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METRON

, Volume 77, Issue 1, pp 19–42 | Cite as

Assessing the influence of marketing activities on customer behaviors: a dynamic clustering approach

  • Antonello MaruottiEmail author
  • Jan Bulla
  • Tanya Mark
Article
  • 30 Downloads

Abstract

This research presents an application of a mixed hidden Markov model to data from a multichannel retailer. The objective of this research is to develop a dynamic model of channel choice and purchasing behavior that accounts for consumer heterogeneity, changes in behavior over time, and the influence of marketing activities on managerially relevant consumer behaviors. The model allows marketers to reduce their direct mailing spending while controlling for potential negative effects on their sales. More specifically, we develop a model that captures the evolution of a consumer’s buying behavior over time across retail channels and compare our model to several other approaches. We find our model outperforms existing models including standard latent class models, including those belonging to the latent transition analysis framework. Using several criteria of model performance and fit, we find a hierarchical clustering structure in the data. Each cluster responds differentially to marketing activities. We find catalogs, on average, are an effective tool to keep consumers active whereas retail promotions are more likely to influence consumers to migrate to another channel.

Keywords

Mixed hidden Markov models Omni-channel retailing Marketing promotions Customer classification Latent transition analysis Dynamic mixture models 

Notes

Supplementary material

40300_2019_150_MOESM1_ESM.pdf (33 kb)
Supplementary material 1 (pdf 32 KB)

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Copyright information

© Sapienza Università di Roma 2019

Authors and Affiliations

  1. 1.Dipartimento di Giurisprudenza, Economia, Politica e Lingue ModerneLibera Università Maria Ss. AssuntaRomeItaly
  2. 2.Department of MathematicsUniversity of BergenBergenNorway
  3. 3.Department of Psychiatry and PsychotherapyUniversity RegensburgRegensburgGermany
  4. 4.College of Business and EconomicsUniversity of GuelphGuelphCanada

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