Financial Management

CATALOG CROSS-SELLlNG

catalogCrossSell.xls is the dataset for this case study. 

Background 

Exeter, Inc. is a catalog firm that sells products in a number of different catalogs that it owns. The catalogs number in the dozens, but tall into nine basic categories: 

1. Clothing 

2. Housewares 

3. Health 

4. Automotive 

5. Personal electronics 

6. Computers 

7. Garden 

8. Novelty gift 

9. Jewelry 

The costs of printing and distributing catalogs are high. By far the biggest cost of operation is the cost of promoting products to people who buy nothing. Having invested so much in the production of artwork and printing of catalogs, Exeter wants to take every opportunity to use them effectively. One such opportunity is in cross-selling-once a customer has "taken the bait" and purchases one product, try to sell them another while you have their attention. 

Such cross promotion might take the form of enclosing a catalog in the shipment of a purchased product, together with a discount coupon to induce a purchase from that catalog. Or, it might take the form of a similar coupon sent by email, with a link to the web version of that catalog. 

But which catalog should be enclosed in the box or included as a link in the email with the discount coupon? Exeter would like it to be an informed choice-a catalog that has a higher probability of inducing a purchase than simply choosing a catalog at random. 

Assignment 

Using the dataset catalogCrossSell.xls, perform an association rules analysis, and comment on the results. Your discussion should provide interpretations in English of the meanings of the various output statistics (lift ratio, confidence, support) and include a very rough estimate (precise calculations are not necessary) of the extent to which this will help Exeter make an informed choice about which catalog to cross-promote to a purchaser.