THE internet ENCYCLOPEDIA 1 volume 3 phần 10 pps

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WIRELESS INTERNET848
Intersymbol interference (ISI) Distortion of the re-
ceived signal due to temporal spreading and interfer-
ence of the transmitted pulses.
Medium access control (MAC) A protocol for ensuring
that the common wireline/wireless medium is shared
nicely among many potential users.
Node A device on the network, such as a workstation or
a router.
Roaming The ability to establish and maintain wireless
connection outside the home area of the user.
Router A device that performs routing.
Routing The process of moving packets from the source
to the destination in a network.
Routing table A list in the router that matches the des-
tination IP addresses to the physical ports that lead to
the optimal path to the destination.
Short messaging service (SMS) A service available on
many cellular networks that enables near real-time
transmission of short text message among the sub-
scribers.
SIP A signaling protocol used to set up and control in-
teractive applications over the Internet.
Tunneling The process of transporting encapsulated
data packets through foreign networks that may be us-
ing different network protocols.
Voice over IP (VoIP) A service that delivers voice com-
munication over the Internet using IP.
World Wide Web (WWW) A large group of servers on

the Internet that uses HTTP to transport files and doc-
uments, often formatted using HTML.
CROSS REFERENCES
See Mobile Commerce; TCP/IP Suite; Voice over Internet
Protocol (IP); Wireless Application Protocol (WAP).
REFERENCES
3GPP TS 23.040. (2002, April). Technical realization of the
short message service (SMS), version 4.6.0.
3GPP TS 23.140. (2002, April). Multimedia messaging
service (MMS); functional description; stage 2, version
4.5.0.
Aboba, B., & Simon, D. (1999, October). PPP EAP TLS
authentication protocol (RFC 2716).
Bakre, A., & Badrinath, B. (1995, May). I-TCP: Indirect
TCP for mobile hosts. In Proceedings of the 15th IEEE
International Conference on Distributed Computing Sys-
tems (pp. 136–143). New York: IEEE.,
Balakrishnan, H., Seshan, S., & Katz, R.H. (1995, Decem-
ber). Improving reliable transport and handoff perfor-
mance in cellular wireless networks. ACM Wireless Net-
works, 1(4), 469–481.
Bender, P., Black, P., Grob, M., Padovani, R., Sind-
hushayana, N., & Viterbi, A. (2000, July). CDMA/HDR:
A bandwidth efficient high speed wireless data service
for nomadic users. IEEE Communications Magazine,
38(7), 70–77.
Bingham, J. A. C. (1990, May). Multicarrier modulation
for data transmission: An idea whose time has come.
IEEE Communication Magazine, 28(5), 5–14.
Black, U. (1997). ISDN and SS7: Architecture for digi-

tal signaling networks. Englewood Cliffs, NJ: Prentice
Hall.
Blake, S., Black, D., Carlson, M., Davies, E., Wang, Z., &
Weiss, W. (1998, December). An architecture for differ-
entiated service (RFC 2475).
Borisov, N., Goldberg, I., & Wagner., D. (2001, July). In-
tercepting mobile communications: The insecurity of
802.11. In Proceedings of the 7th International Confer-
ence on Mobile Computing and Networking (pp. 180–
189). New York: ACM SIGMOBILE.
Braden, R., Clark, D., & Shenker, S. (1994, July). Integrated
services in the Internet architecture: An overview (RFC
1633).
Brady, P. T. (1971, January). Effects of transmission de-
lay on conversational behavior on echo-free telephone
circuits. Bell Technical Journal, 50(1), 115–134.
Brewer, E. A., Katz, R. H., Chawathe, Y., Gribble, S. D.,
Hodes, T., Nguyen, G., et al. (1998, October). A network
architecture for heterogeneous mobile computing.
IEEE Personal Communications Magazine, 5(5), 8–
24.
Brown, K., & Singh, S. (1997, October). M-TCP: TCP for
mobile cellular networks. ACM Computer Communica-
tion Review, 27(5), 19–43.
Caceres, R., & Iftode, L. (1995, June). Improving the
performance of reliable transport protocols in mobile
computing environments. IEEE Journal on Selected Ar-
eas in Communications, 13(5), 850–857.
Cai, J., & Goodman, D. J. (1997, October). General packet
radio service in GSM. IEEE Communications Maga-

zine, 35(10), 122–131.
Deering, S., & Hinden, R. (1998, December). Internet pro-
tocol, version 6 (IPv6) (RFC 2460).
De Vriendt, J., Lain´e, P., Lerouge, C., & Xu, X. (2002,
April). Mobile network evolution: A revolution on the
move. IEEE Communications Magazine, 40(4), 104–
111.
Diersk, T., & Allen, C. (1999, January). The TLS protocol
(RFC 2246).
Doyle, J. (1998). Routing TCP/IP (Vol. I). Sebastopol, CA:
Cisco Press.
Fielding, R., Gettys, J., Mogul, J., Frystyk, H., & Berners-
Lee, T. (1997, January). Hypertext transfer protocol—
HTTP/1.1 (RFC 2068).
GSM Association. Retrieved April 8, 2003, from http://
www.gsworld.com
Haartsen, J. (1998). Bluetooth—The universal radio inter-
face for ad hoc, wireless connectivity. Ericsson Review,
75(3), 110–117.
Hedrick, C. (1988, June). Routing information protocol
(RFC 1058).
Heijenk, G., Karagiannis, G., Rexhepi, V., & Westberg,
L. (2001, September). DiffServ resource management
in IP-based radio access networks. Paper presented at
the 4th International Symposium on Wireless Personal
Multimedia Communications, Aalborg, Denmark.
Hinden, R. (1993, September). Applicability statement for
the implementation of classless inter-domain routing
(CIDR) (RFC 1517).
Honkasalo, H., Pehkonen, K., Niemi, M. T., & Leino, A. T.

(2002, April). WCDMA and WLAN for 3G and beyond.
IEEE Wireless, 9(2), 14–18.
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REFERENCES 849
How to make money on mobile services (2002). Strand
Consult Publications. Retrieved May 13, 2003, from
/>Huitema, C. (2000). Routing in the Internet (2nd ed.). En-
glewood Cliffs, NJ: Prentice Hall.
Instant messaging more popular than ever at work (n.d.).
Retrieved May 13, 2003, from tant-
messangers.com/site/news/im
more popular than ever.
htm
Institute of Electrical and Electronics Engineers. (1999).
Wireless LAN medium access control (MAC) and physi-
cal layer (PHY) specifications, IEEE 802.11.
Institute of Electrical and Electronics Engineers. (2001).
IEEE 802.1X—Port based network access control.
ITU-T Recommendation Q.1701. (1999). Framework for
IMT-2000 networks.
Jakes, W. C. (1993). Microwave mobile communications.
New York: IEEE Press.
Lu, W. W. (Ed.). (2002, March). Fourth-generation mo-
bile initiatives and technologies. IEEE Communica-
tions Magazine, 40(3), 104–145.
Lu, W. W., & Berezdivin, R. (Eds.). (2002, April). Tech-
nologies on fourth generation mobile communications
[Special Issue]. IEEE Wireless Communications, 9(2).
Mahonen, P., & Polyzos, G. C. (2001, December). Eu-

ropean R&D on fourth-generation mobile and wire-
less IP networks. IEEE Personal Communications, 8(6),
6–64.
Mathis, M., Mahdavi, J., Floyd, S., & Romanow, A. (1996,
October). TCP selective acknowledgement options (RFC
2018).
Mills, D. L. (1984, April). Exterior gateway protocol formal
specification (RFC 904).
Mobile Application Part (MAP) Specification. (1997). ETS
300 599 (GSM 09.02), ETSI recommendation.
Mouly, M., & Pautet, M. B. (1992). The GSM system for
mobile communications, Palaiseau, France: Cell & Sys.
Moy, J. (1998a). OSPF anatomy of an Internet routing pro-
tocol. Reading, MA: Addison-Wesley.
Moy, J. (1998b, April). OSPF Version 2 (RFC 2328).
Nielsen/NetRatings First Quarter 2002 Global Internet
Trends report (2002). Retrieved May 9, 2002,
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2002).
Perkins, C. (1997). Mobile IP: Design principles and prac-
tice. Reading, MA: Addison Wesley.
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768).
Postel, J. (1981a, September). Internet protocol (RFC 791).
Postel, J. (1981b, September). Transmission control proto-
col (RFC 793).
Postel, J., & Reynolds, J. (1985, October). File transfer pro-
tocol (FTP) (RFC 765).

Raggett, D., Le Hors, A., & Jacobs, I. (1999). HTML 4.01
specification, W3C recommendation.
Rekhter, Y., & Li, T. (1993, September). An architecture for
IP address allocation with CIDR (RFC 1518).
Rekhter, Y., & Li, T. (1994, July). A border gateway protocol
4 (BGP-4) (RFC 1654).
Rosen, E., Viswanathan, A., & Callon, R. (2001, January).
Multiprotocol label switching architecture (RFC
3031).
Schulzrinne, H., Casner, S., Frederick, R., & Jacobson, V.
(1996, January). RTP: A transport protocol for real-time
applications (RFC 1889).
Simpson, W. (1994, July). The point-to-point protocol
(PPP) (RFC 1661).
Sklower, K., Lloyd, B., McGregor, G., Carr, D., & Coradetti,
T. (1996, August). The PPP multilink protocol (MP)
(RFC 1990).
Telecommunications Industries Association. (1991). Cel-
lular radio-telecommunications intersystem opera-
tions, TIA/EIA/IS-41B.
Telecommunications Industries Association. (1993).
Mobile-station base station compatibility standard for
dual-mode wideband spread spectrum cellular system,
IS-95.
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station compatibility, IS-136A.
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Physical layer standard for CDMA2000 spread spec-
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Viterbi, A. J. (1995). CDMA principles of spread spectrum
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Wireless World Research Forum. (2001, December). The
book of visions 2001—Visions of the wireless world, Ver-
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D. (1993, September). RSVP: A new resource reserva-
tion protocol. IEEE Network, 7(5), 8–18.
Zorn, G. (1999, January). PPP LCP internationalization
configuration option (RFC 2484).
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Wireless Marketing
Wireless Marketing
Pamela M. H. Kwok, Hong Kong Polytechnic University, China
Introduction 850
Wireless Technologies and Wireless Marketing 850
What Is Wireless Marketing? 850
Major Services Are Provided by
Third-Generation Technologies 851
Factors Influencing Adoption of Wireless
(or Mobile) Internet 851
Mobile Penetration in the United States
and Europe 851
Marketing Opportunities and Wireless

