Quotation Boztug, Yasemin, Breugelmans, Els, Reutterer, Thomas. 2008. Detecting Promising Categories for Targeted Promotions. INFORMS Marketing Science Conference, Vancouver, Kanada, 12.06.-14.06..


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Abstract

Marketing managers of companies that offer a broad range of product categories, such as traditional offline and online retailers, are interested in better understanding the interdependency structure among products or categories that are purchased jointly by their customers. Traditionally, insights into cross-category dependencies and corresponding marketing-mix effects are of particular interest for optimizing the overall profitability of retail category management. This interest is further fuelled by opportunities offered by the Internet or modern customer loyalty programs using smart card technologies. Today, click-stream as well as behavioral data is readily available for an increasing number of companies. We present a decision-support tool that assists direct marketers in selecting subsets of promising categories from the large assortment they typically offer for inclusion in targeted promotions. While in a traditional environment, the focus was limited to segment-specific initiatives, the Internet makes it easier as well as cheaper for companies to serve segments of size one, resulting in ‘real’ one-to-one communications. The proposed analytical approach combines conventional wisdom of market basket analysis in a novel two-stage procedure. For deriving segment-specific promotions at the product category level, this procedure takes both interdependencies in purchase behaviour across categories and customer heterogeneity with respect to cross-category effects in response to marketing actions into account. Finally, we outline to empirically evaluate the recommendations derived from the proposed methodology vis-à-vis alternative approaches in a controlled field experiment that is planned in cooperation with a major online grocery retailer.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title Detecting Promising Categories for Targeted Promotions
Event INFORMS Marketing Science Conference
Year 2008
Date 12.06.-14.06.
Country Canada
Location Vancouver

Associations

People
Reutterer, Thomas (Details)
External
Boztug, Yasemin (University of Aarhus, MAPP Department of Marketing and Statistics, Denmark)
Breugelmans, Els (University of Maastricht, Department of Marketing, Netherlands)
Organization
Institute for Service Marketing and Tourism IN (Details)
Institute for Retailing & Data Science IN (Details)
Research Institute for Computational Methods FI (Details)
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