Research of personalisation in online shopping: Literature review and research model

The paper Research of personalisation in online shopping: Literature review and research model studies personalisation at scale in the field of ecommerce, which has changed constantly in recent years due to the advancement of technology. The main purpose of this research was to explore the attitudes of five personality traits toward proactive and reactive mechanisms of personalisation in the field of online shopping. Đề tài Hoàn thiện công tác quản trị nhân sự tại Công ty TNHH Mộc Khải Tuyên được nghiên cứu nhằm giúp công ty TNHH Mộc Khải Tuyên làm rõ được thực trạng công tác quản trị nhân sự trong công ty như thế nào từ đó đề ra các giải pháp giúp công ty hoàn thiện công tác quản trị nhân sự tốt hơn trong thời gian tới.

RESEARCH OF PERSONALISATION IN ONLINE SHOPPING:

LITERATURE REVIEW AND RESEARCH MODEL

Newcastle University

Nguyen Thi Hong Van

Academy of Finance

Nguyen Dieu Thai

Foreign Trade University

ABSTRACT: This paper studies personalisation at scale in the field of ecommerce, which has changed

constantly in recent years due to the advancement of technology The main purpose of this research was to

explore the attitudes of five personality traits toward proactive and reactive mechanisms of personalisation

in the field of online shopping Additionally, the potential mediation effect of personalisation mechanism on

purchase intention of different personality traits was also expected In sum, personalisation, especially the

new proactive personalisation with predictive ability, is future of marketing.

Key words: personalisation, ecommerce, online shopping, five personality traits

INTRODUCTION

Due to the increasing diversity of buying options from a variety of sellers, it has become more

and more challenging for brands to convince customers to choose and stick to their products or

services (McShane et al., 2017) Such intense competition on the market urges companies to adjust

their marketing approach The questions “How to sell?” or “How to increase sales” are no longer

exist; instead, businesses should pay attention to creating value to satisfy customers’ needs and

enhance customers engagement to the brands (Kotler and Armstrong 2017) As an emerging trend

in recent years, personalisation has proven itself as an effective strategy for the customer-centric

marketing orientation (Davis 2019) Also known as one-to-one marketing, personalisation refers to

“the implementation of a strategy by which companies deliver individualized content to recipients

through data collection, analysis, and the use of automation technology” (Emarsys 2017)

In this digital and technological era, the rising of smart devices such as laptops, smartphones

and tablets, and wearable devices like smartwatches has completely changed the retailing industry

Online shopping has increased significantly as a result Focusing on e-commerce environment,

this study evaluates the attitude of different personalities toward two mechanisms: Reactive

personalisation and Proactive personalisation (Zhang and Sundar 2019) The Big Five personality

traits model (Costa and McCrae 1992) is used to reflect how each individual is associated with

these methods of personalisation The main focus of this research is to address the following

research question:

How do different personality traits react to different personalisation mechanisms?

How do different personalisation mechanisms affect the purchase intention of different

personality traits.

LITERATURE REVIEW AND RESEARCH MODEL

Personalisation in marketing was derived from the idea of customer-focused approach based

on customer preference Before becoming a phenomenon in marketing these days, the art of

personalisation has been adopted and mastered by luxury brands with their tailored design items,

buying experience and customer care (Tungate 2009) But those high-end commodities are not for

the majority In fact, not only the wealthy, but each individual, no matter from what social class or

income, also prefers and is more likely to be persuaded by the experience uniquely designed for

them (Walters 2015) That is why marketers are trying is to adapt the personalised strategy from

luxury brands and apply it to the mass customers

Personalisation in modern marketing is separated from customisation Although both

personalisation and customisation aim to create a tailored experience to match a single user’s

needs or interests, the approaches of each method are different Personalisation is achieved when

companies tailor their products or services customer preferences, based on collecting data and

observing previous behaviours of online users; customisation, on the other hand, is achieved when

a user manually specifies the changes should be made for his/her preferred experience (Sundar and

Marathe 2010) Personalisation allows brands to deliver the right products to the right people, at

the right time, while customisation focuses on manufacturing, customising products and services

to fulfil the needs of specific customer groups Because of these superiorities, personalisation can

be seen as smarter but requires far more subtlety and strategic thinking than customisation.

