big data and How It Affects Businesses
Daniel Gibaud
ECPI University
Big Data and How It Affects Businesses
In 2012, the concept of “Big Data” became a widely debated issue as we now live in the information and Internet-based era where everyday up to 2.5 exabytes (one billion GB) of data are created, and the number is doubling every forty months (Brynjolfsson & McAfee, 2012).
According to a recent research from IBM (2012), ninety percent of the data in the world has been created in the last two years alone, and Internet activity during each day will generate more data than all the data combined in the Internet twenty years ago.
Networks and the cloud technology allows processing power and data storage cost to be at a relatively low price which results in the huge database collection and global access (IDC, 2012).
By developing algorithms, Big Data enables us to have a better prediction of what will happen in the future based on previous data and allow us to make better decisions (Brynjolfsson & McAfee, 2012).
The emerging data-driven economy can be categorized by two main characteristics which are the abundance of complex data and the real time speed of change (Johnson, 2012).
Big Data is not just about being large in size, but also about the variety of both structured and unstructured data. “It can be captured, communicated, aggregated, stored and analyzed which is now becoming part of the function of the global economy” (Brown et al, A, 2011, p.25).
The Essay on Cable Modems Data Lan Internet
... to provide a variable bandwidth connection to the Internet. Still, the high peak data rates of cable LANs can make them a ... applications such as telephony. Also, uploading other information over the Internet, such as software, requires 2 way transmissions. In order to ... networks are such large LANs the propagation delay is much bigger. This is because it takes longer for a computer's transmitting ...
Like Brad Brown said, Big Data can be derived from anything and anywhere. It is not just the closed-structured data processed in highly organized databases by corporations, but also those unstructured data from web-browsing trails, posts on social media websites, digital pictures and videos, purchase transaction records both online and offline, and sensor signals to GPS tracking systems which have proven to be crucial in revealing insights about consumer behavior (Corn, 2012).
Data becomes more available and more understandable with better technology; it allows companies to measure and monitor how people behave and how machines operate in order to learn more about these data (Lohr, A, 2012).
Although Big Data is not totally a new concept, it is the new way of representing data, creating a significant change in the way we recognize data, and allowing the discovery of untapped benefits for organizations (Davey, 2012).
Now, the Big Data movement is all about extracting insightful data to turn it into business advantage (Brynjolfsson & McAfee, 2012).
The challenge in using the data is the ability to distinguish between useful information and noise, and to effectively turn good data into meaningful information that organizations can harness to improve performance and increase profit. However, it is critical, in exploiting Big Data, to be able to identify whether or not the data has become insignificant because it is out of date.
For many companies, data used to be undervalued assets but today, data has become the representation of the ultimate challenge and opportunity for businesses to grow (Munford, 2012).
Businesses can now collect data across different functions, from partners to suppliers and most importantly from their clients. New and better technology allows businesses to more effectively analyze Big Data through a more sophisticated algorithm (Brown et al, B, 2011).
The analysis of large-scale data is the new competitive edge for businesses today.
A study conducted by Brynjolfsson & McAfee (2012) shows a positive correlation between the level of data usage and performance both in financial and operational terms. This shows that the company that is capable of using Big Data effectively will result in a better performance based on its company objective measurement. It is so powerful that in the 2012 World Economic Forum in Davos, Switzerland, Big Data was said to have a value just as strong as gold (Johnson 2012).
The Business plan on Opening The Business Steve Research Information
Steve decided to open his own tee- shirt shop, near a local university. He felt it was the perfect time to start his own business, due to the location and the fact that the summer Olympics were being held 55 miles away in Atlanta. Wow! What a great opportunity it was, for him to take initiative to become his own boss, gain exposure, and become profitable. The only problem was that Steve did not ...
As mentioned, Big Data is not entirely a new idea, but only web-based companies like Google and Yahoo are those that truly have familiarity with the Big Data (Dumbill, 2012).
These companies collect large amounts of data every day and create an entirely new method in conducting business by capturing free information from the Internet and servicing them to people in useful ways. For example, Google Trend is a service that displays statistics of a particular search-term relative to the total search size in different demographics and different languages across the world. It also allows users to compare the number of searches among other variables and shows news related to the search terms which can be further analyzed by the users (Matias, 2012).
However, the prevalence of the Internet today naturally makes more business activities digitalized. Large amounts of information can be collected on practically almost any topic related to a business. In addition, people increase the willingness to share their personal information via their electronic devices like smart phones or tablets which allows businesses to capture behavioral patterns and utilize them for business purposes. This opens more opportunities for companies to develop their strategies based on the concept of Big Data and gain a more competitive advantage.
On the other hand, it is important for companies to have a visionary leader who has sufficient understanding of how to access the data and select the appropriate analytical strategies to manage the risk that might occur during the process (Sandman, 2012).
Hence the vastness and varieties of Big Data make it clear that Big Data can be applied not only to businesses under the digital platform, but also to other businesses across the industrial segment like retail, manufacturing, service, finance, and health care (Lohr, A,2012).
