STRATEGIC INTERACTIONS OF FIRMS WITH CONSUMERS-CUSTOMER TARGETING FOR INCREASED PROFITS

Abstract

In this thesis, I look at the impact of two types of mails that a non-profit firm sent to influence the donation behaviour of donors who are in their regular donation program. In the conditional model (CM), I explicitly take into consideration the underlying state which the donor is in (dropped out or not /upgraded or not). In the Simultaneous Model (SM), I do not explicitly build the state the consumer is in into the model but build error correlations that take care of this and allow one process to affect the other. We find that, in both cases, mails explicitly asking for upgrade in donation as well as mails aimed at nurturing the consumer will both decrease the dropout tendency of the donor but due to the inherent correlation between these two decisions, the mails asking for upgrade actually result in negatively affecting the upgrading possibility of the donor.