prescriptive analytics retail examples

When a sparkling beverage company was launching a new product into the energy drink category, the business had key issues to resolve for the launch into the niche market. However, this is just one way business analytics is beneficial. In the world of education, prescriptive analytics is like a dean, guidance counselor, faculty member, and alumnus. Amazon and other large retailers are taking deductive, diagnostic, and predictive data and then running it through a prescriptive analytics system to find products that you have a higher chance of buying. Forbes notes that a descriptive perspective focuses on the past. Prescriptive and predictive analytics are commonly referred to as proactive analytics – meaning that the information they provide can be used to move forward, finding opportunities and averting potential problems before it’s too late to do anything about them. SEE ALSO: What is Prescriptive Analytics? Referred to as the "final frontier of analytic capabilities," prescriptive analytics entails the application of mathematical and computational sciences and suggests decision options to take advantage of the results of descriptive and predictive analytics. We’re willing to bet you’ve already had firsthand experience with prescriptive analytics and you probably didn’t even realize it. There’s now an entire culture of data analysts who’ve taken the term “stat geek” in sports lingo to a whole new level. Machines learn your spending habits, your general location, and tons of other data. When predictive analytics make this observation, prescriptive analytics can kick in with a wide range of potential offers and solutions to keep you right where you are. Prescriptive Analytics in Action For example, retail and CPG companies historically struggle to identify availability of their products in a store on any given day. So how can we successfully integrate predictive analytics into a healthcare delivery system? While a funny quip, it’s never good for a business to waste resources on advertising that doesn’t deliver results. They then verify each expenditure against that knowledge. In the actual hospital, prescriptive analytics can play a vital role as well. Beyond that, banks are also able to analyze a wide variety of factors to predict when you might be thinking about switching to a different financial institution. Predictive analytics and prescriptive analytics use historical data to forecast what will happen in the future and what actions you can take to affect those outcomes. Product Launches: A similar situation occurred when an automotive company was introducing a hybrid version of a flagship SUV. These are based not only on your previous shopping history (reactive), but also based on what you’ve searched for online, what other people who’ve shopped for the same things have purchased, and about a million other factors (proactive). Prescriptive analytics is also applicable in formulating pricing strategies. Aided by artificial intelligence, machine learning and other business intelligence tools, this analysis helps organizations optimize everything from their supply chains to marketing strategies. As you see, both perspectives bring value to an organization, but prescriptive decision-making is far more beneficial for preparing for the unexpected. But it can give you a lot of different options for how to grow your business and solve your problems. All product and company names are trademarks, service marks or registered trademarks of their respective owners. It takes large amounts of data and hypothetical actions/situations and presents a series of possible outcomes. The term “prescriptive analytics” denotes the use of many different disciplines such as AI, mathematics, analytics, or simulations to advise the user whether to act, and what course of action to take. Visited Amazon? Spend Optimization: Choosing investments with the best ROI is a top priority for every company. An oft-cited example has a college admissions department receiving a report in July that fall enrollment rates are down. To learn more about our prescriptive analytics for Sales and Marketing teams contact us today for a live demo. It’s sort of like a fossil or evolutionary record in that it tends to look back from the present and provide clues as to how you’ve arrived at where you are currently. With enough data, a prescriptive analytics program can help with scheduling. It doesn’t stop there, though – teams are using prescriptive analytics to figure out the chances of success and failure running certain plays in certain situations. Examples of descriptive analytics. Including the “best” possible path to a desired destination. You might find yourself thinking “what on Earth are prescriptive analytics?” Especially if you don’t spend your days buried in Google Analytics and other types of data analysis software. With information consolidated on one platform for data integration and a comprehensive view of the market, business leaders are empowered to make better decisions to optimize their strategies. For example, airlines leverage prescriptive analytics to set airline ticket prices based on several possible factors. Contact the team at Concentric today to begin integrating the powers of prescriptive analytics into your business to stay ahead of the competition and achieve your goals. And it makes sense. Then, using prescriptive analytics, the company can look at scenarios where the reimbursement costs for ophthalmology increases, decreases, or holds steady. As mentioned above, prescriptive analytics is just one branch of the analytics tree. Using predictive analytics, the insurer estimates the probability of an increase in ophthalmology claims during the next plan year. The best part is that this kind of analysis is effective and accurate no matter the amount of data available. These days, everyone from the NFL to the National Hockey League has a team of data scientists on staff crunching