Business Problem – An entrepreneur has an idea for a new business venture, which, in a nutshell, is to
offer insurance to customers on price drops of certain products. Registered customers get a certain
multiple of the insurance fee or a certain percentage of the drop provided that the drop happens within
Hypermarts frequently use promotions via mail-in-rebate coupons, bulk buy discount offers etc. to influence customers to purchase greater number of products from their stores. Keeping this in mind, the potential benefit to the Hypermart can be significantly increased if the right promotions are targeted to the right customers - more specifically, identifying a new customer as a potential high margin customer and targeting him/her with promotions related to high margin products for greater sales turnover of such products.
Targeted advertising can be a big challenge for businesses especially retailers. For any business, advertising is a necessary evil. They need it to retain the customer, but they have to pay the heavy costs of advertising and irritating customers by promoting them products they might not need. Targeted advertising, which ensures that customers get advertisements / promotions for only those products they need or are most likely to buy, helps businesses on two ways.
Prof. Galit Shmueli, Institute of Service Science, College of Technology Management, National Tsing Hua University, 101 Kuang Fu Road Sec. 2, Hsinchu 30013 Taiwan
