The trend towards location-based marketing is growing and getting some well-deserved attention with the recent developments and statistics provided in regards to consumer use of mobile coupons. Location-based and proximity-based marketing, a rapidly expanding channel combines the benefits of digital and mobile interactions. In particular, marketers are increasingly using this channel to deliver digital coupons and other sales promotions to reach consumers. From an advertising perspective, this medium is particularly effective because the mobile channel is ideal for reaching today’s technologically-savvy consumers within the context of a place, location or proximity to a retail space.
Consequently, there has been a significant growth in mobile and location-based promotional services such as Groupon, Yowza etc. In addition, many retailers and companies have started using these promotional methods to attract, and retain consumers. Kraft Foods Inc. has released software for Apple Inc.'s iPhone that help consumers find a recipe or create shopping lists. Supermarket chains Kroger Co. and the retailer Target Inc recently expanded programs that let customers redeem coupons using mobile phones. More recently, super market chain Stop & Shop has been testing opt-in apps that push coupons to consumers based on tracking their location in a specific product aisle inside the supermarket.
However, companies are still a bit unsure as to the true impact these types of marketing can have, largely in part due to the lack of specific research. A recent report by the mobile marketing association and NCH marketing services suggests that mobile and online coupons account for barely 2-3% of total coupon redemption even though the sector is growing at a phenomenal rate. Given this, businesses struggle to implement effective location-based marketing or mobile coupon promotions that would work best for them.
There are many opportunities for excellent research in this domain:
1. Consumers' reactions to location-based coupons and advertising in general
Not much is known about how consumers react to location-based coupons and advertising in general. For instance, considerable research has gone into understanding how consumers react to in-store/on the location promotions in the offline world. If we apply the same theories to the mobile marketing, do they stand? How do consumers react to mobile/location-based coupons? Does the element of surprise lead to better coupon redemption? Will that in general increase basket size, coupon redemption and the overall ROI of sales promotions?
In addition, how can marketers use location-based coupons/marketing messages to entice consumers towards or away from products? An important issue is the allocation of marketing spending across the push and pull elements through the mobile medium (Ailawadi et al 2009). What offer should a retailer provide to a consumer who is in a mall that houses one of that retailer’s stores? For example, if the consumer is closer to its competitor’s shoe department, should the retailer text an instant discount offer on its shoes? If the consumer is at another store buying an item that is not sold by the retailer, should the retailer prompt the consumer with an offer on a related item?
2. Coupon framing: How should marketers frame location-based/or digital coupons?
There are many issues related to this topic. For instance, a large body of behavioral research demonstrates that the manner in which a deal is framed influences consumer perception of the deal value and purchase intent. Framing refers to how the deal price is communicated to the consumer, for example, whether an external reference price is provided, whether the deal is in dollar or percentage terms, and whether prices of competing products or other contextual information are provided. This research could inform retailers how mobile coupons/marketing could be framed because small modifications in wording and the information provided can have a significant impact on the effectiveness and efficiency of the deal.
3. Coupon proneness
Another interesting topic could be to understand the types of consumers that are more amicable to mobile marketing/location-based services. Obviously, the demographic and psychographic characteristics of such consumers will be different from those consumers that are prone to traditional sales promotions. I guess this is in itself is an interesting topic.
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