The Smartphone Experience Marketing: Cocreating Value through Mobile Apps

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1 PMKT Brazilian Journal of Marketing, Opinion, and Media Research ISSN: (Print) ISSN: (Online) Editor: Fauze Najib Mattar Valuation system: Triple Blind Review Languages: Portuguese and English Publication: ABEP Associação Brasileira de Empresas de Pesquisa The Smartphone Experience Marketing: Cocreating Value through Mobile Apps Marketing de Experiência do Smartphone: a Cocriação de Valor por meio dos Aplicativos de Celular Submission: 7 fev Approval: 17 jun Mariana de Freitas Coelho Studying Master in Marketing and Strategic Bussiness at Universidade Federal de Minas Gerais - UFMG, Belo Horizonte, Brazil. Post-Graduate in Social Project Management at Centro de Capacitação e Pesquisas em Projetos Sociais - UFMG. Degree in Tourism at UFMG. Address: UFMG - Av. Antônio Carlos, Pampulha Belo Horizonte/MG - Brasil. Pedro Ferraz de Andrade Augusto dos Santos Studying Master in Marketing and Strategic Bussiness at UFMG. Degree in Production Engineering at UFMG.

2 ABSTRACT This article aims to identify the elements present in experience marketing interaction among consumers of Apple-branded smartphones and their applications. Based on the scenario of a significant expansion of the software applications market, this study investigated the relationship between the use of applications on smartphones and the transition in the locus of value creation by the company, which would occur within the paradigm of experience economy. A qualitative exploratory research evaluated interviews with iphone users and their experiences with the applications. Among the results, based on related elements present in the literature, the economics of applications is contained in the paradigm of experience. This requires of the companies the ability to move beyond the focus on products and services, so as to provide a complete customer experience and thus achieve a higher position compared to its competitors. KEYWORDS: Consumer experience, marketing experience, co-creation of value, smartphone applications. RESUMO Este artigo visa identificar os elementos do marketing de experiência presentes na interação entre consumidores de smartphones da marca Apple e seus aplicativos. Tomando por base o cenário de expressiva expansão do mercado de softwares aplicativos, este trabalho investigou a relação entre o uso de aplicativos em smartphones e a transição no locus de criação de valor pela empresa, que passaria a ocorrer dentro do paradigma da economia da experiência. A condução de uma pesquisa qualitativa, de caráter exploratório, avaliou entrevistas com usuários do iphone e as experiências provenientes de seus aplicativos. Dentre os resultados, tem-se que, embasado em elementos relacionados presentes na literatura, a economia dos aplicativos está contida no paradigma da experiência. Este exige das empresas a capacidade de ir além do enfoque em produtos e serviços, de modo a proporcionar uma experiência completa ao cliente e, assim, conquistar uma posição superior em relação a seus concorrentes. PALAVRAS-CHAVE: Experiência do consumidor, marketing de experiência, cocriação de valor, aplicativos de celular. 13, pp , October,

3 1. INTRODUCTION The competitive landscape is subject to intense turbulence as participants continually transform the industries in which they are inserted. The growing rivalry of the markets, combined with the increasing scarcity of natural and human resources necessary to the productive processes, require the organizations to adopt new strategic approaches, in order to guarantee a sustainable advantage over the competition. In this context, innovation becomes a crucial competitive factor (DAVILA; EPSTEIN; OVERSTREET, 2007; TIDD; BESSANT, PAVITT, 2005; TIGRE, 2006). However, Prahalad and Ramaswamy (2003, 2004) noticed that an innovation originated from a product or service centric view is no longer able to provide a sustainable competitive advantage for those organizations that adopt it. Managers from various industries have realized that the traditional means of differentiation are no longer enough to guarantee superior returns. In results of wide diffusion of Information and Communication Technologies - ICTs, information is becoming more rapidly available to an ever-wider public (SMITS, 2002). More active consumers subject companies to detailed evaluation processes, extracting the greater value possible from the transactions for themselves (PRAHALAD; RAMASWAMY, 2004). Thus, the emergence of a class of interconnected and empowered consumers, combined with the convergence among industries and technologies, challenges the traditional premise of value creation by offering only products and services (PRAHALAD; RAMASWAMY, 2003). In this scenario, it becomes imperative to think strategy from the perspective of a value creation process as a whole, and not the internal product development process in isolation (LUSCH; VARGO; WESSELS, 2008; NORMAN; RAMIREZ, 1993). As noted by Pine II and Gilmore (1998), the current competitive scenario is characterized by the commoditization of many products and services. Consumers, unable to differentiate the attributes and functional benefits of the products, become motivated to engage in unique experiences during the interaction with the companies. Thus, to succeed on competition, it is crucial not only to offer low prices and high quality, but also to be able to create, with the consumer, a unique experience (GREWAL; LEVY; KUMAR, 2009). The focus of the innovative process, therefore, must change from the technology to compose the product, to the co-creation experience offered to the consumer (PRAHALAD, RAMASWAMY, 2003). Considering the expressive expansion of the application software market, this paper suggests there is a relationship between the use of apps on smartphones and a transition in the locus of value creation by the firms, which has been transformed from a product-centric view to one that focuses on the consumer experience. The following question emerges: which are the main elements of the experience marketing present in the interaction between users and mobile apps? The start point is the premise that value would be created through the use of applications by users in addition to the device s initial value proposition, focused mainly on its technical features planned at the time of its development. This would enable the emergence of unique experiences for the consumer, and thus, sustain the former hypothesis. 13, pp , October,

