A study on database marketing practices that raise consumer privacy concern : a proposed model for regulating database marketing practices in South Africa

[摘要] ENGLISH ABSTRACT:One of the phenomena's in the marketing industry of the past decade is the increased use ofdatabase marketing. Database marketing involves the collection, processing anddissemination of vast amounts of consumer information in order to compile detailed consumerdatabases. The increasing popularity of database marketing can be attributed to variousfactors. Consumer information can now be obtained easier, cheaper and faster due to theavailability of information technology. It has become easier to segment consumer marketsand it is possible to identify consumer trends. It is possible to make predictions of consumerbehaviour or buying patterns because consumer databases provide a more complete consumerprofile with information ranging from demographics, psycho graphics to life-styleinformation. Database technology improves the efficiency and effectiveness of marketingcampaigns because marketers can analyse the available information and select the mostappropriate marketing strategies and tactics, while concentrating efforts on the most profitableconsumer. Marketers therefore waste less effort, money, and other resources by notpromoting to individuals who are unlikely to react upon such offers. Widespread databasesassist marketers in offering products that are more reasonably priced and more preciselytailored for smaller, more homogeneous market segments. Improved product and serviceofferings as well as the availability of a wider variety of products and services will likelyresult in higher consumer satisfaction and could build consumer loyalty. Therefore, marketersuse consumer information to improve the overall marketing strategy and individual customerservice.Consumers are concerned about database marketing practices because consumers believesome data practices invade personal privacy. The need for privacy has always been inherentto human nature and the concept of privacy dates back to early mankind. One shouldhowever differentiate between an individual's basic need for privacy from a generalperspective and privacy within a consumer-marketer context. Privacy from a generalperspective refers to one's territoriality and need for physical seclusion, whereas consumerprivacy mainly relate to the privacy of personal information. Bennett, as well as Stone andStone proposed that a state of privacy exist when a consumer can control social interaction,unwanted external stimuli, and the dissemination of personal information as well as beingable to make independent decisions without outside interference. Consumers' need forprivacy is however, in conflict with the need for social interaction and the need to participatein commercial exchange relationships. The more a person interacts with other members ofsociety, the more the person could expect to compromise some privacy. This implies thatwhen consumers participate in a business transaction, or where an exchange relationshipexists between the database marketer and consumer, consumers could expect that a degree ofprivacy will be lost.Consumer groups however, argue that some marketing practices invade the reasonableamount of privacy consumers should be able to expect. The raising consumer concern forprivacy is attributable to several reasons. The primary driver of consumer concern is thegeneral lack of knowledge on data collection and use. Other reasons for the raising privacyconcern include the type of information collected and the amount of control consumers haveover subsequent use of data; the use of personal information to identify specific individuals;collection and use of sensitive information, such as medical and financial data; the volume ofinformation collected and used; secondary information use; the use and dissemination ofinaccurate databases; the collection and use of children's data; the lack of tangible benefitsreceived in exchange for information provided; and the use of consumer information forfinancial gain. Consumers have also expressed concern about electronic database marketingpractices because of the secrecy in data collection and use. However, privacy concerns mayvary depending on consumers' cultural orientation, age, perception on what constitutes goodmarketing ethics or the specific methods employed to obtain consumer data. One coulddistinguish between several consumer clusters when considering consumers attitudes ondatabase marketing practices and personal privacy. In this regard the typical South Africanconsumer is classified as a pragmatist. Pragmatists are concerned with privacy to the extentthey are exposed to database marketing activities. The South African database marketingindustry is still in its infancy phase and as the industry progress, and consumers become moreknowledgeable, privacy concerns are likely to increase.It is important to address the issues that raise consumer privacy concerns and to find solutionsfor ensuring sustainable database marketing practice in future. Marketers' information needsand consumers' privacy needs should somehow be balanced in order to withhold governmentintervention. Compromises from both sides are necessary to reach a more balancedrelationship between the two parties. The successful outcome of the privacy debate willdepend on marketers' understanding of consumer privacy issues and by addressing theseaccordingly.Several approaches exist for regulating database marketing practices that invade consumerprivacy: the implementation of information technology, self-regulation and governmentintervention. Self-regulation is preferred for regulating database marketing practices, whereasprivacy-enhancing information technology is recommended as a supplemental tool forprotecting consumer privacy. Government regulating seems to be the last resort because ofunnecessary restrictions that might be imposed on database marketing activities.Recommended models for regulating database marketing activities and for protectingconsumer privacy in South Africa are the Registration Model, together with elements of theData Commissioner Model. These models were proposed after careful consideration ofcharacteristics, unique to the South African database marketing industry. The models placethe responsibility for data protection with the database marketer and the South Africangovernment, rather than with the consumer. The Registration Model and the DataCommissioner Model seems a viable combination for implementation in South Africabecause these models acknowledge the fact that South African pragmatic consumers are notwell educated and informed enough on privacy invading database marketing practices. Thiscombination rarely involves any consumer participation and therefore suits the typicalapathetic nature of South African consumers.The Registration Model acts like a notice system where an agency, currently the DirectMarketing Association of South Africa, develops principles of fair information practices towhich registered marketers need to comply with. A commission, an element of the DataCommissioner Model, has power to investigate consumer complaints, constrain developmentof databases, review data practices and advise on improvements on data collectors' systems.The commission could also monitor advancements in information technology that mayenhance consumer privacy. The only problem with these models seems to be that the agencyand or the commission have no authoritative power to enforce compliance with principles andcodes of conduct.Industry self-regulation in conjunction with some governmental control and the application ofinformation technology seems to be useful in providing adequate levels of consumer privacyand data protection. Such a combination might strike a balance between South Africanconsumers' need for privacy and South African marketers' need for consumer information.

[发布机构] Stellenbosch University