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Media type:
E-Article
Title:
How Targeting Affects Customer Search: A Field Experiment
Contributor:
Fong, Nathan M.
Published:
Institute for Operations Research and the Management Sciences (INFORMS), 2017
Published in:
Management Science, 63 (2017) 7, Seite 2353-2364
Language:
English
DOI:
10.1287/mnsc.2016.2447
ISSN:
0025-1909;
1526-5501
Origination:
Footnote:
Description:
It has become common practice for retailers to personalize direct marketing efforts based on customer transaction histories as a tactic to increase sales. Targeted email offers featuring products in the same category as a customer’s previous purchases generate higher purchase rates. However, a targeted offer emphasizing familiar products could result in curtailed search for unadvertised products, as a closely matched offer weakens a customer’s incentives to search beyond the targeted items. In a field experiment using email offers sent by an online wine retailer, targeted offers resulted in decreased search activity on the retailer’s website. This effect is driven by a lower rate of search by customers who visit the site, rather than a lower incidence of search. There are several ways this could potentially hurt retailers and consumers, such as reduced cross-selling and fewer opportunities for customers to explore new products. This paper was accepted by Pradeep Chintagunta, marketing.