Reactive Personalisation and Proactive Personalisation

Reactive personalisation is generated from users’ explicit requests for personalised suggestions,

it captures already existing knowledge about consumer’s preferences and display these preferences

back to them without any new insights or potential offerings (Tuzhilin 2009) Customers are the

ones who provide information on their preferences and activate the personalisation option The

system will not expose any recommendation until the users start the search for an item Customers

still get the tailored experience based on their background, preceding actions as well as the selected

search criteria (such as price range, category, colour, size) and their feedback on similar items

(Zhang and Sundar 2019)

Proactive personalisation refers to the prediction of customers’ needs or tastes based on

analysing user preferences and online actions (Zhang and Sundar 2019) The personalised content

will proactively, automatically display or will be sent at the optimal time for an individual This

mechanism of personalisation mainly depends on collecting passive digital footprint, which

involves synthesizing user data, implicit feedbacks and observing user behaviours (Chen and

Sundar 2018) Rather than requiring user interaction to generate personalised requests, the system

studies customer needs and interest, then suggests the tailored offers or recommendations at an

appropriate moment or at the right time when needs arise Further, the system can predict the

products or services that customers might be interested in, although they might not even realize

whether they actually need those or not In fact, while reactive personalisation has become quite

popular and many companies have been able to employ it; proactive personalisation with the

distinctive ‘predictive feature’, has newly arisen, and only few brands are moving to it (Jha 2019)

Take Starbucks for example, by proactively recording users’ data including their favourite coffee,

their most frequently purchasing timeframe, and even their location, the Starbucks application

automatically updates individualised recommendations and offers, or display a notification

inviting customers to visit the store if they are close to any Starbucks’ location (Taylor 2016) In

the field of music streaming, Spotify has become the most popular subscription service (Statista

2020) thanks to its predictive personalisation In sum, reactive personalisation brings less privacy

concern while proactive provides better personalised experience However, to choose between

enjoying tailored buying experience and controlling personal information privacy, it depends on

individual personality

Big Five personality traits

Consumer personality has been proven to influence on buying behaviour (Aydın, 2018)

People with different personalities would have different motivations to shop and different barriers

to their buying enjoyment (Goldsmith, 2016) In this thesis, the big-five model was used to study

perspectives of different personalities on proactive and reactive personalisation.

The big-five model, which characterizes a human in terms of thoughts, feelings, and actions, is

recognized as the Standard paradigm in research about the personality and trait theory (Tuu 2017)

The model consists of five dimensions to describe personality: neuroticism, conscientiousness,

agreeableness, extraversion, and openness

Neuroticism is related to negative emotions such as anxiety, irritability, psychological

depression, fear and instability (Costa and McCrae 1992) High scores on neuroticism are

“defensive response” to threat (DeYoung 2015) and more sensitive to hazardous situations

(Chauvin et al., 2007), which means the neuroticism might be more worried about their personal

data being revealed to a party/organisation without their awareness Despite that, neuroticism is

also described as being unstable, easily affected by environment stimuli (Swickert et al., 2010), as

the results, this trait has been found to be positively correlated impulsive buying (Shahjehan and

Saifullah 2012) Thus, personalisation, in whichever mechanism, as long as it provides valuable

offers in a sophisticated delivery method, can positively trigger neurotic consumers.

Conscientiousness refers to self-discipline, ethical behaviour, dependability and precaution

(Costa and McCrae 1992) Further, consumers with conscientiousness characteristic express the

high tendency of future-oriented, which means they focus more on long term goals rather than

short term temptation (DeYoung 2015), hence predictive personalisation with various appealing

offers might not attract them Not only that, due to the cautious characteristic, conscientiousness

individuals are more likely to avoid risky situations Those who get high score on conscientiousness

would consider privacy invasion as unethical and perilous, hence, they might be against data

collection without consent and advocate information security measures.

Anyway, if they are provided with a privacy-safe solution, or at least they can have control

over how information is handled, worry about data security might be mitigated (Sutanto et al.,

2013) That is the reason to expect that, conscientiousness is positively associated with Reactive

personalisation.

Agreeableness reflects to an individual’s level of empathy, trusting, generosity, and flexibility

(Costa and McCrae 1992) Generally, agreeableness relates to positive emotions; thus, agreeable

people have the tendency to experience affective attributes more positively Guido et al (2015)

specifies the positive connection between agreeableness and hedonic shopping values, which

suggests that the agreeableness might enjoy the tailored service and convenient shopping journey

Nevertheless, individuals having high score in agreeableness appreciate proper social

behaviours and avoid deviant actions (Chauvin et al., 2007) They might consider companies’ data

harvesting without users’ consent, for whatever purposes, as an inappropriate activity.

