Location-based Technology: Beacon for Retailing

Jiyeon Kim, University of South Carolina, USA

ABSTRACT

As the physical and digital worlds emerge in stores, the transformation of the retail industry by
digital technology, proximity marketing devices, such as Beacons, have been effectively used. Beacons
emit Bluetooth low-energy (BLE) signals to pinpoint the location of customers with the app on a
smartphone coming within range on that signal can pick up on. Beacons are set up at various locations
within the store and its entrance. iBeacon is for Apple devices to alert apps, which the user has opted into
when someone approaches or passes by where it's deployed. In this paper, the benefits and challenges of
using Beacons for marketing communications are discussed.

INTRODUCTION

In the information era of one-to-one hyper-customized proximity marketing, it is possible, thanks to

geofencing technology, Wi-Fi, Bluetooth, and ubiquitous smartphones, marketers are able to track and
market to customers by identifying the customer's smartphone signals. By connecting location-based
technology devices and a consumer's smartphone, the customer gets a push notification on his/her phone
with a personalized offer as walking into a store. The condition is that a consumer must give permission
by opting in the brand's app for it to work. Beacons have been generating buzz as a first-generation
proximity marketing technology devices since Apple introduced iBeacon technology in 2013. In 2015,
Apple and IBM teamed up on a host of new apps incorporating analytics and iBeacon. Business Insider
Intelligence reported that beacons would increase to $44 billion dollars in retail sales by 2016, which is
up from $4 billion dollars from last year. As the physical and digital worlds emerge in stores, the
transformation of the retail industry by digital technology, proximity marketing devices, such as Beacons,
have been effectively used.
The retail industry is one of the heavy hitters of employing Beacons, like Macy's and Lord & Taylor
deploying them in their stores. In addition to the retail industry, Beacons have been benefitting a variety
of industries (e.g., hospitality, tourism, sports, and entertainment). For example, major League Baseball is
using them along with geo-fencing in stadiums to offer the on-site fans seat upgrades and promotions.
American Airlines is leveraging beacon technology to improve connections with customers in airports
(Maycotte, 2015). Meanwhile, in the business to the business arena, look for beacons to start turning up
everywhere from trade show booths to corporate lobbies (Maycotte, 2015). Facebook's announcement
regarding the mobile beacons as part of its new "Place Tips" service has put the retail world on notice, as
it will become a powerful access point with its 1.3 billion members. Facebook is leveraging it by
delivering information about shops and restaurants to users who are nearby (Petro, 2015).

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 BEACON TECHNOLOGY

iBeacon, in particular, is for Apple devices to alert apps, which the user has opted into when
someone approaches or passes by where it's deployed. Retail stores or other venues that have beacons in
place can detect where a customer is at any given moment so that the user will obtain the information at
the critical moment of action. Then the brands with the nearby store can push real-time notifications (e.g.,
deals and product information) to the customer near/on-site. Brands can use this to capture their attention
as they go by, enticing them to enter. Once inside, beacons can be used to give product information, help
them navigate through the store, make personalized offers, speed up checkout processes, and many more
(Maycotte, 2015).
As small as stickers that can be placed on walls or objects, Beacons emit Bluetooth low-energy
(BLE) signals to pinpoint the location of customers with the app on a smartphone coming within range on
that signal can pick up on. Compared to other near field communication devices, Beacons are more
private than RFID because of user-granted accessibility. Both consumers and brands can benefit from
mobile beacons: Consumers get highly targeted promotions and ads for the things they want, and retailers
can collect consumer data, which can be used for future promotions, pricing strategies, and marketing
communications (Petro, 2015).
Despite the benefits of using Beacon technology to target customers based on location, there are a
couple of challenges before functioning its full potential. First, Bluetooth capabilities must be enabled,
and an app must already be downloaded for the technology to work, a customer has to opt-in. In addition,
Bluetooth signal strength has the potential to fluctuate, which makes determining a distance from the
beacon challenging. By targeting shoppers who have established enough loyalty to your brand to
download the app, and reminding frequent customers to participate. Brands can use in-store signage to
encourage downloads and encourage social sharing to get the word out. Sending push messages in your
existing app can also be effective at driving conversions and seeing results. By honing efforts on loyal
customers and giving them an extra push, marketers can make the most of the iBeacon strategy and
increase reach (Kates, 2014).

