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This project is in lieu of 50% of our grade. This report is based on connectivity as a consumer trend. It throws light on the history, evolution and future of connectivity as a trend. This report has been compiled by Athina D’Silva (ID-101648277) and Callahan Brown (ID-101664347), under the supervision and guidance of Professor Noela Michael.
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CONSUMER TREND: CONNECTIVITY
WHAT IS A CONSUMER TREND?
According to ANDY HINES, it is important to keep track of consumer trends as it helps in providing a primer on the evolving global trends, and how these global trends further evolve in the future (Hines. A 2008, p23). The knowledge gathered from the study of trends can be put to use in terms of detecting threats, uncovering new opportunities, crafting strategies, exploring new market products and services and most importantly understanding consumer needs. Hence as defined by the English dictionary a consumer trend may be defined as consumer habits’ or behaviors that prevail among customers of a particular good or service.
It is helpful to keep track of these trends as it not only help forecasters determine simply how much a particular group of customers buy a product or service but also how much they spend. Data collected by a trend forecaster may include information on how much a consumer uses a particular product/service, and how they communicate with their social network about that particular brand.
In the year 2012, connectivity is said to be one of the consumer trends that is evolving and has already become a necessity to millions. An article by CHRIS FOX talks about the different trends that are booming which will continue to do so, but the overall theme of all these trends is connectivity. Chris Fox explains how, in spite of the business/electronics world becoming more and more complex by the day the consumers seem to be keeping up and adapting to these changes fast. Connectivity does not only define the internet but also branches out to entertainment connectivity such as television, cable or satellite TV. Then there are smart phones, ultra books, connected appliances, card less payments etc (Fox, C 2012, p 8-9)
CONNECTIVITY AS A TREND:
A higher emergence of new technology seems to be spanning the media, social space, internet and telecom; hence the digital consumer came in to being .consider the fact that the TV took 13 years, radio took 38yearsand the internet took 4 years to hit 50 million users; (Infosys, 2011). This not only shows us how technology is evolving rapidly but has also accelerated these changes in the digital landscape and how fast these digitally active consumers accept and embrace these changes with ease. Consumers have changed the way consumers make purchase decisions’, communicate, respond and transact. INFOSYS analyzed this trend and the participants in the digital economy; they fully realized the need to place and make sure the digital consumers were at the core of their business. (Infosys, 2011)
The landscape for wireless connectivity is evolving rapidly, and with these modifications come new challenges for delivering the best quality of consumer experience. Over the last few years there has been a huge growth in volume in terms of mobile data consumption not only by laptops and computers but also smart phones. Smart phones in particular, have seen a massive expansion in numbers with the smart phone forecasts to rise to approximately 64 percent of all cell phone sales in Western Europe by 2015. Public Wi-Fi networks have grown beyond expectations as well. For example -in the UK British Telecommunication plc has now over 1.5million public hotspots. (Orlandi, et al 2011, p1)
Not so long ago customers were connecting to the internet via a dial -up connection modem. The birth of the broadband initially offered the advantages of high data rates as well as “an always on “connection. But now this so called broadband connection is not solely for using the internet but it also supplies its customers with high definition broadcast TV and enhanced telephone services. This offer goes by the name of ‘Triple Play’ , this form of connectivity has already spread from The middle east to most European countries like France and is rapidly becoming the ‘norm’ everywhere. (Hows, C 2006, p73)
Figure 1: AOL BOX , Source : Hows, C (2006)
FIGURE 1 depicts the Triple Play technology.
The AOL box (figure 1) has a high speed ADSL 2+ modem and voice over IP capability. An Ethernet port allows a connection from the set top box to the TV thus providing their customers with high speed internet, a cable TV offer as well as n enhanced telephone line. ( Hows, C 2006, p73)
WHATS BEEN INVESTIGATED AND FOUND OUT BY MARKETING THEORISTS ON CONNECTIVITY AS A TREND:
The alignment between end-user products and services that accompany them is a key trend in this industry. This has been proved in the case of Apple computers Inc’s I pod i.e. a portable digital music player, which is integrated with I tunes music store. The development between the service and handset relationship has proved to be a success. Enabling the transfer of ringtones from a mobile operator to a mobile phone that can play it clearly is a powerful yet simple example of the service-to-platform convergence service. Facilitating this link between the 2 allowed mobile operators who deployed this service to generate revenue from each subscriber for services they subscribed to other than a voice connection as depicted in figure 2.
