Archive for month: March, 2018
Location based Marketing – a new paradigm in digital marketing?
Is Location based Marketing really a new paradigm in digital marketing? For answers to this exciting question, Prof. Dr. Hans-Christian Riekhof is the perfect contact. He is the sole shareholder and managing director of UNICconsult Strategieentwicklung GmbH, also a professor of International Marketing at the PFH Private University of Göttingen, organizer of the Göttingen Marketing Day and publisher of books on topics such as strategy development, personnel development and retail. In addition, he is the founder of locandis, a startup that specializes in Location Based Marketing.
In an interview with Anna-Lina Köhler, who dealt with Location Based Marketing as a student at the PFH Private University of Göttingen, the marketing specialist provides interesting insights.
Anna-Lina Köhler: What do you think of the statement that online is the marketing channel of the future?
Professor Riekhof: This is only partially true in this form. Of course, traditional media will continue to lose importance – even if they cannot be imagined out of the media landscape in the coming years. But what is important is that the online channel is supplemented and also replaced by the mobile channel. People can be reached everywhere, the smartphone is a constant companion and thus also a decisive communication channel – if you master the rules of the game.
Anna-Lina Köhler: The term “relevance” is increasingly used these days. What does this mean in connection with Location based Marketing?
Professor Riekhof: In our empirical projects on Location Based Marketing, we have been able to demonstrate that push messages on the customer’s smartphone attract high interest and undivided attention when they are related to the location where people are currently located. For example, at the documenta 2017 in Kassel, we delivered information about certain works of art directly at the object – with very high opening rates for the message. The right message in the right context and at the right place: this is the formula with which relevance can be demonstrably generated.
Marketing will be even more data-driven in the future
Anna-Lina Köhler: What role does Location Based Marketing play in the marketing of the future?
Professor Riekhof: I assume that we can speak of a new paradigm for marketing here. Marketing will be even more data-driven in the future than it is today. What we already have are customer-related data, e.g. from the CRM system. This is where classic target group-based targeting comes in. In addition, we have learned from Amazon (which companies like the Otto Group of course always knew) that past purchasing behavior is an extremely reliable predictor of future purchasing behavior. That’s why Amazon is superior to Google in the long run: Amazon knows the purchases, Google only knows the searches. But what is now being added is a third data source: location-related information allows setting up targeting that opens up the spatial dimension to marketing.
Anna-Lina Köhler: What do you conclude from this?
Professor Riekhof: My personal assessment is that we have information here with very high predictive power. Where I am in the shopping mall, which areas and shops in the city center are of particular interest to me, is of course highly exciting for targeting.
Anna-Lina Köhler: How useful is Instore Navigation actually? Can’t the staff simply serve as a contact person for the customer?
Professor Riekhof: Instore Navigation makes no sense if you run an ice cream shop or a lottery acceptance point. But think about the situation in a hardware store: find a contact person who tells you where the dowels and seals for the bathroom fittings are. Instore Navigation helps enormously to find the products. We have found in our LBM projects that Instore Navigation significantly increases the acceptance and use of digital customer cards. And ultimately, it relieves the staff in retail if customers are supported in their product search via the digital channel.
LBM with WLAN alone too imprecise for localization
Anna-Lina Köhler: Wouldn’t it theoretically be enough to simply send the customer an SMS via WLAN in stores?
Professor Riekhof: Some retail groups make it a bit too easy for themselves. They install a WLAN accessible to customers in the stores, and then they theoretically have the possibility to send push messages to these customers in the store. In my view, this is not even Location based Marketing 1.0. Because the localization precision with which the campaigns are delivered at the right shelf is simply insufficient. If I’m standing at the red wine shelf, I don’t want a 15% coupon for dog food.
And a second aspect is very important to me personally: WLAN-based Location based Marketing cannot deliver campaigns to defined target groups. This is only possible if I as a consumer have downloaded the digital customer card, have registered and have given permission to receive coupons. Retailers should make sure that they do not advertise typically female products to men and vice versa.
Anna-Lina Köhler: Can the advertising effect be measured by Location Based Marketing, if so how?
Professor Riekhof: This is a very good question, because it focuses on the core of the topic. Location Based Marketing is extremely measurable: I can determine whether push messages were delivered at all, whether they were opened, whether coupons were redeemed, whether cross-selling campaigns were successful and whether customers stayed in the store longer. This goes as far as the economic effects: each individual campaign is completely transparent in terms of its costs, the effects on results of possible price discounts and the effect on sales. Comparable transparency in this form is only available in online retail. The effect of the large marketing budgets in traditional media is not measurable in this precision at all.