4 The purpose, therefore, is to investigate the main elements of the experience marketing involved in the mobile apps usage. Furthermore, this paper s specific objective is to describe the value creation process through the consumer s experience with the products and said softwares. In this context, experience marketing provides management with a solid basis for managing innovation processes, in order to maximize co-creation and contribute to the development of the company's innovative capacity, as suggested by Prahalad and Ramaswamy (2003; 2004). Upon developing new offerings, management must consider the design of an experience space that enables value creation by the end consumer during the usage of the product or service. The cocreation of value would create new experiences, in which experience marketing would provide fundamental source of competitive advantage. This study is justified both by the growth of the apps market (GARNER, 2011; JUNIPER RESEARCH, 2010), and by the need for marketers to understand how individuals perceive the value of their mobile devices through such softwares and how they are inserted in their lives (ANDREWS; DRENNAN; RESSEL-BENNET, 2012). Key authors from the experience economy were used to support this research, such as Pine II and Gilmore (1998), and Berry, Carbone and Haecke (2002) and Schmitt (1999; 2011), as well as the notion of co-creation of value. This study also includes a brief description of the area of study, delimited by Apple s mobile segment, including its App Store and the iphone. The method used was an exploratory multicase study (MALHOTRA, 2004). The considerations were based on secondary data collected about the company and the information obtained through interviews conducted by the authors with iphone users. 2. FROM THE EXPERIENCE ECONOMY TO THE EXPERIENCE MARKETING According to Holbrook and Hirschman (1982) much of consumer behavior can be explained by the way they process information. This process, however, must be enriched with the experience perspective. Although the concept of experience is central in marketing and consumer research, it is a theme still in development and not established either as a conceptor as an empirical phenomenon (SCHMITT, 2011). For Schmitt (2011) the concept of experience involves the perceptions, feelings and thoughts that consumers have when they acknowledge products and brands and engage in consumption activities. From a company's perspective, the experience occurs when services are used as stage and goods as property in the process of engaging individuals in creating memorable events (PINE II; GILMORE, 1998). As Dacko (2008) points out, the effectiveness of the interaction depends on the ability of the experience as a whole in communicating the identity of a brand or company. Pine II and Gilmore (1998) were pioneers in the study of the experience economy. According to the authors, the era of experience economy requires a new marketing philosophy that prioritizes the consumer experience. For this to happen, companies should change their strategies from selling 13, pp , October,

5 products and services, to focusing on the sale of consumer experiences (PINE II, GILMORE, 1998; TSAI, 2005). The traditional view of marketing, which focuses only on consumer satisfaction, is not able to keep up experience economy (TSAI, 2005). The paradigm of experience marketing arises in this scenario, seeking to make consumers to feel, think, act and relate to a brand or company. Experience marketing seeks to build an emotional bond between the company and its customers through a rich sensorial experience. Among its features, there is a holistic communication with a high level of interactivity and engagement in a personal level with consumers (DACKO, 2008). According to Schmitt (1999), the holistic perspective of the experience marketing takes in consideration the sociocultural context in the moment of consumption, in both micro and macro levels and boundaries of categories and competition. In general, this paradigm seeks to identify attitudes and values shared by an audience, even if the lifestyle and characteristics of its members are relatively diverse (TSAI, 2005). Therefore, as proposed by Tsai (2005) and Holbrook and Hirschman (1982), the main focus is on making the daily customers lives more enjoyable and happier. Thus, the emotion becomes a prominent element to be managed by companies. 3. ELEMENTS OF EXPERIENCE MANAGEMENT Understanding the emotions of customers involves great subjectivity and may be challenging for most companies. To Berry, Carbone and Haecke (2002), the first step to manage customer experience is to understand the clues given about the service or product - a clue being "anything that can be sensed or perceived or recognized by its absence" (BERRY; CARBONE; HAECKE, 2002:1). According to Berry, Carbone e Haecke (2002), experience clues may be of two categories. The first concerns the functioning of the product or service itself. The second refers to perceptions such as the smell, sounds, vision, tastes and textures of the products or services and of the environment in which their consumption takes place. The latter may still be divided in two kinds of clues: Mechanic clues emitted by the products. Humanic clues emitted by people. To Berry, Carbone and Haeckel (2002), the functional category holds an essential character, and therefore so does the functionality of the product or service. However, to the authors, the role of the emotional clues (mechanic and human) is not fully clear in the customer experience (BERRY; CARBONE; HAECKE, 2002). For mobile apps, the issue can become even more complex, since the applications allow you to combine functionality and emotion, for example, when using a photograph that can be shared with the user s social networks. Pine II and Gilmore (1998) agree on the contribution of managing the clues to create a unique experience. Harmonize the impressions of clients with clues that affirm the positive nature of the experience and contribute to eliminate negative aspects, which diminish or distract on the topic, are 13, pp , October,

