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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Location-based Marketing outlines the main concepts, methods and strategies for implementing spatial marketing, also known as geomarketing. With an emphasis on the value of mapping in marketing decision-making, this book demonstrates the importance of a more spatialized view of these decisions, in order to best respond to market realities whether local or international. The main techniques of geomarketing are presented along with an understanding of the spatial behavior of consumers, both outside the point of sale and in stores. The book further introduces the idea of a "geomarketing mix", which spatializes product innovations, merchandising, pricing and various aspects of promotion. Finally, the book defines what real georetailing comprises and develops the concept of mobile marketing based on geolocation techniques.
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Table of Contents
Cover
Preface
Introduction
1 Spatial Marketing and Geomarketing
1.1. Defining space
1.2. From geomarketing to spatial marketing
1.3. Spatial marketing and geomarketing applications
1.4. Geomarketing, techniques and software
1.5. Conclusion
2 The Consumer’s Spatial Behavior
2.1. The main concepts of out-of-store spatial behavior
2.2. Models and theories of spatial consumer behavior outside the store
2.3. The consumer’s in-store spatial behavior
2.4. Conclusion
3 The Spatial Marketing Mix
3.1. Spatial marketing and the marketing mix
3.2. Spatial approach to product management
3.3. Spatial approach to the price
3.4. Spatial approach to sales force promotion and management
3.5. Conclusion
4 Store Location and Georetailing
4.1. Store location
4.2. Location models and the use of geographic information systems
4.3. Spatial strategies for locating points of sale
4.4. Conclusion
5 Spatial Marketing, Geolocation and Mobile Marketing
5.1. From e-commerce to mobile marketing
5.2. Mobile spatial marketing
5.3. Mobile space marketing and space management by organizations
5.4. Conclusion
Conclusion
References
Index
End User License Agreement
List of Tables
Chapter 2
Table 2.1. Variables used to validate MCI-type models (source: Cliquet 1997b)
Chapter 3
Table 3.1. Generic marketing functions (source: Van Watershoot and Van der Bulte...
Chapter 4
Table 4.1. The PESTEL model (source: Evans and Richardson 2007 and PESTEL analys...
Table 4.2. Weighted evaluation grids for a supermarket site and a convenience st...
Table 4.3. Application of the Reilly Law formula to Normandy cities
Table 4.4. Portfolio matrix for multiple locations
List of Illustrations
Chapter 1
Figure 1.1. Theoretical and schematic representation of central place theory (so...
Figure 1.2. Map of the addresses of the clients (triangles) of a firm located so...
Chapter 2
Figure 2.1. The attraction of the E. Leclerc hypermarkets in Indre-et-Loire (37)...
Figure 2.2. Theoretical and actual trading areas. For a color version of this fi...
Figure 2.3. Shopping area of stores according to their surface area (source: wit...
Figure 2.4. Monitoring a consumer’s in-store shopping trip. The figure shows the...
Chapter 3
Figure 3.1. Geomarketing and delimitation of geographical areas for sellers (sou...
Figure 3.2. Mapping of potential customers (source: with the kind permission of ...
Figure 3.3. Travel time to visit potential customers, distinguishing between ind...
Chapter 4
Figure 4.1. The process of deciding on the location of points of sale
Figure 4.2. Trading area and cannibalization of sales and potential by area in N...
Figure 4.3. Map of isochrones (source: courtesy of Articque). For a color versio...
Figure 4.4. The evolution of the shapes of trading areas
Figure 4.5. Definition of trading areas by the proximal area method (source: Gho...
Figure 4.6. Outermost points and limits of the trading area (source: according t...
Figure 4.7. a) Division of the area into regions. b) Exploded trading area (sour...
Figure 4.8. Coverage of a network of points of sale in France (source: Baray 200...
Figure 4.9. Studies prior to the opening of a point of sale
Figure 4.10. The breaking point or limit point
Figure 4.11. Service locations within a major metro station in Paris (source: co...
Figure 4.12. The merger of the Auchan and Mammouth hypermarkets (NB: in these pa...
Figure 4.13. Application of the percolation theory to a chain of stores at maxim...
Figure 4.14. The meshing of two networks of "soft" discount stores (source: (Cli...
Guide
Cover
Table of Contents
Begin Reading
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Location-based Marketing
Geomarketing and Geolocation
Gérard Cliquet
with the collaboration of
Jérôme Baray
First published 2020 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:
ISTE Ltd27-37 St George’s RoadLondon SW19 4EUUK
www.iste.co.uk
John Wiley & Sons, Inc.111 River StreetHoboken, NJ 07030USA
www.wiley.com
© ISTE Ltd 2020
The rights of Gérard Cliquet and Jérôme Baray to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Library of Congress Control Number: 2019957599
British Library Cataloguing-in-Publication DataA CIP record for this book is available from the British LibraryISBN 978-1-78630-580-0
Preface
This book is a follow-up to the book Geomarketing: Methods and Strategies in Spatial Marketing published by the publisher ISTE (London) in 2006, then translated into Chinese in 2012 (translation by Pan Yu and Gao Li) under the title .
This new opus is no longer a collective work, but the work of a single author who has tried to bring together the main concepts, methods and strategies to implement marketing that takes space into account.
It therefore not only emphasizes the importance of mapping in marketing decision making, but also seeks to highlight the importance of a more spatialized vision of these marketing decisions in order to better reflect the realities of markets, whether local or international.
