When Should We Use App, Responsive and Mobile Design?

By 2014 mobile internet browsing will overtake desktop internet browsing. Smartphones are cheaper and have a better connection to the internet compared to desktop computers available even a few years ago.
One of the issues that many business owners, designers or developers are debating is,
“Should we develop a mobile site, or create a mobile app,  or just stay with the current responsive design?”
To answer the above question we need to understand these three different approaches better.

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