6 some of the directions proposed by the authors. Other directions include stimulating all five senses of the users and conducting experiments to ensure that they are part of their memories. Since experience management has many diverse elements, Pine II and Gilmore (1998) propose characterizing the experience on two dimensions. The first one relates to consumer participation. This dimension can range from passive participation, which does not affect the event experience, to active participation, in which the client has a key role in the creation of the event that produces the experience. The second dimension describes the connection or environmental relation that unites the consumer to the circumstances of occurrence of the experience. On one side, there is the absorption of the experience in relation to the environment, such as notes taken during a lecture. On the other, there is the immersion in the experience that involves the consumer - something like the feeling of being in a paddock of a Formula 1 race, surrounded by sounds, sights and smells around you. Four classes of realms of an experience are suggested by Pine II and Gilmore (1998), in addition to the dimensions of participation and environmental relation. The first is the realm of entertainment (e.g., watching television, going to a show) which tends to include a more passive experience composed of an absorption connection. The second realm refers to educational events (such as going to a class or learning how to surf), which tends to be more active and absorptive. The third is the realm of escapist experiences, which may be either educational or entertainment, but primarily immersive. An example is to take part in a play or an orchestra. Finally, by minimizing the active participation of the consumer, the experience starts to shift to the fourth realm, of esthetic experiences for example, a visit in an art gallery. With the internet, the experience of using the iphone and its applications can be located in any of the realms. Schmitt (1999) proposed another classification of experiences, according to the emotions they may trigger in the consumers. For the author, the Strategic Experiential Modules - SEM should be managed by companies through marketing experience. Among the main elements of this model are: sense, feel, think, act and relate (Chart 1). The structures and processes of these elements may vary and be different according to the environment in which business and consumers are inserted. Once the consumer is regarded as central to the production of experiences, the process of value creation by the company should be guided based on interactions with the user, triggering a process of co-creation, as detailed in the following section. 13, pp , October,

7 CHART 1 Strategic Experiential Modules according to Schmitt (1999). MODULE Sense Feel Think Act Relate EXPERIENCE CONTENT Sensory experiences. Affective experiences. Creative cognitive experiences. Physical experiences and lifestyles. Social-identity experiences. Source: Adapted from SCHMITT, B. Experiential Marketing. Journal of Marketing Management, v. 15, n. 3, pp , VALUE CO-CREATION According to Berry, Carbone and Haecke (2002), customer value must be comprised of functional aspects of the product or service and the emotional benefits customers receive, minus the financial and non-financial costs that support them. In summary, customer value must not be reduced to a simple comparison between functionality and price. In this scenario, value co-creation is defined by the experience of a specific customer involved in a unique context. In different circumstances, the same individual may have different experiences, which therefore cannot be determined a priori. Thus, co-creation cannot be achieved without intentional consumer interaction with a network of organizations and communities that provide consumers with the occurrence of personalized experiences (PRAHALAD; RAMASWAMY, 2003). The heterogeneity of the consumer base and of the contexts in which they are inserted makes impossible the management of individual experiences by members of the network. The challenge lies in the ability to accommodate this heterogeneity through the creation of spaces of experience, enabling the potential occurrence of a variety of co-creation experiences. The utility of each offering becomes defined by the context, which may also consider other products, services and experiences that eventually impact the way the user handles the good or service purchased (LUSCH; VARGO; WESSELS, 2008). Customizing the co-creation process means fostering individualized interactions and the results of the experiences. Thus, it involves more than simply offering a "à la carte menu" (PRAHALAD, RAMASWAMY, 2004:10), which maintains the locus of value creation centered on the company. The process should reflect the ways the individual chooses to interact with the space of experience facilitated by the company. It is precisely the set of potential experiences offered that determines consumer willingness to interact with businesses (PRAHALAD, RAMASWAMY, 2003). Central to this approach is the adoption of collaborative procedures and methods between companies (LUSCH; VARGO; WESSELS, 2008). Organizations should consider the networks that 13, pp , October,

8 surround the experiences, in which a nodal company becomes responsible for bringing together suppliers, partners and consumer communities into building the necessary infrastructure for creating personalized interactions with consumers. Conceptually different from traditional supply chains, experience networks involve nonlinear and non-sequential interaction flows between organizations and communities of active participating consumers (NORMAN; RAMIREZ, 1993; PRAHALAD, RAMASWAMY, 2003). In the context of the experience economy, companies remain as providers of physical products, however, subject to commoditization. Therefore, the key to achieving new sources of competitive advantage is by promoting interactions of high quality, allowing the creation of unique consumer experiences (PRAHALAD; RAMASWAMY, 2004). To make the experience as part of a value proposition for the customer to be fully exploited by organizations, Berry, Carbone and Haecke (2002) suggest that organizations must manage the emotional component of experiences with the same rigor they bring to the management of product and service functionality. However, regardless of the classification of the experience and how the company strategically manages this resource, there is no guarantee that the organization will be successful. One problem, as noted by Pine II and Gilmore (1998), arises when the company charges a higher value than the one perceived by the customer. However, since the demand becomes contextual (PRAHALAD; RAMASWAMY, 2004), observing and talking with customers about their experiences become crucial for obtaining a deeper understanding of the clues that are offered by them during their encounters with the company or product. Thereby, it helps to identify aspects that would favor the creation of value in these circumstances. 5. METHODOLOGICAL PROCEDURES The method used in this study is qualitative and exploratory, implemented to achieve greater familiarity with the research problem (GONÇAVES; MEIRELLES, 2004). The option of a qualitative research is justified by the need to obtain greater depth about the phenomenon under study. The complexity and scope of events require methodological procedures that allow the capture of all the details that will be useful for the analysis, in order to ensure a holistic view of the phenomenon (CRESWELL, 2007). The research strategy adopted was a multiple case study (Yin, 2005), aiming to explore the experiences of individuals with Apple-branded smartphones. In order to identify the main elements of the experience of a smartphone consumer through the use of applications and also to understand the creation of value through the experience of the consumer 13, pp , October,

