Monday, February 25, 2013
Why smartphones might represent the demise of the impulse brand
According to this article by Emily Steel, published in the Financial Times, smartphones are responsible for a reduction in purchasing of impulse items sold at the checkout. It confirms that I made a mistake today when I walked into town and left my BlackBerry behind. If I had taken the BlackBerry, maybe I would have been busy tweeting instead of grabbing a bar of chocolate.
Apparently the use of smartphones to while away the time in the checkout line is wreaking havoc on the magazine industry. The number of single-copy sales of U.S. magazines at newsstands and retail outlets has dropped by about half in the last decade. Other impulse items like candy and gum are also suffering from smartphone distraction. The article suggests that companies like Mondelez are trying to capture shoppers’ attention on mobile phones by launching marketing promotions with location-enabled mobile applications, including Waze, In Market and Kiip.
I can’t help wondering how many people will be willing to use services like these, but perhaps even more important, I worry about what will happen if they do.
According to the Mobile Life Study by TNS, almost one fifth (19 percent) of the world’s six billion mobile users are already using location-based services and many more want to do so, but right now the main attraction seems to be GPS and maps. The report does find a minority of users (12.5 percent) are willing to share their location in exchange for a deal or special offer, and one in five of all mobile users might be interested in doing so.
James Fergusson, Global Head, Digital and Technology Practice at TNS, is quoted as follows:
We are really starting to see location based services ‘come of age.’ People are realizing that sharing their location often offers some kind of reward in terms of a discount or deal. It is the combination of time and context – directing people towards a deal when they can easily redeem it – that unlocks a powerful tool for marketers to develop precise targeting approaches.
But do marketers really want to offer deals to get people’s attention? I suspect that powerful tool will turn out to be a double-edged sword.
I believe marketers should be very wary of using price as an incentive to command attention. After all, a brand on sale is only a bargain once. Thereafter, the deal price soon becomes the default price against which that brand is judged. I suspect that in future, as well as distracting attention at the point of purchase, the smartphone will also be blamed for brands’ inability to command any sort price premium. As soon as people walk into the store, their phones will light up with competing price discounts. And in the absence of any other good reason to choose, which one will win? The cheapest.
So what do you think? Is location-based price promotion inevitable? What might marketers do to avert this threat? Please share your thoughts.
This entry was posted on Monday, February 25, 2013
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