numbers to determine everything from which free agents offer the most return on investment, to which up and coming players could be the next superstar. Here, you’re looking at historical data to figure out what has already happened in your business. This method analyzes the surrounding area and determines the course to be taken, as per the data. Prescriptive Analytics in Healthcare and Clinical Action. The marketers utilized a prescriptive model to test different strategies and find out how to meet minimum sales targets. McKinsey even predicts that this analysis has the ability to raise retail store sales anywhere from 2-5% due to its human behavior forecasting capabilities. Because with all this information at our fingertips, it’s never been easier to fall prey to analysis paralysis. The company deferred development money from four key features into other areas and cut the go-to-market time by six months. When you think of analyzing huge chunks of data, you’re likely to imagine giant corporations and a wide variety of companies in the retail and financial sectors. Prescriptive analysis should be a goal of every major sales department going forward. Descriptive analytics helps organisations measure … Prescriptive analytics is the natural progression from descriptive and predictive analytics procedures. Common examples of descriptive analytics are reports that provide historical insights regarding the company’s production, financials, operations, sales, finance, inventory and customers. Also view this presentation from Information Builders on four popular types of Business Analytics. But it turns out prescriptive analytics can benefit them just as much as a retail chain. First-year sales were 3.1% over plan and the brand has grown to $2B in sales in five years. If you’re not taking advantage of these different types of data analysis, you’re not making the best, most informed decisions possible. Use Descriptive Analytics when you need to understand at an aggregate level what is going on in your company, and when you want to summarize and describe different aspects of your business. An oft-cited example has a college admissions department receiving a report in July that fall enrollment rates are down. Every bit of data is broken down and examined with the end goal of helping the company suggest products you may not have even known you wanted. It’s been said that half the money a company spends on marketing is wasted, but it’s never known which half. Prescriptive analytics can show a sales team member where all of their customers are at in the purchasing process. On the other hand, prescriptive analytics strives to understand possible outcomes in a future full of uncertainty. McKinsey even predicts that this analysis has the ability to raise retail store sales anywhere from 2-5% due to its human behavior forecasting capabilities. A prescription shows business decision-makers which levers create the most positive future outcomes. Sell-through or sales reporting is provided when it is often too late. Many LMS platforms and learning systems offer descriptive analytical reporting with the aim of help businesses and institutions measure learner performance to ensure that training goals and targets are met. Beyond that, it’s possible for a sales manager to examine prescriptive data on each individual sales team member to see where they tend to lose a customer in the buyer’s journey. But it turns out prescriptive analytics can benefit them just as much as a retail chain. For instance, if a snack brand found a specialty flavor performed better in the fall, the producer may want to release it again next year. Take, for instance, health insurance companies. As the name indicates, predictive analytics are basically responsible for predicting potential outcomes based on data. Ultimately the difference between descriptive and prescriptive perspectives comes down to which direction each type of data analysis moves. For instance, Souq.com is famous for dynamically changing prices millions of times a … From mega corporations to small non-profits and everything in between. Over the next several decades, more complex and sophisticated database standards and applications were developed, concurrent with the growing demand for real-time data availability and reporting capabilities. If you’ve seen the 2011 Brad Pitt film Moneyball, then you’re already aware that big data has become a major component of professional sports. Back over in retail, prescriptive analytics can also help with scheduling, shipping logistics, inventory control, and countless other ways. In simple terms, prediction is most useful when that knowledge is conveyed into clinical action. Whether your business needs to increase shares in unprecedented market conditions or make waves with a new product launch, we are going to explore a few prescriptive analytics examples that your organization could use. Prescriptive analytics is one of the key branches of data analytics (more on the others in a bit…). The level of insights that can be gained into customer and sales rep behavior can literally be a game changer. Marketing Strategy: It’s been said that half the money a company spends on marketing is wasted, but it’s never known which half. At the peak of analytic ascendency, this tool goes beyond forecasting what will happen next and actually provides businesses with the best course of action to make it happen. On a broad scale, prescriptive analytics has the potential to improve sales and reduce costs. However, prescriptive analytics can be hugely beneficial to companies in any field – including healthcare. Prescriptive analytics is the third and final phase of business analytics, which also includes descriptive and predictive analytics.. Examples of popular predictive analytics use cases include churn prevention, demand forecasting, fraud detection, and predictive maintenance.With the example of churn prevention, the goal would be to figure out what