Competitive Mobile Marketing and Its Impact on the Mobile Eco System

Abstract

Targeting mobile consumers is similar to traditional targeting which focuses on stationary consumers in the sense both exploit data about consumers to tailor the marketing strategy. However, factors related to mobility such as travel direction or destination play an important role in a mobile consumer's evaluation of competing products. This paper focuses on consumer targeting using such mobile data. We seek to answer the following research questions in the above context using a game theoretic model: (i) How are the price competition between sellers, seller profits, consumer surplus, and social welfare affected when one or both sellers acquire the information, and (ii) What are the sellers' incentives to acquire the information? We do the analysis for the cases when the information includes only consumer location and when it includes both location and travel direction. We find that the ratio of unit time cost to unit transportation cost, which we refer to as the propensity for instant gratification, and the type of information offered by the app - location only or location and direction - shape the competition between sellers and their incentives to acquire the information. The findings have significant implications for the players in the mobile eco system.