9 with the product and its applications, interviews were conducted with iphone users using semistructured questionnaires. Apple was chosen because of its brand equity, which places the brand as a benchmark in its segment, exhibiting great value to its clients (PALAIO, 2011). The relevance of the study of the applications economy can be observed in the study by Mandel (2012), which estimates that have been created over 460,000 jobs related to the development and commercialization of applications in the United States alone, since the launch of the iphone by Apple in 2007: Nothing illustrates the job-creating power of innovation better than the App Economy. The incredibly rapid rise of smartphones, tablets, and social media, and the applications apps that run on them, is perhaps the biggest economic and technological phenomenon today. Almost a million apps have been created ( ) greatly augmenting the usefulness of mobile devices (MANDEL, 2012:1). CHART 2 Summary of the main phases of the study. PHASE ACTIVITIES 1. Review of the literature Review of the experience elements as discussed in the existing literature. Gathering of secondary data to contextualize the study area. 2. Pilot Conduction of an interview to validate the interview 3. Data gathering questionnaire and to identify points of improvement. Conduction of semi-structured interviews in order to understand the experience of the users involved in the interaction with the smartphone and its applications. 4. Data Investigation of the interview transcripts in search of analysis correspondences to the experience elements identified in the literature and other subjects of the analysis plan. 5. Validation Review conducted by an outside researcher. Source: Created by the authors. MAIN METHODS AND PROCEDURES Selection of papers in journals, books and internet. Pilot questionnaire application and review. Semi-structured in-depth interviews. (1) Pre-analysis, (2) Exploration of the material, (3) Processing and interpretation of results. Peer debriefing. The methodological steps taken began with a literature review, followed by the conduction of a pilot interview (Chart 2). After an adaptation of the semi-structured questionnaire, new interviews were performed, with a total of eleven interviewees, among men and women from 23 to 47 years old. The study sought to ensure diversity among the interviewees (Table 3) in order to better represent the range of iphone users and to find the application usage patterns among them. Data collection was conducted through face to face in-depth interviews, applied individually. The choice of in-depth interviews was due to the fact it is a suitable technique for collecting information about feelings, beliefs, intentions, actions and detailed dimensions of the proposed analysis, as pointed out by Gil (1999). Interviewees were instructed about the research purpose and the experience concept used in the paper. 13, pp , October,

10 Each interview lasted an average of thirty minutes and aimed to understand the relationship between the user and their product as a whole, from the purchase to the daily use of the product and its applications. Subsequently, the data were subjected to content analysis to find elements cited by interviewees, comparable to marketing experience theory - including Pine II and Gilmore (1998), Schmitt (1999) and Berry, Carbone and Haeckel (2002). The content analysis was done through the categorical analysis technique. Hence, thematic categories were prepared (in this case, the topics were chosen) to infer the results (BARDIN, 2008; MOZZATO; GRZYBOVSKI, 2011) and followed three main steps. The first step was the pre-analysis, in which the ideas were organized into a plan of analysis (BARDIN, 2008). During this stage, the units of meaning were elaborated, based on the evidence presented in the transcripts (MINAYO, 1998) and the theoretical propositions that led to the case study (YIN, 2005). At first, the units of meaning (themes chosen to be encoded) were limited to the elements of the experience in the literature (see, feel, experience, action, relationship, memory, product functionality, application functionality and economic value). However, after an initial reading, other issues were also considered, such as, users' core values, motivations for product purchase and repurchase, relationship with the Apple brand, and negative aspects perceived by Apple users. This was a critical step since this is an exploratory study of multiple cases. Then, the analysis plan chosen was replicated for all interviews. The second stage of content analysis involved the examination of the material collected, for closer proximity of the researchers with the data, and the clipping of excerpts from the interviews in comparable units. This step required to identify the logical units (themes) on each of the transcripts. Thus, all interviews were grouped into units of meaning and subsequently grouped into categories corresponding to the elements of experience gathered in the literature review. Finally, during the last stage of the content analysis (treatment and interpretation of the results) it was possible to make inferences about the identified patterns (YIN, 2005). The analysis resulted in a synthesis and highlighted information, as emphasized by Mozzato and Grzybovski (2011). A qualitative analysis was performed by both authors to cross the results. Peer debriefing took place to validate the data (CRESWELL, 2007), in which an external researcher was responsible for reviewing and asking questions about the study in order to pass beyond initial reports considered by the authors. Finally, the obtained results are shown below. 5.1 DESCRIPTION OF STUDY AREA The global market of mobile applications recorded revenues of US$ 10 billion in It is expected to reach US$ 32 billion by 2015 (JUNIPER RESEARCH, 2010). The number of smartphones sold, mobile devices equipped with high-capacity computing that functions as platforms for software applications, is increasing significantly, both in Brazil and in the world (GARNER, 2011). 13, pp , October,

