|Start Page Number:||2353|
|End Page Number:||2364|
|Publication Date:||Jul 2017|
|Authors:||Fong Nathan M|
|Keywords:||marketing, behaviour, advertising, datamining, statistics: inference, simulation|
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.