How does location based marketing affect mobile retail revenues? The complex interplay of delivery tactic, interface mobility and user privacy

Abstract

Location Based Marketing (LBM) increases relevance of placed advertisements by increasing awareness of product offers and availability in the consumer’s proximity. However, depending on how it is executed, such advertising can be perceived as intrusive, irritating, or a violation of consumer’s privacy. Existing research does not offer clear directions for retailers, who are keen to know of LBM’s effectiveness on sales. In this paper, authors investigate the effects of LBM on application (app) driven revenues of 116 major mobile retailers from around the globe. In particular, we examine the contingency effects of the roles of device as well as privacy needs of the brand audience. Findings reveal that effects of LBM on app-based revenues vary by delivery tactic (inbound vs. outbound), interface mobility (Low: Tablet vs. High: Phone), and user privacy needs (Privacy-seeking Android users vs. Privacy-oblivious Apple users). Overall, this research identifies critical factors for retailers to consider in order to best monetize their location based efforts. Contributions of the analysis and managerial implications are discussed.