11 Recent surveys estimate there are 19 million smartphones in the country, reaching a growth of 165% between 2010 and 2011 (CAVALLINI; REIS, 2011). It is expected that, by 2015, there will be over 58 million smartphones in Brazil, which will account for one quarter of total mobile devices in the country (CISCO, 2011). With the growth of this market and the increasing spread of the use of other mobile devices such as tablets, the opportunities related to software applications are also growing. Applications are complete and independent programs that perform specific functions directly to the user. The Apple App Store, the virtual platform of the North American company for commercialization of applications, reached, in 2013, the mark of 50 billion downloads alone (APPLE, 2013). The boom experienced by the applications market suggests a transition in the locus of value creation by firms from a vision focused on the product, to a view focused on customer experience. The App Store works through a platform model that integrates a collaborative community in the process of creating value for users (BOUDREAU, 2009). In this model, smart phone manufacturers, such as Apple, are the nodal network of the experience network formed, as suggested in the framework proposed by Prahalad and Ramaswamy (2003). The App Store allows the development of a network of application suppliers, which is diverse and constantly expanding thanks to its low entry barriers. It currently consists of more than 170,000 developers in the U.S. alone (148APPS.BIZ, 2012). 6. RESULTS E DISCUSSION Through the conducted research, it was possible to identify the elements related to the experience of iphone users and the unique value provided by the smartphone of each respondent. Among the results, the themes to be developed consist of: the core values of the users, the motivations of purchase and repurchase of smartphone users, the elements of the customer experience, the relationship between the Apple brand and its users, and the negative aspects associated to it. Core values of users - One of the main findings in this study concerns to the fact that the applications are central to the creation of value by each user when handling their smartphones. This conclusion could be reached by analyzing the responses of respondents, who were categorized as shown in Chart 3. 13, pp , October,

12 CHART 3 Core value assignments of Apple Smartphone users. NAME AGE PROFESSION GENDER E1 E2 E3 E4 E5 E6 E7 E8 E9 E10 E Source: Created by the authors. International Analyst Production engineer Student Dentist Lawyer Occupational Therapist Planning Technician Interpreter and translator Public Server Teacher Veterinarian /Administrator Male Female Female Male Female Female Male Female Male Female Female MAIN CORE VALUES ASSIGNED Relationship Games, interaction Study, interaction Games, interaction Leisure, music, research Brand, work, bank Communication, brand Brand, Photos Communication, brand Games for son, , bank Work, trips Some respondents also clearly highlighted the integration of the smartphone to their daily lives: Among the [applications] that come on the device, I use the and Safari [browser] a lot. From the ones I got, I often use Whatsapp [messaging] the frequency depends on the day and if I'm exchanging messages with colleagues, Instagram [photography] about three times per day, Facebook [social network] whenever I get a notification, and Messenger [messaging] in accordance with the flow of messages I exchange in the day. E3. My son plays and he always asks me to download a new game. E10. In this sense, it becomes clear the existence of value creation by the users, which is strictly related to their lifestyle and routine. Still, through the interviews, different patterns of the usage of the iphone and its applications were found. Respondents who use the device with a professional motivation reported a more frequent use of applications such as calendar, and document viewers, while others preferred games and programs for messages exchange. Motivations of purchase and repurchase of smartphone users - Among the main reasons for buying the iphone, the physical characteristics of the product, such as design and touch screen were recurrent. Most respondents stressed the interactivity and the ease of use, especially with regard to the touch commands. A variety of applications available has also been mentioned as decisive for the purchase. Amid the respondents, those with previous versions of iphone (iphone 3GS or 4) said they were satisfied with the product. The focus on experience is evident in the fact that respondents said they did not intend to promptly acquire the latest models of the product, since they didn t acknowledge value in newer models to justify the purchase, as told by interviewee: When my [iphone 3GS] gets very outdated, I'll change it. Every time they come up with something different, so I do not know what will determine the time of exchange yet. At the moment, I'm just not entirely satisfied with the quality of the camera, but I don t see the need to change it. For now, I do not see many differences with the newer model [4S]. E11. On the other hand, respondents that attributed high value to the brand said they would buy the product in the near future: 13, pp , October,

13 Sure, I always buy the new iphone version when it arrives and everything that s Apple. E8. Yes [I would buy the newest version]. My iphone is already starting to present problems. E10. It is interesting to note that in the last answer, even a problem in the device would not prevent the purchase of another of the same brand. In this sense, the value assigned to the Apple brand was recurrent in several interviews, highlighting the brand perception as positive as a whole, even in cases where a memory or an asset was perceived as negative. The existence of unique applications for iphone was another factor that influenced the smartphone purchase over other similar products equipped with Android operating system, for example: The App Store has apps that do not run on other platforms, as was the case with the Instagram for a while. You could only access it with the iphone. E7. Another factor that affected the observed buying behavior was the influence of reference groups such as family and friends (GRØNHAUG; KLEPPE, 2010). This influence was also observed in the process of downloading apps, once the recommendation was indicated as one of the greatest reasons to purchase the device (whether free or upon payment). Elements of the customer experience - According to the literature, the elements of the experience may be of emotional or functional basis (BERRY; CARBONE; HAECKEL, 2002). The interviews made it possible to deploy the elements indicated by experience marketing theory and to relate them to the value creation by Apple smartphones users. Among the emotional elements found there are: perceive, feel, think, act, relate, (SCHMITT, 1999) as well as a new element indicated by Pine II and Gilmore (1998), the memory. Related to the functional elements we list: the product functionality, the applications functionality, and also the economic value (BERRY; CARBONE; HAECKEL, 2002). Chart 4 illustrates the occurrence of these elements in the interviews. 13, pp , October,

