The impact of mobile internet technologies on marketing in the era of Covid-19

The worldwide outbreak of the novel coronavirus, also known as Covid-19, was declared a pandemic by the World Health Organization in March, 2020. The ongoing outbreak has disrupted entire industries and economies, by obstructing development and threatening the survival of businesses. Disruptions are inevitably accompanied by innovations. The coronavirus outbreak, like other crises in the past, has catalyzed digital transformation at an unanticipated rate. Microsoft CEO Satya Nadella claimed that the pandemic has condensed two years’ worth of digitization into two months (Sparato, 2020). As a result, technologies that were only popular in idea or amongst early adopters are already diffusing and being adopted to help firms secure their short-term survival and long-term sustainability.

Marketing innovation seems to have taken the center stage by allowing businesses to create sustainable competitive advantage. One of the ways in which firms can improve their short and long-term competitiveness is by leveraging disruptive technologies to innovate their product or service attributes to capture current demand. Disruptive technologies offer businesses the potential to generate or strengthen sources of competitive advantage by innovating across the 7Ps of the marketing mix.

This paper discusses the impact of mobile internet as a disruptive technology on marketing practices during the Covid-19 crisis, with implications for marketing innovation in the post-pandemic world. It covers a brief discussion on mobile internet and the nature of disruptive technologies, and summarizes the capabilities generated by mobile internet and how they work together to create a digital economy. The following sections analyze how disruption and innovation as a paired force has influenced marketing practices during this crisis. Finally, it sheds light on the implications for marketers and offers some foresight into the post-pandemic future.

Background

A technology is disruptive when the innovated product captures the mainstream market with its improved product attributes (Bohnsack and Pinkse, 2017). Disruptive technologies are often seen facilitating rapid change in the capabilities of businesses and their response to consumer needs and expectations through breakthroughs in digital and innovation strategy (McKinsey, 2013). Technologies that have the ability to affect change across entire industries by allowing new products, services or business models to emerge are disruptive on an economic level. Mobile internet refers to internet access through mobile devices like smartphones, tablets, etc. Mobile devices, and in particular smart devices, are fitted with a range of mobile technologies that can be enabled with mobile internet access. These technologies offer a multitude of functionalities that can be accessed with mobile internet, making mobile internet a more versatile option than internet on desktop devices. Mobile internet technologies have the potential to impact the lifestyles of billions of people by changing how they live and work, by generating new opportunities and offering them the tools to contribute towards innovations in the digital economy.

According to data from GSMA intelligence (2019), almost 67% of the world population have access to a mobile device. By 2023, this number is expected to reach nearly the entire world population (Statista, 2020). By 2025, mobile data usage is projected to triple, owing to the anticipation for 5G rollout (Clapp, 2019). This was before the pandemic catalyzed the adoption of mobile internet and rapidly boosted the economic value of the mobile segment. McKinsey, a leading management consultancy firm has placed this value at a global figure of $3.7 trillion to $10.8 trillion by 2025 (McKinsey, 2013). This economic impact is attributed to better service delivery, rise in productivity and the increase in mobile internet adoption.

Access to mobile internet is closely tied to economic development in developing economies. Last year, the UN General Assembly included mobile internet connectivity in a list of 17 sustainable development goals for the immediate future, addressing the importance of bridging the “coverage” and “usage” gaps in mobile connectivity. These gaps refer to the populations that are not covered by mobile networks and those that are covered but do not use mobile internet. At present, these gaps stand at 7 and 43 percent of the world respectively (GSMA Intelligence, 2020).

2020 has been a year of lockdowns around the world. As people moved indoors to curb the transmission of the coronavirus, the adoption and usage of mobile internet technologies saw a dramatic increase during the outbreak. Consumers are now more reliant on digital services; consequently, businesses are more reliant on the digital economy. Amongst the digital activities, there has been a marked shift towards mobile content consumption in particular. A WARC Best Practice report notes that online video consumption accounts for almost half of all media consumption (WARC Best Practice, 2020). This is one of the many trends that are likely going to last into the future.

​Mobile Internet and the Digital Economy

Mobile internet technology is an umbrella term for a range of mobile computing devices and associated technologies like wireless connectivity, mobile web browsing, mobile applications, GPS location-tracking, etc. Mobile devices today are enabled with capabilities like mobile internet access, navigation, health monitoring sensors, gaming software, voice and gesture recognition, mobile payments, cloud connectivity and mobile sensors. The latter includes location sensors, infrared sensors to monitor temperature, light sensors that calibrate to preserve battery health, and even humidity and air pressure sensors (McKinsey, 2013).

Mobile apps, which are unique to mobile devices, are one of the most important products of mobile internet technology. These apps offer businesses the ability to present their products and services much like a website but with the added benefits of personalized interaction, advertisement, services and loyalty building activities through location-based push marketing. Mobile apps can therefore be leveraged in many ways to differentiate a business or innovate an entire business model. This is evident in the way mobile apps transformed payment systems, making it possible to conduct transactions digitally. With developments in mobile technologies, mobile devices are becoming more seamless and flexible in their usability for businesses to reach out to their customers and vice-versa.

