Mobile Marketing

1. A Value and Risk Model of Consumers’ Mobile Marketing Acceptance: An Exploratory StudyFareena SultanProfessorf.sultan@neu.eduTao (Tony) GaoAssistant Professort.gao@neu.eduNortheastern University, Boston, MA Andrew J. RohmAssociate Professorarohm1@lmu.eduLoyola Marymount University, Los Angeles, CAJiao WangBeijing Institute of International Economics and TradeDMEF Marketing Research Summit, October 14, 2012, Las Vegas

2. Mobile Marketing • Mobile Marketing is a set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network (MMA 2009). • Brand in the Hand – the convergence of mobile handsets and the Internet has created new opportunities for m-commerce and interactive marketing and points to the potential for branding, advertising, and m-commerce to be delivered right to our hand (Sultan and Rohm 2005).

3. Examples of Our Research in Mobile Marketing Study 1: “Brand in the Hand” mobile case study with Adidas International in the Netherlands starting in 2004 Euro 2004 Football Championships vs. U.S. Missy Elliot (Ivey/NU Case Series, Sultan and Rohm,2005) Study 2: Managerial study, early mobile efforts by brands such as Adidas International (SMR, Sultan and Rohm, 2005) Study 3: Mobile portal initiatives by Adidas FIFA 2006 World Cup Soccer case study (Ivey/NU Case Series, Rohm and Sultan, 2007) Study 4: Youth acceptance of mobile marketing practices in Established vs. Emerging Market: U.S. and Pakistan, U.S. and China, (IJMM 2006, SMR 2008), (JIM, Sultan, Rohm and Gao, 2009), (JCM, Gao, Sultan, and Rohm 2010), (TIBR, Gao, Sultan, Rohm, and Huang 2011) , (BH, Rohm, Gao, Sultan, and Pagani 2012), (JBR under review, Sultan, Rohm, Gao, Pagani, 2012).

4. Key Research Questions • What factors affect consumers’ adoption of mobile marketing? • How do consumer perceptions of value and risk affect mobile marketing acceptance? • Focus: Emerging markets • China

5. It’s a Mobile World! • Over six billion mobile phones in use worldwide (NY Times, January 5, 2012) • Mobile advertising revenues increased 150% to $1.6 billion in 2011 in the U.S. alone (Interactive Advertising Bureau, 2012) • 40% of smartphone users access the mobile Internet before getting out of bed in the morning! (Ericsson, 2011)

6. Mobile Penetration Growth is Greatest in Emerging Markets

7. China’s Going Mobile…Fast China’s mobile phone users reached 1.02 billion in April 2012 China’s mobile penetration will exceed 100% by 2015 Currently, 450 million 3G/4G users in China (Chinese Ministry of Industry & IT, As of May 2012)

8. Theoretical Background • Perceived Value was found to be an important adoption determinant and segmentation criterion for mobile services (Pagani 2007; Pura 2007; Gao et al. 2012). We conceptualize perceived value as distinct from perceived utility. • Perceived Risk is a key construct in innovation adoption research (Collier and Bienstock 2006; Gao, et al. 2012; Lee 2009; Parasuraman et al. 2005; Walker and Johnson 2006) and in the mobile marketing literature (e.g., Shankar, Venkatesh, and Hofacker 2010). • Mobile Marketing Acceptance refers to the extent to which consumers engage in mobile marketing activities using their phones for purchases and downloads (Sultan, Rohm and Gao 2009)

9. Research Contributions • We propose that both perceived value and perceived riskinfluence mobile marketing activity. • We operationalize perceived value to be the worthiness of an action considering the cost and benefits of that action. • Perceived risk is the likelihood of the occurrence of negative consequences, such as unsolicited texts. • Few studies have examined consumers’ assessment of both risk (as a negative consequence) and value (as a positive consequence) in mobile marketing acceptance. • We also propose that value and risk mediate the influence of location-based usefulness, ease of use, compatibility, innovativeness, and trust on mobile marketing activity.

10. Theoretical Background • Location-Based Usefulness: Perceived utilityis a key reason why consumers engage in mobile marketing (Karjaluoto et al. 2008; Zhang and Mao 2008; Bauer et al. 2005). Increasingly, location-based usefulness has become a key construct in mobile marketing adoption (Xu, et. al. 2009). • Perceived Ease of Use influences consumer acceptance of information technologies (e.g. Davis et al. 1989; Szajna 1996; Hendrickson and Collins 1996; Chau 1996). • Innovativeness was found to be an important adoption determinant, and consequently also segmentation criterion for mobile services (Pagani 2007; Hofacker and Goldsmith 1991). • Compatibility refers to the extent to which consumers view mobile marketing adoption as suitable to their lifestyle (Muk & Babin 2006; Sultan, Rohm and Gao 2009). • Trust has been shown to be an antecedent of acceptance of, and behavioral intent towards, new technology (Gefen et al. 2003; Pagani 2007; Bart et. al. 2005).

11. A Parsimonious Conceptual Model + Location-Based Usefulness + Perceived Value + + Perceived Ease of Use + Mobile Marketing Activities Compatibility - + Mobile Innovativeness Perceived Risk + Trust - 11

12. Respondent Profile Data: Collected Fall 2011 in China Survey respondents: 317 youth consumers (215 undergraduate students and 102 graduate students at a university in Beijing) Gender: 51.4% Female 3G Phone Usage: 49.5% of sample

13. Examples of Construct Measures

14. Model Testing Used confirmatory factor analysis (CFA) to validate scales. Used SEM to test all hypotheses. 14

15. Results of the SEM Model Note: * - Significant at .05. ** - Significant at .01. *** - Significant at .001.

16. Results + Location-Based Usefulness + Perceived Value + ns Perceived Ease of Use ns Mobile Marketing Activities Compatibility - + Mobile Innovativeness Perceived Risk + Trust -

17. Implications Value and risk have countervailing effects on modeling mobile marketing activities. Location-based usefulness enhances value but it also increases risk. Trust increases value and reduces risk. Hence, trust can be used as a lever to reduce risk perceptions. Managers must continue to address perceived risk in terms of privacy concerns such as those related to location-based offers. 17

18. Thank You!Q & A

19. EXTRA SLIDES

20. Full Measures For Value and Risk

21. Conclusions Both Perceived Value and Perceived Risk influence consumers’ Mobile Marketing Activity. While Perceived Value enhances Mobile Marketing Activity, Perceived Risk decreases it. Location-Based Usefulness, while increasing consumers’ Perceived Value of mobile marketing activities, also increases Perceived Risk. Trust decreases Perceived Risk and increases Perceived Value. Innovativeness in the mobile space enhances consumers’ Perceived Value of mobile marketing. 21

22. Descriptive Statistics of Study Constructs Note: All constructs were measured with 5-point scales, with 1 being lowest (or least frequent) and 5 being highest (or most frequent)