Professor Riekhof, locandis founder, in conversation with Anna-Lina Köhler
LbM Technologies: Which has Potential?
Location based Marketing (LbM) is one of the marketing keywords of the future. The potential of location-based technologies is increasing, as is interest in them. There are now various technical options for localization. However, these also differ in their possibilities: some LbM technologies clearly stand out from the standards of others.
Anna-Lina Köhler, who is dealing with LBM as part of a study assignment at the PFH Private University of Göttingen, met a specialist in the field: Stefan Brinkhoff, founder of locandis, the startup for Location based Marketing Solutions. In the interview, he presents some of the essential LbM technologies and assesses their potential.
Anna-Lina Köhler: How can the word “Location” be defined in terms of Location based Marketing?
Stefan Brinkhoff: The basis of Location based Marketing are, as the name suggests, location-based services. There are very different options for determining the location. Basically, however, a distinction is made between outdoor and indoor technologies.
Anna-Lina Köhler: Which methods can be assigned to the outdoor technologies on this basis?
Stefan Brinkhoff: “The so-called Cell Tower are among the outdoor technologies. The localization via these Cell Tower is mainly used by providers such as Telekom or O2. The mobile phone provider can recognize the position of the smartphone through the customer’s permanent registration in his network within a certain framework and thus send him a corresponding SMS. No app is required to deliver this notification, but the mobile phone provider is also only able to transmit simple text messages. Although work is currently being done in the USA to support Rich Text formats, this is very unlikely to be used by providers like Apple.
Anna-Lina Köhler: How well do these Cell Towers work?
Stefan Brinkhoff: A very clear disadvantage of the Cell Tower based location is that due to technical requirements the localization accuracy is sometimes very limited – there can be deviations of several hundred meters. In rural environments, there are even inaccuracies of several kilometers. In the best case, in urban areas, it is a localization accuracy that “only” deviates by 500 meters. I’m not quite sure if you should still call that Location based Marketing.
Anna-Lina Köhler: Are there technical possibilities to increase the accuracy of the localization?
Stefan Brinkhoff: The precision can basically be significantly increased by using an app, as a GPS localization function is used here. The standard APIs of the smartphone manufacturers manage to determine the current position of the user with an accuracy of 50 to 100 meters with an app running in the background. Unfortunately, however, it must be noted again and again that the localization function is usually not sufficient even in urban areas.
Anna-Lina Köhler: Why is that?
Stefan Brinkhoff: If there were a nationwide WiFi infrastructure in Germany, it would also be possible to locate the customer without an app via a WiFi-localized function that also uses trilateration methods. But until that happens, it will probably take a few more years, so that today WiFi localization is mainly used in the interior of buildings such as in shopping malls. Here, anonymized heat maps of the running behavior of individual customers can be recorded. However, this method is not suitable for individual customer contact – this is very important.
Partially questionable methods in LbM technology
Anna-Lina Köhler: So we are in the area of indoor technologies. What other methods are also in use here?
Stefan Brinkhoff: Furthermore, there is the magnetic field measurement indoors. Here, an attempt is made to exploit the specific characteristics of a building in relation to its earth’s magnetic field in order to locate a customer. With this method, the building is measured using “fingerprinting”, and then a localization can be carried out via the magnetometer of the smartphone. The disadvantage here, however, is that the accuracy of the localization is often insufficient, as the conditions of the earth’s magnetic field often change due to various interference factors. Another localization method, which is highly questionable in Germany from a data protection point of view, is localization via inaudible audio frequencies, which are broadcast via the retailer’s sound system and processed by the smartphone’s microphone. Small Bluetooth transmitters, the so-called Beacons, have also been essential for Location based Marketing for some time. They work with Bluetooth signals and are supported by both Apple and Google across all operating systems.
Anna-Lina Köhler: Which of these technologies do you think is the most promising in the future?
Stefan Brinkhoff: In my view, the Beacons are currently the most promising technology in this area. A decisive advantage lies in the fact that the procedure is “permission-based”. The customer therefore actively gives his consent to the localization. In addition, the localization function with a precision of about 1.5 meters is significantly above the standards of the other LbM technologies. Since the procedure works most reliably via an app on the customer’s smartphone, a customer approach is made possible that can take place individually, situationally, at the right time, at the right place and above all personalized.
Anna-Lina Köhler: Where is the maximum beacon density? Can the radii overlap, or should this be avoided as much as possible?
Stefan Brinkhoff: Basically, there is an overlap of radio signals, especially in small rooms. This often happens simply due to reflections. Overlays cannot be ruled out. But they are also not to be seen as dramatic.
