GOOGLE WALLET RESEARCH PROJECT
Evan T. Atherton, John Cheek, and Joseph Stern
ADV380J - Qualitative and Quantitative Research Dr. Wei-Na Lee
The University of Texas at Austin December 2, 2011
SWOT Analysis
Findings within the SWOT analysis were drawn from the Bloomberg Businessweek case
study (Stone & Kharif, 2011) except where otherwise noted.
Strengths
The Google Offers platform recently launched has the potential to surpass the Groupon
daily deals model via customizability and geo-targeting of ads towards mobile consumers. Since
Google knows where your smartphone is relative to Google Maps and searchable businesses,
they are set to earn commissions for delivering paying customers to merchants which creates a
win win relationship for Google and participating merchants. This means that Google Wallet’s
service does not compete with revenue streams from the credit card companies, banks or carriers
for transaction fees.
Large retailers such as Macy’s, Bloomingdales, Walgreens, Foot Locker and Peet’s
Coffee are currently integrating contactless, near-field communcations (NFC) technology into
their stores. Further, payment processors such as Citibank, Mastercard and First Data are on
board with the payment system. Google and its partners are also sweetening the deal for retailers
by subsidizing terminal implementation and their associated costs - via a stimulus spending
initiative to quickly roll out the merchant upgrades.
Google’s Android platform has a growing userbase with over 200 million devices in use
as of November 2011 that will allow for rapid software developments in the smartphone market
(Arthur, 2011). Google is also uniquely positioned being both a hardware and software
developer. Most importantly, Google has strong investor backing and large cash reserves to push
them through the beta testing period.
Weaknesses
Google Wallet is currently a beta service that hasn’t rolled out completely, making it
difficult for consumers who want to try it in areas where it’s unavailable. Currently, only the
Nexus S smartphone includes an NFC chip that works on Sprint’s 4G network. Added to limited
phone device options, consumers don’t have much choice with low carrier network support for
early adopters. Moreover, our in-depth research revealed that awareness of Google Wallet as a
service was minimal. The largest concern was pointed out by Paypal as they believe NFC is
transitory and are hedging their bets beyond NFC technology altogether.
Google Offers, the ad-bundled service with which the NFC payment system will
integrate, is not as established as Groupon or other social couponing services and awareness is
low. At present, Groupon offers better deals and deeper discounts for consumers and holds solid
relationships with merchants. Persuading consumers to adopt a new payment option on their
smartphone is tenuous; primary research shows that potential adopters have security and privacy
concerns. The effect of increased spending due to a more distanced payment experience from
tangible money could create negative attitudes in consumers who struggle to save in a tight
economy, potentially turning them off to NFC. Retailers are also concerned as they struggle with
the lower rate deals for proposed higher traffic and some see no actual benefit from the increased
expense of hardware installation to scan NFC devices.
Opportunities
The first mover advantage in the mobile advertising space could prove to be incredibly
lucrative given that it’s the first comprehensive platform for electronic wallets, real-time
coupons, loyalty points and membership cards for mobile users. After four months, Facebook
discontinued its “Facebook Deals” deal service, leaving the space open for its competitors.
Google Offers, once out of beta, will be the most advanced geo-targeted ad service on the
market. The convergence of maps, ads, and databases via easy-to-use search functionality allows
for purchase immediacy that gives consumers real-time access to deals for what they want.
Additional discounts and check-out terminal incentives will increase consumers spending habits
and bring more revenues to merchants. More direct and immediate contact with consumers who
are ready to buy such as business-class users who want easy-to-use receipt collation, corporate
expense tracking and ongoing loyalty awards will likely win over early Google Wallet adopters.
The forthcoming NFC chip integration with every smartphone manufacturer in 2011 will
bring the cost of the upgrade down dramatically from years past. Further, NFC technical
specifications and standards have been set and are well established after years of testing.
Security elements have also been heavily tested and should minimize user fears with respect to
sharing personal data.
Threats
A major threat to users adopting NFC technology is the invention of services that do
something simpler and better than what Google Wallet’s services offer. Square, for example, is a
technology that bypasses the technological headaches of new terminals and fee re-structuring by
offering a simple point-of-sale device solution that is easily added externally to mobile devices.
Square’s growth has been rampant and continues to gain heavy adoption. In fact, Square may be
a smarter technology compared to NFC at least for the short-term.
Competition for fees from Visa, American Express, Mastercard, Ebay’s Paypal Division
and the Isis Consortium may fragment the market in the mind of the consumer to the point of
confusion. Moreover, the ISIS venture includes major carriers: AT&T Mobility, T-Mobile USA,
Verizon Wireless and Discover Financial Services, creating serious potential problems for
Google Wallet’s integration with the aforementioned carriers. If all these services require
separate logins and accounts, it may be a detriment to the NFC industry as a whole. Historically,
technology adoption rates of new payment innovations have been historically slow to change
consumer behaviours. Specifically in the United States, Smart Card technologies have not been
integrated into mainstream lifestyles - even with solid adoption in countries such as Japan.
