Mobile Technology and Social Media in Retail: Decomposing the Value of Geolocation Information

Abstract

This research examines how consumer response to mobile and social media promotions vary at different stages of the decision-making process. The analysis is based on a proprietary dataset reflecting the operations of a mobile platform that enables firms to send geolocated promotions. In this platform, information is gradually delivered to consumers, which allows for decomposing the value of geolocation information in influencing consumer’s awareness, consideration, purchase intention and recommendation behavior. Our results indicate that geolocation information makes a significant difference in early stages of the purchase process (opening rates), but not in the conditional likelihood of accepting or recommending a promotion. These results suggest that the value of geolocation is reflected primarily in increased consumer awareness, and not in changing consumer behavior in later stages of the conversion funnel. Further analysis reveals that the impact of design features of geolocated campaigns varies throughout the purchase funnel. For example, timing variables have an influence on opening rates, while value proposition attributes are the main drivers of acceptance rates. Our results also show that the performance of geolocated campaigns is in-between social media (Facebook) and non-geolocated campaigns, suggesting that geolocation information can be useful in resolving the trade-off between reach and effectiveness.