engagement of employees.

In fact, companies have started to adopt mobile technologies to make the work environment better. Further, several door to door marketing agencies are enabling their employees with smart devices to get real-time sales data and enhance customer services. Be it emails, customer relationship management, discussion clubs, feedback or product surveys, employees are shifting towards smart phones from desktop applications. The organizations should also change their outlook towards mobile devices at work and integrate them into their corporate culture in order to thrive in the new environment. In fact, the way in which the organizational structure of old and established companies evolve in response to such technological innovations would become an interesting case study in itself.

Thus, it becomes absolutely necessary that companies define the business level strategy in such a way that it is easy to invest in the right technology at right time. The business level strategy should be in the direction of adopting the right mobile technology so that as the technology evolves, the risk of holding an outdated system is less. It is important that new technological changes are sensed and adopted to your system. Be it cost leadership or differentiation, adoption of new technology plays an important role in the business level strategy.

Smart Phones: Catering To A Diverse Customer Base

It was earlier mentioned that smart phones have become utilities in the minds of customers. This shift was influenced by the increasing availability and usefulness of wireless internet. The Nielsen study shows that the largest growth in smartphone users is in the age group of 16 – 18 years (by 22%). Online app downloads have significantly increased whereas there is a reduction in the time spent on browsing using a mobile.

The user experience is a major differentiator in sustaining the smartphone market. “The User Experience of Smart Phones: A Consumption Values Approach” explains how the aspirational value of iPhones have reduced over time. The users went from an exploratory phase during the initial days to an exploitative phase where they identified certain key applications and continued using them. The competitive advantage wielded by high end phones by being products of aspirational value is thus waning over time. As a result, these companies are focusing on creating quality products to retain and enhance their market shares. The wide acceptance of mobile devices across the global community opens up diverse opportunities in front of the companies and to tap in those opportunities, the right business level strategy should be in place.

Challenges In Adopting A Mobile-led Business Level Strategy

While leveraging the mobile environment is a great way to enhance businesses, this business model comes with its own set of challenges. The app market is flooded with many similar applications and it is very difficult to get noticed. Ideal business strategy would be to encourage users who visit the stores to try the apps which are specific to your business.

According to a recent study, even though the general environment is conducive for mobile apps, only 25% of the apps installed are revisited by the app users. Thus, inducing regular usage of your app becomes the next challenge for a business and selling through smart phones is even more challenging. Evolving technologies in hardware and software platforms pose another challenge. The app should be compatible in all these platforms as the variety of mobile phones is much more than the variety of feature phones which were available.

Currently Android, Windows and iOS together hold the majority share in the smartphone market segment. Most of the major Apps are available in all these versions. However for smaller businesses which want to take advantage of the smartphone market it is difficult to develop, maintain and periodically update these apps. Instead most of the companies are bent on designing highly responsive websites using HTML5 technology which enables these websites to perform well in different screen sizes and different OS.

How eBay Defined Its Business Level Strategy In The Rapidly Changing Mobile EnvironmenteBay is one of the front runners when it comes to using mobile commerce to define their shopping experience and has been consistently successful in doing so. eBay is a wonderful example of how the right business strategy can provide better results. After gaining much popularity in the online platform, they came up with their first mobile application in July 2008 on the iOS platform which was made available free via iTunes. The launch of app on a single platform was right business level strategy at that point in time as iOS had the leadership in the smartphone OS market. But later as the market share of android increased, they changed their business level strategy and the app was introduced in Android in July 2010.

The payment solution was provided by financial services provider, Paypal. The use of Paypal was a one of the factors which contributed to the success of eBay’s business level strategy.

