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Beacon technology's place in retail marketing; do kiosks have a role to play?

Beacon technology enables a merchant to track shopping patterns, influence point-of-purchase decisions, and reward consumers through a payment kiosk. Futurists and industry practitioners estimate that beacon technology will become much more prevalent in the coming years.

November 16, 2016

By Michael Kasavana, the National Automatic Merchandising Association endowed professor in hospitality business, The School of Hospitality Business at Michigan State University

Beacon technology, a relatively new retail technology, engages consumers at the point of sale in a non-obtrusive manner. It requires consumers to opt-in on their smartphone to be guided to the correct location of a product offering. Kiosks could play a role in supporting this interactive consumer engagement.

A beacon is a small sensor that can be placed on a flat surface anywhere, inside or outside. Through tiny radio signals broadcasted by the beacon, consumers are able to receive push notifications on a mobile phone or other portable device.

Simply stated, beacons can be implemented to encourage consumers to make a purchase decision and/or spend more through awareness, incentives and strategic merchandising. Growth forecasts put beacon installations in excess of 5 million units within the next several years.

A heightened consumer experience

Through the tiny radio signals emitted by beacon transponders, consumers can receive a variety of push notifications. The beacon sensors communicate with the application lodged on the consumer’s handheld device. The intent is to provide a heightened experience for those who opt-in.

While data analytics allow kiosk providers to collect accurate target marketing profiles of consumers, beacon technology offers the opportunity to target consumers at just the right time in the purchase process.

The technology provides consumers with current relevant promotions, coupons and information based on location (such as proximity to a kiosk). This enables consumer interaction on a personal level in order to create an enhanced shopping experi­ence.

Consumers choose to 'opt in'

Once the consumer opts-in (provides consent), there are three broad forms of communication that can occur:

a) location intelligence – identification of the nearest kiosk or point of sale;

b) product intelligence – disclosure of features and characteristics of product offerings;

c) merchandising intelligence – incentives and rewards to stimulate sales and revenues.

Beacon marketing emerges

Beacons are already at work in a variety of commercial enterprises.

Hotel guests, for example, can opt-in to receive beacon push notifications prior to check-in. Upon entering the hotel lobby, the guest might receive a special welcome message, complementary room upgrade, or special dining room pricing from a front desk terminal or self-check-in kiosk.

Recent innovations in the foodservice industry demonstrate how beacon technology can also be used to provide consumers with on-premises special offers and instantaneous rewards. For example, a beacon can signal a free portion of coleslaw with the purchase of a turkey wrap sandwich to a participating consumer’s mobile device.

This "offer and reward" sequence provides consumers with sales and deals at the point of purchase.

Changes in other industries are also emerging. Consider a scenario in which a consumer entering a storefront might receive an announcement of a special offering or provide information on a new product located on a nearby rack or sales unit.

Additionally, beacons can be used to provide product ratings and reviews, coupons and promotions through what is termed beacon marketing.

Beacons can provide consumers the capability to perform on-the-spot product research to influence point-of-purchase behavior. Many industry observers compare beacon capabilities to the initial implementation of websites; when websites became necessary for all business enterprises.

Coca-Cola has equipped its World of Coca-Cola attraction with beacons that work with a new mobile application for unlocking location-based content around specific areas. It is predicted that beacon technology will increase from the current installation of 50,000 beacons to between 5 million to 10 million in the next several months.

How it works

Beacon apps are based on low-energy Bluetooth connectivity (BLE) that determines a smart device's precise location and then messages about available nearby items for sale. In simplistic terms, it consists of two parts: a broadcaster (beacon device) and a receiver (smartphone app).

The broadcaster is always advertising "I am here, and these products are available," while the receiver detects beacons and communicates what is appropriate given the device location (geo-fencing). In addition, beacons can be integrated with mobile payment solutions so that the consumer does not need to access an auxiliary wallet but can directly interact with the payment kiosk.

Beacons are intended to add value for consumers and business operators, not intrude or spy. BLE enables beacons to be capable of geo-positioning services to within inches of a desired location by triangulating the signal from multiple BLE transceivers.

The short-term challenge is that beacon technology is a two-sided network, so spreading the sensors everywhere is one side, but there's also a mobile app requirement on consumers' devices.

The opt-in side appears to be a slower process. It is anticipated that next-generation beacons may not require an opt-in app as newer devices will have built-in receptors.

What comes next?

Recent advancements in beacon technologies, including the release of Apple’s iBeacons, enable merchants to track and analyze consumer behavior, both in traditional retail and self-service shopping venues.

Industry experts predict the next step is an alignment of iBeacons with Apple Pay to complete a 360-degree perspective of the consumer’s buying experience. Such analysis would be beneficial to kiosk centric operations.

Similarly, PayPal is working on its own "PayPal Beacon" where shoppers check in and pay for goods from a PayPal account via smart phone.

Beacon technology enables a merchant to track shopping patterns, influence point-of-purchase decisions, and reward consumers through a payment kiosk. Futurists and industry practitioners estimate that beacon technology will become much more prevalent in the coming years.

Key takeaways 

Key takeaways are:

• Beacons rely on hardware and software platforms based on Bluetooth technology.
• A beacon sensor can be mounted on a flat surface, such as a kiosk, to communicate point of purchase promotions.
• Beacons promote consumer interactions in real time.
• Beacons are for recognizing and rewarding, not for intruding or infringing.

Michael Kasavana, Ph.D., is the emeritus National Automatic Merchandising Association endowed professor in Hospitality Business, The School of Hospitality Business at Michigan State University. He consults on solutions for both attended and unattended points of sale for the hospitality industry including online and offline, cash and cashless, contact and contactless, physical and virtual data exchange, location-based services, and interchange and merchant fee based digital media.