Consumers’ Perceived Costs and Benefits of Location-Based Smartphone Applications

Abstract

This study aimed to identify the dimensions of benefits and costs that consumers perceive in utilizing locationbased applications (LBAs) on smartphones, and to distinguish consumer groups according to their perceptions of those benefits and costs. A web-based consumer survey was conducted-among consumers who had experience using LBAs. Four hundred participants were 20’s to 40’s, with 200 women and 200 men. Descriptive statistics, frequency analysis, t-tests, one-way analysis of variance, and cluster analysis were used for data analysis. The findings of this study are as follows: first, LBAs accounted for about 20% of the smartphone apps used by consumers. Second, factor analysis identified the underlying dimensions of the benefits and costs of smartphone LBAs. The underlying dimensions of benefits perceived by consumers were information/economic/ convenience, entertainment and personalization. Privacy concerns, lack of trust and lack of behavioral control were the underlying dimensions of the perceived costs of LBAs. Third, ANOVA showed that the perceived benefits and costs of smartphone LBA services differed according to the characteristics of the consumer. Cluster analysis identified three distinctive consumer groups according to the levels of perceive costs and benefits of smartphone LBAs. The three groups were labeled the ‘benefit-cost balanced group,’ ‘cost centered group,’ and ‘benefit centered group.’ Keywords: location-based applications, benefits, costs