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School of Management Spring Semester 2005



SOM 2.116

Professor: Nanda Kumar

Room SM 3.702
Tel: (972) 883-6426
Fax: (972) 883-2799

Office Hours: Mon 3:00 - 4:00pm; or by appointment.

Teaching Assistant: Howard Dover

Room SM 3.618
Tel: (972) 883 4418

Office Hours: Tu/R – Times to be announced later


(I) The New Direct Marketing – David Shepard Associates (Not Required)


The last two decades have witnessed a tremendous explosion in ways that firms use to track consumer
behavior. This was aided considerably by the precipitous fall in the price of electronic storage media as well as
computing power. Despite access to valuable data on purchase behavior and consumer characteristics, very
few firms actually condition their strategies on the data they have. This may be attributed to at least two
factors. First, firms now have so much information that it is often very costly for them to get to the data that
can be meaningfully used to devise their strategies. Second, many firms just don’t know what to do with the

The course addresses both these issues. The course will introduce students to analytical techniques
that will assist in data reduction and consumer segmentation. Additional techniques to uncover the
characteristics of the different consumer segments will be developed. The latter half of the course will apply
these techniques to some marketing problems – devising communication strategies, catalog marketing etc.

While the thrust of the course will be in developing analytical techniques that will eventually aid
managers in devising strategies, the course will require students to work with different data sets and estimate
various models with a software package such as SAS. The Unix/Windows version of SAS is available on the
university computers and all registered students will have access to this version. In addition, PC based versions
of the software may be purchased at a student discount

Each student's grade will be based on the following:

Basis of Evaluation % of Total Grade

Individual Component

Exams (2 x 25%) 50%

Group Component
Assignments (4×7.5%) 30%
Term Project (Report + Presentation) 20%
Total 100%

Group Assignments:

There will be four assignments (see schedule for due dates). Each assignment has two parts – the first part,
involves running the analysis in SAS. This part is relatively straight forward since I will provide sample SAS
code which can be modified to run the analysis. The goal of this exercise is to expose and make students
conversant in a statistical package (SAS) that can help them conduct sophisticated analyses. The second part
of the assignment will require students to interpret the output and make inferences/decisions based on the

Term Project:

The term project is a group assignment, in which each group will work on a database-marketing problem of its
choice. This enables students to apply the techniques discussed in class in developing a database marketing
solution. Each group will turn in a report and present their findings to the class on April 18th.

There will be two exams – a mid-term exam before Spring Break and a final exam on April 25th. Both exams
will be in-class and closed book. Students can expect multiple-choice and short questions on this exam. The
final exam will be comprehensive and will cover all the topics covered in the lectures.

Peer Evaluation:

With the exception of the exams, students will work on the assignments and the term project in groups. Since,
individual group members may not all contribute equally to the task at hand, I seek your assistance in rating
your group members (including yourself) on their contribution to the groups’ overall output. Rate each
member of your group starting with yourself on 20 points, with 0 depicting that the particular member
provided little or no input and with 20 depicting very valuable contribution. Your peer evaluation score will be
the average of your groups’ rating of your contributions. I will provide the peer evaluation forms towards the
end of the semester – please fill it and turn it in with your final exam. Bear in mind that you will be doing
yourself (and other members of your group) a disservice if your rating of your contribution and/or the
contribution of other group members is inaccurate. These evaluations are confidential and your ratings
should not be shared with your group members. I reserve the right to discard valuations that are suspect.

Week Date Topic

1. Jan 10 Course Introduction

Customer Relationship Management, Customer

Equity, Customer Value (LTV)
2. Jan 17 No Class (Dr. MLK Jr. Day)

3. Jan 24 Introduction to SAS

File handling, Creating/Reading datasets, Procedures
4. Jan 31 Customer Value & Characteristics
Relationship between variables – correlation analysis,
regression analysis (1st Assignment Due)
5. Feb 7 Data Reduction
Factor Analysis
6. Feb 14 Segmentation Analysis – I
Decile analysis, RFM (2nd assignment due)
7. Feb 21 Segmentation Analysis – II
Cluster Analysis
8. Feb 28 Midterm Exam

9. Mar 7 Spring Break

10. Mar 14 Response Analysis – I

Discriminant Analysis, Lead Generation
11. Mar 21 Response Analysis – II
Logistic Regression (3rd assignment due)
12. Mar 28 Advanced SAS
Using multiple procedures
13. Apr 4 Integrating the solution
Segmentation, Response Analysis, Lead Generation
14. Apr 11 Other Issues - data integrity, evaluating solutions
Course recap (4th assignment due)
15. Apr 18 Term Project Presentations

16. Apr 25 Final Exam