Case Study E commerce and Mobile Commerce

Location-Based Marketing 

Abstract

Location-based marketing has dramatically improved the way we search for products and services since the advent of GPS in mobile phones. Location-based marketing has enabled businesses to target specific customers and provide them with the products or services based on their location. This allows customers to not only view the products and services relevant to what they're searching for but specifically those that are offered in their area. This saves time for not only customers wanting those products or services quick, fast, and in a hurry but also for the businesses offering those products and services by targeting specifically those groups with the highest potential to become customers. Gone are the days where businesses have to purchase monthly marketing strategies like billboards or newspaper ads, now businesses that advertise online and provide their address have a high potential of being viewed by customers seeking their products or services.

6.3 Case Study E-commerce & Mobile Commerce

Location-based marketing is a direct marketing technique that uses the physical location of a mobile device to inform its’ owner of a nearby business’s sale or special offer. The alerts are known as location-based alerts that are sent to a user's phone via SMS text messages. The information contained in an alert usually pertains to a day's sale for a local business or include an opportunity to buy products or services at a discount utilizing a special code. The location-based marketing requires the customer to opt-in to receiving text messages about the company’s special offers or sales. This usually takes place when a customer installs a mobile app and responds "yes" when the app asks for permission to use the location of the mobile device for marketing purposes.

The technology that enables location-based marketing is geofencing, Geofencing is a software that uses predefined geographic boundaries to trigger alerts when a customer’s device crosses that boundary. Just like all marketing campaigns, the goal of location-based marketing is to grab the attention of the owner of the mobile device and entice them to buy goods or services from the vendor sponsoring the ad. Advocates claim that location-based marketing bridges the gap between online and physical client interactions and encourage an impulse buy. However many skeptics are wary that LBM will cause customer fatigue and infringe on privacy if the data collected is not properly used or safeguarded.

The key to every ad campaign is reaching the individuals that can associate with the product or service, LBM ads facilitate the ability for marketers to targeting specific groups of people that their products or services would appeal to. GPS has propelled this marketing tactic due to the commonality of mobile phones. This contextual ad experience provides marketing interactions that people have become increasingly accustomed to, particularly millennials. Location-based marketing has four main categories and each category targets potential customers uniquely. 

Behavioral targeting is an advertising technique that targets specific behaviors and is based on actions or geographic location of a user. For instance, frequent business travelers can take advantage of discounts provided by hotels that track the GPS activity of their customers and provide loyalty rewards based on their loyalty programs. Behavioral marketing aims to provide advertisements that customers will not dismiss as a 'meaningless ads' but will find relatable to their purchasing behavior. This marketing strategy intends to define audience characteristics such as whether they are into fitness as indicated by their frequent visits to a gym or are daily travelers and tailor ads accordingly. This method can go even further and be used to attract customers competitors, for example, a local pizzeria opens on a quiet city street with little foot traffic, how can this pizzeria draw in customers? Using behavioral targeting marketers can target the customers of the surrounding pizzerias by enticing them to eat at the one on the quiet street by offering coupons and discounts.

Radius targeting is advertising that focuses on potential customers in the immediate area of a business. Traditionally, companies would advertise to a whole community via newspapers or a billboard but now businesses can target people who walk by their shop. A bar owner, for example, wants to take advantage of a local wine festival and wants to attract some of those visitors to their bar. Using radius targeting the bar owner can send out unique advertisements to people who walk within the vicinity of the bar and entice them to pay a visit before they leave the festival. This powerful advertising method enables users to capture their audience in real-time and impact their decision to patronize their establishment.

Local search advertising is requesting from Google or any other search engine to search for ‘restaurants nearby’ and then be presented with a map featuring pinpoints that indicate where they are in your area. Local search advertising commonly generates popups that display special prices and customer reviews. Brand name manufacturers have become increasingly aware of the fact that a third of all mobile searches are linked to location and have allotted significant spending budgets to ensure they appear clearly on the map. There also exists the capability to connect local searches to a business’s web page, this helps drive more traffic to their site and increase the number of online inquiries. Nowadays, three out of every four people who are looking for something nearby use their phone to locate it and 25 percent of those searches lead to a purchase.

Geo-targeting is the last type of location-based marketing method employed by retailers and marketing firms. Brand name retailers have become intimately familiar with the increasing challenge attract customers to a brick and mortar establishment since the rising popularity of internet shopping. Location-based ads are empowering advertisers to reach customers in proximity of a business and inspire them to shop at that business. Customers are 57 percent more likely to engage with location-based advertisements while 50 percent of mobile phone users are permitting access to their location to receive the marketing alerts from their favorite businesses. People have become accustomed to walking into a mall and receiving alerts for sales at nearby retail stores. This marketing tactic has become less of an annoyance and more of a shopping enhancement that leads to more customers visiting the store. There are all kinds of ways businesses can implement this and it’s becoming an important part of many marketing strategies to stay ahead of the competition.

Conclusion

Location-based marketing has become a powerful marketing tool for businesses to attract local customers to their stores by employing the power of the mobile smartphone. Advertisements can be tailored to appealing to one demographic or many, the same ad campaign can be targeted to reach only those that pass by a local business or to anyone within a specified radius. Location-based marketing can even be focused on purchasing behaviors such as offering discounts or rewards to customers who frequent a local coffee shop. Utilizing this new technique provides businesses a competitive advantage to reach further than traditional newspaper or billboard advertisements. Effective marketing campaigns that utilize one or a combination of the several location-based marketing strategies are persuading loyal internet customers to visit local brick and mortar establishments in anticipation of better savings than those offered online. 

References

Banerjee, S., Xu, S., & Johnson, S. D. (2020). How does location-based marketing affect mobile retail revenues? the complex interplay of delivery tactic, interface mobility and user privacy. New York, NY] : Elsevier Science Inc. doi:10.1016/j.jbusres.2020.02.042

Is location-based marketing a 'must have'? location-based marketing allows brands to target individual consumers when they're literally in the neighborhood. our experts discuss whether it's a necessity for marketers. (2010). DM News, 32(13), 9.

Miller, D. (2019). Why small businesses should care about location-based marketing. Retrieved from https://www.thebalancesmb.com/what-is-location-based-marketing-4172454

Yim, J., Ganesan, S., & Kang, B. H. (2019). Location-based mobile marketing innovations 2018. Mobile Information Systems, 2019, e2164708. doi:https://doi.org/10.1155/2019/2164708