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How consumers value online personalization: a longitudinal experiment


Pauline de Pechpeyrou
Institut du Management et de la Distribution, University of Lille II, Roubaix, France
Abstract
Purpose The ability to acquire and process consumer information online has provided web-based vendors with the ability to personalize their merchandising at a very low cost. However, empirically establishing the expected positive effect of personalized merchandising has been difcult for practical as well as nancial reasons. The aim of this paper is to compare the effectiveness of personalized vs random merchandising on consumers attitudes and behaviors. Design/methodology/approach A longitudinal subject experiment comparing standardized vs personalized merchandising was adopted. A ctitious web site was created for the purposes of the study. Findings Personalized items led to more clicks than random suggestions. Moreover, a positive attitude towards personalization enhanced the attitude towards the web site. Research limitations/implications Even if credibility was enhanced thanks to the web site design, the research suffered from a lack of external validity. Additionally, the procedure prevented us from observing any potential effect on basket size. Practical implications A strategy of personalizing the content appeared to be relevant for web site managers. They should use close recommendations rather than broad recommendations and present a moderate number of personalized suggestions. Originality/value The research is one of the few online experiments with a longitudinal perspective, which is considered necessary when studying consumers reactions to the personalization process. Keywords Consumer behaviour, Internet, Customer loyalty Paper type Research paper

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Introduction The internet era has deeply modied the seller-customer relationship. Indeed, each visitor may be personally identied through his IP address and his navigational behaviour may be tracked from visit to visit. His preferences may then be inferred from his navigation and buying behaviour (Resnick and Varian, 1997). Thanks to ltering algorithms, web sites are able to automatically adjust information content, structure and presentation tailored to an individual user. Personalization chooses content for the user automatically, without direct user requests; the process of choosing content remains hidden (Perugini and Ramakrishnan, 2003). Three factors enable commercial web sites to adopt such a strategy at a decreasing cost:
The author would like to thank the two reviewers for their comments and suggestions which helped to improve the quality of the paper. The author also would like to thank Professor Patrick Nicholson for his encouragements.

Direct Marketing: An International Journal Vol. 3 No. 1, 2009 pp. 35-51 q Emerald Group Publishing Limited 1750-5933 DOI 10.1108/17505930910945723

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(1) the extremely large amount of user behaviour data tracked in online sites; (2) the availability of powerful personalization techniques in commercial CRM systems; and (3) the easiness of implementing interaction strategies on the web (Yang and Padmanabhan, 2005). Many studies in the information systems eld have dealt with online personalization. Ho (2006) proposed organizing these numerous studies in three groups: applications of the personalization technology, privacy concerns and data-mining technologies (Perkowitz and Etzioni, 2000). Surprisingly, online personalization has not been studied very widely in the marketing eld. In particular, the relationship between personalization and consumer response has been quite neglected:
Works on this area concentrate on computational procedures to sort out transactions and personal proles. Although these studies look into various aspects of personalization applications, little attention has been paid to the theoretical basis for understanding the relationship between personalization and user behaviour (Ho and Tam, 2005, p. 96).

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Yet, such an understanding would be benecial to web site managers who think they could increase their benets through cross- and up-selling. From a theoretical point of view, personalizing the content proposed to each individual customer represents the most advanced step in online relationship marketing (Schubert and Ginsburg, 1999). It could solve the online assortment problem (Salerno, 2001; Schubert and Ginsburg, 1999) and therefore increase the web site appreciation by working on the content relevance for individuals (Ladwein, 2001). Eventually, it should increase customer loyalty (Salerno, 2001). There is indeed some agreement that online personalization may lead to increased repeated visits and higher amounts spent per visit:
Revisits can be encouraged in a number of ways, for example, by offering valuable information on the web site, by changing some of the content frequently so that something is always new, by offering personalised services, and by providing unique events, such as contests (Supphellen and Nysveen, 2001, p. 341).

