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1 Uncovering Path -to-Purchase Segments in Large Consumer Population using Clustered Multivariate Autoregression Yicheng Song, Nachiketa Sahoo, Shuba Srinivasan, Chris Dellarocas School of Man agement, Boston University Abstract We propose a novel method to identify predominant path s-to-purchase of retail consumers from activity level d ataset collected in CRM systems . We verify the effectiveness of the proposed model on a simulated dataset . Following successful verification , we ap ply the model on a retail dataset from a major multi -channel, multi -brand North American Retailer . We uncover three different types of consumers based on how they respond to external stimuli over time : catalog driven shoppers, email driven shoppers, and ho liday driven online shoppers . We also find significant activity across channels by these consumers . Finally, we use the path information in the segments to identify the groups that are most sensitive to a certain type of marketing contact. By analyzing the response of customers in different groups in a test dataset, we show that managers can optimize marketing budget allocation using our proposed segmentation approach . 1 Introduction ConsumersÕ p ath-to-purchase has been a topic of intense interest in recent years (e.g., David et al.2009, Xu et al.2014) . It is recognized that during shopping consumers move through a sequence of states, such as , Awareness to Familiarity to Consideration to Purchase. By aligning a firmÕs marketing efforts with the consumerÕs jo urney on path -to-purchase one may move the customers along the path to purchase. Properly targeted marketing exposure can move the consumer forward through a sequence of pre-purchase activities (consideration to information search ) to purchase behavior s (online and offline purchase) to potential after -purchase behavior s (reviews and rating s) (Figure 1) . Figure 1. Path -to-Purchase example . Recent observation from the industry suggests that the consumer sÕ journey in a digital age could be non -linear (David et al. 2009). E.g., an impulse purchaser might go from consideration to purchase quickly without going through a process of active evaluation. On the other hand, a deliberate consumer might return from evaluati ng one product to considering other products. So, for different consumers one would need to identify their shopping habits and craft appropriate marketing strategies to be effective. Despite the potential utility of the path -to-purchase few
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