Beacons: Bridging Retail Space & Mobile Devices

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:

  1. Which market segment should retailers focus on when using beacon-driven mobile marketing?
  2. What is geofencing’s greatest challenge to overcome?
  3. Do you prefer traditional retail or mobile retail? Why?

Source: https://hbr.org/2014/09/how-beacons-are-changing-the-shopping-experience

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6 thoughts on “Beacons: Bridging Retail Space & Mobile Devices

  1. Kyley Murphy March 4, 2015 / 5:32 pm

    This technology is revolutionary! It very much enhances a company’s capability to market to their exact target market without the amount of effort that has previously been used. I think a company would just have to watch out for their coupons coming across to the consumer as Spam or unwanted coupons, like you have mentioned. Don’t get me wrong, everybody loves a good deal, but if a consumer gets bombarded with coupons or unwanted notifications they might be less interested in using the coupon. A company would have to try to find a good balance, which might be their biggest struggle. This also wouldn’t work for companies that are trying to target an older generation since they are less likely to carry or use a smartphone.

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    • Jeff Marcoux March 9, 2015 / 6:35 pm

      I think you’re right- over saturation will definitely turn people off. The key is using analytics to individualize the marketing tactics for each consumer based on specific desires. This will cut down on annoyance. Beacon application is still young, so I think highly tailored systems are still 3-5 years away.

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  2. Kevin McAtamney March 4, 2015 / 6:13 pm

    As a response to the third question, I most definitely prefer the traditional retail concept. Call me old fashioned but I would much rather physically go to a location and actually see the product that I will be spending my hard earned cash on. It’s hard for people to believe but this is actually how it once was before online shopping took over. You have to think, have you ever bought something online and had some sort of defect in the product? Your shoes were too small, the material of the shirt you just bought was too itchy, the shipping fees were more expensive then the actual product you bought or your Justin Bieber cut-out “wasn’t as big as the description said it was guna be”……but I digress. The point is, this happens all the time. I feel like the traditional retail experience isn’t just old fashioned but the most effective option between mobile retail and itself.

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  3. Ryan MacLeod March 5, 2015 / 12:53 am

    I think that businesses using this method of marketing have to be overly cautious of the type of promotions a other items they are sending to the consumer. Flooding peoples phones and desensitizing the consumer to their promotions should be the highest priority as it is the biggest challenge. I agree completely that millennials will be the hardest group to overcome. Hopefully the beacon will allow users to select which businesses can send them alerts and updates about their products and not allow “sponsored” updates. But I’m sure that will happen at some point with beacon, similar to how Facebook seemed to change over night with the ridiculous amount of sponsored ads now seen on your newsfeed.

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  4. Linsey Walker March 5, 2015 / 4:47 pm

    Your third question is interesting because in a way, the Beacon is a blend of traditional retail and online retail. I think that Millennials in particular, the group that seems like the most likely to use this technology, engage in both traditional and online retail depending on what they’re buying and what sort of shopping experience they want surrounding those particular purchases. For example, people might be less likely to buy clothing online because they want to be able to try it on first, but replacing a broken toaster would likely be pretty safe to do online. For this reason, I wonder if there’s space for the Beacon in between. When people choose to physically visit a store rather than shop online, do they want to be getting alerts from their phone while they’re there? Or are they looking for a more “in the moment” experience? Given the number of people walking around staring at their phones, maybe not. Still, I wonder if there’s room for this hybrid shopping experience in the current landscape.

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  5. Domenica Fuller April 10, 2015 / 9:01 pm

    I think supermarkets are the ideal customer or user of the Beacons. Customers would be able to receive updates on sales or offerings while shopping in the store. This could be personalized as well, maybe adding a filter capability to only get coupons on what you normally buy instead of everything. It would be easy for customers to buy the “Market Basket” app or for the store to post at their doorway what Beacon app its offers are listed on. The Beacon concept is no more invasive to me than me handing out my email at stores to get coupons and notice of sales because the consumer is able opt into or out of the services.

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