ABSTRACT
SMS advertisement has become one of the popular digital promotional applications in the contemporary markets. While, the opportunities afforded by this method of advertisement seem readily apparent, little is explored regarding the competitive advantage this media could offer to enterprisers and, relatively this aspect has not been investigated substantially in the gulf market. The research was carried at different levels to test the five hypotheses derived from the review of past research. Surveys, interviews and focus group were the major tools used to collect primary data. Parting into two stages the first stage of survey focused on 276 mobile subscribers purposively selected from the directory of Etisalat and Al Tayer Group. The second stage of survey covered 100 respondents, conveniently selected from the first sample; but, at the same time included in the list of regular recipients of Al Tayer Group's SMS messages. A close-ended questionnaire grouped under two sections was used to collect the data. Each respondent registered his/her level of agreement on a balanced rating scale ranging from (1) high (2), medium (3) and low. The questionnaire was administered in two major gulf hubs, namely Abu Dhabi and Dubai. Suitable statistical tools such as Likert scale and Chi-Square test were used to draw meaningful conclusions. The competitive strength model demonstrated in this study highlights the potential of SMS advertisement in gulf markets. The findings tend to support business enterprises in their promotional strategy to tow in SMS advertisements into the UAE market, acknowledging the e-services offered by Etisalat.
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DOI: 10.3923/ajm.2010.131.143
URL: https://scialert.net/abstract/?doi=ajm.2010.131.143
INTRODUCTION
Traditional advertisement media, such as television, radio, magazines and newspapers have served advertisers needs for generations. However, when the prevailing notion that advertisements possess a mass message appeal is failing to reach the fragmented audience, advancement in technology has made it possible to explore numerous alternative communication platforms, encouraging marketers to move to more profitable one-to-one dialogues. Apparently, the media-budget optimization policy announced by global firms divulge many recent market trends that prefer less costly, yet more potential media capable of personalizing their promotional strategies.
Admitting the fact that the days of mass marketing are over, contemporary marketers are looking forward to adopt market-tailored communication channels and, therefore, are eager to opt mobile phones as one of the most accessible and successful, alternative media to customize their advertisements.
In the midst of the aforementioned market changes, while the business entrepreneurs who operate in and from the gulf markets are hustling to adopt best communication media to attain hundred per cent market penetration (Ahmad, 2007), this study examines the plausible openings for Short Message Service (SMS) advertisements in gulf markets, selecting the United Arab Emirates as case example.
Due to its capability to offer multifaceted functions to the customers, mobile communication has gained wide popularity among the multicultural, heterogeneous markets in the UAE. Ranking top with largest number of mobile lines per capita, the UAE offers the best telecom services to its public with various attractive alternative service packages (Vanaja, 2009). Consequently, the innovative technology offered by the national telecom industry and the emergence of several e-service agencies have prompted a number of gulf based business firms to smarten up their prevailing customary promotional mix with an aim to penetrate all deserted Emirati markets.
Several studies, examining the competitive advantages of digital communication, have identified the various benefits of SMS advertisements over the conventional promotions and recommended adoption of this new promotional strategy to challenge competition (MacKenizie and Richard, 1989; Alwitt and Prabhakar, 1992; Jobber, 2007; Sterling, 2009; Wang et al., 2010).
Acknowledging a firm's business association with the telecom industry as well as with e-service agencies to propagate its digital messages, this study, takes a new route to investigate the competitive strength of a business enterprise in promoting its products through SMS, selecting following three organizations as case example.
• | Al Tayer Group: leading business enterprise, which promotes its market through SMS advertisements |
• | Etisalat- national telecom industry |
• | Getinfo- intermediary e-service agency |
The B2B Market Scenario
Operating through the Emirates Telecommunication Corporation (Etisalat) and du (Ahmad, 2007), the UAE telecom industry had broken the existing world record of Singapore by providing almost two mobile lines per person (Haseeb, 2008; Knight, 2009). Along with its highly demanded consumer packages, Etisalat also offers plentiful commercial services to the business marketers. These B2B commercial packages are very often assisted by a few UAE based intermediary e-service agencies, who provide various types of mobile based paid platforms to business firms to promote their brands through SMS advertisements. These platforms are accessible to consumers across the Emirate, who by sending text messages to allotted search numbers, will be furnished with information about various business firms such as restaurants, supermarkets, travel and tourism, bars, saloons etc. (Fig. 1).
