Case study: Identifying Market Niches In the age of Big Data

-          Describe the kinds of data being analyzed by the companies in this case.

Data about e-book purchases and reading habits are being collected and potentially sold to book publishers. The data include whether a book is completed, if pages are skimmed or skipped, and which genres are most often finished.

Airlines are collecting all kinds of passenger data that can be consolidated to build comprehensive customer profiles. Cabin crews can then use the data to identify certain characteristics about on-board passengers and personalize the flying experience.

Car companies integrate databases and use complex algorithms to more closely match car lot inventory to buyer demand. Vehicle turnover rates improve and the price a consumer pays minus the manufacturer subsidy rise, increasing Ford Motor Company’s profits. Using vehicle Internet connections, the company intends to collect fuel economy data, mechanical failures, and other safety and performance metrics to improve product engineering. Ford estimates that by 2016 up to a third of all its consumer communications will occur inside vehicles.

-          How is this fine-grained data analysis improving operations and decision making in the companies described in this case? What business strategies are being supported?

E-book data: The idea is that writers can use it to better tailor their work to their readership and book editors can use it to choose which manuscripts to publish. Business strategy supported—focus on market niche, product differentiation.

Airlines: the data collected can enhance the passenger experience, improve customer service and fashion relevant marketing pitches. Business strategy supported—product differentiation, customer intimacy.

Car companies: which cars to build, which features to include or enhance, which cars sell better than others in different parts of the country. Business strategy supported—customer and supplier intimacies, product differentiation, focus on market niche.

-          Are there any disadvantages to mining customer data? Explain your answer.

Companies can mine too much data on customers to the point of upsetting customers and turning them against the company. Customers have complained that companies are collecting too much data and integrating it from too many sources. Companies defend their use of demographic data and data not covered under their privacy policies.

Even customers who accept the inevitability of profiling are miffed when they receive unsuitable offers based on faulty personal information. Most customers want a line drawn between data collection to facilitate useful offers and data collection that is too intrusive. Although some airlines have curtailed their use of data collected, they continue to collect it nonetheless. None of the airline carriers currently allow customers to opt out of their data programs.

-          How do you feel about airlines mining your inflight data? Is this any different from companies mining your credit card purchases or Web surfing?

I feel insecure about airlines mining in my inflight data. There are some differences but the main concern is security matters.