Consumer Privacy and Marketing Avoidance: A Static Model
Il-Horn Hann, Kai-Lung Hui, Sang-Yong T. Lee, Ivan P. L. Png
Management Science · 2008 · Volume 54 · Issue 6
Abstract
We introduce the concept of marketing avoidance —consumer efforts to conceal themselves and to deflect marketing. The setting is one in which sellers market some item through solicitations to potential consumers, who differ in their benefit from the item and suffer harm from receiving solicitations. Concealment by one consumer induces sellers to shift solicitations to other consumers, whereas deflection does not. Solicitations cause two externalities: direct harm on consumers and the (indirect) cost of consumer concealment and deflection. We find that in markets where the marginal cost of solicitation is sufficiently low, efforts by low-benefit consumers to conceal themselves will increase the cost-effectiveness of solicitations and lead sellers to market more. However, concealment by high-benefit consumers leads sellers to market less. Furthermore, concealment by low-benefit consumers increases direct privacy harm, and consumer welfare is higher with deflection than concealment. Finally, it is optimal to impose a charge on solicitations.
Keywords
marketing avoidance, privacy, advertising, promotion, segmentation
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