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Picture this: A photography lover is taking her latest acquisition-a black-and-white Ansel Adams landscape-to a gallery for framing. After negotiating the price, she remembers seeing a special offer for a 20 percent discount. She doesn't need to run home to find the flyer or print a copy of a coupon from her computer. She simply presents a digital version stored on her cell phone. The store clerk copies the unique identifying number to validate the coupon.
Nearly $60 billion was spent on direct mail marketing in 2006, much of it on coupon and special offers to consumers, according to the U.S. Postal Service. Residential mailboxes regularly overflow with retail circulars, ad fliers and coupon booklets. And retailers and manufacturers have taken the tried-and-true method of inserting coupons into magazines and newspapers to their Web sites, where online users can print discount coupons.
The days of consumers clipping coupons for redemption at their favorite stores may come to a close with the advent of virtual coupons transmitted and retained in cell phones and PDAs.
Cell phones and smartphones are the perfect vehicle for digital shopping incentives, for several reasons.
Sound: They can broadcast a wide array of sounds-from voices to tones to music. The ability to play multiple ringtones to the latest Kanye West single means they can alert users in a variety of ways to special offers and services. For instance, McDonald's in South Korea lets users download an applet to its phones to place orders and avoid long lines. When an order is ready, the restaurant rings the customer's phone.
Imaging: Most phones include cameras-still and video-that can record images as well as codes. Amusement Café Maids in Japan lets customers use these cameras to play interactive games: A participant points a camera at a special barcode on a drink coaster. This triggers the phone's browser to launch, presenting potentially game-winning clues in the form of digital watermarks. Other retailers have used 2D barcodes within digital and paper signage to give prospects more information about a product or service.
Audio Recording: Phones can hear, and can initiate instant one-way audio marketing messages or two-way customer service and support conversations.
Text Messaging: Nearly all phones have SMS text messaging capabilities, if not e-mail capabilities, which can be used to send and receive marketing messages and incentives. AT&T Wireless is using text messaging to promote special wireless services to its subscribers.
Displays: Most phones can show pictures, which can be used to view video messages, documents, product slides and spreadsheets. Some retailers are using Web-based videos to promote their products; it's not too far of a leap to see these videos pushed to cell phones.
Computing: Cell phones and smartphones are essentially computers, with the capacity to process data that in turn allows them to integrate many of the previous features into highly targeted marketing applications. Cell phones could also house RFID chips, making them an alternative to credit cards as a payment vehicle.
Identifying Users: A cell phone's serial number and phone number make it a potential form factor for identity management. Of course, a user should have to present a second form of ID to prove he or she is the rightful owner of a particular phone.
Geographic Locator: Some cell phones can receive GPS satellite signals. With that information, retailers could beam offers to consumers based on their physical location. Some Subway franchisees are testing the use of location information from cell phones to send coupon alerts to current customers when they approach a Subway they've never patronized.
Despite all this potential, U.S. retailers are using only a fraction of cell phones' theoretical capabilities. Generally, it's marrying one of those high-tech attributes with a very low-tech workaround. This is how 8Coupons.com, a New York-based startup, enables coupons via smartphones and PDAs.
8coupons.com founder Landy Ung says the U.S. is so far behind the rest of the world in leveraging the power of cell phones because, ironically, it was so far ahead for so many years. The strength of the U.S. telecommunications industry allowed the North American market to stay with landlines telephony far longer than other parts of the world, she says. Much of Asia "skipped that whole landline infrastructure and went straight to mobile. It's now been there forever."
Unleashing the cell phones for retail convenience isn't as simple as it may sound, even though there are plenty of examples and tools in use worldwide. In the U.S., corporate and political issues pose the greatest obstacles. In much of Europe and Asia, the government plays a major role in managing the telephony infrastructure; wireless carriers are not nearly as powerful as they are in the U.S. Cell phone systems in the U.S. are "all so fragmented," Ung says. "Take Verizon Wireless-its system in the South is different from its system in the North."
Another example is a mobile-commerce rollout by Barnes & Noble. This holiday season, the bookstore chain's customers will be able to review books and related products-"between one and two million SKUs"-on their Blackberries, according to Miles Williams, the retailer's director of online partnerships. "We show the cover image, price and availability and basic product description," Williams says.
The Barnes & Noble service is limited to Blackberry users and doesn't offer much beyond the basics. The Web site and the stores are designed for browsing and finding what might be interesting. The mobile experience is pretty much limited to customers who "know what they want," Williams says. The initial version, created by mobile commerce company Digby, is much more about pushing content out than providing an interactive experience, either for the user or for the retailer's IT staff.
"Digby has zero integration with our stores at this point," Williams says, adding that inventory lookups, loyalty incentives and geography awareness are on his wish lists.
Nevertheless, technology being pioneered by Barnes & Noble and Digby may one day provide a truly interactive mobile shopping experience and change the way consumers search for goods.