However, web site personalization may also decrease value if recommendations are perceived as irrelevant or coming from an incompetent system (Wallet-Wodka, 2003). In addition, some visitors may be strongly opposed to the use of their personal data for commercial purposes (Treiblmaier et al., 2004). Surprisingly, to the authors knowledge, few studies have demonstrated these effects. Our research objective is therefore to ll up that gap by: . providing a conceptual framework to understand consumers beliefs and attitudes towards online personalization; and . testing how consumers value different forms of online personalization (type and number of items recommended). The paper is organized as follows: rst, we propose a conceptual framework to understand the impact of online personalization on customers beliefs and attitudes. Next, we present our methodological approach to test online personalization effectiveness.

Finally, results and the main contributions are discussed, and we offer some directions for future research. Conceptual framework Attitude towards the web site reects the entire web site experience. It has been dened as a predisposition to respond negatively or positively to a web site in a particular exposure situation (Chen and Wells, 1999, p. 28). It is necessary to use a broad measure of attitude towards the web site in order to accurately predict intentions to purchase a specic product and the willingness to visit the web site again (Karson and Fisher, 2005). Over the recent years, several researchers have proposed scales for measuring the navigation experience and efciency or interactivity of a web site (Loiacono et al., 2002; Wolnbarger and Gilly, 2003; Zeithaml et al., 2002; Eighmey, 1997; Chen and Wells, 1999; Chen et al., 2002; Ranganathan and Ganapathy, 2002; Aladwani and Palvia, 2002; Wu, 1999; Ghose and Dou, 1998). The number and the nature of these dimensions are still hotly debated (Zeithaml et al., 2002; Muller and Chandon, 2004). Chen and Wells (1999) demonstrated that three dimensions explained most of the variance of attitude towards a web site, namely information, entertainment and organization. These three ller and Chandon, factors have a positive inuence on attitude towards the web site (Mu 2004) and explain its performance level (Dandouau, 2001). Therefore, we hypothesize: H1. The three dimensions of a web site, namely: (a) information, (b) entertainment and (c) organization have a positive impact on the attitude towards the web site. We build on services marketing literature (Mittal and Lassar, 1996; Surprenant and Solomon, 1987) to suggest that online personalization could have a positive impact on attitude towards the web site. Personalization has a signicant impact on ve criteria: quality of work, quality of service, overall satisfaction, willingness to recommend and propensity to switch (Mittal and Lassar, 1996). Option personalization only affected trust in the bank and satisfaction with the offer (Surprenant and Solomon, 1987). As the available options increased, both trust in the bank and satisfaction with the offering also increased. Programmed personalization exerted strong effects on all three types of evaluation measures evaluations of the employee, the bank, and satisfaction (Surprenant and Solomon, 1987). Similarly, we hypothesize: H2. Attitude towards personalization has a positive impact on attitude towards the web site. H3. Attitude towards personalization is an additional antecedent of attitude towards the web site which increased the variance explained. Qualitative research on 13 web users was performed to understand consumers reactions and feelings to online personalization. The content analysis of the semi-structured interviews conrmed our review of the literature and led to a typology of consumers benets and liabilities associated with personalized web sites. Personalized online merchandising offered three types of benets to the visitor: cognitive, nancial and experiential.

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Cognitive benet from web site personalization resulted from reduced search and comparison costs to nd the best alternative (Schubert and Ginsburg, 1999). However, few empirical papers have examined the role of personalized communication in reducing information overload and making customer decisions easier (Arora et al., 2008). Stone and Gronhaug (1993) established that the predominant risk dimensions were nancial and psychological. When shopping online, the consumer mainly faces a nancial risk if the product he chooses is not the best according to his preferences. Financial benet referred to the reduction of perceived risk associated with a wrong choice decision. Swaminathan (2003) assumes that a recommendation agent is particularly useful when perceived risk is high. Experiential benet referred to the discovery of unknown and surprising products that the visitor would like, increasing the value of the experience (Hirschman and Holbrook, 1982). Three types of liabilities were also identied through the qualitative study: commercial annoyance, low-perceived quality and excessive quantity. Commercial annoyance referred to the visitor feeling that his freedom to browse the web site is restricted and hampered by intrusive commercial messages (cf. Bitner et al., 1990, in the service marketing literature). Low-perceived quality arose when consumers held the belief that the web site would never guess the true decisional logic and the true preferences of the visitor. An excessive quantity of suggestions referred to the perceived excessive pressure from too many messages sent. Adopting a benets and sacrices approach leads to postulate (Figure 1):

