Catalogs1 The HyTex Company is a direct marketer of stereophonic equipment, personal computers, and other consumer electronic products.

HyTex regularly sends catalogues to its customers by mail (at least once in two months), and accepts all of its orders over the phone. The company spends a great deal of money on its catalogue mailings, and it wants to be sure that this is paying off. Therefore, it has collected data on 1000 customers at the end of the current year. The data is given in the accompanying file catalogs.xls The dataset contains cross-sectional data, that is, data collected at approximately the same point in time. It has 9 explanatory variables and includes some categorical variables. The description of the data is given in the table below. Mr Kunal Agarwal has recently joined as the head of the Sales Dept. of HyTex. Mr Agarwal has been given the past sales data of 1000 customer transactions by his manager Mr Mitul Bansal. Mr Agarwal has been asked to come up with strategies or rules that HyTex can use for effective distribution catalogs among potential customers. The primary objective in this case is to identify profitable customers and non-profitable customers and send catalogs only to profitable customers. The printing and postage cost of each catalog is about $4 and the gross profit is around 20% of the revenue generated from a customer. The net profit = Gross Profit 4 x N Where N is the number of catalogs sent to the customer Data Description: Predictor Name Age Type Categorical (3 categories) Data description (code used) Age of the customers classified into the following 3 categories: 1 Age less than 30 2 Age between 31 and 55 3 Age 56 and above 1 Male; 2 Female 1 If a person owns a home 2 If a person is renting 1 Married; 2 Otherwise 1 implies that the person lives close to shops that sell similar products 2 implies that there are no shops in the neighborhood that sell similar products Number of children living with the person

Gender OwnHome Married Close_M

Categorical (2 categories) Categorical (2 categories) Categorical (2 categories) Categorical (2 categories)

Children

Numerical

This problem is suitably adopted from Data Analysis and Decision Making by Albright, Winston and Zappe, pp 567-568.

History

Categorical (4 categories)

Catalogs Amount Spent Salary

Numerical Numerical Numerical

Describes past purchase history NA No spending history before this year 1 = Low spending customer last year 2 = Medium spending customer last year 3 = High spending customer last year Number of catalogs sent this year Amount spent by the customer on purchases this year Family income