Transparency is key for marketers using location-based micro-marketing, expert says

April 29, 2014 by Jeff Falk

Marketers have recently latched on to Apple's iBeacon technology, which extends location services in its iOS mobile operating systems. iBeacon is being used in Major League Baseball and by a number of companies to hyperserve customers based on location.

Utpal Dholakia, professor of marketing at Rice University's Jones Graduate School of Business, is available for news media interviews to discuss how iBeacon may influence people's attitudes and behavior and what the technology means potentially for marketers.

The technology uses Bluetooth to track a customer's movement through stores,and event venues; it relays information about shoppers' interests and allows marketers to not only gather information, but also send consumers promotional items based on their time in the aisles.

"My sense is that there will be stark differences in how different customer segments react to being tracked in this manner," Dholakia said. "In a broad sense, the iBeacon technology is not that different from what apps like Foursquare and even Facebook Places do already. So the 45 million users of Foursquare plus users of other geotracking apps should have no problem. On the other hand, a significant number of users are likely to be suspicious and skeptical to begin with."

Dholakia thinks there is a trade-off between privacy and the tangible benefits associated with giving it up. "In many of the examples of iBeacon's proposed uses, marketers will provide compelling incentives to consumers to allow them to be tracked," he said. "To the extent that consumers get something valuable in return, my prediction is that they will embrace iBeacon. Of course, a lot depends on how Apple and its marketing partners explain this to consumers. Transparency is crucial."

Dholakia's research interests lie in studying motivational psychology of consumers and online marketing issues such as virtual communities and online auctions. He also studies relational aspects of consumer behavior.

Explore further: Research: Facebook fan pages are effective marketing tool

More information: Jones School interview with Dholakia on Apple's iBeacon technology: business.rice.edu/JGSB2011_2Column.aspx?id=4294973454

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