Neural Networks for Target Selection in Direct Marketing

20 Pages Posted: 10 Feb 2003

See all articles by Rob Potharst

Rob Potharst

Erasmus University Rotterdam - Department of Computer Science; Erasmus Research Institute of Management (ERIM)

U. Kaymak

Erasmus University Rotterdam (EUR) - Faculty of Economics - Department of Computer Science; Erasmus Research Institute of Management (ERIM)

Wim Pijls

Erasmus Research Institute of Management (ERIM)

Date Written: March 29, 2001

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: neural networks, data mining, direct mail, direct marketing, target selection

JEL Classification: R4, M, M11, M31

Suggested Citation

Potharst, Rob and Kaymak, Uzay and Pijls, Wim, Neural Networks for Target Selection in Direct Marketing (March 29, 2001). ERIM Report Series Reference No. ERS-2001-14-LIS. Available at SSRN: https://ssrn.com/abstract=370877

Rob Potharst (Contact Author)

Erasmus University Rotterdam - Department of Computer Science ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
+31 10 4081343 (Phone)
+31 10 4089167 (Fax)

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Uzay Kaymak

Erasmus University Rotterdam (EUR) - Faculty of Economics - Department of Computer Science ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Wim Pijls

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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