Cognitive Benefit H4a Financial Benefit H1a H4b Experiential Benefit H4c H4d Commercial Liability H4e H4f Attitude towards Personalization H2 H3 Attitude towards the Website H1b H1c Information Entertainment Organization

Quality Liability

Figure 1. Conceptual model

Quantity Liability

H4. Attitude towards personalization is positively inuenced by perceived cognitive benet (a), perceived nancial benet (b), perceived experiential benet (c) and negatively inuenced by perceived commercial annoyance (d), perceived low quality (e) and perceived excessive quantity (f). Methodology Empirically establishing the expected positive effect of a personalized merchandising is difcult for three main reasons. First, commercial web sites have no interest in suggesting placebo recommendations which might undermine their reputation. Second, visitors trust in particular the credibility and integrity facets in the web site may be reduced if they realize that the so-called personalized recommendations are not personalized at all. Third, longitudinal experiments are quite rare in marketing studies. Indeed, as underlined by Lawrence et al. (2001), it is extremely difcult to establish a personalization effect in a natural context:
[. . .] in order to quantify the impact of the recommender system, it would have been useful to have a control group of customers who received placebo recommendations, such as a list of randomly chosen products. This approach was not feasible since we were dealing with a live system with real customers doing real shopping.

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For these reasons, personalization systems have been evaluated mainly through ctitious systems (Table I). One noticeable exception is the experiment reported by Lawrence et al. (2001). Participants were real Safeway customers, in their usual shopping environment. Each customer participating in the program was issued with a PDA which ran a consumer application enabling the user to build a shopping list and send it to the server. Products in the order could be chosen from three personal databases stored on the PDAs: personal catalogue, recommendations, and special offers. Our research issue, understanding consumers reactions to online personalization, implied that the web site was able to capture consumers preferences and to adapt the presented items on the following visits (Ho, 2006; Miceli et al., 2007). Therefore, we needed at least two series of consumers visits to test our framework. Such a longitudinal approach is very rare in marketing studies since they mostly adopt cross-sectional designs. One exception is the doctoral dissertation of Stoecklin-Serino (2005) who concluded as to opposite effect: personalization techniques had a negative impact on trust building processes.

System implemented in a real situation Quality of the system computed automatically from data Quality computed based on input from human subjects Lawrence et al. (2001)

System not implemented in a real system Mobasher et al. (2000, 2002) Geyer-Schulz and Hahsler (2002), Herlocker et al. (2000), Lin et al. (2002), Sarwar et al. (2000) and Yu et al. (2001)

Source: Adapted from Yang and Padmanabhan (2005)

Table I. A grouping of some of the approaches to evaluating personalization systems

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A commercial web site with a ctitious brand name was built by a professional agency, offering approximately 6,000 cultural products (books, CDs and DVDs). The web site could be visited at the address: www.abcculture.fr. Each item had a picture and was described by several attributes, such as title, author, artist, language, year, category, and subcategory. The web site structure looked the same for all visitors. The ctitious nature of the web site was indicated at the web site entrance by the following text:
This web site is a ctitious one; it has been created for research purposes. You can browse the web site as you would do with a real one, put items in your shopping cart, but you cannot buy items. We wish you a pleasant visit.

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Respondents were recruited from a French online panel. They received an e-mail asking them to visit the web site twice. When opening the link, the following procedure appeared:
Welcome to www.abcculture.fr: you can browse as you like to discover this web site and then put your ve preferred items in the shopping cart! A lottery will take place at the end of the research and some shopping carts will be offered free to their owners.

