Internet Marketing Personalization. Topics Personalization and marketing Consumer benefits of...

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  • Internet MarketingPersonalization

  • TopicsPersonalization and marketingConsumer benefits of personalizationImplementing personalization

  • Personalization & MarketingMarketing has the responsibility to reflect customers goals, needs and wantsThe result is that companies create product lines with many product and service variations in order to meet the needs of various target marketsPersonalization is a special form of product differentiationA standard product is transformed into a specialized solution for an individual

  • Personalization & MarketingAn explosion in the number of choices leads to customer confusionThe Web is rapidly developing methods to help consumers choose wisely from the wide array of available productsChoice assistance can help the consumer to discover his or her own tastesChoice Assistance

  • Personalization & MarketingMass customization has emerged by combining individual-level information and flexible manufacturingBy incorporating individual preferences, marketing more closely reflects the voice of the customerUsing specialized software, it is possible to deliver truly unique and dynamically personalized Web sites in real timeThe Web is emerging as an essential piece of the customization puzzleCustomization

  • Personalization & MarketingChoice assistance and customization lead to more powerful personalizationPersonalization becomes the basis for retaining loyal and committed customersWhen successful, customers are satisfied and profits are highRelationship Marketing

  • Personalization & MarketingOn the left of the continuum, theres no personalizationFurther to the right, products are customized for individual tastesOn the far right, consumers collaborate with companies to create customized products, which builds relationshipsRelationship MarketingFigure 7.4: The Personalization Continuum

  • Personalization & MarketingDigital technology makes it possibleEncyclopedic storage of information provides a rich base of materialThe network makes it availableInternet connections can tap into databases and data archives, get news feeds, and provide time-sensitive information or accumulate information for later use Individuals make it valuablePersonalization provides value by focusing on specific individual needsPersonalization and the DNI Framework

  • Personalization & BenefitsTechnology has the power to make available to the masses what was previously available only to the richDemocracy of goods refers to open and low-cost access to products and servicesAutomation and leverage of existing digital assets makes personalized goods and services cheap to provide and widely available to consumersThe Democracy of Goods

  • Personalization & BenefitsSEARCH GOODS are products and services that are easy for a consumer to evaluateExample well-known branded products such as gasoline from Texaco

    The Internet Benefits Consumers By Turning Experience Goods into Search GoodsEXPERIENCE GOODS tend 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

  • Personalization & BenefitsConsumers benefit from reduced uncertainty about experience goodsAn accurate personalization system that can match products to taste can eliminate unpleasant consumption experiencesThe Internet Benefits Consumers By Turning Experience Goods into Search Goods

  • Personalization & BenefitsLevitts rules for success through differentiationAny product can be customizedConsumers use products to solve problemsDo not ignore hard-to-measure features of the product such as fun or friendlinessMake the intangible tangible. Provide signals that demonstrate quality and reliabilityPersonalization and the Total Product

  • Personalization & BenefitsPersonalization is a rich area for augmenting the product and finding ways to achieve the potential productUse the Wells Fargo exampleto illustrate Levitts framework

  • Personalization & BenefitsThe Personalization BalanceProviding Useful InformationA key challenge is to determine the type and scope of information consumers will value and useCustomers judge information programs by their efficiency and the ratio of usage costs with usage benefitsInformation programs that are linked to customers personal targets and objectives are often successful

  • Personalization & BenefitsThe Personalization BalancePersonalization BacklashA natural result of personalization is treating customers differentlyMore valuable customers will receive special/preferential treatmentThis can lead to a backlash among customers who dont receive special treatmentPreventing resentment may be easier online where preferred programs are less visible

  • Implementing PersonalizationPersonalization has powerful potential competitive advantagesThe first company to create an effective personalization approach in an industry can capture many of the most profitable customersPersonalization creates the opportunity to learn more about Customers current desiresFuture trendsNew opportunities for product features and extensions

  • Customization / PersonalizationTwo Necessary Ingredients

  • 2 ingredients neededDirect interaction between the firm and the individual (the individuals information are collected, see figure 7.8)Software abilities of data retrieval, dynamic web page generation, and capturing user choices)

  • Types of CustomizationPresent a uniform representation & let users filter out most possibilities to create personalized servicePossible to create personalization online via use of frames & cookiesObserve users behaviors (implicit model)Dialogue with customers to help articulate needs, then create custom product

  • Types of CustomizationAdaptive CustomizationOffer the same basic product and representation to everyone Let users filter out most of the possibilities using pop-up menus, search functions and preference settingsExample:At, users can select the music they want to hear using a pop-up menu

  • Types of CustomizationCosmetic CustomizationPresent a standard product differently to each customerUse 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 pageEssential requirement is modularization division of a product into components

  • Types of CustomizationTransparent CustomizationUser needs and behaviors are observedThe product is automatically changed to reflect individual tastes The user isnt told or made aware of changesExample:Smart ads use observable behavior to show different ads

  • Types of CustomizationCollaborative CustomizationConduct a dialogue with individual customersHelp them articulate their needsIdentify the precise offering that fulfills those needsMake customized productsExample:Using a password protected extranet to communicate with customers via real-time sound and video sessions

  • Customization / PersonalizationQ: When isone-to-one marketing worthwhile?

  • 1:1 Matrix

  • When Is Personalization Profitable?

  • Determining the Correct Personalization SystemCustomer Needs, Product SpaceQuantitativeFewHighly DifferentiatedQualitativeComplexUniformFigure 7.12Key Product Attributes

  • Personalization SystemsObserve behavior predict preferencesUnobtrusive: consumers dont have to answer questions or fill in extensive questionnaires Best whenProduct space isnt complicatedProduct / service attributes can be quantifiedExample: American Airlines Require effective user models that are tied to observable online triggersA trigger is a user action that a model can use to decide what personalized information to sendRule-Based System

  • Personalization SystemsCASE (computer-assisted self-explication)The system queries users about preferences matches user with the right product / serviceBest when users only have to evaluate a small number of well-understood attributes and featuresExample: & Personalogic (Chapter 7 Online)Require user cooperation to get relevant user dataCase-Based System

  • FIGURE 7.14 (4875 ->294)

  • FIGURE 7.15 (294 ->285)

  • FIGURE 7.16 (285)

  • Personalization SystemsConnects users with local preferred providersBest whenUsers product needs dont differ greatlyIts a challenge for consumers to judge quality and for vendors to explain the value of available choicesExamples: Autobytel.comEndorsement System

  • Personalization SystemsMatch users who share similar tastesUsers share recommendations and preferencesBest whenProduct space is complicatedPreferences are subjective, qualitative and complexExample: instant recommendationsRequires user cooperation to get relevant user dataCollaborative Filtering

  • TABLE 7.1

  • TABLE 7.2

  • Personalization Flowchart (See Figures 7.11, 7.12, 7.17)Q1: Do customer lifetime values vary significantly?Q2: Do customer needs vary significantly?Q3: Are product attributes qualitative or complex?

  • Personalization ChallengesVarying Benefits (Figure 7.18, Table7.2)Data Needs (Figure 7.19)

  • FIGURE 7.18

  • FIGURE 7.19