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  • Personalization paradox: the wish to be remembered and the right to be forgotten

    A qualitative study of how companies balance being personal while protecting consumers’ right to privacy

    Master’s Thesis 30 credits Department of Business Studies Uppsala University Spring semester of 2019 Date of Submission: 2019-05-29

    Alexandra Harrysson Julia Olsson Supervisor: Cecilia Pahlberg

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    Abstract Many argue that personalization is needed in a modern marketing strategy. Whilst there are

    several positive aspects of personalization, e.g. improved customer satisfaction rates, it can also

    lead to firms being perceived as intrusive and elicit privacy concerns. This dilemma describes

    the personalization paradox, which refers to the two-sided results of using personalized

    communication by collecting and analyzing consumer data. To address the issue of how firms

    balance the need for personalization while still respecting consumers’ privacy, previous

    researchers have mainly investigated the issue from the consumer perspective. However, the

    consumer is believed to display a paradoxical behavior in regards to personalization. Therefore,

    we have addressed this issue through interviewing 12 company representatives from 7

    companies. Our findings indicate that companies are mindful when creating personalized

    content and do acknowledge the issues with privacy and the risk of being perceived as intrusive.

    To overcome the personalization paradox, firms are not explicit about their data analysis in

    their personalized communication as this can lead to consumers feeling discomfort. Finally, an

    essential way that firms can prevent privacy concerns is to create relevant content as this

    outweighs feelings of discomfort. These findings to a certain extent do not reflect the empirical

    research on the topic, however the discrepancies may exist as previous studies were conducted

    from the consumer side.

    Key words: personalization, privacy, trust, transparency, control

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    Table of content 1. Introduction ___________________________________________________________ 5

    1.2 Background _________________________________________________________________ 5 1.3 Problematization _____________________________________________________________ 6 1.4 Purpose and knowledge contribution _____________________________________________ 7

    2. Theoretical Framework __________________________________________________ 8 2.2 Personalization ______________________________________________________________ 8 2.3 Privacy Paradox _____________________________________________________________ 9

    2.3.2 Explaining the privacy paradox ____________________________________________________ 10 2.3.3 Personalization & Privacy Summary ________________________________________________ 11

    2.4 Trust _____________________________________________________________________ 11 2.4.2 Explaining trust in relation to the personalization and privacy paradox ______________________ 12 2.4.3 The three dimensions of trust ______________________________________________________ 14

    2.5 Control ___________________________________________________________________ 14 2.5.2 Transparency ___________________________________________________________________ 15 2.5.3 Information Control _____________________________________________________________ 16

    2.6 Model ____________________________________________________________________ 18 3. Method ________________________________________________________________ 18

    3.2 Methodological approach _____________________________________________________ 19 3.3 Literature review ____________________________________________________________ 20 3.4 Data Selection ______________________________________________________________ 20 3.5 Data Collection _____________________________________________________________ 21

    3.5.2 Interviews _____________________________________________________________________ 21 3.5.3 Privacy statement analysis ________________________________________________________ 24

    3.6 Data Analysis ______________________________________________________________ 24 3.7 Ethical implications _________________________________________________________ 25 3.8 Quality of research __________________________________________________________ 26 3.9 Limitations ________________________________________________________________ 26

    4. Results & Analysis _______________________________________________________ 27 4.2 Interview Participants ________________________________________________________ 27 4.3 Personalization _____________________________________________________________ 28

    4.3.2 Channels and Data ______________________________________________________________ 29 4.4 Relevance vs Privacy ________________________________________________________ 30 4.5 Trust _____________________________________________________________________ 32

    4.5.2 Ability ________________________________________________________________________ 33 4.5.3 Integrity _______________________________________________________________________ 35 4.5.4 Benevolence ___________________________________________________________________ 36

    4.6 Control ___________________________________________________________________ 37 4.6.2 Transparency in personalization ____________________________________________________ 37 4.6.3 Control _______________________________________________________________________ 41

    4.7 Summary and table of recommendations _________________________________________ 44

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    5. Discussion and Conclusion ________________________________________________ 45 5.2 Future research _____________________________________________________________ 48

    REFERENCES ______________________________________________________________ 49

    APPENDICES ______________________________________________________________ 54

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    1. Introduction 1.2 Background “What data is my data?” is a question that is widely discussed today. In a recent scandal by the

    US retailer Target, it was discovered that they had analyzed customers’ shopping habits to an

    extent where they could determine customer pregnancy. Using this information, Target

    personalized messages to fit these customers’ current state and needs (John et al., 2018; Rees,

    2013). This was severely questioned, for one of their teenage customers had not yet discovered

    her pregnancy and it was disclosed to her father by an alert sent out by the retailer (ibid.).

    Many argue that personalization is needed in a modern marketing strategy to capture the

    attention of consumers and provide relevant offers (Aguirre et al., 2015; Jung, 2017; Chellappa

    & Sin, 2005). However, the example above leads to a discussion on what extent personalization

    should be used and the potential downsides of it.

    Personalization refers to “a customer-oriented marketing strategy that aims to deliver the right

    content to the right person at the right time, to maximize immediate and future business

    opportunities” (Tam and Ho 2006, as mentioned in Aguirre et al., 2015: 35). For the company,

    personalization offers benefits in terms of increased customer loyalty (Chellappa & Sin, 2005:

    181), opportunities to better serve their customers and thus increased customer satisfaction rates

    (Aguirre et al. 2015: 36) as well as better effectiveness in gaining the consumers’ attention

    (John et al., 2015; Bleier & Eisenbeiss, 2015). According to Cochrane (2018), consumers want

    personalized offers that are relevant to their past behavior and future needs. However, he also

    acknowledges the trickiness of using consumer data in personalized messaging for the fear of

    consumer discomfort. This dilemma describes the personalization paradox, which refers to the

    two-sided results of using personalized communication by collecting and analyzing consumer

    data (Aguiree et al., 2015: 35). While it can lead to high customer satisfaction rates, it can also

    lead to firms being perceived as intrusive and elicit privacy concerns (ibid.).

    To protect consumers, the General Data Protection Regulation (GDPR) was implemented in

    the European Union on May 25th 2018. This regulation ensures users more control over their

    data, and it enables the European Data Protection Authorities (DPAs) to prosecute companies

    for data and security breaches with bigger implications, up to 4 percent revenue in fines, instead

    of small fines that had only been possible before due to limitations in local regulations (Houser

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    & Gregory Voss, 2018: 7). GDPR requires companies to both reveal what data they are

    collecting as well as obtain explicit user consent before personal data can be collected (e.g.

    location data, IP addresses) (Tiku, 2018). Furthermore, GDPR requires that the consent must

    be explicit and informed and can at any time be revoked (Brandom, 2018).

    However, for personalization to be done well and meet the expectations of customers, large

    amounts of data must be collected (Cochrane, 2016). According to Accenture Strategy (2017),

    48 percent of customers expect personalized offers and 33 percent of custo