The procedure was the same on the second visit. However, between these two visits, the front page had been adapted and contained personalized product recommendations based upon the attributes of the products which had been selected. The research design crossed two factors: type and number of items presented. The rst factor in the research design was the type of personalized items. Many works in the information systems eld have compared algorithms in order to improve accuracy and utility of recommendations (Ansari et al., 2000). There are two main approaches: proposing items appreciated by similar consumers (collaborative ltering) or proposing items according to the preferred items attribute values (information ltering). We chose the second approach for managerial and practical reasons. We compared two algorithms: items sharing most attribute values of the purchased items (close recommendation condition) and items belonging to the most deeply visited general category (broad recommendation condition). The operationalization of this variable was made in the following manner. In the baseline condition (no personalization), items were randomly selected in the whole database, apart from the ve items already presented during the rst visit (to check for a novelty effect). In the close recommendation condition, the algorithm was based on the characteristics of the ve items chosen at the end of the rst visit. For example, if the item was a movie, another movie with the same main actor or, if no such item existed in our database, by the same director, was proposed. In the broad recommendation condition, the algorithm was based on the navigational data. Frequencies were computed and items belonging to the most frequently visited category (for instance, poetry books) were recommended. The second factor in the research design was the number of items presented. Indeed, web sites greatly vary in the number of personalized recommendations they propose to visitors (Murthi and Sarkar, 2003; Tam and Ho, 2005). We simulated situations with 1, 3 or 5 recommendations. These levels were consistent with managerial practices and with past research studies. For instance, Tam and Ho (2005) compared situations presenting 3 vs 6 recommendations. Our manipulations on the type and number of recommended items were pre-tested among experts and students. Experts judged the recommendations to be managerially

relevant and realistic. Students had to participate in the pre-test session in the same conditions as would be with the main experiment. After the second visit, they had to recall the items presented in the suggestions column. Most of them were able to say how many recommendations were presented and to infer why such items were recommended (we got answers such as because I bought a book by this author or because I like thrillers). Our nal sample consisted of 371 participants (53 per scenario). The age distribution was the following: 22 per cent were between 15 and 24, 44 per cent were between 25 and 34, 26 per cent were between 35 and 49 and 8 per cent were over 50. Perhaps, due to the nature of the task (repeated visits to a commercial web site selling books, CDs and DVDs), our sample was biased in favour of women who represented 78 per cent of our participants. All participants in our nal sample were highly motivated for the task, since we did not consider responses from participants whose visits lasted less than ve minutes. Each visit ended with a questionnaire measuring participants appreciation of the web site. Constructs were measured by multi-item seven-point Likert scales, except for antecedents of attitude towards the web site which were measured through seven-point semantic differential scales (Chen and Wells, 1999). Two scales for perceived benets and liabilities had been developed according to Churchills (1979) paradigm. Other scales were taken from previous research and translated when necessary: attitude towards the web site (Chen and Wells, 1999), attitude towards personalization (Holbrook and Batra, 1987). All scales are presented in the Appendix. Validation of the conceptual framework Our conceptual framework proposed a set of antecedents and consequences for attitude towards online personalization. All our constructs were latent variables, measured through multi-item scales. Therefore, we used structural equation modeling to test the predicted relationships (Chin, 1998). Before testing our hypotheses, we checked the reliability and validity of the specic constructs of our model. For perceived benets, reliability was high as Cronbachs a were between 0.71 and 0.80 and Joreskogs r were between 0.72 and 0.81. We then assessed convergent and discriminant validity. All factor loadings were signicant and the average variance extracted (AVE) for each variable exceeded 0.5, meaning that the variance explained by the construct was larger than the variance due to the error (Fornell and Larcker, 1981). Discriminant validity was assessed using the procedure proposed by Fornell and Larcker (1981). The average extracted variances were greater than the squared correlations for all pairs of constructs. We carried out the same tests for perceived liabilities, and the antecedents of attitude towards the web site, concluding as to their convergent and discriminant validity as well. We rst replicated the traditional view of antecedents of attitude towards the web site (AWS): information (b 0.61; p 0.000), entertainment (b 0.24; p 0.003) and organization (b 2 0.12; p 0.001). These three variables explained 78 per cent of AWS variance and model t was quite satisfactory (GFI 0.85; AGFI 0.80; RMSEA 0.03; TLI 0.94; IFI 0.95; CFI 0.95; CMIN/DF 2.18; P 0.00). H1a-H1c were therefore validated. Our conceptual model proposed that attitude towards personalization (AP) should be considered as an additional antecedent to attitude towards the web site. When we