Technological Precedents
Google’s intention to introduce a mobile phone payment system to the American market
utilizing contactless NFC technology represents an ambitious undertaking. However bold
Google’s vision is, though, it is not entirely unique. The technological forerunners to Google
Wallet’s NFC platform are already in place throughout the United States and several other
countries have adapted phone-based payment systems as well, to varying degrees of success.
Contactless payment in the United States has existed since 2005, when MasterCard
introduced their PayPass system. Using Radio Frequency Identification (RFID) technology,
PayPass allows customers with PayPass-equipped credit and debit cards to wave their card past
an electronic reader in lieu of sliding the card conventionally. PayPass transactions amounting to
less than $50 don’t require a signature, letting customers swiftly and conveniently make small,
routine purchases. Shortly after PayPass’s launch, American Express introduced ExpressPay and
Visa introduced PayWave, two similar technologies that can be used with PayPass readers.
While PayPass boasts over 92 million cards and readers issued and over 311,000
participating merchants nationwide, Crowe, Rysman, and Stavins, (2010) assert that “There are
no reliable publicly available data on adoption of contactless cards in [the United States], and
industry estimates vary widely.” They further state that of contactless cards, “...consumer
awareness remains low. Many cardholders receive contactless cards but are unaware that they
have them or how to use them, and do not know whether merchants they frequent accept
contactless payments.”
In other countries, phone-based contactless payments have been put into place since 2001
and obtained different levels of success. These systems could provide a blueprint as to how a
similar payment system like Google Wallet could succeed in the United States.
Spain’s phone-based payment system was introduced in 2001 under the name MobiPay.
With MobiPay, customers can pay for small purchases by giving their phone number to a
merchant, generating a bar code with their phone for a merchant to scan, or texting a payment to
a merchant with a digital address. The MobiPay system is owned jointly by Spain’s major phone
carriers, banks, and payment card companies and does not collect fees for its services.
As of 2007, less than 1% of Spain’s population had registered for MobiPay, with actual
users estimated to be much lower. Because MobiPay does not collect fees or generate revenue,
Mas and Rotman, (2008) believe that it was unable to put any money toward promoting its
platform. As it was an initiative across the board, no single firm stood to benefit from the
adoption of MobiPay against its competitors, and motivation to get consumers to adopt the
platform was low.
In South Korea, however, mobile payment systems have seen a bit more success. LG
Telecom and Kookmin bank put together an NFC-based mobile payment system in 2003 that
originally only worked at transit stations and ATMs. Because of high demand, their system was
adopted by retailers and major card issuers followed suit as well. MasterCard and Visa launched
a specialized SIM card for mobile phones in 2006 that allows purchases too.
While South Korea’s gains in mobile payments are promising, the largest success in the
field (and closest system to Google Wallet’s proposal) can be found in Japan. Originally JR
East, one of Tokyo’s major commuter railroads, introduced a contactless payment card based on
Sony’s FeliCa RFID platform as a reloadable farecard. Their card was adopted by nearby
merchants so rail commuters could make convenience purchases quickly, using their existing
farecards. Japan’s largest mobile carrier, NTT DoCoMo, partnered with Sony and JR East to
bring the FeliCa technology to their mobile phones in 2004 under the name “Osaifu Keitai”
(literally translated as “wallet mobile”). By 2006, Osaifu Keitai customers could link their credit
cards to their mobile payment accounts and use their phone to make purchases much like Google
Wallet’s proposed system. As of 2010, over 70% of mobile phones in Japan have payment
capability.
Japan’s success with mobile payments can be attributed to a number of factors, with
cultural and geographical considerations at the forefront. Being a densely populated nation with
high public transportation ridership and a high reliance on cash transactions make Japan ripe for
mobile payment adoption. Furthermore, Ezell (2009) points to the fact that over 50% of Japan’s
population have adopted contactless cards as a stepping stone to the transition to mobile
payments. While promising, the successes of Japan face an uphill challenge in being applied to
US markets. The United States is decidedly less densely-populated, less reliant on public
transportation, and less reliant on cash transactions than Japan (D’Silva (2009) estimates that
50% of all transactions by dollar value in Japan during 2006 were conducted in cash; compare to
14% for the United States).
Though daunting, the challenge that lies ahead for Google Wallet is not insurmountable.
Evans and Schmalensee (2009) posit that mobile contactless payments in the United States won’t
catch on by offering speed or convenience alone. By bundling contactless mobile payments with
other features, such as targeted mobile advertising or electronic coupons, they believe that a
mobile payment service like Google Wallet has a fighting chance to survive in the Untied States.
Mobile Coupons
An important indication of potential adoption of NFC technology will depend on
consumer attitudes towards social and mobile coupons. The benefits drawn by mobile NFC
users from real-time coupons and convenient loyalty reward redemption represents a prime
motivator for consumer adoption of the new payment platform. Being that the NFC technology
and its nationwide release is just getting underway the response rate to mobile coupons is
currently unavailable. Therefore, our secondary research focuses on a current analysis of the
daily deals industry, current ad networks and the emergence of mobile ad networks to provide
insights in to what the future of what mobile couponing may bring.
