Silicon Valley with Professor Peter Rossi

Ed LeamerBay area alumni gathered in the Silicon Valley at PayPal headquarters to hear from alumnus Steve Fusco ’05, Senior Director, PayPal and Professor Peter Rossi. Steve enlightened the audience about what it is like to work at PayPal, having joined the team in 2010 from a career in Finance. Professor Rossi shared his perspective on the utilization of couponing, including the history, when Kellogg’s created the concept to promote trial awareness and promotion of new products. Couponing’s initial challenges included tracking redemption, distribution, and allowing for price discrimination to avoid cannibalization of existing customers. The rise of electronic couponing such as Groupon has allowed for slightly more customer targeting (e.g. geographic), but its main advantage has been the ability to utilize technology for more effective distribution. Catalina Marketing was illustrated as an effective method for targeting based on individual consumers spending habits, as nearly 70% of all price scanner information is retained by Catalina Marketing. This type of couponing aids in avoiding earlier couponing problems like the standard blanket marketing approach, as well as leakage to customers that you didn’t want to target. Professor Rossi concluded his presentation by enlightening the audience with a more refined method of analyzing and refining the data, namely the Bayesian method of statistical analysis. This method utilizes prior data, like purchase history or browser history, of other similar customers, to infer behavior for customers where we don’t yet have data.