In June 2010, eBay purchased Redlaser as part of its expansion strategy. Redlaser is a bar-code scanning app created by a tech startup called Occipital. Post the acquisition, Redlaser was made a free app and was integrated into its iphone applications such as eBay Marketplace, eBay Selling, StubHub and Shopping.com. Further acquisition of Critical Path Software, which developed the eBay apps like stubhub and shopping.com shows how much strategic importance did eBay associate to mobility solutions.

eBay Is Now Starting To Play In The Commerce Ocean, Not Just In The E-commerce Pond

According to Steve Yankovich, eBay’s Vice President of mobile, eBay is now starting to play in the commerce ocean, not just in the e-commerce pond. This is evident from the new apps they have come up in collaboration with the retailers such as Macy’s Inc and Toys ‘R’ Us Inc. eBay has also come up with Black Friday app which is targeted for managing the unbearable crowds on Black Friday. This app creates a digital fence around 668 Macy’s stores and when a customer with this app enters the store, the finished product recognises the customer and then targets them accordingly. Apps like these have significantly helped the employees in proper store management and thereby provide better customer service.

eBay entered into a joint venture with FAO Schwarz to build a Gift Finder app which would enable the customers to find a suitable gift for their dear ones using a series of questions. Using the answers obtained from the app user, this app makes product suggestions in the eBay’s FAO partner site, which could be bought by the app user.

Recently eBay unveiled an app called eBay Now in November 2012. eBay Now helps customers to search and buy products in their stores and these products are delivered to the local online shoppers within an hour. Currently this app is used by the retail stores such as Macy’s Inc, Toys ‘R’ Us, Target and Best Buy. A strategic analysis of acquisitions and joint ventures reveal how important mobile technology is in eBay’s business strategy.

The mobile strategy has become so important in the changing business environment to eBay that their recent entry in to the Brazilian market used a mobile-first strategy. A Mobile-first strategy essentially means that the development of all your services start with how you define your offerings on the mobile platform. This definitely comes with the cost of research and training.

eBay example indicates that business level strategy should make room for acquisitions and strategic alliances so that any new innovation in the market could be accommodated easily to gain maximum advantage.

New Technologies For Mobile Apps

Zapp – A Complete Payment Solution on Mobile
UK based app developer; Zapp has collaborated with major corporate banks in UK HSBC, First Direct, Nationwide, Santander and Metro Bank to provide complete financial solution through their app without the use of cards. It currently aims to enable 18 million account holders to provide this service so that no-card payment becomes a reality. The customers will now have to only press on a Pay by Zapp button on the checkout screen and confirm the security code to complete a payment.

Apple iBeacon
One of the new products in the Apple’s sleeve is iBeacon which uses low energy Bluetooth used for proximity sensing. Apple uses the phones’ varying signal strengths to locate the user’s phone and promote the stores. This can also be used with android devices. This is considered to be one of the disruptors in the retail shopping experience. The latest implementation of this technology is by the US based advertiser InMarket which has used it to target advertisements for frequent shoppers. Apple iBeacon can be a differentiator for any retail business, if they have the willingness to integrate new technology, in their business level strategy

Near Field Communication
NFC or Near Field Communication Technology has been in the buzz for a while and vendors such as China Mobile and Google Wallet have come up with excellent application for the same in the payment function.

Augmented Reality – Is It Real?
This is another technology yet to make a mark. If implemented in the right way, it can significantly reduce the inventory load of retailers which is one of their pain areas. The 3D models which could be made using this technology can give ultimate experience of a product in the hands of a customer. It also improves the internal environment of a store by a great extent. Recently, Mc Donald’s India came up with a new marketing campaign using an Augmented Reality app while introducing its new dessert Mc Flurry. The app helped in getting more customer engagement as the customer was made part of Mc Flurry animated Ad played on an in-store TV screen. McDonald’s partnered with app developer Junaio to bring out this new marketing campaign.

While devising the business level strategy especially in a changing environment, it is important to make room for investing in research and development of new apps in order to get a competitive advantage. New technologies equip the companies with differentiation- a type of business level strategy. New products also define improved processes which give an option to adopt cost leadership which is another form of business level strategy.

Few Defining Factors Of Success For A Retail App

Search Functions And Filter Options
The user experience ranks first when it comes to any application on a mobile device. The limited screen space demands intuitive design and only essential information to be displayed on the screen of the app user. This has also paved way for the new wave of minimalistic design frameworks. Up in the category of user experience stays the search and filter options that we provide the customers to search through the large product databases.

Also one of the customer behaviour found in the usage of search functionality is that long tail semantic searches have more chances of conversion than plain text searches. According to a study, only 2% of the shopping carts were abandoned which was resulted from a semantic based search engine compared to 40% abandonment of carts in the plain text based search engine sites.

