Location-Based Marketing: Issues and Trends

Executive Summary

Key Findings

The current report aims at investigating location-based marketing as the method of introducing and promoting different goods and services, taking into consideration the location that connects a potential customer and a seller. There are many ways of how to inform a customer about new offers, and location-based marketing is one of the current achievements. Privacy and technology challenges and the necessity to improve location-based marketing and its opportunities to promote goods and services distantly and in real-time at the same time are the key findings of the current paper.

Most Important Information

Through location-based marketing is not a new service in many countries, not all companies know how and when to employ it and enjoy the benefits got. The relations between sellers, marketers, and customers have to be developed in the best possible way, and location-based marketing is one of the methods that can be used. Location-based marketing is the process that may be organised independently by a company or in cooperation with special organisations like Placecast. Sellers have to understand a tiny line that separates the customer’s intention of privacy and the desire to learn more about goods or services. Marketers face a serious task not to break some ethical principles that have been created during the centuries and offer services based on the customer’s location and personal information.

Conclusions and Recommendations

The paper concludes that though certain challenges and drawbacks are associated with location-based marketing and may demonstrate its weakness, the advantages are overweighting. This type of marketing helps a company to understand the needs of customers and introduce a variety of goods and services regarding such factors like demographics and lifestyle differences.


Topic Background

Nowadays, due to the existing information technologies, advertising methods, and opportunities, the companies around the whole are able to choose the most appropriate ways and introduce their products or services. There are many marketing methods to choose from. Still, not all companies know exactly when and what steps they have to take to be sure of the success of the campaign. The main problem of marketing is people’s intentions to identify this process only as of the necessity to sell and advertise different people (Kotler & Armstrong, 2010). However, this definition is too general and has to be elaborated considerably. First of all, people, who are busy with marketing, have to understand that their primary task is not to sell a product or a service but to understand consumer needs (Kotler & Armstrong, 2010), introduce a product/service, and choose the most efficient for a situation strategy.

Location-based marketing is one of the marketing methods characterised by the ability to be changed in regards to the location of a potential consumer; this is why it is also called as “geomarketing” (Kotler, Burton, Deans, Brown, & Armstrong, 2012). There are many challenges and opportunities that can be associated with location-based marketing, and people need to know more about them to benefit from the chosen method.

There are certain opportunities associated with location-based marketing. They are the possibility to identify a potential customer’s location to offer the most appropriate service or sell a product. It is also possible to consider a customer’s purchasing history to make the best offer. At the same time, particular challenges may take place. Location-based marketing touches upon some ethical principles. Many people are not satisfied with the idea that some companies get access to their actual location (Smith, 2014). They take care of their privacy and find this fast-spreading marketing method too offensive and ethically inappropriate.

Another challenge is the necessity to integrate data considering the available geolocation-based apps and existing consumer information. There are companies with low-cost systems that fail to benefit from location-based marketing because of the inabilities to promote communication at different levels. This is why it is necessary not only to investigate customers’ needs but also consider the possibilities of a company before choosing location-based marketing as the main method.

Research Problem

There are many peculiarities of a definition for location-based marketing; still, all of them have one thing in common, the main essence of this type of marketing. In general, location marketing is a type of marketing that promotes the possibility to reach people when they are using their mobiles, define their exact location, and offer the most appropriate services considering their possible purchasing needs (Kotler & Armstrong, 2010). The current paper aims at investigating the ways of how companies can implement effective location-based marketing regarding the existing challenges and opportunities. The chosen research problem is about the necessity to explain a true worth of location-based marketing and underline the factors crucial for its integration. In fact, not all companies may allow themselves to enjoy the benefits of location-based marketing; this is why they have to know when and how location-based marketing ideas can be used.

Research Questions

There are several questions that have to be answered in the project. In fact, the current paper offers explanations for the following issues:

  1. What is the most appropriate period for a company to employ location-based marketing?
  2. What issues have to be considered when location-based marketing is applied? How is it possible to deal with them in a proper way?
  3. Is consumer behaviour affected by location-based marketing?
  4. Are there any possible new location-based marketing trends?

The process of answering all these questions helps to identify the main aspects of location-based marketing and the opportunities available for companies worldwide. Marketing is one of the most competitive spheres of life, and location-based marketing is one of the latest achievements made to learn customer needs and use them offering a new product or a service.

Literature Review

Location-based marketing is rather a new topic for consideration. Still, a number of researchers and scholars have already offered their own ideas and suggestions on how to use location-based marketing and what is the most appropriate time for it. Kotler and Armstrong (2010) define a location as “the mantra of the real estate business” with the help of which it is possible for the marketers to reach people at the right time and at the right place (p.230). The peculiar feature of location-based marketing is that information is more of a value-added type but not of an advertising type. This is why any information chosen for location-based marketing has to be valid and actual. At the same time, marketers cannot be sure all the time that the messages they send via mobiles are seen by the right people at the right time and at the right place (Stolle, 2014).

