Who else knows?
If done properly, data analytics can provide valuable information to a company. There can however be some unplanned consequences.
Data analytics is the process of using statistical and computational methods to explore and analyse large datasets in order to discover insights and patterns. It involves collecting, cleaning, and organising data from various sources, then using tools and techniques to identify trends, correlations, and relationships between different variables.
Some of today’s most successful companies use data analytics extremely well.
One of the most well-known examples of a company using data analytics to drive success is Amazon. The company uses sophisticated algorithms to analyse customer data, enabling it to recommend products, customize search results, and improve the overall shopping experience.
Netflix is another company that has leveraged data analytics to great effect. By analysing user data, the company is able to make personalized recommendations to each user, helping to drive engagement and retention.
Ride-hailing company Uber has built its business on data analytics. By analysing user data, Uber is able to optimize its pricing model, improve driver efficiency, and enhance the overall user experience.
There are unintended consequences of data analytics though.
Back in 2012, Target, one of the largest retail chains in the United States, used data analytics to identify pregnant women who were likely to start shopping for baby-related products.
The story has become a classic example of the power of data analytics and how it can be used to gain insights into customer behaviour.
The situation began when a father from Minnesota walked into a Target store and complained to the manager that the company was sending his teenage daughter pregnancy-related coupons. The manager apologised, but a few days later, the man called back to apologise himself, admitting that he had found out that his daughter was indeed pregnant.
Target’s marketing team had realised that there was a goldmine of data hidden in the company’s vast database of customer transactions. They had analysed the data and found out that there were certain products that pregnant women tended to buy before they started shopping for specific baby-related products.
For example, pregnant women tend to buy unscented lotions and certain vitamin supplements such as calcium, zinc, and magnesium. They also tend to start buying larger quantities of certain items like cotton balls, hand sanitizers, and towels.
Target’s marketing team used this information to develop a pregnancy prediction model that could identify women who were likely to be pregnant based on their shopping behaviour. They used this model to target these women with customized offers and coupons for baby-related products.
The results of this targeted marketing campaign were impressive. Target was able to increase sales of baby-related products by 50 percent, and the company’s revenue increased by $2.5 billion over the next two years.
However, the use of data analytics to target pregnant women also raised some ethical concerns. Some customers felt that their privacy had been violated, and there were concerns that the use of big data could lead to discrimination against certain groups of people.
Target responded to these concerns by making its data collection and analysis practices more transparent and by giving customers the option to opt-out of personalized marketing campaigns.
Overall, the story of how Target used data analytics to identify pregnant women highlights the power of data analytics as well as the importance of using data in an ethical and responsible manner. Whilst the use of data analytics can provide companies with valuable insights into customer behaviour, it is important to balance the benefits of data analysis with the need to respect customers’ privacy and autonomy.