I would first and foremost like to acknowledge the generosity of the villagers of Telav, Shela, Kaneti(Gujarat) and Amgachia(WB) who in spite of their busy life took time to let me understand their lives.
I am also deeply indebted to Prof. Rajat Iyer and Prof. Arbind Sinha, Faculty MICA,for being a thesis guide in every sense of the word. I would also like to thank Mr Shailesh Yagnik, Librarian MICA, and all the library staff for their immense cooperation without which this might not have been possible.
I would also like to thank Prof. Rajneesh Krishna for clarifying my doubts about various Market research tools and methodologies despite his busy scheduleand engagements.
I would also like to thank Mr. Raj Kumar Jha,O&M Outreach who shared with us valuable inputs in Rural marketing and inspired me to work on this topic.
I would like to thank my parents who have been a constant source of inspiration for me and have held me through ups and downs in my life.
I would also like to thank all my friends for helping me organise my thoughts,constant encouragement, sleepless nights and chota breaks.
Thanks guys for giving me confidence to submit this document.
Today Mobile phones have made their presence felt not just in urban India but also in rural areas. This phenomenon has increased the scope of branding which most company considered a tough turf in rural India. Though it may seem a far-fetched idea currently but considering the giant leap the economies of developing nations like India is making, tapping of rural markets & building brands for this market make sense.
Innovative use of Mobile application is helping war torn Afghanistan fight corruption and elevate the standard of living of its people. Similarly in developing nations, application developed for local needs like M-Pesa in South Africa, Pesapal in Kenya are finding consumers and helping the brands make an impact.
Study in the past conducted in various geographies have developed model for either urban consumer or directly generalized model for mobile marketing. From the literature review few factors were derived for mobile advertising like (1) utility, (2) context, (3) control, (4) sacrifice, and (5) trust. My study aims to works on these parameters, but specifically on rural India to find out attitude and behavioral implication of mobile advertising. The study also includes technology barriers & advancement in India and barriers related to social implication in rural areas like language and cultural difference.
For the purpose of the study a qualitative research has been commissioned across two regions – Gujarat and West Bengal. This was a contrasting study to find out the motivation underlying the use of mobile phones and the prospect of mobile marketing across two extreme geographies since West Bengal is one of the least mobile savvy state whereas Gujarat has one of the highest mobile phone users.
Focus group discussion & depth interviews with the help of projective techniques revealed the underlying motivation for using mobile marketing. It mainly reinforced the fact that while rural consumer do not want intrusion in their life they are willing to open up the space for better living standards. Hence the desire to gain knowledge and make money to elevate the living standards was of prime importance.
The study also reveals certain limitation to mobile advertising which has to be kept in mind while designing any mobile marketing campaigns.
Finally the study proposes a framework to facilitate acceptance of mobile marketing message among consumer and maximize marketing objective of brands, which outlined as follow
1. Collaborate with Service providers
It is a win-win situation for the service providers as well as the marketers and not to forget the consumer, if the contextual targeting of advertising is maintained.
2. Precision targeting
It is rewarding for advertiser since they are able to overcome the challenge of predicting who’s on the other side of a product or service purchase and target them with brands according to the demographics
3. Develop content relevant for the consumers in collaboration with Media agencies
Develop content of significant importance by understanding the day to day life of rural consumer e.g. the language assistance application which has the potential to become a way of life for the consumer and then only can a brand reach the stage of resonance in the mind of rural consumer
As a concluding note, this conceptual study offers to provide a discussion on how mobile advertising might subsidize wireless infrastructure growth among underprivileged societies and allow marketers to target more specifically the consumer in media dark region.
Also with the collaboration of private partners the social development in rural areas with the help of mobile communication will be faster. Marketers can increase their consumer base by targeting the huge potential at the bottom of pyramid and hence increase their bottom line significantly as well as deliver to their promise of corporate social responsibility.
C. K. Prahlad in his book “The Fortune at the Bottom of the Pyramid” says, “If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up”. This statement has been taken to like a gospel truth by marketers in India and many are now trying hard to target this untapped potential.
India is a country of 1.13 billion, out of which 70% of the people are living in the rural India.
