Upload
jaquelyn-knowles
View
30
Download
0
Tags:
Embed Size (px)
DESCRIPTION
Internet Marketing. Personalization. Topics. Personalization and marketing Consumer benefits of personalization Implementing personalization. Personalization & Marketing. Marketing has the responsibility to reflect customers’ goals, needs and wants - PowerPoint PPT Presentation
Citation preview
Internet Marketing
Personalization
Topics
• Personalization and marketing• Consumer benefits of
personalization• Implementing personalization
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
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 to discover his or her own tastes
Choice Assistance
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
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
Personalization & Marketing
• On the left of the continuum, there’s 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
Mass Market Differentiated Customized Relationship
Choice Assistance
Design
Figure 7.4: The Personalization Continuum
Personalization & Marketing
• Digital technology makes it possible– Encyclopedic storage of information
provides a rich base of material
• The network makes 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
• Individuals make it valuable– Personalization provides value by focusing
on specific individual needs
Personalization and the DNI Framework
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”
Personalization & Benefits
• SEARCH GOODS are 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 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 & 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
Personalization & Benefits
Levitt’s 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
Personalization & Benefits
Personalization is a rich
area for augmenting the product and finding
ways to achieve the
potential product
Use the Wells Fargo exampleto illustrate Levitt’s framework
Figure 7.6: Increasing Amounts of Differentiation
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
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 don’t receive special treatment
• Preventing resentment may be easier online where preferred programs are less visible
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
Customization / PersonalizationTwo Necessary
Ingredients
• Software capable of delivering customization
• Direct interaction between the firm and individual customers / consumers
2 ingredients needed
• Direct interaction between the firm and the individual (the individual’s information are collected, see figure 7.8)
• Software abilities of data retrieval, dynamic web page generation, and capturing user choices)
Change
No Change
Change
Types of Customization
CosmeticAdaptive
Collaborative
Transparent
Product
Attribute
s
Product Attributes: create unique functionality
Representation
Representation: how a product or service is portrayed to a customer
Present a uniform representation & let users filter out most possibilities to create personalized service
Possible to create personalization online via use of frames & cookies
Reflect.com
Observe users’ behaviors (implicit model)
Smart AdsSmart OffersSmart EPG’s
NYTimes.com
Sybase.com
Dialogue with customers to help articulate needs, then create custom product
Types of CustomizationAdaptive 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 Spinner.com, users can select the music they want to hear using a pop-up menu
Types of CustomizationCosmetic 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 user’s name at the top of the page
• Essential requirement is modularization – division of a product into components
Types of CustomizationTransparent Customization
• User needs and behaviors are observed
• The product is automatically changed to reflect individual tastes
• The user isn’t told or made aware of changes
• Example:Smart ads – use observable behavior to show different ads
Types of CustomizationCollaborative 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
Customization / Personalization
Q: When isone-to-one marketing worthwhile?
HighlyDifferentiated
Uniform
HighlyDifferentiated
1:1 Matrix
QuadrantII
QuadrantI
QuadrantIV
QuadrantIII
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?
When Is Personalization Profitable?
III
IVIII
Customer
Needs
SimilarHighlyDifferentiated
Customer
Valuations
Wide Range
Uniform
1:1 Marketing
Niche MarketingTarget Marketing
Mass Marketing
Frequency Marketing
Key Accounts
Figure 7.11: The 1:1 Matrix
Determining the Correct Personalization System
Customer Needs, Product Space
Qu
an
tita
tive
Few
Highly Differentiated
Qu
alita
tiv
eC
om
ple
x
Uniform
Collaborative Filtering
CASERule Based
Endorsement
Figure 7.12
Key P
rod
uct
Att
rib
ute
s
Mass M
ark
eti
ng
Price
Brand
Personalization Systems
• Observe behavior predict preferences– Unobtrusive: consumers don’t have to answer
questions or fill in extensive questionnaires
• Best when– Product space isn’t complicated– Product / service attributes can be quantified
• Example: American Airlines • Require effective user models that are tied
to observable online triggers– A trigger is a user action that a model can use
to decide what personalized information to send
Rule-Based System
Personalization Systems
• CASE (computer-assisted self-explication)– The system queries users about preferences
matches user with the right product / service
• Best when users only have to evaluate a small number of well-understood attributes and features– Example: Chipshot.com & Personalogic
(Chapter 7 Online)– Require user cooperation to get relevant user
data
Case-Based System
FIGURE 7.14 (4875 ->294)
FIGURE 7.15 (294 ->285)
FIGURE 7.16 (285)
Personalization Systems
• Connects users with local preferred providers
• Best when– Users’ product needs don’t differ
greatly– It’s a challenge for consumers to judge
quality and for vendors to explain the value of available choices
• Examples: Autobytel.com
Endorsement System
Personalization Systems
• Match users who share similar tastes– Users share recommendations and
preferences
• Best when– Product space is complicated– Preferences are subjective, qualitative and
complex
• Example: Amazon.com instant recommendations
• Requires user cooperation to get relevant user data
Collaborative Filtering
TABLE 7.1
TABLE 7.2
Personalization Flowchart (See Figures 7.11, 7.12, 7.17)
Q2
Q3
Q3 Collaborative
Filtering
CASE
Endorsement
RulesBased
Q1: Do customer lifetime values vary significantly?
Q2: Do customer needs vary significantly?
Q3: Are product attributes qualitative or complex?
Q1
Don’t Personaliz
e
NO
Q2
NO
YES
NO
YES YES
NO
NO
YESYES
Personalization Challenges
• Varying Benefits (Figure 7.18, Table7.2)
• Data Needs (Figure 7.19)
FIGURE 7.18
FIGURE 7.19