Service design of consumer data intermediary for competitive individual targeting

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Xia Zhao, Associate Professor (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: Individual targeting, a marketing strategy that firms target individual consumers with tailored offers, is currently a widespread practice. Customer data intermediaries (CDIs) have emerged recently to help firms learn their prospective customers and launch their target marketing campaigns. This paper uses a common-value auction framework to study how a CDI designs and differentiates its information services to help two competing firms identify and target valuable customers. We characterize the firms' equilibrium target marketing strategies. The results show that the CDI serves one firm exclusively in unpromising markets where the proportion of valuable customers is relatively low, and provides both firms with differentiated services in promising markets where the proportion of valuable customers is relatively high. In addition, the CDI differentiates its services less when the proportion of valuable customers is higher.

Additional Information

Decision Support Systems
Language: English
Date: 2012
Target marketing, Individual targeting, Customer data intermediaries, Information economics

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