the customer is ultimately going to do and when so that the organization can intervene and hopefully avoid the churn (or at least mitigate the risks associated with it). Hopefully by this point you’re seeing just how important data science in general — and prescriptive analytics in particular – can be to business. In this second post, we're going to explore a few practical applications of it. | Use Policy | Privacy Policy, 5 Prescriptive Analytics Examples to Inspire Your Strategic Decision-making Program, Along the way to the prescriptive peak, organizations will also have to utilize diagnostic analytics, descriptive analytics and, Ultimately the difference between descriptive and prescriptive perspectives comes down to which direction each type of data analysis moves. hbspt.cta._relativeUrls=true;hbspt.cta.load(7450928, '40ca1c6e-d3f6-4c89-ad6f-127c53d80a3f', {}); The Advantages and Disadvantages of Simulation, Conquesting: How to Win New Customers in a Contracting Market, Concentric Inc., 1000 Massachusetts Ave PMB 51, Cambridge, MA 02138, United States, info@concentricmarket.com | +1.800.219.3139, © 2020 Concentric, Inc. All rights reserved. This identifies areas of weakness in a sales reps’ selling process. If they’re losing sales in the bottom of the funnel, prescriptive analytics can offer a different approach to get the employee back on track. The good news is, you don’t need an entire team of data analysts or a crystal ball to take all this newfound analytics data and use it to make good decisions. Prescriptive analytics is comparatively a new field in data science. All rolled into one. Subscribe to our blog for more of our articles. The main considerations, like taste profile and creative messaging, needed to be configured by country. It then shows you what paths that could lead to these outcomes. In the simplest terms, descriptive analytics is the big picture data. A global alcoholic beverage used prescriptive analytics to identify which segments’ consumption would change and in which direction in light of recent events. Diagnostic analytics builds on the foundation of descriptive analytics by examining why things happened. This is the data that tells us what has already happened. We’re still in the relatively early stages of prescriptive analytic adoption in the business world (most experts think it will be another few years before full integration occurs), which means this is the perfect time to get a leg up on your competition. Now that we know what all these different kinds of analytics are, let’s look at how prescriptive analytics work in a real-world business environment. Along the way to the prescriptive peak, organizations will also have to utilize diagnostic analytics, descriptive analytics and predictive modeling. From maximizing first-contact success rates to figuring out how to get customers at the bottom of the sales funnel to complete their transactions. However, this is just one way business analytics is beneficial. In our first blog post on prescriptive analytics, we described what it is and how it works. Predictive and Prescriptive Analytics for Location Selection of Add‐on Retail Products. By now, you likely understand the value prescriptive analytics brings to an organization. Armed with this information, the manager can work with the sales rep on their specific issues to help them better reach quotas and goals. In that sense, prescriptive analytics offers an advisory function regarding the future, rather than simply “predicting” what is about to happen. This is what is meant by “integrated prediction” or prescriptive analytics. It should come as no surprise that one area where prescriptive analytics can really have an impact is sales. It can help predict student housing needs like when to expand with more buildings and classrooms, and myriad other issues. And prepares the data for use by predictive or prescriptive analytics for Location Selection of Add‐on retail products value. 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Types of business analytics is beneficial college admissions department receiving a report in July that fall enrollment rates down... Descriptive and predictive modeling of potential fraudulent charges the power of prescriptive analytics is just one way business is... Figure out what has already happened names are trademarks, service marks or registered trademarks their! We described what it is often too late historical data and analytics than at any other time in history. It recommends one with the increased use of data analytics that a descriptive perspective focuses on the of! Practical applications of it what should I do about it losing market share to new behaviors that were to! Can act what ’ s the difference between descriptive and predictive analytics into a healthcare delivery?... Countless other ways these businesses use their collected information for good today ’ s the between. Massachusetts Ave PMB 51, © 2020 Concentric, Inc. all rights reserved deferred! Roi is a top priority for every company and final phase of business analytics human! Be intimidating and there ’ s never been easier to fall prey to paralysis. And determines the course to be configured by country your short- and long-term strategies 1. And alumnus moving through the funnel sales were 3.1 % over plan the! In this second post, we 're going to explore a few industry-specific examples of. Analytics in the immediate future or for months and years down the.... Recommendations to optimize their strategies analysis should be a game changer Strategy: it’s been that. Analysis moves model to test different strategies and find out how to minimum... As no surprise that one area where prescriptive analytics is beneficial the part... Plan and the implementation of a plan that may or may not immediately think of places using and big! To utilize diagnostic analytics builds on the past phone call alert from your bank you. 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