Latent Customer Segmentation and Value-Based Recommendation Leveraging a Two-Stage Model with Missing Labels

The success of businesses relies heavily on their ability to convert consumers into loyal customers. The value proposition of a customer is considered the primary determinant in this conversion process, and establishing intrinsic product worth at a specified value point is essential. While affordability remains a significant factor for online shoppers, brands are transitioning away from broad-scale promotions and campaigns that reduce the perceived brand worth. Implementing such widespread marketing campaigns can inadvertently erode brand equity and diminish the probability of achieving the desired return on marketing investment. Existing solutions have fallen short in addressing the twin challenges of finding the optimal balance between value proposition and long-term brand value. At the same time, existing dynamic economic algorithms often misidentify highly engaging customers as ideal campaign targets, leading to sub-optimal engagement and conversion rates, thereby diminishing customer loyalty.