Abstract: A method and system thereof for segmenting customers by promotion. Each customer in a test group of customers is segmented into a segment in a plurality of segments for each promotion in a plurality of promotions. Accordingly, for each promotion, there is a corresponding set of segments, each segment representing a first respective group of customers having a certain response to the promotion. The customers are then separated into a plurality of meta-segments, wherein each meta-segment represents a second respective group of customers having a certain response to all of the promotions in the plurality of promotions. The use of meta-segments facilitates the design and optimization of an advertising campaign by maintaining a desirable level of detail while reducing the number of input parameters.

Abstract: The offerings of promotions to prospective customers are differentially allocated on the basis of customer segmentation, which is a mapping of the customers to a smaller number of segments that reflect commonalities of purchasing attributes. An optimization engine includes inputs of customer segment information, promotion information, market information, management information, and supply chain information. The various forms of information are utilized to provide promotion strategies on a promotion-by-promotion basis and a segment-by-segment basis. Preferably, the market information includes “null promotion data” for the individual customer segments. The null promotion data relates to conversion probabilities, revenues and costs for those occasions on which there are no promotions offered to the customers.