The marketers all around the world interested in India are becoming more curious to explore the rural potential. With 128 million households, the rural population is 3 times the urban. As a result of rural affluence, fuelled by good monsoon and the increase in agriculture to 200 million tones, the rural India has large consuming class of 41% of middle class and8 58% of the total disposable income.
The Census of India defines Rural India as anything which is not urban. Village is defined as a basic unit for the rural areas is the revenue village, might comprise several hamlets demarcated by physical boundaries. Thus a Rural is defined when it meets the following criteria
- Minimum Population <= 5,000
- Population density <= 400/sq. km.
- 25% of the male population engaged in agricultural activity
Reserve Bank of India defines rural as ‘Locations with population up to 10,000 will be considered as rural and 10,000 to 100,000 as semi-urban.’ Similarly NABARD, Planning Commission, Sahara also define the villages on population criteria.
As mentioned in The Rural Marketing Book, Pradeep Kashyap and Siddhartha Raut (ed.2008), the rural economy has seen tremendous growth since 1990s because of thirteen consecutive good monsoons. This various radical changes in rural market has been testimonial to this development, some of them are as follows;
- There has been a 600% increase in the outlay of rural development programmes in the five year plans from Eighth to Tenth Five year plan.
- 41 million Kisan Credit Cards (KCC) has been issued since the inception of the scheme amounting to a total of Rs. 97,700 crore of cumulative credit. The number of KCC issued is more than the 40 million credit-plus-debit cards issued in urban India.
- Also a 230% increase in the flow of institutional credit for agriculture from 1997-98 to 2004-05 has been registered.
Today Mobile phones are ubiquitous not just in urban India but also in rural areas. This phenomenon has increased the scope of branding which most company considered a tough turf in rural India. Though it may seem a far-fetched idea currently but considering the giant leap the economies of developing nations like India is making, tapping of rural markets & building brands for this market make sense. There is virtually no branding effort in these areas so a scope for brand salience & resonance doesn’t increase. Mostly brands in these areas right now are competing on price points which will cease to exist as differentiator as customer becomes more evolved & bestowed with financial prowess. But there seem to be branding efforts from the marketer’s viewpoint and also there is some franchise on factors other than price from the consumer view.
A lot of work in the field of mobile telephony has been going around e.g. A team of MIT Media Lab’s Next Billion Network participants – next generation of tech movers and shakers- who are building technologies to help people in the developing nation to raise their incomes, learn to read, get where they’re going, and diagnose their health. (david-chandler, july-2-2009)
Innovative use of Mobile application is helping war torn Afghanistan fight corruption and elevate the standard of living of its people as depicted in the following new report. (Loyn, 2009)
Nokia have also felt the rural potential and developed product consumer in those regions. Even their communication for the Model 1100 has been specifically targeted at the rural audience fully portraying the need in the rural settings. (Banerjee & Sangameshwaran, 2009)
Also the value of VAS industry is estimated to be Rs.16500 crores by 2010 according to a research by RNCOS, with expansion into rural markets where more services in banking, gaming data and TV segment will be seen. (Mobile VAS to Drive Telecom Growth, 2009).
Thus the future of mobile marketing looks optimistic and with rural economies building into a sustainable model, marketers have to no longer think about the return on marketing investment.
In the following literature review, I have reviewed the various published articles & white papers from journals, books & Reports. First I have looked into the knowledge created on rural marketing & it implication, in this domain a lot of work has been done with a global perspective and quite a few with the Indian market in viewpoint.
Rural Marketing & its Implication
Some of the studies are regularly published in the Journal of Rural Marketing by RMAAI to help marketers keep track of updates in rural market. A study on evolution of rural consumerism conducted by Hansa Research reveals the rural consumption pattern over a period of five years i.e. 2000 to 2005. The study has data on three levels i.e. exposure in terms of communication and education, consumption of several categories of products and distribution of these products.
According to the report shampoo consumption in rural India has increased from 13.9 % in 2000 to 31.9 % in 2005. (The Rural Marketing Journal of RMAAI, 2007)
Dr. Vinod Kumar Bishnoi and Bharti of Haryana School of Business have done a research paper on Awareness & Consumption Pattern of Rural Consumers towards home and personal care products. The paper contains details on awareness and usage of brands in rural areas. It also tries to find out the motives and factors behind brand choice, the sources of information and to measure any association between demographics and brand choice.
