Consumers choose what they like, but their preferences depend on their specific situation. Situational variables like time, day of the week, season, local weather or social situation and, of course, specific locations form the context for all decisions. A person might feel and act differently on a workday than on the weekend, in summer or winter, on a sunny or rainy day, whether alone or with family and friends, out in the countryside or in a shopping mall. The digitization of business processes has been tremendously helpful in identifying those preferences and leaving a broad and rich data trail. This development has even intensified by the increased popularity of smartphones. Smartphone applications generate situational variables, including path data such as movement sequences through supermarket aisles or the movement patterns within different parts of a city. Figure 1 visualizes movement patterns based on the physical location of smartphones or other devices.
Location data – the new cookie?
Location data become more and more accessible. Location-based advertising is one application that takes advantage of those context factors. Mobile ads might be tailored and targeted for consumers who happen to be in a certain area or even in or within a small radius of a seller’s store at a certain time. The total value of real-time location-based advertising is supposed to grow to about $15 billion in 2018 or approximately 40 percent of total mobile advertising, according to a research report from the Swedish Berg Insight market research company. Not surprisingly, location is sometimes referred to as the new cookie. While desktop cookies allow identifying a browser’s activities over time, a consumer’s physical location is an indicator of his or her preferences in the “real” world. Therefore location is more relevant for offline shopping patterns. It is hence tremendously important for companies to understand how this type of data can be leveraged to improve marketing decisions regarding promotions, pricing, the assortment of products and the choice of store locations.