Abstract
To maximize LTV, it is common for internet shopping to conduct sales promotion periodically. Incentives such as coupons and points are given or attractive products are recommended in order to stimulate the purchase motivation. To maximize the effect with limited cost, it is important to narrow down the target to effective customers. We formulated this problem as a product portfolio optimization problem with the objective of maximizing LTV using Markowitz's mean-variance model. This model is generally used for deciding the portfolio of diversified investments of stocks. It can be applied to indices such as LTV, sales, and inventory cost in EC logistics. Demand fluctuation lead to the increase of cost, so the mean-variance model, which considers the fluctuation as a risk, good match for logistics. In this study, we constructed a mean-variance model for multiple indices of EC logistics, and related the models with a vector variable of product inclusion ratio to determine a recommended product portfolio that reduces the risk of fluctuation and achieves the expected LTV. As a result of verification with actual data, we confirmed the effectiveness of the proposed method.