Product Display
The display of products and the product details on screen is an important factor in converting a customer. This again accounts for better user experience. Since a mobile app is aimed at replacing or enhancing the store experience, it should also augment the need for displaying the product in store. Good retail apps give a good presentation of the products of a store. The apps should also give the customer option to compare the products and their features. This enables the customer to take the right decision in choosing the product of their choice which would lead to a better customer satisfaction which in turn would lead to sales growth.

Security And Ease Of Payment
One another factor that the customers look at while making a purchase through a mobile application is the payment option provided by the mobile app. If the app does not provide a safe and secure way to complete the payment, the transaction would suffer. Amazon provides its own payment solution to complete the transaction whereas E-bay has collaborated with Paypal and uses their services for the payment. The one step payment solution offered by Amazon and Paypal’s password based payment option has contributed much to the success of the mobile apps. The latest move by Flipkart in creating and providing payment solutions through its PayZippy is testimonial to the role which payment solutions play in the e commerce industry. Snapdeal has entered into a strategic alliance with a startup driven payment gateway called KlickPay.

While considering the safety of the payment solutions, it is important to consider the global standards followed by the Payment Card Industry Security Standards Council. It is important that these payment solutions comply with the two major standards namely- Payment Card Industry Data Security Standard (PCIDSS) and the Payment Application Data Security Standard (PADSS) by the Payment Card Industry Security Standards Council. The customer data pertaining to the payment in a transaction needs to be secured and these security standards provide the technical guidelines to implement them while developing a payment solution.

In India, Citibank Corporation in collaboration with Ezetap Mobile solutions has come up with its mobile payment solution which can not only handle the payment process but also handle the reward and coupon schemes by the various vendors. Zaakpay’s Mpay is another payment solution targeted at the mobile customers. A new trend in the payment feature is the use of NFC or Near Field Communication which completes a payment with the tap of a phone. China Mobile and Google wallet are the frontrunners in the NFC based payment model. Three mobile operators in Singapore have also come up with a model to build a shared infrastructure for NFC. In India, NFC is yet to gain ground.

Barcode Scanning
Scanner applications are widely used in the retail industry for price look up of products and checking the product reviews. E-bay acquired the Red Laser from Occipital for integrating the barcode scanning feature to its iPhone app. This application provides the consumer with the capabilities of price comparison of the products to be purchased. This was initially viewed as a disadvantage by the retailers but as it evolved, the option of giving the right and timely information was found to be more beneficial by the retailers.

Other than the usual variety of barcode scanning, a recent trend is QR codes or Quick Response Codes which could be scanned by the mobile cameras and converted to readable information. QR codes have faster readability and more storage capacity when compared to the normal Universal Product Code (UPC) barcodes due to its two dimensional matrix design.

User Experience
The waiting time and the overall performance of the app influence conversion of a customer and number of revisits the customer does to an app. Performance is one major factor which needs to be taken care of from the app development stage as it demands the optimisation of your app according to the varying device specifications. According to a recent study, even though the app downloads in the app market are high, not more than 25% apps are revisited by a user. This signifies the importance of pulling the customers to your app and engaging them using the app experience. The user experience of a retail app can be also improved by the usage of push notification features to notify the users regarding the product or store promotions, personalised offers by looking at the search history etc. Even though a lot can be done to add new features to the app, the trend is to minimize or de-clutter the screen usage and provide only the relevant and targeted information on the mobile screen so that the right customer is provided with the right information to take the right decision. The user experience has a major role in bringing sales through a mobile application.

Recommendations For Aligning Mobile Strategy With Business Level Strategy

1. Put Mobile At The Heart Of Your Business Level Strategy
While developing for the mobile, it is quite important that we keep mobile at the heart of business level strategy. The world is moving towards mobile and it is the next big thing. Thus it is now important to change the business level strategy to ‘Mobile First’ strategy. The design of the mobile platform for retail requires a different set of user experience model. The mobile design would involve the use of a smaller screen which puts a restriction on the amount of information to be put up on the platform. Thus, it is all the more important to understand the customer on the other side and put across the relevant information to him to meet the business level strategy goals. The new business level strategy should be such that it enables the businesses to reach the maximum number of consumers. Thus, companies are reinventing their marketing strategies to include mobility into their marketing plan.

