Factors Affecting Short Message Service Effectiveness

Published Date: 02 Nov 2017

MUBS

A study of factors affecting "Short Message service" effectiveness

Nizar Al Fakih

Fall semester 2013

Table of Contents:

2.4 Response/ Read rate 14

2.5 Why SMS works? 16

2.5.1 Speed 16

2.5.2 Flexibility 16

2.5.3 Read/ Response 16

2.5.4 Personal 17

2.5.5 Inexpensive service 17

2.5.6 Return on Investment 17

References 18

Chapter I: Introduction

The rapid spread of mobile phones is becoming an effective direct tool that can reach a huge number of people since almost everyone from different ages and gender holds a personal mobile phone. Advertising methods are followed by three stages, the first stage when billboards, magazines and newspapers were emerged. Then Radio and TV were the best advertising tools before the booming of mobile and internet advertising occurred (Park et al, 2008). Direct marketing is known as selling product to the end user directly without the help of third party. The main goal of direct marketing is sending a direct message directly without reaching any third party. There are many types of direct marketing rather than Short Message Service as: Direct mail, Telemarketing, Email marketing, Flyers, Social media marketing, and Direct selling.

Short Message Service (SMS) is one of the direct marketing methods which promote customers by studying their personal characteristics, needs, and approaches in order to downsize the mass consumers into specific potential consumers(Ling & Li, 1998). Short Message Service (SMS) is becoming the most significant direct marketing tool for many types of businesses around the world (Drossos et al, 2007).

Many researchers had studied the effectiveness of mobile advertising.(Drossos, Giaglis, Lekakos, Kokkinaki, & Stavraki, (2007) discovered many variables that shake the effectiveness of mobile advertising. In 1998, Ling & Li studied how to make a data mining for better effectiveness. In 2004, Tsang, Ho, & Liang found that consumers have negative attitude towards mobile advertising unless they have a direct significant need for the product or service. This study constitutes a contradiction to previous research. In 2007 (Merisavo, et al) said that mobile advertising is negative unless having the permission of the consumer, some say that there is a significant effectiveness using mobile advertising, and other said that there is a significant effectiveness using mobile advertising but there are variable that change the level of effectiveness or show how to make mobile advertising more effective using these variables.

1.1 Purpose of the study

The purpose of the study is to examine if the Short Message Service are effective in the Lebanese markets according to the customer attitude. Therefore the study will highlight on mobile marketing and its characteristics in order to facilitate achieving the objective of the study.

Chapter II: Literature Review

2.1 Mobile Marketing

According to Drossos, Giaglis, Lekakos, Kokkinaki, & Stavraki ( 2007), there are many factors which affect mobile advertising .These are six independent variables including Location and time, Interactivity, Incentive, Source Credibility, Appeal, Product involvement, and Altitude towards mobile advertising.

2.1.1 Location and time

Pointing customers according to their location and time; In order to create awareness, the targeted consumer should be near the business or the business should be between the lists of places that the customer is willing to visit. According to time, time also should be convenient to the customer because customers have definite time margins that they might buy or visit according to it (Drossos, Giaglis, Lekakos, Kokkinaki, & Stavraki, 2007). The meeting of the perfect time and place in the SMS campaign would be very effective in order to convince customers in the product (Brady, Cronin, & Hult, 2000).

A combination of different business issues definition will be the path to reach a direct explanation in order to understand what mobile marketing is and how it succeeded in becoming an effective advertising media.

As a first step, the study should highlight the difference between marketing, advertising and direct marketing: Marketing is the planning, implementing and control of a mix of business activities intending to bring together buyers and sellers for the mutually advantageous exchange or transfer of products. Advertising is the paid, public, non-personal announcement of a persuasive message by an identified sponsor; the non-personal presentation or promotion by a firm of its products to its existing and potential customers. The media used can be television, billboards, radio, internet sites, and mobile marketing. Sales and promotion marketing strategies in which the promotional materials are delivered individually to potential customers via direct mail, telemarketing, door-to-door selling or other direct means (Brady, Cronin, & Hult, 2000)

Marketing and advertising started in the late 1950s on television, the media that was attracting at that time high numbers of users. But for businesses, it costs time to reach customers with the encoding advertising message. In fact, the few companies that had the courage to be the first in using the television advertising in the early days dominated and are still dominating a global and wide market share (Drossos, Giaglis, Lekakos, Kokkinaki, & Stavraki, 2007).

