Case Questions: 1. Using the information in Exhibits 5 and 6, summarize - for the Director of Marketing - which customer groups should be targeted with this mailing. 2. Use the information in Exhibit 7 to make a cumulative gains chart for both the training and test samples. Does the tree appear 'overfit'? Why or why not? 3. Using the same costs as before ($18 selling price, $9 wholesale price, $3 shipping and $0.50 mailing costs), estimate what the gross profit (in dollars and as a % of gross sales) as well as the return on marketing would be if the "The Art History of Florence' offer were only mailed to those predicted by the CHAID tree results to be good prospects for this offer. 4. Compare and contrast the results and insights from using RFM, logistic regression and CHAID decision tree analysis for targeting buyers for BookBinders offers.

Fig: 1