The technological progress made and more particularly the arrival of mobile tools from information and communication technology (ICT), especially tablets and smartphones, have led the author to take an interest in the specificities of geolocation, to use this pleonastic expression. For a long time, location was reserved for buildings with an economic purpose, such as factories (Weber 1909; Merenne-Schoumaker 2002) or shops (Huff 1964; Applebaum 1966). Now, it is individuals and, with regard to marketing, consumers who can be geolocated and whom it is possible to address directly via email, SMS or even social media, which makes it possible to boost marketing strategies. ICT is disrupting the daily lives of consumers and practitioners, whether retailers or industrialists. Many companies have not yet taken advantage of the opportunities offered by these technologies, and when they have acknowledged them, they are still looking for ways to use them to improve contact with their customers. These developments do not take place without raising legal issues of privacy concerns, which will also be mentioned, as the academic community has been addressing these risks very early on.
This book offers a synthesis of knowledge concerning consumer behavior, the elements of the marketing mix with of course store location in a specific section, and therefore these new aspects related to geolocation that the integration of geolocation systems in new ICT tools allows.
The author sincerely thanks Jérôme Baray, Professor at the University of New Caledonia in Nouméa, Dany Vyt, Associate Professor at the IGR-IAE and Pierre-Alain Guillo, Associate Professor at the Faculty of Economics, both at the University of Rennes, for their comments. He is also very grateful to the company Articque for the supply of maps that will found in this book, as well as to Mr. Philippe Latour for the supply of an illustration from his company Spatialist.
Gérard CLIQUET
January 2020
Introduction
This book attempts to take stock of knowledge and applications in an evolving field. It focuses on aspects related to the discipline of marketing, while others provide a broader vision of digital geography applications, using computer science, in management sciences (Caron 2017). Digital geography has also been implemented in many fields such as weather, military strategy and environmental crisis monitoring (Plantin 2014).
Research based on spatial considerations began in economics as early as the 19th Century (von Thünen 1826; Weber 1909). Publications published around the 1930s would leave their mark on the economy (Hotelling 1929) and marketing (Reilly 1931) for a long time, alongside the work of geographers of the time (Christaller 1933; Lösch 1941). But the importance of the “geography of marketing” began to be recognized in the 1960s (Revzan 1968). This evolution also marks the birth of retailing (Scott 1970), that is, the activity of selling goods in stores or on the Internet1. Chapter 4 of this book will be entirely devoted to georetailing.
The interest of multidisciplinary research, particularly of course with geography, lies in the possibility of bringing out the determinants and models of store location by linking business units and geographical elements and highlighting their evolution. This takes into account population disparities within regions, changes in the urban economy with spatial interactions within market areas and trading areas, while taking into account competition, commodity flows and geographical barriers. But only store location specialists, retailers, will continue in this direction, with traditional marketing remaining largely aspatial. However, Chapters 2 and 3 will show that all marketing can be impacted by the need to spatialize studies, especially since recent technological advances in mapping.
English speakers do not normally use the word geomarketing, instead making a distinction between GIS (geographic information systems), geodemographics, which is the study of people according to their place of residence (Johnson 1997; Gonzàlez-Benito et al. 2007), and micromarketing, which is defined as the customization of marketing mix variables at the store level (Montgomery 1997; Swinyard 1997). Finding English language sources for geomarketing is therefore not always easy. This book will help the reader in this respect by providing him or her with a large number of bibliographical references.
In terms of geomarketing considered as a set of techniques to map many social phenomena, as we will see, we could also go back in time and recall the role of the Belgian Gérard de Kreme, known as Gérardus Mercator, who invented mapping in the 16th Century (Horst 2011). In the 18th Century, the first map of the Kingdom of France was drawn by the Cassini family and this work, based on geodesic triangulation, lasted more than 60 years. Today, we still consult Cassini’s map for historical works. And, older readers will surely remember the geography courses and maps of Vidal de la Blache (often called Vidal-Lablache).
But while geomarketing is a set of mapping techniques, spatial marketing is above all a much broader field, not only in methodological terms, but also and above all in conceptual and theoretical terms, which should enable private or public organizations to define more precise and appropriate strategies: space is not only geographical, it is also economic, cultural and institutional if we break down the notion of distance according to the Uppsala model (Johanson and Wiedersheim-Paul 1975).
This is why this book talks about spatial marketing, because mapping, which is important and central to the notion of geomarketing, is not the only technique that makes it possible to control space in marketing decisions. Spatial marketing therefore concerns all of the following:
– location issues, including
- points of sale for retailers;
- private institutions (factories, head offices, warehouses, etc.) or public institutions (town halls, administrations, departmental or regional buildings);
– localized marketing, including
- at the local level, micromarketing – marketing applied locally to individuals whose characteristics related to their location are known;
- at the international level, macromarketing – marketing applied at the level of a country taking into account the specificities of its population compared to others;
– geographic information systems applied to marketing;
– mobile marketing based largely on issues of dynamic customer location-based marketing (Palos-Sanchez
et al
. 2018).
Developing spatial marketing requires a clear understanding of two closely related phenomena referred to as location and localization. This book will deal with aspects related to both location and localization and therefore knowledge specific to management sciences, both those related to the geography of territories and those related to intercultural aspects. Social considerations will not be forgotten insofar as space and especially the ability to travel and move around it can be a source of inequality that has serious economic and social consequences (Fourquet 2019). Spatial mobility and the ability to change residence are one of the causes of unemployment.
