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Neural network based empirical models are used in a wide range of
marketing applications. Despite the growing use of the internet as a
direct marketing medium, with every increase in surface postal rates the
need to target direct mail offers only to those who are most likely to
respond becomes more important. Neural networks are used to learn the
critical attributes of a sampling of people in a large database who are
amenable to particular kinds of offers; then only people who have those
attributes are selected from the entire database to receive the direct
mail.
Similarly, as consumer purchasing behavior is increasingly capable of
being monitored in real-time using the internet, neural network models
can learn not only the preferences of individuals, which then an
organization can use to target specific offers; but also the aggregate
collection of data across a broad spectrum of customers permits
constructing models of aggregate behavior that can suggest future
consumption trends. In addition, discovering patterns in purchase
behavior can provide the basis for making rational choices for real-time
price adjustments as incentives for customers to purchase additional
goods or services.
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