Predicting What Customers Will Buy Next

This is a fascinating story of how marketers learn about the needs of their customers and then use marketing approaches to target these needs.  What is so compelling is how marketers are using statistical analysis to analyze customer shopping trends, and then from these trends try to predict what customers will be buying.

There are many marketing concepts at play in this story, most built around buyer behavior.  For instance, the story explains how most customers’ buying decisions are ingrained and are, in effect, habits that are difficult to change.  However, certain life events do open the door to changing buying habits.  To address this, many leading companies, including Target, are using statistical techniques (called predictive analytics) to predict these life changing events.  A key part of this is tracking customer purchase patterns.  Yet, as the story discusses, marketers are gathering much more information than simply following what a customer purchases.  And the depths they go to in order to learn about customers is quite remarkable.

The story also includes an entertaining account of how Procter & Gamble used extensive customer research to re-market its Fabreze product.  The research methods used by P&G include ethnographictechniques that offered key insights enabling Fabreze to move from being a failed product to becoming a major success.

For some, the information in this story may be startling and possibly disturbing.  But the research methods used are catching on across many industries and the use of these techniques is likely to become even more aggressive in the next few years.

Almost every major retailer, from grocery chains to investment banks to the U.S. Postal Service, has a “predictive analytics” department devoted to understanding not just consumers’ shopping habits but also their personal habits, so as to more efficiently market to them. “But Target has always been one of the smartest at this,” says Eric Siegel, a consultant and the chairman of a conference called Predictive Analytics World. “We’re living through a golden age of behavioral research. It’s amazing how much we can figure out about how people think now.”

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