1. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENT THOMSON BUSINESS and ECONOMICS 5109 Natorp Boulevard Mason, OH 45040 Phone: (800) 423-0563

2. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Part Two: Chapter Nine Personalization The rediscovery of the customer is a byproduct – perhaps the most important one – of the onset of the information revolution. Blattberg and Glazer, The Marketing Information Revolution

3. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Benefits of Personalization Product distinction: a standard product becomes a specialized solution

4. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Benefits of Personalization Product distinction: a standard product becomes a specialized solution Low cost access to luxury and status of personalized services

5. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Benefits of Personalization Product distinction: a standard product becomes a specialized solution Low cost access to luxury and status of personalized services Hard to evaluate experience goods become predictable search goods

6. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Benefits of Personalization Product distinction: a standard product becomes a specialized solution Low cost access to luxury and status of personalized services Hard to evaluate experience goods become predictable search goods Survival through differentiation

7. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Benefits of Personalization Product distinction: a standard product becomes a specialized solution Low cost access to luxury and status of personalized services Hard to evaluate experience goods become predictable search goods Survival through differentiation Increased customer loyalty

8. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Personalization Balance Competitive advantage comes when personalization is supported by focus on customer-relating capabilities (CRC)

9. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Personalization Balance SOURCE: George Day and Christophe Van den Bulte, Superiority in Customer Rlationship Management, working paper, Wharton School, September 2002

10. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation The Personalization Balance Personalization efforts can produce backlash: First Class envy Excessive personalization wastes time Sometimes, standardization is just fine

11. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalization Approaches Mass Customization: blending standard products with individual information

12. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalization Approaches Mass Customization: blending standard products with individual information Choice Assistance: advice giving systems cut clutter of product choice

13. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalization Approaches Mass Customization: blending standard products with individual information Choice Assistance: advice giving systems cut clutter of product choice Personalized Messaging: consumer needs and choices tracked across repeated interaction

14. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation SOURCE: Adapted from Kai Riemer and Carsten Totz, The Many Faces of Personalization, in Tseng and Piller, The Customer Centric Enterprise, (New York/Berlin: Springer Verlag, 2003 Many Opportunities for Personalization

15. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Mass Customization Customization of how a product is represented or of a products specific attributes through four approaches: – Collaborative – Cosmetic – Transparent – Adaptive

16. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Mass Customization Collaborative Customization: Online reconfiguration of a product to match consumer preferences – Example: Choosing features for a new car

17. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Mass Customization Cosmetic Customization: Packaging choices personalize standard products – Example: Choosing an iPod case SOURCE: Getty Images

18. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Mass Customization Transparent Customization: Product features learn the user and adjust accordingly – Example: Google Scholar

19. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Mass Customization Adaptive Customization: Product features naturally customize themselves or are individually configured – Example: Weather reports by zip code

20. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Choice Assistance Determining if a recommendation system could enhance online marketing: – Do customer lifetime values vary greatly? – Do customer needs vary greatly? – Are key product attributes qualitative or complex?

21. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Choice Assistance A recommendation system flowchart

22. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Choice Assistance: Approaches Rules-based: Combines information about customers with understanding of how products are used

23. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Choice Assistance: Approaches Rules-based: Combines information about customers with understanding of how products are used Computer-assisted self-explication (CASE): Advice generated from databases of consumer input

24. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Choice Assistance: Approaches Rules-based: Combines information about customers with understanding of how products are used Computer-assisted self-explication (CASE): Advice generated from databases of consumer input Collaborative Filtering: For complex product choices, linking like-minded individuals for recommendations

25. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Choice Assistance: Approaches Rules-based: Combines information about customers with understanding of how products are used Computer-assisted self-explication (CASE): Advice generated from databases of consumer input Collaborative Filtering: For complex product choices, linking like-minded individuals for recommendations Endorsement: Virtual word-of-mouth referrals link users with preferred providers

26. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalized Messaging Users must be authenticated through a fixed, valid address – Online through Web servers, browser cookies or registration systems – Email and Instant Messaging accounts – Cell phones and wireless PDAs

27. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalized Messaging Increasing levels of knowledge about Web user Cookies Log Analysis Online Behavior Visitor Statistics Anonymous Valid Name and Database Valid Name User ID

28. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalized Messaging With an established address, online behavior patterns suggest best approach for personalized messaging

29. © Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Personalized Messaging With an established address, online behavior patterns suggest best approach for personalized messaging Distinct online events or inquiries can provide trigger moments for messaging – Example: A user searching for home value calculator could need real estate services