Most individuals are able to acquire knowledge of space, including locations, distances and directions: we speak of “spatial intelligence” and even “brain GPS” (OʼKeefe et al. 1998) and “cells that constitute a geoposition system in the brain”, a kind of internal GPS. An article in the CNRS journal explains how this brain GPS works (Belaud 2019). This discovery answers the following questions:
How do we know where we are? How do we find our way from one place to another? And how do we store this information in such a way that we can immediately find the path the next time we take the same route?
There has even been an attempt to model this acquisition process without any real success (Montello 1998). These digital geographic tools and especially GPS can cause some people to lose all or part of their ability to explore new environments, and added to the development of artificial intelligence, may lead them to sink into the “planet of the apes syndrome” (Picq 2019).
Moreover, it is difficult today to separate a firm’s functions (namely marketing, information systems and human resources management, logistics, strategy, but also the underlying organizational forms) at local, regional, national and international levels. This is why many of the reflections in this book will focus on aspects other than marketing in the strict sense.
The communications revolution may have led us to believe that distance was “dead” (Cairncross 1997). This is not the case and it is time to rediscover space (Barnes et al. 2018). Digital mobility tools, smartphones and tablets are largely based on geolocation systems. Not taking geographical space into account in its decision-making processes could in the long-term lead to the company that refuses to comply with it becoming “obsolete”. It is true that in all markets, there are small firms that survive very well without using “new” technologies at all. But they often work in niches that are inaccessible to larger organizations. The latter explore the possibilities of Big Data in particular by relying on geolocated data, as about 80% of the data relevant to business is linked, in one way or another, to spatial considerations. These firms are developing data mining methodologies to improve their decision-making processes related to customer relationship management (CRM), hence the need to link marketing and information systems management (Goes 2014). In addition, space continues to play an essential role in the location of points of sale. Recent decisions by retail groups to close outlets are a telling example of this, if not perfect (see Chapter 4). We must be aware that today’s location strategies concern at least as much the opening of contact points as closures, in other words, network restructuring.
Finally, while this book aims to disseminate theories, concepts and methods, not to mention applications, it is also a call for more research focused on spatial marketing. Decision makers need a theoretical basis to interpret mapping results, better understand the consequences of introducing space into their decision-making process and once again develop finer strategies. This book is divided into five chapters according to the structure of a marketing manual (definitions and research techniques, consumer behavior, marketing mix with a stronger focus on location), with a contribution, in the last chapter, on mobile marketing even if information and communication technologies are present in all the chapters.
Chapter 1 attempts to define spatial marketing as distinct from geomarketing and concepts and techniques to understand how mapping software adapted to geomarketing works.
Chapter 2 summarizes knowledge of the consumer’s spatial behavior outside the points of sale as well as in the points of sale, without forgetting the cultural specificities linked to spatial diversity that product globalization has not eliminated. This chapter will mainly deal with shopping in its spatial dimensions.
Chapter 3 focuses on the spatial marketing mix, that is, the combination of the famous 4 Ps (Product, Price, Place, Promotion) (McCarthy 1960) with the spatial diffusion of products, geomerchandising and geopricing, geopublicity, direct marketing, now interactive marketing and sales force management. The third P (Place) will be discussed in Chapter 4.
Chapter 4 deals more specifically with georetailing since location methods were the first geomarketing management applications. Retailers are major users of geomarketing techniques, especially for setting up their points of sale, but we will see that other uses are possible.
Chapter 5, after recalling some considerations on e-commerce, covers both mobile shopping on the consumer side and mobile marketing on the business side, as well as m-commerce and mobile ICT applications, that is, smartphones and tablets, with their uses of geolocation in marketing.
1
https://dictionary.cambridge.org/fr/dictionnaire/anglais/retailing
.
1Spatial Marketing and Geomarketing
The terms “spatial marketing” and “geomarketing” call for the following questions:
– What is space?
– Why introduce space in marketing in an almost systematic, if not systemic way?
– Why expand the already vast field of geomarketing?
What is space? The recent French “yellow vest” crisis has shown how much making decisions without taking into account space or, as we now say, territories, can lead decision-makers to provoke reactions that are then very difficult to manage. Can we say that this “yellow vest” crisis invokes “geography is destiny”, as the American thriller writer James Ellroy likes to talk about? Making decisions today, either for private or public institutions without caring deeply about local issues can lead to a profound crisis. Everybody is not supposed to be mobile as expected.
Defining space and quickly understanding the consequences of these decisions on the “territories” for which we are responsible, whether at the level of a State or a company, are today prerequisites for good management of the organization for which we are responsible. However, the principle of subsidiarity (Martini and Spataro 2018) had been defined at the European level in the 1980s: “a central authority can only carry out tasks that cannot be carried out at a lower level” or “the responsibility for public action, when necessary, lies with the competent entity closest to those directly concerned by this action”, a recommendation that most companies cannot deny today. This principle has even been associated with the sustainable nature of economic activity in particular (Gussen 2015).
Why introduce space into marketing in an almost systematic, if not systemic, way? The reason is not only the need to localize all market characteristics (Rigby and Vishwanath 2006): customers, suppliers, points of sale, logistics and many other aspects revealed in this book. Even technological change requires us to take into account geographical space. The almost systematic use of GPS (Global Positioning System) and soon of the European Galileo system, is becoming increasingly present and is forcing all actors, suppliers and demanders as well as market facilitators to introduce spatial considerations into their reasoning, decisions and actions. The term systemic can also be used insofar as, if the company is considered as a system, it must now adapt as well as possible to its environment, whether for economic or environmental, or even social and cultural reasons.