Regarding motives and factors behind brand choice, Bishnoi and Bharti say that rural consumers purchase a product mostly for its utilitarian value rather than the peripheral values. Consumers tend to stick to the brand once they are satisfied with it. The brand loyalty in this case is unusually high even though consumers switch FMCG brands very frequently. The rural consumer is also very quality conscious. Advertising and retailer’s advice play a major role in decision making. The consumer is also a little cautious with price levels. The study also reveals that there is clear association between income level and expenditure habits in these products. The primary source of information about brands is television. Retailer, newspaper and radio are other prominent sources. As Bishnoi and Bharti highlighted in their paper some very interesting aspects, that whatever is the leading brand in all the products that remains leading irrespective of any demographic variable be it income, education, age or gender. This might be explained by the fact that the family structure in rural India is such that that several people of various education and age group stay together.
The contemporary media scenario in India is marked by a frenetic proliferation of television channels, FM radio stations, daily newspapers, mobile telephony and digital media. Despite this situation, as the following article argues, the poor while highly visible almost everywhere in urban and rural India remain, ‘invisible’ in the nation’s mass media. (Kumar, Jan 2008)
To successfully market products in rural areas, distribution is a critical barrier which needs to be overcome. An understanding of the structure of distribution in rural areas would help in the development of an efficient distribution system. The paper after a thorough literature review proposes a conceptual framework which identifies the drivers of the structure of distribution in rural areas. (Rajesh & L. K., January – June, 2005)
The paper discusses the need for strengthening marketing efforts in rural India. The author mentions about the rural network, whose basic objective is to try and get clients who are looking for a national strategy in rural marketing and provide help in implementing such plans across different regions with the local expertise. The paper also deals with instances on how marketers aiming to target their brand commercials to both urban and rural audiences are required to do well to pre-test the spots and that the spots communicate what is intended for the targeted viewers, thus providing the basis that there is a huge difference in rural & urban consumer and they have to be dealt with differently (Rajan, 2005)
The second stage of my literature reviews knowledge on the mobile telephony- the development with respect to marketing, the intention in developing VAS, user perception of mobile marketing, the obstacle & barriers to mobile marketing.
Carter in the journal of Mobile marketing defines mobile telephony as a set of buzz words like Mobile marketing, mobile advertising and m-commerce. He examines the Generation Y, the generational cohort born between 1979 and 1994, which researchers think will change the marketing landscape forever. This paper addresses some of the many issues and opportunities that may affect marketer’s abilities to reach Generation Y African-American mobile consumers. (Carter, June 2008)
Another journal in mobile marketing reveals that empirical studies have been limited to exploring consumer justifications for accepting or rejecting cell phone advertising on either a speculative basis among possible mobile marketing users, or a post hoc basis among those who had already chosen to receive cell phone advertising. This research explored consumer justifications in the context of a field test, in which mobile phone users were offered subscriptions to a mobile phone text based advertising program. Thus found out that among acceptors information benefits of cell phone advertising was prime due to positive attitude towards information & entertainment. While for the rejecters the perception of having to pay for advertising was enough to discourage participation. (Newell & Meier, Dec 2007)
This journal examines the drivers of consumer acceptance of SMS-based mobile advertising. A conceptual model and hypotheses are tested with a sample of 4,062 Finnish mobile phone users. Structural equation modeling is used to test five drivers of mobile advertising acceptance: (1) utility, (2) context, (3) control, (4) sacrifice, and (5) trust. The results show that utility and context are the strongest positive drivers, while sacrifice is negatively related to the acceptance of mobile advertising. Thus marketers should pay particular attention to the utility and relevancy of mobile advertising messages. (Merisavo, Kajalo, Karjaluoto, Virtanen, & Salmenkivi)
I have reviewed the various application of mobile telephony and the consumer perception towards mobile marketing in particular and mobile application in general.
Also innovation from companies for rural consumer were of considerable significance as firms like Nokia had earlier launched a basic handset with a torch (large parts of rural India don’t have electricity) and an alarm clock.