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added AP in the preceding model, the proportion of AWS explained variance increased signicantly (R 2 0.82) with an acceptable adjustment t (GFI 0.84; AGFI 0.80; RMSEA 0.03; TLI 0.95; IFI 0.95; CFI 0.95; CMIN/DF 1.86; P 0.00). H3 was therefore validated. More importantly, AP had a positive effect and was the second most important antecedent (b 0.195; p 0.000), after information (b 0.564; p 0.000), and before entertainment (b 0.167; p 0.033) and organization (b 2 0.078; p 0.016). H2 was therefore validated. Regression weights and formal testing for H1 and H2 are presented in Table II. The H4 group of hypotheses was tested through the structural coefcients under AMOS. All hypotheses were rejected, except for the H4b and H4f. We found a positive effect of perceived nancial benet on attitude towards personalization (non-standardized b 0.357; p 0.001) and a negative effect of quantity liability on attitude towards personalization (non-standardized b 2 0.146; p 0.035). However, the three perceived benets as well as the three perceived liabilities were positively correlated. To avoid misleading collinearity problems, correlation analysis was performed with a mean score for each dimension (Table III). All perceived benets had strong positive correlations with AP whereas all perceived liabilities had negative correlations with AP. Observed effects of personalization on behaviors Two kinds of behavioral data were captured during the experiment: navigational data and personalization effectiveness data. Researchers in online marketing traditionally consider the number of pages visited and the average visit length as indicators of web site interest (Huberman et al., 1998; Bucklin et al., 2002; Bucklin and Sismeiro, 2003; Senecal et al., 2005). Therefore, we collected indicators such as visit length, number of pages visited and nature of the pages visited (category and subcategory). We measured the recommendation source effectiveness by a dichotomous variable indicating whether the consumer eventually bought the recommended item or not, as did Senecal and Nantel (2005). Before comparing consumers reactions to different scenarios, we checked whether the respondents characteristics differed or not across scenarios. Variance analyses

Structural path Attitude towards the web site Attitude towards the web site Attitude towards the web site Attitude towards the web site Table II. Structural paths information organization personalization entertainment

Non-standardized coefcient 0.564 20.078 0.195 0.167

SD 0.073

CR 7.744

p-value 0.016 0.033

Hypothesis testing H1a validated H1c validated H2 validated H1b validated

0.032 2 2.416 0.031 0.078 6.221 2.134

Notes: Adjustment t of the model: absolute indices GFI 0.842, AGFI 0.801, RMSEA 0.030, RMR 0.186; incremental indices TLI 0.947, IFI 0.954, CFI 0.954; parsimony indices CMIN/DF 1.86

Cognitive benet

Financial benet

Experiential benet

Commercial liability

Quality liability

Quantity liability

Attitude towards personalization

Cognitive benet Financial benet Experiential benet Commercial liability Quality liability Quantity liability Attitude towards personalization 1 0.597 * 0.279 * 20.263 * 1 0.268 * 20.319 * 0.420 * 0.438 * 0.356 *

1 0.559 * 1 0.574 * 0.427 * 1 20.286 * 20.208 * 2 0.299 * 20.412 * 20.420 * 2 0.265 * 20.082 ( p 0.142) 20.100 ( p 0.076) 0.051 ( p 0.369)

1 2 0.172 * 1

Note: *Signicant at the 0.01 level

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Table III. Correlations between perceived benets and liabilities

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revealed that the distributions of age (x 2 11.135; df 18; p 0.889) and gender (x 2 3.352; df 6; p 0.763) were the same across scenarios. We also found no signicant difference for additional individual variables measured. Therefore, we could attribute differences in behaviours to our different manipulations and not to individual differences among scenarios. Table IV shows the average visit length and the average number of pages visited during the two visits. We rst observed that visit length and number of pages visited both decreased between the rst and the second visit. That could reect a learning phenomenon. We also found that the second visit to the web site was marginally longer for the personalized merchandising than for the random merchandising (m 823 vs m 687; p 0.051), whereas the number of pages visited was not signicantly different (m 36 vs m 38; p 0.262). This implied that personalization could increase time spent on each page. Our behavioral data conrmed that personalized merchandising was more efcient in terms of clicks than random merchandising (Table V). Click levels, however, remained quite low (Hussherr, 1999). We observed that the standardized total of clicks (clicks divided by the number of items suggested) was higher for close recommendations (scenarios 1-3) than for broad ones (scenarios 4-6). Additionally, scenarios with fewer items presented led to better standardized totals. When we looked in more detail at the average perceived benets and liabilities for scenario 2 (three close recommendations), we could see that this very favorable reaction was associated with the highest level for the experiential benet (5.31 on a seven-point scale) and the lowest commercial liability (2.90 on a seven-point scale).

