Competitive location-based mobile coupon targeting strategy

At present, retailers are increasingly targeting consumers based on consumers' geographic locations by distributing mobile coupons. We develop a theoretical model to compare uniform coupon targeting with one-to-one coupon targeting for two competing retailers with asymmetric mobile accessibilities. We find that retailers engage in targeting promotion only when the marginal cost of targeting is not too high. Adopting uniform coupon targeting does not necessarily lead to the prisoner's dilemma. Additionally, the asymmetry of mobile accessibility lessens inter-firm price competition. Finally, our results further demonstrate that marketers should switch from offensive to defensive targeting as the marginal cost of targeting declines.