(or Mobile) Internet 851
Will Wireless (or Mobile) Substitute
Fixed-Line Internet? 853
M-commerce and Marketing 853
What Industries Benefit Most From
M-commerce? 853
M-commerce and Information Services 853
Database Marketing in M-commerce 853
What Must Marketers Do to Be a Successful
M-marketer? 853
Merits of Reconfiguring the Value Chain 854
Wireless Consumer Behavior 854
Key Impact of Mobile Number Portability
(MNP) or Wireless Number Portability
(WNP) on Customer Loyalty 854
Brand Community and Customers’ Loyalty 854
Consumer Decision-Making Process
for Wireless 855
Segmentation Variables for Wireless
Consumer Markets 855
Permission Marketing and Customer
Relationship 855
Participation Marketing and Customer
Relationship 855
Ethical and Privacy Issues in Wireless
Marketing 855
Consumer Protection 856
Marketing Mix for Wireless 856
Product 856
Price 856

Distribution or Sale Channels 857
Promotion 857
Real-Time Impacts of the Wireless Internet
on the Four Ps of Marketing 858
Wireless Marketing and Examples of
Business Models 858
Measurment of Marketing Performance 859
Performance-Measurement Management 859
Marketing Effectiveness and Efficiency
Measures 859
Looking at Future 859
Glossary 860
Cross References 860
References 860
Further Reading 861
INTRODUCTION
Wireless technology began its growth in the 1980s and
the rapid development of wireless products such as mo-
bile phone, pagers, and other handheld devices has trans-
formed the ways that people conduct business (Lamont,
2001). Surfing the Web or online services is another way
to get product information and order merchandise from
catalogs. Firms can quickly update information at min-
imum “costs” (Boone & Kurtz, 2001, p. 25).
During the mid-1990s, the Internet became the main
online direct-marketing channel that allows users to send
e-mail and access public news, product information, and
online shopping activities, among other things (Kotler &
Armstrong, 2001). Nowadays, the development of high-
speed wireless Internet, Web-enabled mobile phone hand-

sets, and other wireless technologies has further sustained
the application direct-marketing or one-to-one marketing
in the wireless business world.
WIRELESS TECHNOLOGIES AND
WIRELESS MARKETING
Advancement in wireless technology such as WAP, iMode,
GSM, GPRS, UMTS, wireless LAN, WCDMA (see Table 1
for details) has enabled marketers to develop more
effective and specific marketing (or one-to-one marketing)
programs tailored to the needs of individual customers.
To fully utilize these technologies, marketers must learn
how to work with their customers to develop long-term
mutual benefit relationships. Obviously, wireless mar-
keting offers new business opportunities and threats to
m-marketers. Marketers must understand the key dy-
namic developments in the wireless world to capitalize on
business opportunities at the right time and take proactive
strategies to eliminate potential risks.
What Is Wireless Marketing?
Wireless is defined as “radio communications” or a “radio
receiver or transmitter” (Oxford Advanced Learner’s
English–Chinese Dictionary, 4th Edition, 1994). Microsoft
Dictionary (1998, available on CD-ROM) defined wireless
as “pertaining to, or characteristics that take place with-
out the use of interconnecting wires or cables, such as
by radio, microwave, or infrared.” Marketing is regarded
as “a social and managerial process whereby individuals
and groups obtained what they need and want through
creating and exchanging products and value with others
(Kotler & Armstrong, 2001, p. 6). So wireless marketing

850
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MOBILE PENETRATION IN THE UNITED STATES AND EUROPE 851
Table 1 Summary of Key Wireless Technologies
WAP Wireless application protocol
i-Mode A wireless service launched in Japan in spring 1999 by NTT DoCoMo. The
service is accessed by a wireless packet network (PDC-P), and the contents
are described in a subset of the hypertext markup language.
GSM Global system for mobile communication
GPRS General packet radio service
UMTS Universal mobile telephone system (third-generation telecommunications
system based on wideband code division multiple access)
Wireless LAN Wireless local access network
WCDMA Wideband code division multiple access
Source: Nokia ().
refers to the exchange process (i.e., buying and selling)
that is carried out by wireless means (e.g., mobile phone,
m-commerce, wireless Internet, or any handheld wireless
devices).
Major Services Are Provided by
Third-Generation Technologies
The advancement in third-generation (3G) technology
brings additional benefits to consumers. Multimedia func-
tions of 3G consist of several media components which
allow wireless delivery of video clips, still images, and
music. It can be “interactive and distributional” (i.e.,
users may have subscribed to certain distributional ap-
plications, and receive only those subscribed services).
The maximum speeds of GPRS can reach up to

171.2 Kbps faster data transmission speed or download
time. So GPRS enables interactive visual display (i.e.,
MMS [multimedia message service]) and enhancing com-
munications quality.
Besides these benefits, 3G technologies deliver the fol-
lowing value-added wireless services as well:
1. Internet access (e.g., users can download ring-tones,
music, cartoon characters, real-time events)
2. Location-based application (e.g. users can send promo-
tional messages to specific groups of customers)
3. Simple games (e.g., users can play card games and
crosswords)
Factors Influencing Adoption of Wireless
(or Mobile) Internet
The decision-making process is complex, and there is no
perfect formula to explain customers’ purchase behavior.
An industry report published by the International Tele-
communication Union (ITU, 2002a) in September 2002
reported that the adoption of mobile Internet service
might be due to the following factors:
r
Application of mobile multimedia services such as video
clips or still images, video, and music through 3G tech-
nologies
r
Availability of Internet-enabled handsets with affordable
prices
r
“Unrestricted and nonproprietary” mobile Internet con-
tent

r
Simple billing systems or models for both voice and data
transmission services
Mobile communication and Internet access have been
the key drivers for consumer telecommunications services
in recent years. In 2002, the ITU (2002b) indicated the top
20 mobile and Internet markets worldwide (Table 2).
MOBILE PENETRATION IN THE UNITED
STATES AND EUROPE
e-Marketer reported the interactive survey conducted by
Telephia and Harris (Figure 1). The survey indicates that
Greenville had the highest mobile phone’s penetration
(i.e., 71%) among 35 major U.S. cities by December
2002. It is closely followed by St. Louis (69%). Forrester
Research study in March 2002 reported that Finland,
Norway, Sweden, and Italy have highest mobile penetra-
tion (Figure 2).
Marketing Opportunities and Wireless
(or Mobile) Internet
An analysis of Internet usage and projections covering
more than 50 countries, carried out by Computer Indus-
try Almanac in March 2002, reported that there would
be 1.12 billion Internet users worldwide by the end of
2005, and wireless Internet users will reach 48%. “The
wireless Internet will take off when always-on service and
useful content for the small displays of wireless devices
are available,” predicts Dr. Egil Juliussen, author of the
report (Computer Industry Almanac, 2002). Access to the
Internet through personal digital assistants (PDAs) with
multiple functions (e.g., built-in Internet access, digital

camera, music player, and scanner) is expected to increase
in developed countries.
Interestingly, these wireless devices are expected to
be considered the primary devices for Internet access in
countries with low Internet penetration rates. The report
suggests that 41.5% of the worldwide population will use
the wireless Internet by 2004. In some developing markets
such as the Philippines, the penetration rate of mobile
phone services was three times higher than fixed-line
penetration at the end of 2001.
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WIRELESS MARKETING852
Table 2 Top 20 Mobile and Internet Index Rankings,
Worldwide
MOBILE/INTERNET
ECONOMY SCORE (per 100) RANKING
Hong Kong, China 65.88 1
Denmark 65.61 2
Sweden 65.42 3
Switzerland 65.10 4
United States 65.04 5
Norway 64.67 6
Korea, Rep. of 63.42 7
United Kingdom 63.00 8
Netherlands 62.25 9
Iceland 62.03 10
Canada 61.97 11
Finland 61.22 12
Singapore 60.58 13

Luxembourg 58.58 14
Belgium 57.80 15
Austria 57.7 16
Germany 55.53 17
Australia 55.40 18
Portugal 55.13 19
Japan 54.94 20
Note: From the International Telecommunications Union
Mobile/Internet Index included in the Internet for a Mobile Generation
Report. The index measures how each economy is performing in terms
of information and communication technologies (ICTs) and captures
how poised the country is to take advantage of future ICT
advancements. The index covers 26 variables sorted into three groups:
infrastructure, usage, and market structure. These three components
combine for a score between a low of 0 and a high of 100. The table is
taken from the Statistical Annex to the Report, which provides
comprehensive data on network and service development for more
than 200 economies.
c
International Telecommunications Union
(ITU), 2002. Reprinted with permission.
Richter and Mar (2002, p. 128) reported a recent
IDC forecast that the estimated average growth of global
spending on information technology (IT) would be about
10 to 11% between 2002 and 2005. The forecast report
showed that the Asia Pacific region has the highest growth
Figure 1: U.S. cities with the highest mobile phone penetra-
tion rates, December 2002. Source: Telephia/Harris Interac-
tive, February 2003.
c

2003 eMarketer, Inc.
Figure 2: Mobile phone penetration in selected countries
in Europe, fourth quarter 2001. Source: Forrester Research,
March 2002.
c
2002 eMarketer, Inc.
potential for IT spending (i.e., 11%) compared with other
regions. Moreover, according to the forecast, extraordi-
nary growth of about 30% is expected in countries such
as India, China, Turkey, Egypt, and the Philippines.
For example, the penetration of value-added services
of short message service (SMS) is popular and success-
ful in the Philippines. Although that country has about
10 millions subscribers, 100 millions SMS messages are
sent every day. In fact, making e-jokes through SMS
has become part of Filipino culture. The subscribers
enjoy circulating e-jokes among themselves. In addi-
tion, the second-generation handsets are widely avail-
able and supported by a competitive pricing strategy
(about 2c
/
U.S. per SMS message) and a simple billing
system (Ritcher & Mar, 2002). SMS is simple to adopt
and adaptable for low-bandwidth services (i.e., always
online).
E-entertainment (i.e., e-music, e-video, interactive
TV, e-gambling, etc.) has been regarded as the main
driver behind wireless technologies. The demand for
e-entertainment service has led to new business oppor-
tunities for hardware manufacturers (e.g., mobile phone

