Category: PREDICTIVE MODELING

ABB Electric faced a flat market for electric equipment (e.g., transformers, breakers, relays) used by electrical utilities to distribute power. The company was exploring options to increase market share by identifying “switchable” customers, i.e., customers who are currently buying products from competitors, but could potentially switch to ABB through additional marketing efforts targeted to them. There are four competitors (ABB, GE, Westinghouse, and Edison), and students are provided with data from 88 customers about their perceptions of the four competitors along several attributes, such as availability of spare parts, price, and warranty. Students are asked to identify switchable customers, and to articulate the changes to attributes that are most likely to induce specific customers to switch to ABB. This case is set in a B2B context but can be used in any marketing course to illustrate the application of choice modeling to predict customer choices. Although the case is set in the 1980’s, the insights learned should help students to gain deep and generalizable insights about how customers make choices, and to use those insights to target marketing efforts to specific customers or to customer segments.

The Bookbinders Book Club (BBC) was established in 1986 for the purpose of selling books through direct marketing.  BBC built and maintains a detailed database of its members and is developing a program to improve the efficacy of its direct mail program.  Under consideration are three modeling approaches to isolate the factors that most influence customers using data collected from a recent mailing.

The Gabriel Hansen Foundation is a nonprofit organization whose mission is to raise money to finance the Gabriel Hansen Institute’s research activities. After a few years of rapid growth, the amount of funds the Institute was able to raise flattened out, while the Institute’s needs continued to grow. The Gabriel Hansen Foundation is under intense pressure to collect more without an increase in spending. Foundation management believed that one of the ways to achieve such a goal would be to optimize and rationalize its direct marketing strategy.