Dynamic allocation of promotional budgets based on maximizing customer equity

Memarpour, Mehrdad; Hassannayebi, Erfan; Miab, Navid Fattahi; Farjad, Ali

doi:10.1007/s12351-019-00510-3

Cited by 10 publications

(5 citation statements)

References 41 publications

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“…Furthermore, our results broaden the understanding of the effectiveness of sales promotions from a customer segment perspective, as emphasized in previous studies [66,67]. This study demonstrates that lower-tiered members prefer price discounts to coupons when economic and social satisfaction are high.…”

Section: Theoretical Implicationssupporting

confidence: 77%

Do Economic and Social Satisfaction Matter Equally in Sustainable Business? Hotel Membership Types and Sales Promotions

Wen,

2024

Sustainability

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Customer responses to economic and social satisfaction are important in business-to-business transactions; however, these responses can vary when customer segments and sales promotions are combined. This study investigates the roles of two satisfaction types by demonstrating three-way interactions with two moderators: memberships and promotion levels. Using survey data on paid hotel memberships in Korea, this study focuses on the moderated moderation effects of hotel membership type and sales promotions. The authors find that sales promotions positively affect members’ behavioral intentions when they are economically or socially satisfied, regardless of the membership type. In particular, when social satisfaction is positive, the impact of sales promotions on paid membership renewal intentions increases dramatically regardless of the membership type. Meanwhile, lower-tiered members respond more positively to price discounts, increasing their paid membership renewal intentions. In contrast, premium members prefer coupons over price discounts. However, the slope of customer responses is steeper for social satisfaction than economic satisfaction, highlighting that the impact of sales promotions differs by membership type.

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Section: Theoretical Implicationssupporting

confidence: 77%

Do Economic and Social Satisfaction Matter Equally in Sustainable Business? Hotel Membership Types and Sales Promotions

Wen,

2024

Sustainability

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“…In related literature, customer lifetime value has been considered as an important factor in allocating the promotion budgets using various approaches ( [26,19]). The experience Fischer et al [14] of marketing budget allocation showing that profit increase from improving allocation across products or regions is more effective than expanding the total budget.…”

Section: Media Planningmentioning

confidence: 99%

An application of approximate dynamic programming in multi-period multi-product advertising budgeting

Khalilzadeh

Neghabi

Ahadi

2023

JIMO

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<p style='text-indent:20px;'>Advertising has always been considered a key part of marketing strategy and played a prominent role in the success or failure of products. This paper investigates a multi-product and multi-period advertising budget allocation, determining the amount of advertising budget for each product through the time horizon. Imperative factors including life cycle stage, <inline-formula><tex-math id="M1">\begin{document}$ BCG $\end{document}</tex-math></inline-formula> matrix class, competitors' reactions, and budget constraints affect the joint chain of decisions for all products to maximize the total profits. To do so, we define a stochastic sequential resource allocation problem and use an approximate dynamic programming (<inline-formula><tex-math id="M2">\begin{document}$ ADP $\end{document}</tex-math></inline-formula>) algorithm to alleviate the huge size of the problem and multi-dimensional uncertainties of the environment. These uncertainties are the reactions of competitors based on the current status of the market and our decisions, as well as the stochastic effectiveness (rewards) of the taken action. We apply an approximate value iteration (<inline-formula><tex-math id="M3">\begin{document}$ AVI $\end{document}</tex-math></inline-formula>) algorithm on a numerical example and compare the results with four different policies to highlight our managerial contributions. In the end, the validity of our proposed approach is assessed against a genetic algorithm. To do so, we simplify the environment by fixing the competitor's reaction and considering a deterministic environment.</p>

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“…They considered unique features of social network marketing and aimed at minimizing the campaign's length upon reaching a desired level of exposure of each marketing segment. Memarpour et al [23] used the Markov decision process with a budget constraint and measured customers' profitability through customer equity to find the optimal allocation strategy. Previous studies focused on marketing resources related to budget decisions indicated that profit improvement from better allocation across products or regions is much higher than that from improving the overall budget [24].…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamic Marketing Resource Allocation with Two-Stage Decisions

Zhang

Liao

et al. 2022

JTAER

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In the precision marketing of a new product, it is a challenge to allocate limited resources to the target customer groups with different characteristics. We presented a framework using the distance-based algorithm, K-nearest neighbors, and support vector machine to capture customers’ preferences toward promotion channels. Additionally, online learning programming was combined with machine learning strategies to fit a dynamic environment, evaluating its performance through a parsimonious model of minimum regret. A resource optimization model was proposed using classification results as input. In particular, we collected data from an institution that provides financial credit products to capital-constrained small businesses. Our sample contained 525,919 customers who will be introduced to a new product. By simulating different scenarios between resources and demand, we showed an up to 22.42% increase in the number of expected borrowers when KNN was performed with an optimal resource allocation strategy. Our results also show that KNN is the most stable method to perform classification and that the distance-based algorithm has the most efficient adoption with online learning.

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Dynamic allocation of promotional budgets based on maximizing customer equity

Cited by 10 publications

References 41 publications

Do Economic and Social Satisfaction Matter Equally in Sustainable Business? Hotel Membership Types and Sales Promotions

Do Economic and Social Satisfaction Matter Equally in Sustainable Business? Hotel Membership Types and Sales Promotions

An application of approximate dynamic programming in multi-period multi-product advertising budgeting

Dynamic Marketing Resource Allocation with Two-Stage Decisions

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