Data Warehousing

by Industry
Chapter 4
e-Data

Retail

Data warehousings early adopters

Capturing data from their POS systems

POS

= point-of-sale

Industry analysts predict that brick-and-mortal

retailers will see a slowdown in sales growth
over the next several years (Silverman, 1998).

Typical Uses of Data Warehousing

in Retail

Market Basket Analysis

Refer

to p. 79, Table 4-1

In-Store Placement
Use

decision support to understand which items are being

purchased, where they belong, and modify configurations
in order to maximize the # of items in the market basket.
Retailers are able to negotiate more effectively with their
suppliers

Display space, product placement . . .

Typical Uses of Data Warehousing

in Retail

Product Pricing
Price

elasticity models manipulate detailed

data to determine not only the best price, but
often different prices for the same product
according to different variables
Permits differential pricing

Typical Uses of Data Warehousing

in Retail

Product Movement and Supply chain

Analyzing

the movement of specific products

and the quantity of products sold helps retailers
predict when they will need to order more stock
Product sales history allows merchandisers to
define which products to order, the max # of
units and the frequency of reorders
Automatic replenishment with JIT delivery

The Good News and Bad News in

Retailing

Good News
Retailers

are the most open to trying out

new analysis techniques and

adopting state of the art tools to enable discover of
new information about customers, their purchases,
and the most likely avenues to maximize
profitability

The Good News and Bad News in

Retailing

Bad News
The

lack of success measurement

Not using the data warehouse to its fullest
potential

Hallmark

Financial Services
The pioneers of the data warehouse
Business intelligence has become a
business mandate as well as a
competitive weapon.
1999 Financial Services Modernization Act

Requires

financial service and insurance

companies to disclose how they will use data
collected from their customer

Uses of Data Warehousing in

Financial Services

Profitability analysis
Cannot

know the true value of a customer

without understanding how profitable that
customer is
Figure 4.2: Customer Profitability Analysis (p.
87)
Used by many banks to help dictate the
creation of new products or the expunging of
old ones

Uses of Data Warehousing in

Financial Services

Risk Management and Fraud Prevention

DW

provides a banking compnay with a scientific

approach to risk management
Helps pinpoint specific market or customer segment
that may be higher risk than others
Examines historical customer behavior to verify that
no past defaults have occurred

Ever

gotten a call from you credit card company

asking about a recent purchase?

Uses of Data Warehousing in

Financial Services

Propensity Analysis and Event-Driven

Marketing
Helps

bank recognize whether a customer is

likely to purchase a given product and service,
and even when such a purchase might occur

Example:
Loan

for college tuition may mean a graduation

gift or wedding in the future

Uses of Data Warehousing in

Financial Services

Response and Duration Modeling

Can

tell a bank which customers are likely to

respond to a given promotion and purchase
the advertised product or service
How long a customer might keep a credit card
and also how often the card will be used

Uses of Data Warehousing in

Financial Services

Distribution Analysis and Planning

By

understanding how and where customers

perform their transactions, banks can tailor
certain locations to specific customer groups.
Allows banks to make decisions about branch
layouts, staff increases or reductions, new
technology additions or even closing or
consolidating low-traffic branches

The Good News and Bad News in

Financial Services

Good News
Less

of a training curve because banks have

been monitoring trends and fluctuations in data
long before the DW
Regular users of decision support

Bad News
Deregulation,

mergers, changing demographics

and nontraditional competitors

Royal Bank of Canada

Uses of Data Warehousing in

Telecommunications

Churn
Differentiate

between the propensity to churn

and actual churn
Differentiate between product church and
customer churn

Fraud Detection
Data

mining tools can predict fraud by spotting

patterns in consolidated customer information
and call detail records

Uses of Data Warehousing in

Telecommunications

Product Packaging and Custom Pricing

Using

knowledge discover and modeling,

companies can tell which products will see well
together, as well as which customers or
customer segments are most likely to buy them

Packaging of vertical features

Voice products such as caller ID, call waiting

Employ

price elasticity models to determine the

new package's optimal price

Uses of Data Warehousing in

Telecommunications

Network Feature Management

By

monitoring call patterns and traffic routing, a

carrier can install a switch or cell in a location
where it is liable to route the maximum amount
of calls

Historical activity analysis can help

telecommunications companies predict
equipment outages before they occur

Uses of Data Warehousing in

Telecommunications

Call Detail Analysis

Analysis

of specific call records

Helps provide powerful information about
origin and destination patterns that could spur
additional sales to important customers

Uses of Data Warehousing in

Telecommunications

Customer Satisfaction

The Good News and Bad News in

Telecommunications

Bad News
Many

arent effectively leveraging the

information from their data warehouses once
they obtain it

GTE (p. 103)