The recent rapid evolution in mobile technologies is creating next-generation applications of mobile commerce which are more efficient and sustainable. The development of global positioning systems and mobile data tracking provides both consumers and businesses with access to vital information and network services. Through the use of geofencing, these technologies can be employed for a wide range of location-sensitive uses such as directory, asset tracking, navigation, entertainment, and advertising. This report will define and investigate the concepts of geofencing and location-based services, its real-world applications with subsequent benefits and challenges.
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Evolution of Location-Based Services
Location-based services (LBSs) are a software application that utilizes user location data to control or trigger features. With the rapid adoption of smartphones that have an in-built Global Positioning System (GPS) that allows for geolocation, LBSs have increased in number as well. The most common use of this technology remains maps and navigation software as well as information searches dependent on “nearby” locations.
LBS consumers may also utilize the technology for gameplay (such as the popular Pokemon Go) and mobile social networking applications (Foursquare). In combination, LBSs consist of geosocial services, advertising, and geo-information services. It is estimated that at least 74 percent of smartphone users activate location tracking on their devices and actively use it for one or more of LBSs (Jang & Lee, 2018). Since LBSs are dependent on the geographical location of the smartphone, the primary objective is to determine where the user is.
Location-based technologies have always been central to human navigation and communication. Starting with smoke signals and celestial navigation, gradually transitioning to magnetic compasses until reaching the satellite era, bringing in a revolution of geolocation. Satellites have a clear positioning to triangulate locations as technology became more evolved and widely adopted, from military use to automobile GPS, and now into smartphones.
It is only logical that LBSs are the next step in the development of human location technology. Nevertheless, the foundational elements of the technology remain largely unchanged. For example, smoke signals were lit once something entered an area and was in the direct line of observation, parallel to LBSs which activate when an individual is in a certain location. Meanwhile, celestial navigation was conducted through triangulation based on the starts, a similar principle to the operation of GPS satellites in the modern-day. It is suggestive that location-based methods are critical to the development of human civilization and technological evolution.
LBS has its roots in geographical information systems (GIS), with similar elements of collecting information in a network computing environment. A communication network, such as the mobile signals are critical for LBS as it is used to transfer user data and service requests. Furthermore, there must be service and content providers present for the system to function and adequate information shared.
The location-based data provided by technology serves as a powerful tool for advertising. Smartphones can relay advertisements to their users through a variety of mediums such as text messaging, pop-ups and notifications, search engines, mobile coupons, and location-based advertising (Jang & Lee, 2018). Considering that after being exposed to advertising, consumers are more likely to purchase a product or shot at a business, especially if it is conveniently nearby; LBSs advertising holds a significant value from an economic perspective.
Geofencing is an innovative technology that utilizes the global positioning system or radio frequency identification (RFID) in a mobile device for spatial analysis to determine if the current location is within an ascribed area. It creates a virtual perimeter (“fence”) around a predetermined physical area. In combination with location-based services, actionable operations on the smartphone, such as push notifications, occur when a subject crosses the geofence.
Therefore, for effective implementation, geofencing requires continuous and accurate tracking on a smart device (Wong, Sang, & Peng, 2017). The use of geofencing holds certain benefits, the first one is particularly dependent on the architecture of mobile operating systems. Any given application on a smartphone is either being used (in the foreground) or suspended in the background. Background software is limited in function, including directly accessing geolocation services.
However, geofencing is available and is very efficient as hundreds of geofences can be monitored in the background on all operational systems, with its circular shape being the only limit as a circular buffer is created around an object (Wawrzyniak & Hyla, 2016).
Elements of geofencing include a mobile device, the positioning system, a communication network (cellular), and a service or content provider, similar to LBSs, which are utilized in unison to create the virtual perimeter that activates notifications. When a user triggers the geofence by entering it or being present in the area for a certain time, the computing device triggers a notification. This can be used for distributing content or delivering information, depending on the context. A geofence has a radius, which is an indicator of how far the fence extends from the target. The target is usually a physical location, such as a store. Geofences are inherently a more focused utilization of location-based technology and services, limiting it to a specific location and purpose (Kirmizibayrak & Quong, 2016).
With the rapid growth of smart device usage, geofencing has become a key feature for many applications and is being adopted by physical brick and mortar businesses as well. There are seemingly numerous opportunities that technology can offer. A key principle behind geofencing is networking since the technology is aimed towards bringing people together. Social networking especially benefits from geofencing for promoting location-based services, human interactions, and events (White, 2017).