Why expand the already vast field of geomarketing? In fact, this term was coined in France by the professional world when eponymous software spread to companies and local authorities; the technical dimension is therefore strong.
Wikipedia gives this definition: “Geomarketing is the branch of marketing that consists of analyzing the behavior of economic individuals taking into account the notions of space.”1 And the same source confirms this technical side:
Geomarketing is present in various applications, such as studies of trading areas, store location studies, potential studies, sectorization, optimization of direct marketing resources (phoning, ISA, direct mail, etc.), network optimization, etc. Geomarketing frequently uses Geographic Information Systems (GIS) to process geographic data using computer tools.
Wikipedia also reports that
English speakers use the term Location Business Intelligence (or geo-business intelligence), which is more appropriate when the approach concerns marketing; but the discipline also applies to territory development in the context of socio-economic studies.
In local authorities, geomarketing has become an essential tool for the development of their territorial marketing for the management of public spaces from a social, economic or tourist perspective. But reducing geomarketing to location choices undoubtedly limits what will be the common thread of this book: the introduction of space into marketing decisions regardless of the sector of activity.
The objective of this book is therefore to broaden this field in a strategic perspective while addressing the main technical aspects of geomarketing in relation to the elements of the marketing mix for all companies. It will therefore take into account the specificities of sectors such as retailing, services and technology.
While mapping is certainly helpful, it is not the only means available to decision makers. The accelerated development of mobile marketing thanks to the rapid spread of smartphones reinforces the need to expand the field of geomarketing; indeed, can we imagine a smartphone without GPS? And even if the geolocation of smartphone owners poses legal problems, it is essential and many techniques have been developed to refine the accuracy of its geographical location.
Tracing a future perspective on the use of space in marketing decisions requires studying the historical trajectory of this idea. And even if it is possible to go even further back in the history of thought, as we will see, authors such as von Thünen, Hotelling, Reilly, Christaller, etc., in the 19th Century and in the first half of the 20th Century, whether economists or geographers, were able to trigger “spatial reflection”. This chapter, after a few definitions, traces the consideration of space in order to understand where the fields of geomarketing and spatial marketing come from before better understanding them.
1.1. Defining space
Space has long been reduced to a mathematical notion: “a geometric concept, that of an empty environment” (Fischer 1981). Today we talk about social space, and the space treated here is in fact the market. But before coming to this notion, it is important to clearly identify all the variants of this concept of space. We talk a lot about territory, about countries (within a country in the sense of a nation) and about “spatial surface”. A space can be defined both in geographical terms and in relational terms (Duan et al. 2018), or even in historical or political terms (Paquot 2011). We then have a better understanding of the polysemy surrounding the notion of space. Space would be “a place, a reference point, more or less delimited, where something can be located, where an event can occur and where an activity can take place” (Fischer 1981), but to which it would be appropriate, in order to conceptualize it, to associate all the spatial practices of individuals (Lefebvre 2000) thus showing the close relationship between individuals and space (Fischer 1997). However, this relationship is currently undergoing major upheavals due on the one hand to societal changes (Levy 1996; Oliveau 2011) and on the other hand to extremely rapid technological change.
The territory has received several definitions resulting from two different meanings: a first one defines a territory as a place where a population resides, while a second one, more precise and legal, not to say more political, considers the territory as a place where power is exercised that can be justly political or judicial (Paquot 2011).
From these two meanings, definitions will be added that are increasingly out of step with each other. This drift may also explain some misunderstandings, with the State preferring to put forward the second meaning, favoring time over geographical space in order to establish its domination, when the people understand the first one which prefers living space over the time of power. It is then easier to understand why historians and geographers do not necessarily speak the same language when describing territories.
A country is a French administrative category defined by the law of February 4, 1995, on guidance for spatial planning and development (LOADT), known as the Pasqua law, and reinforced by the LOADDT (known as the Voynet law) of June 25, 1999. But it is now prohibited to create new countries (article 51 of law no. 2010-1563 of December 16, 2010, on the reform of local authorities). A country is defined as follows:
A territory that presents a geographical, economic, cultural or social cohesion, on the scale of a living or employment area in order to express the community of economic, cultural and social interests of its members and to allow the study and implementation of development projects.
Although considered as an administrative category, a country is neither a local authority, nor a canton, nor an EPCI (Établissement public de coopération intercommunale) and therefore does not have its own tax system. A large part of France is thus composed of “countries” resulting from contracts concluded between municipalities; this is of particular interest to rural areas.
The spatial surface is in fact a rather vague concept, but it expresses the difficulties resulting from the spatial heterogeneity encountered in certain spaces, due to discontinuities resulting from irregular borders, for example between regions, peninsulas or real inner holes. This heterogeneity can make the valuation of house prices very complex. This idea was applied to define house prices in the Aveiro region of the Ílhavo district (Portugal) (Bhattacharjee et al. 2017).
1.2. From geomarketing to spatial marketing
After describing the evolution of spatial marketing and placing it in the midst of other disciplines, it will be necessary to define this field, then to specify its differences from geomarketing, before identifying its content.
1.2.1. Spatial marketing: between economics and geography
It all starts with the development of the location theory of economic activities. Thomas More defended, as early as 1516 in his book Utopia, the need to divide the city into districts to accommodate each a market (Dupuis 1986). In his economic writings, Turgot (1768) posits three principles of the theory of store location:
– the centrality of the points of sale;
– the demographic threshold for the establishment of businesses, the existence of a sufficient market;
– the grouping of purchases.
