Strategy has been a well studied subject area under the Business Management discipline and there are various models researched and proposed by scholars on this topic. This article presents another strategy model that businesses may use, especially on how they layout their business from the viewpoint on how they want to target their customers.
Figure below illustrates the proposed model.
Generalization is the strategy in which you consider your entire customer base as one. Your business is not focussed on catering the needs of a particular customer or a particular customer segment within your customer base. Your focus is to provide an experience/engagement to all customers that is generalized. This should not be confused with providing a consistent experience/engagement to all customers.
In this strategy, you understand and appreciate that there are different customer segments within your customer base. You also know the possible experience/engagement criteria that would suit these customer segments. However, you lack the means of identifying which customer is exactly belonging to which segment. Thus, you randomly (or controlled randomly) select an experience/engagement that you think may appeal to a given customer. Yes, it may work if the customer is actually belonging to the anticipated segment, but there is also the possibility that a customer is getting the not so optimized experience/engagement that he/she expected.
One step ahead of the randomization strategy, now you know to which customer segment a given customer is belonging to. Thus, you can selectively provide the more appropriate experience/engagement that is generalized to that segment of customers.
Personalization requires that you build up a persona for each customer (i.e. long term customers), carefully analyzing the customer’s behaviors on your previous engagements with that customer over a longer period of time. Overtime, this persona profile of the customer will get more & more refined which will let you customize your experience/engagement to that customer into more granular levels.
Individualization involves a more real time or short term oriented analysis of what your customer is looking for and catering that exact need. The difference between personalization and individualization is, personalization is more long term oriented (for example the customer prefers Nike Sports Shoes), where as individualization seeks to cater the customer’s immediate need (for example the customer is trying to purchase a Gift for his sister’s birthday). Thus, individualization tends to be momentary.
There is no hard and fast rule that a given business will (or should) always only use one of these strategies. There can be occasions where businesses will adapt different strategies at different stages of a customer’s or business’s life cycle. For example, for brand new customers, the business will start off with a generalization or randomization strategy, and as the business learns some details about that particular customer may move to a differentiation strategy. In the long run, the business may adapt a personalization strategy to long standing customers, while also catering the momentary needs of the customer via an individualization strategy.