It is clear that consumers are motivated to try new products and services if given a fifty
percent discount. Mintel reports that the number of subscribers to the online discount site
Groupon reached 115 million in 2011, up from 50.58 million at the end of 2010 (Online and
Mobile Shopping - US, 2011). Traffic at Groupon's closest rival, LivingSocial saw a 96%
increase in visitors from a year earlier. Moreover, Groupon recently raised $510 million in its
initial public offering on November 4, 2011, valuing the biggest online-coupon provider at about
$11.2 billion (IPO News, 2011). The rapid adoption of mobile technology and daily deals
highlights an interesting trend with respect to the future potential of mobile coupon adoption.
Google Wallet's payment system includes features that let users automatically apply
discounts and earn reward points with each transaction. The U.S. industry most widely known
for its deep base of coupon users is the grocery business. One key test run of Groupon-like
coupon deals exhibits the potential of real-time coupon and loyalty programs for grocery
consumers. In late April 2011, General Mills, the first large consumer packaged goods company
offered a sample pack of products, including Hamburger Helper, Fiber One bars, and Betty
Crocker Sugar Cookie mix, along with a coupon book shipped right to the buyer’s door. The deal
offered a 50% discount with a $40 value, selling for $20. The respective company's offered
deals in two metropolitan areas, Minneapolis and San Francisco, as a trial run to see if the
promotion which included 4,500 sample packs in each city was cost-effective and got
consumers’ attention. The results were immediate and highly positive as the products sold out
within hours, according to Mintel (Attitudes Toward In-Store Promotion at FDM - US, 2011).
Google Wallet’s adoption or lack thereof will depend largely on consumer use of point-of-sale
NFC driven deals. Both consumers and merchants will need to see clear benefits.
As evidenced by the radical growth of Groupon, consumers are definitely on board with
daily deal discounts. Do business owners feel the same way? A recent survey found that 51% of
independent restaurant operators who had participated in third-party deal sites were pleased with
their result. Further, 46% of operators thought they got a good return on investment with their
participation in a deal, according to Mintel (Attitudes Toward Independent Restaurants, 2011).
This survey leads us to believe that nearly half of the independent restaurant operators surveyed
were happy with the experience. So what problems or potential issues are there for merchants
with daily deals? To keep market share, Groupon has introduced a rewards scheme to encourage
users to redeem more deals from merchants by unlocking extra rewards with increased spending.
The launch of Groupon Rewards is likely to please merchants, who were complaining to the
company that once Groupon customers redeem their deals, they rarely return.
Morgan Stanley analyst Mary Meeker declared, “More people would access the internet
through mobile than desktops in just a few years” (Patel, 2011). The rapid adoption of Apple
iPhones, Android platform smartphones and tablets has drastically changed the way consumers
interact with merchants and retailers. It is clear that consumer access through new technologies
to real-time information, discounts and payment methods is allowing for the emergence of new
mobile ad networks. The effects on advertising spends and user engagement are definitely
shifting to follow suit. Notably, Google recently revealed that Mobile ads are now a $1 billion
business worldwide (Patel, 2010). Google also acquired mobile ad network AdMob, for $750
million in late 2009 to assume the No. 1 spot in the mobile ad network space with 21% market
share (Chang, 2009).
As the daily deal market grows, increased competition to unseat the industry leaders such
as Groupon from Google Offers and Facebook Deals has taken shape. First mover advantages
appear to be the name of the game though, as both Google and Facebook have altered their
competitive strike towards future mobile couponing platforms. Recently, Google acquired The
Dealmap, a website that collects all the daily deals from various sources and rolled it into Google
Offers. The Dealmap gathers offers from daily deal websites and has more than two million
users, as well as apps on the iPhone and Android devices (Greene, 2011). Facebook, on the other
hand has decided to shut down Facebook Deals, its four-month-old Groupon competitor. “We
think there is a lot of power in a social approach to driving people into local businesses,”
Facebook said in its statement. “We’ve learned a lot from our test and we’ll continue to evaluate
how to best serve local businesses” (Parr, 2011)
As the mobile couponing space emerges, it is clear that Google and Facebook with their
large user bases and data insights are hot on the trail of what will follow the daily deal
phenomena largely driven by email. Ultimately, competition for the mobile ad market will be
highly related to the future platform that consumers adopt. As electronic wallet services
continue their roll-out, it is essential to take a look at the attitudes of consumers in key test
markets.
Potential Market
In determining which group of consumers we would research for this project, we
considered groups that would be most likely to adopt a novel payment technology using their
smartphones. We isolated and examined other adoption behaviors that might serve as indicators
of willingness and ability to use mobile payment technology. First, our consumer must have a
device equipped with the necessary hardware and software to make mobile payments. This near-
field communication (NFC) technology is currently far from ubiquitous, but will spread in
coming years. Notably, Apple declined to put the technology in their newest version of the
iPhone, released in October 2011 (Perez, 2011). Perez notes, however, that NFC is already
included in many handsets, and is projected, by Forrester Research, to be nearly universal on
smartphones by late-2012 to mid-2013. With NFC technology spreading on smartphones, an
important question becomes: who uses smartphones?
