AAM FINAL

PRESENTATION
Topic: Discovering customer value for marketing
systems: an empirical case study
Group Members
• Syeda Azka Ali- 70074344
• Amna Hashim- 70074334
• Syed Manzoor ul Hassan- 70073265
• Zainab Rizvi- 70073233
• Fatima Yaseen- 70073231
Abstract
• Data mining technologies have been employed in a variety of business
managements for discovering useful commercial knowledge or
marketing model for many years.
• This research proposes a model (FSLC model, RFM model based) via
the data mining technologies to discover valuable travelers for airlines.
• This study partitions the market of air travelers in Taiwan, and the paper
generates useful association rules to find an optimised target market for
dynamic marketing or CRM systems.
• The results of this research can be applied on marketing or CRM
systems of the airline industry for identifying valuable travelers.
Introduction
• Data mining technologies have been widely used in science and
management fields for many years.
• These technologies analyse shopping behaviors for the purpose of
determining customer values and enhancing customers’ loyalties.
• Data mining usually consists of classification, prediction, estimation,
association, clustering and visualisation
• The technologies of the data mining are widely used in marketing or
CRM systems to find customers’ knowledge and it can enhance their
contributions.
• Hence, marketing or CRM systems are important marketing tools for
increasing growth rate of airlines
 Which
technologies
are used?
Literature review
RFM model and customer value
• The RFM model is widely used for a variety of retailing
industries, where the R (Recency) is defined as ‘Recent
purchasing date’; the F (Frequency) is defined as
‘Frequency of purchasing in a specific period’; and the M
(Monetary) is defined as ‘Average amount of purchasing in
a specific period’.

• Customer value can be estimated via the RFM model, and

the RFM model can be processed in market segmentation
to find some valuable customers.

• For the researches of improvement of RFM model. In

Chiang’s study (2010), the RFM model has been improved
to be RFMP (P: Price-Discount) for mining useful
customer value of online shopping markets.
The figure shows Departure and arrival passengers in Taiwan from 2005 to 2015
Findings
• In Taiwan, the passenger growth rates of departing passengers declined
from 2007 to 2009 due to the high price of aviation fuel and global
economic depression.
• The growth rates of arriving passengers were found to decline from
14.50 to 3.47% (from 2005 to 2008) and to increase up to 14.30% from
2008 to 2009.
• The growth rate of 2010 increased about 12.34% from 2009. In 2013
and 2014, both of the growth rates increased.
• The departing passengers increased from 8,208,125 to 13,182,976 from
2005 to 2015.
• Compared to 2004, the growth rate of arriving passenger in 2005 was
only about half value; the rates from 2006 to 2008 were both lower than
6%.
• The research found the market were of four types: loyal, potential, new,
and lost customer. And the research found eight customer clusters and
two types of high-value customers.
• The study found three markets of online shoppers: Cost, Risk, and
Convenience.
• Chen and Chang applied the RFM model to partition customers for
obtaining higher value customers.
• There are four markets found by the shopping benefit variables of air
travelers in Taiwan.
• Finally, there are five association rules created by this framework.
• There are about 38.95% of the air travelers who have travelled abroad
one to five times in the past three years; 29.78% of the air travelers who
have travelled abroad in high season one to three times in the past 3
years.
• The objective of this study is to discover customer knowledge, such as
finding the optimized tourist market targets for airlines in Taiwan.
• Cost of developing a new customer is much more (five or six times)
than retaining an existing customers.
• Therefore, airline companies can retain existing customers via dynamic
online CRM systems.
• Increasing Customer Values: Airlines can increase existing travelers’
customer values.
• That is, airlines can increase the lower travelers’ customer values of
middle level; and increase the middle level to the higher level.
Conclusion
This research uses data The study uses Ward’s
mining technologies to method to partition air
discover five association travel market of Taiwan to
rules of customer value for be four markets via shopping
air travelers. benefit variables.

The procedure of this

The research applies the
research can be applied in
FSLC model and socio-
other industries (such as
economic variable on the
logistics industry) for
Supervised Apriori
discovering optimized target
Algorithm to extract five
markets as well.
useful association rules.
Suggestions
In accordance with this
The research framework One of the
research, airlines can
can be applied to other disadvantages include
easily extract customer
retailers for discovering that questionnaires for
values from their big
customer values and customer benefits are
database in marketing
association rules. not easy to be collected.
or CRM system.

Questionnaire items of Researchers should

customer benefits focus future studies on
should be updated in the industry of the LCC
accordance with airlines’ (Low-Cost Carriers) or
new services. other businesses.
 THANK YOU!
YOUR PATIENCE IS HIGHLY APPRECIATED.