and components suppliers), service operators, and soft-
ware and network suppliers.
Another emerging market is China, where mobile
phone service subscribers are expected to exceed fixed-
line subscribers by March 2003. Furthermore, China’s cur-
rent 5-year plan indicates that telecom service revenues
will increase at twice the rate of the gross domestic
product.
This implies the growing importance of wireless Inter-
net services, particularly in those countries with a low In-
ternet penetration rate. On the other hand, marketers can
make use of this opportunity to develop creative wireless
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M-COMMERCE AND MARKETING 853
marketing strategies to foster customer relationships and
cultivate new business opportunities—at the right time,
in the right place.
Will Wireless (or Mobile) Substitute
Fixed-Line Internet?
Mobile Internet will not be treated as a substitute for the
fixed-line Internet (ITU, 2002a, p. 3), although 3G is con-
sidered a global wireless medium. This is because mobile
Internet services can be supported by different wireless
technologies such as wireless local area networks (LANs),
short-range connectivity technologies, fixed broadband
networks, and so on. From the user’s perspective, the fol-
lowing issues should be taken into considerations:
r
Display quality is limited by the screen size of mobile

devices.
r
Functions provided by a keyboard are superior to those
of a mobile device keypad.
r
Fixed-line broadband has brought speedy connection
benefits at reasonable prices.
Nowadays, the majority of display screens provided
by wireless devices (e.g., PDAs and Web-enabled mobile
phones) are too small for viewing long documents such as
a contract or a book chapter. In addition, more and more
consumers in developed countries have adopted fixed-line
broadband Internet access services at home. For exam-
ple, going online through fixed-line broadband Internet
services at home has become part of the daily lives of
Hong Kong residents. Although mobile messages through
SMS and multimedia messaging service (MMS) provide
“instant” and “interactive” benefits, they may not be able
to substitute for land-line access at this time; nonetheless,
they offer other benefits.
M-COMMERCE AND MARKETING
What Industries Benefit Most From
M-commerce?
A new market space has been created by Web-enabled mo-
bile phone services. The interactive features, always-on
connections, and tailor-made contents benefit following
industries (Lamont, 2001):
r
M-banking (e.g., online stock trading—making en-
quiries and money transfer transactions): M-banking

offers convenient and “instant” benefits through both
voice and data communications. It allows customers to
use their mobile phone services for online stock trading,
checking balances, making money transfer, and so on
anytime and anywhere. Security issues have been a key
obstacle for influencing consumers’ adoption of mobile-
banking services.
r
M-entertainment services (e.g., real-time sports, games,
live-entertainment events, entertainment on Internet
and music): The unique benefit of “real-time” enables
subscribers to enjoy different types of live-entertain-
ment services anytime and anywhere.
M-commerce and Information Services
M-commerce is the word used to describe the consump-
tion of Internet services or the purchase of goods via a
wireless link (Korhonen, 2001, p. 433). M-commerce is
expected to grow continuously in the coming years. Fur-
thermore, “everything available via the fixed Internet will
also be available via the wireless Internet” (Korhonen,
2001, pp. 434–435). Wireless technologies allow speedy
and real-time data transmission benefits. As a result,
information services in m-commerce may apply to the
following:
1. Real-time broadcasting services (e.g., on television,
radio)
2. Location-based advertisement (e.g., a list of restaurants
offering special discounts in a particular location tar-
geting specific customers); it is suggested that the list
should cover only those restaurants located within half

a kilometer of the location of the handset
3. Purchase of consumer goods through mobile phone
handsets
4. Paying for parking through SMS notices (e.g., sending
reminders)
5. Conducting transactions with the parking meter thro-
ugh Bluetooth technology
Database Marketing in M-commerce
Database marketing can be applied to m-commerce in the
following areas (adapted from Kotler & Armstrong, 2001,
p. 626):
1. Identify business prospects: Information obtained
from enquiries (e.g., through counter services, the In-
ternet, e-mail, or mobile phone) and business reply
cards enable companies to identify potential customers
as well as business opportunities
2. Deciding which customers should receive a particular
offer: Companies can tailor an offer (e.g., sending an
e-coupon to a customer through mobile phone) accord-
ing to the customer’s preferences and needs.
3. Deepening customer loyalty: Companies can make use
of database information to identify customers’ interest
by discovering their preferences and purchasing pat-
terns. Furthermore, marketers can please customers
by sending small gifts on special days. For example,
a company could send an SMS birthday greeting, a
birthday ring-tone download, or a discount e-voucher
through mobile phone services before or on the cus-
tomer’s birthday.
4. Reactivating customer purchases: A database enables

marketers to stimulate sales from potential customers
such as replacement of a mobile phone handset, up-
grading of a service plan, or purchase of a package or
of complementary mobile phone products or services.
What Must Marketers Do to Be
a Successful M-marketer?
Lamont (2001) proposed several criteria (Table 3) for
being a successful m-marketer. In sum, m-commerce
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WIRELESS MARKETING854
Table 3 Criteria for Being a Successful M-marketer
M-MARKETING
STRATEGIES DETAILS
Product Introduce miniature information appliances with unique interactive content to
m-commerce customers
Price Offer both commodity and higher value for money as marketing managers divide
m-commerce customers into those who do virtually everything online and those
who prefer personal services from telecom, content, and financial service
providers.
Promotion Provide customers with value-added intangible product attributes that are included
as part of their smart handheld devices. For example, e-discount couples and
free ring tone downloads
Segmentation Divide like groups of people across national frontiers into those who have the
income, are the correct age, live in the right neighborhoods, and belong to
modernizing ethnic groups as candidates for the purchase of miniature
information appliances, third-generation telecom services, and interactive
Internet content.
Targeting Assemble smaller like groups of people who are bound together by profession,
skills, or personal tastes, habits, or values.

Positioning Match possible online Internet products with probable customers; the former offers
the latter enhanced customer relationships to try out m-commerce and the
mobile Internet.
From Conquering the Wireless World—the Age of M-Commerce, by Douglas Lamont, p. 279. Oxford, UK: Capstone, 2001.
c
 Captsone Publishing Limited (A Wiley Company). UK, 2001. Reprinted with permission.
operators must offer unique, personalized services to their
customers that offer value for the money. More important,
m-commerce requires marketers to adopt a proactive ap-
proach and be sensitive to their marketing environment to
pursue new business opportunities in the changing wire-
less world. M-marketers have to recognize that the prod-
uct life cycle of portable wireless devices (e.g., PDAs and
mobile phone handsets) is much shorter than it is for other
consumer durables in technology sector.
Merits of Reconfiguring the Value Chain
The term “wireless world” implies global business per-
spectives and death of physical distance, and it offers con-
venience benefits to the services subscribers. “Businesses
now have to compete on the basis that the world is a sin-
gle market. Under such circumstances, the two keywords
that are expected to lead corporations to a stable growth
are “efficiency” and “creativity” (Richter & Mar, 2002,
pp.142–143). Consequently, marketers need to “create
new value through the wireless Internet services (Lamont,
2001, p. 55). Lamont summarized three merits of recon-
figuring the value chain:
1. Firms can recognize and identify decision opportuni-
ties across the industrial world for wireless telecom
services.

2. Firms can create better alternatives for making good
decisions either through alliances and partnerships or
through direct investments (or both).
3. Firms can establish a set of competitive principles for
the firm as they seek to conquer the wireless world in
the age of m-commerce.
WIRELESS CONSUMER BEHAVIOR
Key Impact of Mobile Number Portability
(MNP) or Wireless Number Portability
(WNP) on Customer Loyalty
The policies of MNP or WNP allow subscribers to carry
their existing mobile telephone numbers to other network
service providers. It enables subscribers to switch service
provider more easily. Mobile phone subscribers are price
sensitive and tend to keep on seeking service packages of-
fering better value for money. This has had a significant
impact on customer loyalty and churn rate. Marketers
have to put more effort into cultivating customer loyalty
and building long-term customer relationship to prevent
high churn rate. Obviously, it costs companies more to
acquire new customers than to keep their existing ones.
Unfortunately, MNP may disrupt subscribers’ privacy
when telemarketing calls are received through mobile
phones. As a result, m-marketers need to consider per-
mission marketing seriously and develop a strategy for
pursuing consistent branding image to establish a brand
community for fostering customer loyalty and reinforcing
customer relationship.
Brand Community and Customers’ Loyalty
Brand community exists because “brands connect con-

sumers to brands, and consumer to consumer” (Muniz
& O’Guinn (2001, p. 418). These social groups have a
high propensity to be reasonably stable and devoted
to the brand. Furthermore, members of a brand com-
munity tend to be “committed,” “conscientious,” and
“passionate” toward the brand (Gruen & Ferguson, 1994).
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Consequently, it facilitates marketers to strengthen their
branding strategies because the Web enable firms to
communicate instantly with each customer.
Consumer Decision-Making
Process for Wireless
Adoption of wireless services can be divided into five
stages (Steuernagel, 1999):
1. Awareness stage—information obtained from televi-
sion advertisement, mass media, observation of users.
2. Interest stage—attention and interest are stimulated by
multiple exposures to users and ads.
3. Evaluation stage—perceived benefits (e.g., job or
lifestyle, emergency, security), making enquiries for
different models of handsets.
4. Trial stage—through friends or promotional demon-
strations.
5. Adoption stage—customer adopts wireless service and
continues tracking the cost—benefit relationship of the
adoption.
Segmentation Variables for Wireless
Consumer Markets