The investigation of Stolle (2014) shows that the only correct way to use the location-verified services is to define it as a catalyst for conversations. However, the effectiveness of location-based market cannot be as high as it is expected if it is considered only in this particular aspect. This is why it seems to be better to identify the challenges associated with location-based marketing and think about the ways of these challenges may be overcome or, what is more interesting, turned into the opportunities for the marketers.

The essence of location-based marketing is all about the necessity to define an actual location of a customer and send the necessary information about a service or a good to be sold. At the same time, a number of doubts and misunderstandings may take place. For example, Stolle (2014) mentions that one of the possible challenges for the location-based marketers is a poor assurance about the fact that “a target consumer sees the message while they [marketers] are still at the intended location” (para. 6). In other words, the idea of location-based marketing is challenged because of the inability to be confident that the chosen method is working and the context of a message, as well as its impact, is the strongest at the moment.

The analysis of location-based marketing offered by Smith (2014) introduces a powerful combination of challenges and opportunities available for marketers. On the one hand, location-based marketing is a unique chance for the sellers to offer their services and goods to consumers on a regular basis or occasionally. It happens that a person passes by a store or even enters it and gets a message about the available discounts, interesting offers, and new products that may be relevant to a consumer with his/her own purchasing history (Smith, 2014).

The example of Rogers Communication, one of the leading and the most popular media companies in Canada, proves that it is possible to benefit from location-based marketing even if being already involved in a variety of mobile services (Tode, 2013). Its cooperation with Placecast and the desire to launch Rogers Alerts as a possibility to send various exclusive offers to the customers around had an incredible success. Millions of people are eager to use Rogers’ services and enjoy the offers they have. Rogers’ services became available to a broad range of people within a short period of time, and it was a real success.

On the other hand, many people cannot agree with the fact that their actual location is available to a number of networks. It is not a secret that sometimes people cannot, do not want to, or have not to disclose their location because of a variety of reasons. This is what creates another challenge for location-based marketing. The main drawback of location-based marketing is the consumer’s right to privacy. At the same time, the investigations show that almost all people, who use the location-based services, do not care about their location privacy (Smith, 2014). They are free to choose the companies that may get access to their geolocation and cut access to the required information anytime.

The other location-based marketing challenge is based on the quality and appropriateness of the information available via location-based services and apps. Even if consumers neglect the threats of their location identification, some companies also face some technical issues based on the necessity to integrate the information and combine with the environment of real-time (Smith, 2014; Stolle, 2014; Kotler et al., 2012).

Kotler et al. (2012) also underline the fact that there are many people who find the ads sent to their mobiles irritating and useless. People explain that they do not want to be pushed to buy something or choose a service. There is always a possibility to use the Internet and find out the most appropriate suggestions. This is why the companies that are going to use location-based marketing as a chance to extend their services and make their goods more popular may ask their consumers about their desire or intentions to share personal information and their location and make some agreements within the frames of which the companies get the right to send special messages (Kotler et al., 2012).

Steinberg (2012) says about the best possibilities available for the companies, who are eager to try location-based marketing, and uses the stats (more than 420 million smartphones with GPS devices have been sold) to prove the worth of the chosen marketing methods. When people make a decision to buy a GPS device, he/she agrees with the fact of sharing his/her location information. This is why it is normal for the companies to make use of such decision and close more deals offering interesting discounts, sending special text messages, and attracting people by special offers.

The companies that decide to use location-based marketing may take independent steps and develop their own strategies or take a look at a number of specialised companies that aim at selling location-based marketing. Placecast, Geotoko, Yelp, and Foursquare are the location-based marketing services available (Steinberg, 2012). They can offer the best options for different companies regarding their opportunities and expectations. With time, the idea of location-based marketing has been dramatically changed. Some companies do not want just to offer their goods and services at the right place and time. They want to compete and take the leading positions to make the offers better than their possible competitors.

Schwartz (2011) explains that location-based marketing is an excellent opportunity for sellers and consumers as business wins a lot due to a chance to be noticed, and consumers should not spend much time searching for the necessary opportunities. A variety of goals set by the companies considering the geolocation factor increases considerably day by day, and it is necessary to think over the best methods of how location-based marketing strategies and techniques can be employed.

Data Analysis

Research Methods

The current report offers several evaluations of the challenges and opportunities associated with location-based marketing. To give the answers to the research questions posed at the beginning of the paper and analyse the research problem based on the necessity to use the appropriate methods while employing effective location-based marketing, a number of case studies have been evaluated as well as several research articles and academic books have been chosen.