On a more methodological level, von Thünen (von Thünen 1826), considered as the “father of location theories” (Ponsard 1988), then explains that “the optimal locations of agricultural activities are such that in every part of the space the land rent is maximized”. He thus founded the spatial economic analysis which he would later rely on to design his industrial location models at the beginning of the 20th Century (Weber 1909), which in turn would be used to model the expansion or spatial development of retail chains (Achabal et al. 1982). We can thus see how, in terms of the use of space in economic and managerial theories, progress has taken time.
Another economist (and also a leading statistician), Hotelling (Hotelling 1929), described in a celebrated article the consequences of location changes using a simple example and thus defined the principle of minimal differentiation, often referred to as the Hotelling rule (Martimort et al. 2018) or the Hotelling law (Russell 2013). Hotelling developed the idea that competition between producers tends to reduce the difference between their products. His theory is still being discussed today and is still the basis for much research. It has thus been possible to demonstrate in a theoretical way the contribution of advertising in order to allow companies to bypass this principle of minimal differentiation (Bloch and Manceau 1999). Geographers then developed the concept of central squares (Christaller 1933) from which the hierarchy of cities and the hexagonal shape of the geographical segments surrounding the squares (cities, towns, villages) were deduced (see Figure 1.1).
Each economic actor maximizes its utility (consumer) or its profit (firm) in a homogeneous space where prices are fixed and where the cost of transport depends on distance. The hexagonal shape of Figure 1.1 theoretically facilitates a perfect interlocking of these segments around the squares that form a network as shown in southern Germany (Christaller 1933), southwestern Iowa, northeastern South Dakota and the Rapid City area of the United States (Berry 1967). In these great plains of the United States, a diamond-shaped network of central squares was observed; this is called a rhomboidal grid. This network of markets, with regular hexagonal outlines, suggests, on the one hand, the existence of a single equilibrium configuration with a given number of firms on the market, and on the other hand, the domination of this network with free market entry (Lösch 1941). This author formalizes the central place theory using a micro-economic approach. It is also based on the actual price of a good defined from its factory price plus the cost of transport. As the latter increases with distance, the quantity requested will be reduced accordingly, thus allowing the construction of space demand cones by integrating the function linking quantities requested, on the one hand, and price and distance in transport costs, on the other hand. Lösch then defines a profitable location as one whose sales amount, as determined by the spatial demand cone, provides the appropriate rate of return. This concept would correspond well to the markets for industrial goods (Böventer 1962). This design will be challenged, because this hexagonal network is not the only equilibrium configuration (see above the rhomboidal grid) and free market entry does not necessarily lead to hexagonal shapes of market segments (Eaton and Lipsey 1976). In any case, it is possible to retain from this work the idea of centrality with the objective of reducing distance for the greatest number of people and thus facilitating access to goods and services.
Figure 1.1.Theoretical and schematic representation of central place theory
(source: after (Christaller 1933))
Shortly before, another geographer (Reilly 1931), a consultant to his state, had proposed a law of retail gravitation, often called Reilly’s law, based on the notion of gravitation by analogy with Newton's theory applied here to retail activities. This law was for a long time the basis for many academic and professional projects, for example to set up supermarkets in rural areas or malls. Based on this pioneering work, researchers have proposed models to better understand consumer spatial behavior and, above all, to predict the future level of city activity or store sales (Converse 1949; Huff 1964; White 1971) until these attraction models become widespread, whether spatial or not (Nakanishi and Cooper 1974).
Pioneering work in space marketing as early as the 1970s and based on time series data, long before geomarketing software appeared, showed that it was important to study market shares according to sales territories in order to understand how buyers react and to better predict these sales (Wittink 1977). It can be concluded that advertising, which is supposed to increase sales if adapted to the territories, can improve price sensitivity.
However, a few years later, based on previous work (Ohlin 1931), it became apparent that marketing researchers were not interested in spatial or regional issues (Grether 1983). It could not be said today that much has changed. Even store location issues are no longer of much interest to researchers, probably because it is mistakenly believed that the Internet has definitively removed the tyranny of distance. However, most of the pure players, those businesses that are only present on the Internet, are starting to open brick and mortar stores that are either physical or “hard”: Amazon has acquired the Whole Foods Market network of organic stores in the United States.
Moreover, the very rapid development of applications (apps) on smartphones may change the situation by creating on the one hand a real mobile commerce and on the other hand a new kind of spatial consumer behavior favoring mobility (or rather ubiquity), comparisons of products, services, prices, etc.
1.2.2. Definition of spatial marketing and geomarketing
Spatial marketing is a broader and more conceptual field than geomarketing, which remains more oriented towards mapping techniques.
1.2.2.1. Definition of spatial marketing
Spatial marketing can be defined as anything related to the introduction of space into marketing from a conceptual, methodological and of course strategic point of view (Cliquet 2006, 2003). This implies taking into account not only issues related to the local or regional environment at the microeconomic level (Grether 1983), but also in relation to territorial coverage in the geographical sense. This concept does not necessarily imply that territories correspond to political division and/or interculturality at a more socio-cultural scale at the macroeconomic level, in other words in relation to national and international frameworks (Ohlin 1931; Hofstede et al. 2002).