Three major segmentation variables have been identified
for wireless consumer markets (Lamont, 2001):
1. Demographic—generation (e.g., Generation Y), in-
come groups (e.g., high disposable income groups who
can afford to pay for the wireless services), occupation
(e.g., professional athletes).
2. Psychographic—lifestyle (e.g., high mobility, enjoying
high-tech life, people who prefer to do everything on-
line), personality (e.g., personal value).
3. Behavioral—benefits (e.g., seeking speed, convenient
services, etc.), loyalty (through brand community).
Permission Marketing and Customer
Relationship
Godin and Peppers (1999) indicated the merit of per-
mission marketing is that it allows both parties to en-
joy “mutually beneficial dialogue” without worrying about
the privacy and legal issues. “Permission Marketing has
been around forever (or at least as long as dating), but
it takes advantage of new technology better than other
forms of marketing. The Internet is the greatest direct mail
medium of all time, and the low cost of frequent interac-
tion makes it ideal for Permission Marketing” (Godin &
Peppers, p. 51). Wells, Burneet, and Moriarty (2003, p. 23)
documented that this concept because many advertising
messages are regarded as interruptive. As a result, per-
mission marketing should be taken seriously as a means
to foster good customer relationships and “mutually bene-
ficial dialogue.” This concept includes the following three
principles:
1. The consumers (or audience) are in charge of the

process.
2. The consumers (or audience) have agreed to receive
promotional messages.
3. The consumers willfully sign up (i.e., willingness to
participate).
Because consents are obtained from customers before
sending promotional messages, the perception of invasion
of personal privacy can be reduced. More important, cus-
tomers are given an opportunity to control the process of
marketing communication activities such as accepting or
rejecting an SMS promotional message. This is an effec-
tive and efficient way to attract customers’ attention and
acceptance to the advertising messages. It also enables
marketers to foster good customer relationships without
invasion of personal privacy or sending offensive SMSs.
Participation Marketing and Customer
Relationship
This concept goes beyond permission marketing, accord-
ing to Alan Rosenspan (2000), an expert in direct market-
ing. It covers the following five principles (as cited in Wells
et al., 2003, p. 24):
1. You really understand your customers (i.e., needs and
preferences), for example, by collecting feedback from
customers through marketing research, internal sales
team, enquires, and customers’ complaints.
2. You provide feedback at every opportunity (i.e., to show
your concern and customer care), for example, by mak-
ing a call to seek subscribers’ opinions of new value-
added services.
3. You involve customer and prospects as much as pos-

sible (i.e., stimulate customers’ participation to build
loyal customers, e.g., inviting customers to participate
into charity events or public relations activities.
4. You market on customers’ schedules, for example, by
making promotional offers, such as sending coupons
or e-gifts (e.g., free download services) on customers’
birthdays.
5. You make customers feel vested in your success.
Ethical and Privacy Issues in
Wireless Marketing
Similar to wired marketing (i.e. marketing activities con-
ducted through fixed telephone lines), wireless marketing
can annoy and interrupt customer’s privacy. Ethical and
privacy issues (e.g., irritation, fraud, invasion of personal
privacy) should be taken into consideration when develop-
ing the marketing strategies to foster long-term customer
relationships. Some examples of ethical and privacy
issues that can arise in the mobile environment are as
follows:
1. Irritation—sending out too many, too long SMS promo-
tional or advertising messages to potential customers
for pursuing location marketing strategies.
2. Fraud—making false claims such as “today is the last
day for the special offer” when it actually isn’t, over-
charging customers on their bills, giving “misleading”
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WIRELESS MARKETING856
or “unclear” product information to potential cus-
tomers.

3. Invasion of personal privacy—conducting telemarket-
ing activities too early in the morning or too late at
night, disclosing personal data to a third party for com-
mercial or fundraising purposes.
Consequently, the concept of permission marketing
should be encouraged and cultivated throughout the or-
ganization. In fact, companies need to set good practices
and an effective system to monitor these consumer issues.
Consumer Protection
Wireless technologies have gone through a significant
development period; however, the legal protection for
m-commerce is still in its infancy. From an e-commerce
perspective, OECD’s (Organization for Economic Co-
operation and Development) Consumer Protection Guide-
lines for e-Consumers (December, 1999) has indicated
clearly about the possible consumer legal protection for
e-commerce. The guidelines attempt to draw government,
business bodies and consumer groups’ attention for devel-
oping national and global awareness of consumer protec-
tion laws.
An ITU report (2002a), published in September 2002,
proposed the creation of special legal protection for
mobile consumers for the following reasons (OECD’s
guidelines can be regarded as a foundation for the legal
protection of m-commerce):
1. Mobile devices are classified as high-speed terminals.
2. Users of mobile devices are numerous and always have
limited usage experience.
3. Users usually have limited technical and legal knowl-
edge of m-commerce.

4. The display screen for display on mobile devices is
limited (it is difficult to display contract details).
5. Mobile devices have limited keypad functions (e.g.,
absence of “cancel” or “undo” keys) for making cor-
rections.
MARKETING MIX FOR WIRELESS
Product
Product Characteristics
Lamont (2001) suggested that marketers should make use
of brand name to differentiate themselves from their com-
petitors. He also has identified the following product or
service characteristics for wireless industry:
r
Effective mobile devices should have interactive and
instant features with unique content through wireless
Internet. This content should be created for a particular
mobile device (e.g., PDA or mobile phone).
r
SMS (the “killer application” for mobile phones), MMS
services, m-sports, m-commerce, m-entertainment, and
m-banking are expected to be the major value-added
services for mobile devices.
r
New products develop on mini handsets and handheld
mobile devices such as Web-based phones, WCDMA,
and GPRS (“always on connection”).
New Product Attributes in M-commerce
Dynamic wireless technology has changed the ways that
people conducting their business, it also influences con-
sumers’ daily lives and their consumption behavior. The

following summary of new product attributes for the wire-
less products and services is adapted from Lamont (2001,
p. 48–49). Wireless devices can or soon will be able to
r
find a parking space for your car,
r
search for the best bargains for your family (e.g., where
to eat and shop),
r
transfer medical records to your physician,
r
permit mothers to breast-feed their babies on time and
at work,
r
scan inventory and close a sale,
r
download music recommended by your friends,
r
chat with your friends,
r
read your e-mail,
r
pay bills while you commute to the city,
r
transfer funds from your checking to your savings
account,
r
arrange travel and other services,
r
conduct banking services (e.g., enquiries, transfer pay-

ment),
r
watch entertainment programs (e.g., sports),
r
take photos, and
r
listen to the radio.
Price
In the early days of widespread Internet use, an initial
pricing strategy for the fixed-lined Internet was charged
according to time spent online. Later, flat-rate schemes
or plans for different user groups were offered. Pricing
for mobile (or wireless) Internet use is expected to follow
the pattern of the fixed-line Internet (ITU, 2002a). Today
subscribers are charged according to their rate of con-
sumption (i.e., per minute) to browse the wireless Inter-
net. Unfortunately, the wireless industry is competitive,
and marketers cannot control their prices. Customers play
a more active role in influencing the pricing strategies of
wireless industry because of a high level of transparency
in the wireless business world.
Pricing 3G
There are different types of services provided by 3G mo-
bile devices, such as data services and real-time Internet
game applications, so the billing system is more complex
than it was 2G devices. It is expected that different tariffs
will be adopted because some wireless services such as
e-mail can accept delay, but other services such as Inter-
net game applications cannot. As a result, managers need
to consider what happens if a real-time Internet game ap-

plication suffers from lower service quality because of net
congestion, for example. A billing system must be able
to solve this kind of problem automatically (Korhonen,
2001). Above all, Lamont (2001) indicated that customers
needed to be educated about the merits of the wireless
Internet (e.g., anytime, anywhere, voice and data com-
munications) to ensure that potential customers of 3G are
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willing to pay for different service rates and a smart billing
systems is developed to solve some basic technical prob-
lems of Internet surfing (e.g. net congestion).
Prepaid Versus Postpaid
A prepaid concept is defined as customers who do not
have subscriptions with a mobile operator but buy air-
time for their SIM (Subscriber Identity Module) cards in
advance and then use the phone as long as there is credit
in their accounts. When their airtime runs out, they pur-
chase more (Korhornen, 2001). SIM card is a small chip
card kept inside a mobile phone. It serves as a network ac-
cess card and it is similar to a tiny computer. It provides
storing capacity for phone numbers, text messages, and
value-added services. The advantages of prepaid service
for the provider are as follows:
r
There is no need to carry out a credit check on new
customers.
r
Customers with imperfect credit information can adopt

mobile phone service under the prepaid scheme.
r
There is no need to bill prepaid customers.
r
Customers may never uses the services they pay for.
The advantages of prepaid service for users are as follows:
r
Users remain anonymous in prepaid (hardware and soft-
ware operators).
r
Users have more freedom to decide where to buy a hand-
set and SIM.
r
There is no contract arrangement, and customers have
more freedom to switch network operators.
r
There is no monthly subscription charge, so light users
can be attracted (e.g., keeping a mobile device for emer-
gency purpose only).
r
It is an efficient way for customers to control costs
(automatically limits their phone service usage).
Disadvantages of prepaid service for the provider are the
following:
r
From the operators’ perspective, there are security prob-
lems, because it is difficult to identify fraudulent users.
r
The anonymous nature of prepaid service does not allow
marketers to employ data mining or database marketing

techniques (cannot identify their needs and characteris-
tics).
The disadvantages of prepaid service for the customer are
the following:
r
Prepaid calls are more expensive than postpaid SIMs.
r
Prepaid service may have an expiration date (unused
airtime cannot be carried forwarded).
In Finland, the network usage is relatively inexpen-
sive, and thus the prepaid with no monthly fee would not
offer any particular benefit. Consequently, the demand
for the prepaid is limited in that country. In Italy and
Portugal, however, some operators have more than 80
prepaid scheme customers.
Distribution or Sale Channels
As discussed earlier, the wireless Internet is not going to
replace fixed-line Internet in the immediate future, so the
wireless distribution channel is regarded as a supplemen-
tary to existing sales channels (e.g., it could be applied
to internal direct sales force, dealers, retailers, and direct
marketing, etc.). Direct marketing is covered in more de-
tail in the Promotion section.
Internal Sales Force—Telemarketing
The internal sales team of service providers can pursue
telemarketing to individual potential customers. Suffi-
cient training and retraining programs must be provided
to all sales people to carry out effective telemarketing ac-
tivities, however. In addition, motivation programs (e.g.,
incentives, commission, or bonus schemes) for rewarding

outstanding salespeople and employees should be consid-
ered and integrated into the company’s policies.
Middleman (e.g., Dealer, Retailers)
Service providers use middleman to attain a wider cover-
age of the marketplace. The middlemen play an important
role in facilitating business transactions for both business
and consumer markets.
Good channel relationship management is a key is-
sue for pursuing success in channel management. To
eliminate channel conflicts, however, the m-channel (mo-
bile channel) should only be considered a supplementary
mode to the traditional channel of distribution. Generally
speaking, the channel of distribution can be divided into
intensive, exclusive, and selective distribution. Because
mobile phone service is perceived as a commodity, inten-
sive distribution (i.e., as many outlets as possible; Kotler
& Armstrong, 2001) should be considered.
Promotion
There are several promotional mix tools used in marketing
strategy. With respect to m-commerce, advertising, public
relations, and direct marketing are recommended.
SMS Advertising
SMS refers to the short message services provided by
mobile network providers. SMS allows m-marketers to
send electronic coupons and customized promotional
messages to individual customers. Advisor.com (2002,
Document No. 09546) reported a recent global study by
HPI Research Group (marketing specialists) on the be-
half of Nokia showing that a majority (88%) of customers
like this mobile advertising method (i.e., sending advertis-