According to Mintel (Mobile Phones - US, 2011), the age segment most likely to own a
smartphone is 25 - 44-year olds. Consumers in this age group are also the most likely to have a
smartphone purchase intention within the next six months. Consumers 18 - 24 show the highest
level of interest in owning a smartphone without purchase intent. By contrast, users 44 and up
(including baby boomers) are the most likely group to indicate no interest in owning a
smartphone. Both 18 - 24 and 25 - 44 groups also over-index on behaviors such as “downloaded
an application” and “used GPS to find direction” that would be critical to the adoption of mobile
payment. Not surprisingly, due to the high cost of smartphones relative to other communication
technologies, smartphone ownership is positively correlated with household income. Even with
relatively low incomes, however, college students are a demographic worth paying attention to,
especially for Google.
Unlike other groups, college students favor Google’s Android over any other smartphone
platform (Marketing to College Students - US, 2011). They are also more likely than the general
population to own a cell phone (97% penetrance among full-time students versus 90% among
non-students). Furthermore, with their earning power likely to increase as they begin and
advance their careers, college students are an important market for Google to consider regarding
its mobile payment platform. Having considered some of the demographic characteristics that
make up a likely market for mobile payment, we next considered location.
Austin Market Adoption Potential
Partially as a matter of convenience, we chose to focus on the Austin market. However,
this market makes a good choice to study mobile payment attitudes for several reasons. The first
is that mobile payment companies themselves regard it as an important city. In 2012, Google
Wallet competitor, Isis, will begin a two-city trial of its platform in Austin and Salt Lake City,
Utah (Cheng, 2011). Discussing why they chose Austin, Isis marketing director, Jaymee Johnson
said, “Isis selected Austin for its culture of innovation, thriving business community,
entrepreneurial spirit and early adopters...Austin is home to progressive, tech savvy consumers
and merchants, a key demographic for Isis’ mobile commerce program.” (Kim, 2011). This fits
with our perceptions of Austin, but we looked for some data to back these claims up.
To study the lifestyles and motivations of Austin’s consumers, we used psychographic
data obtained from Nielsen’s MyBestSegments database (MyBestSegments, n.d.). This resource
profiles the population of a given zip code in various dimensions, grouping them into segments
and ranking the segments in terms of population size within the zip code. In particular, we were
interested in the Connexions subsection of MyBestSegments, which concerns habits relating to
technology and communications usage and acquisition. We looked up ten zip codes in the Austin
metro area, and determined the most common segments across the area (Appendix A). While this
is not intended as an accurate census of psychographic segments, it does indicate that the
population of Austin embodies behaviors and motivations that make it favorable for Google
Wallet.
The most common segments we found across all zipcodes were under 45 years of age.
The top three, in fact, were under 35. This aligns well with our findings on the target age range
of smartphone users. All but one of the most common segments was solidly middle- to upper
middle-class in income, ranging from $40,000 to $80,000 in median household income. The one
exception was the second most popular segment, composed of people in their 20’s who have not
yet realized their full income potential, but prefer “their cell phones for their calls, Internet
access, and voice mail.” This indicates good opportunities for these consumers as their careers
progress and they gain in earning power. Regarding technology use lifestyles of these
consumers, MyBestSegments had these to say about various segments:
● “But because many still have low incomes, they lack the money for the fanciest gear and
must choose their devices carefully. Cell phones are a necessity, so they insist on
smartphones that allow them to access the Internet, download games, and use a calendar
to schedule activities.”
● “The upscale suburbanites in The Pragmatics use technology to simplify their lives.
These couples go online to pay bills, buy merchandise, and track investments.”
● “Concentrated in suburban and small-town areas, these Gen-Xers are mobile Americans
who live on their cell phones, carry work home on laptops, and rely on BlackBerries to
stay current with their e-mail. Many of these consumers have dropped their landline
phones altogether and are avid users of their mobile phones' enhanced features.”
Taken together, these elements indicate that Austin is a tech-ready city, and is a good test
market for a mobile payment service like Google Wallet.
Qualitative Research
After reviewing the available secondary research on mobile payment services, online
coupon services, and the Austin market we decided to collect some primary, qualitative data
using depth interviews. In conducting the interviews, we sought to gauge attitudes of the
relevant test market demographic toward the following six topics: Technology use and adoption;
Smartphone usage; Online coupon and deal sites; In-store payment behavior; Security and
privacy; and Google Wallet itself. We conducted the interviews using a 25-question discussion
guide and interviewed 11 respondents. Interviews can be found in the DVD media disc labeled
“Appendix D”.
The responses we gathered from the depth interviews were valuable and eye-opening.
Many of the findings were unexpected based on our secondary research. A summary of our
findings follows:
Technology Use and Adoption
Our respondents ran the tech-adoption gamut from early adopters to late majority, with
no laggards found. On their attitudes toward adapting new technology, most respondents
favored a “wait-and-see” approach to first-generation technologies, as voiced by respondent
Justin A., a 26-year old Software Engineer:
“When a brand new concept comes out, a common philosophy… is to wait for the second
generation to come out. The idea is that the bugs and kinks will be worked out, which
may or may not be true.”
The wait-and-see approach usually owes to either the high cost of first-gen technology...
