Case Study:
Target’s Big Data Analytics Know Too Much
An angry man went into a Target store near Minneapolis insisting on talking to a manager: He handed a Target promotion that had been mailed to his daughter to the manager saying: “My daughter got this in the mail. She’s still in high school, and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?” The confused manager had no idea what was going on. The mailer had been sent by Target and addressed to the man’s daughter; and it contained specials for maternity clothing, and nursery furniture. A few days later he called the father to apologize again. Instead, the father apologized to the manager explaining that he has since learned that his daughter was pregnant. Big Data Analytics Too Invasive How did Target know? Using big data, models of buying habits, predictive analytics, and her purchase history, Target had figured out (with about 87 percent probability) that she was pregnant. But Target informed her family before she did. A lesson that Target discovered fairly quickly is that knowing about pregnancies in advance creeps out people and can be a public-relations disaster (Duhigg, 2012). While Target assures compliance with all privacy laws, not breaking the law does not mean it’s in the company’s best interest to invade customers’ privacy. How Does Target Make Such Accurate Predictions? Target assigns every customer a Guest ID number that is linked to her credit card, name, e-mail address, social media profile. Guest ID becomes a bucket to store everything she’s bought and demographic data. Linked to Guest ID are demographic data including age, marital status, number of kids, address, how long it takes to drive to the store, estimated salary, whether the person moved recently, other credit cards, and visited web sites. Using their own predictive models, Target identifies customers who are pregnant. Why Does Target Invest in Predictive Analytics? Target’s strategy is to capture a greater share of spend on baby items by being first to reach and promote to prospective parents. Waiting for public birth records is too late because by then parents are bombarded with offers and incentives from competing companies. Not everyone appreciates Target’s strategy.
Q1. Are Target’s data mining and predictive analytics a success or failure? Explain your answer.
Q2. How does Target create profiles of customers?
Q3. Is Target’s “pregnancy predictor” a competitive advantage? Explain.
Q4. How can this predictor upset families who receive the promotions?
Q5. How does Target make such accurate predictions?
Q6. Why does Target invest in predictive analytics?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.