Effects on the smartphone’s battery consumption
Anna-Lina Köhler: For many LbM technologies such as Beacon technology, users are often required to have the Bluetooth function of their smartphone switched on in connection with an app. This often affects the battery consumption of the smartphone. How is it with the locandis technology?
Stefan Brinkhoff: Yes, we have also heard from some customers that certain LBM solutions drive up battery consumption a lot. At locandis, we use, among other things, a so-called “silent tracking”. Our solutions are implemented in such a way that even with necessary Bluetooth use, the battery performance is not impaired. This is also due to the fact that the app does not have to be open to fulfill its purpose.
Anna-Lina Köhler: In the area of indoor localization, Philips offers a light-based solution for the localization function. Why do you think Beacons are still the better solution?
Stefan Brinkhoff: The infrastructure costs are completely different with Philips’ light-based solution. While Beacons can simply be attached to the ceiling, the entire lighting system must be replaced for Philips’ indoor localization. In addition to the high cost difference, there is also the significant disadvantage that indoor navigation with the light-based solution only works if the app on the customer’s smartphone is also open. This is not required with Beacon technology, and the app can also be closed. We assume that this has a significant influence on customer acceptance.
Anna-Lina Köhler: Finally, the question, what importance do you attach to Location based Marketing and its technologies for the future?
Stefan Brinkhoff: Location based Marketing is becoming increasingly important. Because advertising, especially for the younger generation, is relevant when it is broadcast in the right context. And this is made possible by Location based Marketing technologies such as Beacons.
Stefan Brinkhoff, locandis founder, in conversation with Anna-Lina Köhler
ADAC Study on Price Competition at Gas Stations
Are customers too comfortable for price comparisons and prefer to incur higher costs? At least a large part of drivers do not seem to care so much about the prices at gas stations. This conclusion is suggested by a new ADAC study that examines price competition at gas stations. The study provides interesting insights into pricing and consumer behavior. Thus, ADAC President Peter Meyer says that 43 percent of drivers only refuel when the tank is empty. 41 percent never or rarely compare fuel prices, and 40 percent always head for the same gas station – even though the prices fluctuate by up to 10 cents per day at the same gas station.
Price competition at gas stations leaves customers rather cold
To this pricing expert Professor Hans-Christian Riekhof: “Basically, the ADAC study confirms what we also find out again and again in our regular empirical studies on consumer behavior: customers are far less price-sensitive than is generally assumed. They buy products (and refuel) when it is necessary and the specific need is there (the tank is empty), they neither have the time nor the energy to deal extensively with price comparisons or even to drive a detour. From a behavioral research perspective, this is quite understandable.”
Locationinsider: The future of the customer card is digital
The future of customer cards is digital. This is written by the Location Insider, who has picked up the study on the future of customer cards, which Prof. Dr. Hans-Christian Riekhof and Stefan Brinkhoff have created for the PFH Private University of Göttingen. The Location Insider, Germany’s online service for the digitization of trade, explains: “The plastic customer card in the customer’s wallet has no future.” This succinctly summarizes the result of the investigation of the PFH Private University of Göttingen. A look at the details of the study shows that companies are already implementing digital customer cards, or at least consider them to be sensible. 85% of the companies surveyed generally consider a customer card to be very useful or useful.
All respondents from all sectors agree on one thing: company-specific cards are clearly preferred over cross-sector initiatives such as Payback or Deutschlandcard.
Here you can read the entire article
Here is the study on the future of customer cards
16.04.2018 │Hamburg – Pricing as a Marketing Tool
The topic of “Pricing as a Marketing Tool” is the focus of a lecture by Prof. Dr. Hans-Christian Riekhof on Monday, 16.04.2018 in Hamburg. The pricing expert is following an invitation from the Association of Indoor and Indoor Playgrounds e.V. (VDH) on the occasion of their 28th network meeting and regular general meeting.
Price specialist Riekhof (UNICconsult Strategy Development GmbH) demonstrates in his lecture why strategic pricing is an important profit lever in the company. He lectures on the price psychology of customers and on company hypotheses in price setting. Using examples, he demonstrates which companies possess pricing competence and explains price finding models and possibilities for price differentiation also in the leisure industry.
The Association of Indoor and Indoor Playgrounds e.V. (VDH) is the leading industry representation of commercial indoor playgrounds. It represents the ideal and economic interests of its members and is the first point of contact for operators, manufacturers, media and investors when it comes to the topic of indoor playgrounds.
Location:
Play barn of stories
Marie-Henning-Weg 1
21035 Hamburg
Further information:
www.myvdh.de