Question

What are the four types of marketing analytics approaches? How is each type of analytics useful?

Answer 1

Following are the four types of marketing analytics approaches-------------

1. Descriptive Analytics: Describing or summarising the existing data using existing business intelligence tools to better understand what is going on or what has happened. This can be termed as the simplest form of analytics. The mighty size of big data is beyond human comprehension and the first stage hence involves crunching the data into understandable chunks. The purpose of this analytics type is just to summarise the findings and understand what is going on.

2) Diagnostic Analytics: Focus on past performance to determine what happened and why. The result of the analysis is often an analytic dashboard. Diagnostic analytics is used to determine why something happened in the past. It is characterized by techniques such as drill-down, data discovery, data mining and correlations. Diagnostic analytics takes a deeper look at data to understand the root causes of the events. It is helpful in determining what factors and events contributed to the outcome. It mostly uses probabilities, likelihoods, and the distribution of outcomes for the analysis.

3) Predictive Analytics: Emphasizes on predicting the possible outcome using statistical models and machine learning techniques.  predictive analytics is used to predict future outcomes. However, it is important to note that it cannot predict if an event will occur in the future; it merely forecasts what are the probabilities of the occurrence of the event. A predictive model builds on the preliminary descriptive analytics stage to derive the possibility of the outcomes.

4) Prescriptive Analytics: It is a type of predictive analytics that is used to recommend one or more course of action on analyzing the data. It can suggest all favorable outcomes according to a specified course of action and also suggest various course of actions to get to a particular outcome. Hence, it uses a strong feedback system that constantly learns and updates the relationship between the action and the outcome