Due to high competition and better technology, customers become more price sensitive and have more power than ever before. Since buyers can easily go online to compare prices from different sellers, the prices offered by businesses that compete mainly on price will be relatively low. This means that companies like Tesco, one of the four leading UK supermarkets, cannot rely solely on price competition, but need to better understand the behavior of its customers and use the information effectively (Savitz, 2012).
The Business plan on Tesco: the UK biggest supermarket
... business. Tesco’s Baby and Toddler Club was also relaunched as the Tesco Loves Baby Club, with a new website containing advice and information ... behind customers switching to Tesco for their weekly shopping during FY2011. Further, in September 2011, Tesco launched The Big Price ... the contract, Cable & Wireless would provide data, fixed and mobile voice telecommunications services and streamline ...
Information technology and digital data become an important factor in boosting the profitability of the retail sector because Big Data is increasingly becoming crucial due to rising internet activities as consumers search, research, compare prices, buy, and find support online. (Brown et al, B, 2011).
Therefore retail companies have invested in data warehouse storage where they can keep their customer transaction records, inquiry, complaint or feedback in general to analyze overtime (Savitz, 2012).
According to the research by McKinSey Global Institute, the benefit of Big Data for the retail sector can be summarized into four main points. First, it helps by improving the effectiveness of their marketing. Second, companies are able to develop a better operation and supply chain management. Third, it can be used for improving store merchandising, and lastly, businesses can use it to find new business opportunities for the expansion of their businesses (Brown, et al, B, 2012).
Big Data has allowed Tesco to understand more about their customers and develop better customer service. It initiated the Club Card in 1995 in order to maintain their loyal customers (McElhatton, 2012).
Tesco believes that it is more profitable to invest in existing customers than to attract those from its competitors (Grant, 2012).
They will use customer data from the Club Card which includes customers’ demographics, information about their purchases, payment method and social networking to offer suitable promotions to each individual customer which is what Philip Clarke, Tesco’s chief executive officer, refers to as “mass personalization” (Anon, 2012).
The Essay on Tesco Customer Service Customers Products Provide
Tesco - Customer service Customer service is the most important aspect of any business. Without an adequate relationship with its consumer base, a company is at an enormous disadvantage. Today's world competition is very strong in every kind of businesses. Every organisations must provide high quality products or services in order to survive, however their competitors also providing the same or ...
Especially with online shopping, marketers should not only track previous transactions, but also other products that each customer might be interested in, how customers navigate through the website, and how much they are influenced by special offers (Brynjolfsson & McAfee, 2012).
As for Tesco, it utilizes these data to send precisely targeted offers to specific customers based on customers’ information and suggests bundles of products that complement with the customer’s previous purchases. For example, Tesco usually sends beer discount coupons together with diaper purchases, since they know that with the arrival of children in the family, the father will have less time to enjoy drinks outside of their homes (Rohwedder, 2006).
Moreover, the Club Card also allows Tesco to analyze customers’ information to offer cheaper products to price-sensitive customers and premium products to wealthier ones. Tesco conducted a test by displaying the types of mattresses based on the prices that reflect the purchasing power of different customers. The result of that strategy increased Tesco’s mattress sales by ten percent (Anon, 2012).
Tesco has seen the growing trend of smart phone usage and other personal location data-enabled mobile devices that it decided to partner with social media platform foursquare, which is a partner with American Express, to offer special deals to customers who ‘check-in’ at Tesco (Hobson, 2012).
This location-based marketing targets customers who are near to the stores or those who are already inside. When the store detects that information, it can send customers special offers for certain products on their smart phone devices (Brown et al, B, 2011).
Eventually, these customers will end up buying more merchandise than just the special offers.
Big Data does not only help Tesco create a competitive advantage by improving the effectiveness of its customer service and marketing campaigns/promotions, but also aid in the operation and supply chain management. Tesco can now run daily analysis of their operations and access the sales report from every branch in real-time. This gives more transparency and accuracy in the system, which leads to a more efficient and effective operation system. It can monitor each and every customer service related issue in order to achieve better quality service (Brown et al, B, 2011).
The Essay on Local Branch Customer Product Supplier
Overview. The process is designed to handle the interaction with customers and suppliers, and also deals with stock control. Invoice and payment data is recorded. For clarity I have noted down the following: o Head Office consists of - Product Management Finance Sales A Local Branch consists of - A Local Office Warehouse Distribution Preliminary List of Entities. In my top-down analysis of the ...
In addition, the increase of digital data allows Tesco to connect with its supply chain electronically (Brown et al, B, 2011).
Since some orders cannot be processed and delivered overnight, it is therefore important for Tesco to keep track of their information and let the suppliers know when products should be restocked. With the application of Big Data, Tesco can now make sure that less products will be out of stock, which is represented by the thirty percent fewer gaps on store shelves (Miller, 2012).
Tesco uses data like sales history, weather prediction and seasonal sales cycles to improve inventory management so that they can stock up the inventories according to the demand. These variables, like the weather, though cannot be predicted with precision, can still show the likelihood of demand forecast for certain products. For example, barbeque meat or ice cream demand will go up corresponding to the rise in temperature (Miller, 2012).
