Question: The Club is considering using predictive modeling to improve the efficacy of their direct marketing program. The Club sent 36,316 customers in PA, NY and

The Club is considering using predictive modeling to improve the efficacy of their direct marketing program.

The Club sent 36,316 customers in PA, NY and NJ a promotion for a new book. They obtained an 8.98% response rate (3263 orders). The Club has considered using a similar mail-in promotion tactic in the Midwest- in the Midwest there is data for 50,000 customers. The allocated cost of the mail-in promotion is $0.70 per addressee for this new book, and the book costs The Club $15 to purchase and mail. The selling price of the book is $19.95. We will assume that the distribution of the segments in the target (Midwest) market will mirror (be proportional to) the existing (tri-state) market and use the results from the existing market to make targeting decisions for the target market.

The two decision trees below are fairly different though they deal with the same data. The first tree is the Decision Model and the second is the Misclassification Model. Why might these differences have occurred? Do the differences make sense and Is one model better?

The Club is considering using predictive modeling

Appendix 12: Decision Tree results, Misclassification model: Tree Node Id: Train 1 Validation 9.11 8.95 Statistic DID BUY: DID NOT BUY: Count: 90.95 18152 91.15 18164 number of art books purchased = 1.5 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 7.2% 92.8$ 16839 Validation 7.19 92.95 16898 Node Id: 3 Statistic Train Validation DID BUY: 33.45 32.5% DID NOT BUY: 66.65 67.51 Count: 1313 1266 months since last purchase = 14 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 41.64 58.45 896 6 Validation 38.00 62.09 855 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 15.61 84.45 417 Validation 21.21 78.81 411 number of art books purchased = 2.5 Node Id: 12 Statistic Train Validation DID BUY: 34.61 31.71 DID NOT BUY: 65.41 68.35 Count: 694 657 number of geography books purchased Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 65.81 34.25 202 13 Validation 59.15 40.99 198 = 3.5 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 33.05 67.00 678 24 Validation 30.88 69.24 647 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 100.00 0.01 16 25 Validation 90.05 10.08 10 Appendix 18: Decision Tree results, Decision model: Tree BTW WIN r -15V www.RU = 1.5 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 7.2% 92.8$ 16839 Validation 7.19 92.95 16898 Node Id: 3 Statistic Train Validation DID BUY: 33.45 32.5% DID NOT BUY: 66.65 67.51 Count: 1313 1266 months since last purchase = 14 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 41.64 58.45 896 6 Validation 38.00 62.09 855 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 15.61 84.45 417 Validation 21.21 78.81 411 number of art books purchased = 2.5 Node Id: 12 Statistic Train Validation DID BUY: 34.61 31.71 DID NOT BUY: 65.41 68.35 Count: 694 657 number of geography books purchased Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 65.81 34.25 202 13 Validation 59.15 40.99 198 = 3.5 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 33.05 67.00 678 24 Validation 30.88 69.24 647 Statistic DID BUY: DID NOT BUY: Count: Node Id: Train 100.00 0.01 16 25 Validation 90.05 10.08 10 Appendix 18: Decision Tree results, Decision model: Tree BTW WIN r -15V www.RU

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

CASE 32 Panera Bread Company (2010): Still Rising Fortunes? Joyce P. Vincelette and Ellie A. Fogarty BREADESSENTIAL AND BASIC, but nonetheless specialhas transcended millennia. A master baker...

Read the case Hi Ho Silver at the end of Chapter 4 (I Included the relevant pages to answer this assignment at the bottom) After reviewing the case information, write a 2 to 3-page paper where you...

Bookbinders Book Club Introduction About 50,000 new titles, including new editions, are published in the United States each year, giving rise to a $20+ billion book publishing industry. About 10...

Could the Clubcard concept be expanded to better use the rich mine of information Tesco has about where, when and what customers buy? Keeping ethical concerns in mind, how could the Clubcard program...

1. Analyze the article Remember to use the analysis tools in your writing ask yourself after reading the article "so what?" and "why is this important?" *** Article: Marketing is important to every...

Please help. Bookbinders Book Club case study Introduction About 50,000 new titles, including new editions, are published in the United States each year, giving rise to a $20+ billion book publishing...

Introduction UPGUYS, established in November 2019, is a digital pharmacy that connects men customers and doctors before selling medicines. The company was founded by Mat Rezaei ( Mat Rezaei, n.d. ),...

If a large increase in investment increases labour productivity, explain what happens to a. Potential GDP. b. Employment. c. The real wage rate.

A space explorer is moving through space far from any planet or star. She notices a large rock, taken as a specimen from an alien planet, floating around the cabin of the ship. Should she push it...

how does information asymmetry hurt investors in the capital market place

Compute the cost per equivalent unit for direct materials and the cost per equivalent unit for conversion costs. 85-9 Recompute SeaView's cost per equivalent unit (Learning Objective 3) Return to the...