Figure 2 : U.S. Mobile Phone Revenues & ARPU: 1999-2010
Source: Scherf, K (2006)
The figure above shows the gradual increase in the revenue from the year 2000 to 2010.
Another example would be the sales of high definition television and the upgrade to a HD television service. A high definition display provides consumers will turn to a service provider such as cable, Telco (if available) or satellite in order to provide them with a broader content. certainly the era of antennas will facilitate over -the-air high definition of local channels, but the increasing consumer base (figure 3) indicates that they are paying for such services due to the fact that they are seeking more in terms of High Definition programming, half of them initiated this service last year . These are the trends that service providers are studying in order to help them determine how much high definition content to provide their customers with .The graph below shows the increase in the sales of high definition displays in the late 2006, where service providers will have an even larger base of potential high definition customers.
Figure 3 : high definition TELEVISION SERVICES :SUBSCRIPTION AND INITIATION
Source : Scherf, K (2006)
Broadband And Conectivity:
It had been said that the number of worldwide households that have broadband is expected to increase from 184 million at the end of 2005 and will move towards the mark of 400 million at the end of 2010. Each consumer will center on how effectively broadband carriers build enticing packages of services and enter the realm of ‘experience providers’. Consumer research showed that unique service offerings and good consumer support happen to be key variables in improving consumer satisfaction and retaining customers. (Scherf, K 2006, pp 4-5)
Broadband Enabled Content:
Households with a home computer and broadband connection drive a share of digital home services and product trends now. Although the lure of a broadband connections are ‘faster e-mail and categories of ‘media active consumers’-those consumers that have invested heavily in online applications such as music, videos ,movies and photography already number in millions of households. Research shows that a prominent percentage of U.S internet users are now paying for these online content experiences as shown in Figure 4. As more consumers begin to use internet content services as complements to existing broadband, television and mobile phone subscriptions there is bound to be an expected increase in the number of users paying for these services as value- added -services rather than the stand -alone-subscription. Revenues in the U.S for such entertainment like music, movies, gaming and videos via the internet all of which can be enjoyed with a broadband connection at home on a computer – was said to increase $11 billion annually by the end of 2010 ,which is quiet an enormous change. ( Scherf, K 2006, pp7-8)
The figure 4 below shows the percentage of internet users that are 18+ and paying for their online content .the highest percentage of users use the internet for online music and is followed by pc gaming , online console gaming shows a still lesser percentage and the least number of users for online videos.
Figure 4 : Percentage of Internet Users Paying for Online Content
Source: Scherf, K 2006, pp7
Most of the services currently are PC based and with the consumers strong familiarity with the internet multimedia content and their increasing desire to enjoy video content on the television will increase the demand to bridge the solutions like today’s digital media adapter or electronic devices with direct connection to the internet and their home networks( television).a good example would be the HOMEZONE SERVICE offered by AT &T ,which includes the internet video offerings of AKIMBO ,this is defiantly one model that can lead to the success of ‘connected entertainment experience’ that consumers crave for. ( Scherf, K 2006, pp7)
The market for linking a home PC to a CE device is quiet small as of now. Furthermore the market for the digital media adapters has not fared as well as it was hoped to have by many manufactures due to many challenges such as the high prices and the less-than -perfect connectivity issues. That being said, there is going to be an expected increase in consumer use of digital content in terms of both downloading and streaming due to the emergence of multimedia network i.e. PC-CE,as consumers seek ways to extend the means of entertainment beyond their home computers. For example the GLOBAL DIGITAL LIVING research identified a global base of households in millions that are potential buyers of atleast a point-to-point music distribution system as shown in the FIGURE BELOW. (Scherf, K 2006, p 14)
Figure 5: categorize Global “Digital Music Enthusiasts”
Source : Scherf, K 2006, p 14
Already over 500,000 XBOX users have linked their xbox to their home computer, including media center systems that are beginning to enter a large base of households worldwide. Another category of products to be watched in this area is the network attached storage media servers (NAS).these will be use to back up any digital content but will also enable its users to stream its contents in various ways in the comfort of their own homes. (Scherf, K 2006, p 14)
HOW HAS THE INDUSTRY UTILIZED AND DOCUMENTED THIS TREND?