The aforementioned technologies introduced by Etisalat offer both pull and push SMS advertisement models (Barnes, 2003; Scharl et al., 2005) to the UAE marketers. For instance, in a pull model campaign, the customers will search in for current offers by sending SMS to e-service agencies such as Getinfo; whereas in a push model, the Getinfo takes the initiative to send messages to consumers across the UAE.
Usually, as an e-service agency, Getinfo collects location based up-to-date information from the data bank furnished by business enterprises and disseminates it to consumers through Etisalat's B2B packages. Accordingly, The B2B market co-operation retained between business firm and Getinfo and, subsequently Getinfo with Etisalat, facilitates users to subscribe to these services at a standard minimum fee of 30 fils per SMS.
Fig. 1: | Strategic path of SMS advertisement in UAE market |
Consequently, the above trend has invited many business firms into this network with a hope that majority of the UAE mobile subscribers, in due course, would welcome SMS advertisements and, therefore, there would be considerable opportunity to reach them through this media.
Established in 1979, with head quarters in Dubai, Al Tayer Group runs diversified businesses in twelve regional centres in the gulf market. Being a leading company, operating in multiple sectors, Al Tayer Group currently deals in a few well-known global brands such as Dior, Fendi, Gucci, Areej, Armani, etc. In spite of its late entry into digital promotions, realising the fact that investment in SMS advertisements would create long-term economic value to business (Porter, 2001), Al Tayer Group urges for a speedy shift from the conventional promotional practices to digital promotions with an aim to penetrate any unexplored gulf markets.
In fact, there are increasing evidences to prove the rapidly growing demand for mobile advertisements across the globe. Many studies have recorded that nearly 30 per cent firms are currently engaged in pull or push SMS campaigns with diversified objectives (Baltas, 2003; Barwise and Farley, 2005; Drossos et al., 2007). Neff (2004) also reports about the high rate of acceptance for text messages, elucidating statistics of number of consumers browsing mobile messages in the gulf region. But, conceptualizing the emerging significance of this media from a marketing perspective, so far no initiatives have been taken to explore the competitive strength of this media in gulf regions. Against the backdrop of shortage in academic accomplishments on this subject, this paper is a first step to evaluate the competitive strength of SMS advertisements in the UAE markets, selecting Al Tayer Group as case example.
Literature Review and Hypotheses
Previous studies reflect on many conceptual findings that have gone so far to believe that televisions heyday as an advertising medium has now passed and most of the traditional promotional measures are on their deathbeds (Rust and Richard, 1994; Neff, 2004; Shimp, 2007). Constant efforts to pick out contemporary advertisement technologies offering less expensive, less cluttered and potentially more effective channels (Forester Research, 2010) impelled marketers to go in for digital media to capture local and international markets. Consequently, emails and text messages have changed the way marketers think about communication (Leggatt Helen, 2008). In addition, recent report by MMA (2009), delving into the statistics of mobile users, has discovered the fact that while the number of calls made on mobile phones had remained steady over the last couple of years, the number of text messages sent and received had risen up to 450% within the last one year.
With 68% global consumers responding to this media, Blythe (2003) believes that this new wave may make a profound impact on the worldwide promotional strategies. It is true to believe that what it took for radio and television over seventy years to achieve has been attained by email and SMS technologies within a short span of time (Sugandhi, 2002). Indeed, this popularity would be due to the features this technology has in hand to offer such as flexibility, privacy and high-level of interactivity (Carat Interactive, 2002).
Monitoring the growing demand for text messages, experts argue that by the end of 2010 nearly half of global marketers, no doubt, would double their promotional budgets on SMS advertisements (Forester Research, 2010; MMA., 2009). Reviewing the above studies, indubitably, this paper too believes that within a span of five years, the spending on SMS advertisements would gradually surpass the combined spending allocated to traditional methods of advertisements. This belief has been both theoretically and empirically supported by the studies by Jobber (2007), Leggatt Helen (2008) and Knight (2009).