In another paper, an instrument for measuring attitudes toward mobile advertising is developed. The results of a survey indicate that (1) consumers generally have negative attitudes toward mobile advertising unless they have specifically consented to it, and (2) there is a direct relationship between consumer attitudes and consumer behavior. Hence concluded that it is not a good idea to send SMS advertisements to potential customers without permission.
Their attitudes were favorable if advertisements were sent with permission. This implies that permission-based advertising may become a major mechanism in the mobile environment in the future. The research notably points out relationship between attitude, intention and acceptability of Mobile advertising through empirical study. The respondents were more willing to accept incentive based mobile advertising. Finally, intention significantly affected how and when the respondents read the message. (M. Tsang, Ho, & Ting-Peng, 2004)
Although mobile phones have been shown to be highly effective as education content delivery mechanisms, underlying handset and subscription costs have limited their usefulness in many underprivileged countries. Thus the author proposes a model where education content can be subsidized by mobile advertising and a business model is developed where sellers is able to communicate to buyers in their native tongue and vice-versa in order to close transactions.
The paper touches on many key issues that are determining the mobile marketing sector. The mobile dam is about to burst and marketers have to be prepared for this through well developed and formulated ethical strategies. Customers will have to be gently cajoled and locked into useful market applications. (Ranchhod, June 2007)
Impact of Technology in Marketing
The article “The Missing link-Why mobile marketing is different” is rich with illustrations, examples and detailed footnotes, includes a thorough discussion on how marketing, technology, and business practices and models have matured and converged over time to make the medium what it is today. He discusses the impact network migration from 2G to 3G, globalization, the changes in marketing practices, and the value system have had on mobile marketing practices. He suggests that we need to focus on developing successful revenue models, create favorable conditions for relationship marketing and long term-dialog amongst the players in the industry, and that we must have a global mindset and to put aside any not-invent-here mentalities. (Steinbock, June 2006)
Again in the paper stresses on the increasingly complex and demanding customers as ICT developments becomes rapid and marketers start coping with highly demanding customer who require extraordinary experiences and highly user-friendly service interfaces particularly in technology services, such as mobile marketing (as illustrated in the Figure below). (Steinbock, June 2006)
The rural market works on 4 As i.e. Accessibility, Affordability, Acceptability and Awareness and the traditional four Ps of marketing cease to exist in this scenario.
There is a presence of huge potential in rural India but at the same time there is a lot of obstacle faced venturing into these markets. Low per capita disposable incomes, large number of daily wage earners, acute dependence on vagaries of monsoon, seasonal consumption linked to harvest & festivals and special occasion, poor roads power problems and inaccessibility of conventional advertising media.
As much as there is potential, there is also a good amount of ambiguity on how to create brand salience in these markets.
In such situation marketers who see huge potential in rural market with around 700 million consumers, everyone would like to take its brand to the next level of brand salience & resonance. Hence with increased penetration of mobile phones there has been more chance of mobile communication entering the media dark region. It may seem farfetched as an idea to brand product for rural consumer when presently we think that rural consumer stress on affordability.
Much has been written about rural marketing, the consumption patterns, attitudes & behavior of rural consumer in India and Mobile marketing in isolation but the whole perspective of mobile marketing for rural India is not covered in the literatures.
Therefore this study aims to look at the future prospects of mobile telephony as a means to communicate brand promotion and create a brand resonance with the rural consumer.
Objectives are as follows;
- To find out the present usage of mobile telephony among rural users and their perception of brands using mobile marketing
- To find out the technology/language barriers in implementing branding activities in the rural environment
The objectives will aim to find out what are the technology barriers, governments policies and technological advances for the implementation & development of mobile application to facilitate interactive marketing. It also aims to understand the acceptability of technology in the rural environment and the language barrier, since most of the rural India has lower literacy rate and use local languages as means of communication is prevalent.
The second objective aims to find out the acceptability of mobile marketing in the rural context and how will it affect a brand. We intend to discover whether the consumer reacts to marketing communication over mobile phone in positive manner and how will it affect the purchase intention of the brand.
