Neural Networks for Target Selection in Direct Marketing

Rob Potharst, Uzay Kaymak () and Wim Pijls

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: Partly due to a growing interest in direct marketing, it has become an important application field for data mining. Many techniques have been applied to select the targets in commercial applications, such as statistical regression, regression trees, neural computing, fuzzy clustering and association rules. Modeling of charity donations has also recently been considered. The availability of a large number of techniques for analyzing the data may look overwhelming and ultimately unnecessary at first. However, the amount of data used in direct marketing is tremendous. Further, there are different types of data and likely strong nonlinear relations amongst different groups within the data. Therefore, it is unlikely that there will be a single method that can be used under all circumstances. For that reason, it is important to have access to a range of different target selection methods that can be used in a complementary fashion. In this respect, learning systems such as neural networks have the advantage that they can adapt to the nonlinearity in the data to capture the complex relations. This is an important motivation for applying neural networks for target selection. In this report, neural networks are applied to target selection in modeling of charity donations. Various stages of model building are described by using data from a large Dutch charity organization as a case. The results are compared with the results of more traditional methods for target selection such as logistic regression and CHAID.

Keywords: data mining; direct mail; direct marketing; neural networks; target selection (search for similar items in EconPapers)
JEL-codes: M M11 M31 R4 (search for similar items in EconPapers)
Date: 2001-03-29
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Citations: View citations in EconPapers (4)

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