Evaluating the short-term effect of cross-market discounts in purchases using neural networks: A case in retail sector

Promotional tools such as cross-market discounts have been increasingly used as a means to increase customer satisfaction and sales. This paper aims to assess whether the implementation of a cross-market discount campaign by a retailing company encouraged customers to increase their purchases level. It contributes to the literature by using neural networks to detect novelties in a real context involving cross-market discounts. Besides the computation of point predictions, the methodology proposed involves the estimation of neural networks prediction intervals. Sales predictions are compared with the observed values in order to detect significant changes in customers' spending. The use of neural networks is validated through the comparison with the forecasting estimates of support vector regression, regression trees, and linear regression. The results reveal that the promotional campaign under analysis did not significantly impact the sales of the rewarded customers.