Case Study:

With the amount of data available to companies doubling every year, new sources of data, and innovations in data collection, possibilities for marketers to identify market niches and finely tune campaigns are boundless. In the e-book market, for example, three reading subscription service startupsScribd, Oyster, and Entitleaim to turn a profit by discovering exactly what makes readers tick.

A flat monthly fee gives users unlimited access to a broad selection of titles from these companies digital libraries. Like Barnes and Noble and Amazon, the newcomers will collect an assortment of data from their customers digital reading devices (e-readers, tablets, smartphones), including whether a book is completed, if pages are skimmed or skipped, and which genres are most often finished. These subscription services intend to disseminate what they have learned. The idea is that writers can use it to better tailor their work to their readership, and book editors can use it to choose which manuscripts to publish.

When customers sign up with these services, they are informed that some of their data will be collected and used but assured that their identities will be protected. Large independent publisher Smash words is enthusiastic about the value of such data to the authors who use its platform to self-publish and distribute their work. Many contemporary authors have already explored the feedback opportunities available through their own Web sites, social networking sites, and Goodreads, a user-populated database of books, annotations, and reviews now owned by Amazon. The subscription services will take this type of market research to a more quantifiable level.

Preliminary data analysis has already revealed that as the length of a mystery novel increases so does the likelihood that a reader will skip to the end to discover the resolution. Business books are less likely to be finished than biographies, most readers complete just a single chapter of a yoga book, and some of the quickest reading is recorded for romance novels, with erotica leading the pack. Shorter chapters entice readers on e-readers, tablets, and smartphones to finish a book 25 percent more often than books with long chapters.

But does book completion translate to book sales? And how will this knowledge impact the creative process? Will quality be negatively impacted to satisfy reader preferences? Before any of these questions can be answered, authors will need access to comprehensive data. And that depends on the large publishing houses signing deals with the subscription services. After nearly two decades of market disruptions spearheaded by Amazon, publishers are not flocking to supply titles. So far, only Harper Collins has signed with Oyster and Scribd, while Random House, Penguin, and Simon & Schuster remain on the sidelines.

In the airline industry, nearly all carriers collect passenger data, but some are aggressively pursuing data mining to personalize the flying experience. Previously unlinked data sets can now be consolidated to build comprehensive customer profiles. Cabin crews equipped with tablets or smartphones can identify the top five customers on the plane, passengers with special diets or allergies, seat preferences, newlyweds embarking on their honeymoon, and customers whose luggage was misplaced or who experienced flight delays on their previous flights. In-flight browsing history and Facebook likes are even used to fashion relevant marketing pitches.

This captive audience aspect of air travel in conjunction with the sheer volume of information airlines collect presents a unique opportunity to marketers. Allegiant Travel company has already been able to sell show tickets, car rentals, and helicopter tours to Las Vegas travelers. United Airlines revamp of its Web site, kiosks, and mobile app, along with its data integration initiative, have enabled it to target flyers predisposed to upgrading to an economy plus seat.

Not all customers are pleased. A user on Deltas FlyerTalk forum complained that a link from the new DL.com Web site led to a personal profile that included a lot more than her miles accumulated and home airport. Annual income, home value, and the age ranges of her children were included along with expected data such as amount spent on airfare, hotel preference, and type of credit card. The resulting negative publicity prompted Delta to apologize, but it defended its use of demographic data and data not covered under its privacy policy. Credit-card partner American Express had supplied some data, as allowed under the policy. Global information services group Experian supplied the rest, unbeknownst to consumers.

These data-driven marketing approaches are not flawless. Even customers who accept the inevitability of profiling are miffed when they receive unsuitable offers based on faulty personal information. A Qantas survey of frequent fliers found that most customers want a line drawn between data collection to facilitate useful offers and data collection that is too intrusive. British Airways crossed the line with its Know Me program. Google Image searches were used to identify VIP customers as they entered the airport and first class lounge. The practice has since been discontinued. Customers can opt out of British Airways personalization servicesbut not its data collection. Upon request, a note is added to the customer profile, which nonetheless continues to grow. None of the carriers currently allow customers to opt out of their data programs.

As car companies explore their Big Data opportunities, customer privacy will become an issue for them as well. Ford Motor Company began exploring how integrating databases and using complex algorithms could lead to increased sales three years ago when it developed a program for its dealerships to more closely match car lot inventory to buyer demand. Using buying trends, local and national vehicle supply, and current car lot inventory, Ford devised a program to make purchasing recommendations to dealers. Not only did vehicle turnover rate improve, but net pricethe price a consumer pays minus the manufacturer subsidy rose, fueling an upturn in Fords profits.

But Ford is thinking even bigger. Performance monitoring using vehicle Internet connections to collect fuel economy, mechanical failure, and other safety and performance metrics could soon be used to improve product engineering. Whats more, onboard connections can be used to message drivers about potential breakdown issues, perhaps heading off an expensive recall. Since Ford estimates that by 2016, up to a third of all its consumer communication will occur inside vehicles, possibilities abound. Leased vehicle usage data could inform end-of-lease marketing pitches; driving pattern, schedule, and driving maneuver data could suggest routes most compatible to a drivers habits; car location data could be sent to traffic management systems to control stop lights; data from networked cars could alert other drivers to hazardous conditions and traffic jams, and current car value and payment data can advise drivers of their optimal trade-in date.

((((Case Study Question 1))))

A: Describe the kinds of data being analyzed by the industries in this case.

B: How is data analysis improving operations and decision making in the industries described in this case? What business strategies are being supported