Optimizing Rhenania's direct marketing business through dynamic multilevel modeling (DMLM) in a multicatalog-brand environment

Optimizing Rhenania's direct marketing business through dynamic multilevel modeling (DMLM) in a multicatalog-brand environment

0.00 Avg rating0 Votes
Article ID: iaor20061587
Country: United States
Volume: 23
Issue: 2
Start Page Number: 192
End Page Number: 206
Publication Date: Mar 2004
Journal: Marketing Science
Authors: , ,
Keywords: management, markov processes
Abstract:

We introduce Dynamic Multilevel Modeling (DMLM) to a multicatalog-brand environment to determine the optimal frequency, size, and customer segmentation of direct marketing activities. This optimization method leverages multicatalog-brand effects including the utilization of prior customer ordering behavior, maximization of customer value and customer share, and economies of scale and scope in printing and mailing. This enhancement of the original DMLM-approach is called Dynamic Multidimensional Marketing (DMDM). With DMLM alone, Rhenania, a German direct mail order company, turned its catalog mailing practices around and consequently rose from the number 5 to the number 2 market position. The DMLM approach was so effective that two major competitors could be bought out. Improvements provided by DMDM were threefold: more efficient resource allocation across all catalog brands, more accurate customer microsegmentation, and more effective reactivation. Presently, the company's target is to transform single-brand customer relationships into two- or three-brand relationships with higher revenue per customer. As a consequence, the Rhenania group's performance was decoupled from the overall market trend.

Reviews

Required fields are marked *. Your email address will not be published.