14 CHART 4 Elements of the experience of iphone users leading to value co-creation. ELEMENTS AUTHORS INDICATIONS OF ELEMENTS OF EMPIRICAL EXPERIENCE Perceive Schmitt (1999) I got a clock application which is great. It emits both sounds and lights. E1. Feel Schmitt (1999) I really like the iphone for everything. E8 / There are many applications that are fun at the time, but lose it very fast. E11. Think Schmitt (1999) I'm a bit addicted to seeking new applications, I usually take a look at the App Store every week. E3. Act Schmitt (1999) Applications I download every week. E4. / As for applications, they do portray my lifestyle. Many applications of reading, communication, travel and some games. E9. Relate Schmitt (1999) [The iphone offers] all communication networks that I need and I use. E2 / I always get applications that someone used and enjoyed. E3 Memory Product Functionality Applications Functionality Pine II e Gilmore (1998) Berry, Carbone e Haecke (2002 Berry, Carbone e Haecke (2002) I bought the iphone in my exchange program [United States]. E1 / When I bought the iphone there were only Blackberry and iphone for smartphone options. E5. [IPhone 4] has a frontal camera. E8 / I found interesting, both the design (...) and the features [iphone]. E1. And there is an application that I'm using a lot, the Instagram (...).It is for photos. You take and share photos. E6. Economic Value Pine II e Gilmore (1998) Source: Created by the authors. Although the iphone has a closed [operating] system, there are many free apps. E7 / Normally, for every paid application there is a similar app that is free. E5. One factor worth mentioning is the economic value. The price was presented by some respondents as crucial to the applications choice, many opting for those softwares offered for free. Those who paid for the acquisition of an application only did it because they could not find a free version that offered the same functionality. This conclusion contradicts the assertion that: To realize the full benefit of staging experiences, however, businesses must deliberately design engaging experiences that command a fee (PINE II; GILMORE, 1998:98). Therefore, the price (or gratuity) is a very important factor influencing the experience of creating value for users of smartphone applications. Relationship between users and Apple brand - The high frequency of applications downloads indicate the ability of the App Store to meet the demands of its users. All the respondents claimed to be satisfied with the platform, emphasizing its ease of use and the diversity and variety of applications available. [The App Store] offers free devices, and facilitates the search when I want something specific. It has everything I need. E1. Everything I seek [at App Store] I find. E2 13, pp , October,

15 The usefulness of the applications was a recurring issue. Many stressed the fact that each application meets a specific demand. Thus, the set of multiple applications purchased - all respondents claimed to have at least 20 applications, reaching 150 in some cases - contributes to the creation of unique experiences according to the context experienced by the user. There is an application for everything. E2. The advantage of the application is that they have a very specific functionality that and one can access what you want very fast you. E1. Applications are very specific, each one has a utility, depending on the time that I need it. If I need to know an address, I use Google, for example. If I need to check an appointment, I consult my schedule. E11. Therefore, it is possible to infer that the various combinations of applications lead to product differentiation in the hands of consumers. The high possibility of customization according to interests and needs allows the company to achieve various market segments with a single product. Negative aspects associated to the Apple brand Even though Apple is a reference brand and many respondents have positioned themselves favorably to it, some clues were provided by them. It is worth noticing that finding negative perceptions about the Apple brand was not the focus of this research, neither of the proposed questions. However, this issue was found in the speech of some of the interviewees. The iphone alarm clock is unbearable. E1. I do not listen to music on the iphone very much because it discharges very fast. E1 I'm just not fully satisfied with the quality of the camera. E11. There could be different ringtones, I don t like the songs available. E11. These phrases are in accordance with Pine II and Gilmore (1998) who claim that customers can provide clues about their experience. Thus, the management of these clues in order to eliminate the negative ones can contribute to both innovations in new product versions and to improve relationships with current customers. It is worth mentioning the example of one of the interviewees, which brings evidence on the relationship with customers from the App Store: I once bought an application [in the App Store] which cost 0.99 Euros and they charged me 9.99 Euros. I wrote them and half an hour later I had the money back placed on my card, and they offered me the application [for free]. E8. Thus, the possibility of service recovery when faulty is also a way to improve the relationship between the company and the service user. In accordance with Gilmore (2003), technology is enabling new ways to create synergies between industries, suppliers and consumers. In Apple s case, the App Store platform enables more sophisticated communication between users and the company. 13, pp , October,