“I usually wait for a lot of people to be using it so the price goes down. Usually the first
round is pricier than the second.” (Zezelia O., 29, Editorial Assistant)
...perceived bugs or flaws...
“It depends on the technology. If it’s a new phone or something like that, that I’m going
to use on a regular basis, and I’m going to depend on it like a phone or something, I’ll
wait around for it...I wouldn’t buy the first generation or anything like that. I’ll wait till
they [fix all the bugs].” (David R., 27, Graduate Student)
or a desire to see what peers think:
“I like to wait a while and hear reviews and people’s firsthand accounts. I don’t beta
test.” (Latisha N., 32, Paralegal).
Another roadblock to early technology adoption lies in whether the individual feels the new
technology is even warranted, according to respondent James L.:
“If it's not broken, don't fix it. I'm not going to jump on new innovations if my current
smartphone fulfills the needs I have. I also want to wait until tweaks and nuances get
figured out.” (James L., 25, Freelance Writer)
Smartphone Usage
Regarding usage of smartphones, all eleven of our respondents used one. While Apple’s
iPhone has been on the market for less than five years it and other smartphones, such as Google’s
Android or RIM’s Blackberry, has become nearly indispensable to most:
“[My mobile phone] is kind of like my security blanket.” (Zezelia O.)
“My iPhone has essentially become an extension of my brain.” (James L.)
“[My smartphone] is absolutely critical to my everyday life.” (Justin A.).
Others didn’t have quite the same high opinion of their phones, but they represented a minority:
“[Using my phone as] a smartphone? I never use it for the internet. I never have it
turned on. I occasionally use it for GPS.” (Robert F., 27, Microbiologist)
“Well, calling and texting is important. But I have my computer as well, so I'd say
[having a smartphone is] not that essential.” (Stuart R., 21, Student).
Online Coupon and Deal Sites
When it came to couponing, few respondents felt like putting in the effort to obtain
physical coupons:
“I don’t actually go in search of coupons.” (Zezelia O.)
“I just have my girlfriend [collect coupons] for me.” (Jose R., 28, Software Engineer)
“I rarely use coupons because I always forget them and leave them at home. (Anna G.,
30, Massage Therapist).
“I barely ever use a physical coupon anymore.” (Justin A.)
Some had tried online coupon and deal sites such as Groupon, with mixed results...
“I purchased a Groupon which was really convenient... I use both Groupon and
LivingSocial. If I'm online, I use dealnews.com or woot.com sometimes to get deals.”
(Stuart R.)
“[I don’t use Groupon] because it's mostly [for] stuff I don't need. And I'm trying to be
conscious about where I spend money… I'd be more interested in deals on more practical
items...” (Anna G.)
...and some had incorrect information about how the sites worked:
“I don’t think [Groupon would] be worth it for me. I don’t buy enough stuff to justify the
price of the membership or whatever you have to pay.” (David R.) - Groupon is free to
members.
James L., our only merchant, tried Groupon for his business and had a negative experience:
“I've offered daily deals through Groupon for my theater company. I've never bought
anything via Groupon. I wasn't satisfied with Groupon because they took such a large
cut… making it hard to break even.”
In-Store Payment Behavior
When making payments at physical retail outlets, most of our interviewees used cash:
“80% of my financial transactions are debit or credit.” (James L.)
“I would say I usually don't have cash because my debit card is essentially like cash.”
(Stuart R.)
“I only pay with cash if it’s under $20. I only keep about $20 cash on me.” (Latisha N.)
“I [pay for things] almost always with a card.” (Zezelia O.).
As a surprise to us, some also used cash when patronizing small businesses, citing the high
transaction fees charged to the businesses by payment processors:
“I do have a personal policy… If I’m going to a chain outlet like Starbucks I’ll always
use my card. If I go to a local merchant like a food truck, I try to always use cash
because their merchant fees are so high.” (Justin A.)
“I’ll only pay with cash if [the merchant’s policy is] ‘cash only’… Or if it’s a local
merchant.” (Zezelia O.).
Security and Privacy
Respondents, when asked about their feelings on privacy and security regarding mobile
wallet payments, seemed to feel pretty secure about their monetary transactions:
“As long as you have a good credit protection program, you should feel pretty secure.”
(Latisha N.)
“I feel pretty safe [using credit/debit cards].” (Justin A.)
“I don't see anything more dangerous than getting my wallet stolen or dropping my credit
card on the ground.” (James L.).
However, interviewees did have concerns about their personal privacy...
“I do have the big brother concern of everything I do being tracked and watched… but
would eventually give in if [Google Wallet] were mainstream.” (Anna G.)
...as well as physical phone theft:
“I think more people I know have had their phones stolen than their credit cards. I think
it's unnecessary to put a credit card on a phone.” (Stuart R.).
Google Wallet
When asked if they were aware of Google Wallet, many respondents had not heard of the
service. After receiving a brief description, their views tended to be mixed:
“Google Wallet? I really don't think it'd be something that revolutionary or increase sales
that greatly.” (Stuart R.)