The many issues developed in this book concern not only marketing in the strict sense of the term, but also other management disciplines such as information systems management and human resources, strategy, logistics, organization at local, regional, national or international level. Spatial marketing is useful in the management of organizations insofar as it makes it possible to specify and strengthen proximity with the customer and therefore customer relations depending on where the customer is located. It authorizes the link between this geolocation and the customer’s personal data. The verb “authorize” is used intentionally, because the risk of breaking the boundaries of individual privacy is real; it is an important societal issue as is the installation of video cameras in public places for security reasons. Surveys on personal data protection (privacy) show that consumers are aware of possible abuses, but this does not prevent them from using smartphones and tablets (Cliquet et al. 2018), and the Absher application that Saudi Arabian men use to track their wives does not help.
1.2.2.2. Definition of geomarketing
Geomarketing is based on digital geography using computer science, that is, computerized cartography and therefore geography on the one hand and marketing on the other. It is a term coined in France by practitioners in the 1980s. Strangely enough, this word is almost unknown in North America 30 years later. On the other hand, we hear about micro-marketing, geodemographics, GIS or Location Business Intelligence in the United States, even though people are familiar with geomarketing in Quebec. It has subsequently spread to the European continent: there is research on the openly displayed theme of geomarketing in Belgium (Gijsbrechts et al. 2003), and above all specialized works, often short and technical, for example in Germany (Schüssler 2006; Tapper 2006; Grasekamp et al. 2007; Herter and Mühlbauer 2007; Trespe 2007; Menne 2009; Kehl 2010; Kroll 2010), Spain (Chasco and Fernandez-Avilez 2009; Alcaide et al. 2012) and Italy (Galante and Preda 2009; Cardinali 2010; Amaduzzi 2011). In France, there are books by consultants that generally present, in a clear manner, the possibilities offered by their firm (Marzloff and Bellanger 1996; Latour 2001) and academic books either oriented towards business studies (Douard 2002; Douard and Heitz 2004) or methodology (Barabel et al. 2010) or concept and strategy (Cliquet 2006). Some books on digital geography also deal with geomarketing (Miller et al. 2010).
There are of course many definitions of geomarketing. However, most of these books agree at least on the objective of geomarketing, which aims to introduce spatial data into marketing analyses that are often totally lacking. However, “about 80% of all business-relevant information within a company has a relation to spatial data” (Menne 2009), in other words, 80% of the information related to a company's business is linked to spatial data.
Some will argue that the dramatic increase in online data tends to reduce the importance of spatial data. In fact, the opposite is true since a very large part of this online data is geolocated.
Geomarketing can simply be defined as a field involving disciplines such as digital geography and marketing, but also social sciences such as economics, sociology, psychology or anthropology, because geomarketing makes it possible to understand much more precisely the behavior of economic actors and the environments in which they operate. These behaviors and environments are changing increasingly rapidly as a result of demographic pressure and climate change. All these developments cannot be ignored by strategists in both private and public organizations.
1.2.3. Content of spatial marketing and geomarketing
Introducing space into management and marketing decisions in particular means resolving a dilemma that is driven by a priori oppositions such as local versus global or adaptation versus standardization.
1.2.3.1. Local versus global
The local level is often overlooked by strategists, while it can sometimes be realized that a priori remarkable strategies on paper are simply inapplicable on the ground, a fact that many politicians would do well to consider. Neglecting the field has sometimes cost even the largest multinational firms that thought the world would adapt to their strategies and genius: the major American firms have long thought so like General Motors CEO Charles Erwin Wilson, who said in 1953, “What is good for General Motors is good for the United States and what is good for the United States is good for the world.” Today, things have progressed on this front and everyone is aware that globalization is more a myth than a reality (Douglas and Wind 1986). But in the face of this dilemma, a question arises: should we first globalize and then localize in a top-down decision-making process or localize before globalizing in a bottom-up approach? Some believe that it is better to use a “glocalization” process (Svensson 2001; Kjeldgaard and Askegaard 2006; Cliquet and Burt 2011) by trying to show that it is appropriate to globalize your business strategy and at the same time localize your marketing strategy in the broad sense (Rigby and Vishwanath 2006) in order to attract customers very quickly, hence the need for located databases (Douard et al. 2015). We were able to show how Walmart had to change its marketing methods, and thus its so-called organic growth, when this major American distributor bought Asda in the United Kingdom in 1999 (Matusitz and Leanza 2011).
The purpose of introducing space into decision-making processes is both strategic and tactical: strategic, because a strategy must also be able to express itself in terms of territorial gains and not only in terms of turnover or market share, which are too global concepts; tactical, because the company will need to know its local markets well to implement its strategies efficiently and not only effectively.
1.2.3.2. Standardization versus adaptation
The second way of presenting the dilemma refers to the presumed opposition between, on the one hand, standardization (in other words, total standardization) and on the other hand, adaptation, which involves taking into account the local environment. This apparent conflict is frequent, particularly in the definition of retail and service outlet network strategies. The elements at the heart of the strategy are commonly distinguished from the elements at the periphery, which can be described as secondary (Kaufmann and Eroglu 1998). The elements at the heart of the strategy must never be adapted, as they are essential for brand recognition at any time and in any place by real and potential customers. On the other hand, it must be possible to adapt the peripheral elements when necessary in order to satisfy customers as much as possible regarding their tastes, consumption habits and even traditions. This problem is especially specific to the marketing of franchise networks, even if it is found in many sectors from the moment that activities are relocated or spatially distributed (Cox and Mason 2007). Indeed, while chains tend to want to simplify their offers, including geographically in order to benefit from better productivity and therefore lower costs, their customers increasingly want product customization. The idea of mass-customization then emerged as necessary (Pine 1993; Piller and Müller 2004). Indeed, in franchising, the brand is, with the know-how, one of the two fundamental concepts in the very definition of the network’s activities.
