IDEAS home Printed from https://ideas.repec.org/a/eee/joreco/v54y2020ics096969891831169x.html
   My bibliography  Save this article

A product-centric data mining algorithm for targeted promotions

Author

Listed:
  • Moodley, Raymond
  • Chiclana, Francisco
  • Caraffini, Fabio
  • Carter, Jenny

Abstract

Targeted promotions in retail are becoming increasingly popular, particularly in UK grocery retail sector, where competition is stiff and consumers remain price sensitive. Given this, a targeted promotion algorithm is proposed to enhance the effectiveness of promotions by retailers. The algorithm leverages a mathematical model for optimising items to target and fuzzy c-means clustering for finding the best customers to target. Tests using simulations with real life consumer scanner panel data from the UK grocery retailer sector show that the algorithm performs well in finding the best items and customers to target whilst eliminating “false positives†(targeting customers who do not buy a product) and reducing “false negatives†(not targeting customers who could buy a product). The algorithm also shows better performance when compared to a similar published framework, particularly in handling “false positives†and “false negatives†. The paper concludes by discussing managerial and research implications, and highlights applications of the model to other fields.

Suggested Citation

  • Moodley, Raymond & Chiclana, Francisco & Caraffini, Fabio & Carter, Jenny, 2020. "A product-centric data mining algorithm for targeted promotions," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:joreco:v:54:y:2020:i:c:s096969891831169x
    DOI: 10.1016/j.jretconser.2019.101940
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S096969891831169X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretconser.2019.101940?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thomas Reutterer & Kurt Hornik & Nicolas March & Kathrin Gruber, 2017. "A data mining framework for targeted category promotions," Journal of Business Economics, Springer, vol. 87(3), pages 337-358, April.
    2. Grewal, Dhruv & Roggeveen, Anne L. & Nordfält, Jens, 2017. "The Future of Retailing," Journal of Retailing, Elsevier, vol. 93(1), pages 1-6.
    3. Shahriar Akter & Samuel Fosso Wamba, 2016. "Big data analytics in E-commerce: a systematic review and agenda for future research," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(2), pages 173-194, May.
    4. Paul Klemperer, 1989. "Price Wars Caused by Switching Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(3), pages 405-420.
    5. Yasemin Boztug & Thomas Reutterer, 2006. "A Combined Approach for Segment-Specific Analysis of Market Basket Data," SFB 649 Discussion Papers SFB649DP2006-006, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    6. Pan, Yue & Sheng, Simon & Xie, Frank T., 2012. "Antecedents of customer loyalty: An empirical synthesis and reexamination," Journal of Retailing and Consumer Services, Elsevier, vol. 19(1), pages 150-158.
    7. Sorensen, Herb & Bogomolova, Svetlana & Anderson, Katherine & Trinh, Giang & Sharp, Anne & Kennedy, Rachel & Page, Bill & Wright, Malcolm, 2017. "Fundamental patterns of in-store shopper behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 37(C), pages 182-194.
    8. Elms, Jonathan & de Kervenoael, Ronan & Hallsworth, Alan, 2016. "Internet or store? An ethnographic study of consumers' internet and store-based grocery shopping practices," Journal of Retailing and Consumer Services, Elsevier, vol. 32(C), pages 234-243.
    9. Gijsbrechts, Els & Campo, Katia & Vroegrijk, Mark, 2018. "Save or (over-)spend? The impact of hard-discounter shopping on consumers' grocery outlay," International Journal of Research in Marketing, Elsevier, vol. 35(2), pages 270-288.
    10. Harald J. Heerde & Scott A. Neslin, 2017. "Sales Promotion Models," International Series in Operations Research & Management Science, in: Berend Wierenga & Ralf van der Lans (ed.), Handbook of Marketing Decision Models, edition 2, chapter 0, pages 13-77, Springer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fernando, Angeline Gautami & Aw, Eugene Cheng-Xi, 2023. "What do consumers want? A methodological framework to identify determinant product attributes from consumers’ online questions," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    2. Luo, Meiling & Li, Gang & Chen, Xudong, 2021. "Competitive location-based mobile coupon targeting strategy," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    3. Li, Hailin & Wu, Yenchun Jim & Zhang, Shijie & Zou, Jinchuan, 2021. "Temporary rules of retail product sales time series based on the matrix profile," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fagerstrøm, Asle & Eriksson, Niklas & Sigurdsson, Valdimar, 2020. "Investigating the impact of Internet of Things services from a smartphone app on grocery shopping," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    2. Garrido-Morgado, Álvaro & González-Benito, Óscar & Martos-Partal, Mercedes & Campo, Katia, 2021. "Which Products are More Responsive to In-Store Displays: Utilitarian or Hedonic?," Journal of Retailing, Elsevier, vol. 97(3), pages 477-491.
