Discussion
Hypothesis 2a is supported by the second study. Consumers spent more money on purchases after exposure to an advertisement in store than exposure to an advertisement outside of the store. With regards to hypothesis 2b, this is partly demonstrated by Study 2. The interaction effect revealed that when the advertised product was non-habitual for the consumer, the consumer spent more money on purchases after exposure to an advertisement in the store, than to exposure to an advertisement outside of outside of the store. However, the expectation was that in situations in which the advertised product was habitual for the consumer, the consumer would spend more money on purchases after exposure to an advertisement outside of the store than after exposure in the store. The results have proven this expectation to be false.
General discussion
The aim of the current study was to examine the effect of location based advertising message content and location based advertising types on purchase behavior, taken into account the moderating role of consumer loyalty and advertisement relevance. With regards to consumers exposed to advertisements outside of the store, price promotions are more effective to influence purchase behavior, than inspirational promotions. Furthermore, consumer loyalty moderates this effect. This means that less loyal consumers spend more money after exposure to price promotions, and the more loyal consumer spends more money on purchases after exposure to inspirational promotions. Subsequently, we demonstrated that consumers spent more money on purchases after exposure to advertisements in the store, compared to exposure to advertisements outside of the store. Furthermore, we expected that this effect would be dependent on whether the advertised product is habitual or non-habitual for the consumer. The results reveal that when the advertised product is non-habitual for the consumer, consumers spent more money on purchases after exposure to an advertisement in the store. However, the expectation was that in situations in which the advertised product was habitual for the consumer, the consumer would spend more money on purchases after exposure to an advertisement outside of the store than after exposure in the store. However, we can draw the conclusion only for the scenario that we mentioned.
This is the first study that disentangled how consumers’ interests contribute to the working and limits of LBA. We found support to the idea that consumers’ interests can contribute to the effectiveness of LBA, by using a framework in which we also took into account factors relating to the message and the location. We demonstrated that the consumers’ degree of loyalty is important to take into consideration by in investigation of LBA. The results show that exposure to price promotions is more effective to influence purchase behaviour in situations when the receiver is less loyal. This is in line with traditional marketing research that argues that less loyal consumers are sensitive to price changes by making a decision to purchase a certain brand (Brown, 1974, Webster, 1965, Massy & Frank, 1965, Kanghyunm & Thanh, 2011). In line with cognitive consistency theories (Calder, 1981, Cacioppo, & Petty, 1985) it is argued that cognitive elaboration of persuasiveness is richer when the receiver is loyal, due to existing experiences with the brand. Moreover, this finding relies on another theoretical approach that implies that loyalty is associated with the willingness to spend more money on trying new products of services of the brand to which consumers are committed, because of positive affection of the consumer towards the brand (Roselius, 1971, Bauer, 1960, Mellens, Dekimpe, & Steenkamp, 1996). Inspirational promotions contain information about new products, this explains why for loyal consumers inspirational promotions are more effective to increase purchase behaviour than price promotions.
Another important finding of the current study is that the effect of LBA types is dependent on consumers’ consumption habits. We were able to establish that advertisements containing non-habitual products for the consumer are more effective when consumers are exposed to it in the store, compared to exposure outside of the store. Through this information we can conclude that consumers who are being located in stimulus based environments –at the time of exposure to the advertisement– are more triggered to purchase products when normally externally driven (Nedungadi, 1990). Thus, when consumers base their choices on a stimulus based consideration set, they need a certain stimulus that can influence their purchase behaviour (Nedungadi, 1990, Alba & Amitava, 1985). Thus, in stimulus based environments price promotions relating to non-habitual products that are not encoded in memory, are an external cue for consumers which might influence their purchase behaviour. Price promotions containing habitual products that are encoded in memory are less effective in such environments to influence purchase behaviour.
Furthermore, with this study we were able to demonstrate that exposure to advertisements in the store is more effective to influence consumers’ purchase behavior than exposure outside of the store. These findings are in line with the CLT (Liberman & Trope, 2008), which explains that closer psychological distance leads to lower construal levels which in effect could increase involvement and higher purchase intentions (Luo, Andrews, Fang, & Phang, 2013, Hühn, 2016). Furthermore, these insights are in line with the RAM (Baker & Lutz, 2000) which complies that perceived usefulness of a persuasive message could be increased when the product in the message is both accessible and relevant for the receiver. Advertisements in the store are, besides congruent with the location, also more congruent with receivers’ present goals.
