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Consumer Privacy and Marketing Avoidance: A Static Model

Marshall School of Business, University of Southern California, Los Angeles, California 90089
Department of Information Systems, City University of Hong Kong, Hong Kong and Department of Information Systems, National University of Singapore, Singapore 117543
College of Information and Communications, Hanyang University, Seoul 133-791, Korea
Department of Information Systems and School of Business, National University of Singapore, Singapore 117543
hann{at}marshall.usc.edu
lung{at}comp.nus.edu.sg
tomlee{at}hanyang.ac.kr
ipng{at}comp.nus.edu.sg

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.

Key Words: marketing avoidance; privacy; advertising; promotion; segmentation
History: Received: March 14, 2005;