What Is Location-Based Marketing? A Guide for Retail SMBs

a shopper walks through an old fashioned mall

Location-based marketing has become an increasingly popular strategy in the digital age. Experts predict that by 2025 this sector of the marketing industry will generate $24 billion per year.

Harnessing the power of location data allows businesses to target and engage their audiences in highly relevant and personalized ways. By delivering hyper-localized content, businesses increase foot traffic, provide exceptional experiences, and outmaneuver the competition.

But what is location-based marketing? This article will delve into this modern strategy, exploring what it is, how it works, and whether it has any limitations.

What Is Location-Based Marketing?

Location-based marketing refers to delivering targeted marketing messages or advertisements to consumers based on location. It leverages real-time location data from GPS, Wi-Fi, IP addresses, or beacon technology to deliver content.

Businesses tailor their marketing efforts by understanding where specific customers are located. This precision powers targeted promotions, personalized recommendations, and highly relevant offers.

What Kind of Technology is Location-Based Marketing?

Several technologies enable the implementation of location-based marketing. Global positioning systems (GPS) use satellites to determine the precise geographical coordinates of mobile devices. Mobile apps and operating systems can also access this data to provide location-based services and information to users.

Here are some examples:

IP Address

IP address geolocation is a method that uses the IP address of a device to estimate its location. By mapping IP addresses to specific geographical regions, businesses can approximate a user’s location and deliver relevant content. This kind of information is used by Google to promote local businesses on smartphones through Google Maps.


WiFi-based positioning is another method used in location-based marketing. It relies on wireless networks to estimate a device’s location by analyzing WiFi signals from nearby access points. This technique is commonly used indoors or in areas with limited GPS signal availability.


Beacon technology is also prevalent in location-based marketing. Beacons are small devices that use Bluetooth Low Energy (BLE) to transmit signals to nearby mobile devices. When a user’s device detects a beacon, it triggers location-specific actions or delivers targeted messages.

Geofencing and Proximity Marketing

In retail marketing, geofencing is a location-based technique that involves creating virtual boundaries or “geofences” around specific physical locations, such as stores, shopping centers, or event venues. These geofences are typically defined using GPS or RFID technology.

Once marketers establish a geofence, they can trigger targeted marketing actions when customers enter, exit, or dwell within the defined area. These actions include sending push notifications, SMS messages, email outreach, or displaying in-app messages to the customers’ mobile devices.

a person using a smartphone receives a location based marketing message

Examples Of Location-Based Marketing Implementation

All types of retail companies can utilize different location-based marketing strategies. This is true whether you are an enterprise retailer with an elaborate smartphone application or a local business trying to appeal to a certain zip code. Here are some tangible examples to consider.  

Mobile App

One example of how retailers in real life use location-based marketing is through mobile app notifications triggered by a customer’s proximity to a store.

Consider a scenario. Imagine you’re walking near a shopping mall, and you have installed a retail store’s mobile app on your smartphone. As you approach the mall, the store’s app detects your location through GPS or beacon technology.

The app then sends you a push notification with a personalized offer or promotion, enticing you to visit the store. The notification may include a message such as, “Welcome to The Wine Shop! Get 20% off all Red Wine today! Visit our store on the 2nd floor to redeem this offer.”

Smart Digital Signage

Imagine a retail clothing brand that wants to attract customers to its newly opened flagship store in a popular shopping district. To accomplish this, they utilize location-based marketing techniques through outdoor advertising.

The retailer strategically places digital billboards or electronic signage near high-traffic areas close to their store, such as bus stops, subway stations, or major intersections. These displays are equipped with location-based technology that detects nearby mobile devices.

As people pass these digital billboards, the technology identifies their presence and triggers dynamic, personalized advertisements on the screens. Suppose, for example, the system detects a group of young adults passing by. The billboard would display a vibrant ad showcasing the brand’s latest trendy collection.

The message might be, “Discover the hottest fashion trends at our flagship store just around the corner!” Of course, this message would be accompanied by other media like images or videos. 

How Small Businesses Can Use Location-Based Marketing

Some location-based marketing tactics are feasible for small businesses as well. While local shops might not have their own smartphone apps, there are some other options for small businesses to take advantage of location-based marketing and increase store traffic and revenue.

Optimizing Google My Business

Search engines use GPS to locate smartphones and IP addresses to determine the whereabouts of a computer. When you search for local businesses on your smartphone or computer, Google uses your location to generate suggestions.

From there, Google will offer the best available local businesses within close proximity. Thus, optimizing Google My Business profiles is essential for location-based retail marketing.

Improving local SEO, searchability, and exposure will ensure your business can compete with other local retailers.

See related: What Is Google Map Pack? Increase Your Business’s Ranking

a screen capture showing a Google Map search for a coffee shop and optimized location based marketing

Location-Based Social Media Ad Targeting 

Instagram and Facebook are great options here. By combining geofencing with social media advertising, small businesses will reach potential customers more effectively.

