Price-personalization: Customer typology based on hospitality business.

Abstract

Personalization drives value co-creation and willingness to pay for customers. Consumers are keen to receive personalized services but have various willingness to pay for the personalization process. The willingness to pay is influenced by motives for customer purchase behavior and personalization expectations in a specific context. It also depends on disposable income and the availability of resources, as well as the severity of requirements. The results indicate that customers comprise a heterogeneous market concerning their personalization expectations and willingness to pay. The paper proposes a customer typology based on a conceptual framework that includes personalization, willingness to pay, customer philosophy, and novelty-familiarity continuum. By analyzing data from thirty-eight semi-structured interviews, six customer types are proposed, namely: Budget Adventurer, Family Explorer, Relation Seeker, Relaxation Seeker, Delight Seeker, and Must-Have Customer. The findings suggest that revenue managers should understand customer personalization preferences for each type in order to develop effective pricing strategies.