    3. Bombaij, Nick, 2021. "Effectiveness of loyalty programs," Other publications TiSEM 095c506d-5b5c-4ea3-9b41-a, Tilburg University, School of Economics and Management.
    4. Moore, Simon & Bulmer, Sandy & Elms, Jonathan, 2022. "The social significance of AI in retail on customer experience and shopping practices," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    5. Bilgihan, Anil & Madanoglu, Melih & Ricci, Peter, 2016. "Service attributes as drivers of behavioral loyalty in casinos: The mediating effect of attitudinal loyalty," Journal of Retailing and Consumer Services, Elsevier, vol. 31(C), pages 14-21.
    6. Luís Cabral, 2018. "We’re Number 1: Price Wars for Market Share Leadership," Management Science, INFORMS, vol. 64(5), pages 2013-2030, May.
    7. Ngui Min Fui Tom, 2020. "Crashed! Why Drone Delivery Is Another Tech Idea not Ready to Take Off," International Business Research, Canadian Center of Science and Education, vol. 13(7), pages 251-251, July.
    8. Ali Hortaçsu & Chad Syverson, 2004. "Product Differentiation, Search Costs, and Competition in the Mutual Fund Industry: A Case Study of S&P 500 Index Funds," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 403-456.
    9. de Camargo Fiorini, Paula & Roman Pais Seles, Bruno Michel & Chiappetta Jabbour, Charbel Jose & Barberio Mariano, Enzo & de Sousa Jabbour, Ana Beatriz Lopes, 2018. "Management theory and big data literature: From a review to a research agenda," International Journal of Information Management, Elsevier, vol. 43(C), pages 112-129.
    10. Pot, Erik & Flesch, János & Peeters, Ronald & Vermeulen, Dries, 2013. "Dynamic competition with consumer inertia," Journal of Mathematical Economics, Elsevier, vol. 49(5), pages 355-366.
    11. Nils Engelbrecht & Tim-Benjamin Lembcke & Alfred Benedikt Brendel & Kilian Bizer & Lutz M. Kolbe, 2021. "The Virtual Online Supermarket: An Open-Source Research Platform for Experimental Consumer Research," Sustainability, MDPI, vol. 13(8), pages 1-25, April.
    12. Jingjing Wu & Yiwei Chen & Lin Hu & Anxin Xu, 2022. "Influence Factors on Consumers’ Instant Cross-buying under Supermarkets’ Cross-border Integration: From the Perspective of the Elaboration Likelihood Model," SAGE Open, , vol. 12(3), pages 21582440221, September.
    13. Pozharliev, Rumen & De Angelis, Matteo & Rossi, Dario & Bagozzi, Richard & Amatulli, Cesare, 2023. "I might try it: Marketing actions to reduce consumer disgust toward insect-based food," Journal of Retailing, Elsevier, vol. 99(1), pages 149-167.
    14. Gilboa, Shaked & Mitchell, Vince, 2020. "The role of culture and purchasing power parity in shaping mall-shoppers’ profiles," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    15. Martin, James & Nenycz-Thiel, Magda & Dawes, John & Tanusondjaja, Arry & Cohen, Justin & McColl, Bruce & Trinh, Giang, 2020. "Fundamental basket size patterns and their relation to retailer performance," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    16. H. R., Ganesha & Aithal, Sreeramana & P., Kirubadevi, 2020. "Changes in Consumer Perspective towards Discount at Brick-and-Mortar Stores owing to Emergence of Online Store Format in India," MPRA Paper 104023, University Library of Munich, Germany.
    17. Joerß, Tom & Hoffmann, Stefan & Mai, Robert & Akbar, Payam, 2021. "Digitalization as solution to environmental problems? When users rely on augmented reality-recommendation agents," Journal of Business Research, Elsevier, vol. 128(C), pages 510-523.
    18. Alessandro Acquisti & Hal R. Varian, 2005. "Conditioning Prices on Purchase History," Marketing Science, INFORMS, vol. 24(3), pages 367-381, May.
    19. Sebald, Anna Kathrin & Jacob, Frank, 2020. "What help do you need for your fashion shopping? A typology of curated fashion shoppers based on shopping motivations," European Management Journal, Elsevier, vol. 38(2), pages 319-334.
    20. Maggioni, Isabella, 2016. "What drives customer loyalty in grocery retail? Exploring shoppers' perceptions through associative networks," Journal of Retailing and Consumer Services, Elsevier, vol. 33(C), pages 120-126.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joreco:v:54:y:2020:i:c:s096969891831169x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing-and-consumer-services .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.