Abstract
Ignoring endogeneity when assessing investors’ decisions carries the risk of biased estimates for the influence of exogeneous marketing variables. This study shows how to overcome this challenge by using Pólya trees in the quantification of impacts on investors’ decisions. A total of 2255 investors recruited for this study received and opened a digital marketing newsletter about investing daily. Given the nature of investors’ decisions characterized by heterogeneity and endogeneity, the response model is assessed with the Dirichlet process mixture and estimated with the Markov chain Monte Carlo method. Digital marketing substantially exceeds the impact of investor experience, but both have a significant positive impact on investors’ trading volume. Findings obtained with the Dirichlet process mixture as a flexible model indicate that digital marketing even with latent endogenous factors makes an underlying contribution to the investors’ actions in the stock market.
Highlights
Departments of Business Management, University of Tehran, Kish 7941639982, Iran; Department of Sustainable Marketing, Faculty of Economics and Management, University of Kassel, 34125 Kassel, Germany
Investor lifetime value is evaluated by the length of time investors who are active in the capital market from the date of the account is opened
Results are obtained by applying the Bayesian analysis for a semiparametric linear regression model of the Dirichlet process (DP) package in the R library
Summary
Digital mail as a means of marketing communication is differentiated from other communication instruments by the trustworthiness attributed by the recipients (Feld et al.2013), which is very important (Nikunen et al 2017)—just as it is in the finance industry (Rizzo 2018). Empirical findings showed that email contributes to increasing customer purchase rates over the short- and long-term. Modern digital communication production technologies in combination with growing databases enable digital marketers to design and customize emails, newsletters, catalogs, and other communication instruments separately for each customer. Increasing literature recognizes the importance of personalized marketing as a marketing tool because it is considered an essential factor in predicting customers’ preferences and advertising customized products or services (Tang et al 2013). Personalized marketing has accentuated contextual information, through customer’s current environment/situation or pricing (Liu et al 2020; Tang et al 2013; Yelkur and DaCosta 2001)
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