Geo Marketing Strategy Methods
When individuals find themselves in an external environment, particularly an unfamiliar one, their behavior can be predicted to an extent. People search for similar things in terms of places to eat, to get gas, or to find an ATM amongst others. In locations that are meant for commercial or tourist purposes, users will look for landmarks or large stores. Each sequence of actions taken by the user is likely aimed at achieving a specific objective or resolve a problem.
Therefore, while mobile, users will follow patterns of activities with spatially related objectives such as locating, searching, navigating, identifying, and checking (Steiniger, Neun, & Edwardes, 2006). Studies have suggested that implementing geo-marketing strategies with the purpose of “geo-conquesting” can have significant economic returns. Although, the effect is decreased and balanced if competitors choose to respond with similar strategies (Dubé, Fang, Fong, & Luo, 2017). Those benefiting from geofencing can utilize this knowledge and data to design carefully crafted marketing strategies which will draw people into specific locations through the location-based technology.
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The first strategy, the elements of which are described in the previous section, is geofencing. Geofencing can be an effective marketing tool as it can be modified to achieve a competitive advantage. For example, the geofence can be set up to include the location of a competitor business so that customers entering their location receive an advertisement or coupon for one’s store, enticing them to modify shopping patterns. Modern geofencing has a relatively large number of options, ranging from boundaries and time of display to more contextual information such as target location and user interests based on browsing history or application use (Kirmizibayrak & Quong, 2016).
The parameters of traditional spatial marketing apply to the creation of the virtual space as well. The perimeter and shape of the geofence depend on the business and contextual factors such as geographical area, competition, traffic flow, and product mix. It is the objective of retailers to customize geofencing in a most efficient and precise manner based on data to redirect customer flow and behavioral patterns through geofencing (Streed, Cliquet, & Kagan, 2015).
Geo-targeting is a more specific approach to geo-marketing. While geofencing relies on pushing notifications to anyone crossing a specific perimeter, geo-targeting delivers advertisement only to individuals meeting a specific criterion within a defined area. The radius is commonly broader than the rigidly defined barriers of geofencing, and geo-targeting can exclude certain areas. Geo-targeting is based on personal data such as demographics and interests and then coordinates it with an individual’s location to focus on marketing.
This marketing strategy tends to be more effective for larger geographical populations since targeting can be customized by demographics and personal interests (Steinhoff, Arli, Weaven, & Kozlenkova, 2018). This strategy is particularly useful for offline stores attempting to engage online consumers by using behavioral and temporal targeting as well as discounts in an online-to-offline commerce context. Comprehensive marketing that evaluates distance, correct timing, and user preferences can match consumers to businesses such as restaurants based on these aspects predefined by targeting algorithms (Lian, Cha, & Xu, 2019).
The third geo-marketing strategy which can be employed is beaconing. It is the narrowest and most focused of all location-based methods. Beaconing consists of using small physical objects (known as beacons) within a confined space such as a store or building. Beacons interact with mobile devices via Bluetooth or wi-fi signals to determine an extremely precise location of a person inside a building. The benefit of beacons is that they can be placed in locations with limited cellular signals since they do not rely upon the cellular network to connect to mobile devices. However, for the beacons to function, they rely on Bluetooth or wi-fi to be activated on mobile devices, which is not always the case.
Ultimately, this technology can be used to enhance the in-store experience and track customer movement patterns. Based on the continuous stream of transmission of tiny packets of data within a store, highly targeted promotions can be sent out as determined by the artificial intelligence of the system using the profile and position of the customer. This can assist in the decision-making of an individual within the context of the products or stores in which they are located (Zaim, Benomar, & Bellafki, 2018).
Push notifications are one of the most potent marketing tools as they cannot be easily avoided or ignored similar to other types of advertisements, partially due to behavior trends of individuals checking their smartphone when a notification arrives. However, it should also be used carefully to avoid intrusions of privacy or unnecessary spamming, both of which may have an opposite effect on customer acquisition.
However, carefully tailored notifications have been known by marketers to attract all kinds of consumers, including those usually dormant or distrustful of online advertisement. The key is personalization, which can be achieved through the tremendous amounts of data collected on the individual as well as overall customer patterns. Personalization converted into push notifications based on user activity or behavior is vital to attaining loyal customers.
