Reasons Companies Use Data Mining Techniques

Have you ever thought that a company knows more about your buying habits than you do? This is due to the use of data mining, which includes finding out buying habits by looking at patterns among information such by analyzing what customers have done in the past, and using the data extracted to produce charts, models, and graphs. For example, a shoe company may show advertisements on Google based on shoes you have searched for or purchased online.

Digging Up Dollars
This article shows that information about customers can benefit companies in several ways.

•  First, it helps companies gain customers. This is accomplished by sorting through a database of customers and their attributes or characteristics. Selected potential customers with certain attributes then became the company's target market.

•  Second, the use of data mining software can reduce expenses. Some data mining applications can detect people who are likely to commit a fraud. Companies can incur a lot of expenses detecting a fraud, and these applications can reduce fraud, which in turn reduces expenses.

•  Third, it can make a company more profitable. Data mining software can be used to figure out which promotions will be the most helpful based on customer information. For example, telemarketing may be less effective than advertising on Google if customers are likely to screen their calls.         

Oracle. The Greek gods of data prediction

Oracle is a company that provides specialized software designed to create layouts to see patterns in data accumulated by companies like HP, Dell, and IBM. These companies use oracle to trace customers usage and even see patterns in competitors selling trends to try and penetrate other markets. According to Oracle," Oracle Data Mining (ODM) provides powerful data mining functionality as native SQL functions within the Oracle Database." SQL is a programming language that Oracle is based in. Oracle provides a diagram of how data is mined, processed, and then rendered to the user for analysis.

   

Oracle in the time of the Greek empire were witches that shared a single eye which they used to see the future of any person or event associated with a single or multiple people. In this day in age the witches are Oracle and the systems used for finding patterns in data is like the eye of the future for these companies.   

Does Target Have YOU in It's Aim??

As the years progress and technology advances, people are generating more and more data through their everyday actions of surfing the web, socializing on Facebook and Twitter, and shopping online and on-site at their favorite clothing stores and/or supermarkets.  The data that's created is collected, stored, and analyzed to find relationships to help businesses essentially make better business decisions.  This is the gist of data mining.  

One decision in which businesses use data mining techniques is the decision of which products should be marketed/advertised to a certain demographic of customer.  A good example would be Target's method of marketing baby products to their customers.  Target, along with almost every other business today, records EVERY piece of data that customers generate; everything from the type of product purchased to how the product was purchased (be it with debit, credit, cash, check, online, on-site, during the day, at night,... the list goes on and on).  Once all of this raw data is analyzed, Target is able to make pretty accurate predictions of what customers want and need, create very informative profiles for each of the customers, and very effectively market certain products to customers, tailoring those products to very specific times in the customers' lives.  Target practices this marketing technique to increase customer loyalty by creating an image that Target has "everything for every occasion."

Pretty good way to use data, right?  Yeah, that's what I thought as well.  

As good of a way to use data as it may seem, there is a lot of controversy surrounding Target's marketing practices.  There are claims that Target is being too intrusive into the personal lives of customers and are invading their privacy! 

Forbes released an article that supports these claims with the title of "How Target Figured Out A Teen Girl Was Pregnant Before Her Father Did."  The article simply summarized Target's marketing technique of analyzing their customers' buying habits to make predictive profiles of their customers for more effective marketing.  The article also explains how Target accurately profiled one of their customers, a teenage girl, as pregnant based on her buying habits in comparison to other customer's buying habits. 

Some feel that her privacy was invaded due to the fact that the teenage girl never disclosed her pregnancy to anyone affiliated with Target, yet still got targeted promotional advertisements for baby and pregnancy products mailed to her home.

I personally feel that the girl's privacy was not invaded, due to the fact that although she may not have come right out and said that she was pregnant, clearly her buying patterns did!  After all, why would her receiving coupons for baby products be a bad thing if indeed she is pregnant?  I mean, isn't that what marketing is all about, finding out what the customer needs/wants and giving it to them?  I definitely think that Target is just ahead of the curve with putting all of their raw data to good use.

What do you think?