Geomarketing and Geocoding

Given steady advances in location reporting engines, large retail organizations have enabled not only to track
their customers both demographically and physically, typically via exit surveys and loyalty programs, but also
to identify and attract them. To increase competitiveness, most national organizations have begun using
geocoding and new mapping technologies, complementing existing location-based analysis tools and creating
major efficiencies in-house. Geocoding is the process of deriving the position of a location in latitude and
longitude. Address information is one of the most common attributes of data stored in a business data
repository, and examples of such data can be addresses of employees, store locations of retail chains, customer
addresses (via catalogues) and sales of a product. Sales of a product can be linked with an address through a
loyalty card, on which they collect points for each product purchased. This card contains the address of the
customer and so geographic data on sales is collected. This data facilitates data mining using algorithms such as
market-basket analysis by geography, and using the same data in spatial form, one can analyze consumption of
any particular product in an area. Information about business relationships (customers, vendors, outlets,
competitors) includes a variety of traditionally tabular facts: age, first contact date, scope of business, and
potential for future revenue. Where they are located is also valuable information. The proximity of a customer
to a retail outlet (and to a competitors location) is very valuable information for business analysts. Geospatial
data and GIS tools can tell retailers where things are, instantly, and how close they are to each other.
Understanding where their customers are, enables retail managers to serve them better. Retail analysts gain a
deeper understanding of customer behavior and purchasing preferences by including location technology and
demographic data. This intelligence is leveraged to increase profitability and realize greater ROI from other
initiatives, and to launch expansion strategies. To get the most out of a location-based geocoding system,
retailers must first collect at least the most basic geographic information from customers, such as a postal code,
at the store level. Preferably the information includes a name and address, the products they purchased and the
costs of the products. This information can then be linked with geodemographic information to bring new and
meaningful insight into these purchases. During the development of any retailers marketing plan, topping the
wish list is a desire to know what specific groups of customers were the most historically profitable and
therefore deserve a stronger focus and higher marketing budget. Retailers already using customer-modeling
applications can apply geodemographic data to tie existing information to supplement neighborhood
demographic data. This provides an ideal understanding of where the most profitable customer clusters are
located and what they are like in terms of demographics, based on census data, and lifestyle habits. After
investing in sophisticated CRM systems, retail businesses typically understand their customers purchasing
habits via their postal codes, income and other demographic characteristics. But location affects customer
behavior as much, if not more than demographic characteristics. To fully understand the customer, retailers must
understand where they live and what their location means. Combining CRM and geocoded retail analytics
facilitate better commercial decisions based on historical consumer and relevant store data. This technology
enables forward-thinking companies to evaluate the effectiveness of promotional campaigns, and determining
the impact of marketing events (coupons, discounts, specials, advertisements), as well as customer retention and
acquisition.

Geofencing
A geo-fence could be dynamically generatedas in a radius around a store or point location. When the
location-aware device of a location-based service (LBS) user enters or exits a geo-fence, the device receives a

generated notification. This notification might contain information about the location of the device. The
geofence notice might be sent to a mobile telephone or an email account. Geofencing apps are the longanticipated next frontier in mobile technology. They stand to shake up industries from retail to healthcare by
transforming how companies interact with customers, say industry analysts and insiders. The ability to identify
a customer's location at any time opens up seemingly endless sales, marketing and business opportunities. In the
retail industry, for example, companies can use information about a customer's location -- combined with details
about that person's purchasing history -- to send personalized offers to a smartphone when the customer walks
into a store. The biggest benefit of geolocation technology is the ability to deliver relevant offers to the
customer -- the right product at the right place at the right time. If a person is walking in front of a store or
within a certain radius, the company can ping them with an offer that's relevant. Companies can create
personalized offers based on a customer's location time and previous buying patterns.

Example 1 Starbucks

Whenever a customer walks into Starbucks, the coffeehouse chains mobile application knows that he is
there.
The app pulls up customers loyalty card and applies any discounts he has earned.
The app is integrated with the CRM application of Starbucks and hence knows and understands the
customers preferences and choices from their past buying behavior.
Hence the application knows what kind of drinks will the customer like, and can propose offers and
discounts accordingly.
Also Starbucks provides the customer a chance to customize their drink and also pay them instantly through
the mobile application and hence making it easier and convenient for repeat customers
Here Starbucks is using geolocation technology to collect unprecedented amounts of data about customers
and then uses that data to sell products by tailoring perks, rewards and discounts.

Example 2 - Walmart
Walmart has elevated its comprehensive 360-degree mobile commerce efforts to create a more streamlined
shopping experience that incorporates various channels such as mobile applications, mobile Web, augmented
reality, mobile advertising, mobile bar codes, social media, location-based services and push notifications.

Walmart has launched its Store Mode mobile app that uses geolocation and geofencing technology to detect
when consumers enter a Walmart location.
From there, consumers check prices by scanning product bar codes and QR codes, as well as planning their
shopping list and digital coupons.

Furthermore, Walmart launched its Scan & Go service that lets consumers save time by scanning store items
with their iPhone device and bagging them while they shop. Consumers can head to a self-checkout lane,
transfer their basket wirelessly and complete their payment. This eliminates the need to wait in the line for
standard checkout.
The retailer also introduced electronic receipts into its app that lets customers receive electronic receipts and
access purchase history.

Challenges to Geolocation and Geofencing

Privacy and security issues are the topmost concerns. For some people, the idea that a company knows
where they are is an invasion of privacy.
For geolocation-based marketing to work, companies must have detailed and specific information on each
customer's purchasing habits and preferences. Sending a coffee coupon to a Starbucks regular is pointless if
the person drinks tea. Companies don't have the kind of detailed and segmented data they need to deliver
offers that are relevant to a set of consumers. If companies send customers irrelevant information and offers,
geolocation stands to go the way of email marketing and direct mail.
Data integration presents another challenge. How do companies organize all the data from geolocationbased apps and integrate it with their existing CRM data? All customer data needs to be in the same place to
make the most of geolocation