Location based marketing is a marketing strategy used by business firms which uses your mobile device's location to alert you about their product. This strategy is becoming more and more common everywhere. “Businesses are increasingly using location analytics—which integrates organizational and geographic data—to help identify trends, develop more accurate predictions, and make better decisions” (Garber, 2013). The companies use location data to better market their products and they relies on users using smart phone that access rich internet features and GPS. They get the location data either directly from the customers or by their phones' GPS.This paper talks about different ways companies use location data to market their products, the applications that use location, where they collect the data from and advantages and disadvantages of location-based services.
“The term location-based services (LBS) is a recent concept that denotes applications integrating geographic locations (spatial coordinates) with general notion of services.” Examples can be services like navigation, tourism, tracking, gaming etc. (Jochen Schiller, 2004)
The location-based services can be classified in to two: push and pull services.
Push services: The user gets the information without requesting it. These may be sent with prior consent by the user like subscription-based system or without prior consent like advertisements when the user enters a location.
Pull services: When the user uses an application, it will pull the information from the network. For example, to find nearby shopping mall.
Some applications use both services.
The location-based marketing is evolved around both business and consumer services and they can be grouped in to vertical and horizontal.
In vertical market, mobile location information plays the integral part of business. For example, taxi services, airport and police services.
On the other hand, an example for horizontal market is child tracking where the use of mobile location information is new and added value to existing services. (Jochen Schiller, 2004).
Table 1. overview and examples of location markets and segments
The marketing companies uses different ways to market their products using location information. Most common ways are geo-targeting and geofencing.
Geo-targeting: This is a marketing method that determines user's geolocation when they visit a website and notifies the user about the products based on the user's location. In this method, the location of the user is identified by IP address. The first three digits of the IP address corresponds to the country code, the rest corresponds to specific areas of that domain. For example, if the product is a plane ticket from Auckland to Sydney, then they will sell the product to users who are in Auckland or in Sydney.
But “simply targeting consumers based on location is not good enough; marketers have to reach them at the right moment to avoid any disturbance or disruption.” (Syagnik Banerjee, 2013). To reach out users at the proper time, the business marketers should have precise information about the users' activities at different times in a day. Also, it is important for the marketers to understand about the time-use-activity patterns because it helps them to understand the life styles of the users. According to Syagnik, the prime time the users watches TV is between 7 pm and 11 pm. But this will be different for sports programs. The mail goal for geotargeting is to influence users to visit a location and make them buy a product or service. Foursquare is a location-based application that uses precise actual information of the users. Most of the marketers find this method difficult because this method need precise information about the user because they will face difficulties in communicating with the potential customers.
Geofencing: This is one the most used marketing method businesses use. This method uses Global positioning system or RIFD technology to create a geographic boundary and when the user arrives a location it triggers notifications. For example, Uber application uses geofencing method. When the user arrives at an airport, he will receive notifications about the number of available cabs. Another example is Warehouse, when the user visits a warehouse shop, he will receive notifications like take photos and share it with other users(friends) which is one way for promoting their products(Fig1).
Fig 1. Screenshot of notification from warehouse
The applications of location-based services are:
Infotainment services – These services meet user's requests such as path to reach the destination, location of businesses like hotels, malls etc. and how to find another user's location. Characteristics: they are mobile user initiated, query-based and request driven and the location data is either collected with request or assessed by service. For example, find a friend application.
Tracking services – These services are used to track vehicles, buses or trucks and packages. You can track the current location of your package if you purchase something online or mails. Characteristics: Requests are initiated by a remote monitoring entity and they are both push based and pull based services.
Selective information dissemination(advertisements) – These services mainly concentrate on advertisements. When a user reaches a particular location, he will receive notifications.
Location-based gaming – These services focus on younger users since they are very much into games. (Jochen Schiller, 2004). For example, games like treasure hunts, Pokémon Go and scavenger hunts.
Social Media – In apps like Facebook, user can share their location by checking-in and other users can see it.
Emergency support – ambulance, fire, police dispatching and roadside assistance comes under these services.
Location-sensitive billing – This refers to “potential to dynamically bill a mobile user based on its present location” (Jochen Schiller, 2004). Call billing, toll payment and purchase of goods and services comes under this service.
Sports – Applications like Nokia Sports tracker collects the user's workout data (location, speed, distance and so on) and store them on the server.
Geotagging – Photo-sharing sites use this and it is popular among the users. It adds geospatial metadata to photos, videos, web pages etc.
