Competitive location-based and trajectory-based mobile targeting

Abstract

Advances in mobile analytics have enabled sellers to target mobile consumers using geolocation and the more granular mobile trajectory information. Using a game-theoretical model of a context in which two competing sellers choose to target mobile consumers using location or trajectory, we examine the long-term implications for sellers, consumers, and the social welfare. We show that mobile targeting, either location-based or trajectory-based, by both sellers indeed emerges as the equilibrium; however, trajectory-based targeting need not always emerge as the equilibrium. For instance, location-based targeting emerges as the equilibrium if the consumers’ disutility from a consumption delay (i.e., time cost) is low relative to their transportation cost. The primary driver of our findings relates to the role of location and travel direction information in exposing (or masking) the degree of consumer heterogeneity and the competitive advantage a seller has over the other in attracting a consumer.