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LBS & tourism through the eyes of a postgrad marketing student in New Zealand.

Saturday, April 30, 2005

Thoughts on 'The Location-Based Services Renaissance'

Having now thoroughly read 'The Location-Based Services Renaissance' white paper I mentioned in the last post, I felt impelled to respond to some of the points raised...
"One operator recently said, “No one appears to want to pay for [LBS] services, and for current services, demand is greatest among young people, who can least afford to pay for them.” " (p5)
Actually, many young people have little regard for how much money they spend on their mobile. This is especially true in New Zealand, as illustrated by this NZ Herald story about a 17 year old who sends about 8,000 text messages (i.e. $280 on Telecom) every month. Also, in mid to high socioeconomic classes, teenagers can have a lot of spending power, both in terms of the money given to them and the influence they have over their parents' purchase decisions. Finally, when they grow older and initially enter the workforce, they will be both tech-savvy and have a relatively high disposable income, since they may not need to support a family yet (some of them probably still live with their parents to save money).
"If the user’s experience is poor, they will abandon the service when the promotion is over." (p7)
This is consistent with services marketing theory, whereby the actual service experience has the greatest impact on customer value, satisfaction, etc. It's common sense!
"In Japan, carriers distribute Cell ID location data freely, encouraging application developers to post applications on their portals, which drives user traffic." (p8)
It's kinda like open-source software development - the more users you can get to actually collaborate and co-create the product/service with you, the more innovations you're going to get! Firefox is a great example, with a neverending myriad of plugins you can download to personalise and enhance the web browsing experience. (Yes, I'm a Firefox evangelist too...)

In the end, it's really the conclusions of the paper that I wanted to address:
"In the future, parents will be able to locate their children with the touch of a button." (p10)
I'm paraphrasing Russell Buckley here - basically, the above sentence should say 'parents will be able to locate their children's phone with the touch of a button'. Here's more reasons why child tracking is misguided. While it's very tempting (easy, even) to sell child tracking LBS to paranoid parents, unless the GPS/RFID chip is directly embedded in someone's body (in a difficult-to-remove place), people-tracking really equates to device-tracking, and it doesn't take a genius to work out how to get around that!
"Parole violators will be readily caught." (p10)
Don't they already have ankle-bracelets for that? And see my point above about the embedded-in-a-hard-to-remove-place thing.
"Mobile users will sign up to receive coupons for lattes on their handsets as they pass Starbucks." (p10)
Russell's ZagMe White Paper put it best when he did some simple calculations to conclude that a sale with at least a 5 pound profit margin would be needed just to break-even on this sort of mobile marketing (hope you don't mind me quoting just one paragraph!):
"This simple analysis explodes the popular Starbucks myth - for low cost items, mobile marketing used in this way is simply unaffordable. It can only be justified for higher priced and higher margin products." (p27)
Perhaps a better example would be to use a CD store selling CDs or even concert tickets (actually, I think they do that already, though not in a location-based way).

Overall though, still a very good paper - I'm always happy to find white papers because they're generally quite practical, not to mention easy to read (compared to some academic journals)...


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