Location Based Services

Location-based services (LBS) are software applications that uses IP-capable mobile device - such as iPhones, Androids etc to require knowledge about the location of the mobile device. LBS can be query-based or pushed based, depending on service specification. Query-based services provide useful information to users, such as the “location of the nearest taxi stand” while push-based services are predominantly used to pass ads or marketing information to users when they are in a specific geographical area.

LBS answer three fundamental questions, which are also referred to as Points of Interest (POIs):

For a product or service provider (especially equipped with a push based LBS), answering these three fundamental questions can mean the difference between a prospective customer and an actual customer - however we will discuss that later.

All these components enable LBS to “triangulate” a user's position and enable the service to provide guidance (if needed). The idea revolves around the rules of demand and supply. Users demand specific information while LBS supply the most “relevant” information. Today, a user can utilize LBS to find a restaurant, an ATM, a taxi stand, the location of the nearest hospital or pharmacy, or maybe even the location of the nearest shopping mall. This information is duly important when the user is abroad, or is travelling through an unfamiliar environment.

Location-based services have been around since 2000, but failed to make any significant headway. It was not till the advent of Apple's 3G iPhone and Google's LBS-enabled Android system, along with developments in the industry of communication and Internet did the service gain a new lease on life.

In 2008 location-based services accounted for 58% of the total downloaded application revenue for mobile phones in USA. According to a recent survey, conducted by the marketing and tech firm Forrester, more than 4% of Internet-users are associated with one or more location-based services. The survey also revealed that these customers are ardent users of location-based services and use the services to look up information, check out local businesses, and read or submit business reviews.

The potential for location-based services, especially from a marketer's point of view is hard to resist. The service allows maximization of the marketing mix by facilitating marketers to gain knowledge of customer needs and demands and enables them to target those needs and demands perfectly. In essence location-based services, especially in the context of sales and promotion, can usher in a new era of Marketing and can deliver real business value to companies.