Personalized marketing refers to targeting a product or service to an individual customer. It can be achieved only by collecting data and information about a particular customer, or small group of customers, and then creating products and/or advertisements of special interest to that individual. It is distinct from mass marketing, which creates a product designed to appeal to as wide an audience as possible, and from niche marketing in which a product is created designed to appeal to a group or segment of the population.
When a product is created, it has a target market. The target market refers to all the people who may be potential customers interested in purchasing that product. Some companies strive to create the largest target market possible, while others establish smaller segments of the market they wish to aim their product at.
Personalized marketing is the most extreme form of target marketing. Instead of creating a product designed to appeal to many people or to the whole population, the target market is one specific customer. Some forms of personalized marketing will appear to a slightly wider audience than just one person, but the market segment is still very small.
In order to be successful at personalized marketing, the company must be able to collect information on the individual being marketed to. As such, this form of marketing is especially popular on the Internet, since the Internet is a more interactive platform for communication between company and customer. For example, a web page may institute cookies to track the types of products a customer routinely buys when he visits. It then creates advertisements specifically for that individual based on his buying history. One example of this is the recommendations Amazon.com makes to customers who are signed into their account; Amazon tracks the purchasing history of customers and then populates that customer's home page with similar products.
Marketing to an individual customer can be a lucrative method of generating increased sales, as long as the collection of data and the means of personalization is easy. For Amazon, for example, it is not difficult to generate a different home page for each customer because the computer programming software has automated the task. It would be much more difficult and cost prohibitive, on the other hand, for a grocery chain to send a personalized brochure to each of its shoppers, offering each customer deals and discounts based on the customer's shopping history.