Bestowed with sophisticated e-retailing as well as e-business facilities, the current digital evolutions have not only changed UAE consumers' perceptions on marketing but also instill in them the desire to adopt contemporary style in shopping. Apparently, this move has invited many enterprisers to this market with a hope that majority of mobile subscribers would unreservedly espouse this trend.
Consumers Perception
Many past studies have opined that appraising consumers' response on different promotional media would hold greater significance in assessing the influence of any communication strategy (MacKenizie and Richard, 1989; Alwitt and Prabhakar, 1992; Forester Research, 2010). Consequently, even if mobile is considered to be a highly embraced communication media, success of SMS advertisements could be, inevitably, appraised periodically to measure its impact in diversified markets. Keeping in mind that in a multicultural consumer market, like the UAE, there are possibilities to express unreceptive attitudes towards non-personalised promotions (Tsang et al., 2004), the study proposes the following hypothesis.
• | H1: The different types of promotion media preferred by different nationalities do not differ significantly in the UAE market |
Social Exclusion
The study by Wu and Wang (2005) examined the drive that encourages business enterprises to remain with traditional promotional strategies and their findings highlight that the strongest factor that promote any types of advertisement could be the assurance of wide market coverage that media could offer without risk of social alienation. The possibility of social exclusion of market segments in SMS communication was initially examined by Peace (2001) and eventually, this subject was further explored by Silver and Miller (2003). The aforementioned studies define this concept as the incapability of a consumer population to reach mobile technology market due to lack of knowledge or inadequate income.
Report in 2007 condemned the risk of social exclusions in digital advertisements elucidating incidents where mobile promotions had worked out well in alleviating social exclusion. But referring to Ghosh and Malik (2007) criticism for SMS advertisements for its chances for social exclusion, few studies discover that the major part of the world is still deprived of mobile services and so, e-based marketing is reported to be still a dream for them (Cherrayil, 2008). This handicap, certainly limits consumers' appreciations for digital advertisements.
However, believing that SMS advertisements could gradually cope up with this limitation, because of its ubiquitous, affordable and easy usage (Chigona et al., 2008), such arguments invite further research in this field; hence the following hypothesis is offered.
• | H2: There is a high risk of social exclusion while promoting SMS advertisements in the UAE markets |
Privacy Intrusion
According to the Theory of Reasoned Action (Ajzen, 1991) the most important factor that affects the consumers' attitude towards SMS advertisements are their concern for security and confidentiality of the information they browse. Since unsolicited advertisements may lead to consumers apprehension towards innovative promotion strategies (Barnes and Scornavacca, 2003), consumers willingness to accept SMS advertisements depended on the assurance the senders could provide to reduce privacy cost or risk in misuse of information. Many studies have listed the risk of privacy intrusion as one of the threat or weakness in SMS marketing (Gaffney and Ulvila, 2001; Krishnamurthy, 2001; Gartner Research, 2002). The aforementioned authors have expressed their concern, arguing that SMS was not a secured commercial media, as breach of security could often occur much more easily in this media than any other mode of promotion. When the notion of control over the wireless service provider remained pertinent in implementing SMS promotions (Barnes and Scornavacca, 2003), an analysis of the perception that SMS should not be assumed an appropriate media for secured commercial communication holds greater relevance. Hence, the following hypothesis looks into the UAE consumers perception on this issue.
• | H3: The B2B relationship of Al Tayer with Etisalat protects consumers' fear of undue intrusion by hackers to their mobile privacy |
Financial Benefit
A firm would invest in any business ventures up to the point where the benefit out of each additional investment (marginal benefit) would be equal to the marginal cost of its investment (Sterling, 2009). Usually the same strategy could be employed by a business enterprise in its SMS promotions, expecting optimum financial benefit and customer satisfaction at a time. Subsequently, once the earned marginal benefit from SMS advertisements indicates favourable trend, the enterprise is expected to give up all the supplementary promotional strategies and should focus on aggressive text messages to penetrate potential markets. Therefore, the competitive strength of SMS advertisement could be measured in terms of the comparative financial advantage an enterprise could enjoy out of its investment in SMS promotions. This signifies the following hypothesis.