The new capabilities with the mobile phones like touch, gesture, voice recognition and more recently the NFC also demand for a focussed design model on the mobile platform as opposed to what used to be in the web platform. The recent developments in the HTML5 and CSS3 are enablers to this change companies are making in their marketing mix. The developers are now looking towards responsive design principles which would enable them to develop sites which fit into the device in which it is accessed, thus giving a suitable user experience to each desktop, mobile and tablet users. The business level strategy is only successful when it takes care of all the needs of its consumers.

Thus people defining the business level strategy must be cautious while choosing the technology stack for their business. The sites such as 8faces.com, Currys, Starbucks are examples of how responsive design is an integral part of business level strategy of different companies.

2. Customers Need A Complete Solution
It is important that the app developed for retail serves multiple purposes than just completing a transaction. Thus, while defining the business level strategy, one must understand the myriad of functionalities the app must perform. Mobile technology should be so designed as to make an impact in the entire retail value chain for it to be successful so that you reap the benefits of a good business level strategy. It needs to handle various purposes such as Mobile Marketing, Shopping Services, Payment handling, inventory management, location tracking etc. In addition to these activities, mobile technology can make significant changes in the way corporate governance is implemented. It enables decentralised decision making which is necessary for firms with international presence to adapt to stimuli of external environment while enabling the headquarters to retain a corporate- level control over the day to day matters.

Mobile marketing essentially means to target marketing communications and promotions to customers on a permission basis. In 2010, Adidas included mobile to its marketing strategy and gained 35 percent response rate compared to a mere 2 percent response of a campaign using traditional advertising strategies. The shopping services include the whole mobile buying and if implemented in the right way, it can create value to the customers and deliver the best shopping user experience. The mobile platform opens the window of new opportunities when it comes to loyalty programs for high spending customers. Thus, while implementing mobile strategy, it is important that all the systems act together to create a synergy in providing the best shopping experience to the user. The features like GPS, NFC etc can be made to work together and enable location based services and create enormous cross selling opportunities. The rising security concerns also warrant the need for new products such as Mobile Device Management applications to be made part of your technological ars`enal.

3. The Phenomenon Called Social Media Marketing

The advent of social networking platforms has opened a window of opportunities. According to a report by Social technology company, 8th Bridge, 78 percent of the companies buy Facebook ads and the customers who were surveyed suggested that Facebook was one of the effective methods of learning about new products with a score of 2.73 in a scale of 1 to 5. Thus, it is really important for any retail company to include social media in their business level strategy since that is where the customers are. Social Media is a phenomenon which has become an integral part of business level strategy of many companies.

The platforms such as Foursquare can be integrated to create promotions for in-store customers. The Facebook and Twitter also provides with application program interfaces that could be integrated to the mobile application to provide better user experience and gain a better reach. Thus, the business level strategy must also give space for other applications to be integrated so that

4. Business Level Strategy Should Get Cues From Analytics Data.

The data insights obtained from customers’ past purchases give us information regarding the various buying pattern of the customers. Though this has been there from the time of web platforms, this is now gaining more importance as the mobile app can give more information about the user than the websites. According to Forrester research, 52% of large enterprises have a mobile analytics solution. App analytics is still in its nascent stage and would take time to develop when compared to mobile site analytics and website analytics. The data insights thus obtained can be used by the executives at the management to improve their business-level strategy and to take innovative management decisions. Analytics would also help executives in validating business level strategy with respect to your competitors.

5. Continuous Improvement Is Key Element In Defining A Business Level Strategy
As with every technology platform, mobile technologies also evolve and it is important to keep up with both the technological changes as well as the changing customer preferences. In this environment, it is easy to get carried away in the technology wave and the one thing that can help a business survive is the right business level strategy. The myriad of platforms available for app development and their popularity makes it difficult for a retailer to prioritize and choose. And hence the need for mobile web and responsive design sites etc which work across all platforms. Apart from the platform differences, the emerging technologies like NFC, augmented reality also needs the attention of retailers as these can improve the shopping experience of the consumer in a number of ways. Integration of new products and platforms need to be integrated to your business level strategy to keep up pace with the evolving times.