ing messages or e-coupons via SMS). The study covered
11 countries including Brazil, Denmark, Germany, Italy,
Japan, Korea, Singapore, Spain, Sweden, the United
Kingdom, and the United States.
Public Relations
Service providers can use public relations to build brand
or corporate image. Public relations is defined as “build-
ing good relations with the company’s various publics
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Table 4 Real-Time Impact of Wireless Internet on the 4 Ps of Marketing
PRODUCT Real-time wireless Internet transactions force products to become commodities,
core assets to become peripheral, and valuable assets to become loss leaders.
Recognize that goods and services from wireless content providers tend to be
the same in the minds of the buyers. Marketers must create competitive
transparency to succeed.
PRICE Real-time m-commerce transactions base prices on demand at the time of sale, and
these prices change continuously. Deliver the lowest possible prices and
minimum transactions costs for goods and services from content providers.
Users demand this competitive pricing structure in return for maximum
purchases. Marketers must establish financial nakedness to succeed.
PLACE Real-time wireless Internet transactions give all sellers power in the channel of
distribution. Provide the maximum number of suppliers and minimum inventory
levels. Customers insist on success in fulfillment or the delivery of accurate
orders. Marketers must put in place distribution exposure.
PROMOTION Real-time m-commerce transactions push well-established brands out of the
market and into the dead brands society. Increase marketing openness as the
norm for customers who want promotion and advertising to provide information
rather than new entry barriers. Marketers must convert traditional push

advertising to pull promotions that are targeted to specific individuals through
permission marketing.
From: Conquering the Wireless World—the age of m-commerce, by Douglas Lamont, 2001, p. 28. Oxford, UK: Capstone.
c
 Captsone Publishing Limited (A Wiley Company), UK, 2001. Reprinted with permission.
by obtaining favorable publicity, building up a good cor-
porate image, and handling rumors, stories, and events”
(Kotler & Armstrong, 2001, p. 512).
Public relations consists of different types of promo-
tional activities such as press releases for launching new
products or services and holding charity events, seminars,
or conference activities. Customers tend to believe news
from public relations’ events or activities more than they
believe advertising messages. As a result, an effective pub-
lic relations program enables a company to build a good
corporate image in a cost-effective manner. Obviously, it
also allows marketers to strengthen customer relation-
ships through interactions with existing and potential cus-
tomers.
Direct Marketing
There are five major tools in direct marketing: (a) direct
mail, (b) catalogs, (c) telemarketing, (d) direct-response
advertising (Wells et al., 2003, p. 407), and now (e) the
Internet. The wireless technologies help marketers to col-
lect more detailed information about their customers’
needs and buying behavior. Thus, it enables marketing
to tailor-made direct marketing strategies based on cus-
tomers’ individual’s needs. Direct marketing tools include
the following:
1. Direct mail—SMS and MMS through mobile phones.

2. Catalogs—e-catalogs provided in Web pages, SMS, or
m-coupons of promotional offers sent through mobile
phones.
3. Telemarketing (message must be simple)—call cus-
tomers directly through mobile phone for information
promotional offers.
4. Direct-response advertising (to obtain action-oriented
objectives)—interactive advertising messages hosted in
m-commerce or the wireless Internet, which are sent
directly to customers through mobile phone.
In addition, service providers may apply either push or
pull promotion strategies for to pursue their promotional
objectives (e.g., to create a level of awareness). Kotler and
Armstrong (2001, p. 531) defined the two strategies as
follows:
Push strategy is a promotion strategy that calls for using
the sales forces and trade promotion to push the prod-
uct through channels.
Pull strategy is a promotion strategy that calls for spend-
ing a lot on advertising and consumer promotion to
build up consumer demand, which pulls the product
through the channels.
Real-Time Impacts of the Wireless Internet
on the Four Ps of Marketing
Lamont (2001) summarized the “real-time” impact of
wireless Internet on the Four Ps of marketing (product,
price, place, promotion) as detailed in Table 4.
Wireless Marketing and Examples
of Business Models
Companies adopt different business models based on

their strengths and their market situations. The follow-
ings are some examples of business models for wireless
marketing:
1. Focus on every opportunity for generating revenues
from wireless portal. InfoSpace is considered as a
very successful wireless portal. It generates revenues
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LOOKING AT FUTURE 859
in three ways, as indicated by its chairman, Naveen
Jain (Fletcher, 2000):
(a) When signing up with Infospace, merchants and
Internet service providers, are assured of reach
millions of wireless customers.
(b) Merchants are required to pay for a percentage
(about 2–25%) for each business transaction gen-
erated from the wireless portal.
(c) Wireless providers are obliged to pay a per-
subscriber, per month fee.
2. Keep brand identity in wireless portal. The service
provider is free to negotiate with content providers and
merchants who are shown on its portal as long as they
agree to carry the brand name in their contents. Cur-
rently, Rupp (2002) reported that BT (British Telecom)
has adopted this business model, and it seems to be
successful in terms of reducing churn rate (the rate at
which subscribers stop using the service) and enhanc-
ing ARPU (average revenue per user).
3. Charging for contents. “The business model based
on paid content is simple and transparent—content

providers know what they want and what revenues they
will get,” said Eden Zoller, the Senior Analyst of Ovum
(Fricke, 2001). This is because subscribers are expected
to pay for the content, which has perceived value,
personalized and suitable for the reception by their
mobile devices such as PDAs or Web-enabled mobile
phones.
MEASURMENT OF MARKETING
PERFORMANCE
Performance-Measurement Management
Korhonen (2001) indicated the following factors for
performance-measurement:
1. Traffic levels within the network (traffic load on the
radio interface and the utility of resources within the
network nodes).
2. Verification of the network configuration (verifications
are based on fact findings).
3. Resource-access measurements (at regular time inter-
vals across the network).
4. Quality of service (QoS; attributes as experienced by
subscribers).
5. Resource availability (availability of the chosen re-
sources at different phases of the life cycle of the
system).
The performance-measurement reports are expected to
produce at a particular frequency known as the granular-
ity period. Measurement samples are collected during the
granularity period. The results can be kept in the local net-
work entity as files or sent to the concerned parties all at
once. The network manager can access these files when-

ever he or she wants to. Finally, data must be presented
to the configuration-management application.
In addition, it is necessary to have a strong system of
fraud management for detecting and preventing fraud in
mobile telecommunication networks (Korhonen, 2001)
to ensure that quality wireless services are provided to
customers.
Marketing Effectiveness and
Efficiency Measures
Steuernagel (1999, p. 106) defined the effectiveness and
efficiency as follows:
1. “Effectiveness is the degree to which the marketing
process—advertising, sales channels” converts poten-
tial targets into customers. There are many way to mea-
sure it, such as
(a) revenue versus sales expense,
(b) customer gain versus sales expense,
(c) revenue versus marketing expense,
(d) customer gain versus marketing expense,
(e) store traffic or lead generation versus advertising
expense,
(f) customer satisfaction (e.g., overall satisfaction,
monthly statement clarity, missed or error calls
over the past 30 days, etc.), and
(g) customer churn.
2. “Efficiency is a measure of long-term revenue versus
the total cost to get and keep the customer—the ra-
tio of unit output to input.” It may cover the following
measures:
(a) increase in revenue,

(b) gross sales per salesperson (vs. peers in the same
channel),
(c) leads and sales generated by promotional cam-
paigns, and
(d) expected revenue per customer divided by the sales
and marketing.
LOOKING AT FUTURE
The following represent future challenges for wireless
marketers:
r
Customer churn rate,
r
Wireless consumer applications,
r
Data mining,
r
Mergers and acquisition,
r
Standards adoption,
r
Security concerns,
r
Customer relationship marketing,
r
Roaming hurdles,
r
Billing challenges for GPRS, and
r
The rise of the application service provider (ASP), which
offers cost savings.

To be successful in the dynamic wireless business, it
is necessary for marketers to “work closely with other
company departments to form an effective value chain
that serves the customer” (Kotler & Armstrong, 2001,
p. 677). A value chain involves commitments from various
departments of an organization—for example, product
design, production, marketing, logistics, and delivery—to
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perform value-creating activities. The success of a com-
pany’s value chain depends on the performance of various
departments and how well these activities are coordinated
(Kotler & Armstrong, p. 677).
In summary, customers are always the center of all
marketing activities in m-commerce. A firm’s capabilities
and its adaptation for value creation based on customer
information are vital to sustaining long-term success.
“Customers become data. Then data become customers.
Finally, both customers and data migrate to real time”
(Lamont, 2001, p. 58). Marketers must carefully examine
the best ways to work with their customers; they must
know how to use the collected data better than their com-
petitors to create more value for customers.
GLOSSARY
Always-on service A 24-hour service supported by
GRPS that allows wireless subscribers access to value-
added services anytime and anywhere.
Anonymous Nondisclosure of personally identifiable
information

Brand community A group whose members have a par-
ticular brand preference and are grouped together to
form a brand community. Members of this social group
are committed to the brand and are willing to share and
exchange information.
Churn rate A measure for the percentage of subscribers
who switch from one mobile phone service provider to
an alternative provider.
Consumer market The business environment in which
individual end users purchase goods or services for
their personal or household use.
Customer needs Human needs (e.g., basic needs for
food and shelter) that are not conceived by marketers.
Customer loyalty A factor used to describe a con-
sumer’s faithfulness in a particular brand or store. A
loyal customer is one who has a preference for a par-
ticular brand or store without considering the alterna-
tives. Marketers differ on how this loyalty can be mea-
sured.
Data mining A method for discovering patterns and
meaningful relationships of customers’ buying behav-
ior from a data bank
Database marketing A process that involves establish-
ing and updating customer information into a data
bank. Marketers use the information provided to de-
cide how and when to contact the consumer for mar-
keting activities, such as a sales promotion.
Direct marketing A method of distribution in which
sellers contact potential buyers through direct commu-
nication channels (e.g., e-mail) seeking customers’ re-

sponses (e.g., seeking more information, making a trial
purchase).
E-tailing (electronic retailing, e-retailing) A form of di-
rect marketing in which all business transactions are
arranged through electronic means such as the Inter-
net and cellular phones.
Lifestyle The ways that a consumer spends his or her
time and money.
One-to-one (1:1) marketing Designing and im-
plementing the marketing mix (product, price,
distribution, and promotion) for the individual
buyer. It relies on extensive information about each
purchaser’s buying needs and behaviors.
Push promotion A traditional promotional method in
business-to-business market. Manufacturers offer dis-
counts or incentives to a wholesaler or retailer to push
their products to end users (or final consumers).
Pull promotion Manufacturers focus all their promo-
tional efforts (e.g., promotional discounts or compli-
mentary gifts) to attract end users or final consumers
who buy their products. Under this structure, final cus-
tomers would request the products from retailers. Re-
tailers will order the products from the manufacturers
to meet expressed consumer demand.
Segmentation An important concept in marketing.
Market segmentation divides the market into small,
mutually exclusive groups. Each segment consists of
customers with similar needs, characteristics, and buy-
ing behavior. Different marketing strategies (i.e., prod-
uct, price, place [or distribution], and promotion) are

required for targeting different segments because their
needs are different. Firms can select one or more seg-
ments to target based on their strength and resources.
Supplementary channel An additional channel to ex-
isting distribution or sales outlets for selling products
to customers or end user.
Telemarketing A kind of direct marketing method in
which sellers use telephone calls to sell a product or
service to an individual customer.
Value chain A management tool to identify methods for
generating more customer value.
CROSS REFERENCES
See Consumer Behavior; Marketing Communication
Strategies; Personalization and Customization Technolo-
gies; Value Chain Analysis.
REFERENCES
Advisor.com (2002, April 2). Mobile marketing: Con-
sumers say, “Bring it on!” (Marketing Advisor zone,
Doc. No. 09546). Retrieved November 20, 2002, from

