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Valuing customer portfolios with endogenous mass-and-direct-marketing interventions using a stochastic dynamic programming decomposition

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dc.affiliation.dptoUC3M. Departamento de EconomĂ­a de la Empresaes
dc.contributor.authorEsteban-Bravo, Mercedes
dc.contributor.authorVidal-Sanz, Jose M.
dc.contributor.authorYildirim, Gökhan
dc.contributor.editorUniversidad Carlos III de Madrid. Departamento de EconomĂ­a de la Empresa
dc.date.accessioned2012-06-12T17:04:29Z
dc.date.available2012-06-12T17:04:29Z
dc.date.issued2012-06
dc.description.abstractCustomer Relationship Management generally uses the value of customers to allocate marketing budget. But marketing interventions generally change the customer behavior, turning upside-down the customers ranking based on their initial valuations and making the budget allocation suboptimal. Rational Managers should allocate the marketing budget to maximize the expected net present value of future profits drawn from each customer, simultaneously planning mass marketing interventions and direct marketing effort on each individual. This is a large dimensional Stochastic Dynamic Program, which cannot be easily solved due to the curse of dimensionality. This paper propose a new decomposition algorithm to alleviate the curse of dimensionality in SDP problems, which allows forward-looking firms to allocate the marketing budget optimizing the CLV of their customer base, simultaneously using customized and mass marketing interventions
dc.description.sponsorshipResearch funded by two research projects, S-0505/TIC-0230 by the Comunidad de Madrid and ECO20011-30198 by MICINN agency of Spanish Government
dc.format.mimetypeapplication/pdf
dc.identifier.repecwb121304
dc.identifier.urihttps://hdl.handle.net/10016/14547
dc.identifier.uxxiDT/0000000928
dc.language.isoeng
dc.relation.ispartofseriesUC3M Working papers. Business Economics
dc.relation.ispartofseries12-04
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRightsopen access
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.ecienciaEmpresa
dc.subject.otherMarketing Budget allocation
dc.subject.otherCRM
dc.subject.otherStochastic Dynamic Programming
dc.titleValuing customer portfolios with endogenous mass-and-direct-marketing interventions using a stochastic dynamic programming decomposition
dc.typeworking paper*
dc.type.hasVersionSMUR*
dspace.entity.typePublication
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