Geo-Conquesting: Competitive Locational Targeting of Mobile Promotions

Journal of Marketing Research, 52 (October 2015), 726-735

Fox School of Business Research Paper No. 14-030

10 Pages Posted: 21 May 2014 Last revised: 22 Nov 2017

See all articles by Nathan M. Fong

Nathan M. Fong

Temple University - Department of Marketing and Supply Chain Management; MIT Sloan School of Management

Zheng Fang

Sichuan University - Business School

Xueming Luo

Temple University

Date Written: May 20, 2014

Abstract

As consumers spend more time on their mobile devices at various locations, a focal retailer’s natural approach is to target potential customers in close proximity to its own location. Yet focal location targeting may cannibalize profits on infra-marginal sales. This study demonstrates the effectiveness of competitive locational targeting, the practice of promoting to consumers near a competitor’s location. The analysis is based on a randomized field experiment in which mobile promotions were sent to customers at three similar locations (competitive, focal, and neutral) in shopping malls. The results show that competitive locational targeting has the potential to take advantage of heightened demand that a focal retailer would not otherwise capture. Competitive locational targeting produced increasing returns to promotional discount depth, indicating the presence of threshold effects. In comparison, targeting a retailer’s own location produced decreasing returns to deep discounts, indicating saturation effects and profit cannibalization. These findings are important for marketers, who can use competitive locational targeting to profit from incremental sales while preserving margins on sales to consumers near their own locations. Locational targeting has enormous potential as a competitive weapon that allows a retailer to maintain a presence anywhere – including on a competitor’s doorstep.

Keywords: Mobile commerce, Mobile targeting, Competitive targeting, Real-time targeting, Locational Targeting, Randomized field experiment

Suggested Citation

Fong, Nathan M. and Fang, Zheng and Luo, Xueming, Geo-Conquesting: Competitive Locational Targeting of Mobile Promotions (May 20, 2014). Journal of Marketing Research, 52 (October 2015), 726-735; Fox School of Business Research Paper No. 14-030. Available at SSRN: https://ssrn.com/abstract=2439398 or http://dx.doi.org/10.2139/ssrn.2439398

Nathan M. Fong (Contact Author)

Temple University - Department of Marketing and Supply Chain Management ( email )

Philadelphia, PA 19122
United States

HOME PAGE: http://sites.google.com/site/nmfong/

MIT Sloan School of Management ( email )

Cambridge, MA
United States

Zheng Fang

Sichuan University - Business School ( email )

China

Xueming Luo

Temple University ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

HOME PAGE: http://www.fox.temple.edu/mcm_people/xueming-luo/

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