Extraversion involves venturesome affiliation, positive affectivity, optimism, ambition,

sociability, activity, and excitement-seeking (Costa and McCrae 1992) Due to these characteristics,

the extraversion individuals yearn for exploring new experiences and seeking reward With regard

to privacy concern, extraversion has been tested as being negatively associated with privacy

concern (Bansal et al., 2016); and on the other hand, this trait has been proven to be positively

associated with impulse purchasing (Badgaiyan and Verma 2014) The extraversion, thus, can be

willing to embrace both personalisation mechanisms, as long as he/she finds them beneficial

Openness characterized the tendency of curiosity, creativity, innovation and receptivity to new

ideas Thus, customers with dominant trait of openness are more curious about new experiences

and tent to quickly adopt new trends or products Badgaiyan and Verma (2014) indicated that such

individuals are likely to be more impulsive in buying behaviour Hence it is proposed that:

Mediating role of personalisation mechanisms

Purchase intention is the indicator that is widely investigated in business and marketing research

(e.g Pappas, 2018; Martins et al., 2019), because after all, one of the main purposes of marketing

is to generate profit by driving consumer’s willingness to buy Previous studies found the positive

impact of personalisation on purchase intention (e.g Bues et al., 2017; Li & Liu, 2017) Besides,

association between personality traits and buying behaviour was also investigated (e.g Bosnjak

et al., 2007; Goldsmith, 2016) Therefore, this research would examine whether personalisation

mechanisms affect purchase intention of different personalities based on mediation model; in

other words, exploring the potential mediating role of different personalisation mechanisms in the

relationship between personality traits and purchase intention

According to Baron and Kenny’s (1986) mediation model, there are three conditions should

be established: (1) the independent variable must significantly influence the mediator; (2) the

independent variable must significantly influence the dependent variable; (3) the mediator must

significantly influence the dependent variable (Baron and Kenny 1986) The model for mediation

effect of this study is described as below:

Figure 1: Mediation model

The conceptual framework is developed as below:

Figure 2: Conceptual framework

Table 1: Summary of hypotheses in the research

Aiming to investigate (1) whether online shoppers with different traits react differently with

two personalisation mechanisms, and (2) whether reactive or proactive personalisation have more

effects on buying intention of different personalities, positivism was chosen as the main philosophy

for this research.

Positivism is one of the two classical philosophical schools of scientific research (Melnikovas

2018), the other is Interpretivism Positivism reflects the view of studying consumers and marketing

phenomena in natural sciences stance, using deductive reasoning for theory testing, while interpretivism

is associated with inductive approach for theory building (Saunders et al., 2019) If some theories

exist, applying deductive reasoning would be most appropriate (Hinkin et al., 1997) Thus, positivism

philosophy with deductive approach is compatible with this research where existing theories about (1)

big five personality traits and their buying behaviours, and (2) personalisation mechanisms and the

choice between the benefits from individually tailored service and concerns about data privacy

CONCLUSION

Personalisation is an inevitable part of the modern customer-centric marketing, it has

become more and more popular and has evolved more and more sophisticatedly From providing

tailored experiences based on customers’ intentional submission of information and preference

(reactive personalisation), technology has enable the ability to collect data trails that internet user

unintentionally reveal to establish the higher level of individualisation (proactive personalisation)

Consumers value highly-personalised experience, but it often goes with higher concern about

privacy That is why this research looked into five representative personality traits (Costa and

McCrae 1992) to explore how they would perceive reactive and proactive mechanisms of

personalisation Additionally, it examines the potential effect of each mechanism on the purchase

intention of different personalities A quantitative research in Vietnamese e-commerce industry

using questionnaire survey method and statistical analysis via SEM was adopted Despite not

successful in supporting all proposed hypotheses, the findings still brought out meaningful insights.

In conclusion, personalisation, especially the new proactive personalisation with predictive

ability, is future of marketing (Jha 2019) While in practice, this mechanism has started to seep

into some leading firms for a couple of years; in academic field, there is not much literature about

it That is why further studying on this topic is necessary.

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