Location, location and …er … location

Dr Jonathan Reynolds, of the Oxford Institute of Retail Management, Said Business School, University of Oxford, outlines the new developments in retail apps on smartphones.

Dr Jonathan Reynolds
Dr Jonathan Reynolds

Just two years ago, it was SMS marketing rather than the use of the mobile web which dominated mobile marketing thinking. But Apple had just launched its iPhone and Google Android was imminent. Writing today we can see that the bandwagons are well and truly rolling, on the back of exponential growth of the high end iPhone handset (with sales of 25mn units worldwide in 2009). Google’s own Android operating system was available on the 6.7mn phones being sold across 22 markets in 2009, with major handset manufacturers such as LG Sony Ericsson and Samsung launching their own smartphones. But not everyone has quite got the point of the mobile marketing opportunity. Of course, the market’s a complex one and, whilst new mobile communication paths are being explored, most companies are still feeling their way with experimental approaches.

Two developments in the market now mean that a particular retail marketing opportunity is now ripe for exploitation, however. The first is the exponential growth of free or cheap downloadable third party applications and mobile web interfaces. At the time of writing, over 100,000 applications have been developed in the iPhone App Store with over 3bn total downloads. But few retail apps have made it into the serious download rankings. We’ve seen a frenzy of activity amongst retail marketers, yet I’ve lost count of the number of, frankly, instantly forgettable retail-related apps, often developed as an afterthought or a ’me too’ by firms. One or two stand out – for example, Amazon’s ’Remembers’ service, where the user creates visual lists capable of being matched to Amazon product. But very few are being designed as part of an integrated go-to-market package or with any distinctive capabilities. That’s where the second development of note comes in: the growth of GPS capability in handsets, with analysts Gartner estimating that some 29% of new phone handsets included GPS in 2009.

The combination of these two developments can be seen in the growth of genuinely location-based applications. Now, so-called LBS applications have been around for some time and have often been described as ’solutions in search of problems’. But early implementations were clunky and unreliable, GPS expensive and not widely available and consumer unused to or unwilling to pay significantly for such information. Contemporary applications show much greater promise and LBS capabilities cry out to be exploited by retail marketers. We can consider contemporary LBS services across two broad dimensions: the extent to which they are personal or social applications and whether they are push or pull in orientation. Applications such as physical asset or information tracking tend to be user-initiated, whilst geographically targeted incentives (such as proximity promotions), or applications such as child location or congestion alerts are pushed to the user. On the other axis, we can distinguish between personal productivity tools such as local train departure information, as against social apps (such as ’who is tweeting nearby?’ or ’where are my friends?’) Each type of application offers different opportunities for retail marketers, although whilst clearly push-based apps are more attractive for market targeting purposes, the reality is that users may prefer to retain control of the interaction.

Branded pull-based personal apps range include that launched in March 2009 by discount hotelier Travelodge, which provides a simple interface to allow the user to find, price, and book the nearest Travelodge to their location. Similarly, Tesco Finder provides an on-request shelf lookup and pricing service for individual items in the user’s nearest store (’Sausage rolls are in aisle 2, 8 units along and 2 shelves up. And by the way, we’re offering any two for £1.50’). Push-based personal apps rely on responding to profile or stored alert information in a proactive way.

Zillow’s Real Estate app will push-notify you of new property for sale near your current location. Aloqua is a mobile search engine which proactively notifies the user of interesting places, events and Facebook friends near you (www.aloqa.com). The user can select ’channels’ (such as pizza outlets, movies, concerts and medical facilities) and determine the extent of ’proactive notification’ of particular events, such as a voucher available in the area, to a child leaving a safety zone.

Figure: Categorising location-based apps

Social apps, on the other hand, are reliant on network effects to create sufficient critical mass to be useful to both users and to retail marketers. Here, the running is being made by third party businesses. Social apps with push-based capabilities include Centrl, (www.centrl.com), Brightkite (www.brightkite.com), Foursquare (http://foursquare.com) and Google Latitude (www.google.com/latitude). Most will notify the user of friends in the vicinity. For example, Foursquare allows the user to ’check-in’ wherever they are and will tell the user’s friends where they can find them and recommend places to go & things to do. But services such as Centrl offers to push money-saving offers to them too.

Whilst social apps are less well developed than personal apps and push apps less than pull apps, many think that the future lies in ’social push’. It is here, too, that retail marketers may begin to use mobile apps as tools to understand social behaviour rather than just individual behaviour, and to incentivise it accordingly. The next two years should be quite interesting. As one blogger put it recently: “mobile applications without context provided by location-based services will be like pizza without cheese.”Now there’s an observation that a retailer can relate to.

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Tom Fishburne is founder of Marketoon Studios. Follow his work at marketoonist.com or on Twitter @tomfishburne See more of the Marketoonist here

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