Identifying the direct mail-prone consumer

Current modeling research in target marketing usually stresses the identification of profitable names for specific mailings. There is little recent research about the characteristics of typical direct mail (DM) customers. In this paper we determine the link between customers' socio-demographic characteristics and their propensity to purchase products through the mail. We hypothesize the existence of a latent variable, DM-proneness, which represents a consumer's tendency to shop via direct mail. Our model links the socio-demographics of customers to their self-reported purchase behavior through the latent variable of DM-proneness in a Multiple Indicators and Multiple Causes (MIMIC) model. We also introduce a second latent variable, DM information interest, which represents the desire to receive direct offers through the mail. The model allows for testing the influence of DM information interest on DM-proneness. We fit the model to actual consumer data using the LISREL program. The findings show that the characteristics of the DM-prone and the DM information-interested are similar, and that DM information interest appears to directly affect DM-proneness. The DM-prone consumer is identified as relatively younger, with somewhat lower education, rather well-off, from a relatively large family, and relatively more likely to have a female head of the household. We also show that consumers' tendency to shop via direct mail can be captured by a latent variable approach, and that DM-proneness can be quite well predicted by demographic consumer characteristics.