BEACON TRIGGERED PROXIMITY MARKETING

Unlike other proximity marketing devices, which get a device's location from GPS and Wi-Fi
signals, a Beacon works by looking for the Bluetooth signal from a beacon located with the store. This
makes it much more accurate and hyper-local. Wi-Fi often places devices at the neighborhood level, and
GPS doesn't always work within a building (e.g., shopping malls). This means Beacons help the brands
push in the right messages to the right customer at exactly the right time. In the era of omnichannel
retailing, Beacon triggered marketing can help increase in-store sales and customer engagement. Beacon
triggered marketing, lets businesses target consumers in their stores with highly relevant content and deals
that can drive people to buy (Roesler, 2015). Swirl, one of a beacon platform, found that 73 percent of
shoppers who received a beacon-triggered message on their smartphone said it increased their likelihood
of making a purchase during a store visit and 61 percent said the message would prompt them to visit the
store more often (Korber, 2015).

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 HYPER-CUSTOMIZED MARKETING COMMUNICATIONS USING BEACONS

Location-based technologies can track customers as they travel from location to location,
developing a granular profile that offers insight into their lifestyle, shopping habits, and product needs.
Such real-time tracking capabilities also provide opportunities for engaging consumers. Offering
promotions using iBeacon is a good way to incentivize customers to spend in-store. At trade shows or
other events, Beacon's location-based tracking system can deliver content to attendees to enhance their
experience (Kates, 2014).Beacons can help attract customers into the store and keep them stay longer.
However, its main higher goal is to strengthen a personal relationship with current customers by
providing a personalized experience. In addition to financial values, it is important to make a customer
know that personalized care is made for the customer that made it into the store, and it is appreciated and
valued. By embracing Beacon technology in a meaningful way, major department stores like Macy's and
Lord and Tailor have found a way to build relationships and bonds between stores and shoppers (Kline,
2016).
More than half (53%) of smartphone shoppers are already comparing prices while in the store,
according to research from the Google Shopper Marketing Agency Council and M/A/R/C Research.
Additionally, smartphone shoppers who shop at least once a week spend 25% more in-store compared to
occasional smartphone shoppers. Offering the ability to price-compare in-store will help retain customers
and build brand loyalty. To help facilitate this activity, BestFit Mobile's offspring, Shelfbucks, is
leveraging beacon technology to allow shoppers to compare product prices while in the store. Price
comparison via beacons could be a game-changer for customers with shopper anxiety who might be
skeptical of in-store prices (Taylor, 2014).

CONSUMER ATTITUDE TOWARD LOCATION-BASED DATA COLLECTION

The recent innovations aided by technological advances in retail have sprung up to serve
omnichannel retailing that combines online, mobile, and brick-and-mortar sales. The location-based
technology devices facilitate that by connecting to a consumer's smartphone while they're in the vicinity
of the store. However, privacy concerns deter consumers from the opt-in attitude toward Beacon triggered
apps. OpinionLab survey found consumers' concerns regarding in-store tracking data security. A
majority of respondents stated they do not trust retailers to keep their data private and secure (Bachman,
2014). Privacy for electronic data exchange was the first concern in the early days of e-commerce. In
2003, FTC required marketers to include a way to unsubscribe and the physical address of the publisher.
It also banned harvesting email addresses. Mobile marketing and in-store tracking are still very young,
but regulators may take notice and implement some ground rules to protect consumers' privacy. Today's
consumers enjoy hyper-customized communications to save their time and energy when shopping. They
acknowledge marketers and e-commerce sites use cookies to follow their movements around the web to
serve them with customized ads and recommendations based on our browsing histories. They are willing
to give up a bit of their privacy in exchange for convenience and savings. In the OpinionLab study, 61%
of respondents said they expect to be directly compensated with price discounts for their participation.
Another 53% said they expected free products. Still, a whopping 35% said they detested the practice so
much that there's nothing a store could do to motivate them to opt-in. The overall survey shows
challenges for these technologies: 63% of those surveyed said they would not opt in to be tracked, even at
their favorite stores. So, while retailers buy it, consumers still need to be sold (Griffith, 2014).

42 The Journal of Global Business Management Volume 16* Number 1 * April 2020 issue

 
 Despite the privacy concerns, consumers are willing to opt into in-store tracking and mobile push
notifications if they were properly incentivized by retailers. Location-based technology could enhance
customers' in-store shopping experience by offering various services (e.g., promotions, store information,
product content and reviews, and in-store navigation, mapping layouts, and product locations). Beacon
technology is ready for full-scale deployment in the retail industry, but implementation largely depends
on the specific goals of the retailer. Early adopters could measure the success level of their program on a
different scale than the next generation and are treading uncharted territory in the customer-retailer
relationship (Taylor, 2014).

REFERENCES

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