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An RFM Model Customizable to Product Catalogues and Marketing Criteria Using Fuzzy Linguistic Models: Case Study of a Retail Business
- Source :
- Mathematics, Vol 9, Iss 1836, p 1836 (2021), Mathematics, Volume 9, Issue 16
- Publication Year :
- 2021
- Publisher :
- MDPI AG, 2021.
-
Abstract
- In the field of strategic marketing, the recency, frequency and monetary (RFM) variables model has been applied for years to determine how solid a database is in terms of spending and customer activity. Retailers almost never obtain data related to their customers beyond their purchase history, and if they do, the information is often out of date. This work presents a new method, based on the fuzzy linguistic 2-tuple model and the definition of product hierarchies, which provides a linguistic interpretability giving business meaning and improving the precision of conventional models. The fuzzy linguistic 2-tuple RFM model, adapted by the product hierarchy thanks to the analytical hierarchical process (AHP), is revealed to be a useful tool for including business criteria, product catalogues and customer insights in the definition of commercial strategies. The result of our method is a complete customer segmentation that enriches the clusters obtained with the traditional fuzzy linguistic 2-tuple RFM model and offers a clear view of customers’ preferences and possible actions to define cross- and up-selling strategies. A real case study based on a worldwide leader in home decoration was developed to guide, step by step, other researchers and marketers. The model was built using the only information that retailers always have: customers’ purchase ticket details.
- Subjects :
- Knowledge management
Computer science
Process (engineering)
AHP
k-means
General Mathematics
2-tuple RFM model
Analytic hierarchy process
fuzzy linguistic modelling
product catalogue management
Field (computer science)
Market segmentation
0502 economics and business
Computer Science (miscellaneous)
QA1-939
Product (category theory)
Engineering (miscellaneous)
Interpretability
Marketing
customer segmentation
PCA
Hierarchy
business.industry
05 social sciences
customer loyalty in retail
Ticket
multicriteria decision making
050211 marketing
RFM model
business
050203 business & management
Mathematics
Subjects
Details
- Language :
- English
- ISSN :
- 22277390
- Volume :
- 9
- Issue :
- 1836
- Database :
- OpenAIRE
- Journal :
- Mathematics
- Accession number :
- edsair.doi.dedup.....3c73fae243a15f2a3c23d76ae0ee6299