Boone, L. E., & Kurtz D. L. (2001). Contemporary market-
ing (10th ed.). Forth Worth, TX: Harcourt College.
Computer Industry Almanac (2002, March 21).
Internet users will top 1 billion in 2005, wireless
Internet users will reach 48% in 2005 (press release).
Retrieved November 22, 2002, from http://www.c-i-a.
com/pr032102.htm
e-Marketer (2003). Mobile penetration in the US and
Europe. Retrieved February 13, 2003, from http://www.
emarketer.com/news/article.php

Fletcher, J. (2000, August 14). InfoSpace looks to wireless
for exponential growth. eCommerce Business, p. 14.
Fricke, P. (2001, August 22). Study: charging for con-
tent lead to wireless success. CommWeb.com. Retrieved
October 18, 2002, from />article/COM20010822S0003
Godin, S., & Peppers, D. (1999). Permission market-
ing: Turning strangers into friends, and friends into
customers. New York: Simon & Schuster.
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Gruen, T., & Ferguson, J. M. (1994). Using member-
ship as a marketing tool: Issues and applications. In
N. Jagdish & A. Parvatoyar, Relationship marketing:
Theory, method, and application (pp. 60–64). Atlanta,
GA: Center for Relationship Marketing, Roberto C.
Goizueta Business School, Emory University.
International Telecommunication Union (2002a, Septem-
ber). ITU Internet report: Internet for a mobile
generation—executive summary. Retrieved October
28, 2002, from />sales/mobileinternet/execsumFinal.pdf
International Telecommunications Union (2002b). Hong
Kong (China) and Denmark top ITU Mobile/Internet
Index (press release). Retrieved February 8, 2003, from
/>releases/2002/20.
html
Korhonen, J. (2001). Introduction to 3G mobile communi-
cations. Boston: Artech House.
Kotler, P., & Armstrong, G. (2001). Principles of marketing
(9th ed.). Upper Saddle River, NJ: Prentice Hall.

Lamont, D. (2001). Conquering the wireless world—the age
of m-commerce. Oxford, UK: Capstone.
Muniz, A. M., Jr., & O’Guinn, T. C. (2001). Brand commu-
nity. Journal of Consumer Research, 27,412–432.
OECD (1999). The guidelines for consumer protection in
the context of electronic commerce. Retrieved April 18,
2003, from />M00000363.pdf
Oxford Advanced Learner’s English-Chinese Dictionary (4th
ed.) (1994). Oxford, UK: Oxford University Press.
Richter, F J., & Mar, P. C. M. (2002). Recreating Asia—
vision for a new century. In World Economic Forum—
committed to improving the states of the world. Singa-
pore: Wiley.
Rosenspan, A. (2000, June). Participation marketing.
Direct Marketing, pp. 54–55.
Rupp, W. T. (2002, July–August). Mobile commerce: New
revenue machine or black hole? Business Horizon,
pp. 26–29.
Steuernagel, R. A. (1999). Wireless marketing. New York:
Wiley.
Wells, W., Burnett, J., & Moriarty, S. (2003). Advertising—
principles and practice (6th ed.). Upper Saddle River,
NJ: Prentice Hall.
FURTHER READING
Advisor.com (2002). Wireless Internet’s future depends on
service pricing (Wireless Tech Advisor, Advisor zone,
Doc. No. 11487). Retrieved November 20, 2002, from

International Telecommunications Union (2002c, De-
cember 9). Telecom Asia 2002 Show. Special adver-

tising section. Business Week (Asian ed.). pp. 36–
52
Lamont, D. (1997). Salmon day: The end of the beginning
for global business. Oxford, UK: Capstone.
Shama A. (2001, September–October). E-coms and their
marketing strategies. Business Horizons, pp. 14–20.
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X
X
XBRL (Extensible Business Reporting Language):
Business Reporting with XML
XBRL (Extensible Business Reporting Language):
Business Reporting with XML
J. Efrim Boritz, University of Waterloo, Canada
Won Gyun No, University of Waterloo, Canada
Introduction 863
XML: A New Paradigm for Internet Documents 863
SGML (Standard Generalized Markup
Language) 864
HTML (HyperText Markup Language) 864
XML Document 865
Benefits of XML 867
XBRL (Extensible Business Reporting Language) 868
How XBRL Works 869
XBRL Taxonomy and XBRL Instance
Document 870

Extensibility 873
Style Sheets 873
Summary of Advantages and Limitations
of XBRL 875
Advantages of XBRL 875
Limitations of XBRL 876
Conclusion 876
Appendix A: Creating an XBRL Document 876
Appendix B: For More Information Related
to XML and XBRL 883
Glossary 883
Cross References 884
References 884
Further Reading 884
INTRODUCTION
Since Pacioli defined the double-entry bookkeeping sys-
tem in his 1494 book, Summa de Arithmetica, Geome-
tria, Proportioni et Proportionalita, there have been many
new developments in accounting, and these continue to-
day in response to the demands of business and other
organizations, and users. Accounting has contributed
to economic prosperity and will continue do so in the
future. Indeed, with the explosion of interest in communi-
cating business information over the Internet, the recent
initiative to create and implement an XBRL (Extensible
Business Reporting Language) promises to dramatically
enhance the speed and ease of information exchange for
enhanced analysis and decision making. In this chapter,
we trace the development of XBRL, from its conceptual
origins in SGML and XML, providing examples of its ap-

plication to financial information, including illustrations
of the steps involved in creating an XBRL document. An
appendix provides a detailed illustration of the steps in-
volved in creating an XBRL document. We conclude with
a summary of the benefits and limitations of XBRL.
XML: A NEW PARADIGM FOR
INTERNET DOCUMENTS
Today, most B2B (business-to-business) and B2C
(business-to-commerce), and many P2P (person-to-
person), interactions involve the exchange of informa-
tion over the Internet. In fact, the empowerment of
information providers to easily and cheaply distribute
electronic documents via the Internet has fueled the as-
tonishing growth of the World Wide Web (henceforth, the
Web). Today, most documents on the Web are stored and
transmitted in HTML (HyperText Markup Language), the
Web’s lingua franca. HTML is a simple language that was
developed to provide hypertext and multimedia functions
for the Internet. However, as documents on the Web have
grown larger and more complex, information providers
have begun to encounter limitations in the functionality
of HTML attributable to its lack of extensibility, struc-
ture, and data checking. These limitations prevent HTML
from being a universal information exchange method.
HTML is based on SGML (Standard Generalized Markup
Language), the international standard for defining de-
scriptions of the structure and formatting of different
types of electronic documents. SGML is complex, dif-
ficult, and costly to use. To overcome these limitations
and to extend Web technology, XML (Extensible Markup

Language) was developed, started by John Bosak in
1996, and established by the W3C (World Wide Web
Consortium) as a standard in 1998. W3C was created
in October 1994 to lead the World Wide Web to its full
potential by developing common protocols that promote
its evolution and ensure its interoperability. W3C has
around 500 member organizations from all over the
world and has earned international recognition for its
contributions to the growth of the Web.
In contrast to HTML, which was designed to display
data and to focus on its appearance, XML was designed
to provide structure and to validate the content of docu-
ments. XML not only removes the limitations of HTML, it
863
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XBRL (EXTENSIBLE BUSINESS REPORTING LANGUAGE): BUSINESS REPORTING WITH XML864
also facilitates more precise declarations of content, more
effective and efficient information exchange, and more
meaningful search results. XML includes self-explanatory
data within a document; thus, it can be used for univer-
sal information exchange over the Internet. This section
outlines the similarities and differences between SGML,
HTML, and XML, concluding with a summary of the ben-
efits of XML and setting the stage for the subsequent dis-
cussion of XBRL.
SGML (Standard Generalized
Markup Language)
GML (General Markup Language) was developed at IBM
in 1969 by Charles F. Goldfarb, Ed Mosher, and Ray Lorie.

Markup refers to the sequence of characters or other sym-
bols that are inserted at certain places in a text or word
processing file to indicate how the file should look when it
is printed or displayed, or to describe the document’s logi-
cal structure. The markup indicators are often called tags.
GML was not merely an alternative to procedural markup
but the logical representation that motivated all process-
ing. Publishing companies implemented it because they
needed a means of tagging the contents of a document
so that text could be presented in a number of different
ways. This approach combined two traditions, one then
about 25 years old and the other around 500 years old.
(A third tradition, the computer programmer’s strategy of
tying markup to specific interpreters, which went back
to the first versions of ROFF at MIT in about 1962,
was intentionally set aside as violating the independence
of structural information from presentation processing.)
The 500-year-old printing and publishing industry tradi-
tion started when the first editor needed to give unam-
biguous instructions to more than one typesetter and de-
veloped his own markup language to do it. According to
Smith (1996, pp. 75–92), this goes back at least to Anton
Koberger’s printing of the Wurzburg Pslater in 1486.
Most of these instructions had the common charac-
teristic of using instructional tags in a format, such as
<start bold>some text<end bold>, to communicate dis-
play formatting instructions to typesetters and other ar-
tisans as clearly and unambiguously as possible. The
25-year-old computing tradition was reflected in early text
processing applications, such as DIALOG and COLEX, de-

veloped in the 1960s. These applications generally tagged
data by type at the time of data entry to make it easy to ap-
ply Boolean logic in text searches on files prepared using
tape-to-tape sorts. Thus, a file entry would contain both
data and labeling information about the meaning and role
of that data, such as in the following example:
PUBDATE: JULY 26, 1959
LIB: 105DWC/PEMBROOK
PUB: RS, NY
AUTH: JOHN SCARNOUGH, BRANSTON GRECHI
TITLE: LOAD CONDITIONS FOR POLYHEDRAL RISERS
ABSTRACT: REVIEW OF STRUCTURAL INTEGRITY
FAILURE CONDITIONS FOR MECHANICAL
RISERS IN INTERVAL SUPPORT STRUCTURES.
In the mid-1980s, SGML was established by the
International Organization for Standardization (ISO
8879:1986) as an international standard for defining and
using document structure and content. ISO, founded in
1947, is a worldwide federation of national standards
bodies from some 100 countries, one from each country.
Among the standards it fosters is OSI (Open Systems In-
terconnection), a universal reference model for communi-
cation protocols. Many countries have national standards
organizations, such as the American National Standards
Institute (ANSI), that participate in and contribute to ISO
standards. SGML incorporates both data labeling and
data presentation information but leaves procedural is-
sues entirely to the rendering application.
Because SGML is a generalized theoretical specifi-
cation, actual use requires selection of a specific DTD