On one of its help pages, Instagram explains how they gather user location data and what they use it for:

  • Connection information, such as your device’s IP address.
  • Activity from the use of Instagram, such as location tags for photos, videos, or posts you engage with.

Even if you do not have Location Services enabled, Instagram can still gather information about your location based on information that you and others provide through your activities and connections on our services.

Instagram uses your primary location to help keep your accounts secure, provide a more relevant experience on Instagram and show you ads for businesses and services you might be interested in.

Small business retailers should experiment with all the options for ad targeting depending on their niche and intended audience.

For example, a local bookstore can use geofencing tools on social media apps to target individuals within a certain radius of their location. However, they should also tailor their ad content with further audience segmentation, like demographics, age, interests, and more.

See Related: How to Use Social Media in Retail: 5 Social Media Networks to Consider

a busy book store sales floor pictured from above

Benefits of Location-Based Marketing for Retailers

Location-based marketing allows businesses to engage customers at the right time and place, increasing the relevance and impact of their messages. Companies can capture attention and drive immediate action by delivering personalized offers or information based on a user’s proximity to a physical store or relevant landmarks.

Increased Foot Traffic and Sales

Location-based marketing can help drive foot traffic to physical stores. By enticing customers with location-specific promotions, discounts, or loyalty rewards, businesses incentivize customers to visit their establishments. This strategy increases sales, repeat visits, and customer loyalty.

Precise Targeting 

Leveraging location data enables businesses to target their marketing efforts more accurately. Audience segmentation based on specific geographical areas ensures that messages reach the right people in the right locations. This accuracy powers personalized messaging that resonates with relevant consumers and boosts conversion rates.

Data-Driven Insights

Location-based marketing generates valuable data that businesses can leverage to gain insights into consumer behavior, preferences, and trends. By analyzing location patterns and user interactions, retailers can refine their marketing strategies, optimize their campaigns, and make data-driven decisions.

Personalized Experience 

Location-based marketing allows businesses to deliver personalized experiences to customers. For example, mobile apps can offer location-specific recommendations, directions, or information based on a user’s location. This level of personalization enhances the overall customer experience, fostering a deeper connection between the consumer and the brand.

Challenges and Limitations

While location-based marketing offers significant benefits, businesses should be mindful of certain challenges and considerations. Privacy concerns and data security are paramount. Users must trust that their location data is handled responsibly and used solely for relevant purposes.

Businesses should be transparent about their data collection practices and provide users with honest information about how any of their data will be used. Similar to SMS marketing, retailers must print clear opt-in and opt-out options on all messaging. Marketers should also familiarize themselves with all local and national privacy laws before implementing any location-based marketing tools.

Additionally, technical limitations such as GPS signal accuracy and indoor positioning challenges can impact the effectiveness of location-based marketing campaigns. Businesses must thoroughly test their strategies and ensure seamless user experiences.

Plus, the technology will still be viewed as “creepy” by a large portion of consumers. Businesses must be careful not to be too aggressive in implementing the technology into their business.

Power Your Marketing With KORONA POS

KORONA POS offers the most advanced retail analytics in the industry. Power your marketing decisions with actionable insights regarding product performance, key performance indicators, customer purchase history, and more.

Streamline your location-based marketing presence and optimize your omnichannel retail with a dynamic and modern solution. The point of sale software integrates with several location-based marketing platforms, mapAds and Near St. Give us a call today to learn more about how these software applications can help drive more foot traffic and sales at your brick-and-mortar store!

FAQs: What Is Location-Based Marketing?

1. What is the definition of location-based marketing?

Location-based marketing is a marketing strategy that utilized physical location to deliver targeted advertisements or messages. It leverages technologies like GPS, WiFi, or geofencing to identify a user’s location and then serves relevant content based on their proximity to specific businesses, events, or areas of interest. The goal is to increase engagement, drive foot traffic, and deliver personalized experiences.

2. What are the types of location-based marketing?

There are several types of location-based marketing strategies. Geofencing allows businesses to set up virtual boundaries and trigger targeted actions or notifications when users enter or exit these specific locations. Beacon-based marketing utilizes Bluetooth to deliver personalized messages and promotions to users within proximity. Finally, WiFi-based marketing tracks user location through WiFi signals and enables businesses to target users with relevant ads based on their physical location.

3. What is an example of location-based mobile marketing?

An example of location-based mobile marketing is a retailer sending a push notification or SMS with a special discount coupon to users who are in close proximity to their store. Another example is a restaurant using geofencing to target social media ads to individuals who have recently visited nearby food establishments. 

About the Author

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Shane Ortale

As a history enthusiast, Shane loves reading and writing. He blogs about small businessmarketing and cloud based POS. He is also an avid bird watcher, and Liverpool FC fan.