The rapid diffusion of new mobile technologies and their enthusiastic adoption has shed light on a range of mobile technology applications that include more than just mobile internet browsing. The aforementioned features offer immense potential for improving organizational productivity and customer relationships during this crisis.

Digitization and the digital economy

The digital economy refers to the economic influence of online activities that result from billions of online interactions amongst consumers, businesses, organizations, machines, processes, devices and data. The digital economy relies on hyper-connectivity and interconnectedness enabled by the internet, mobile technologies and the internet of things (Deloitte, 2021). The digital economy is enabled by the online channels and digital resources that are available to everyone with access to the internet, from big businesses to small entrepreneurs, allowing them to compete globally through e-commerce platforms.

The covid-19 pandemic may have slowed the economy down, but the digital economy has captured growth and progress, which is commonly referred to as the trend of digitization. Digitization is the process in which tasks are increasingly being carried out over the internet. Internet-enabled mobile technologies offer a range of ways in which these can be executed, especially by the use of mobile apps. The potential of mobile internet technologies are far from fully realized but in many industries, the diffusion of mobile technologies and their rapid adoption itself is a major driver of digital transformation.

In a research exploring attitudes towards digital transformation, PricewaterhouseCoopers (PwC) found that different businesses defined the “digital” differently. To most, the term referred to technologies, IT capabilities, customer relationship management technologies. Only a 6% of these businesses reflected the opinion that digital involves an innovation mindset that goes beyond technological capabilities in a particular business activity or department (eMarketer, 2017). Digitization therefore is driven by a mindset that pushes businesses to consider the different ways in which technology can be leveraged to create and maintain competitive advantage. The Covid-19 crisis has made this essential for survival.

The Impact of Mobile Internet on Marketing Practices during COVID-19

Consumer Behavior

Hoekstra and Leeflang (2020) state that despite similarities between marketing in an economic downturn and marketing during the pandemic, there are significant differences in market behavior during the pandemic. These include falling consumption, low consumer confidence, low incomes, falling share prices and shifts in consumption from one product category to another.

According to Euromonitor International (2020), some of the major changes include a shift of focus to community and digitization. Customers are more connected digitally, shopping experiences have shifted to an online model, and consumer spending has taken a hit for mid-to-lower income consumers. Consumers are now more aware of the corporate social responsibility of businesses. There is a greater general scrutiny of what businesses are doing not just to stay connected to their customers but also to help different causes that require support during the crisis. Push marketing activities are no longer the norm, rather customers must be pulled into the brand community through influence and impact. Companies are responding by adapting their objectives to the values that have emerged in the pandemic, and supported them with initiatives to tackle crises both locally and globally. Hoekstra and Leeflang (2020) referred to this as “cause-related” or “purpose marketing”, which serves as a demonstration of corporate social responsibility. The direct implications of these changes seem to point at the necessity for businesses to reinvent their marketing strategy, business models and innovate their products and customer service to adapt to a new environment. A shift to online creates greater opportunities for businesses to engage heavily in data-driven marketing. Exchange of information is crucial to maintaining connectivity in an environment where stringent social distancing measures are observed with a decline in physical activities and exchange. In fact, the abundance of information is powering consumers and businesses alike by providing customers with more awareness and choice of brands based on their responses and by allowing businesses to leverage consumer data to generate valuable customer insights and create a more agile and sustainable business model. Information channels like social media drives this exchange of information for both parties, allowing customers to find businesses they support and allowing businesses to innovate products, create a brand community, interact directly with customers and differentiate their brands.

Digital transformation of marketing channels

As physical activity declines, mobile internet offers a platform for digital exchange and transformation within businesses. In the retail sector in particular, mobile internet allows businesses to create digital capabilities based on new or existing online and hybrid marketing channels (McKinsey, 2013). McKinsey in their 2013 report on disruptive technologies, projected the productivity gain of digital channels over traditional channels at up to 15% due to reductions in inventory, labor and real estate costs. The pandemic has certainly added the major benefit of building a brand community that surpasses local and national boundaries, leveraging user-generated content for data-driven promotion, and maintaining a strong brand personality despite reduced physical interactions. The report asserts that as more internet traffic goes mobile, businesses should adapt themselves to capture revenue via mobile internet.

At its core, a business’s digital transformation should align with its value proposition. According to Payne and Frow (2014), a value proposition is “the promise of value to customers”. In the context of the Covid-19 pandemic, businesses should redefine their digital value proposition to meet current expectations. The following section briefly summarizes some digital capabilities that can be leveraged using mobile internet technologies by businesses aiming to develop a sustainable competitive advantage.

