Chapter 9, Problem 9.22MML

Explanation of Solution

Retailer’s role:

As a retailer, one’s role in the organization is to provide ideas on how to increase sales. This is achieved by market analysis, which can be done using two approaches; they are,

• Recently (R), Frequency (F), and Money (M) approach and
• Market basket analysis.

Usage of RFM and market basket approach to increase sales:

RFM approach:

RFM approach deals with Recently (R), Frequency (F), and Money (M), which states the following:

• How recently customers purchased the goods?
• How often do the customers purchase goods?
• How much do they spend on goods?

Customer satisfaction using RFM model:

Segmenting the customer needs using just one parameter will not work every time and that is the reason RFM model can work efficiently for an online sports goods retailer.

By getting these details, it is possible to determine what the customers are actually looking for.

• With these details, the organization can segment the customers such as promising customers, loyal customers, recent customers, and so on...