16 7. FINAL REMARKS The fast expansion experienced by the applications market is related to the transition to an experience economy. By providing an extensive range of options for unique interactions, creating space for the combination of functional and emotional aspects, companies such as Apple develop a significant competitive advantage compared to its competitors. The iphone maker enjoys a privileged position on the global scenery, having achieved the top ranking of market value companies (FINANCIAL TIMES, 2012). Such recognition was also demonstrated in this study, in the form of brand appreciation by the interviewed consumers. Hence, as pointed out by Prahalad and Ramaswamy (2003), it becomes imperative to gradually introduce the marketing experience as the main focus of the innovation process. Once, unlike products and services, experiences cannot be commoditized, only companies that achieve above average results through differentiated offerings can achieve value co-creation with consumers. The key, as stated by Berry, Carbone and Haeckel (2002) is on how companies manage experiences. To ensure competitive success, a growing number of organizations apply the principles and tools of customer experience management as a way to primarily foster their loyalty. As noted in the case of the App Store, which allows more concretely the management of an experience network, it is also necessary to invest in structuring a space that enables collaboration and, thus, fosters cocreation. It was possible to achieve the objectives proposed by this study, by understanding the possible ways the smartphone user obtains unique experiences through the same product. The applications usage adds unique value to the product and allows value to be co-created beyond the initial iphone value proposal. Perceptions, actions, thoughts, feelings, relationships, memory and economic value were some of the elements found on the experience when using the iphone. Furthermore, the physical attributes such as design and functionality were also mentioned by the respondents. The brand value was another attribute of the smartphone that has shown to have influenced both the buying behavior of some users and their future purchase intents. Applications contribute to the reputation of iphone and Apple, while the App Store contributes to the continuity of the interactions between the brand and its customers. Through the applications commercialization platform, Apple maintains a collaborative network that contributes to the innovation process. The generation of ideas and their development are left to developers affiliated to the App Store, while Apple manages marketing and promotion actions and upholds the quality standards, in similarity to processes of open innovation (CHESBROUGH, 2003). This research is limited due to its methodological approach, which does not allow generalizations. The number of respondents and the personal information collected are also subject to external influences and biases that have not been identified by researchers, due to the high degree of subjectivity from projective techniques, including in-depth interviews (FRANCISCO- MAFEZZOLLI et al. 2009). Likewise, since the phenomenon of applications is recent, it still presents few academic publications to explain theoretically the research topic and, thus, deserves further investigation. Furthermore, only one company was focused (Apple) and may not match the reality of smartphone users of other brands. 13, pp , October,

17 Moreover, this research points to further studies that may seek relationships between age or gender and the behavior of smartphones users. Another possibility is to study the clients clues in relation to a reference brand in the cellphone industry such as Apple. It is possible to extend the search for both a quantitative analysis and for users of mobile devices other than those manufactured by Apple. Understanding the company s management reality may also complement this study, which was narrowed to smartphone users. Among the managerial implications, this paper reaffirms the importance of the experience economy proposed by Pine II and Gilmore (1998), indicating that more companies should go beyond the focus on products and services and provide a complete customer experience. Thus, as the authors propose, managing customers clues, stimulating all the five senses of the users and conducting experiences which can take part of their memory, may consist of strategies to be adopted by companies. Finally, value co-creation can also be used strategically by businesses, enabling the innovation of its products and services according to the value perceived by their users. 8. REFERENCES 148APPS.BIZ. App Store Metrics. Available in: <http://148apps.biz/app-store-metrics/>. Access in: 8 dec APPLE Press Info. Apple s App Store Marks Historic 50 Billionth Download. 16/05/2013. Available in: < Billionth-Download.html >. Access in: 17 may ANDREWS, L.; DRENNAN, J.; RUSSEL-BENNET; R. Linking Perceived Value of Mobile Marketing with the Experiential Consumption of Mobile Phones. European Journal of Marketing, v. 46, n. 3/4, p , BARDIN, L. Análise de conteúdo. 4. ed. Lisboa: Edições 70, BERRY, L. L.; CARBONE, L. P; HAECKE, S. H. Managing the Total Customer Experience. MIT Sloan Management Review, v. 43, n. 3, Spring BOUDREAU, K. J. How to Manage Outside Innovation. MIT Sloan Management Review, v. 50, n. 4, CISCO VNI Forecast. Cisco Visual Networking Index: Global Mobile data Traffic Forecast Update Cisco Public Information, CAVALLINI, R.; REIS, T. 1 a pesquisa mobilize: consumidor móvel Mobi; W/Mccan: São Paulo, CHESBROUGH, H. W. The Era of Open Innovation. MIT Sloan Management Review, v. 44, n. 3, CRESWELL, J. W. Procedimentos qualitativos. In: CRESWELL, J.W. Projeto de pesquisa. Métodos qualitativo, quantitativo e misto. 2. ed. Porto Alegre: Artmed, p , pp , October,

