Marketing in the era of convergence

Posted by Abhijit Telang in

 Marketing & Strategy

Dec 12, 2011 | Total views: 117

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Abhijit Telang
Marketing Manager - Product Engineering Services
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What is convergence?
Convergence, when taken in the context of consumer experience is essentially the continuation of information access, delivery, presentation and ensuing interaction, irrespective of the venues and mediums.

When we shift the context to devices, it means delivering a seamless and stateful experience through a set of interconnected devices. The meaning of stateful here is more in terms of preserving the user experience state when device boundaries are crossed. This does not necessarily mean that the experience will stay the same. In fact, the quality and relevance of experience will vary based on the device capabilities and form factor, but the overall process would appear seamless to the user.

So, is Convergence really happening? Do consumers want it? What are the leading indicators?

Drivers of convergence from the consumer side:

1. Desire for continuity of experience and attention (considering the information overload).
2. Instant gratification need when it comes to desired product/service.
3. Convenience and control over experience (when, how, how long).
4. Need to experience the advancements in web/mobile user experience on conventional media channels.

Leading Indicators:

Proliferation of Connected Devices:

A good way to fathom this is to look at the growth in average devices per household. According to the latest research report published by In-Stat, by 2015, 65% of US households would own either a smartphone or a tablet and the average household would have at least four Apple devices. GSMA estimates that total number of connected devices, worldwide is expected to grow from 9 Billion as of today, to more than 24 Billion in 2020.

Now let us look at the smart phone market which is characterized by market dominance and consolidation. In Q2 2011, smart phone purchases were up 75% over the previous quarter, comprising about 25% of overall new purchases, with Apple, Android and RIM controlling about 75% of those sales.

The good news for marketers is, despite the proliferation of devices, mobile data usage is still largely consolidated in favor of smart phone owners. Even though they account for less than 20% of all mobile handsets, they account for 78% of mobile data traffic, about half of it being video related.

If we consider the US markets alone, tablet devices have reached about 4% of US households, but are expected to grow rapidly taking away more share from PCs and netbooks. Gaming devices have reached more than 20% of households already and at least 50% of households now have an HDTV.

So which consumer segments would desire and seem to benefit from device convergence?

To answer this, let’s consider which segments would own or like to own multiple connected devices.
A simple way to describe the persona of this segment would be the people who desire to own multiple devices because they feel the utility of owning such devices do justice to their lifestyle needs, and they are capable and willing to pay for the same.

Since the purchase and use of such devices are so closely related to lifestyle choices, they typically would fall under the household disposable income budget.

As we try to focus on consumers who own multiple devices as opposed to one, there is a marked upward shift in household income.

According to a research by Nielsen, 50% of both iPad and iPhone users earn $75,000 or more annually. In contrast, about 30% of all mobile subscribers earn more than $75,000 annually. At the same time, the very segment is also likely to own 4-5 devices on an average, including gaming consoles, netbooks, eBook readers and more.

Therefore, consideration and conversion possibilities are higher with this segment than with any other segment based on the criteria of multiple device ownership alone.

Why are marketers interested in it?

Main drivers for marketers are:

• Suitability of market segments owing to their high income, and historically high consideration rates
• Higher tendency of impulse buying and higher willingness to pay for a certain lifestyle.
• Possibility of sharing consumer data across multiple service providers such as carriers and cable providers allows better behavioral insights.

Does convergence drive purchases?
Does it aid instant gratification or impulse buying?
Does it drive loyalty?
What kind of marketing innovations are needed to benefit from convergence?
We will consider these aspects and consumer experience factors in convergence in the next blog.