Has the quest for marketing data gone too far?

The Hutch Report

As consumers we love to purchase goods. We purchase basic needs and necessities and we purchase any item that renders our lives more comfortable or interesting. Companies love to sell us these goods and profit from it. To sell as much as they can, they want to know as much as they can about their customers, so they compile masses of data about them. However, there is a point when we need to ask, “Is all this marketing data eroding the right to privacy?”

Consumerism is defined as a social and economic order and ideology that encourages the acquisition of goods and services in ever-increasing amounts. It states that a progressively greater level of consumption is beneficial to consumers.

It was during the Industrial Revolution in the 1800s that allowed products to be available in large quantities for the first time in history. Because of the decreased cost of production and lower prices, products became available to all. This has led to an ever increasing rate of consumption among the masses, or better known as the era of mass consumption.

This era has also seen the psychology of the consumer shift over the years and a change behind the motivation of purchasing decisions. Although they may believe they are thinking independently when making a purchasing decision, consumers have been greatly influenced by the producers of the products they buy. The manner in which companies manipulate consumers has changed over the years and continues to become more and more sophisticated.

Companies have employed a number of strategies over the years in order to provoke consumers to purchase in greater and greater quantities. They design products so that people will need or want to throw them out soon after they buy them, also known as planned obsolescense. They make use of advertisements and newer models with additional gadgets to convince customers that he/she needs an updated product, even though his/her existing product is working well, also known as perceived obsolescence. The evolution of the iPhone is an excellent example. Slight changes in the newest models has driven the almost fanatical Apple evangelists to rush out and replace their current perfectly functioning iPhone for those few additional functions. They have even done their best to market “water” in every way imaginable. All for the sake of the purchasing thirst of the consumer.

The Hutch Report

The marketing tactics used on consumers have been even more diverse. We have seen the development of database marketing, CRM (customer relationship management), telemarketing, the emergence of computer oriented spam (see here), viral marketing, and the overall emergence of social media and a connected world like we have never seen before. The common denominator underlying all these tactics and strategies has been that of information. Information about the consumer. The more a company knows about a consumer the greater control they have over the consumer’s purchasing decision.

The chain store Target provides an excellent example. Target assigns every customer a Guest ID number, tied to their credit card, name, or email address. This information makes up a database that stores a history of everything that the customer has purchased. It stores any demographic information Target has collected from them or bought from other sources. To understand how it is used, Target’s data science team looked at the historical buying data for all the ladies who had signed up for Target baby registries in the past and correlated them with information in their present database of ladies consumption habits.

The Hutch Report

From Charles Duhigg’s article in the NYT:

“[Pole] ran test after test, analyzing the data, and before long some useful patterns emerged. Lotions, for example. Lots of people buy lotion, but one of Pole’s colleagues noticed that women on the baby registry were buying larger quantities of unscented lotion around the beginning of their second trimester. Another analyst noted that sometime in the first 20 weeks, pregnant women loaded up on supplements like calcium, magnesium and zinc. Many shoppers purchase soap and cotton balls, but when someone suddenly starts buying lots of scent-free soap and extra-big bags of cotton balls, in addition to hand sanitizers and washcloths, it signals they could be getting close to their delivery date.”

Once Target has this information in hand, they are able to deliver advertisements that address the exact needs of that consumer at that particular time. They are more likely to know that someone is pregnant before anybody else in their family becomes aware of it!

These huge databases know a lot about us, more than we are aware of. Companies reason that they want to know as much as possible about their client base in order to service them in the best and most efficient manner. However, should this information fall into the wrong hands, it could provide a large number of opportunities for the innovative criminal.

As we have seen time and time again, the information is not always as secure as you would think in spite of tougher and tougher security measures. The following chart illustrates the largest data breaches of the 21st century (it does not include the most recent Facebook database breach).

(Source: CSOOnline.com)

The lure of greater and greater profits is driving companies to dig deeper and deeper into our habits, daily lives and psyches in order to know what we want and what they can sell us. Their motivation is clear. On the other hand, having such a large repository of information on a nations consumers in itself has huge value also, as companies such as Google, Amazon and Facebook have shown. It is no wonder these information repositories are the target of criminals.

As consumers we may be enjoying the luxury of more refined products that provide us value in all different ways throughout our daily lives and at lower costs. Yet what we are often unaware of is to what extent we are sacrificing our independence and privacy as individuals in order to have it.

Stay tuned! We will soon highlight 5 companies that are using new powerful artificial intelligence technology in order to know everything about you!