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By Rud O.P.

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It is very easy to identify the groups with the highest response rates. 5%. The offers would be directed to males who make more than $30,000 a year and females over age 40. A definite advantage of classification trees over other techniques is their ability to explain the results. I often develop complex logistic models for scoring and build a tree to explain the results to the marketers. Although the outcome is never identical, the tree does a good job of uncovering key drivers in the market. Due to their broad applicability, classification trees will continue to be a valuable tool for all types of target modeling.

This can cause the model to deteriorate more quickly when applied to new data. If this is the method of choice, be sure to validate carefully. Another disadvantage to consider is that the results of a neural network are often difficult to interpret. Genetic Algorithms Similar to neural networks, genetic algorithms do not have an underlying distribution. " Simply put, many models are compared and adjusted over a series of iterations to find the best model for the task. There is some variation among methods.

A descriptive model is just as it sounds: It creates rules that are used to group subjects into descriptive categories. Companies that engage in database marketing have multiple opportunities to embrace the use of predictive and descriptive models. In general, their goal is to attract and retain profitable customers. They use a variety of channels to promote their products or services, such as direct mail, telemarketing, direct sales, broadcasting, magazine and newspaper inserts, and the Internet.

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