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ISOM5535

Assignment 2

Spring2023

The direct marketer sells her products (e.g., clothing, books, or sports gear) only via direct mail; that is, she sends catalogs with product descriptions to her customers, and the customer’s order directly from the catalogs (via phone, Internet, or mail). The direct marketer is interested in mining her customers in order to better customize the marketing process.

The marketer suspects that her product and service offerings may appeal more to some demographics (e.g. customer’ s age (coded as young, middle, and old), gender (female/male), )than others, she is particularly interested in detecting “pockets” of customers that are most profitable (which she may ultimately decide to target with coupons and promotions).

As we see from the case analysis, the (log-) amount spent and (log-) salary are highly correlated. Hence, we may consider both of them as our response vector subjects to some demographics. This motivates us to differentiate those customer with (log-) amount spend (salary) by different backgrounds. For example whether young single customer spend significant more (earn significant more) than young married customer.

According to the case, the marketer suggests the following segmentations:

•   Married by Age

•   Location by purchasing history

1.   Reading: DirketMarketing.pdf

2.   Report the summary statistics of (log-) salary and (log-) amount spend according to the above segmentations.

3.   Conduct the effect of Married and Age with interaction on the response vector using MANOVA. What do you conclude?

4.   Confirm the (log-) salary are different by Married and Age (include/exclude interaction observed from an interaction plot) by univariate ANOVA. Repeat for (log-) amount spent.

5.   Based on the results of Q4, profile the customers using post hoc comparisons and provide some insights.