As well, advertising on the internet took the same way in the late 1990s. At the beginning, it was an offending issue; no one believed that money can be earned online. But, few years later, the internet pages and sites were crowded by advertisement for everything. Therefore, it can be said that it’s somewhat impossible to do business without creating a website in nowadays business. In improving the techniques used in the previous advertisement media, mobile marketing was created. This new advertising media involved in the three marketing steps: Mobile Marketing: bringing buyers and sellers together in order to exchange or transfer products where the primary point of contact with the consumer is via his mobile device. Mobile Advertising: the non-personal presentation or promotion by an organization of its products or services to its existing and potential customers where such communication is delivered to a mobile phone or other mobile devices. Mobile advertising would include: WAP Banner ads, mobile search advertising, mobile video bumpers, interstitial ads in on device portals, noting that Mobile Advertising does not require permission (Brady, Cronin, & Hult, 2000).

Mobile Direct Marketing: promotional materials are delivered individually to potential customers via the potential customer’s mobile phone including SMS, MMS or WAP push messages, Bluetooth messaging. However, Mobile Direct Marketing requires permission (Drossos, Giaglis, Lekakos, Kokkinaki, & Stavraki, 2007).

In order to receive these tools, the phone devices are produced in order to be able to act with all the types of advertising. Some of these devices start with a front page carousel for each page through a number of featured applications, this will help people to find new applications for all aspects of life, and they will be able to download categories including: Entertainment, games, maps and navigations, music and videos, news, personal finance, banking, social networking and travel (Drossos, Giaglis, Lekakos, Kokkinaki, & Stavraki, 2007).

(LBS) are offered by some cell phone networks as a way to send custom advertising and other information to cell-phone subscribers based on their current location. The cell-phone service provider gets the location from a GPS (global positioning server) chip built into the phone. By catching the phone signal due to the large stations, LBS can be enabled without GPS tracking technique. Mobile Wi-MAX technology is utilized to give a new dimension to mobile marketing. Therefore, the new type of mobile marketing is envisioned between a BS (Base Station) and a multitude of CPE (Consumer Premise Equipment) mounted on vehicle dash tops (Milne & Gordon, 1993)

2.1.2 Interactivity

Increasing interactivity may increase involvement of the customer into the product, thus creating a link for the brand web-site within the SMS information components would allow the customer to interact with the brand and may feel curious to go search toward this site. This two-way interaction is better than just giving info to the customer without giving any impulse to know about the brand. And if the customer is familiar with the brand ‘interactivity’ is then found which is needed to for the attention to the SMS (Merisavo et al, 2007).

Using SMS, MMS and other interactive applications, the business can build direct marketing, mobile advertising, competitions, and promotional campaigns while increasing advertising response rates and brand loyalty. But maximizing the marketing dollars and reaching the target audience can be a time-consuming and costly endeavor if consumers cannot respond to the offer (Merisavo et al, 2007).

The direct connectivity offered by the telecommunication companies allows the company owners and their marketers to efficiently market and deliver mobile programs to the widest consumer base possible without the financial barriers since the open markets are easier to reach directly a high number of consumers. Due to the fact that any form of outbound marketing, like bill boards and TV ads on way to consumers, is often viewed as irritating, the companies, organizations and most of the businesses start searching for a new efficient marketing that leads them to new market segments. The success of SMS messaging has taken many in the industry by surprise, while expansion of mobile data services has resulted in a rapidly growing number of consumers. This has created high expectations among companies in the content industry, many of which have created specialized divisions or acquired companies that specialize in the mobile space (Merisavo et al, 2007).

2.1.3 Incentive

"Each and every customer’s objective from investing in any product may be even monetary, or features benefiting purpose" (Milne & Gordon, 1993). A Short Message Service should contain either a promotion for the product or a sale discount that may attract the customer and increase the involvement to the product. Therefore businesses should knock on the beneficial side that the customer seeks and give it to him/her in order to make the Short Message Service more effective (Milne & Gordon, 1993)

2.1.4 Source Credibility

Due to the huge number of products evading the market, customers can’t trust any unknown brand so they go for known, trustworthy, and which have good reputations. Therefore, in order to make a Short Message service effective, the brand should be credible and the product should be trustworthy or the prospect would never be involved (Mackenzie & Lutz, 1989).

