Location-based marketing (LBM) is a direct marketing strategy that uses mobile devices such as smartphones to offer potential customers products at a nearby sales or service location. Users will receive notifications on their smartphone as soon as they are near a predefined location or site and need to have agreed to receive push messages. Location-based marketing requires a single opt-in of the user, usually associated with the use of an app. The app accesses the location-based services of the mobile device and the notification is initiated by this location data when the user is within range. The purpose is to reach users at the point of sale in order to promote a product and increase online customer loyalty and relevance of the transmitted messages.
The basis for location-based marketing are location-based services such as GPS, GSM modules or RFID chips. On the one hand, navigation satellites can be used; on the other hand, mobile radio networks and transponder chips also offer different options for positioning. The principle is that advertising messages are contextualized. The context is the location, which is determined through the above-mentioned technologies and suggests a fundamental interest in the services offered. If a user is near a location and uses the company’s app, it is likely that they could become a customer or at least be interested in the services.
Location-based marketing is basically a form of targeting that relies on location data to provide the user with special offers through an innovative technology. This can serve both customer acquisition and long-term customer loyalty. It is not just the delivery of advertising messages to potential customers, but services that make up and, above all, complement the company’s portfolio. The customer should be offered relevant information in a particular situation. Examples are incentives when buying at the store, additional services or simply helpful information about opening times, current waiting times or information about events and special promotions. Customers can be approached with LBM at the right time, at the right place, and with the right message along the entire customer journey.
Different approaches exist in the field of location-based marketing such as location determination and the form of the approach.
The technologies used are different, but in most cases require an explicit consent from the users:
The possibilities for location-based marketing are numerous:
Location-based marketing can be used to link consumers’ offline and online behaviors. The local connection with location-based data allows the relevance of the advertising messages to target groups using mobile devices and thus have a higher probability of users accepting the advertising. Especially in the case of stationary trade, customers can be reached in their immediate vicinity with this kind of mobile marketing and directed to the point of sale. Special advertising tailored to the customer, which is carried out via a mobile device can make a decisive contribution to handle avoidance of effects such as banner blindness and a negative attitude towards ads.
However, legal barriers arising from data protection and the protection of privacy are also central in this context. Opt-ins and the permission to send push messages are just as necessary as the technical relatively demanding implementation of such campaigns. In the marketing mix, location-based marketing can convey advertising messages at the right time and at the right place, especially in the case of young, technology-conscious target groups, if the technical possibilities are used efficiently.