Direct mail promotion mechanisms and their application in supermarkets

In this study, we consider the problem of selecting supermarket loyalty program members to receive physical direct mail and promotional electronic direct mail (i.e., direct email). To help marketers choose the target members for physical direct mails, we modify the customer’s preference index of our original model to predict members’ repurchase rates for a physical supermarket’s members. Based on members’ predicted repurchase rates, marketers can design proper marketing strategies for different types of supermarket member to improve marketing effectiveness. In addition, because members can only spend a short amount of time reading direct emails before choosing the products that they like, a recommender system based on a simple combination method is introduced. The system determines the most suitable combination of commodity types under the condition that a customized direct email can include only a small, fixed number of such types. In this study, member transaction records from a well-known Taiwanese supermarket were used as the test data. This supermarket’s marketing department reviewed all the experimental results and confirmed that our approach is not only superior to the current approach employed by the supermarket but also useful in designing appropriate direct-mail marketing strategies for selected supermarket members. Our approach is also suitable for direct email sent by the supermarket.