Mobile coupon-clicks inside vs outside a mall: implications for location-based targeting

Purpose This paper considers mobile coupons issued outside and inside a shopping mall with multiple stores. It aims to study the implications of coupon-click effects on optimal location-based mobile coupon targeting (LBMCT) strategy. Design/methodology/approach The study first empirically examines the effect of consumers’ coupon-click behaviors on purchases and find that coupon clicks made outside the mall are associated with a stronger purchase response than inside-mall clicks for experiential-product stores, a pattern consistent with a traffic-conversion mechanism overlooked in prior literature. Then the study builds a mathematical model to investigate whether, when and where to issue coupons for different types of stores. Findings The analytical results identify the conditions regarding two new decisions – whether a store should issue coupons, and if so, where to target the coupons. The study shows that cross-store traffic spillovers from outside-mall coupons can induce free-riding and coordination failure, such that stores may choose not to issue coupons even when mutual couponing would make them better off. Research limitations/implications Future research could examine whether the findings generalize to other geographic and cultural contexts, to settings with multiple stores or malls, and to competitive conditions that influence coupon effectiveness. Practical implications Marketers should evaluate LBMCT by considering not only direct sales conversion but also traffic spillovers across stores. Because outside-targeted coupons can benefit neighboring stores, mall managers should coordinate coupon programs or design incentives when spillovers are strong, thereby reducing free-riding and overcoming coordination failure. Originality/value To the best of the authors’ knowledge, this study is among the first in the LBMCT literature that develops an empirical analysis motivated game model to investigate retail stores’ mobile coupon issuing and targeting strategies for inside and outside of a shopping mall, and considers two coupon effects and two product types.