Targeted Marketing Using Balance Optimization Subset Selection

Shouvik Dutta, Jason Sauppe, Sheldon Jacobson

Research output: Contribution to journalArticlepeer-review

Abstract

Customers today are faced with a plethora of choices of products to buy and consume. The sheer volume of choices can be daunting, and customers forced to sift through the products are likely to become dissatisfied. Retailers have the ability to solve this problem by providing customers with recommendations of products that are likely to be of interest to each specific customer. This can be done by profiling each customer and identifying products that similar customers like. This paper presents a balance optimization approach, where customers are characterized and matched as groups. By identifying and analyzing a group of customers who have shown positive reactions to a specific product, we propose a technique to find a comparable group who we hypothesize will show a similar positive reaction. This allows for the creation of targeted advertisements, mailing lists, and other material to recommend products to customers. The methodology is tested using a Netflix dataset, where we are able to show a statistically significant improvement on the mean rating of selected users over random selection of 0.384 when the ratings are on a scale of 0–5.

Original languageEnglish (US)
Pages (from-to)423-444
Number of pages22
JournalAnnals of Data Science
Volume3
Issue number4
DOIs
StatePublished - Dec 1 2016

Keywords

  • Balance optimization
  • Product recommendation
  • Subset selection

ASJC Scopus subject areas

  • Computer Science Applications
  • Artificial Intelligence
  • Statistics, Probability and Uncertainty
  • Business, Management and Accounting (miscellaneous)

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