Tuesday, February 21, 2012

On Target: Predicting Pregnancy

Call me biased, but I think creative uses for predictive analytics are pretty cool.  Target’s “pregnancy-prediction model”, explained Thursday in a The New York Times Magazine article, is a great example.  It should inspire all of us to take a fresh look at our data and consider what more we can accomplish with a powerful predictive analysis tool (like RI Analytics) and a little bit of creative thinking.

Target’s journey to predicting pregnancy started with an idea conceived by its marketing department. The department had previously conducted surveys which indicated that once a consumer’s shopping habits are ingrained, it can be hard to change them – except during certain brief periods of a person’s life, like after a marriage or the birth of a child, where shopping patterns and brand loyalties often change.  The birth of a child represents a new grocery and household goods list for new parents, as well as the opportunity for Target to sell things like cribs, rugs, furniture, car seats, and other items that a person or couple would not usually buy. Because birth records are public information it was already common practice for companies to send promotional items to new parents; so, to stay one step ahead of competitors, marketers at Target wanted to see if there was a way to predict pregnancy during the second trimester.

Target reviewed the shopping habits of women who had a baby-shower registry as they approached their due dates. Eventually they were able to identify about 25 different products that were indicators of pregnancy, including items like unscented lotion, vitamin supplements, hand sanitizers and washcloths. By treating the purchase of each item as a variable, they were able to create a model that assigned each shopper a pregnancy prediction score based on their purchases. This score was then used to send out relevant coupons and advertisements tailored to each woman at a specific point in her pregnancy – before other retailers even knew she was pregnant. Needless to say, sales in Target’s Mom and Baby department skyrocketed.

This is one way that a creative use of data, combined with some predictive analytics, yields some pretty cool results. Target had the data they needed all along –they just needed the right person to ask the right question. 

-Caitlin Garrett, Statistical Analyst at Rapid Insight

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