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Location-Based Services: Definition and Examples

Max Freedman
Max Freedman

Location-based services use real-time geodata from a smartphone to provide information, entertainment or security.

  • Location-based services rely on consumers' smartphones to provide interactive opportunities and targeted advertisements.
  • Location tracking is conducted with GPS data, Wi-Fi data, cellular tower pings, QR codes and RFID technology.
  • Location-based services include ridesharing service Uber and popular mobile game Pokemon Go.
  • This article is for business owners who want to learn more about location-based services and how they can use local user data for their businesses.

Location-based services (LBS) use real-time geodata from a smartphone to provide information, entertainment or security. Some services allow consumers to "check in" at restaurants, coffee shops, stores, concerts, and other places or events. Often, businesses offer a reward – prizes, coupons or discounts – to people who check in at their locations. Google Maps, Foursquare, Yelp and Facebook Places are among the more popular services.

Location-based services use a smartphone's GPS technology to track a person's location, if that person has opted in to allow it. After a smartphone user opts in, the service can identify their location down to the street address without the need for manual data entry.

What is location-based technology?

Location-based service is any technology that depends on real-time location tracking to function. This means the technology is persistently identifying the user's physical and geographical location. That information is used to perform services and functions. The technology is most frequently used with mobile devices, but it can be applied to any device that can provide a location, including desktop PCs.

Key TakeawayKey takeaway: Location-based technology tracks your physical and geographical location constantly, not just at one moment.

How does location technology track your movements?

There are several mechanisms inside a typical mobile device that can provide location information. The most common are GPS, RFID, Wi-Fi and cellular technology. We'll explain these in more detail in the next section, but they all operate on similar principles.

A mobile device communicates with other devices and hubs – such as satellites, routers and towers – to function. Because the mobile device is pinging off of multiple communication hubs, its precise location can be triangulated.

Examples of technologies used to track location

A few examples will clarify how these methods work. The most precise location-tracking services incorporate more than one of these technologies.


The Global Positioning System is an array of satellites that exist solely to help find things across the planet. Any device with a GPS receiver (which includes most smartphones) can ping the satellites with that receiver. This will cause it to communicate with at least four satellites, and the satellites can compare the signal delay to pinpoint where the signal originated. This allows your phone to know exactly where you are and provide turn-by-turn navigation. A common business use case is GPS fleet tracking software, which businesses use to remotely keep tabs on their company vehicles and their drivers' performance.


Wi-Fi location tracking is a bit different from other methods. Typically, a device only connects to one Wi-Fi network at a time. This eliminates the possibility of triangulation. Instead, this form of location tracking uses IP addresses. Every network has a physical IP address that allows the greater internet to know where it is. This is necessary for it to accurately send information across internet infrastructure. When your phone connects to a Wi-Fi network, it pairs with the physical IP of that network. That allows location services to know your current address.

Cellular technology

Cellular tracking works much like GPS. Instead of connecting to satellites, though, your device is connecting to cellular towers. Generally speaking, you will be in range of at least two towers, which is enough for the system to use triangulation to find your location.

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QR codes

Quick-response (QR) tracking is close to Wi-Fi in principle. When a dynamic QR code is scanned, it logs information related to the scan. When the QR code is established, its physical location can be recorded. That location can then be tagged anytime the code is scanned.


RFID tracking is effectively a combination of these other methods. The RFID scanner typically has a static location. When it pings off of other networks, the location of the scanner can be logged. When the RFID scanner is activated, it can tag its location when it records the access. This can identify the location of the device accessing the scanner.

Key TakeawayKey takeaway: There are multiple methods for gathering location data, enabling a wide range of geotargeted functions for businesses, from tracking assets to generating leads.

Uses of location-based services

Companies have found several ways to use a device's location.

  • Store locators: Using location-based intelligence, retail customers can quickly find the nearest store location.
  • Proximity-based marketing: Local companies can push ads only to individuals within the same geographic location. Location-based mobile data can improve local marketing efforts to potential customers within that city who might actually act on the information.
  • Travel information: An LBS can deliver real-time information, such as traffic updates or weather reports, to the smartphone so the user can plan accordingly.
  • Roadside assistance: Many roadside assistance companies provide an app that allows them to track your exact location in the event of a blown tire or car accident without the need for you to give directions.
  • Mobile workforce management: For logistics-dependent companies that employ individuals out in the field or at multiple locations, an LBS allows employees to check in at a location using their mobile devices. Businesses with remote workforces often rely on geographic data to ensure workers are where they need to be.
  • Fraud prevention: An LBS creates another level of security by matching a customer's location to a credit card transaction. Tying the smartphone's location to a credit card allows you to flag transactions made across several geographic locations over a short time.

LBS companies

Many app developers lack the resources to develop software that can interpret a smartphone's location, so they use existing solutions through an API to save time and money. Many of these companies liaise with wireless carriers to connect businesses with smartphone users' locations. They provide tools to increase user engagement and connect with the most mobile phone users possible. Companies well known for their LBS software include AT&T and Esri.

Examples of location-based service apps

These are some LBS apps that you might already be using.

1. Uber, Lyft and other ridesharing apps

Hailing a cab from your phone relies on the power of location-based services. Wouldn't it be annoying to manually enter your address into your favorite ridesharing app every time you're in a rush to get somewhere? With location-based services, your ridesharing app immediately knows where you are. The app can then locate drivers near you upon request and get you a quick ride to your destination.

2. Dark Sky

Most weather apps present you with forecasts from just one nearby source. Dark Sky uses location-based services to go above and beyond this standard model. When you open the Dark Sky app on your phone, it collates weather data from several sources into a forecast unique to your exact location. Its location-based services make it especially apt at detecting rain that will likely fall within minutes, even if no other forecasts have called for rain. With the power of LBS, Dark Sky keeps you dry.

3. Pokemon Go

Pokemon Go is an immensely successful location-based app. Its entire model is based on location: Everywhere you go, there's a different set of Pokemon to catch. Some locations even have Pokemon you can't catch anywhere else. Pokemon Go shows the power of LBS not just for business, but for fun.

Ryan Goodrich contributed to the writing and research in this article.

Image Credit: app_ipopba / Getty Images
Max Freedman
Max Freedman
Business News Daily Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.