• | H4: Al Tayer Group enjoys a comparative financial advantage in SMS advertisement over other promotional mix |
Strategic Strength
Some recent research recommends SMS marketing as an effective tool to survive in competitive markets with low budget (Jobber, 2007; Sterling, 2009) but, indeed, they also warn marketers that just applying text messages to any context would not give them desired outcome in all markets. The strategic competitiveness of SMS promotion could be measured in terms of conveying right value of contents, at right time, at right location, to the right customers with correct result. To measure the aforesaid strategic competency, enterprises should follow marketing auditing to find out whether the text messages are effective or not in the UAE market. Consumers perception on strategic application of text messages would help any enterprise to appraise its competitive strength in SMS promotion strategies. The following hypothesis examines the aforementioned issue:
• | H5: Consumers' positive perception towards SMS promotion proves that Al Tayer Group holds competitive strategy in SMS advertisements in the UAE markets |
Taken as a whole, the factors discussed in the aforementioned reviews lead the study to develop a research model investigating the competitive strength of SMS advertisements over conventional promotions. The factors that influence the competency of SMS advertisements are illustrated in Fig. 2. In order to analyse the competitive strength of SMS advertisements the hypotheses are tested by grouping them under following two major heads:
• | Market opportunity: Measured in terms of customers preference for promotional mix, perceptions on social exclusion and risk of privacy intrusion in SMS advertising, in general |
• | Managerial strength: Measured in terms of customers perception on Al Tayer Groups SMS strategy, financial competency and strategic competency of Al Tayer Group, in specific |
• | Methodology: The research was carried at different levels to test the given five hypotheses. Hypotheses H1 and H5 were tested carrying a primary survey. Hypotheses H2 and H3 were tested analyzing the data collected through a focus group. Finally, hypothesis H4 was tested by computing the financial statements provided by Etisalat and Al Tayer Group. The primary survey was conducted at two levels to test hypotheses H1 and H5. The data to analyse consumers preference for different types of promotional mix (H1) were obtained by focusing the survey on 276 mobile subscribers selected from the directory of Etisalat and Al Tayer Group.With a purposive sampling the survey covered six nationalities consisting of the Emiratis and other Arab nationals, Europeans, Americans, North Asians including Indians, Pakistanis, Sri Lankans and Bangladeshis and South Asians with Philippines and Malays. The mean age of sample was approximately 25 with diploma as minimum level of education |
Fig. 2: | Factors influencing competency of SMS advertisements |
To test the hypothesis H5, the second stage of survey covered 100 respondents, conveniently selected from the first sample; but, at the same time included in the list of regular recipients of Al Tayer Group's SMS messages. A close-ended questionnaire designed under two sections was used to collect the data. Each respondent registered his/her level of agreement for 17 items on a balanced rating scale ranging from (1) high, (2) medium and (3) low.
Both the questionnaires were administered in major two gulf hubs, namely Abu Dhabi and Dubai. The first stage of primary data collection was carried from January to July 2009 and the second stage was conducted during August 2009 to January 2010. Suitable statistical tools such as Likert scale and Chi-Square test were used to draw meaningful conclusions.
The sample frame for the focus group to test hypotheses H2 and H3 consisted of functionaries from Etisalat and Al Tayer Group. Focus group provided the researcher with fresh insight to the phenomenon and information to test the hypotheses. The financial competency (H4) of SMS advertisements of AL Tayer Group was analysed, tabulating the marginal cost and returns from SMS advertisements in lieu of the expenses incurred for traditional promotional mix. The data provided by Al Tayer and the existing tariff-offers of Etisalat were used to test above hypothesis. The study was conducted during the period 2009-2010.
RESULTS
Market Strength: 1 Consumer Preference on Different Types of Promotional Mix
Even though the rapid expansion of mobile technology has attracted more and more firms into this promotional media, the competency of their SMS messaging over other media of advertisements rely more upon consumers willingness to accept text messages in a cross-cultural market (Table 1).
Table 1 shows the compressed analysis of consumer preference for different types of media to test hypothesis 1. The intention of this hypothesis was to examine whether all types of media were equally adopted by all the nationalities. Table 1 described that SMS was the commonly preferred media among all the nationalities. To confirm the valid significance of the differences in consumer preference for media, among the different nationalities, a Chi-Square test had also been executed.