The operational process of geofencing can be inherently divided into four categories: barrier, crossing, messaging, and permission. A barrier consists of a digital interface that is tied to a geographical location, with a preset radius. There is no specific guidance on the size of the geofence, but a small one would not allow the user enough time to orient themselves, while a perimeter too large would become irrelevant.
The crossing is the act of someone entering the geofence perimeter, which is identified through a network interaction with a user’s smartphone via GPS. The messaging stage consists of contacting an individual once they have crossed the barrier and fit specified characteristics. Commonly, the user must have a pre-installed application or SMS services that would allow for a mobile-friendly notification via a backend server delivery platform.
Finally, permission is critical to the successful operation of geofencing as users must allow location tracking on their smart from the services and applications to be notified accordingly. Geofencing can be active or passive. Active notifications only work when the application is open and initializes GPS contact. Meanwhile, passive geofencing works when the app is closed, but it is significantly more difficult to implement (Statler, 2016).
The significant aspect of the success of geofencing is notifications on mobile devices. There are two models for geofencing and LBSs following the pull and push methods. In the first, the mobile user has to “pull” relevant information and inquire whether notifications are available about the current location. In a second model, information is pushed to subscribers in a virtual area. Geofencing is most commonly connected to the push-type of notifications since these are triggered when a virtual perimeter is crossed. Geofencing is set up to determine the width of the radius and push notifications options that apply.
A user must have an application installed for a specific business or platform which allows for remote notifications that are “pushed” from a backend server (Greenwald, Hampel, Phadke, & Poosala, 2011). Geofencing as part of LBSs is attractive due to the serendipity of notifications arriving and its relevance to the subject without requiring them to remember to check for information.
The innovation and complexity of geofencing technology provide numerous opportunities for its implementation for a variety of purposes and in different industries. As discussed, its primary use remains for marketing and networking objectives. Proximity marketing, sale and event announcements, and other business engagements benefit from the use of geofencing.
Social networking has adopted geofencing for various means, such as showing other users of a social platform nearby with whom you can communicate that is useful for finding common activities and dating. The technology is being gradually introduced into the professional sphere for human resource management and logistics, allowing to track movement patterns of employees or shipments. The GPS-enabled data tracking can help in increasing efficiency by identifying areas of weakness or delay (Oliveira, Cardoso, Barbosa, Costa, & Prado, 2015).
Geofencing has recently been introduced to industries such as security and surveillance where there is purposeful tracking of individuals. Some of the applications are relatively niched such as a chaperone service for a child which allows parents to receive notifications if their dependent crosses an outlined perimeter alongside real-time tracking, which can be implemented for safety reasons. Location systems are on the rise in judicial monitoring where geofencing can be placed around a prison or someone’s residence if they are under house arrest.
Proximity alerts are accurate, ensuring a level of oversight while being able to provide more freedom of movement inside the designated radius itself. Security applications are possible as well, where important persons can be tracked for safety purposes while anyone undesignated entering the perimeter would be identified and stopped. It has been utilized by the military as well to create no-fly zones and automatic shutdowns for any aircraft or drones entering an area. National security or priority target protection are potential applications since geofencing is a perfect fit by creating a defensive perimeter around a set object (LaMarca & de Lara, 2008).
As a technology, geofencing has tremendous benefits in any of the applications described above. Location-based notifications can serve an effective purpose of informing individuals of any given event, ranging from marketing promotions to national emergencies. Information is critical in the 21st century, and competently utilizing geofencing provides an efficient tool for its distribution and receiving. From a marketing perspective, a geofencing capacity to notify consumers in appropriate circumstances can create a profitable scenario for both, a customer and a business that benefits from an interaction elicited by a notification.
However, geofencing is much more than advertisement through notifications, it is a tool of complex data collection on behavior and movement patterns of individuals. As a high percentage of the population has smartphones, even if their push notifications are disabled, they are constantly transmitting data and their location. This provides invaluable data that can be analyzed to be transformed into intelligence for application in a variety of industries. Geofencing provides endless possibilities for monitoring, security and surveillance, management, transportation, business, and many others which have the potential to enhance operations and methods of functioning in an efficient manner (Kapadia, 2015).
Geofencing presents the benefit of a positive economic impact for businesses that utilize it. The mass-market applications to proximity data collection and advertising present a viable tool that can be scaled on large populations. Furthermore, geofencing allows to geographically visualize information, in contexts of marketing, logistics, or management which can be used to address points of interest and maximize outcomes such as sales, output, or productivity.
