Data Mining Equals Competitive Advantage

When I hear the words Data Mining, I think of the invasion of individual privacy.  But let’s say that you run a business, we’ll use a Coffee Shop, would you use Data Mining to help your business increase in profits as well?  Your competitors like Starbucks and Dunkin’ Donuts are already doing it.  Data Mining, if used correctly can be a pot of gold for your company’s success and here are a few ways that you can use the information that you collected to your advantage.  Data mining helps you forecast sales, market, plan, and identify market segment. 

When you forecast sales, you’re using past sales to predict when your customer will buy again!  You might ask how many people, households, businesses will buy your coffee?  How many competitors are in a mile?  How many people, households, businesses are in 5 miles as well as how many competitors are in that 5 mile?

Marketing:  By examining customer purchasing patterns and looking at the demographics and psychographics of customers to build profiles, you can create products that will sell themselves.  With that being said, you can now begin to send weekly emails about your company’s promotions/discounts, or new incentive awards/bonus programs.  (Example, for every $3 purchase you make, you’ll receive 1 point to your card.  10pts=1 free coffee)

Planning:  Data mining will help you identify which products are selling the most, how much inventory you will need to have, and how you should price your items as you uncover customer sensitivity.

One of the best uses of data mining is to segment your customers. And it’s pretty simple. From your data you can break down your market into meaningful segments like age, income, occupation or gender. Segmentation can also help you understand your competition. This insight alone will help you identify that the usual suspects are not the only ones targeting the same customer money as you are.

In conclusion, if I were a business, I would use Data Mining to my advantage as well.  Powerhouse companies like Wal-Mart, Amazon, Microsoft, Starbucks and much more survive not by sitting on these data but to put them to use.  As I continue to understand the usage of data mining this semester, this is a technique that companies use to get ahead of their competitors.  Companies may know my purchasing history, street address, phone number, email, and credit card information but so far, my account balance still remain the same and my credit is still good, so it’s safe to say that companies who invaded my privacy are keeping me safe from thieves.

Source: http://blog.kissmetrics.com/data-mining/