Let us take a concrete and very significant example of this problem, the bakery chain under the Great Harvest brand (Streed and Cliquet 2007). The first bakery was opened in 1976 in Great Falls, Montana (United States), the second in Kalispell, also in Montana. But the objective was not to distribute exactly the same type of bakeries everywhere. Freedom has been left to the franchises to manage their bakery (the “front office” in front of the customers) as they see fit, knowing that the “back office”, the making of bread in particular, is maintained by the chain. In fact, the founders, Pete and Laura Wakeman, created the first “freedom franchise”, which they define as follows:
We provide an alternative with some of the advantages of a traditional franchise and some of the fun of a “let’s-do-it-all-ourselves” start-up. Our philosophy is simple: let’s create unique neighborhood bakery cafes that are a reflection of the Great Harvest brand and the bakery cafe owner. We are no cookie cutter franchise. We are a freedom-based, healthy franchise that encourages excellence and individuality (not to mention a spirit of fun and generosity).2
There are now more than 200 Great Harvest franchises in the United States (including Hawaii and Alaska). And every franchised bakery must be the bakery in the city: we immediately see the importance of localization and the need for highly targeted spatial marketing.
But often, the franchisee’s freedom is more restricted and the peripheral components of the franchise are more limited, thus reducing the possibilities of adaptation. However, even large chains such as McDonald’s have realized that excessive standardization can lead to rapid consumer fatigue as consumers become increasingly eager to personalize the service and the products that go with it. The orientation towards “glocalization”, a process already mentioned above, is now effective at McDonald's (Crawford 2015), including in their desire to attract so-called “ethnic” customers: we understand the importance of spatial marketing based on geodemographics, GIS (Geographic Information System) and micromarketing in order to identify these targets and define an appropriate advertising strategy (Puzakova et al. 2015).
1.2.3.3. The fields of spatial marketing
Once these dilemmas have been established, the content of spatial marketing is presented according to the usual areas of marketing:
– the buyer’s behavior (consumer in B2C, business to consumer, or business in B2B, business to business), this book focusing on the consumer;
– marketing research concerning market studies in the broadest sense;
– strategic marketing and marketing management.
Introducing space in these areas involves many changes, sometimes even upheavals, because it is now a question of thinking and acting differently.
1.2.3.3.1. The consumer’s spatial behavior
Consumer behavior can no longer be considered in the same way once space is taken into account. Too little marketing research has considered this spatial dimension in consumer behavior and this requires a revisit to geography (Golledge and Stimson 1997; Golledge 1999).
A few articles have been able to advance knowledge in this area. Work based on reference dependence theory (Tversky and Kahneman 1991; Tversky and Simonson 1993) has led to a better understanding of consumer shopping trips (Brooks et al. 2004; Brewer 2007) (see Chapter 2).
Older work has been carried out on the basis of gravity and/or spatial interaction models (Reilly 1931; Huff 1964; Nakanishi and Cooper 1974).
Increased consumer mobility, their ability to use so-called mobile technologies (smartphones and tablets) and changes in retail offers, physical or virtual stores on the Internet, are accelerating ubiquitous purchasing processes. This evolution makes gravity-based models less efficient even if they are far from useless, if only in the definition of certain geofencing applications, that is, the determination of the attraction or trading area. This technique is described as an extreme form of marketing location and is increasingly used to send promotional offers in the form of coupons to consumers who are either in the store or near the point of sale using SMS on their smartphone (Mattioli and Bustillo 2012). In other words, the issue here is how far away should current or potential customers of promotional offers be alerted, on their smartphone or tablet, when they pass “near” the store or more generally on opportunities that may interest them. Chapter 5 will deal with geofencing.
Consumers are increasingly capable of mobility without it increasing overall: retailers and traders must adapt to it (Vizard 2013). Sometimes it is quite easy. For example, a distributor near the Massachusetts-New Hampshire border found that residents of New Hampshire may not pay the vehicle taxes required in Massachusetts (Banos et al. 2015). He therefore placed an order with a company specializing in geofencing to include all potential customers in New Hampshire in his database. But this is again a gravity-type attraction (Reilly 1931; Huff 1964; Cliquet 1988).
When we want to attract customers who pass near a point of sale, otherwise known as taking advantage of the flows of the temporary attraction (Cliquet 1997a), the operation is more delicate. Indeed, how can this proximity be evaluated? This concept of proximity has become central to the thinking of major retailers, for example. For many years now, people have been wondering about the future of these “shoe boxes”, known as hypermarkets, a store format invented in France in 1963 by Carrefour and copied in many countries, including the United States in the 1990s (Europe can also sometimes be a little ahead). But hypermarkets are increasingly neglected, especially the largest ones, because they no longer meet the needs of customers seeking both purchasing power and another way of life that is less consumer-oriented. Will smartphones and geo-fencing (Streed et al. 2013) be able to save them?
1.2.3.3.2. Spatial marketing studies
The introduction of space in marketing studies implies taking distance into account. Just because we regularly talk about the digital economy, which no longer has a border, does not mean that there is no longer any distance or that everything has been globalized, thus eliminating any local specificity. On the contrary, we are witnessing a real resurgence of the local.