Competent geofencing is considered to have a high return on investments (ROI) since it inherently causes customer awareness which gradually transitions into loyalty and even advocacy by word of mouth advertisement. Referrals are associated with shorter sale cycles and higher ROI.
Therefore, the concept of geofencing should be considered beyond the original mass notification, but the process which a consumer undergoes under the influence of the marketing. Furthermore, geofencing can be used to acquire feedback through surveys, as push notifications surveys have a higher return rate (Berman, 2016). However, for geofencing to achieve considerable benefits it needs to be implemented on a large scale and includes greater participation from relevant stakeholders such as cellphone producers, network providers, advertisers, and particularly the end user who would be willing to provide relevant permissions.
Despite evident benefits, the technology is in relative infancy and poses many challenges, both technical and social. Perhaps the biggest concern is privacy, which geofencing violates to an extent, and many users and experts believe it outweighs the benefits of implementing the technology. People believe that pushing notifications based on interests and locations is overstepping boundaries (Kapadia, 2015).
While traditional online advertising based on search results or social networks may be common, with nearly everyone receiving promotional e-mails, a direct notification or message to the phone seems intrusive to personal life and activities of users on their smart devices. As with other forms of advertising, rarely, a customer may want to consider a purchase at that moment as most individuals already have a specific purpose of being at a location.
Therefore, the geofence-triggered push notifications become irrelevant or even spam-like, which serves as a deterrent. Unfortunately, there is a significant potential for abuse and the concerns remain valid since there are currently few mechanisms in place to protect user data or to avoid being seen by the geofencing technology.
Technical aspects of geofencing present numerous challenges as well, as technology is relatively difficult to deploy. A business must be prepared to invest in digital infrastructure include databases and intelligent notification systems. Geofencing can be unreliable and ineffective as well. Consumers are mostly unfamiliar with the technology, leading to poor adoption rates. There must be a continuous presence of a wireless or cellular signal to communicate the device’s location.
Currently, the market of location-based technologies is in disarray as there is a mix of old and new systems, lacking universality and ease of use required to carry out its functions (Statler, 2016). Meanwhile, the smart device users may struggle to understand geofencing, choosing for more traditional uses of location tracking such as technology. Also, constant location tracking leads to a significant battery drain which makes it ineffective in the long-term.
Geofencing technology will continue to expand and innovate with increased capabilities and applications to a wider number of environments. Features are being developed such as 3D mapping, more accurate tracking, and smarter artificial intelligence which can interact with the data and technology. Additional applications for geofencing will become widespread as new industries implement the technology for problem-solving.
Some examples include unmanned aerial vehicles management, farm management with cattle tracking, and smart home ecosystems which can benefit from the tracking of user devices and other signals. A complex algorithm is being developed for geofence software known as “If This Then That” (IFTTT) which allows us to create dynamic scenarios based on user actions with networking interactions amongst mobile devices and smart environments (Iqbal & Hassan, 2018). Such a complex but useful implementation of geofencing can significantly improve the technological connectivity of the future.
In the business and retail environment, geofencing will likely continue to expand due to its numerous benefits. It will become a strategically indispensable tool for customer relationship management (CRM) and acquiring customer loyalty.
Furthermore, as the technology expands, big data will be collected and analyzed with enhanced analytics which will provide significant economic and psychological inferences about consumer behavior, allowing to perfect the marketing approach of the system. As other mobile technologies develop, virtual reality will become possible and geofencing can be modified to interact within a virtual overlay in the real world, as artificial intelligence automates several tasks for business and industry alike. Overall, innovation in geofencing has proven fruitful and most technology experts agree on its significant potential in the future.
The rapid development and adoption of mobile and spatial technologies have allowed for the growth of location-based services. Through the use of various methods such as geofencing, location tracking has become a vital tool for marketing. By specifically targeting users in a defined area and using other personal characteristics, businesses can implement strategies directed at attracting new customers.
The technical process of operation and setting geofencing can be complex, relying on a multitude of aspects such as global positioning, cellular networks, and consumer devices. Geofencing provides numerous benefits for effective marketing and tracking which leads to efficient business processes and economic gains. However, there are numerous challenges involved include technological and privacy aspects. As geofencing continues to develop, its application to numerous industries and purposes will improve with greater connectivity within a network of devices that will greatly enhance the interconnection between virtual and physical realities.
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