Privacy Graeff and Harmon (2002) Studied the Essay

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Privacy

Graeff and Harmon (2002) studied the issue of consumer views about privacy, and found a few things. They found that consumers are generally concerned about privacy, but that the level of their concerns varied by demographic market segments. Further, they supported the long-held view that consumer concerns about privacy and how their personal information is used will affect their desire to make purchases on the Internet. Thus, there is a disconnect between the level of concern that consumers have with respect to their personal information, and their knowledge of how their information is gathered. Even consumers who were concerned about the use of their data were unaware, for example, that loyalty cards are used to gather consumers' personal information and record their shopping habits.

In a study contemporary to the same time frame as the Graeff and Harmon study, Phelps, D'Souza and Nowak (2001) lend support to Graeff and Harmon's findings. Phelps noted that privacy concerns have a negative correlation to purchase behavior and the purchase decision process. Their study focused on learning the antecedents of consumer privacy concerns and theorized that when such concerns are understood, they can be overcome. Overcoming these concerns would allow companies to sell more to consumers, especially online. My experience is that at that point in time, there was significant concern among the public about buying things online, given that online retailing was still fairly nascent, seen as something of a fly-by-night industry (the dot com boom/bust cycle having just been completed) and that online security was perceived as being underdeveloped.

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That study in turn built on an earlier study by Phelps, Nowak and Ferrell (2000) that assessed the trade-offs that consumers make during the purchase decision process. Consumers view the primary trade-off as being between privacy and the protection of their information and the desire to make the purchase. Thus, if the product is easier to acquire online than offline, the consumer might be more willing to ignore feelings of discomfort about online purchasing. At the time, however, online purchasing was still in its infancy and many consumers were entirely unwilling to use the Internet to make purchases. Today, more consumers have a much higher level of comfort.

Consider another key element of the findings in Graeff and Harmon, which is that consumers seem unaware of how loyalty programs are used to collect personal information including demographic data and information about purchasing patterns. Consumers seem to be more wary of security online than offline, indicating that perhaps ten years ago consumers had less understanding -- or that they perceived their understanding to be lower -- of online vs. offline privacy. That privacy violations (or issues) have crept into the offline sphere in recent decades has perhaps gone unnoticed by a large number of consumers. This leads to the apparent disconnect between how privacy is viewed and how willing consumers are to cede their privacy offline vs. online.

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