Understanding Fairness Perceptions in Demographic Segmentation and Targeting

Segmentation and targeting are cornerstones of marketing and advertising. While it is common to segment and target customers based on demographic characteristics, these practices may seem increasingly at odds with recent cultural movements (e.g., #MeToo, Black Lives Matter). Yet research to date has not explored whether consumers today believe these tactics are fair or appropriate. Across 14 experiments (N = 10,404) and two Facebook A/B Tests (N = 513,151), we find that perceptions of fairness generally suffer when companies target a specific demographic group, relative to when they advertise broadly. These perceptions, in turn, cause reputational damage, diminish purchase intentions, reduce willingness to recommend, and worsen impressions of firms. We propose that these negative effects are attributable to the belief that demographic segmentation and targeting is discriminatory, defined as harmful behavior against a group based on stereotyped beliefs. Our conceptual framework moreover organizes five moderators around these two key dimensions of discrimination. We find that beliefs about discrimination mediate the effect, and factors that either limit reliance on inaccurate stereotypes or reduce the potential for harm attenuate it. Our theory both contributes novel insights to the fairness literature and offers concrete guidance to practitioners navigating increasingly complex targeting decisions