World Retail Voice Blog Post
Emerging Technologies Driving Innovative Marketing Strategies In Retail
By Ankit Abraham Sinha, Senior Analyst
The global marketing landscape is constantly evolving due to emerging technologies. As a result, marketers need to ensure that they are in line with the latest high tech trends that will have a strong impact on their industries. Wearable and location-based marketing technologies are two trends that marketers, and the retail industry specifically, need to pay close attention to, as these can revolutionize the means of targeting customers. These areas open up significant opportunities for retailers if they have the strategies, IT systems, and data analytics in place to fully leverage them. If these two technologies are used together, the sky is the limit for marketing opportunities that can be uncovered.
Wearable Technology Gaining Significant Momentum
The growth of wearable technology is predicted to substantially pick up in 2015 and continue to gain strong momentum in the near future. Market research firm Canalys estimates that 4.6 million smart wearable bands were shipped in 2014. This is projected to grow to 28.2 million units in 2015, at a growth rate of 513% Y-o-Y.
According to a December 2014 report by Ipsos, the wearable tech market is growing with 80% individuals polled having heard of the technology. 18% of the respondents also indicated their intentions were to purchase a wearable device in the next 12 months.
"The Apple Watch raises the profile of wearables in general, and there are many vendors and devices that are eager to share the spotlight. Basic wearables, meanwhile, will not disappear. In fact, we anticipate continued growth here, as many segments of the market seek simple, single-use wearable devices." – Ramon Llamas, Research Manager, IDC (April 2015)
From Google Glass to FitBit, Galaxy Gear Fit and Pebble Watch, there is no question that wearable technology has arrived and is here to stay. For marketers, this is not only a new way to reach out to the consumer, but also a new data stream that can be leveraged to highly customize offers and messages for target audiences with optimal precision and success.
Kmart is tapping into the wearable technology trend by introducing an “inactivity tracker” to promote its Joe Boxer pajama brand. In April 2015, the limited edition device was distributed as a free gift with purchases of Joe Boxer pajamas. The company is also launching a video, a content hub, and social media promotions as part of the campaign on the wearable device.
Along with wearable technology, another area that is picking up momentum is location-based marketing. According to an April 2015 forecast by local media and advertising firm BIA/Kelsey, location-targeted mobile advertising revenues in the US are expected to grow from $6.7 billion in 2015 to $18.2 billion in 2019, at a 28.4% CAGR. The share of mobile in total local media advertising is projected to increase from 4.8% in 2015 to 11.5% in 2019.
As an example of this technology in use, Starbucks recently rolled out location-based mobile ads in the UK. These were broadcast in December 2014, to increase traffic in stores before the holiday season. The campaign tracks consumers’ device IDs and locations, and uses this information to deliver targeted advertising. According to xAd—the company Starbucks partnered with for this campaign—standard visitation to Starbucks stores increased more than 100% after the ads were released.
Nestlé also used an innovative approach to location-based marketing in the UK. In a September 2012 campaign, the company attached GPS trackers to the wrappers of some of its chocolate bars. A team then tracked the customers after they opened the wrapper and contacted them within 24 hours to deliver a cash prize.
The Combined Power of Location-based Marketing and Wearable Technology
To harness the huge power of location-based marketing blended with wearable technology, organizations will require access to the data streams that these technologies generate, along with analytical capabilities at the back-end. They also need dedicated resources to analyze this data and develop actionable insights. This will allow companies to target the right customer, at the right time, in the right location, with the right offer.
Consider a grocery store chain that is running a location-based marketing campaign. The chain could use wearable technology to automatically alert customers when they are near one of their grocery stores, and offer them deals on products of their interest. For example, if the targeted customer is a runner, the retailer could offer a deal on vitamin-infused water. Similarly, sports apparel stores could offer runners alerts and discounts on running attire and accessories when they are nearby.
This technology can enable powerful marketing, which allows the retailer to reach out to consumers with highly targeted offers. In the process, retailers also gather real-time data on each of their location-based marketing promotions, and can leverage this data to improve promotions, while the consumer receives more relevant deals, making it a win-win situation for the consumer and the retailer.
An example of marketing that utilizes both wearable technology and location-based targeting is mobile payments company LevelUp’s application for the Android Wear smartwatch. Launched in July 2014, this application enables users to make payments using their smartwatches. When a user is near a store that he/she frequents and if that store accepts payments through LevelUp, the user will receive a notification to pay from his/her wearable device.
“What we really always dreamed of was being the largest smartwatch payment network.” – Seth Priebatsch, Chief Ninja, LevelUp (July 2014)
Data Analytics is Critical to Success
With these types of emerging technologies, the need for data analytics is critical, which helps organizations uncover consumer patterns, trends, hidden correlations and other valuable consumer insight. According to a February 2015 report by The CMO Survey, 92.3% of the executives polled were of the opinion that their company’s use of customer data was increasing over time. This type of information can be leveraged not only by marketing, but also in other areas, such as customer service and product development.
For data analytics to be successful, two levels are required in this process:
The algorithms that help connect the two technologies and can deliver benefits to a marketer from a tactical perspective
Business analytics that ensures the algorithms are actually delivering the value and meeting the business objectives that were originally outlined
Business analytics helps support the marketing strategy for organizations, ensuring long-term growth. Both aspects of the analytics mentioned above need to be implemented to ensure optimal success.
An example of a retail company that is extensively and successfully leveraging data analytics is Target, so they can improve their understanding of customers and their purchasing decisions. In line with this strategy, the company plans to create a center for data analytics within the organization. Personalized email marketing, more tailored promotions, and customized offers delivered through the company's smartphone app are some of the benefits expected to accrue from enhanced data analytics capabilities. The company will also leverage data analytics to deploy new technologies—such as iBeacons. These are low-cost, low-power transmitters that send notifications and other alerts, such as coupons and discount notices, to smartphones and other devices (including wearables) when the device is in the proximity of the beacon—in this case, a specific product, or even multiple products on a specific rack.
“Data and analytics is one of the capabilities wherein we know we need to make up ground quickly. We are going to continue to improve on the mobile experience in a number of ways this year—in-store location and navigation capabilities, greater mobile payment integration and testing of new technology, such as iBeacons—to make shopping even more personalized.” – Casey Carl, Chief Strategy and Innovation Officer, Target (April 2015)
What Should Companies Do to Successfully Leverage New Technologies?
Every year, new technologies will emerge in the market, and it is critical that organizations carefully evaluate them to ensure they generate sales, increase loyalty, and fit the brand characteristics. If these criteria are met, then companies should integrate the new technology into their marketing program, which will help them compete more profitably, stay relevant to their customers, and enhance their brands.
For the retail industry in particular, there now exists a wealth of new technology that can be leveraged to improve the marketing practices of retail companies. By adopting robust data analytics solutions, a company can take a significant step towards the successful implementation of new technologies, by improving its integration in the marketing space, as well as analyzing whether these technologies are delivering value.
Originally published on The Smartcube on April 30, 2015