Competitive location-based mobile coupon targeting strategy. (January 2021)

• Record Type: Journal Article
• Authors: Luo, Meiling; Li, Gang; Chen, Xudong
• Is Part Of: Journal of retailing and consumer services. Volume 58(2021)
• Publication Date: 2021-01
• Subjects: Mobile coupons -- Geo-location targeting -- Asymmetric competition -- Mobile accessibility -- Price discrimination; Retail trade -- Periodicals; Service industries -- Periodicals; Customer services -- Periodicals; Commerce de détail -- Périodiques; Service à la clientèle -- Périodiques; Customer services; Retail trade; Periodicals; 658.87
• DOI: 10.1016/j.jretconser.2020.102313
• Languages: English
• ISSNs: 0969-6989

Abstract

Abstract: At present, retailers are increasingly targeting consumers based on consumers' geographic locations by distributing mobile coupons. We develop a theoretical model to compare uniform coupon targeting with one-to-one coupon targeting for two competing retailers with asymmetric mobile accessibilities. We find that retailers engage in targeting promotion only when the marginal cost of targeting is not too high. Adopting uniform coupon targeting does not necessarily lead to the prisoner's dilemma. Additionally, the asymmetry of mobile accessibility lessens inter-firm price competition. Finally, our results further demonstrate that marketers should switch from offensive to defensive targeting as the marginal cost of targeting declines. Highlights: Retailers adopt targeting promotion based on consumer's real-time location. Two competing retailers have asymmetric mobile accessibilities. Retailers' targeting strategies depend on the marginal targeting cost. Location-based targeting does not necessarily lead to the prisoner's dilemma. Retailers switch to defensive targeting as the marginal targeting cost declines.