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Caroline Ahmed

Gulf between expectation and reality on mobile experiences puts banks at risk of losing customers

The London Olympics. Facebook’s IPO. Obama vs Romney. A decade from now, these will no doubt be some of the events that we’ll look back on as the most significant and memorable of 2012. But, for business, the biggest long-term legacy of 2012 may well turn out to be that it was the year when, at last, mobile commerce made the jump from hype to reality. For the first time, the question now facing many brands is not whether, but how, they should be capitalising on opportunities presented by m-commerce. And brands are having to come to terms with the fact that, for the first time, consumer expectations for mobile functionality and user experience are running well ahead of the services their organisations are actually delivering.Caroline Ahmed

A ‘big bang’ event
At Foolproof we believe that what’s happening with mobile devices and the mobile internet is every bit as profound as the web revolution of the late 1990’s. We see it as a ‘big bang’ event: mobile is creating new time and space for consumers. Time that was previously unproductive or inert is now filled with mobile interaction. What are users doing with this time? What brands are they engaging with in this new, very intimate, digital space? Which tools and services create value for them…and which are just creating noise? Knowing the answers to these questions can be the difference between success and failure in the design of digital services.

Right now, the mobile marketplace is still forming. This represents an opportunity for companies to design services to win a share in this new, digital environment and protect competitive advantage for years to come.

In order to help our clients better understand the needs and demands of the mobile consumer, Foolproof recently undertook a major research study – Going Mobile. This rich body of insights was collated over a five-month period and included interviews with brands, a two-week diary study with respondents, and quantitative validation with 500 smart phone users.

One chance to make a first impression
Going Mobile found that today’s consumer views the quality of their mobile interactions with brands as being an important indication of the overall quality of that brand. Respondents said an unsatisfactory mobile experience engendered feelings of mistrust in a business and, in nearly 50% of cases, mobile users stated that they had already ceased dealing with a brand as a direct result of the mobile service or ‘app’ being below par.

When asked to choose words to describe a company which designs or offers a poor mobile app or service, 38.2% stated ‘unprofessional’, 35.8% ‘poorly-managed’, and 35.2% ‘out of touch with their customers’. On the flip-side, organisations delivering a ‘great’ mobile service or app tend to benefit from very positive brand associations. Initial impact is all-important in mobile, with 80.6% of people stating that a mobile service or app has to make a strong first impression if they are to continue using it.

An emotional bond
Going Mobile highlighted the fact that, unlike their other devices, consumers have a strong sense that their smartphone is ‘alive’ and an extension of their own body and personality. There is very real affection and an emotional bond between some users and their phone. Despite the phone being an essential, everyday tool, there’s still a sense of excitement and expectation about how services will develop – and how these will change the users’ lives still further. For many, their phone and tablet offer a sense of freedom and renewed control over their life:

  • Consumers describe feeling closer to, and more personally involved with brands which create valued mobile apps and services.
  • Unused and unloved apps don’t routinely get deleted, but persist as a reminder of a failed promise by the brand that created them.
  • Consumers are already showing sophisticated shopping behaviours that weave usage of phones, tablets and desktop PCs into the purchase decision process. This includes the merging of the physical and digital worlds in the shopping journey.
  • There’s a security paradox: consumers have a heightened sense of security and privacy risks, but avoid using services which have complicated or difficult security processes.

Banking on mobile
With retail banking being one of Foolproof’s specialist sectors – we work with some of the world’s leading banking brands – we were keen to drill further into the detail to help our clients understand some of the particular challenges facing them. Mobile devices are redefining how we organise and use our time, and essential tasks like banking are now being made easier as the digital and physical worlds converge in the form of smartphones. It is clear from Going Mobile that the growth of mobile technologies is already changing the way consumers interact with their banks, therefore presenting new challenges to the industry:

– 58.3% of respondents say that mobile devices have given them more control of their money and that they check their finances more regularly.

– One in three respondents say that they look into new financial products and services more since they started using mobile banking.

Personal banking is viewed as a very important part of overall mobile usage. Users are fully engaging with mobile platforms not only to keep up-to-date with balances and transactions (78.8% of respondents), but also to manage and initiate payments from mobile devices (64.4% of respondents).

Mobile is creating valuable opportunities for banking brands to engage with consumers in new ways, at new times, and in new places. However, banks have struggled to fill these new spaces in consumers’ lives and the need for innovation in mobile product and service design has become a strategic issue for protecting and growing market share.

