Often times, big data is viewed as the instant solution and
answer. Playing “devil’s advocate”, I’d like to explore some of the reasons why
bid data fails us in marketing strategies. In a recent article on Forbes, an
author explored why big data has limits in marketing.
The first reason why big data limits us in the development
of our marketing strategies is that we are operating under the assumption that
the real world operates like our simulated world in big data. Big data analysis
essentially creates and analyzes an alternate world where our entities are
operating randomly, yet predictably. Although people do tend to make decisions
in trends, this alternate simulated world is not a perfect and ideal
representation of a true reality. Also, in a simulated world, our risks are
negligible and costs of failure is minimized. This leads us to explore more
risky marketing strategies which could ultimately yield more results at the end
of the day.
Another reason why big data often can fail in marketing
strategies is that the life span of industry leading technology is fast and
fleeting. By the time one companies snags a technology or idea to transform
it’s marketing strategy, another company might quickly be closing in on the
same strategy. As more industry players close in on the strategy, it is no
longer an industry leading idea, but rather an industry standard protocol. This
takes what was once innovation and transforms it into potential extra work and
expense for marginal benefit to the company.
The Forbes article also emphasizes the benefit of human
experience on marketing strategies. It focuses on data mining is performed by
machines, which don’t understand the personal experiences of human life and
circumstances. The article closed by emphasizing the difference in efficiency
versus innovation. Efficiency often comes from machines and algorithms whereas
innovation comes from individuals and personal experiences.
Sources:
http://www.forbes.com/sites/gregsatell/2013/03/06/the-limits-of-big-data-marketing/2/
I agree with your post in that companies have to be careful when apply big data analytics to a market. However, in some cases companies can model their entire business plan around them. One company, Stitch Fix, has done exactly this. They basically take a customer and they input 30+ variables (preferences) into their account and stitch fix sends them a box of items that they think they will buy. The customer will then look at the items in the box and choose which items they would like to buy. Because stitch fix pays for the S&H both ways the customer has no risk in trying their product. This could be a huge problem for Stitch Fix because if they are not getting any sales, then they are just shipping boxes around the country for a lose of capital. Considering that they are still up and running they must have a fairly good model, and very good applications of big data analytics.
ReplyDeleteFor the sake of argument:
ReplyDeleteOne can argue that at one point everything starts as innovation, but turns into the norm. If anything this just affirms that competition, or simply the world, is consistent.
As far as the simulated world having a loss of human touch, I agree, but at the same time, you mentioned that it could ultimately yield more results at the end of the day. Also, the blog suggests as though one can only do one or the other, which I'm sure is not the case for most respectable companies.