It's an old retail trick: encourage people to buy things by turning consumption into a game. From the Green Stamps coupon program to frequent-flier miles, loyalty bonuses have been businesses' way to reward customers in hopes of prodding them to buy even more. But now this technique is taking on a new and potentially more powerful form by exploiting the ubiquity of GPS-enabled smart phones and their users' love of video games. More and more, businesses can use game elements—virtual points, levels, and challenges—to boost demand and shape consumer behavior.

One prominent startup behind this trend is Foursquare, which offers a smart-phone app that asks people to "check in" at bars, restaurants, and clubs. Foursquare awards points for check-ins and anoints the person who accumulates the most for one place during a certain period as the "mayor" of the location—a title that usually confers no benefits other than bragging rights. Foursquare has several competitors in the check-in game, including Go­walla, Brightkite, Whrrl, and Booyah. Another company, Scvngr, aims to take the concept further: its intense 22-year-old founder, Seth ­Priebatsch, likes to describe his goal as "building a game layer on top of the world."