Competitive Mobile Geo Targeting

Yuxin Chen (), Xinxin Li () and Monic Sun ()
Additional contact information
Yuxin Chen: New York University Shanghai, 200122 Shanghai, China
Xinxin Li: University of Connecticut, Storrs, Connecticut 06269
Monic Sun: Boston University, Boston, Massachusetts 02215

Marketing Science, 2017, vol. 36, issue 5, 666-682

Abstract: We investigate in a competitive setting the consequences of mobile geo targeting, the practice of firms targeting consumers based on their real-time locations. A distinct market feature of mobile geo targeting is that a consumer could travel across different locations for an offer that maximizes his total utility. This mobile-deal seeking opportunity motivates firms to carefully balance prices across locations to avoid intrafirm cannibalization, which in turn mitigates interfirm price competition and prevents firms from going into a prisoner’s dilemma. As a result, a firm’s profit can be higher under mobile geo targeting than under uniform or traditional targeted pricing. We extend our model in three different directions: (a) a fraction of consumers are not aware of mobile offers outside of their permanent locations, (b) mobile offers can be collected when consumers travel for other reasons, and (c) firms use both permanent and real-time locations when setting prices. Our findings have important managerial implications for marketers who are interested in optimizing their mobile geo-targeting strategies.

Keywords: targeted pricing; mobile targeting; geo targeting; analytical models (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:36:y:2017:i:5:p:666-682

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