Lastly, this study reveals important results with regards to message content designs. In line with research of Katz and Byrne (2013) this study shows that price promotions in LBA have a stronger effect on purchase behaviour than inspirational promotions. With regards to CLT (Liberman & Trope, 2008) it can be concluded that LBA persuasiveness increases when LBA message design content matches the detailed-oriented and concrete manner in which people process LBA. This leads to fluent processing of the persuasive message and thus might decrease perceptions of intrusiveness which in effect influences purchase behaviour.
Strengths, limitations and directions for further research
The present study has some limitations. Firstly, the quasi-experimental design of our study lacks internal validity, however this design does result in higher external validity. Given that the experimental design was applied to data from existing mobile application of an international fashion retailer we were limited in obtaining focused information which could be randomized across the population. This pre-designed application data could be a limitation, however, since our field experiment used real world data the lack of ecological validity is solved resulting in a good reflection how LBA works in real marketing practices. Further research can replicate the current study by randomly assigning the treatments to all participants to increase the internal validity.
Furthermore, the disability to randomly assign consumers to all conditions resulted in unequal sample sizes in the second study. By analyzing the data we have taken this into account and therefore it is important that our results are a reflection of reality. The reason for the difference in sample size is consumers only receiving advertisements in the store when they have activated Bluetooth on their devices. With this real life data we have shown that not many consumers have capitalized it. A possible solution for this is running the campaign for a longer period of time. Since the international fashion retailer has short duration campaigns by nature, we were not able to implement this solution. This is a suggestion to include in further studies.
Interestingly, we found no evidence for the assumption that, in situations when consumers are outside of the store, advertisements containing habitual (vs. non-habitual) products, are more effective to influence purchase behavior. We based this expectation on the idea that choices outside of the store are being considered based on memory based consideration sets (Nedungadi, 1990, Alba & Amitava, 1985). In such situations brand or product retrieval play important roles, and habitual products are encoded in memory thus can be retrieved more easily from memory (Lynch & Scrull, 1982). Therefore it seems that when consumers consider choices based on memory, and are located in close proximity of stores, consumers’ consumption habits do not matter. This is the first study in LBA research that investigate the interaction of LBA message types and consumers’ consumption habits, and therefore for further research it is suggested to replicate this to control whether the same results will be found.
This is the first study taken into account consumers’ interests by the investigation of LBA. Because of privacy concerns we were not able to take into account demographics of consumers. For further research this could be interesting to investigate as, for example, younger consumers use mobile phones more often than older consumers which contribute to the working and limits of LBA. Moreover, it would be interesting for further research to investigate how these findings relate to other businesses, such as hospitality- or travel-business.
Managerial implications
This paper demonstrates that consumers spent more money after exposure to advertisements in the store, compared to exposure advertisements outside of the store. For this reason retailers should consider the deployment of this LBA type, even though the number of consumers exposed to advertisements in the store is lower compared to the number of consumers exposed to advertisements outside the store. Another interesting finding is that when the advertised product is non-habitual for the consumer, the consumer spent more money on purchases after exposure to advertisements in the store, compared to exposure to advertisements outside the store. For retailers this means that in store LBA is useful to target consumers with new products or recently launched products.
Furthermore, consumers spent more money on purchases after exposure to price promotions outside of the store, than after exposure to inspirational promotions. Additionally, we demonstrated that less loyal consumers spent more money on purchases after exposure to price promotions outside of the store. Furthermore, loyal consumers spent more money on purchases after exposure to inspirational promotions outside of the store. Therefore, it is advisable to lure loyal consumers to the store by targeting them with inspirational promotions, and for the less loyal consumer it is better to use price promotions.
In conclusion, mobile loyalty applications enables retailers to target their consumers with personalized and location based offers. This research shows that it is important to use such tools and unique data as it turns out to be a huge opportunity to increase effectiveness of marketing campaigns.
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