The case studies of Rogers Communications, an international airline company with its intentions to hire people via mobile ads, a retailer in the sphere of boutique fashion, Quiznos with its desire to promote its fast-food in the five-mile radius, etc. make it possible to see and analyse how different companies with different food and services are eager to use location-based marketing and attract more attention of their new potential customers as well as remind about themselves to their regulars. The same research method helps to understand why and when the companies are able to employ location-based marketing.

Case Study Data Analysis

For example, the Got Milk campaign is the example of location-based marketing with medium results. In 2011, when the company has already established itself in a marketplace, there was a necessity to promote the already known goods to a wider range of people (“Case Study: Got Milk?”, n.d.). It was offered to use location-based marketing as a possibility to learn more about the people, who have already used the product, or about the effects, the product may have on people, etc. The results amazed its developers: more than 54% of the people, who got the messages, visited the shop, and more than 17% purchased the product (“Case Study: Got Milk? n.d.). Though it was hard to make every person buy the product, another goal, to tell more of milk, its effects, and peculiarities, has been successfully achieved.

The case study about one home improvement retail companies shows that some brief information about the nearest trade counters may also attract the consumers and make them enjoy the discounts offered (“Case Study: Home Improvement”, n.d.). The results of this case study prove that location-based marketing can improve foot traffic and promote mobile purchasing considerably.

Another successful example of how location-based marketing can change the company is demonstrated by direct cooperation of Kiehl with Placecast. Their location-marketing campaign aims at increasing brand awareness and enjoying the benefits available to its new customers. More than 45 stores of the company were geofenced (“Case Study: Kiehl’s”, n.d.). In the period of six months, the company sent its messages to about 7000 people. The results amazed a lot: more than 73% of the recipients made purchases in the stores offered, and 48% of those, who read the messages, were interested in the idea of buying Kiehl’s products and learn more about the discounts available.

It has been proved that Kiehl’s consumers are eager to know about the events and get access to new products as soon as possible. The chosen location-based marketing program is one of the possible chances to meet the customers’ needs and advertise the products that have been already in demand among a certain group of people and should be introduced to new people.

All these case studies explain how and why the companies with the products and services of various natures are able to succeed with location-based marketing. In spite of the fact that some people may be irritated with the ads they can get, some companies are not able to integrate the information about consumers and their offers, and some technical problems may take place, location-based marketing is a chance for any organisation to improve their current situations and try to achieve new goals, close more deals, and settle right relations with consumers. It is critical and promising for a company to be introduced and memorised as a reliable source of services, a valid retailer, or a trustful companion, the services of which are always in demand.

Period to Employ Location-Based Marketing

One of the crucial steps that any developing company has to take is to make a decision when it is high time to employ location-based marketing and be more or less about the possible positive results. The evaluation of the case studies and the achievements of various academic researchers and contributors show that location-based marketing may take place anytime (as soon as the company appears on the market or after a certain period passes). It is explained by the fact that location-based marketing is not about time or certain periods. It is about the customers and their needs. It is more important to choose the most appropriate tools and interesting ideas to prove that a good or service is worth recognition.

Of course, a certain period of time is necessary to introduce and offer a good/service to some people and make sure they need (or, at least, they are interested in) the offerings. A particular location-based marketing strategy should last at least six months to be defined as effective or not. It is not enough to attract some people during a short period of time. The effects of location-based marketing can be observed and analysed in case the campaign lasts for some period of time.

Ordinary people should be provided with some time to get a chance to use the offered service and make a purchase if the conditions are appropriate. The period of location-based marketing usage depends directly on the goals set by the company and the location. If the store is in the region with a more or less constant population, it should not take much time to inform the majority of people about the events of a store. However, if there is a chance of constant tourists or other groups of people, who may be interested in the services offered, the company should benefit from the chosen location-based marketing strategy for a long period of time and make its services/goods known to every person around.

Issues of Location-Based Marketing

The issues that may be associated with the location-based market are defined on the basis of the opportunities and challenges the marketers and consumers may face. It is necessary to take into consideration the following challenges, like privacy needs and certain technology needs, and the opportunities, like the possibility to learn better different services and goods that are more or less appropriate to the existing consumer’s purchasing history. As soon as these challenges and opportunities are discussed, the companies have to think about some adequate steps to be taken. For example, a successful location-based marketing campaign may consist of the following issues:

  1. Customers and their needs have to be put in the first place. The marketers have to analyse the environment and learn whether the chosen service/good is appropriate for a region.
  2. Customers’ opportunities and tools have to be appropriate. The marketers need to consider the possibilities of the customers and make sure the customers are able to share their personal information or use GPS anytime.
  3. Analyse the location of the customers. It is a very important step in location-based marketing because such kind of analysis helps to identify the needs of people who live around and think about the best ways to offer the services.
  4. Never rely on location-based marketing only. It is wrong to believe that the chosen location-based marketing strategy is the only thing that should be done. It is also necessary to remember about the additional offers, opportunities for regular customers, and online services for those customers, who are far and cannot reach the location defined by the service.