Table 2 revealed that the calculated value of Chi-square was larger than the tabulated value at 5%, with a conclusion that all the media were not preferred equally by all nationalities but SMS promotion had received highest priority in the minds of consumers, irrespective of their nationality; hence hypothesis 1 was rejected.
Social Exclusion
Another competitive challenge discovered by this study from the review of past research was the fear of social exclusion due to limited coverage of mobile service. It is quite natural to face such a challenge in gulf countries that holds a very large number of expatriates who are segmented into multi-layer classes, due to disparities in their employment, education and income.
Table 1: | Consumer preference for different types of promotion mix-nationality cross tabulation |
Primary survey |
Table 2: | Chi-Square test: Significance of difference in preference for various types of promotional mix among different nationalities |
Table 3: | Strength and weakness analysis of Etisalats market segment coverage policy |
*Ministry of Labour Law; **Etisalat's Schemes; ***dupromotion leaflets |
It is also reported that among these expatriates the majority of employees were working as labourers or house maids. However, from the one on one interview with the functionaries of Etisalat, the study realized that Etisalat, with its plentiful package for international calls had succeeded in penetrating the UAE markets reaching out to all classes of the aforementioned segments. In addition, the current UAE regulation that insists on supplying mobile phones to all sponsored labourers had also facilitated SMS channels to reach the nook and corner of every market. Moreover, the confidence expressed by the officials on the success of their current deep market penetration policy to reach even those customers who were hard of hearing (Table 3) had suspended the issue of social exclusion in the UAE market. But, to what extent the SMS advertisements could entertain the low income segment with limited purchasing power is obviously under debate and beyond the coverage of this study. The outcome of the discussion with the focus group and results depicted in Table 4 drew researcher's attention to reject hypothesis 2.
Privacy Intrusion
Past research has revealed that some mobile users are wary of SMS advertisements expecting that mobile messages may peer into their privacies. Thus, to what extent the SMS advertisements could assure protection against spam would be assessed by analyzing the competitive promises offered by Etisalat to its clients in protecting the confidentiality of their messages.
Table 4: | Customers perception on SMS advertisements in general and Al Tayer Group's in particular |
Primary Survey; Note: All items are measured on a three point scale where high = 1, medium = 2 and low = 3 |
The one-on-one interview with Etisalat officials revealed their B2B ethics that ensured hundred per cent confidential protection to all their clients including companies, suppliers, distributors and customers. Furthermore, Etisalats Consumer Care Centre had achieved the ISO 27001:2005 certification in recognition of fulfilling the 'Information Security Management System Standard' set by International Organization for Standardization. Leaping one more step ahead, the study found that this certificate would ensure adequate and proportionate security controls to protect information assets of Etisalat's business partner and thereby this system of sending SMS messages through Etisalat had gained the confidence of its clients (statement 10, Table 4), hence hypothesis 3 is accepted.
Managerial Strength of Al Tayer Group in SMS Promotion
The managerial strength of Al Tayer Group is highly influenced by customer's perception towards the SMS messages sent by Al Tayer Group. As customers' support is the main strength of any organization, the following session had made attempts to explore customer perception on mobile advertisements in general and Al Tayer Groups SMS advertisements in particular.
Consumer Perception
Majority of the questions in Table 4 had scored a mean value less than 2. The frequency of mobile usage was found uniformly very high (mean=1.02 and SD = 0.14) among those respondents who receives very high network connectivity and have significantly good knowledge about SMS advertisements. Even though respondents expressed interest in browsing SMS (statement 4), the high score for statement 5 indicated that they still remained under the fascination of other types of media. Response on disturbance of overloaded data through SMS advertisements with a mean > 2 threw light to customers limited apprehension on the security of SMS messages. However, majority of the respondents has agreed that in near future SMS advertisements would turn to be the most attractive promotional strategy and therefore, this move is inevitable for the UAE market.
Financial Competency
To evaluate the competency of a new marketing strategy, it is crucial to analyse the economical value derived by the application of that strategy. Hence, the financial competency of SMS advertisements was evaluated by examining the cost incurred and benefit received from this media comparing it with an alternative promotional strategy.
