Thursday, March 5, 2015

Big Data Analytics

This is the process of analyzing large amounts of unstructured or semistructured data of various types across different sources to identify patterns and correlations that could provide better targeting, additional revenue opportunities, and other competitive advantages. Some uses of big data include:
  • More in-depth and precise business understanding
  • Improved customer relationship management (CRM) campaigns
  • Optimized segmenting of customers
  • Improved market trends and analysis
  • Recognition and development of sales and market opportunities
  • Improved planning and forecasting
Big data analytics is enabled primarily by substantially improved statistical and computational methods, but also by improved storage and computational capacity. Rather than constructing the experiments first, big data allows one to accumulate vast quantities of data and then identify statistically significant patterns. The largest challenge to big data analytics is an internal skills gap. Big data can reveal unexpected correlations. My favorite is that the purchase
of furniture coasters is a strong indicator of low credit risk and high credit scores.

Jason Frand of UCLA Anderson Graduate School of Management provides these examples of how big data is being used today:
  • "One Midwest grocery chain used the data mining capacity of Oracle software to analyze local buying patterns. They discovered that when men bought diapers on Thursdays and Saturdays, they also tended to buy beer. Further analysis showed that these shoppers typically did their weekly grocery shopping on Saturdays. On Thursdays, however, they only bought a few items. The retailer concluded that they purchased the beer to have it available for the upcoming weekend. The grocery chain could use this newly discovered information in various ways to increase revenue. For example, they could move the beer display closer to the diaper display. And, they could make sure beer and diapers were sold at full price on Thursdays. . . .
  • American Express can suggest products to its cardholders based on analysis of their monthly expenditures.
  • WalMart is pioneering massive data mining to transform its supplier relationships. WalMart captures point-of-sale transactions from over 2,900 stores in 6 countries and continuously transmits this data to its massive 7.5 terabyte Teradata data warehouse. WalMart allows more than 3,500 suppliers to access data on their products and perform data analyses. These suppliers use this data to identify customer buying patterns at the store display level. They use this information to manage local store inventory and identify new merchandising opportunities. In 1995, WalMart computers processed over one million complex data queries. In 2010, WalMart processed 1 million customer transactions every hour feeding 2.5 petabyte databases.
  • The National Basketball Association (NBA) is exploring a data mining application that can be used in conjunction with image recordings of basketball games. The Advanced Scout software analyzes the movements of players to help coaches orchestrate plays and strategies. For example, an analysis of the play-by-play sheet of the game played between the New York Knicks and the Cleveland Cavaliers on January 6, 1995 reveals that when Mark Price played the guard position, John Williams attempted four jump shots and made each one! Advanced Scout not only finds this pattern, but explains that it is interesting because it differs considerably from the average shooting percentage of 49.30 percent for the Cavaliers during that game."
As additional examples:
  • Netflix mines its customer digital download database to recommend movies and shows that their customers may like, based on their viewing history.
  • Xerox is developing social media analytics software to enable businesses to monitor their brand images. The software will be able to identify specific themes in social media content (tweets, blog posts, etc.) and route them to the appropriate internal people to handle.

Excerpted from Brand Aid, second edition. Order your copy here now.

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