When there is leftover stocks and the products are approaching their expiration date, retail companies are forced to sell the goods at a very low price. However, with better inventories management, there will be less leftover stocks, which help Tesco lower the number of sales lost.
Tesco realizes that different products have different price elasticity and has developed a demand elasticity model to understand when and how much they need to reduce the price corresponding to the expiry date and stock shift (Miller, 2012).
Moreover, Tesco can hold a lower level of inventory because Big Data analysis allows them to respond more precisely to the demand of consumers (Brown et al, B, 2011).
The statistic shows that by predicting the weather, Tesco is able to deliver six million dollars less food wastage in the summer, thirty million dollars increase in profit by reducing price accordingly, and fifty million dollars less inventory in the warehouse (Miller, 2012).
As for the physical stores, Tesco can use in-store data to analyze the behavior of customers while they are shopping in order to increase the sale size. The data tells Tesco how to design the optimal store layout, determining which products should be placed together along with their location on the shelves. It can also help Tesco make better decisions in determining which merchandise should be placed in a different store location (Brown et al, B, 2011).
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1. Introduction: The retail industry plays a significant role in the development and growth of overall economy of a nation. In countries such as UK, retailers have positioned themselves in such a way that they are able to cater all types of customers’ needs and wants. (Economic Survey, 2012). The major retailers of UK are Tesco, Sainsburys, Asda, John Lewis, Marks and Spencer etc. Even when the ...
For the online store, Tesco can adjust the website layout from navigation system to the displayed photos based on the data derived from that customer’s previous transaction records, browsed items or how they navigate through the site and such (Brynjolfsson & McAfee, 2012).
The idea of Big Data together with the advancement in technologies in retail business allows Tesco to break through the traditional way of running supermarkets and follow a more innovative business model (Brown et al, B, 2011).
Tesco understands how consumer behavior changes as the technology changes, which transforms the way people shop. Hence, it developed a location-based campaign without having a physical location; such as in South Korea, by launching interactive virtual stores in subway stations, which is the place where most of its customers will pass by as they go through their daily life. Customers can use their mobile phones to scan QR codes for each product and these products will be added to their shopping cart and delivered to their home or office (Wrenn, 2012).
The campaign was so successful that Tesco launched a similar virtual store at Gatwick Airport’s departure lounge with visual techniques that display graphic representations of the products so real that it resembles the supermarket aisles with actual products on the shelf. Tesco uses customers’ data to select what type of product to be displayed on the virtual store. Customers then use a barcode scanning application to scan for each product and either adds the litem to a shopping list or puts it in a virtual check-out bin (Simpson, 2010).
Tesco understands that after a long exhausting day from travel, the last thing people want is an empty refrigerator when they get home. Therefore with the Tesco virtual store, customers can book a delivery slot up to three weeks in advance while waiting at the airport so the purchased items will be ready by the time they arrive home (Wrenn, 2012).
It is evident that Big Data can help companies like Tesco where there is large information about products and services, suppliers and customer flow, to stay ahead of the competition in the retail sector. It allows businesses to have a deeper understanding about their customers so that they can deliver better products and services geared towards specific customer’s needs and characteristics. However, the impact of Big Data extends beyond the business side. It can also help us understand the economic implications and other government issues; for example, defense, energy, and education (Mervis, 2012).
There is evidence showing that the information from search engines like Google Trend give more accurate predictions of house sales than the forecasts from real estate economists which later forced the National Bureau of Economic Research to hold a workshop on “Opportunities in Big Data” (Lohr, A, 2012).
However, there is some concern about the privacy regarding the emergence of Big Data both to individuals and to companies. For the companies that have to rely on data as a competitive asset like real estate or financial companies, they might feel the threat from the data being exposed to the public. Business units like Research and Development or Engineering will face greater risks to data security and intellectual properties issues (Brown et al, A, 2011).
As for the individuals’ side, technologies allow companies to access personal information more than ever with or without individuals’ knowledge. Every transaction made will leave a digital footprint from buying groceries, credit card information, to how much electricity is used. Even though the information is being used for marketing purposes, many still feel concerned about their privacy. So it comes to the choice between living ‘off the grid’ and staying outside the digital world, or accepting the fact that this has become part of our technological life (Hill, 2012).
Whatever choice is made, individuals must bear the consequences that will affect their life and learn to live with it understandingly.
From this, we can see that Big Data may ultimately be the driving force for the nation, not just companies to prosper, but may also give us hope for the global economy to get back on track and find a path towards more growth through investment and government policies (Brown et al, A, 2011).
However, Big Data is all about statistics, explaining trends and patterns from pools of data sets. It does not guarantee accuracy and sometimes leads to false discoveries, or what statisticians regard to as the stochastic variable (Lohr, B, 2012).
Remember that the most important challenge lies within human intuition of how to get exactly the right information from the right sources in appropriate formats in proper timing with suitable algorithm for it to be most effective (Brynjolfsson & McAfee, 2012).
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