Location-based social networking and marketing

Citation

Pitta, D.A. (2011), "Location-based social networking and marketing", Journal of Consumer Marketing, Vol. 28 No. 2. https://doi.org/10.1108/jcm.2011.07728bag.001

Location-based social networking and marketing

Article Type: Internet currency From: Journal of Consumer Marketing, Volume 28, Issue 2

Arguably, if left to themselves, engineers and scientists will develop new technology because it is novel, innovative, fixes a problem that they have, or is just “cool”. Product developers have a different task. They are charged, in part, with scanning for new technology that provides valued customer benefits and incorporating the most relevant innovations into their products. Sometimes the additions offer minor benefits but serve to differentiate one product from another. In other cases, the value is more tangible. Thus, rudimentary cameras became standard in cell phones. They could take a snapshot or even a short video. At the beginning, the resolution was so low that it was clear that the phone was primarily a phone. For example, phone camera video taken during the London subway bombings in July 2005 is grainy and of low quality. Other technological improvements like a rudimentary global positioning (GPS) function were included but did not change the essence of the cell phone.

However, today, improvements in technology have changed the nature of communication. Particular cellular telephones like the newest Apple iPhone or the Motorola Android (Droid) are packed with technology. They and the products of other competitors support internet browsing, integrated mapping services with local business listings, integrated social networking, and even allow automatic background data updates. Moreover, the camera functions have improved markedly. Since 2005, the resolution has become sharp enough that a camera manufacturer with a strategic viewpoint might identify the new smart phones as serious competitors. After all, consumers could take a high-resolution digital picture with their phone and then send it to a social media account without going through the process of downloading the files from a camera onto a computer. Similarly, the GPS functionality has improved markedly. The developments have interesting implications for marketers.

The integration of social media and geolocation

Marketers are well aware of the change in the nature of marketing communication. In the past the marketer, brand manager, or advertising agency was in charge. Consumers exposed themselves to media and to the promotional communications that companies paid for. Companies spent money on all the promotion mix elements including personal selling, publicity and actions that produced word of mouth. Social media and online communities have changed the balance in favor of the consumer and word of mouth. The internet, Web 2.0, has revolutionized the ease of interacting with others. Its bandwidth allows multimedia communication that might be the envy of television networks. Using social media or online forums, consumers can interact with each other and seek advice about their consumption decisions. They can identify those with subject matter expertise. Moreover, like the operation of word of mouth, they tend to trust the recommendations and experiences of other consumers, whom they perceive as unbiased. As a result, Facebook, Twitter, YouTube and other social networking sites, as well as more traditional special topic websites, have become highly important in the consumer decision process.

Several companies exploit the capabilities of smart phones and their geolocation capabilities, one stands out.

foursquare.com http://foursquare.com/

foursquare uses geolocation for marketing. The site established its value to consumers by offering its application free to smart phone users. Consumers can sign up for an account and download an application for their iPhone, BlackBerry, Android, palm pilot, Nokia or other device. After signing up, foursquare links to the new user’s current Facebook account. Instantly, other foursquare/Facebook members can see each other’s profiles. The automatic social media links helps to propagate the service.

From that start, it allowed members to post comments about retail locations, restaurants, entertainment venues and other sites of interest. Its value is that it can help retailers drive customers to their locations. foursquare exploits geolocation by combining it with a game that rewards users for visiting new retail locations or old favorites. If people explore targeted geographic locations they receive a reward for checking in. Users are encouraged to, “Check-in, find your friends, unlock your city”. It represents a challenge that seems like a good idea.

The user pitch is slick. It portrays the combination of phone and foursquare as a key to knowledge and freedom. It promises to “unlock your world and find happiness just around the corner”. That kind of appeal strikes a chord with Millennials, especially those who’ve moved to an unfamiliar city in pursuit of a career.

The process is simple, users download the application (app) which instantly links to their address book, Twitter and Facebook friends. In a test, we were surprised to see links to Facebook friends in our computer link before we downloaded the phone app. The significant fact is that once foursquare is on the phone, one can see if any friends are nearby, or were when they “checked in” to a location. Checking in is the act that tells friends of your location. To younger, socially oriented Millennials, the ability to meet their friends when they are out shopping or dining must be valuable. When checking in, users can leave hints, recommendations or warnings about businesses that can help others learn about the good and avoid the bad.

foursquare empowers consumers by letting them add places that are not already listed and lets them search for things to do and places to visit. The website provides motivation by offering prizes for visiting sites. The prizes are not really tangible; one might view them as worthless. One can earn a series of “badges” which are icons that look like badges and decorate a user’s profile. Badges are rewarded on the basis of the number and types of physical locations visited. The person who has the largest number of visits to a location becomes “the mayor” of that place. The badges or mayoralty rewards are certainly not financial but psychic.

Businesses can provide financial incentives to drive customers their way. They can use foursquare to engage their mobile customers with foursquare “Specials”. They can be discounts or prizes available when users check in on foursquare at their location. In addition, foursquare Specials can be tracked with a free set of traffic analytics to assess their effectiveness.

The web site knows consumer motivation. They provide businesses with self-service tools that act like the free hot dog promotion of a grand opening. Marketing lore holds that people will drive miles just to get a free hot dog and soft drink. foursquare exploits this truth by providing a group of business generated specials along with promotional tag lines. Some of the possibilities are:

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  Mayor Specials: unlocked only by the Mayor of a venue (the user who has checked in the most in the last 60 days). The special can be as simple as a free order of French fries.

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  Check-in Specials: unlocked when a user checks in to a venue a certain number of times (e.g. ten visits may yield a free drink.)

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  Frequency-based Specials: are unlocked every X check-ins and can be a one-time discount.

Businesses can promote their foursquare specials using social media like Twitter, signs at cash registers and outdoor signs. The site even provides official foursquare window clings, similar to Visa, or MasterCard signs to place on the location’s windows.

Implications for marketers

It is easy to state that social media have revolutionized marketing. Instead of robbing marketers of the power to influence consumers, social media have presented new opportunities to succeed. Marketers who embrace websites like foursquare can reap the benefits of word of mouth, credibility, fun, and a bit of peer pressure.

The consumer empowerment that foursquare provides cannot be underestimated. Being able to locate friends while out shopping, dining or drinking, has a powerful appeal to some consumers. The much discussed Millennials are a prime target since they are technologically knowledgeable, tend to purchase more entertainment and dining experiences, and are motivated by the fun of the foursquare ”treasure hunt”.

Given the change in the perceived control over communication in favor of consumers, foursquare offers chance to reverse the balance in favor of the marketer.

In our next issue, we will investigate other informative sites and invite readers to submit their favorite internet sites for our consideration.

Dennis A. PittaUniversity of Baltimore

Reader requests

Please forward all requests to review innovative internet sites to: Dr Dennis Pitta, University of Baltimore, 1420 North Charles Street, Baltimore, MD 21201-5779, USA. Alternatively, please send e-mail to: dpitta@ubalt.edu for prompt attention