“I think it’s awesome, quite honestly. The idea of shortening my wallet is cool, if I can
leave my credit card at home… I’m going to have my phone with me at all times
anyway... The convenience factor around [Google Wallet] is why I’m excited.” (Justin
A.)
“[I would] Absolutely [use Google Wallet]! It would be much more convenient than
other forms of payment.” (James L.)
“[Mobile payment] is something I’d wait a very long time to pick up on… I’d wait for the
first wave of techies to get [screwed] over.” (Zezelia O.)
“I think there are some definite benefits [to Google Wallet]. If I could easily collect
coupons for products I want and it would instantly apply them at check out… that would
be great to save me money.” (Anna G.)
“It sounds like [mobile payment is] just not needed… It sounds like it’s trying to fix a
problem that isn’t there... Why would you ever need to do that? I have a wallet with
cash and plastic - what’s the advantage [to using mobile payment]?” (Robert F.)
“You wouldn’t have to carry around as much. It’s a double edged sword. You’re putting
everything in one device, but it also means you don’t have to carry your credit card.”
(David R.).
Quantitative Research
Based on the results of our depth interviews, we created a survey to gain some
quantitative insights into our consumers’ motivations and attitudes. We devised several research
questions we wished to test, and designed a survey using the Qualtrics platform. All figures in
this section can be found in Appendix B. Our SPSS output can be found on the DVD (Appendix
D).
Sample
Due to our limited resources, it was necessary we use a convenience sample, consisting
primarily of members of our own personal networks. Because Qualtrics is an online survey
platform, Facebook and Twitter were ideal ways to broadcast our need for respondents. This also
fit with our goal of finding a sample consisting mostly of young, educated smartphone users
concentrated in Austin, as we match this description, and so do many of our contacts. Following
is a snapshot of our survey respondents.
128 people took our survey. Of these, 45 were male (34.6%) and 83 were female (63.8%)
(fig. 1). The mode age of our respondents was 25 - 32, with a standard deviation of 1.018 (fig. 2).
All but one (99.2%) of our respondents had at least some college eductation (fig. 3). 104 of our
respondents (80.0%) own a smartphone (fig. 4), with AT&T being the most popular carrier by a
wide margin (41.5% of respondents) (fig. 5). From this pool we asked questions designed to test
several attitude measures.
Measures
The questions we asked dealt with several main areas of interest:
● Comfort using smartphone to perform various tasks
● Awareness/use of daily deals sites
● Influence of coupons on purchase behavior
● Price ranges in which particular payment types are used
● Feeling of security relating to mobile payment
● Familiarity with Google Wallet
● Willingness to try Google Wallet
Comfort Using Smartphones
This was tested by a four-part question in which respondents who indicated they own a
smartphone were asked to complete a Likert scale stating how comfortable they were using their
smartphone for email, calendar, web browsing and apps. The median response to all four
questions was “Extremely Comfortable,”(fig. 6-7).
Awareness / Use of Daily Deal Sites
89 of our respondents (70.1%) have used daily deals sites such as Groupon and
LivingSocial (fig. 8). Among users who have used them them, the median value for frequency of
use was “Less than once a month,” (fig. 9). We then asked these users what specific ways they
access daily deals sites. 89.9% have used computers; 64.0% have used smartphones; 3.4% have
used tablets; 1.1% have used other (figs. 10 -11). Of the 37 users who have never tried a daily
deals site, 33 are aware of them (89.2%) and 4 are not (10.8%) (fig. 12). 11 of these users are
considering trying a daily deals site within the next month or two (29.7%) and 26 are not
(70.3%) (fig. 13).
Influence of Coupons
We asked two questions regarding the influence of coupons and discounts on purchase
decisions:
● Having a coupon available influences what I choose to purchase (fig. 14)
● A fifty percent discount on an item or service would motivate me to buy the item (fig.
15).
The median answer in both cases was “agree”.
Price Ranges
In order to see if there was a difference in respondents’ choice for method of payment
depending on the price of the item(s), we asked whether they mostly made credit or debit card
purchases (vs. cash) in the following price ranges:
● Less than $5
● $5 - $10
● $11 - $20
● $21 - $50
● More than $50
In all the first three ranges, the median answer was “Frequently”. In the last two, the median
answer was “Always,” (fig. 16 - 20).
Familiarity
To preface questions about Google Wallet, we asked whether respondents are familiar
with Google Wallet. Of all our respondents, 29 were familiar with Google Wallet (23.0%). Those
who were not were presented with the following explanatory paragraph before proceeding:
Google Wallet is a mobile application that will make your phone your wallet. It will store
virtual versions of your existing plastic cards on your phone, along with your coupons,
and allow you to make purchases by swiping your phone over a reader instead of swiping
your credit or debit card.
Security
We asked three questions which were used to measure feelings of about security. Each
was an agree/disagree scale.
● I feel safe purchasing products with my mobile phone.
● I would feel comfortable swiping my smartphone at a retail store to make a payment.
● I trust Google with my private information.
The median answer to all three questions was “neither agree, nor disagree,” (figs. 21 - 23). For
correlative analysis, these questions would be aggregated into a single mean that was a measure
of feelings of security. The Cronbach’s Alpha score for these was 0.817.