Promising Indian Start-ups In The Mobile Space

1. Mobstac
Mobstac is a Bangalore based start-up which leverages the power of mobile cloud platform and publishes mobile apps on different platforms such as HTML5, iOS, Android and Windows. Mobstac has a variety of mobile development capabilities suited for different businesses, publishers and e-commerce players. Mobstac has developed applications for the clients like The Hindu, Times Internet etc. Started in 2009, it has been able to catch the attention of both consumers and investors alike and has been helping different companies in charting their business level strategy.

2. iKaaz
iKaaz is an Indian startup based out of Bangalore which focuses on the payment services on mobile like mobile wallets, mobile point-of-sale, NFC tags and readers. The leadership at iKaaz is headed by Mr.Soma Sundaram who has previously worked with Nokia Corporation in the global mobile money division and has significant experience in the payments industry. iKaaz has recently come out with a new product – a low cost NFC tag which can make any phone into an NFC-enabled phone. One reason why NFC payments could not catch up in India is because of the lack of low –cost NFC enabled phones and latest technology by iKaaz bridges this gap. If this technology catches up, then mobile wallets are not far away. iKaaz enable companies chart out integrated cost leadership/differentiation business level strategy.

3. Adstuck
Adstuck is a start-up specialized in the development of mobile apps and software using the Augmented Reality technology. Augmented reality is fast becoming a part of differentiation business level strategy. It has developed AR apps for clients like Maruti Suzuki, Havells India Limited etc. Started in 2008, the company also offers different product platforms like Areal App ,All Meet , Fit Your etc which makes use of the technologies like augmented reality, motion sensing, 3-D mapping, which are its core competencies, to their full potential. The Augmented Reality app used in the launch of Maruti Alto 800 enabled users to watch videos, see 3 D model of the car, book a test drive and other functionalities.

4. Blink Solutions
Blink Solutions is a growing company in the digital media space which makes use of different technologies like Mobile Apps, Augmented Reality etc for better brand and marketing communications. It has made use of Augmented Reality technology on mobile devices for big companies like Cadbury India and KFC India for their digital campaigns. The Cadbury Diary Milk App managed to get an amazing 25000 downloads in just five days which clearly shows the acceptance of this technology among the users and the possible reach its can give to your marketing communication.

5. Scandid
Scandid is an app which helps shoppers to find the best deals and discounts on a product using their mobile phone. It makes use of the mobile phone camera to read the barcodes and uses GPS technology to locate nearby stores with better deals. Apart from product deals and discounts, the consumer can also know about other details of the product. The app has attracted many followers in the industry. It was featured as the one of the top 10 mobile apps in the recently held Nasscom product enclave in October 2013.

Like-wise, there are umpteen numbers of companies providing business solutions using mobile technologies which can be leveraged to define your business level strategy. A lot of marketing ideas as well as advertising ideas are tried every day. Some fail, some succeed. The companies employ different marketing tactics to adapt to the changing consumer preferences.

As new companies are coming up with new products into the market and competition becomes fierce, few companies fail to survive the heat. Many new products fail to define their business level strategy to suit the growing expectations of consumers. One such case is that of Google Wallet which was expected to revolutionize the payment process in e-commerce. But even after two years, the mobile solution failed to gain much traction among retail consumers. The lack of support from mobile carriers is cited as one of the reasons for the apps’ failure. Thus, it is really important to have both strategic alliances and market willingness, as part of business level strategy, for the acceptance of any mobility solution in the market. If only Google had defined its business level strategy to involve the mobile carriers while introducing Wallet, the case would have been different.

But even as projects fail, new companies are coming up with new products at a much faster pace. And, for a business to bet their resources in one of these products is really difficult especially as the costs involved are high. Thus, it is really important that businesses have the right mobility strategy which aligns with your business level strategy. This helps in choosing the right path for using the mobility solutions as an enabler to business rather than creating just a hype.

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