How to offer mobile targeting promotion under asymmetry

Based on consumers’ geographic real-time locations, firms can utilize mobile targeting promotion (MTP) to target consumers through some applications embedded in mobile device. This paper aims to focus on two competing firms about how to make MTP strategies under asymmetric mobile accessibilities, i.e. the proportions of consumers who can be targeted by firms through apps are different.

This paper develops a game model for two competing firms. Aiming to maximizing profit, firms should consider how to utilize MTP strategies to trade off the benefit (expand market share) and the cost (intensive price competition).

The optimal MTP strategies and equilibrium prices have been presented under different scenarios. This paper verifies that asymmetry can make the firm with high mobile accessibility obtain extra profits. Furthermore, when unit targeting cost is relatively low, profit of the firm with low mobile accessibility increases first and decreases later with respect to its mobile accessibility.

Competing firms’ optimal MTP strategies and equilibrium prices are determined not only by unit targeting cost but also by consumers’ mobile accessibilities to firms. Firms have strong incentive to enlarge the mobile accessibility to procure more profit in monopoly context, but, under competing context, a higher mobile accessibility may not mean better for firm.

This is one of the few papers which study mobile targeting based on game theory considering unit targeting cost and asymmetric mobile accessibility simultaneously.