Google Wallet Trial
Three agree/disagree scale measures were asked to all respondents to determine their
willingness to try Google Wallet: “I would consider using Google Wallet on a trial basis,” had a
median answer of “neither agree nor disagree.” “I would consider utilizing Google Wallet once it
becomes widely available,” had a median answer of “Agree.” Finally, “I would never consider
using Google Wallet had a median answer of “Disagree.” (figs. 24 - 26). The third question was
reversed, and all three were averaged as a measure of willingness to try Google Wallet. The
Cronbach’s Alpha score for these three was 0.801.
Research Questions and Correlations
All questions we tested involved either combinations of nominal and ordinal variables, or
all ordinal variables, so in each case, we tested for the Pearson correlation coefficient.
● Does smartphone ownership correlate with willingness to try Google Wallet? Yes. There
is a weak positive correlation (p = 0.363, r = 0.01) (fig. 27).
● Does accessing daily deals websites from a smartphone correlate with willingness to try
Google Wallet? No. (p = 0.052) (fig. 28).
● Does a feeling of security relating to mobile payment correlate with willingness to try
Google Wallet? Yes. There is a strong positive correlation (p = 0.690, r = 0.01) (fig. 29).
● Does influence of coupons on purchase decisions correlate with willingness to try Google
Wallet? No (p = 0.111) (fig. 30).
Seeing that there was a strong correlation with feelings of security and willingness to try Google
Wallet, we also tested for any other factors that correlated with feelings of security. We found
the following (fig. 31):
Weak positive
● Do you own a smartphone (p = 0.326, r = 0.01)
● Having a coupon influences what I choose to purchase (p = 0.224, r = 0.05)
● Are you familiar with Google Wallet (p = 0.239, r = 0.01)
Weak negative
● How often do you use coupon sites? (p = -0.285, r = 0.01)
Very weak positive
● A 50% discount would motivate me to buy a product or service (p = 0.190, r = 0.05)
Conclusion
Ultimately, our secondary research found a strong relationship between the adoption of
NFC and its successful bundling of targeted real-time mobile coupons that both worked for
consumers and merchants. Even though we found Austin to be a strong market to test for early
adopters of Google Wallet (due to its large college-aged demographic), our primary research
surprisingly didn’t find a strong correlation to support that this demographic would adopt NFC
due to coupon incentives. Thus, our secondary and primary research did not match each other.
Our reasoning for this is that our convenience sample for the primary research was too limited,
and likely less valid than the secondary research.
Appendix A: MyBest Segments Data
MOST COMMON DEMOGRAPHIC GROUPS IN 10 AUSTIN ZIP CODES:
78759 78746 78703 78705
13 Cyber Sophisticates 07 Generation Wifi 18 New Technorati 30 Techs and the City 17 Time Shifters
22 Analoggers 13 Cyber Sophisticates 07 Generation Wifi 06 High Tech Society 10 Smart Gamers
22 Analoggers 07 Generation Wifi 14 The Pragmatics 11 Wifi Warriors 05 You & I Tunes
34 Gearing Up 07 Generation Wifi 44 Leisurely Adopters 38 New Kids on the Grid 30 Techs and the City
78724 78745 78704 78753
28 Big City, Small Tech 08 Calling Circles 09 Dish Country 37 Techtown Lites 27 Video Vistas
41 Antenna Land 33 Digital Dreamers 07 Generation Wifi 30 Techs and the City 17 Time Shifters
34 Gearing Up 07 Generation Wifi 38 New Kids on the Grid 30 Techs and the City 17 Time Shifters
28 Big City, Small Tech 08 Calling Circles 34 Gearing Up 30 Techs and the City 05 You & I Tunes
78727 78756
35 Broadband Boulevards 07 Generation Wifi 14 The Pragmatics 11 Wifi Warriors 05 You & I Tunes
34 Gearing Up 44 Leisurely Adopters 38 New Kids on the Grid 30 Techs and the City 14 The Pragmatics
MOST COMMON SEGMENTS AND COUNTS 07 Generation Wifi 7 30 Techs and the City 6 13 Cyber Sophisticates 2 17 Time Shifters 3 34 Gearing Up 4 38 New Kids on the Grid 3
28 Big City, Small Tech 2 08 Calling Circles 2 05 You & I Tunes 3 14 The Pragmatics 3 11 Wifi Warriors 2 44 Leisurely Adopters 2
Appendix B: Google Wallet Depth Interview Discussion Guide
1 Demographics/background.
a Name, age, occupation.
b Do you use a smartphone? If so, what platform and what provider?
c If not, do you have a plan to purchase one?
2 Tell me about your relationship with technology.
a How much do you rely on technology in your day to day life?
b What kinds of things do you use it for?
c Where do you fall on the spectrum of expertise with the technology you use
everyday? Are you the person that always gets called to “tech support” your
friends and family, are you the one asking for help frequently, or is it somewhere
in between?
d When new technology comes out, are you quick to try it out or buy it or do you
wait a while? What influences how long you take to use a new innovation? Are
there specific types of technology, like home theater, mobile devices, etc., on
which you’re more ahead of the curve than others?
