Forschungs- & Entwicklungsinformationsdienst der Gemeinschaft - CORDIS

Business model VII: Private push approach I (LBA in big shopping centers)

- Expected ad perception: affinity;
- Local system operator-centric;
- Retailer is likely to be the local system operator;
- Diversification of advertisement is limited to the product portfolio of local system operator;
- User owner: retailer;
- Incentives for the user: informative advertisement, discounts and coupons from retailer;
- Source of payment: retailer;
- User grants opt-in and personal data;
- Target group: shoppers;
- Especially interesting for large shopping malls or big brand store chains, as well as city centres;
- Revenue stream: retailer - local system operator - content supplier.

This scenario is typical for the exploitation of LBA in big shopping centres and well-known department store chains or at other highly frequented shopping areas like the city centre. It is very likely that the customers are hard to convince at launch as they are reluctant to accept ads on their mobile devices. Hence, the retailer has to make really appealing offers to its customers in order to convince them, e.g. high discount on selected items. LBA is to be promoted as a service that keeps the customer up-to-date about the latest articles and special sales and avoid the perception of it as being solely an additional marketing channel. It is obviously easier for well-known stores to convince their customers to register to the LBA service than less known shops. This is based on the brand awareness of the shop and the high level of reliability associated with it. Furthermore, this service is more appealing if it is applicable to more than just one location. This business case is comparable to that of the storecards that have been offered by an increasing number of chains, e.g. Karstadt, Breuninger, Kaufhof etc. in Germany. If the retailer succeeds in convincing the customers, it will, in return, receive precious information about their habits, their likes and dislikes and other relevant data that enables a tailored advertisement approach, which eventually, means to reduce ineffective advertisement costs and increase sales at the same time. It is expected that the customers will not pay for this service but just provide their personal data at the utmost.

Since the two main goals of a merchant has always been to fully understand the customers’ needs and based on that to retain them, LBA offers a new opportunity to achieve those goals through establishing a customer profile pool which makes it easier for the retailer to retain customers by serving their needs.

The underlying technology is very likely to be WLAN, possibly in combination with Bluetooth, and is provided by the local system operator with the purchase of the required elements middleware, application and content, in case additional content is needed. The most valuable content, however, remains the information offered by the retailer, like information about new items in stock or special offerings combined with coupons. The operator of a local system can either be the owner of the facility in which multiple shops are located or a single store itself if it is big enough to run it profitably.

Although big stores have the best chances to exploit this business case, it is also possible for small shops to successfully participate in the long run, especially with decreasing WLAN prices. However, small shops should join a strategic network in order to reach a critical mass of users and to be attractive enough for the customers.

Reported by

YellowMap AG
Wilhelm-Schickard-Strasse 12
76131 Karlsruhe
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