Optimizing Rhenania's Mail-Order Business Through Dynamic Multilevel Modeling (DMLM)

Ralf Elsner (), Manfred Krafft () and Arnd Huchzermeier ()
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Ralf Elsner: Rhenania Group, 56061 Koblenz, Germany
Manfred Krafft: Westfälische Wilhelms-Universität Münster, Institut für Marketing, Am Stadtgraben 13-15, 48143 Münster, Germany
Arnd Huchzermeier: Wissenschaftliche Hochschule für Unternehmensführung (WHU), Otto-Beisheim Graduate School of Management, Burgplatz 2, 56179 Vallendar, Germany

Interfaces, 2003, vol. 33, issue 1, 50-66

Abstract: Rhenania, a German direct mail-order company, turned its catalog mailing practices around within one year and consequently moved up in market position from number 5 to number 2. A dynamic multilevel modeling (DMLM) approach uses elasticities to determine the optimal frequency of catalog mailings, a customer-segmentation approach allows for optimization of mailings, and a recency, frequency, monetary-value (RFM) segmentation in combination with a chi-square automatic interaction detection (CHAID) algorithm determines when customers should receive a reactivation package—as opposed to a catalog—to optimize mailing efficiency further. The DMLM approach was so effective that Rhenania acquired two competitors (one a subdivision of Springer Verlag).

Keywords: Marketing:; buyer; behavior.; Statistics:; elimination. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (6)

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