customer relationship management: a database approach
DESCRIPTION
MARK 7397 Spring 2007. Customer Relationship Management: A Database Approach. Class 11 Discriminate Analysis. James D. Hess C.T. Bauer Professor of Marketing Science 375H Melcher Hall [email protected] 713 743-4175. Discriminant Analysis of Toaster Customers. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/1.jpg)
Customer Relationship Management:A Database Approach
MARK 7397Spring 2007
James D. HessC.T. Bauer Professor of Marketing Science
375H Melcher Hall [email protected] 743-4175
Class 11Discriminate Analysis
![Page 2: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/2.jpg)
GS = location of Goldstar buyerBD = location of Black & Decker buyer
Size ofFamily
10
9 BD BD
8 GS
7 BD
6 BD
5 BD GS GS
4
3 GS GS
2
1
0 10 20 30 40 50 60 70 80 90 100 Taste forSpeed
Discriminant Analysisof Toaster Customers
![Page 3: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/3.jpg)
Location of average Goldstar buyer
Location of average Black & Decker buyer
Size ofFamily
10
9 BD BD
8 GS
7 BD
6 BD
5 BD GS GS
4
3 GS GS
2
1
0 10 20 30 40 50 60 70 80 90 100 Taste forSpeed
Toaster CustomersMeans and Confidence Circles
![Page 4: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/4.jpg)
Size ofFamily
10
9 BD BD
8 GS
7 BD
6 BD
5 BD GS GS
4
3 GS GS
2
1
0 10 20 30 40 50 60 70 80 90 100 Taste forSpeed
Toaster CustomersMeans and Confidence Ellipses
![Page 5: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/5.jpg)
Size ofFamily
10
9 BD BD
8 GS
7 BD
6 BD
5 BD GS GS
4
3 GS GS
2
1
0 10 20 30 40 50 60 70 80 90 100 Taste forSpeed
Discriminant Analysisof Toaster Customers
0=-2.0-.013TS+.456SFor SF=4.2+.03TS
![Page 6: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/6.jpg)
![Page 7: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/7.jpg)
![Page 8: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/8.jpg)
![Page 9: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/9.jpg)
![Page 10: Customer Relationship Management: A Database Approach](https://reader036.vdocument.in/reader036/viewer/2022082611/56812d14550346895d91f54d/html5/thumbnails/10.jpg)
Assignment of Observation to Population
Suppose we have computed discriminant coefficients and have observed a value X for an observation.Suppose that a priori we think the two populations haveprobabilities qBD and qGS and the costs of misclassificationare C(BD|GS) and C(GS|BD). Let the group centroids be XBD and XGS then the observation should be allocated to GS if
X < -------------- + ln --------------------- XBD+XGS
qBDC(GS|BD)
qGSC(BD|GS)
2
Note: if prior probabilities and costs are symmetric then the last term above is ln(1)=0.
However, suppose that qGS=2/3 and misclassifying a GS as BDis 5 times more costly than misclassifying a BD as GS. Then the threshold for allocating to GS is easy since ln(10)=+2.3.