Maximizing the Potential of Targeted Marketing: A General Framework for Customized Category Promotions in Retail

On October 22nd, Bernhard von Mutius  and Arnd Huchzermeier (both WHU - Otto Beisheim School of Management) presented the talk “Maximizing the Potential of Targeted Marketing: A General Framework for Customized Category Promotions in Retail” at the 2019 INFORMS Annual Meeting in Seattle, Washington, USA. 
 
Abstract: We develop the first general framework for category selection in targeted marketing based on segmenting customers in terms of churn, frequency, and loyalty. For the latter attribute, we propose a novel data-mining methodology that can distinguish between customers who shop at several retailers versus mostly at a single retailer. Using our framework, marketing managers can identify customers to target with category-specific promotions and with what objective function to target them. Our analysis reveals that the personalized targeting strategy exploits the full potential of customized marketing by optimizing the trade-off between CLV considerations and short-term campaign profitability.