Applying latent trait analysis in the evaluation of prospects for cross-selling of financial services

Identification of the order in which households acquire financial services has important implications for market segmentation and cross-selling strategies. This study illustrates a procedure by which financial institutions, based on internal records, can estimate the likelihood that a customer will...

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Bibliographic Details
Published in:International journal of research in marketing 1991-11, Vol.8 (4), p.329-349
Main Authors: Kamakura, Wagner A., Ramaswami, Sridhar N., Srivastava, Rajendra K.
Format: Article
Language:English
Subjects:
Consumer behavior
Cross selling
Financial services
Mathematical models
Studies
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Summary:Identification of the order in which households acquire financial services has important implications for market segmentation and cross-selling strategies. This study illustrates a procedure by which financial institutions, based on internal records, can estimate the likelihood that a customer will purchase/use additional services. The methodology discussed in this study positions financial services and investors along the same continuum according to the particular ownership pattern. The location of an investor indicates his financial expertise and resources, while the location of a financial service measures the level of expertise/resources needed for ownership of that service. A key feature of the methodology is its ability to predict the probability of ownership of some financial services given information on (non-)ownership of other services. This study concludes with an illustration applying the methodology for targeting customers for cross-selling efforts.
ISSN:0167-8116
1873-8001
DOI:10.1016/0167-8116(91)90030-B