Location-based health applications –There is a rapid growth in location-based health applications which focuses on exercises and monitors health. There are also applications to monitor children's health. There are also navigation apps for blind users which includes both planning a route to a destination and also guides the user to the destination. The system was named as MoBic (Mobility of Blind and elderly people). It consists of MoPS and MoODS. The function of MoPS is to organize the user's journey before he starts to travel and also calculates the time to travel or distance to walk. MoODS combines the information given by MoPS with the user's current location provided by GPS and helps to assist the user with audio directions. (Jonathan Raper, 2008)
Examples for location-based applications available. Some of them are mentioned below:
Foursquare: This is one of the top brand that uses geolocation. It shares and saves the places you have visited. This app will also give recommendations and deals based on where you are. When a user explores a location, they will receive prizes or rewards for checking in (Pitta, 2011).In a recent research it is found out that over 2 billion people use this application (MARINOVIC, 2012).
Fig 2. Foursquare application
Google My Business: When a user searches a particular business or shops in google while standing on a street, it will show all the shops which are nearby. This software is available to everyone and you don't have to download it or sign in.
Social networking: Most people use social networking applications because they can create, share location-based contents. Even though these apps are mainly used for communicating, it always integrates geolocation features.
Consider Facebook, people can check in to a place, post a video or comment. When you check in to a particular place, you can see the advertisements of hotels, clothing shops, café etc. Users can even sell a product by posting in Facebook. According to Sensis survey 2016, small to large business advertise their products in social media. Facebook remains at top followed by LinkedIn and Twitter. Instagram can also be used to promote the products even though it is a photo sharing app.
Fig 3. Facebook application Fig 4. Marketers using Facebook to promote their products
On demand apps: Apps like Zomato, Uber etc. are very common.
Considering Zomato application, users can review restaurants and cafes and others can read it. Users can choose categories like Chinese, Italian etc. and it will show the nearest restaurants.
Fig 5. Zomato
In Uber application, if a person books a cab or taxi from his location to any destination location, he uses geolocation. Geolocation gets his location address and sent it to the driver and it is referred to as pick up location. The fare for the journey is based on the geolocation feature. Location plays an important part in Uber.
Fig 6. Uber
Travel apps: Applications like trip advisor uses geolocation feature to help the customers with place recommendations near based on where they are and also give driving directions.
Games: You know that most of the smart phone games don't need GPS, they need only internet connection. But a game named Pokémon Go which was released in 2016 uses player's GPS and it became very popular and successful within one week. It was released in July 16 2016 and by the end of July, this game gained US$160 Million.
Fig 7. Pokémon Go location-based game
Now we need to understand how these marketing companies get location data of the users. They use several methods to collect the data. Some of them are mentioned below:
- Some of the marketing companies ties up or make a contract with location data vendors like Carto, Bils, Cubiq etc. These location data companies give the location data to the marketing companies and that's how they promote their products.
- Global Positioning System – when the GPS is turned on in the mobile device, it will share the location data with the applications which are already installed in the device.
- Wi-Fi – Some hotels or cafes offer free Wi-Fi. When the user enters the hotel, the device will be connected to the hotel's Wi-Fi and the user will receive notifications about discounts and surprise deals.
- According to a survey conducted by Carto, a location data company, they found out the top methods the marketing companies use to collect data. (Liffreing, 2018)
Fig 8. Graph showing top methods to collect location data
From the graph given above, the top methods the companies use to collect data are from websites or web-based applications. When a user visits a website, the company will get the user's IP address and hence they can locate the user's position. The second way of collecting data is by mobile devices and device applications.
A similar survey was conducted over 200 business executives to understand the top uses of location data.
Fig 9. Graph showing top uses of location data by marketers
The top three uses of location data for business are identifying new customers, improve marketing strategies and followed by improving customer services.
There are certain advantages and disadvantages of sharing user's location data to location-based applications. The advantages are as follows:
- Helps to find information based on user's location. For example, if the user wants to rent a room in a hotel then he can get the nearby hotel using location-based application.
- Finding other users in emergency situations. For example, during flood or natural calamities Facebook provides a feature where user can mark SAFE and let the other users know whether he is safe or not.
- Find nearby social events
The disadvantages of sharing location are
- Bothered by advertisements that uses the user's location. (Janice Y. Tsai, 2010)
The companies should take measures to ensure the privacy of location data of the customers using security features and policies.
Location-based marketing is growing day by day since the use of smart phones that has GPS services are increasing. According to my opinion, using location-based applications are very helpful. When you visit a new place, you need to be aware of nearby hotels, salons, post offices etc. Even though we receive numerous ads it can be beneficial. Carto's( location data company) study found out that in the future more companies will invest in location data
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