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Predicting Purchasing Behavior at PriceMart (A)
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This case follows VP of Marketing, Jill Wehunt, and analyst Mark Morse as they tackle a predictive analytics project to increase sales in the Mom & Baby unit of a nationally recognize retailer, PriceMart. Wehunt observed that in the midst of the chaos that surrounded a new baby, parents' shopping habits became quickly ingrained. She hypothesized that if she could get households expecting a new baby to make PriceMart a part of their routines before becoming parents, she might keep them as customers for the next several years, winning significant additional revenue. Technical topics covered: Collecting data and preparing a dataset; constructing training, validation, and holdout sets; cross-validation; Linear regression as a modelling technique; statistical tests; Logistic regression as a modelling technique for estimating predictions between 0 and 1; maximum likelihood estimation; log likelihood; Comparing model outputs.