Geo-Conquesting : Competitive Locational Targeting of Mobile Promotions

As consumers spend more time on their mobile devices at various locations, a focal retailer’s natural approach is to target potential customers in close proximity to its own location. Yet focal location targeting may cannibalize profits on infra-marginal sales. This study demonstrates the effectiveness of competitive locational targeting, the practice of promoting to consumers near a competitor’s location. The analysis is based on a randomized field experiment in which mobile promotions were sent to customers at three similar locations (competitive, focal, and neutral) in shopping malls. The results show that competitive locational targeting has the potential to take advantage of heightened demand that a focal retailer would not otherwise capture. Competitive locational targeting produced increasing returns to promotional discount depth, indicating the presence of threshold effects. In comparison, targeting a retailer’s own location produced decreasing returns to deep discounts, indicating saturation effects and profit cannibalization. These findings are important for marketers, who can use competitive locational targeting to profit from incremental sales while preserving margins on sales to consumers near their own locations. Locational targeting has enormous potential as a competitive weapon that allows a retailer to maintain a presence anywhere – including on a competitor’s doorstep