From his key note for the manufacturing innovation conference in 2012 held in Orlando, Florida. “Futurist ” Jim Carrol spoke about how manufacturing companies can add value to their product through ‘intelligence and connectivity’. He said connectivity is one of the leading trends which will define products through the next 10 years. According to Jim Carrol, everything around us is built to be plugged into everything else, the essence of the devices we used then has changed to what they are now. Since everything around us is driven by innovation and the need to improvise and innovate in order to be on top and increase business velocity and how connectivity as a trend is now the driving force or the core foundation to everything in our lives. AT&T is in the process of developing clothing with in- built body sensors that keep track and monitor blood pressure, perspiration rates and other health indicators. The core foundation here reflects on connectivity, and is based on the idea where one small cell phone App tracks everything. This basically gives us an idea of the rapid pace of innovation in terms of connectivity. (Caroll, J 2012)
HOW HAS THE INDUSTRY UTILIZED THIS TREND IN CREATING AND CHANGING THE MARKETING MIX?
All of the changes above have all taken place one after the other over night and its very obvious that these changes in people’s lifestyles will also lead to changes in how organizations approach potential customers and sell their products. Since each product is unique and has different functions and different types of buyers companies have to come up with customized marketing mix for each product.
V.I. THE MARKETING MIX DESIGNED KEEPING CONNECTIVITY- AS A CONSUMER TREND IN MIND WOULD BE AS FOLLOWS:
PRODUCT- the means by which consumers create and share commercial and personal content, enjoy a variety of entertainment and programming Apps and enhance their productivity be it at home or on the go is evolving immensely as digital technologies are become more mainstream. We have now reached a point where the digital life style – comprising the consumer activities mentioned above – has become more of a reality now than ever. The last decade has seen a lot in in terms of solid activity and potential among multi- players in service delivery, development of software and platform design to address the growing consumer need for solutions in terms of enhancement of their life style and productivity application from broadband to new television services to portable music. (Scherf, K 2006, pp 5-6)
The digital lifestyle market growth has largely been consumer driven and products and services have been acquired in piecemeal fashion. For instance, three-fourths of data networks in U.S households were purchased directly at retail by consumers, meaning it was up to them to decide if they had a need for network as in to share a single connection for instance; if the solution for their needs were based on social parameters such as reviews, performance and opinions from trusted and known sources; lastly if they knew how to install and configure the product. QUAD-PLAY BUNDLE is an example which includes mobile communication and entertainment services in their package. This part of the marketing plan also deals with product enhancement,in earlier times the mobile phone was nothing but a bulky voice transmitting device , now the headsets are sleek ,converged devices that not only help in transmitting or enabling voice communication but can also provide diverse experiences ,from camera like functions to video viewing capabilities etc. Since 2004 80% of mobiles in U.S markets have been camera capable pieces. Ever since the invention of cell phones with cameras, service providers have been offering attractive prices to entice their clients to buy a cell phone with a camera. This demand has further increased with the introduction of mega -pixel camera phones that promote services like photo sharing and printing. Also, SMS(short message service) have been futher enhanced with 2 way video calling . (Scherf, K 2006, pp 5-6 )
PLACE: with regards’ to connectivity there isn’t a particular place that organizations can be specific of when it comes to marketing their product. They have to cover all area such as offices , homes and even connectivity on the go as people opt to stay connected even when they are travelling from one place to another be it through their lap tops ,I pads or even cell phones.
The advent of the 3G technology is a good example of the know fact that people find it a necessity to be connected even when they’re on the move and hence the element of place in the marketing mix cannot be confined to 1 aspect but is has to cover all aspects of connectivity in terms of different locations.
PRICE: with regards to the growing needs of consumers to stay connected, consumers are willing to pay any price to be connected at all times. Now service providers are coming up with reasonable packages for their clients to keep them connected. A good example is the etisalat triple play, (e-vision), black berry and I phone packages that are available. Fulfilling the requirement for end to end wireless applications for customers at low costs have been implemented. (ICRM India, 2012)
PROMOTION: this is the most important element of the marketing mix. Service providers have various promotion methods to attract a strong client base and spread awareness of their product/service.
Promotion methods include advertising via the television, magazines, internet, bill boards, and social networking sites, holding press conferences, appointing a brand ambassador to promote the product or service and lastly putting up official websites for the product.
