Key Learning’s from Marketing Analytics Course

Jasdeep Singh (2018EPGP020)

1. RFM Model

a) Learning Objective : To identify most ‘responsive’ and ‘profitable’ customers to lieu of

new direct marketing offer
b) Tool used: SPSS
c) Process: Model uses ordinal or past customer ‘recency’ (date of last customer purchase
transaction), frequency(count of purchase transactions) & ‘Monetary’(Sum Value of last
purchase transactions) on a Likert 1-5 Scale for identification) to identify ‘Most or Least
Recent-Frequency-Monetary’ Valued Customers. This helps us in identification of
‘Customer Life-Time’ Analysis. Basis Each Clustered/Binned Score Segment (555 to 111)
individualized Campaigns could be released.
d) Functional Application: Customer ‘Experience’ Team/ Marketing Team/ ‘Supplier Team
e) Types of Data Set could be Customer based or Transaction based.
f) Steps on the Data Set : Direct Marketing>>Choose Technique>>RFM
g) Output & Learning Outcomes

(Most Profitable Segment on Heat Map- High ‘CLTV’)

(2-Way Scatter Plots)

  ‘RFMPD’ is the new technique that captures ‘Payment Mode’ and ‘Date of Payment’ as
additional metrics for further segmentation as most profitable/responsive or least
profitable/responsive.

2. Exploratory Factor Analysis

a) Learning Objective : To understand the factors that influence a consumer’s buying

behavior’ during a typical purchase situation or factors influencing ‘Satisfaction’ intention.
b) Tool used: SPSS
c) Process: Model uses Multivariate Factor Analysis with interdependent metric scale and
uses reduction technique using Principal Component Analysis. The assumption of this
model is no multicollinearity between factors. There exists a pattern between various
factors which can be identified through subsequent rotation method (‘varimax’ was used
here.
Steps 1) Check for Data Adequacy: KMO Test KMO index >0.6 2) Barlett’s Test of
Sphercity to examine for multicollinearity; Significance<0.05 3) Factor Reliability:
Bivariate Analysis and ‘Cronbach’s Alpha >0.6 4) Eigen Value >1 for Factor
Consideration
d) Functional Application: Marketing Team, Product Management Team, R&D Team
e) Types of Data Set is using ordinal likert Scale based 1-7. Primary Questions identified via
FG’s.
f) Steps on the Data Set : Analyse>>Dimension Reduction>>Factor
g) Outputs & Learning Outcomes:
 Eigen Value >1 to be a Factor(Scree Plot, Variance Mat)

Factor Loading >0.6 and Reduction Matrix for Factor Extraction

3. Multi-Dimensional Scaling(MDS)

a) Learning Objective : To understand the perceptual mapping of consumers on

competition on the basis of ranking or rating method or similarity/dissimilarity data or
preference.
b) Tool used: SPSS
c) Process: Principle Component Analysis is used for Brand Positioning purposes basis
similarity indexes between brands (Proxscal), Brands and Consumer(Prefscal) and Brand
& Attributes( Correspondence). Preference Ranking for brands through unfolding process.
Kruskal Stress is a measure of variance and DAF is measure of R sq. for Goodness of fit.
Consumer’s positioning basis plot of Subjects, Plot of Objects and Joint Plot.

d) Functional Application: Marketing Team, Product Management Team, R&D Team ,

Advertising/PR -3rd party firm.
e) Types of Data Set is using ordinal likert Scale based similarity rating scores 1-7 or
Preference Ranking
f) Steps on the Data Set : Analyse>>Scale>>Proxscal/PrefScal
g) Outputs & Learning Outcomes:

Joint Plot: Useful for

Brand Repositioning

Plot of Objects: Brand

Similarity/Dissimilarity
perception
 4. Conjoint Analysis

a) Learning Objective : To understand the main attributes using all attributes’conjointly’ or

together that influences consumer prefer the most and which product managers should
incorporate during product design stage
b) Tool used: SPSS
c) Process: Understanding the drivers & subdrivers(Level’s) of attributes and its relative &
absolute worth using utility function, dummy variables and linear regression. This uses
maximum likelihood technique.
d) Functional Application: Marketing Team, Product Management Team, R&D Team ,
e) Types of Data Set : Ranking or Rating based or Non-Metric or Metric Data
f) Steps on the Data Set : Analyse>>Regression>>Linear
g) Outputs & Learning Outcomes:

Solving Linear Equations, for part worth utilities and maximizing sub-utility function. Absolute
utilities can be derived from

% Utility Ri= (Max(Uij)- Min(Uij))/(Sum (Max(Uij)- Min(Uij))

Helps in designing most preferred product Attributes

5. Cart

a) Learning Objective : To understand the decision tree framework from classification

perspective and modeling over testing data from a supervised learning data set
b) Tool used: SPSS
c) Process: Using decision tree to assess risk involved with a new customer sign-in based on
historical data of risk assessment using ‘CHAID’ or ‘CRT’ technique and seeing the the
classification error/risk via ‘confusion’ matrix
d) Functional Application: Marketing Team,Finance, Risk Team
e) Types of Data Set : Nominal Data
f) Steps on the Data Set : Analyse>>Classify>>Tree
g) Outputs & Learning Outcomes:
Helps in criteria evaluation for a new Customer Classification. S-Shaped/ Oval shaped- Gain
Chart a good metric for proper assessment.

6. Survival
a) Learning Objective : To understand the customer churn rate and time of churn for
designing effective marketing techniques for retention
b) Tool used: SPSS
c) Process: Using Lifetables, KMO and Cox Regression techniques to understand biases in
data (KMO) using log rank, Breslow, Taron ware method. Significance to be <0.05. Mean
Survival and 1- Survival Method (Churn) can further help us understanding type of churn
and period of churn. Hazard rate was used to determine % churn which have started
during the term of evaluation and ratio of respective Hazard rates on the strata explaining
likelihood of churn at segment level. The evaluation is done on the basis of the ‘factor’
which influences churns separately.
d) Functional Application: Customer Service team, Manufacturing team, Insurance etc
e) Types of Data Set : Nominal Data
f) Steps on the Data Set : Analyse>>Classify>>Tree
 1st graph explains the churn segment wise
 2nd table explains the mean or median survival time periods
 3rd explains Cox Regression and its coefficient of likelihood for churn using logit
function.
 4th table explain Tests explain the biases in the segment of evaluation