A New Two-Group-Forecast-and-Selection Method for Direct Marketing

Abstract

Identifying customers who are likely to respond to a product offering is an important issue in direct marketing. In this article, we propose a new approach based on repeat buying theory. We argue that the mailing list could be divided into two groups for separate model developments: repeat buyer model and new buyer model. We name this procedure two-group-forecast-and-selection method. Empirical study shows that the new method performs better than the traditional one.

Keywords:

• Customer selection
• Direct marketing
• Repeat buying theory

2000 Mathematics Subject Classification:

• 62-07

Acknowledgments

This research is supported by the fundamental research funds for the central universities, and the research funds of Renmin University of China through No. 2011030017.