(Document Type Definition). A DTD defines the tags the
document type will use, what they mean, and whether,
and if so to what extent, individual tags can be nested.
For example, HTML is a SGML DTD. SGML also requires
use of an application that will correctly interpret the DTD
in combination with the document text to output either
data for use by another application or instructions for a
rendering engine. SGML also requires a data processing
application or a rendering application that will output the
document on a specific display device, such as a screen or
printer. Web browsers like Netscape or Internet Explorer
contain a rendering tool, such as a compiler or document
handler, that combines text with HTML markup to create
displayed pages using a set of internal rules known as style
sheets. For example <TITLE>text</TITLE> is interpreted
as labeling information giving the document title as “text”;
<P> as an instruction to begin a left-justified paragraph
within the current text block, and <H1>text</H1> as an
instruction to display “text” on a line (or lines) by itself
using the font type and color set in the enclosing block
but at about 3.1 times the user’s global default font size.
SGML was intended to be a language that would ac-
count for every possible document format and presen-
tation. Thus, it enables users to create tags, to define
document formats, and to exchange data among vari-
ous applications. Because SGML is system and platform
independent and can save and validate a document’s
structure, it can be used in various ways, such as for
searching and exchanging data. However, SGML is com-
plex and contains many optional features that are not

needed by many Internet applications. Furthermore, it
is costly to develop software that supports SGML. As a
result, there are few SGML applications for the Inter-
net. Two examples are Xmetal and Wordperfect. Figure 1
shows an SGML document that describes customer e-mail
information.
HTML (HyperText Markup Language)
As mentioned earlier, HTML, the basic language for cre-
ating a Web page, is based on SGML. HTML consists of
a set of markup symbols inserted in a file intended for
display on a Web browser. The markup tags tell the Web
browser how to display a Web page’s words and images
for the user. Each individual markup tag is referred to as
an element. HTML uses predefined tags, and the mean-
ing of these tags is well understood; for example, <p>
means a paragraph, </p> means end of a paragraph, and
<table> means a table. Thus, the text “Current Assets, Cash
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Figure 1: SGML example.
and Cash equivalents, $12,345” can be marked up using
HTML as
<table border="1" cellpadding="0"
cellspacing="0" width="70%" align="Center">
<tr>
<td width="70%"><p align="left">Current
Assets</p></td>
<td width="30%"></td>
</tr>

<tr>
<td width="70%"><p align="left">Cash
and Cash Equivalents</p></td>
<td width="30%"><p align="center">
$12,345</p></td>
</tr>
</table>
This markup produces the table below when rendered
on a display using the postscript language. However, the
result can be unpredictably different when rendered using
another combination of Web browser, graphics processor,
desktop settings, and screen.
Current Assets
Cash and cash equivalents $12,345
HTML also adds hyperlink functions to simple doc-
uments using tags. A hyperlink function enables a user
to jump from document location to document location
within the same document or documents at physically dis-
tant locations connected by the Internet. Hypertext is the
organization of information units into connected associa-
tions that a user can choose to make. An instance of such
an association is called a link or hypertext link. Hyper-
text was the main concept that led to the invention of the
Web, which consists of information content connected by
hypertext links.
HTML is easy to learn and use. Its simplicity and con-
venience have aided the explosion of interest in the Inter-
net. Figure 2 contains an example of an HTML document
and Figure 3 shows the HTML example from Figure 2 as it
would appear in a Web browser such as Internet Explorer.

As mentioned previously, HTML has some fundamen-
tal limitations. It merely facilitates access to text and
multimedia. It does not allow intelligent search, data ex-
change, and non-HTML forms such as spreadsheets and
databases. Although HTML tags generally indicate only
how the content should appear, XML tags indicate what
the content is. For example, a financial statement pre-
pared using HTML displays the financial statement itself
but cannot communicate information about the classifica-
tion of numbers within categories or subtotals like current
assets or cash and cash equivalents. In contrast, XML can
give information about the meaning of the numbers in the
financial statement as well as displaying them. Content,
therefore, becomes more readily accessible through XML.
As e-commerce grows, it becomes important to exchange
data, use more meaningful search, manipulate data, and
generate multiple views of the data. As a result, HTML’s
limitations and XML’s virtues are becoming increasingly
noticeable.
XML Document
XML stands for Extensible Markup Language. It is
extensible because the language can be extended by
anyone who wants to create additional tags for new
and unforeseen purposes. It is a markup language be-
cause XML is a method of tagging information using
accepted rules and formats to give definition to text
and symbols. XML was invented by adopting the key
functions of SGML while excluding the less essential
ones. In fact, SGML can be used without modification
and can be converted to XML. (Further information

may be found at />971215.html, Clark, n.d.) Furthermore, existing HTML
can continue to be used, but more complicated and more
highly structured documents can be created using XML.
The basic structure of XML is similar to HTML in
many respects. XML documents consist of XML ele-
ments. Basically, these elements involve a start tag such
as <TITLE>, an end tag such as </TITLE>, and the
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Figure 2: HTML example.
content between the two tags. Figure 4 shows an XML
document that contains customer information. The code
for this example and all the other examples and tax-
onomies described in this paper is available in full online
at />Figure 3: HTML example in Internet Explorer.
Unlike HTML, XML tags indicate what each item
of data means; for example, tags such as <DATE>,
<ADDRESS>, and <PROFILE> convey meaning. In the
example in Figure 4, the data defined by the <PROFILE>
tag indicates that the data represents customer profile.
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Figure 4: XML example.
Therefore, recipients of this document can decode the
XML data and use it for their own purposes. For instance,
a customer manager might use it to find customers who
live in the Waterloo area (<CITY>Waterloo</CITY>).
Because HTML tags are predefined and understood

by Web browsers, the Web browsers can display HTML-
tagged documents. In contrast, because XML enables
users to create any tags they need, the meaning of these
tags will not necessarily be understood by a Web browser
unless they are the preexisting HTML commands. There
is no way for a generic Web browser to anticipate all
possible tags and contain all the necessary rules for dis-
playing them. Thus, to display XML documents in a Web
browser, it is necessary to have a mechanism to describe
how the document should be displayed. This is done by
means of a style sheet. A style sheet is prepared using style
sheet language. Two of the most popular style sheet
languages are CSS (Cascading Style Sheets) and XSLT
(Extensible Stylesheet Language Transformations). CSS
provides procedural control by putting the additional
presentation control information needed to force a
browser to override its internal style sheet inside the
HTML file. Thus, the following command overrides the
browser’s internal style sheet to turn text between <H1>
and </H1> blue while forcing it to a 12-point font size
regardless of user settings.
<STYLE TYPE=text/css>
H1 {color:blue font-size:12.000000pt}
</STYLE>
When a browser reads a style sheet, it will format the
document accordingly. There are three ways of linking a
style sheet to HTML: external style sheet, internal style
sheet, and inline styles. An external style sheet can be cre-
ated with any text editor, and a CSS style sheet should
be saved with a “css” extension. Figure 5 shows an ex-

ample of an external style sheet. An internal style sheet
should be used when a document has a unique style.
The internal style sheet is defined in the head section
by using the <style> tag. The example shows an inter-
nal style sheet. Finally, inline styles can be used with
the style attribute in the relevant tag. The style attribute
can contain any CSS property. (Further information may
be found at />html.html, Web Design Group, n.d.)
Figure 5 contains the CSS code used to represent the
XML example in Figure 4, so that it can be displayed by
a Web browser exactly like Figure 3. There are several
tools available to create the CSS code (e.g., Microsoft
FrontPage).
After a XML document and a style sheet for that doc-
ument are prepared, the XML document can be shown
in the Web browser by including an instruction in the
XML document specifying the style sheet to be used,
as in Figure 4: <?xml-stylesheet type = “text/css” href =
“customer.css”?>. Of course, an HTML document is but
one way of presenting an XML document. Because XML
separates content from presentation format, through the
use of style sheets and other programmatic methods, the
content in XML can be presented in several ways, such as
an HTML document, text document, and spreadsheet.
Benefits of XML
XML enhances the power and flexibility of Web-based
applications and other business software packages.
It is an open standard and is system and platform
independent. Also, it is free—the XML specifications of
tags and attributes are developed by the W3C, which

is a consortium led by not-for-profit entities. Thus,
XML creates a universal way for both formatting and
presenting data and enables putting structured data
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Figure 5: CSS example.
in a text file. Because data in XML are coded with
tags that describe content and structure, the data pre-
sented in a XML format can be parsed, edited, and
manipulated. Searches can produce more accurate and
relevant outputs. Data can be exchanged and processed
without modification on any software and any hardware
platform because XML-based data are self-describing.
These capabilities have potential application to B2B
communications, transaction processing, and data trans-
fers between various systems and platforms. Once an
XML file has been delivered to users, they can view it in
different ways. Because XML is extensible, it also allows
users to create their own validation tools, including DTDs
and XML schema, effectively creating extensible tag sets
that can be used for multiple applications.
As mentioned previously, a DTD is a specific definition
that follows the rules of the SGML. It defines elements, el-
ement attributes, and values and describes specifications
about which elements can be contained in others. A DTD
accompanies a document and can be used as a validation
tool.
An XML schema is an XML-based alternative to a DTD.
It is developed to provide XML with flexibilities that a DTD

