Predictive modeling is a set of statistical procedures designed to predict a set of outcomes based on measured variables, assumptions and inputs. In a broader sense, it includes product recommendations, but for practical purposes, we’re limiting it here to responses to marketing actions.
Predictive modeling is used in marketing for 4 reasons
- Marketing spend effectiveness (How much to spend)
- Targeting (Who to target)
- Promotion differentiation (How to differentiate offers)
- Contact strategy (How to contact customers over time)