VI. WHAT ARE THE CONSUMER BEHAVIOR CONCEPTS IN TERMS OF ‘CONNECTIVITY’?
MOTIVATION: connectivity has become a major delivery channel for all industries. It creates easy access and convenience for consumers, it has also emerged as one of the easiest and most opted means of increasing and improving business agility throughout the business world from customers, partners, employers, employees and suppliers. The fact that even though it is in so much demand by consumers it is very cost effective as suppliers have come up with various schemes and benefits and most importantly different forms of connectivity ,be it via 3G connections on cell phones, 3 in 1 modem that links TV, landline and broadband connection etc. (ICRM India 2012)
CONSUMERS ATTITUDES TOWARDS THE TREND: based on research it has been said that connectivity (data networking) is become a success story on its own. Penetration of data networking has grown from 2.5 million in U.S households at the end of 1998 and has said to exceed 20 million today and also an estimated 80 million worldwide because it solved a couple of key problems such as allowing multiple users to access shared resources such as broadband. (Scherf, K 2006, p 12). All consumers have a positive attitude towards the trend .The only negative aspect of the trend is the risk of using the internet if people aren’t well educated in terms of using the internet for online shopping, or banking etc.
BUYING AND DISPOSING OF THE TREND:
According to an article posted by the official JIM CARROLL website, he talks about how connectivity has no end and how it will only keep evolving. Consumers opt to use the trend as they are extremely dependant on it in terms of easy access, quality of experience, delivery and pricing of the trend. Since most of the services are online ranging from household to electronics, medical equipment etc it is impossible for consumers to replace or give up this trend no matter what. He says according to research firm IDC internet trafficking will grow to 32% each year starting from 2010 – 2015 (Caroll, J 2012). Hence, it is practically impossible to dispose of this trend.
INTERNAL AND EXTERNAL INFLUENCES ON THIS TREND:
Connectivity has a customer base of active, assertive and active members identified by their craving for unique, participation and independence. This craving is motivated by several internal and external factors such as:
Convenience and Personalization – these consumers demand customized and personalized products and services and connectivity as a trend provides then with it.
Entertainment and Experience – consumer’s value innovative experiences and hence seeks to be engaged in it whenever they can this is also something connectivity provides its customers with.
Peers Impact – customers rely heavily on peer reviews for anything and everything.
Secure and Easy purchasing – customers want to make their purchases anywhere and at any time and in this point in time (digital age) access, speed and security is paramount and connectivity provides then with this satisfaction as well . ( Infosys 2011)
Accountability and Transparency – customers demand for integrity, honesty and accountability.
V.THE IMPACT OF CULTURE AND SUBCULTURE ON THESE TRENDS:
Culture and subculture do play an important role in this trend, it is known as ‘consumer acculturation’, it is a subset of socialization and acculturation. Consumer acculturation is only in terms of consumption processes. It can also be defines as a socialization process wherein an immigrant consumer learns the behaviors values, norms and attitudes of a culture that are not the same from their culture of origin ( T Ogden, Denise, R Ogden, James 2004, p4)
Also a good example of culture and its effect on this trend is the fact that now technology is trending towards the production of more female friendly goods. Another example is now almost all countries have their online shopping site; these sites have the option of changing the display language to anything including a change in currency display. Also, one of the most obvious impact culture has on this trend is the change in language display on cell phones in any country in the world. Consumers can now choose to view their phone display in their preferred language at the click of a button.
VI.CONCLUSION- HISTORY, EVOLUTION AND FUTURE OF THIS TREND:
Connectivity has revolutionized the world of computers and communication and entertainment. The invention of telegraph, radio, telephone and computer are the level of such unparallel development of capabilities. Connectivity represents one of the most successful examples of the benefit of investment.
Soon the trend of connectivity in terms of the internet, media, and phones was used by everyone. The commercialization of connectivity involved not only competitive development, private network services but also development of such sophisticated products that help people stay connected at all times (M Leitner, et al 2011). Connectivity is in so much demand that now it is not just a trend followed by millions but is also a necessity to most people specially in the health care sector. It is no longer only a means of networking and providing customers with entertainment and other services on the move or in the comfort of their homes but is evolved into becoming something people cannot function without.
The future of this trend over the next 3 years is predicted by a trend forecaster, Jim Carroll by name. He described the trend to be never ending in terms of its evolution, and looking around us with the way we consumers behave towards this trend it is hard to say this is something we would give up or replace.
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