Ch7 Personalization

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Transcript of Ch7 Personalization

  • 1. Internet Marketing Personalization

2. Topics

  • Personalization and marketing
  • Consumer benefits of personalization
  • Implementing personalization

3. Personalization & Marketing

  • Marketing has the responsibility to reflect customers goals, needs and wants
  • The result is that companies create product lines with many product and service variations in order to meet the needs of various target markets
  • Personalization is a special form of product differentiation
    • A standard product is transformed into a specialized solution for an individual

4. Personalization & Marketing

  • An explosion in the number of choices leads to customer confusion
  • The Web is rapidly developing methods to help consumers choose wisely from the wide array of available products
  • Choice assistance can help the consumer discover his or her own tastes

Choice Assistance 5. Personalization & Marketing

  • Mass customization has emerged by combining individual-level information and flexible manufacturing
  • By incorporating individual preferences, marketing more closely reflects the voice of the customer
  • Using specialized software, it is possible to deliver truly unique and dynamically personalized Web sites in real time
  • The Web is emerging as an essential piece of the customization puzzle

Customization 6. Personalization & Marketing

  • Choice assistance and customization lead to more powerful personalization
  • Personalization becomes the basis for retaining loyal and committed customers
  • When successful, customers are satisfied and profits are high

Relationship Marketing 7. Personalization & Marketing

  • On the left of the continuum, theres no personalization
  • Further to the right, products are customized for individual tastes
  • On the far right, consumers collaborate with companies to create customized products, which builds relationships

Relationship Marketing Figure 7.4: The Personalization Continuum Mass Market Differentiated Customized Relationship Choice Assistance Design 8. Personalization & Marketing

  • Digitaltechnology makes it possible
    • Encyclopedic storage of information provides a rich base of material
  • Thenetworkmakes it available
    • Internet connections can tap into databases and data archives, get news feeds, and provide time-sensitive information or accumulate information for later use
  • Individualsmake it valuable
    • Personalization provides value by focusing on specific individual needs

Personalization and the DNI Framework 9. Personalization & Benefits

  • Technology has the power to make available to the masses what was previously available only to the rich
  • Democracy of goods refers to open and low-cost access to products and services
  • Automation and leverage of existing digital assets makes personalized goods and services cheap to provide and widely available to consumers

The Democracy of Goods 10. Personalization & Benefits

  • SEARCH GOODSare products and services that are easy for a consumer to evaluate
    • Example well-known branded products such as gasoline from Texaco

The Internet Benefits Consumers By Turning Experience Goods into Search Goods

  • EXPERIENCE GOODStend to be difficult to understand and evaluate. They are too complex to judge easily. They may be highly subjective, with personal taste being the most important determinant of usefulness
    • - Example health care services

11. Personalization & Benefits

  • Consumers benefit from reduced uncertainty about experience goods
  • An accurate personalization system that can match products to taste can eliminate unpleasant consumption experiences

The Internet Benefits Consumers By Turning Experience Goods into Search Goods 12. Personalization & Benefits

  • Levitts rules for success through differentiation
    • Any product can be customized
    • Consumers use products to solve problems
    • Do not ignore hard-to-measure features of the product such as fun or friendliness
    • Make the intangible tangible. Provide signals that demonstrate quality and reliability

Personalization and the Total Product 13. Personalization & Benefits Personalization is a rich area for augmenting the product and finding ways to achieve the potential product Use the Wells Fargo example to illustrate Levitts framework Figure 7.6: Increasing Amounts of Differentiation 14. Personalization & Benefits The Personalization Balance

  • Providing Useful Information
    • A key challenge is to determine the type and scope of information consumers will value and use
    • Customers judge information programs by their efficiency and the ratio of usage costs with usage benefits
    • Information programs that are linked to customers personal targets and objectives are often successful

15. Personalization & Benefits The Personalization Balance

  • Personalization Backlash
    • A natural result of personalization is treating customers differently
      • More valuable customers will receive special/preferential treatment
    • This can lead to a backlash among customers who dont receive special treatment
    • Preventing resentment may be easier online where preferred programs are less visible

16. Implementing Personalization

  • Personalization has powerful potential competitive advantages
    • The first company to create an effective personalization approach in an industry can capture many of the most profitable customers
  • Personalization creates the opportunity to learn more about
    • Customers current desires
    • Future trends
    • New opportunities for product features and extensions

17. Types of Customization Present a uniform representation & let users filter out most possibilities to create personalized service Possible to create personalization online via use of frames & cookies Observe users behaviors (implicit model) Dialogue with customers to help articulate needs, then create custom product Change No Change Change Cosmetic Adaptive Collaborative Transparent Product Product: attributes create unique functionality Representation Representation: how a product or service is portrayed to a customer Smart Ads Smart Offers Smart EPGs 18. Types of Customization Adaptive Customization

  • Offer the same basic product and representation to everyone
  • Let users filter out most of the possibilities using pop-up menus, search functions and preference settings
  • Example:
    • At, users can select the musicthey want to hear using a pop-up menu

19. Types of Customization Cosmetic Customization

  • Present a standard product differently to each customer
  • Use of unique packaging, presentation, etc.
  • Example:
    • New York Times uses cookies to store registration information and show the users name at the top of the page
  • Essential requirement is modularization division of a product into components

20. Types of Customization Transparent Customization

  • User needs and behaviors are observed
  • The product is automatically changed to reflect individual tastes
  • The user isnt told or made aware of changes
  • Example:
      • Smart ads use observable behavior to show different ads

21. Types of Customization Collaborative Customization

  • Conduct a dialogue with individual customers
  • Help them articulate their needs
  • Identify the precise offering that fulfills those needs
  • Make customized products
  • Example:
    • Using a password protected extranet to communicate with customers via real-time sound and video sessions

22. Customization / Personalization Q: When is one-to-one marketing worthwhile? 23. 1:1 Matrix Highly Differentiated Uniform Highly Differentiated Quadrant II Quadrant I Quadrant IV Quadrant III Customer Valuations Valuations: How different are your customers in terms of their value to your enterprise? Customer Needs Needs: How different are your customer needs? 24. When Is Personalization Profitable? II I IV III Customer Needs Similar Highly Differentiated Customer Valuations Wide Range Uniform 1:1 Marketing Niche Marketing Target Marketi