Random Table IV. Characteristics of the visits Visit length (second) Visit 1 Number of pages visited Visit 1 Visit length (second) Visit 2 Number of pages visited Visit 2 1,039 51 687 38

Personalized 1,079 57 823 36

t-stat. 2 0.356 2 1.085 2 1.637 0.615

Sig. (unilateral) 0.361 0.140 0.051 0.262

Scenario 1 2 3 4 5 6 7 Total

Type of items presented Close Close Close Broad Broad Broad Random

Number of items presented 1 3 5 1 3 5 5

Total 11 21 21 3 8 11 7 82

Click Standardized total 11.0 7.0 4.2 3.0 2.7 2.2 1.4

Basket insertion Standardized Total total 9 16 16 0 8 8 3 60 9.0 5.3 3.2 0.0 2.7 1.60 0.60

Table V. Comparison of behavioral measurements

Contributions and future research directions Personalization has become a widely adopted strategy on the internet. It is supposed to increase customer retention simply by making loyalty more convenient for the customer than non-loyalty (Holland and Baker, 2001, p. 39). However, the literature is more mitigated about personalization effectiveness. For instance, concerns about privacy may contribute to negative reactions to personalization (Bitner et al., 1990; Treiblmaier et al., 2004). Our contributions are of three types: theoretical, methodological and managerial. From a theoretical point of view, we propose a conceptual framework to understand consumers reactions to online personalization. The methodological contribution relates to our longitudinal experiment, which offers a valid comparison approach to test personalization effectiveness. Finally, our different scenarios enable us to provide some guidelines for managers. No general framework for consumers reactions to online personalization was proposed in the past (Ho, 2006). Based on a literature review and on a qualitative approach, we proposed specic antecedents and consequences for attitude towards online personalization. We identied three perceived benets and three perceived liabilities which explain consumers attitude towards online personalization. Online personalization creates value for the customer by: (1) reducing the time and effort needed in the decision-making process; (2) helping nd a better match for the customers preferences; and (3) enjoying the discovery of new items. These perceived benets parallel those found by Sunikka et al. (2007) in the banking sector. Similarly, attitude towards online personalization is also negatively related to three perceived liabilities. Annoyance with the commercial aspect of personalization decreases a positive attitude towards personalization, as well as giving the feeling that recommendations are of poor quality or are too numerous. Again, these perceived liabilities reect previous results from literature on privacy (Phelps et al., 2000) and on electronic agents (Wallet-Wodka, 2003). Building a positive attitude towards personalization is important for web site managers as our conceptual framework demonstrates that it as an antecedent of attitude towards the web site, in addition to information, organization and entertainment (Chen ller and Chandon, 2004). Additionally, we and Wells, 1999; Chen et al., 2002; Mu measured intention to return to the web site in the future and this was highly correlated with attitude towards the web site. We preferred not to include it in our framework for discriminant validity purposes. However, a positive and strong attitude towards the web site may be used as a proxy for intention to return to the web site in the future. From a methodological point of view, our research offers a contribution to longitudinal research (Bergeron, 2001; Ho, 2006; Miceli et al., 2007). Indeed, in his theoretical review of online loyalty, Bergeron (2001) underlined the inherent limitations of cross-sectional studies:
[. . .] our research was based on a descriptive perspective in a cross-sectional approach, and not in a longitudinal approach, which limits our understanding of the long-term impact of the different factors in our proposed model.