The opportunities that mobile marketing has to get in order to become the leader of the market media are convincing consumers in receiving the marketing message since they will choose to receive the messages if they trust the messaging source. The customer’s trust makes the mobile marketing a highly qualified marketing media.

The arrival of Skype on I phone has been hailed as a big deal, so this application is slick and easy to use with an interface that will be instantly familiar to people. This is an example how the phone is turning to be an internet device permitting the mobile marketing to spread widely.

The Advantages of Mobile marketing Via SMS: Mobile SMS marketing for the marketer and customer is: cost effective way of promoting products and improves the company’s profit if implemented carefully. The information delivery is very fast since it takes a few seconds to reach the consumer. Commission margins are higher in comparison with other forms of marketing. Moreover, It creates strong relationships with the consumer. Consumers have the right to permit or reject receiving marketing messages and they will get the ad information because they choose to receive it. SMS marketing messages go to consumers' most personal communication device (cell phones). Fast response rate since the SMS will be read after15 minutes of receiving, while the response will need 60 minutes. In case the phone is closed, SMS will be delivered immediately after switching on the phone. Mainly, all cell phones can support SMS messages. Mobile marketing can be used for a wide variety of purposes such as raising the quality of the customer service, increasing loyalty to the brand and using as a sales promotion tool in opening up new markets. SMS is one of the most cost-effective marketing media available. SMS messaging allows the marketer to benefit from interactive campaigns and gather real-time responses from the customers (Milne & Gordon, 1993).

2.1.5 Appeal

Johar & Sirgy, (1991) Divided appeal into two categories, the first appeal is described by the rational appeal. The rational appeal is applied by giving the features and the attributes of the product which target customers by their needs, or attracting customers by the benefits that the customer may have if he/she adopted the product. Rational appeal is effective if the product really have attracting attributes that gives benefits to the prospect. The prospect then is more likely to adopt.

The second type is emotional appeal the emotional appeal which is by describing the outer appearance or describing the product’s nature or character which forms a positive emotional appeal that effect the customer emotions towards the brand. It may be effective if the customer holds emotional feelings toward the brand or is likely to be emotional rather than typical. Humans are characterized by the control of their feelings; this means that their response is based on their feeling and emotions (Johar & Sirgy, 1991)

2.1.6 Product involvement

Every customer have needs, internal attraction towards a product or more, or an evoked set of products which always having the brain involved with. Product involvement is an important factor for the customer to adopt the product. The product may have no appeals that attract; the customer may have this product stored already in the brain which involves him/her and to be motivated towards the product (Ratchford, 1987).

Companies are always innovating new products that provide specific need and benefits. Launching any new product requires many experts with different skills such as engineers who design the product using salesperson reports about customer needs, while marketing experts research the market and introduce the product potential and share in designing the features, slogan, logo, and advertising campaign. Globalization have open different markets on each other, this provides the companies with the ability to know customers’ needs and different tastes. Marketer should make a lot of efforts before marketing any product or service; he must study the market and identify the target customers (Ratchford, 1987)

2.1.7 Altitude towards mobile advertising

The attitude in psychology is a mental position with respect to a fact or state; it reflects the tendency to classify the objects and to react towards them. The attitude is observed after the evaluation of the behaviors of the consumers; therefore the investigators depend on the behavioral indicators of the attitude. However, the attitude is not related to the concepts such as the values, opinions, and the knowledge (Leppäniemi& Karjaluoto, 2005).

The attitude is the behavior of the consumers in general and the Lebanese consumers in particular. It is based on their believes and the ways they see the advertisements and the product itself. Thus the attitude is the reflection of the product on the consumers whether they are attracted to it or not. The attitude or the response of the consumers are variable and changeable, and that’s why its measurement are very difficult and can’t be taken directly so it demand the collection of data about the consumers behavior and observation of these data in order to know what are the positive and negative attitudes and to know the point of strength of this product, then the direct questioning is done to study the attitudes and to classify the consumers that has been giving their behaviors. And other methods can be used which are disguising the objective of collecting the attitudes data in order to make direct observation and facilitate the study of the attitudes (Leppäniemi& Karjaluoto, 2005).