• Social Media Marketing: Social Media channels and social networking sites are powerful digital marketing tools for businesses. Social distancing has shifted consumption behavior and threatened the survival of brick-and-mortar businesses and physical interaction with customers (Sheng et al, 2020). Social media offers the opportunity for brand to use multimedia content to create a strong impression, build loyalty through digital interactions, promote their products and services and create a brand persona by engaging in CSR activities. Social media also offers the added benefit of employing Artificial Intelligence and machine learning tools to analyze customer reactions, collect data and understand their market from an analytical perspective (Sheng et al, 2020).

• Customer relationship marketing: The performance of businesses during this crisis will hinge on consumer expectations. Businesses are being scrutinized not just from a customer service perspective but also from a social responsibility point of view. And the exchange of information on mobile media like apps and websites makes this process more transparent. Businesses should be aware of their markets through data collected through CRM software and campaigns. An upgrade in mobile data analytics can prove to be a key technological capability during this crisis (Wang et al, 2020).

• Digital consumer behavior: The pandemic has boosted digital activity. It’s important for businesses to stay on top of digital trends to create competitive advantages that combine online and hybrid efforts to differentiate oneself. The major trends that marked digital transformation during the pandemic are online learning, e-gaming, internet streaming, cashless payment, e-commerce and home delivery services (Brem et al, 2021). Emerging business models should accommodate efforts in some or all of these digital dimensions to enable adaptability to the present and future crises as well as to digital behavior that will linger beyond the pandemic.

• e-Commerce and cashless payments: Prohibitive controls on social activities such as retail shopping has led to a surge in e-commerce usage. In the first quarter of 2020, the US saw an increase an e-commerce activities to 27% of total retail, up from 16% (McKinsey, 2020). According to McKinsey, a similar gain had previously taken 10 years to achieve between 2009 and 2019. Whether it is customers looking for safe ways to shop or businesses trying to survival with an online strategy, e-commerce has offered a convenient online marketplace with safe, virtual transactions. Even categories that weren’t popular before, such as groceries, have generated high online sales. Further risks of spreading the virus has also contributed to the rise in cashless mobile or contactless payments.

• Internet of Things: In a 2018 survey by KPMG, 17% of participants identified the Internet of Things as pivotal in driving digital transformation. From supply side optimization, efficiency and transparency to obtaining and utilizing data on the demand side, the Internet of Things offers the potential for cloud-connectivity that will generate leaps in productivity in every step of a firm’s value chain process. The convergence of disruptive technologies like IoT, AI and robotics may produce new business models that are more robust and adapted to the post-pandemic world (KPMG, 2018). These technologies can also enable smart product and process innovations like smart shelves, artificially intelligent retail assistants, smart shopping systems, wearables for monitoring health and sensors that can help enforce social distancing and scan temperatures in public places.

Digital responsiveness is essential to survive in the current environment. Before the pandemic hit, Peacebird, a Chinese fast-fashion brand, operated primarily through their offline retail model. Now a close competitor that might overtake established retailers like H&M, the brand has tapped into the needs of their target market by identifying and acknowledging changes like feminism, personal aesthetics, internet influencer-culture and other emerging shifts in cultural mindsets amongst young Chinese consumers. During the pandemic, some of these offline stores were forced to shut down as a consequence of a sharp decline in demand (Zhou, 2020). The company responded by shifting their activities to online media. From analyzing their targets presence on online channels, to transferring their employees to form online marketing teams by providing targeted training, the firm successfully executed their digital transformation into a powerful brand online (Wang et al, 2020). The firm leveraged social media platforms and the growth in media consumption to engage in activities like livestreaming to create its own community as an online “influencer”. This is an example of how businesses and brands are creating digital personalities to create a followership. This allows them to retain and engage existing customers and gain a large number of potential customers through new “followers”.

Conclusion

The Covid-19 crisis has led companies to reconsider their assortment, price, promotion and communication strategies. The pandemic provides an opportunity for firms to critically revaluate their business models and redefine what efficiency means in the context of the new normal. A multichannel strategy combines offline capabilities with online channels to generate the most value for businesses and customers. Companies that leverage a multichannel strategy in their business models are better adapted for different natures of crises in the future as their experience and learning leads to better responsiveness. As advertising expenditures decline, online channels such as social networking sites at their most basic provide convenient and cost-free ways to maintain a brand and its relationship with its current and potential customers. Such a medium not only offers a front-facing opportunity for direct interaction and feedback from customers but also a back-office peek into large amounts of data. Online promotion is relatively easily achieved through e-word of mouth or user generated content by an existing, loyal customer base. As firms grapple with short and long term responses to the crisis, it’s important to stay digitally relevant and be where the consumers are. Decreased consumer loyalty and frequent brand switching behavior also means that firms have to bring creativity and innovation to the way they carry out a digital strategy. Like in any offline business, there is no one-size-fits-all business model. In the current environment, a firm’s digital innovation strategy is crucial to differentiating oneself, building competitive advantage and maintaining long-term sustainability.

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