Brenton Chin's Blog

What factors affect the effectiveness of Personalization?

March 14th, 2012 · No Comments

After reading Malte Otremba’s blog about a high-end company that is personalizing chocolates, it got me thinking – if a company can derive consumer value and profits by personalizing something as unsubstantiated such as chocolate, then what factors do other companies and industries consider when they contemplate about personalizing their products.

Malte Otremba’s blog: https://blogs.ubc.ca/malteotremba/

I came across a graph that shows companies in relation to how high and low their level of personalization is

Judging by the graph, there is a big range of companies that have high levels of personalization. These include, apparel companies such as H&M, Nike and Converse; car companies such as BMW and internet-related companies such as Firefox.

It looks like there are 3 different dimensions that determine whether or not the company employs personalization:  1) design, 2) usage 3) services.

1) Design
This is the most common feature – it gives consumers the opportunity to design the product based on selected criteria (shape, color, accessories). For example, the level of customization could be limited (different Apple iPod colors)  or sophisticated (BMW – consumers get to choose if they want leather seating, a GPS system.. etc.)

2) Usage
The consumer is able to influence some core characteristics/functionalities of the product.  For example, when you use Firefox you are able to define their service based on the functionalites you want.

3) Services
The objective here is to provide consumers with personal recommendations in order to propose the most appropriate product. For example, the retail chain H&M gives customers the opportunity to design their own character according whichever body shape, allowing people to try different combinations of clothes.

 

From my point of view, I like it when companies allow you to personalize your products because it makes you feel like you had a part in creating the final product. For example, when I go to a frozen yoghurt shop, I like that they allow you to choose the toppings that you put onto the yoghurt. Because I get to choose the toppings that go on my yoghurt, I place more value on the yoghurt and I would be wiling to spend more because of it! From a company standpoint however, if they want to employ personalization, they need to consider the three factors that I described above, and furthermore, it should only be done if it is strong enough to create a significant gap vs the competition, while increasing consumer value in proportion to the profit that they will reap as a result.

 

Links:
http://www.readwriteweb.com/archives/top_5_web_trends_of_2009_personalization.php
http://www.useit.com/alertbox/981004.html
http://www.futurelab.net/blogs/marketing-strategy-innovation/2009/01/is_it_enough_to_personalize_pr.html

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