Fairness Perceptions in Demographic Targeting

Abstract

Deciding which customer segment(s) to serve, or targeting, is a cornerstone of marketing strategy. Although companies commonly target based on demographic characteristics, recent cultural movements (e.g., #MeToo, Black Lives Matter) have heightened sensitivity to the differential treatment of certain demographic groups. Yet, research to date has not examined whether demographic targeting itself seems fair or appropriate. Fourteen experiments (N = 9,399), 13 supplemental studies (N = 7,065), and 2 Facebook A/B tests (N = 513,151) reveal that when consumers learn or infer that they or others have been targeted based on demographic characteristics, fairness perceptions and brand support suffer (relative to broad advertising). To explain why, we propose a conceptual model based on the extent to which consumers view demographic targeting as discriminatory (i.e., differential treatment based on attributes that are irrelevant and/or uncontrollable) and whether the discrimination is perceived as intentional (i.e., knowingly or willingly bringing about an avoidable outcome). Consequently, factors that (a) improve relevance (i.e., whether belonging to the targeted segment is diagnostic of preferences), (b) increase controllability (i.e., whether consumers themselves determine their membership in the targeted segment), or (c) reduce perceived intentionality (e.g., firm size, industry norms) attenuate perceptions of unfairness.