Although marketing continues to rely on consumer savvy to engage with new and established customers, data analytics, particularly with regard to online shopping, is increasingly becoming the more accurate measure of consumer behavior. Samantha Porter, writer of several marketing pieces, some of which describe what students learn in behavioral marketing courses, today explores how exactly the shift from savvy to analytics occurred and why it is as accurate as it is. In this article, Samantha provides the history surrounding Core3 Solutions post about privacy and online marketing.

The Big Crunch: Marketing Shifts from Society Savvy to Analytics

Online MarketingProduct marketing has always been an intricate science, but the rise of technological tools has made the task even more complex—and in many respects, even more precise. Marketers who once relied on basic demographics like ZIP code, income bracket, and family size are finding that computers and tracking algorithms can help them drill down to their ideal customer base with little more than a bit of research and some savvy code-writing.

Coupons and e-offers that once were wild guesses today can be specifically tailored to individual families—and even individual family members. Much of this tracking is done online, but not all of it. Retailers are getting much more clever about how they collect in-store purchase data, and can often build profiles of regular customers based only on cart contents so accurate as to be downright spooky.

The increase in web shopping has been a boon for many marketers, simply by virtue of how easy it is to track and store information on consumers. Most websites make use of cookies, small data packets stored on a hard drive that convey glimpses of browsing history to requesting sites. A clothing retailer’s servers can tell if a visitor has recently been on a competitor’s website, for instance. Marketing executives are using this sort of information to trigger certain offers, like discounts on shipping or other promotions, in order to seal the deal and make the sale. The same metric is responsible for online ads. A customer who visited a certain site but did not make a purchase is likely to see ads for that site popping up elsewhere as she browses.

Some web-based analytics teams are also looking for ways of using browsing trends and static data to make calculations about how much a consumer may be willing to pay for certain products. “Online shoppers let slip plenty of information about themselves that could be of use to crafty salesmen,” a 2012 article in The Economist noted. In addition to browsing history, the article said, this information may also be amassed to estimate a web user’s basic income. Rather than offering discounts or special offers to make a sale, marketers with this sort of information are looking for windows in which to sell something for a higher-than-normal price—and get away with it on the assumption that a deep-pocketed customer will not know the difference.

“Sellers will eye up buyers arriving on their homepage, make some assumptions, then charge accordingly,” the article said. “This will be especially true for products whose pricing is complex, variable and therefore unpredictable to buyers, such as insurance, air travel, mobile-phone plans and hotel rooms.” Though these sort of price-prediction programs are not yet in widespread use, the simple fact of their existence signals a major shift in the marketing world.

Another new trend in modern marketing involves tapping into social networks, both as a means of reaching out to new customers and as a way of collecting information about buying trends and spending habits. “For the first time since the Internet became available hundreds of millions of consumers are consistently congregating in a single place,” Jeff Dachis, founder and CEO of Internet marketing firm Dachis Group, said of social networks in a Business Insider article. “Social marketing, and more specifically authentic engagement at scale, is proving to be the key to unlocking and achieving the brand outcomes marketers are desperate to find in digital.”social media marketing

Corporations are increasingly interacting with customers online, through platforms like Facebook and Twitter. They offer deals, run promotions, and link ads. Connecting in this way not only gets a brand name out into the social networking ether, but also opens up a veritable treasure trove of personal information to the curious eyes of marketing executives. This gives companies a much clearer picture of who their customers are as people, and helps them design advertising campaigns that can really be effective at delivering customers what they want—even if they may not know they want it.

The idea of knowing customers better than they know themselves is not limited to the online space. Tracking technologies and computerized identification markers are making it easier than ever for brick-and-mortar retailers to very accurately profile customers. Most modern companies, from grocery chains to department stores, employ teams of trained statisticians whose careers are devoted to understanding the inner workings of shoppers’ minds. Some information is easy enough to discern. A female in her mid-twenties who regularly buys diapers, baby wipes, and pacifiers is likely a young mom, and stores can use this information to send her coupons for other baby products, or e-mail her offers for family-related goods.

Where things get trickier is when stores want to know information that is not so easily disclosed. Retail giant Target, for instance, recently sent its statisticians and analytic experts on a quest for customers who were pregnant. Participation in a baby registry was a give-away. Many of the tactics analysts used were much more subtle, however.

One analyst, Andrew Pole, created a computer program designed to deduce whether or not a shopper was pregnant based on the timing and frequency of otherwise innocuous purchases like lotion and vitamins. “Pole applied his program to every regular female shopper in Target’s national database and soon had a list of tens of thousands of women who were most likely pregnant,” The New York Times reported.  The goal of this targeting went far beyond baby sales, too. “If they could entice those women or their husbands to visit Target and buy baby-related products, the company’s calculators could kick in and start pushing them to buy groceries, bathing suits, toys and clothing, as well,” the Times noted.

Retailers’ ability to store and collect data on consumers is growing exponentially. While new technology has many benefits for consumers, particularly those looking to comparison shop, it also carries increased risk that they are being tracked. While most of this tracking raises no legal or ethical concerns, it can nevertheless be unsettling for the consumer. Finding the balance between shopper privacy and marketer gain can be difficult, but is all but essential as this sort of profiling becomes ever more commonplace.

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