The phones are the most spread technology nowadays and the wide variety of this telecommunication devices have lead to the confusion of which phone to choose in order to be able to receive any updates. However, the huge amount of consumers of the phones made it easier for the researcher to select a sample for examining the attitude towards the smart phones and the ways of marketing them. Globalization has spread the technology in almost all the poles of the global earth, except the few places that are considered as the poorest and undeveloped. However the third world has received the technology which is meant to be as an important basic in dealing with everyday life. Such technology includes the transportation, internet, e-business, smart phones, laptops etc… The high education level that Lebanon have allowed him to receive these technologies and to gets benefit from it in the domain of business, as well as it helped with the revolution of women in getting her rights. So women nowadays start to work as well as men do. The tendency that women have to shopping allowed her to be more interested in the products that the technology keep offering day after day, and her attraction to what’s new have also directed her towards these products. Therefore, the women are more likely to buy the high tech-products than men since they are interested in the applications they offer and the entertainment parts that these products contain, while the men uses them only for dealing with their businesses and making good contracts. This explains the women emotionally acceptance to mobile marketing in which it is much more than men who only cares for the working needs and not show off process (Leppäniemi& Karjaluoto, 2005).

2.2 Sample SMS advertisement

Figure 1 shows a sample of a SMS text that can be used in mobile advertising. As we see, the text is very short, meaningful, and contains a promotion for something that may attract the prospect and may change this prospect into a customer. Short messages may hold promotion sales, discounts, cross-selling, new collections promotions, informational messages, alerts and much more.

C:\Users\Nizar\Desktop\My336Deals_Sample_Texts.jpg

Figure 1: SMS Sample sent from a SPA center to customers (MY336DEALS.com, 2011).

2.3 Statistics about mobile users and the rapid growth

Figure 2 shows a statistics made by (International Telecomunication Union (ITU), 2012), showing the rapid growth of mobile subscribers in year 2001 (Around 1 billion subscriber) reaching around 6 billion subscriber in the end of 2011 which means that it have increased more for the year 2013. Also (International Telecomunication Union (ITU), 2012) showed that the subscribers per 100 inhabitant was 15.5 in 2001 reaching 85.7 inhabitant in the end of 2011 which means 85.7%. Typically Lebanese people are people who may hold this percentage as well because Lebanon is one of the up-to-dated countries proportionally in mobile commerce. So we can say that the huge number of mobile subscribers, who may hold their cellphones all the time, shows that mobile advertisement is significant due to its effectiveness of reaching huge number of people with specific targeting in cheap prices.

Figure 2:

2.4 Response/ Read rate

95% of Short Messages are read with during 4-5 min from when receiving it. And the response rate is up to 30% making mobile advertising the best read and response rate among all direct advertising methods (SomoTechologies, 2011).

In comparison with E-mail marketing, SMS have 8 times more response rate, no spam allowing, high open rates, and mobile phones almost held al-time by customers in contrary to E-mails which is checked from time to another. On the other hand, SMS have low characters allowing/ message while in E-mails characters are unlimited with the ability for sending images or any visual object. In comparison, SMS showed better way for marketing over E-mail marketing with much more facilities and preferences (SomoTechologies, 2011).

2.5 Why SMS works? By (Weinberg, 2011)

2.5.1 Speed

SMS messages are received almost in the same time from sending it; it takes few seconds to be delivered. It is very fast service and it can be sent almost for all the world and also with very few amount of time (Weinberg, 2011).

2.5.2 Flexibility

As mentioning before; SMS can offer plenty of offers, promotion sales, cross-selling, discounts, new collections promotions, informational messages, alerts and much more (Weinberg, 2011)

2.5.3 Read/ Response

As statistics showed that SMS have very great read and response rates which make SMS number 1 read/response rate over all direct marketing tools (Weinberg, 2011)

2.5.4 Personal

Targeting is so easy to reach the right customers. We can target customers by gender, place, age, loyal or strange customers, and many other demographic factors (Weinberg, 2011).

2.5.6 Inexpensive service

The cost of Short Message Service is very cheap among the world which can bring a good return on investment. The cost of SMS in Lebanon costs 9 cents for public, while it is less for businesses (Weinberg, 2011).

2.5.7 Return on Investment

Since SMS have a high response rate, cheap, and effective, it can give a high return on investment for business in order to increase its profit and generate its wealth.There are no performance requirements on investments imposed by law. there are no requirements in foreign investors regarding geographic location, amount of local content, import substitution, export expansion, and technology transfer, or source of financing. Investors are not required to disclose proprietary information as part of the regulatory approval process, except in the case of banks, which must have the central banks approval for transfer of ownership. Now, the application can be sent from the mobile banking (Weinberg, 2011).