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Testing New Direct Marketing Offerings: The Interplay of Management Judgment and Statistical Models

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  • Vicki G. Morwitz

    (Stern School of Business, New York University, New York, New York 10012-1126)

  • David C. Schmittlein

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6371)

Abstract

The launch of a new product or service via direct marketing is nearly always preceded by a test of that offering. Such a "live" test, conducted with a subset of the entire list of customer prospects, can sometimes be useful in a "go/no-go" decision regarding a full-scale launch of the offering. More commonly, the test is used to direct the offering more effectively toward the market segments that appear most promising. Specifically, test results are used and useful to determine whether a particular rental list of customer prospects should indeed be rented, and (for both rental and in-house lists) which specific customer segments should be contacted with the offering. This paper examines the effectiveness of managers' decisions related to designing a test and interpreting test results both conceptually---based on the literature of heuristics and biases in expert judgments---and empirically, for two new direct marketing offers. The paper describes how an interplay of management judgment and statistical models can lead to increased profits for new direct marketing offerings.

Suggested Citation

  • Vicki G. Morwitz & David C. Schmittlein, 1998. "Testing New Direct Marketing Offerings: The Interplay of Management Judgment and Statistical Models," Management Science, INFORMS, vol. 44(5), pages 610-628, May.
    • Handle: RePEc:inm:ormnsc:v:44:y:1998:i:5:p:610-628
    DOI: 10.1287/mnsc.44.5.610
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    References listed on IDEAS

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    Cited by:

    1. A. Prinzie & D. Van Den Poel, 2005. "Constrained optimization of data-mining problems to improve model performance: A direct-marketing application," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/298, Ghent University, Faculty of Economics and Business Administration.
    2. Zhou, Guiqin & Liu, Wei, 2022. "Consumer choice in online vegetable distribution terminals: A Planned Behavior approach," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    3. Sridhar Balasubramanian, 1998. "Mail versus Mall: A Strategic Analysis of Competition between Direct Marketers and Conventional Retailers," Marketing Science, INFORMS, vol. 17(3), pages 181-195.
    4. De Cannière, Marie Hélène & De Pelsmacker, Patrick & Geuens, Maggie, 2009. "Relationship Quality and the Theory of Planned Behavior models of behavioral intentions and purchase behavior," Journal of Business Research, Elsevier, vol. 62(1), pages 82-92, January.
    5. King, Ruth C. & Sen, Ravi & Xia, Mu, 2002. "Impact of Web-Based e-Commerce on Channel Strategy," Working Papers 02-0123, University of Illinois at Urbana-Champaign, College of Business.

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