does not possess to meet users’ needs. For example, with
a DTD it is difficult to validate the correctness of data, to
work with data from a database, and to describe permissi-
ble document content because a DTD does not have sup-
port for data types. In addition, a DTD is not an XML doc-
ument; therefore, users have to learn another language.
In contrast, an XML schema describes the structure, con-
tent, and semantics of an XML document. Thus, an XML
schema provides a means for expressing shared vocabu-
laries and allows machines to carry out rules made by de-
velopers. (Further information may be found at the XML
schema Web site, />W3C, n.d.b.) Also, users do not have to learn another lan-
guage to create an XML schema because it is written in
XML.
XML is being extended with several additional stan-
dards that add styles (XSLT), linking (XLink), and
referencing ability to the core XML set of capabilities.
XML linking language (XLink) is a method of creating
and describing hyperlinks that support both tradi-
tional HTML and extended links, which provide more
functionality than traditional HTML links. (Further infor-
mation may be found at the XLink Web site, http://www.
w3.org/TR/xlink/, W3C, n.d.a.)
XBRL (EXTENSIBLE BUSINESS
REPORTING LANGUAGE)
XBRL (Extensible Business Reporting Language), for-
merly code-named XFRML (XML-based Financial Re-
porting Markup Language), is the financial profession’s
adaptation of XML for financial reporting. A joint industry
and government consortium was established for this pur-

pose in the fall of 1999, including the American Institute
of Certified Public Accountants (AICPA), six information
technology companies, and the five largest accounting
and professional services firms. (Information on XBRL
member organizations is available at the XBRL Web site,
The consortium developed an XML-
based specification for the preparation and exchange of
financial reports and data. This freely available and open
specification provides a method by which financial profes-
sionals can prepare, extract, analyze, and exchange busi-
ness reports, like financial statements, and the informa-
tion they contain.
The main objective of financial reporting is to provide
useful information to users for their decision making pur-
poses. By providing financial information to intranet, ex-
tranet, and corporate Web sites, entities can help users
obtain more easily and on a more timely basis the infor-
mation they need. However, because there are no com-
mon, generally accepted formats for describing business
reporting data, it is difficult to generate reporting formats
tailored to different users’ needs and to exchange data
among applications. Thus, users seeking to work with data
posted on Web sites must reenter or cut and paste the
data into their documents or spreadsheets. This is clearly
inefficient.
XBRL was created to help address these issues by cre-
ating a set of tags recognizable to XML-enabled Web
browsers or other applications, such as spreadsheet and
database software. Using XBRL, tags are attached to all
financial statement data to identify them as asset, cur-

rent asset, liability, capital, profit, and so forth. There-
fore, information users can use a Web browser to visit
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companies’ Web sites, find the data with the tags (e.g.,
CashAndCashEquivalents), extract the data, and analyze
the data with analytical applications.
XBRL is different from other XML-based specifica-
tions, such as FpML, FIX, FinXml, OFX, ebXML, and
XML/EDI.
r
FpML (Financial Products Markup Language) is an
XML-based industry-standard protocol for swaps,
derivatives and structured products. (Further informa-
tion may be found at the FpML Web site, http://www.
fpml.org, FpML, n.d.)
r
FIX (Financial Information Eschange) defines specific
kinds of electronic messages for communicating secu-
rities transactions between two parties. (Further infor-
mation may be found at the FIX Web site, http://www.
fixprotocol.org, FIX, n.d.)
r
FinXML is an XML-based standard for financial insti-
tutions to exchange financial data and to communicate
the details of highly structured financial transactions.
(Further information may be found at the FinXML Web
site, http://www.finxml.org, FinXML, n.d.)
r

OFX (Open Financial Exchange) is a specification for
the electronic exchange of financial data between finan-
cial institutions, businesses, and consumers via the In-
ternet. (Further information may be found at the OFX
Web site, , Open Financial Exchange,
n.d.)
r
ebXML (Electronic Business using XML) is a suite of
specifications that enables enterprises to conduct busi-
ness over the Internet. ebXML provides a standard
method for exchanging business messages, conducting
trading relationships, communicating data in common
terms, and defining and registering business processes.
(Further information may be found at the ebXML Web
site, , ebXML, n.d.)
r
XML/EDI (Extensible Markup Language/Electronic
Data Interchange) provides a standard framework to ex-
change various types of data—for example an invoice,
healthcare claim, or project status—can be searched,
decoded, manipulated, and displayed consistently and
correctly by first implementing EDI dictionaries and ex-
tending vocabulary via online repositories to include
business language, rules, and objects. This framework
is intended to apply to a variety of information sources:
transactions, exchanges via an API (Application Pro-
gram Interface), Web automation, database portal, cat-
alog, workflow document, or message. (Further in-
formation may be found at the XML/EDI web site,
, XMLEDI, n.d.)

In contrast with these transaction-oriented specifica-
tions, XBRL is reporting oriented. As such, XBRL enables
individual investors and financial professionals to search
through and extract data from financial statements, then
place them in their own applications, simplifying one
of the key phases of financial statement analysis. XBRL
does not establish new accounting standards (although
XBRL.org has a process for approving taxonomies) but
is intended to enhance the value or usability of existing
standards. Also, it does not require providing additional
financial information to outside users.
How XBRL Works
Figure 6 depicts how XBRL would be used. Suppose that a
public company, Toronto Inc., wishes to provide financial
statements to analysts.
After the company prepares its financial information
using its internal accounting system, an XBRL document
is created by mapping the financial information to
Toronto Inc.
Database
Application
such as
Accounting
System
XBRL Taxonomy
Other Taxonomies
Toronto Inc. User
Internet
XBRL
Document

Application
Software
HTML
PDF
Application Data
Other Formats
Style Sheet
-Prepare XBRL Document
-User’s Request
-Obtain XBRL Document via the Internet
-Translate XBRL Document into Other Formats
Third Party
Style Sheet
Figure 6: How XBRL works.
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XBRL (EXTENSIBLE BUSINESS REPORTING LANGUAGE): BUSINESS REPORTING WITH XML870
XBRL taxonomy elements. A number of new software
packages can do this automatically. The created XBRL
document is automatically checked to ensure it is proper
XBRL. There are several XBRL document validation
programs. One is available from XBRL Solutions Inc., at
. Then, the validated XBRL
document is placed on the company’s Web site or FTP
server.
When users need the information contained in the
XBRL document for their analysis, they obtain it on the
Internet. Users use the XBRL document for their analy-
sis. If they want to translate the document into HTML, a
spreadsheet, or database, they can do so with appropri-

ate style sheets developed by them or by outside software
developers. Of course, an XBRL document would not nec-
essarily be viewed by a person in its raw form. XML-
enabled software could automatically parse and trans-
form the content of the XBRL document and then transfer
it to another system for further processing.
XBRL Taxonomy and XBRL
Instance Document
A XBRL document is created by mapping financial
information to an XBRL taxonomy that describes
financial “facts” and the relationships between them. A
taxonomy is a dictionary of the financial terms used
in preparing financial statements or other business re-
ports and the corresponding XBRL tags. A XBRL tax-
onomy can be regarded as an extension of an XML
schema that defines elements corresponding to concepts
that can be referenced in XBRL documents; for ex-
ample, the element with the name “nonCurrentAssets.
propertyPlantAndEquipmentNet” represents such a con-
cept. A XBRL document has a hierarchical structure that
is defined by the taxonomy. Figure 7 contains a graphi-
cal illustration of the hierarchical structure of an XBRL
document and a taxonomy as seen through a “taxonomy
viewer.”
A XBRL instance document is an XML document
containing XBRL elements. In other words, a company’s
financial statements, created by using XBRL, are an in-
stance document in which various XBRL elements are
embedded based on a specific taxonomy. A common tax-
onomy enables users to compare several firms’ finan-

cial statements (assuming they use the same accounting
guidelines). Because the same tags are used by all “pub-
lishers” of XBRL documents, who rely on the same tax-
onomy, all users of those documents will recognize the
tagged data the same way. For example, the tag <group
Figure 7: XBRL taxonomy as seen through a taxonomy viewer.
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XBRL (EXTENSIBLE BUSINESS REPORTING LANGUAGE) 871
Figure 8: XBRL example.
type = “ci:balanceSheet.assets”> indicates that the data
after the tag relates to assets on the balance sheet. Figure 8
shows an example of an XBRL instance document. (Please
note that all the examples used in this chapter are based
on version 1.0 of XBRL. The XBRL specification version
2.0 was publicly announced on Dec. 14, 2001. This specifi-
cation is to be used to create XBRL taxonomies. However,
at the time this chapter was prepared no XBRL taxonomy
based on version 2.0 was available. Version 2.0 is signif-
icantly different from version 1.0, but the key concepts
described in this chapter are still applicable.)
The sample XBRL document in Figure 8 is based on
the XBRL taxonomy for business reporting of commercial
and industrial companies, under U.S. Generally Accepted
Accounting Principles (US GAAP), dated 2000-07-31. Fig-
ure 9 shows a part of this taxonomy. (A new version of this
taxonomy was nearing completion at the time this chapter
was written. The new version will have significant differ-
ences from the version illustrated in this chapter; however,
the key concepts discussed here still apply.)

A XBRL taxonomy has several advantages. First, it
makes it possible to bring the semantics of financial infor-
mation to the surface, making it more transparent. Sec-
ond, an XBRL taxonomy can make it easier to analyze how
similar companies applied various accounting rules or
methods. Third, an XBRL taxonomy provides contextual
information that can enhance information search using
XBRL-based search engines to obtain more complete and
more accurate search results. Finally, an XBRL taxonomy
can be used for converting an XBRL document based on
one country’s generally accepted accounting principles
(GAAP) to an XBRL document based on another coun-
try’s GAAP. For example, an XBRL document prepared
by using a U.S. taxonomy can be converted to an XBRL
document based on International Accounting Standards
(IAS) taxonomy. This may become an important function
because hundreds of national and industry taxonomies
are being developed.
At present, several taxonomies have been developed
such as US GAAP CI, the XBRL taxonomy for busi-
ness reporting of commercial and industrial companies
under US GAAP, the XBRL GL (General Ledger) tax-
onomy, and the IAS GAAP CI taxonomy. Also, several
national taxonomies are under development: Canadian
GAAP CI, German GAAP CI, Australian GAAP CI, New
Zealand GAAP CI, and Singapore GAAP CI. Also, sev-
eral prominent organizations have announced commit-
ments to XBRL, including the Australian Prudential Reg-
ulatory Authority, UK Inland Revenue, U.S. FDIC, NAS-
DAQ, Microsoft, Bank of America, Morgan Stanley, and

Reuters. Information about XBRL taxonomies may be
found at , XBRL Home Page (2000).
Information about the Australian Prudential Regula-
tory Authority may be found at ,
APRA (n.d.). Information related to Microsoft’s com-
mitment to XBRL may be found at Microsoft’s web
site, Microsoft (n.d.).
Information on companies and organizations that
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Figure 9: Taxonomy for business reporting of commercial and industrial companies, US
GAAP.
Figure 10: Customized taxonomy example.
872