On a more methodological level, distance is a complex variable. A distinction is made between geographical distance and temporal distance: the law of gravity of retail trade uses geographical distance when Huff’s model favors temporal distance. However, the geographical distance is difficult to manipulate. Purely metric distance is only rarely considered, especially in the behavior of out-of-store consumers. Since they travel with their vehicles, or by public transport, the temporal distance (Brunner and Mason 1968) is preferred by researchers and analysts. But it is no more satisfactory, because consumers, like all decision-makers, make their decisions not according to reality, but according to their perception of it. This can probably be partly attributed to bounded rationality (Simon 1955). Under these conditions, the perceived distance should be preferred despite methodological problems (Cliquet 1990, 1995).
With regard to internationalization, companies are not immune to problems related to culture, among other things. The so-called Uppsala model (Johanson and Wiedersheim-Paul 1975) underlines the influence of psychological distance to explain the difficulties of export companies. This psychological distance is broken down into geographical, economic, cultural and institutional distances (see Chapter 2).
1.2.3.3.3. Strategy and spatial marketing
Once potential targets have been identified by the spatial study of behavior, the marketing strategy can be defined. Taking the environment into account can lead to the dilemma already mentioned: local versus global. This contextualization can be troublesome, and has been for a long time, because it can lead to conflicting options that can damage the brand image. However, digital mobility tools can partly solve this dilemma by improving customer contact. This evolution implies a better consideration of the link between production and distribution, in other words, logistics. In order to solve the problem of the optimal compromise between quality and cost (and therefore price), effective coordination becomes essential, and only flawless logistics can make this possible. However, logistics also has a cost, and reducing it requires a rigorous control of space by controlling the distribution of products and therefore thanks to a good spatial distribution of sales outlets. We will see that this spatial dissemination of customer contact points implies a different way of thinking about the spatial strategies for setting up sales units, stores, restaurants, hotels, etc., through, for example, the application of percolation theory (Cliquet and Guillo 2013).
This problem of spatial coverage of point of sale networks does not only affect retailing. It is also of interest to manufacturers; some of them have found that traditional media no longer allow contact with the consumer as effectively as before. As the American firm Procter & Gamble has found, individuals now have technical possibilities to bypass advertising on their TV sets or to avoid spam in their mailboxes (Arzoumanian 2005). However, points of sale are now a safer medium: in 2005, Procter & Gamble observed that in the United States, 100,000,000 customers visited Walmart stores every week, 22,000,000 visited Home Depot stores and 42,000,000 visited 7-Eleven convenience stores. Under these conditions, the best located chains are better media than TV or Internet advertising. Moreover, Zara, the Spanish clothing company, has never advertized in the traditional sense and uses its own stores as promotional media. Procter & Gamble had even thought of launching its own chain of stores selling all the company's products, but had to give it up: P&G is primarily a manufacturing company, and retailing is a quite different job.
1.2.3.3.4. Spatial marketing management
The marketing strategy must then be implemented by a marketing management team that also includes the introduction of space into operational decisions. This marketing management involves the definition of a marketing mix that refers to the 4Ps (McCarthy 1960) for Product, Price, Place and Promotion. Chapter 3 of this book shows that the 4P “rule” has been challenged (Van Watershoot and Van der Bulte 1992), and that it is possible to “geolocate” the elements of the marketing mix.
1.3. Spatial marketing and geomarketing applications
The applications of spatial marketing and geomarketing concern both practitioners and researchers. However, it must be noted that, while practitioners have been able to use geomarketing tools to identify sites where to set up points of sale, broadcast an advertising campaign in the regions or practice direct marketing (Ozimec et al. 2010), they suffer from a lack of conceptual models allowing them to better interpret the data. However, it must be admitted that the number of scientific publications in spatial marketing, except those concerning location issues, is limited to say the least.
The beginning of the new millennium was approached like the beginning of the digital age. But we could already regret the “tide” of advertisements received by everyone without too much differentiation (Preston 2000): the spam emails we all receive every day show that 20 years later, things have not really changed. The customer orientation of European distribution companies seems insufficient despite the amount of local information they have in their possession thanks to loyalty cards (Ziliani and Bellini 2004). The mass of data resulting from these cards should make it possible to identify consumers’ needs and desires and thus to offer them appropriate promotional offers: this is one of the purposes of Big Data (Nguyen and Cao 2015) which constitute one of the major challenges of the now-joint research, on the one hand, in marketing, and on the other hand, in management of information systems (Goes 2014).
1.3.1. Applications in retail and mass distribution
Retailing was among the first sectors to be interested in geomarketing techniques. The applications focus on problems related to the analysis of trading areas and the location of points of sale. As far as trading areas are concerned, professional methods were once often based on the determination of primary, secondary and tertiary (or marginal) areas, known as the analog method (Applebaum 1966). This more or less circular representation around the point of sale has been called into question with the appearance of geomarketing software and the possibility of geolocating store customers from their addresses obtained by questioning the customer at the checkout and then thanks to loyalty cards now dematerialized in most stores. The trading areas of the stores no longer have anything to do with concentric circles: we are in fact dealing with “archipelagos” (Viard 1994).
Concerning location problems, articles in scientific journals were mainly published in the 1980s (Ghosh and McLafferty 1982; Ghosh and Craig 1983; Ghosh 1984; Ghosh 1986; Ghosh and Craig 1986; Ghosh and Craig 1991) and based on location models, such as MCI (Multiplicative Competitive Interaction) (Nakanishi and Cooper 1974), useful both for understanding consumer spatial behavior (see Chapter 2) and georetailing with point of sale location (see Chapter 4).