- Present and future platforms/technology which makes mobile telephony ubiquitous for Rural India
- Studying the branding & marketing efforts of companies for rural India, the number of companies interested in marketing & branding their products for rural India
Qualitative research is applied to understand the consumer perception in rural India while using mobile telephony. This is done in two stages;
- Focus group discussion with rural respondents
- Depth interviews with rural respondents
- Depth Interviews with marketers after the FGDs/DIs
The TG of the study is defined as:
Age: above 15
SEC RI, R2, R3
Location: West Bengal, Gujarat
Gender: Males & Females
Presumption is that the decision makers in rural India are generally the head of the family, who is the male member. Also the same holds true for mobile users, though a considerable amount of women these days are using mobile phones too. So I have conducted FGDs across all age group for the male sample size. Each FGD had people from the same caste & same gender to maintain cohesion & focus in the discussion.
West Bengal has the least mobile phone user whereas Gujarat is one of the highest mobile phone users. Hence it’s a contrasting study to find out the motivation underlying the use of mobile phones and the prospect of mobile marketing. The following table represents the No. of users in Gujarat and West Bengal.
- 2 focus group discussion in each location i.e. Gujarat and West Bengal
- Five depth interviews in each location
- Interviews with marketers after the FGDs
Profile of respondents:
- All respondent must be using mobile telephones in daily basis
- Should be literate with primary school education
From being charged for incoming calls to getting paid for calls you receive and then a pay per second regime, Indian wireless telephony has come a long way.
India has one of the biggest telecom markets in the world. It has the third-largest telecom network in the world and second-largest among the emerging economies. The Indian telecom industry generated revenues of approximately US$ 32 billion in 2007–08 with a growth rate of 60 per cent over 2006–07. It witnessed a compound annual growth rate (CAGR) of approximately 29 per cent from 2002–03 to 2007–08.
- Total telecom subscribers – 545.05 million (January 2010)
- Teledensity – 43.50 (September 2009)
- Addition of mobile subscribers (July–August 2009) – 15.08 million
- Annual growth rate of telecom subscribers (June 2008–June 2009) – 42.68 per cent
- Average Revenue Per User (ARPU) for GSM (as on 30 June 2009) – US$ 3.80
The wireless subscriber base increased from 535.15 million in December 2009 to 545.05 million at the end of January this year for a monthly growth rate of 3.79 per cent. The wireless density in the country now stands at 46.37.
It grew at a CAGR of 45.21 per cent from June 2004 to June 2009. The handset market in India, consisting of mobile and fixed handsets, registered an overall growth of 5.8 percent from 2007-08 to 2008-09. (India, 2009)
The value added service (VAS) market in India has a great potential for growth and revenue from this growth potential is expected to reach above INR 250 billion by the year 2009-10 and more than 30% of the revenue of the telecom access service providers in the next 5-7 years. The VAS industry in India generated revenue of US$ 1.2 billion in 2007–08 and is expected to reach US$ 4.0 billion by 2015.
Top 11 Wireless Operators in the country: (September 2009) (India, 2009)
Among the wireless service providers, Tata had a 14.97 % share of the net additions during January, followed by Bharti Airtel with 14.31 %, Reliance 14.08 %, Vodafone 13.78 %, Idea 11.42 %, BSNL 11.29 %, Aircel 10.10 %, Uninor 6.68 %, Stel 1.83 %, Sistema 1.07 %, Loop 0.26 % and MTNL 0.23 %.
Market share of top 12 operators:
Bharti Airtel had a market share of 22.33 per cent, followed by Reliance with 17.72 %, Vodafone 17.27 %, BSNL 11.95 %, Tata 11.07 %, Idea 10.99 %, Aircel 6.06 %, MTNL 0.90 %, Sistema 0.60 %, Loop 0.50 %, Uninor 0.47 %, Stel 0.09 % and HFCL 0.06 %.
Present technology in India
GSM has a market share of ~75% out of the 500 million wireless subscribers
Reliance has registered a 6.73 % market share which is quite impressive for service which was launched only 6 months ago.
CDMA subscribers are at 94.5 million and here is how they are split:
Tata Teleservices which launched its GSM operations under brand name Tata DoCoMo will be another player to look out for in the next few quarters. Unitech Wireless has launched its services in 2009 and has a subscriber base of 2.5 million as of Jan 2010. New entrant S Tel added 0.22 million subscribers to take its subscriber base to 0.36 million.