3 Questions for smartphone users only:
a How essential is your smartphone in your daily life?
b Do you download applications on your device? What are some of your favorites
or must-haves?
c In what ways you use your device that relate to buying things? Do you purchase
things directly on the phone? Do you look for information that helps you make
purchases? Are there other features or apps that assist you in some other way
with buying things?
4 Talk to me about coupons.
a Do you use any kind of coupons? What for?
b Where do you find the coupons you use?
c Have you ever used Groupon, LivingSocial, or another daily deals service?
Describe your experiences with it/them. How do you access these services?
d For non-users, is there a reason you don’t use them?
5 Let’s discuss paying for things, specifically in a retail store, restaurant, or other in-person
purchase.
a How often do you pay with a credit or debit card* versus with cash?
b Are there situations in which you always pay with one or the other? Why or why
not?
c Do you see advantages to using cash, either overall or in specific instances?
Disadvantages?
d How about plastic? Are there advantages or disadvantages to paying with a
card?
e How secure do you feel paying with a card in a retail store or restaurant?
f Have you ever had a negative security or privacy experience with paying with a
credit or debit card? What happened, and how has it affected your behavior?
6 Finally, a few questions about mobile payment.
a Are you familiar with the concept of mobile payment, also known as electronic
wallets? (if no, it is paying for purchases in a store or restaurant by swiping your
smartphone past a sensor, rather than swiping a card or using cash.)
b What do you think about the idea of mobile payment?
c Is it something you see yourself using if it became widely available at stores or
restaurants?
d Can you imagine any advantages or disadvantages to using mobile payment
versus a card?
e Advantages or disadvantages vs. using cash?
* Since credit or debit accounts could both theoretically be linked to Google Wallet, it does us no
good to go off on a tangent about credit vs. debit. Steer the conversation instead to the
dichotomy between paying with any card vs. paying with cash.
Appendix C: Quantitative Data FIGURES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30 31
Correlations
Mean_Security Are you male or female?
What is the highest
level of education you have achieved?
Mean_Security Pearson Correlation
1 .167 -.026
Sig. (2-tailed)
.063 .777
N 125 125 125
Are you male or female? Pearson Correlation
.167 1 .125
Sig. (2-tailed)
.063 .162
N 125 127 127
What is the highest level of education you have achieved?
Pearson Correlation
-.026 .125 1
Sig. (2-tailed)
.777 .162
N 125 127 127
Do you own a smartphone? Pearson Correlation
.326** -.056 -.082
Sig. (2-tailed)
.000 .534 .362
N 125 127 127
Have you ever used online coupon or daily deal services such as Groupon, Living Social or any other...
Pearson Correlation
.057 -.139 -.118
Sig. (2-tailed)
.527 .120 .187
N 125 127 127
Having a coupon available influences what I choose to purchase.
Pearson Correlation
.224* -.008 .168
Sig. (2-tailed)
.012 .925 .060
N 125 126 126
Are you familiar with Google Wallet? Pearson Correlation
.239** .084 -.096
Sig. (2-tailed)
.007 .352 .283
N 125 126 126
Correlations
Do you own a smartphone?
Have you ever used
online coupon or daily deal services such as
Groupon, Living
Having a coupon
available influences
what I choose to purchase.
Social or any
other...
Mean_Security Pearson Correlation
.326 .057 .224
Sig. (2-tailed)
.000 .527 .012
N 125 125 125
Are you male or female? Pearson Correlation
-.056 -.139 -.008
Sig. (2-tailed)
.534 .120 .925
N 127 127 126
What is the highest level of education you have achieved?
Pearson Correlation
-.082 -.118 .168
Sig. (2-tailed)
.362 .187 .060
N 127 127 126
Do you own a smartphone? Pearson Correlation
1** .195 .138
Sig. (2-tailed)
.028 .123
N 127 127 126
Have you ever used online coupon or daily deal services such as Groupon, Living Social or any other...
Pearson Correlation
.195 1 .011
Sig. (2-tailed)
.028 .899
N 127 127 126
Having a coupon available influences what I choose to purchase.
Pearson Correlation
.138* .011 1
Sig. (2-tailed)
.123 .899
N 126 126 126
Are you familiar with Google Wallet? Pearson Correlation
.121** .104 .064
Sig. (2-tailed)
.176 .246 .477
N 126 126 126
Correlations
Are you familiar with
Google Wallet?
Mean_Security Pearson Correlation .239
Sig. (2-tailed) .007
N 125
Are you male or female? Pearson Correlation .084
Sig. (2-tailed) .352
N 126
What is the highest level of education you have achieved? Pearson Correlation -.096
Sig. (2-tailed) .283
N 126
Do you own a smartphone? Pearson Correlation .121**
Sig. (2-tailed) .176
N 126
Have you ever used online coupon or daily deal services such as Groupon, Living Social or any other...
Pearson Correlation .104
Sig. (2-tailed) .246
N 126
Having a coupon available influences what I choose to purchase.
Pearson Correlation .064*
Sig. (2-tailed) .477
N 126
Are you familiar with Google Wallet? Pearson Correlation 1**
Sig. (2-tailed)
N 126
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
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