Will banks look back on 2012 as the year when, like their customers, they made the big leap forward on mobile?  Or will it turn out to be the year when they fell behind the rest of the field and consigned themselves to be forever playing catch-up?

By Caroline Ahmed, Head of Practice & Insight at Foolproof, Europe’s biggest specialist experience design agency.

 

 

 

Business

Foxconn chairman says expects “limited impact” from chip shortage on clients

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Foxconn chairman says expects "limited impact" from chip shortage on clients 1

TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients will face only “limited impact” from a chip shortage that has rattled the global automotive and semiconductor industries.

“Since most of the customers we serve are large customers, they all have proper precautionary planning,” said Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd

“Therefore, the impact on these large customers is there, but limited,” he told reporters.

Liu said he expected the company to do well in the first half of 2021, “especially as the pandemic is easing and demand is still being sustained.”

The global spread of COVID-19 has increased demand for laptops, gaming consoles, and other electronics. This caused chip manufacturers to reallocate capacity away from the automotive sector, which was expecting a steep downturn.

Now, car manufacturers such as Volkswagen AG, General Motors Co and Ford Motor Co have cut output as chip capacity has shrunk.

Counterpoint Research says the shortage has extended to the smartphone sector, with application processors, display driver chips, and power management chips all facing a crunch.

However, the research firm predicts Apple will face a minimal impact, due to its large size and its suppliers’ tendency to prioritise it. Apple is Foxconn’s largest customer.

Foxconn is looking at other areas for growth, including in electric vehicles (EVs), and Liu said their EV development platform MIH now had 736 partner companies participating.

He expected it would have two or three models to show by the fourth quarter, though did not expect EVs to make an obvious contribution to company earnings until 2023.

Liu also said the company was still looking for semiconductor fab purchase opportunities in Southeast Asia after not winning a bid to take over a stake in Malaysia-based 8-inch foundry house Silterra.

(Reporting by Ben Blanchard and Jeanny Kao; Writing by Josh Horwitz; Editing by William Mallard and Ana Nicolaci da Costa)

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EU seeks alliance with U.S. on climate change, tech rules

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EU seeks alliance with U.S. on climate change, tech rules 2

By Sabine Siebold and Kate Abnett

BERLIN (Reuters) – Europe and the United States should join forces in the fight against climate change and agree on a new framework for the digital market, limiting the power of big tech companies, European Union chief executive Ursula von der Leyen said.

“I am sure: A shared transatlantic commitment to a net-zero emissions pathway by 2050 would make climate neutrality a new global benchmark,” the president of the European Commission said in a speech at the virtual Munich Security Conference on Friday.

“Together, we could create a digital economy rulebook that is valid worldwide: a set of rules based on our values, human rights and pluralism, inclusion and the protection of privacy.”

The EU has pledged to cut its net greenhouse gas emissions to zero by 2050, while President Joe Biden has committed the United States to become a “net zero economy” by 2050.

Scientists say the world must reach net zero emissions by 2050 to limit global temperature increases to 1.5 degrees above pre-industrial times and avert the most catastrophic impacts of climate change.

The hope is that a transatlantic alliance could help persuade large emitters who have yet to commit to this timeline – including China, which is aiming for carbon neutrality by 2060, and India.

“The United States is our natural partner for global leadership on climate change,” von der Leyen said.

She called the Jan. 6 storming of the U.S. Capitol a turning point for the discussion on the impact social media has on democracies.

“Of course, imposing democratic limits on the uncontrolled power of big tech companies alone will not stop political violence,” von der Leyen said. “But it is an important step.”

She was referring to a draft set of rules unveiled in December which aims to rein in tech companies that control troves of data and online platforms relied on by thousands of companies and millions of Europeans for work and social interactions.

They show the European Commission’s frustration with its antitrust cases against the tech giants, notably Alphabet Inc’s Google, which critics say have not addressed the problem.

But they also risk inflaming tensions with Washington, already irked by Brussels’ attempts to tax U.S. tech firms more.

Von der Leyen said Facebook’s decision on a news blackout on Thursday in response to a forthcoming Australian law requiring it and Google to share revenue from news underscored the importance of a global approach to dealing with tech giants.

