One-to-one marketing on the internet

The Internet provides unprecedented ability for marketers to learn about their customers and offer custom products at special prices. The technology, marketing and economics of using the Internet for one-to-one marketing is examined. We find that, under very genera l conditions, a seller can make higher profits by adopting a "mixed" strategy of serving conventional segments with standardized products at a uniform price and serving the direct marketing segment with customized products at differentiated prices. Surprisingly, the seller can raise its prices for both standard and customized products as customization and information collection technologies improve. The seller’s best response to reduction in technology costs is to increase its customization effort at the expense of its standard products.