Competing advertising and pricing strategies for location-based commerce

Owing to the fast growth in smart phones and tablets as well as increasing number of downloading apps, it makes commercial sense to use the smart phones as another platform for advertising. While many advanced location-based service (LBS) apps have been proposed, the study of analysing their impacts on the marketing strategies is still little. In this paper, we study the issues of the promotion pricing scheme and mobile LBS advertising level of the stores. We will also investigate the impact of LBS on the store's pricing strategy and corresponding profit when having an opportunity of being a first mover or facing the pressure of being a second mover to adopt mobile LBS advertising. Our results show that the stores will advertise more and give higher discounts to their customers when the proportion of consumers with a mobile device is increasing. The price and LBS advertising cost will affect the stores' profits. We find that the economic intention to adopt LBS advertising is higher for a first mover than a second mover.