Table 5: | The digital promotional schemes offered by Etisalat in B2B markets |
Fig. 3: | Competitive strength of SMS advertisement in the UAE |
Appraising the different schemes offered by Etisalat to the B2B markets (Table 5); this part had evaluated the financial competency of SMS advertisements, comparing its cost with newspaper advertisements.
Table 5 featured the three types of packages offered by Etisalat to its business buyers for text messaging. The factors in the aforementioned table were used to compare the cost of SMS advertisements and newspaper advertisements. The study compared financial competency of these two types of media, selecting Gucci Boutique ladies bag, costing AED 1500 with 50% reduction offered through SMS as case example.
• | If Al Tayer Group would have selected Etisalat's package 3 reaching 30000 customers, the total cost for SMS advertisement was estimated to be AED.4500 |
• | If Al Tayer Group had used newspaper for advertisements, selecting two well known dailies, the Gulf News and Khaleej Times, with a quarter page full colour advertisements, the cost would be approximately estimated as AED.28000 |
The foregoing analysis demonstrated the cost efficiency of SMS messaging through which Al Tayer Group could save 1/6th of its advertisement expenditure compared with news paper advertisements. Apparently, Al Tayer Group had also claimed that on an average 300 customers would be visiting their outlets per week. In addition, among the visited customers if one per cent would have bought a Gucci handbag, the store revenue at that week would be 3 x AED 1500 = AED 4500, meeting the breakeven. If this assumption works out, the aforementioned analysis revealed that digital promotions would be the most promising media assuring financial competency to similar business firms (Fig. 3). The study was supported by the response of a lady customer in a one-on-one interview by revealing her habit of purchasing reputed brands very often from the showrooms of Al Tayer Group browsing advertisements from her mobile.
Table 6: | Customers opinion on Al Tayer groups SMS advertisements |
Primary survey; Note: All items are measured on a three point scale where high=1, medium=2 and low=3 |
The aforementioned analysis satisfies norms to accept hypothesis H4 (Table 6).
Strategic Competency
Basically, the art of promotion rests in the ability of an organization in exploiting customers weakness for a brand. Moreover, marketers believe that any strategically adopted media could easily penetrate targeted segment and would at once gain customer reputation for their brands. Therefore, customers opinions recorded in a three point scale elucidate to what extent Al Tayer Group had gained strategic competency in terms of market penetration, source credibility and ad-localization to attract customers for their brands.
The strategic competency of Al Tayer Group in promoting SMS advertisements was found extensively high due to their ability to establish direct link with customer through Etisalat. Customers acknowledge their better ad localization, targeting right customer at the right time. Apparently, adopting Etisalat's strategy to introduce commercial messages in exchange of free talk time had promised wide range of coverage for Al Tayer Group irrespective of age and social-class segmentations. Aforementioned analysis demonstrates the efficiency of Al Tayer Group in deploying optimistic SMS, hence above analysis supports hypothesis H5.
DISCUSSION
Looking at the emerging demand for SMS promotion and to analyse the hypothesis 2, the researcher had made an attempt to apply the results of the study in Model 1. The derived hypothesis and above analysis, supporting the past research Sugandhi, (2002), Blythe (2003), Jobber (2007), Chigona et al. (2008), Leggatt Helen (2008) and Knight (2009) implied that compared to other conventional commercial channels such as television, newspapers, personal selling and bill boards, SMS messaging, was found to be an emerging trend in global market. Acknowledging Al Tayer Groups business commitment with Etisalat, the study foresee that the persuasive B2B marketing strategy offered by Etisalat would facilitate entry of more business enterprises into this mode of promotion in the gulf market.
CONCLUSION
Rapid growth in communication technology challenges the traditional promotional strategies that are generally based on the belief that perceivers are passive elements in the communication process. Riding on great GDP growth with high consumer market index, the booming UAE consumer segment supports competitive innovations in marketing. The competitive strength model demonstrated in this study highlights the potential of SMS advertisement' in the gulf markets, exemplifying the fact that what distinguishes SMS advertisements from other promotions are not merely the number of consumers covered or the amount of information disseminated. This study identifies that the comfortable growth of e-based markets and government decision to digitalize commercial communication across the UAE have enabled the gulf consumers to increasingly accept SMS based advertisements. This strengthens the competitiveness of SMS advertisements in gulf markets.
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