Answered: Do sequential RFM and independent RFM…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Question

Do sequential RFM and independent RFM approaches generally yield the same index for any given customer? What are the pros and cons of the two approaches (from a statistical as well as logical perspective) and why?

Expert Solution

Concept

The RFM customer segmentation concept is a simple way to segment customers. The resulting segments are easier to understand and help marketers target marketing better. R, F, and M stand for:

Recency – How recently do the customers purchase?
Frequency – How often do they buy?
Monetary Value – How much do they spend (each time on average)?

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