(Additional reporting by Foo Yun Chee; editing by Robin Emmott and Nick Macfie; editing by Jonathan Oatis)

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Packaged food giants push direct online sales to gauge consumer tastes

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Packaged food giants push direct online sales to gauge consumer tastes 3

By Siddharth Cavale and Nivedita Balu

(Reuters) – Packaged food giants including Kraft Heinz, General Mills and Kellogg are pushing sales of their products to consumers directly via their own online channels, in a quest to gather more data about shoppers’ purchasing habits.

Velveeta-cheese maker Kraft Heinz saw its e-commerce sales double in 2020, now representing more than 5% of its global sales, Chief Executive Miguel Patricio said at the virtual Consumer Analyst Group of New York (CAGNY) conference this week.

The company sells Heinz baked beans and tomato soup by subscription or in bundles directly to consumers on a “Heinz To Home” website in the United Kingdom, Australia and Europe.

Sales on the site are “giving us valuable insights into consumer behavior, enabling us to quickly test and learn from innovations,” Kraft’s head of international business, Rafael de Oliveira, said at the conference.

Kraft would continue to use the site as a channel to generate strong sales in developed markets, he said.

The company also counts sales of its products through marketplaces such as on Amazon.com and Walmart.com as part of its e-commerce sales.

U.S. shoppers spent on average $1,271 buying groceries online last year, 45% more than they did in 2019 as the pandemic spurred shopping online, according to market research firm Earnest Research. In contrast, the average dollars spent in stores rose only about 7% to $3,849.

PepsiCo sells products including Doritos, Quaker oats and Gatorade directly to consumers through two websites, pantryshop.com and snacks.com, both launched in 2020.

Chief Financial Officer Hugh Johnston said that more than 45% of the company’s capital investments over the next few years would be dedicated toward manufacturing capacity, automation, and a “ramping up of investments in our e-commerce channel.”

As major online retailers including Amazon.com and Walmart.com continue to gather valuable data on shoppers, many packaged food manufacturers are keen to gather their own data on shoppers, too.

“COVID (has) simply accelerated our digital growth and has provided us with yet another source of data and insight,” Monica McGurk, chief growth officer at breakfast cereal maker Kellogg Co., told the conference.

Kellogg, producer of Corn Flakes as well as Pringles chips, said on Wednesday it had launched a direct-to-consumer website focused on digestive wellness. The group plans to sell its new Mwell Microbiome Powder for gut health via the site to gather data on customer interest before it launches the product more widely.

E-commerce sales have doubled in the past year and now represent about 8.5% of the group’s $13.77 billion in annual sales, Kellogg said.

Pillsbury dough-maker General Mills also sees the benefits of tracking consumer habits more closely.

“We’re aggressively investing in data and analytics. We are gathering unparalleled insights from the first-party data we collect through our brand websites,” General Mills’ Chief Executive Jeffrey Harmening said at the conference.

On its Bettycrocker.com website, General Mills provides hundreds of recipes using Betty Crocker cake mixes and frosting. The site leads people to the closest store or an online retailer where they can purchase the products, thereby generating data for General Mills on what a particular customer from a certain zip code is buying. The company does not sell the food products directly on its website.

Consumers, however, may have to shell out more if they shop directly from brand websites.

Prices on the two PepsiCo sites, for example, were generally higher than those on Walmart.com or Amazon.com, Reuters checks show. On Walmart.com, for example, a 10 oz pack of Doritos Nacho Cheese was on sale for $2.50 compared to $4.29 on Pepsico’s website.

Kraft Heinz offers tins of soup, beans, pasta and baby food bundled into packs ranging from six to 25 items and costing between 10 and 20 pounds ($14.01-$28.03) on its UK website. It told Reuters the relatively higher prices of items and bundling of packs than on some other online marketplaces was to be able to eke out a margin after including delivery costs.

“Longer term, we see real value in this channel to be an insight and data channel for us,” Jean-Philippe Nier, head of e-commerce for Kraft Heinz’s business in the UK and Ireland, told Reuters. People are more prepared to order directly from manufacturers than they were before. The time is now.”

Graphic: Direct online sales to cross $20 billion in 2021 – https://graphics.reuters.com/PACKAGEDFOODS-ECOMMERCE/rlgpdexngvo/chart.png

($1 = 0.7137 pounds)

(Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru; Editing by Vanessa O’Connell and Susan Fenton)

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