Reliance rules CDMA followed by Tata Teleservices (Tata Indicom). Shyam telelink has rebranded to MTS India has a subscriber base of 3.5 million (as of Jan 2010). CDMA doesn’t look as much over-crowded as GSM but when put together the overall picture of Indian telecom looks crowded with 12 operators and 3 waiting in the wings. Reliance and Tata are the 2 companies to watch out for with the dual play of GSM and CDMA operations.
The average revenue per user of CDMA is 99 rupees and that of GSM is 205 rupees. With 3 new players coming in for GSM the ARPU’s will come down. CDMA which is supposed to be a better network for data access can use this opportunity to increase the ARPU’s and subscribers. It just has to sort out the handset availability issue. (India, 2009)
Penetration in Rural India
As on 31st September 2009, out of the total 500 million subscribers, the rural subscribers contribute 151.8 million, comprising of 10.13 million wireline and 141 million wireless. The Rural teledensity as on September 2009 was 18.46% as compared to 9.20% during the previous year in March’08. Subscription in Urban Areas grew from 328.55 Million in Jun-09 to 357.22 Million in Sep-09, taking the urban Teledensity to 102.79. Rural subscription increased from 136.27 Million to 151.81 Million, taking the Rural Teledensity from 16.61 in Jun-09 to 18.46 at the end of Sep-09.
Total Wireless (GSM + CDMA) subscriber base increased from 427.29 Million at the end of June-09 to 471.73 Million at the end of Sept-09, thereby showing a growth of 10.4%. During this quarter 44.43 million subscribers were added. Wireless Teledensity increased from 36.64 at the end of June-09 to 40.31 at the end of Sept-09.
Rural subscription (12.5%) has been growing at a faster rate than Urban (9.5%). The share of rural wireless subscription is 30% in total wireless subscription. Overall rate of growth of Wireless Subscription in QE Sept-09 (10.40%) is higher as compared to previous quarter (9.07%). Higher growth rate could mainly be attributed to the launch of GSM services by Tata Teleservices Limited across service areas.
Technologies in India
WiMax stand for “Worldwide Interoperability for Microwave Access” is a standard-based wireless technology that allows broadband connections over long distances.
The Economic Times, citing a study by US market research firm Strategy Analytics, reports that India will become the largest WiMAX market in the Asia-Pacific by 2013.
The study forecasts that consumer subscriptions in the developing Asian countries will grow at a compound rate of 132% through 2013, with the subscriber base reaching almost 27 million in that year.Most emerging markets WiMAX providers will launch their initial services in major urban areas, to take advantage of concentrations of existing Internet users with purchasing power. However, over the longer term the most rapid growth is expected to be in second-tier cities and in rural areas, where there is substantially less competition from incumbent broadband suppliers.(Study Predicts India to be Largest WiMAX market in Asia Pacific by 2013, 2010)
BSNL, HCL Infosystems Ltd and Intel Corp. have started a series of wide-reaching initiatives to spur economic and educational opportunities in India by expanding access to wireless broadband Internet and affordable computers. This is in support of the India government’s Bharat Nirman rural development agenda. Intel and BSNL will jointly propagate wireless broadband Internet in what is intended to ultimately become a nationwide mobile WiMAX network. BSNL will also work with the two to make available in rural India WiMAX-capable nettop computers designed by the two companies and made in India by HCL using the Intel atom processor.
Despite spectrum auction delays and other bureaucracy, India is set to be the biggest base on earth for WiMAX by 2012, and state-owned carrier BSNL, which has pre-auction access to its spectrum, has gone live with the country’s first Mobile WiMAX network.
BSNL has two parallel projects, one for rural areas and one for metro networks kicked started by Minister Sachin Pilot. BSNL intends to usher in a new era of growth in rural areas by offering a broadband speed of 7Mbps at a distance of 15 kilometers.
WiMax plans to bring to the underserved communities several key applications to meet the Indian government’s target to reduce the country’s woeful levels of broadband penetration.
Some of them will include;
- Utility bill payments
- Issue of official
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