When all these issues are identified and considered, the location-based marketing process can be started, and its effects on the selling process and income levels may be observed.

Location-Based Marketing Effects on Consumer Behaviour

In addition to the already discussed concepts of location-based marketing, it is necessary to mention the idea of consumer-related behaviour and its connection to the chosen marketing strategy. The marketers have to understand that there are different groups of people who may use mobile services and be influenced by a particular location-based marketing campaign. There are cases when a person uses its GPS to find a necessary store or a place to meet the need. In this situation, customers want to rely on each piece of information about the service or good available.

There are also the customers irritated by the apps they get. They may want to have nothing in common with the company sending the message. And there are also the people who may know nothing about the services around and are happy to learn better their opportunities and enjoy the discounts available. This is a successful app of location-based marketing has to be properly organised to cause positive consumer behaviour. As a rule, location-based marketing may influence consumer behaviour in a variety of ways. Still, it is necessary to consider the importance of such factors like a distance, the amount of a discount, nature of a good/service, and the consumer possibility to reach the desirable product/service within a required period of time (Steinberg, 2012). In case the stimulation within an ad got is high; indeed, consumer behaviour will be the one that is expected from the marketer.

Future Trends in Location Based Marketing

Regarding the current achievements in location-based marketing, it is possible to say that there is a definite and even successful future of this type of marketing. One of the latest trends in marketing is the possibility to meet the needs of retailers, who perform the function of the company’s first-line customers (Kotler & Armstrong, 2010). This trend can be developed considerably in the nearest future.

Another interesting location-based marketing trend is connected with the methods of sharing information. It is not only possible to inform a person in the radius about the possible discounts and offers. It is more effective and interesting to involve the customers in the process of marketing and make them believe that they are a part of a huge system. The customers may share the information they get with other people and demonstrate their loyalty that can be appreciated financially.

Finally, the future of location-based marketing may be the possibility of mobile payments. People may pass by a store without the required sum of money. Still, they surely have their mobiles. So, they can use these devices to make a payment.

In fact, the future of location-based marketing varies considerably. The possible kind of technological improvement that can be offered the next year is hard to predict; this is why this type of marketing should be constantly analysed, learnt, and improved according to the new customer needs and technological opportunities.

Conclusion, Recommendations, and Future Research Directions

In general, nowadays, it is hard to imagine a person without a mobile phone. This technology is used to make the connection between people from different parts of the world possible, to share information, and to introduce new offers and ideas to people within a short period of time. Location-based marketing is something that has been expected for a long period of time. As soon as GPS appears on mobile phones, people start thinking about how to use it more effectively. This is why the promotion of goods and services by means of mobile phones and the possibility to determine the location of a person is not a surprise but more an expectations that meet the needs of many customers.

Location-based marketing is a good chance for people to learn better the latest offers and discounts within a short period of time. It is a symbolic guide for those who are in professional need and want to achieve some improvements within a short period of time. And even if people may suffer from the existing challenges and inabilities to gain control over all processes, it is still recommended to continue developing location-based marketing and introduce new trends by means of which the process of selling goods and services can be improved.

Future research of location-based marketing is possible in a variety of ways. The researchers may focus on the current technological progress and consider how to achieve the implementation of the technologies and meet the needs of customers. It is also necessary to investigate the challenges and overcome them regarding the current improvements in the spheres of marketing, technology, and communication. Though all steps should be properly weighted, the researchers have all chances to contribute to the chosen sphere of investigations and prove a true worth of location-based marketing.


Case study: Got milk? (n.d.). Placecast. Web.

Case study: Home improvement. (n.d.). Placecast. Web.

Case study: Kiehl’s. (n.d.). Placecast. Web.

Kotler, P. & Armstrong, G. (2010). Principles of marketing. Upper Saddle River, NJ: Pearson Education. Web.

Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2012). Marketing. Frenchs Forest, Australia: Pearson Higher Education. Web.

Schwartz, J. (2011). Location-based marketing. CPA Practice Management Forum, 14-15. Web.

Smith, A. (2014). Location-based apps present opportunities – and data challenges. SearchCRM. Web.

Steinberg, S. (2012). Business expert’s guidebook: Small business tips, technology trends and online marketing. Raleigh, NC: Lulu Press. Web.

Stolle, B. (2014). Message to marketers: Location-based marketing at its best is a two-way street. Forbes. Web.

Tode, C. (2013). Rogers communications partners with retailers to deliver location-based offers. Mobile Marketer. Web.

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