Fingerhut and IBM Named Finalists in Prestigious Franz Edelman Award For Innovative Business Intelligence Technology

Fingerhut and IBM Revolutionize Marketing Process with Patent-Pending Algorithms

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SOMERS, N.Y - 09 May 2000: -- Leading direct marketer Fingerhut, a wholly owned subsidiary of Federated Department Stores, Inc. (NYSE: FD), and IBM were named finalists in the prestigious Franz Edelman Award for IBM's patent-pending marketing technology.

The Edelman Award, given by the Institute for Operations Research and the Management Sciences (INFORMS) at its 28th International Competition in Salt Lake City, is the "Nobel Prize" of operations research. The international award recognizes and rewards outstanding examples of management science and operations research in practice. This year, the IBM/Fingerhut project was one of six competing for the annual award.

IBM's business intelligence consultants worked with Fingerhut to use Wall Street-like algorithms developed by IBM Ph.D.s to enable Fingerhut to "invest" its marketing dollars as one would invest funds in a stock portfolio.

"Fingerhut sought to transform its business from a focus on how to sell the most merchandise from each catalog to maximizing revenues from individual customers," said Richard Tate, president of the Fingerhut Catalog. "IBM's Horizontal Marketing technology helped Fingerhut increase revenue by $5 million in only 18 months - revenue that flowed directly to its bottom line."

Fingerhut mails catalogs more than 100 times a year, totaling more than 480 million catalogs annually, to seven million active customers. It has a database of 50 million customers and its catalogs include 15,000 items. The numbers are impressive - but that is also the challenge: to avoid saturating customers with too many promotions.

Fingerhut successfully implemented IBM's Horizontal Marketing solution, enabling the retailer to more accurately target customers, cut costs and boost its profitability. Horizontal Marketing helped Fingerhut analyze planned marketing campaigns and determine the optimal mix of advertising, direct mail and/or other components before diving into costly, hit-or-miss marketing blitzes. Having cut its promotions to customers by 6 percent, Fingerhut increased profits by 2 percent.

Operations researchers are little known but indispensable experts who use math and science to improve decision-making, management, and operations. They work throughout business, government, and academia. For example, operations research is responsible for the math models used to book the complex web of passenger reservations and discount tickets at busy airlines. Operations research is also used to save lives, for example through AIDS prevention.

Additional information about the INFORMS conference, with a full list of workshops, is at and

For more information on IBM business intelligence,

For more information on Fingerhut,

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