Geolocation and mobile marketing

According to Skyhook Wireless, a Boston firm that offers Wi-Fi location services, more than 300 iPhone apps use geolocation, out of the estimated 4,000 applications on the market. 

So what does that imply as far as marketing is concerned? To fully understand the implications of local marketing, let’s go back to 2002 when Daniel Kahneman, professor of psychology at Princeton University, won the Nobel Memorial Prize in Economic Sciences. His findings indicate that approximately 75% of purchase decisions occur at or near the place where the purchase will be made.

How does this apply to smartphones? I experienced it first-hand on a trip to New York. I was looking for a good restaurant and decided to use an app to help me with my choice.

Using my iPhone, I checked out TripAdvisor’s Local Picks (which I strongly recommend!), an application that displays all the restaurants in my immediate vicinity. Then, after taking member comments and ratings into consideration, I chose a restaurant that offered the best value for price and was within 500 metres of my current location.

This experience clearly demonstrates how social applications, available on your smartphone, can influence onsite purchase decisions. It’s therefore no surprise that 17% of iPhone applications have a social network component and 18% use geolocation (see tables below).

From the company’s point of view, there are two key elements for creating local smartphone applications that consumers will find useful.

  1. First, the application must be integrated in the purchase process, and come into use when consumers are near or at the purchase site and they suddenly realize they have a need. For example, the application should help the consumer determine: where to shop, what to eat, which product to choose, etc.
  2. Second, the application should offer reliable sources of information, such as from other consumers who have been through the same purchase process for similar products or services. Consumers don’t trust companies to tell them what to buy; they prefer to get advice from their peers. Essentially, it boils down to word-of-mouth on online communities.

This new emerging market could be very interesting, as it puts consumers in the driver’s seat by making it possible for them to influence each other’s purchase decisions. Stay tuned to see what happens next in this exciting field!


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