Mobile Geo-Targeting: Inside vs. Outside a Mall

Posted: 16 Apr 2021 Last revised: 13 Aug 2021

See all articles by Hubert Pun

Hubert Pun

Ivey Business School

Qi Wang

China Europe International Business School (CEIBS)

Xia Wang

Renmin University of China - School of Business

Xiaoqing Xie

China Europe International Business School (CEIBS)

Date Written: April 4, 2021

Abstract

Although the extant literature has much research on location-based targeting, it does not distinguish between inside and outside a location. This paper extends the literature by considering mobile coupons issued outside and inside the location in the setting of a shopping mall with multiple stores, where each store may issue mobile in-app coupons to potential customers. We first empirically examine the effect of coupons on stores’ sales using a proprietary dataset from a large Chinese shopping mall. We show a stronger sales effect of coupon clicks made by consumers outside the mall than inside the mall, implying a traffic-conversion effect – bringing additional traffic to the mall – that has been overlooked in prior literature. Our data also suggest that stores may not gain more sales from issuing coupons, but can benefit from free-riding on other stores’ coupons. Motivated by our empirical findings, we build a mathematical model to investigate optimal location-based coupon strategy. Our analytical results identify the conditions regarding two new decisionswhether and where a store selling experiential or functional products should issue coupons, which not only echo our empirical findings, but also show that without distinguishing inside or outside a location, marketers may underestimate these coupon effects and may target the wrong consumers. Lastly, we show the existence of the prisoner’s dilemma where stores would not offer coupons, although they would be better off issuing coupons; moreover, we show that the driver is the coupons’ traffic-conversion effect. These findings underscore the needs for stores to distinguish consumers inside or outside a location so as to target right ones.

Keywords: location-based targeting, mobile in-app coupon; game theory; empirical data; experiential/functional products

Suggested Citation

Pun, Hubert and Wang, Qi and Wang, Xia and Xie, Xiaoqing, Mobile Geo-Targeting: Inside vs. Outside a Mall (April 4, 2021). Available at SSRN: https://ssrn.com/abstract=3819066

Hubert Pun (Contact Author)

Ivey Business School ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Qi Wang

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Xia Wang

Renmin University of China - School of Business ( email )

Beijing
China

Xiaoqing Xie

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
167
PlumX Metrics