eThesis - School of Business electronic theses

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Increasing market penetration of smart phones and mobile broadband subscriptions has created new marketing communication avenues that allow interactive and highly targeted advertising based on individuals' location and contextual environment. However, the factors that guide consumers' adoption of such advertising and consumer perceptions of this new advertising channel are not yet fully understood. This research attempts to bridge this gap. Location-based services are smart phone applications that enable this avenue. The purpose of this study is to understand the factors that influence consumer acceptance and adoption of one specific type of location-based service, location- based advertising, where advertising messages are customized to individuals' location, personal information and interests. Drawing theories from the fields of technology adoption, social psychology, and mobile marketing, ten constructs are identified and a modified conceptual model and hypotheses are built and tested with survey data from 138 individuals. Structural equation modeling is used to test 10 factors that influence consumer adoption of location-based advertising: (1) attitude, (2) social influence, (3) perceived usefulness, (4) perceived ease of use, (5) perceived enjoyment, (6) compatibility (7) incentives, (8) personal innovativeness, (9) privacy issues, (10) Attitude toward advertising in general. The results indicate that enjoyment - as entertainment, fun, and interactive - is the strongest driver that influence individuals' attitude that in turn, is the strongest determinant of behavioral intention to adopt location-based advertising. A strong indirect influence of compatibility, perceived usefulness and incentives to adoption is also found. The relationship between privacy issues and personal innovativeness toward adoption are not statistically significant and therefore, their importance in guiding consumer adoption of location-based advertising cannot be determined based on this research.