Personalization 3.0: How Personality Can Predict Consumer Behavior

Personalization 3.0: How Personality Can Predict Consumer Behavior

Katharina Sophie Kuehn (Deep Sphere, Australia)
DOI: 10.4018/978-1-7998-3115-0.ch002

Abstract

Approaches that attempt to predict consumer behavior have come a long way since the inception of socio-demographic profiling. This development is, on the one hand, driven by the desire of businesses to perform better and connect better with consumers. On the other hand, this is also driven by consumers who are explicitly seeking personalized guidance in a crowded marketplace and implicitly, nonconsciously, seeking to fulfill underlying emotional needs and goals by consuming brands and products. The author proposes a biopsychological framework to understand personality based on evolutionary studies of primal emotion systems and explains how this framework can predict preferences and behavioral tendencies in consumers. To ascertain the validity of the theory, four experiments were conducted to test and confirm personality-specific predictions regarding the effectiveness of personalized advertising campaigns, product choices, and brand preference.
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A Brief History Of Personalization

Between the beginning of anonymous mass consumerism and now, many businesses have moved from treating every customer the same to clustering customers into demographic segments. The author refers to this as Personalization 1.0 because demographic segmentations were the first rudimentary attempt to categorize customers into different segments. The first socio-demographic market segmentation tool of this kind was developed in 1916 by Paul Cherington, director of research for J. Walter Thompson, a marketing communications brand, and member of the census advisory committee for the American Statistical Association (Lockley, 1950). His research department, using the socio-demographic ABCD typology of households, quickly became an epicenter for market and consumer research in the United States. Demographic segments are still widely used in business today. According to a Marketing Week survey (2019) with a sample of more than 800 professionals working across 23 sectors, the currently most commonly used methods of segmentation are age (38%), location (42%) and, increasingly, behavior (44%).

More recently, data and technology-driven businesses such as Netflix and Amazon have dedicated large investments into personalizing their customer experience based on user behavior and engagement with different products and titles.

To date, the main focus of Netflix’s product recommendations engine has been to analyze how subscribers search, click, watch, and pause, creating “doppelganger” profiles for users with similar behavioral histories. Nevertheless, getting it right is a complex and elusive endeavor, as anyone who has ever desperately searched for inspiration and relevant recommendations on new content to watch can attest.

Key Terms in this Chapter

Characteristic Adaptations: Consequences generated by cybernetic processes of learning and adaptation of the individual. Characteristic adaptations evolve through changes in the brain function within one human lifetime, in relation to particular life circumstances of the individual. Characteristic adaptations can be conceptually attributed to the system 2 layer of personality and consist of goals, interpretations, and strategies, and can be conscious or nonconscious.

Epigenetics: The study of gene-environment interactions, explaining how the same genotype leads to different phenotypes.

Traits: Characteristic patterns of emotions, motivations, strategies, behaviors, or styles for pursuing need fulfilling goals. Traits are probabilistic, so even an error-free measure of a trait cannot predict behavior at any given moment with 100% accuracy. Nevertheless, they provide significant predictive power in aggregate and can in many cases also predict single instances of behavior better than chance.

Personality: An individual’s variation to the general evolutionary design, which encompasses a set of relatively stable dispositional traits and behaviors that can be identified across all human societies as well as other mammals.

Motivation and Goals: At the core of personality stands motivation, in an evolutionary sense, the motivation to ensure basic survival and functioning, in a psychological sense the motivation to fulfill basic human needs. These needs, in turn, give rise to goals.

Saliency: An important attentional mechanism in cognitive neurosciences, focusing on an organism’s limited amount of cognitive and perceptual resources toward stimuli that are key to their survival, functioning, and goal pursuit, while not allocating limited attention toward less pertinent stimuli.

Primal Emotion Systems: Mammal’s core operating systems that have evolved to ensure individual survival and functioning as well as the survival, cohesion, and functioning of the group. These remain universally influential in humans.

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