Assignment:
Catalog Marketing Case two year catalog
XYZ Company sells products on-line, and they are planning a mailing campaign. They have a database of 1000 customers who purchased la and a second database of 10,000 potential customers who have never purchased. of the 1000 customers who recently purchased, the average purchase amount was $40.0 Assume for the moment that this amount is constant over time and across future purchasing customers as well Note: Even though most catalog customers make their purchases on line, catalog mailings continue to be a strong driver of retail s Without receiving a catalog, a customer who already purchased has a probability of purchasing in any of the following years. A potential customer who has er purchased before has a 3% chance of purchasing without receiving a catalog. XYZ has some previous experience with catalog mailings, and they have found receiving a catalog doubles the probability of purchase for the year that the catalog is received, but it does not effect on the probability of purchase in any year after that on costs S3.00 to mail a catalog. Since the marketing manager is being evaluated based two ears of results, any future purchases after these two years do not count. should be mailed each year and to which customers should the
How many catalogs should be mailed to which consumer should they mailed?
How much total revenue can be expected if this policy is followed?
Do a sensitivity analysis of the total number if catalogs sent to the average purchase amount in the range of s10 to $120. Explain the behavior of the number of catalogs sent over this range.
Do a similar sensitivity of revenue minus catalog cost with regard to the average purchase size. Discuss the shape of this curve.
Explain why catalog mailings in the first year are more attractive than in the second year.
Suppose that the company wishes to target specific customers based on their expected purchase size. If there are 3 kinds customers with purchase sizes $20, $85 and $110, discuss the optimal mailing policy for each type.