18 DACKO, S. G. The advanced dictionary of marketing: putting theory to use. New York: Oxford University Press, DAVILA, T.; EPSTEIN, M. J.; OVERSTREET, R. E. As regras da inovação. Porto Alegre: Bookman, FINANCIAL TIMES. FT Global 500 March Available in: <http://www.ft.com/intl/cms/3f3c81d e1-a75a-00144feab49a.pdf>. Access in: 10 dec FRANCISCO-MAFEZZOLLI, E. C.; FABRIS, C.; RIBEIRO, C. M.; SANTOS, T.; LIMA, M. V.; SEMPREBOM, E.; BRUNETTA, D. F.; PRADO, P. H. M; MADY, E. B. Reflexões sobre o uso de técnicas projetivas na condução de pesquisas qualitativas em marketing. PMKT Revista Brasileira de Pesquisas de Marketing, Opinião e Mídia, v. 3, p , sep GARNER, R. The smartphone market is there to be won In: 2011 the mobile ecosystem will be critical to driving loyalty. Available in:<http://www.gfktechtalk.com/2010/11/30/the-smartphonemarket-is-there-to-be-won-in-2011-the-mobile-ecosystem-will-be-critical-to-driving-loyalty/>. Access in: 15 dec GIL, A. C. Métodos e técnicas de pesquisa social. São Paulo: Atlas, GILMORE, A. Services marketing and management. New Delhi: Response Books, GONÇALVES, C. A.; MEIRELLES, A. M. Projetos e relatórios de pesquisa em Administração. São Paulo: Atlas, GREWAL, Dhruv; LEVY, Michael; KUMAR, V. Customer Experience Management in Retailing: An Organizing Framework. Journal of Retailing, v. 85, p. 1-14, GRØNHAUG, K.; KLEPPE, I. A. The sociological basis of marketing. In: BAKER, M.; SAREN, M. (Eds.). Marketing theory: a student text. Sage Publications: London, Cap. 7, p JUNIPER RESEARCH, Mobile app stores: business models, strategies & market segmentation. Hampshire, p , HOLBROOK, M. B.; HIRSCHMAN, E. C. The Experiential Aspects of Consumption: Feelings, Fantasies and Fun. Journal of Consumer Research, New York, v. 9, n. 2, p , Set LUSCH, R. F.; VARGO, S. L.; WESSELS, G. Toward a Conceptual Foundation for Service Science: Contributions from Service-Dominant Logic. IBM System Journal, v. 47, n. 1, p. 5-13, MALHOTRA, N. K. Pesquisa de marketing: uma orientação aplicada. 3. ed., Porto Alegre: Bookman, MANDEL, M. Where the jobs are: the app economy. Available in: <http://www.technet.org/wpcontent/uploads/2012/02/technet-app-economy-jobsstudy.pdf>. 13, pp , October,

19 Access in: 8 dec MINAYO, M. C. S. O desafio do conhecimento: pesquisa qualitativa em saúde. 5. ed. São Paulo: Hucitec-Abrasco, MOZZATO, A. R.; GRZYBOVSKI, D. Análise de Conteúdo como Técnica de Análise de Dados Qualitativos no Campo da Administração: Potencial e Desafios. RAC, Curitiba, v. 15, n. 4, p , Jul./Ago NORMANN, R.; RAMIREZ, R. From Value Chain to Value Constellation: Designing Interactive Strategy. Harvard Business Review, v. 71, n. 4, p , PALAIO, R. E. A. Brand Equity: um estudo sobre a marca Apple. Dissertação (Mestrado em Marketing) - Faculdade de Economia, Universidade de Coimbra, Coimbra, PINE II, J. B.; GILMORE, J. H. Welcome to the Experience Economy. Harvard Business Review, July-August, PRAHALAD, C. K.; RAMASWAMY, V. Co-creation Experiences: The Next Practice in Value Creation. Journal of Interactive Marketing, v. 18, n. 3, PRAHALAD, C.K.; RAMASWAMY, V.The New Frontier of Experience Innovation. Sloan Management Review, Summer, SMITS, R. Innovation studies in the 21st century: Questions from a user s perspective. Technological forecasting and social change, v. 69, n. 9, p , SCHMITT, B. Experience Marketing: Concepts, Frameworks and Consumer Insights. Hanover: Now Publishers, SCHMITT, B. Experiential Marketing. Journal of Marketing Management, v. 15, n. 3, p , TIDD, J.; BESSANT, J. R.; PAVITT, K. Managing innovation: integrating technological, market and organizational change. 3. ed. Chichester: John Wiley Inc, TIGRE, P. B. Gestão da inovação: a economia da tecnologia no Brasil. Rio de Janeiro: Elsevier, TSAI, S. Integrated marketing as management of holistic consumer experience. Business Horizons, Indiana, v. 48, p , YIN, R. K. Estudo de caso: planejamento e métodos. 3. ed. São Paulo: Bookman, , pp , October,

20 Appendix 1 - Script for in-depth interviews This research is developed by the Center of Studies and Strategies of Integrated Marketing Communication, from the Federal University of Minas Gerais. We intend to understand the relationship between the use of iphone applications and the experience provided to its users. Experiences are all perceptions, feelings, thoughts and memories that consumers have about a product or service. Thank you for contributing to this research. Your data and information is confidential and your name will not be exposed at any time in the research. However, we would like to ask for your consent to publish your answers exclusively for academic purposes. If you are interested, we may contact you to disclose the results of this research. In addition, our contact can be made through the following s:... or... Instructions: Please answer the questions below according to your perceptions. Date: Name: Age: Profession: IPhone version: 1. How long have you had an iphone? 2. Who was responsible for purchasing the product? 3. What was your motivation to buy the iphone? (If presented, what was the motivation of the person who gave it to you). 4. Why did you choose the iphone instead of a similar device? (If presented, it is not necessary to answer). 5. Would you buy the newest version of the iphone? Why? 6. For what purpose do you use your iphone more often? 7. Do you own applications? How many? 8. Have you joined the AppStore, the application store from Apple? Feature your experience with this platform. 9. Which applications do you use most and how often? Are they different from the applications you used in the past month? 10. What are the benefits of your applications? You may exemplify through applications you have. 11. How often do you download an application? 12. What criteria do you use to download an application? 13, pp , October,

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