By: Jeff Marcoux
A device in its infancy, the Beacon, has joined the marketing strategy of retailers in recent years, and, in the process, has changed the paradigm of retail shopping. A Beacon emits a low frequency radio wave, via Bluetooth, from which an individual within a relatively close proximity to a store with a Beacon will receive pertinent information directly to their smartphone, based on their particular desires, including coupons and promotions. This type of marketing is also known as “Geofencing.” Projections estimate that by 2016 85% of the top 100 retailers are expected to implement some form of geofencing.
The traditional retail model, required consumers to physically enter retail space to see a product and purchase it. Advertising for items included print, radio and television, with limited capabilities of reaching consumers. With the introduction of email that model transitioned slightly to include direct messaging to parties who had decided to sign up. This increased marketing capabilities, giving the retailers the ability to send promotions directly to consumers; However, it lacked analytics and provided vague, irrelevant outreach, often ignored by customers. Most recently, the smartphone (remember, the 1st generation iPhone came out only eight years ago in 2007!) has revolutionized consumers’ knowledge of the market and given them instant access to manipulate competing retailers. Similarly, the smartphone revolution has given retailers another form of direct communication to influence consumers- through email, text, video and audio. The advantage seen by retailers when marketing through smartphones is that the consumer is almost always paired with their device, and receives information instantly. Smartphones also streamline the process, giving consumers the ability to receive, view and purchase items remotely.
The Beacon is currently only utilized by an estimated 8% of the top 100 retailers, but this number is projected to increase to 35% in 2015 and 85% in 2016 (Smith, C. (2014). Beacons and the Retail Industry. http://www.businessinsider.com/beacons-and-the-retail-industry-2014-11.). Why are the growth projections so strong? Smartphone users should hit 1.5 Billion in 2015, and will continue to increase, meaning the potential dollar value to be gained is staggering. In 2014, 64% of U.S. shoppers preferred to opt-in to in-store tracking (Smith, C. (2014). Beacons Will Help Retail Combat the E-Commerce Threat. (http://www.businessinsider.com.au/beacons-will-be-a-critical-way-in-store-retailers-combat-the-e-commerce-threat-2014-7.). Through Beacons retailers are able to provide instant mobile marketing, collect real-time data, and identify customers entering (or nearby) their store. The collected data will provide targeted marketing strategies geared towards specific, individual needs. As described by G3 Communications, the Beacon is the “connective tissue between customer benefits and retailer benefits through service and engagement.” (G3 Communications. (2014). A Retailer’s Guide to iBeacon Marketing, http://www.slideshare.net/G3Com/a-retailers-guide-to-ibeacon-marketing.)
There are several barriers for the Beacon to overcome in order to successfully impact the retail market. First, the consumer must have the appropriate smartphone app in order to receive updates. Currently, most retailers utilize a third-party app and platform for the Beacon. Simon Malls is one of the few that has developed its own app that can be used across its 200 malls nationwide. In both cases, without the app the Beacon is useless. Secondly, the Millennial generation, although tech-savvy, are also distrustful of mobile marketing. In-store shopping alerts are often ignored due to their irrelevance, lack of perceived value or are found annoying. In order to overcome this stigma and successfully capture the largest smartphone segment, retailers must develop strong Beacon marketing strategies that hone in on exact needs of each individual, rather than general promotions.
The Beacon’s potential is great, and it will only be a matter of time before everyone, both retailers and consumers, utilizes it in their daily lives.
A few things to consider:
- Which market segment should retailers focus on when using beacon-driven mobile marketing?
- What is geofencing’s greatest challenge to overcome?
- Do you prefer traditional retail or mobile retail? Why?