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Therefore, our longitudinal experiment enabled us to test the impact of online personalization with an appropriate methodology. Previous studies on personalization issues suggested coupling behavioral data with attitudinal data. For instance, Tam and Ho (2003) compared downloading behavior and satisfaction towards the music items for both the personalized and non personalized groups. Similarly, we collected browsing behavior data (visit length, number of consulted items, number of subcategories and items put in the shopping cart) as well as declarative data at the end of each visit (perceived benets, perceived liabilities, attitude towards the web site, intention to visit the web site again, etc.). Therefore, we were able to establish the positive effect of online personalization through both a higher click-rate and a more favorable evaluation of the web site. Finally, our research offers insights about two managerial questions: which product should be recommended to a customer? How many recommendations should be presented to an online visitor? These questions were raised by Murthi and Sarkar (2003) who presented a review of research studies that dealt with personalization. Which product should be recommended to a customer? We compared consumers reactions to three types of recommended items: random, close and broad recommendations. Personalized recommendations generated more clicks and more insertions in the shopping cart than random ones. One explanation might be that personalized recommendations, which correspond to the customers personal preferences, may remind him/her of the product. The probability that the product may be included in the consideration set increases as well as the probability that it might be purchased (Hauser and Wernerfelt, 1990). This positive effect of personalized recommendations on behaviors is an important contribution, as Fan and Poole (2006, p. 180) stressed that empirical studies that have compared and contrasted the effectiveness of different personalization technologies are rare. Additionally, attitudinal measures conrm that close recommendations generate greater benets that broad ones, the best scenario being three close recommendations. How many recommendations should be presented to an online visitor? A rst insight was given by Tam and Ho (2005) who demonstrated that the size of the recommendation set (six vs three items) had a positive impact on elaboration and on choice probability (47 vs 33 per cent). In our experiment, the size of the recommendation set could take three values: 1, 3 or 5 recommended items. We observed that visitors expressed higher concerns about the quantity liability when they were presented with ve recommendations. Web site managers should therefore avoid presenting too many recommendations. Our research design presents some limitations. First, we chose managerially relevant levels for the factors of our research design. Therefore, we compared 1 vs 5 recommendations. In the second case, the quantity liability was higher, but the difference was not signicant. Had the manipulation been more marked, we would have reached statistical signicance. Second, our experiment guarantees internal validity but it lacks external validity. Indeed, visitors were asked to choose their ve preferred items and put them in the basket. This procedure helped us infer consumers preferences. However, using this procedure again for the second visit prevented us from demonstrating the potential positive effect of personalized merchandising on basket size. In the sales promotion context, Gupta (1988) established

that promotional variables do affect purchased quantity. In the same vein, personalized merchandising could increase cross-selling and the size of the average basket. Fruitful research areas include considering situational as well as individual variables. For instance, one could study online personalization effectiveness under high vs low situational involvement. Individual characteristics, such as familiarity and expertise with the product category, could also inuence the most efcient algorithm to implement. For instance, we can imagine that expert consumers prefer close recommendations whereas novices prefer broad ones. Finally, complementary data collection methods, such as eye-tracking techniques, could be used to get a complete picture of personalization effects. Indeed, we observed during some pre-tests that respondents stared longer at the personalized zone. This technique has already been successfully used in advertising efciency studies (Hussherr, 1999; Maughan et al., 2007).

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Appendix

Construct Created Created Created Created Created Created Adapted from Holbrook and Batra (1987) 5 5 4 5 5 2 4 3 2 3 2 0.75 0.80 0.71 0.86 0.89 0.95 0.87 0.79 0.87 0.83 0.83

Type of scale

Number of items Sample item

Cronbachs a

Financial benet

Cognitive benet

Experiential benet

Commercial liability

Low perceived quality

Quantity liability

Attitude towards the personalization offered by the web site Entertainment

There is a smaller risk of making a bad choice when items are recommended based on my personal preferences The suggestions allow me a faster search before buying Thanks to the items selected for me, I discover more products Personalisation prevents me from enjoying the discovery of items by myself I believe the web site cannot understand how I choose the items I decide to buy I do not want an overload of personal recommendations I like the personalization made by the web site Exciting, entertaining, ashy, imaginative, fun Informative, knowledgeable, helpful, resourceful, useful Messy, cumbersome, confusing, irritating I would like to visit this web site again in the future

Adapted from Chen and Wells (1999) Information Adapted from Chen and Wells (1999) Organization Adapted from Chen and Wells (1999) Attitude towards the web site Adapted from Chen and Wells (1999)

How consumers value online personalization 51

Table AI. Scales and items

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