Data-Driven and Predictive Marketing

Target

Data-Driven and Predictive Marketing Case Study

​Situation

​Target sells everything from hardlines to softlines

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​Complication

​But most shoppers don’t buy everything at one store

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Poll

But which customer segments do buy many things in one store?

• Large family

• People with time constraints

• People going through life events e.g. new homes, marriage

​Target finally selected pregnant women

as a main segment to serve

Multiple Select

But what do you think is the main reason to target the segment? You may choose more than one reason

• Buy a lot of new products

• Less price sensitive

• Buying everything in one place

• Remain loyal for years

​THE DATA-DRIVEN MARKETING AND PREDICTIVE MARKETING OBJECTIVE

​If we wanted to figure out if a customer is pregnant, even if she didn’t want us to know, can we do that?

Multiple Select

What do you think the predictive model should tell us about a customer?

• Probability of being pregnant

• Estimated due date

• Items to buy next

• Best media to offer items

Multiple Select

The following data is available. Which ones do you think are the most important for Target to build a pregnancy prediction model?

• Membership ID

• Baby registry data

• Member demographic (age, gender, marital status, address, salary)

• Purchase history

• Customer engagement history

​The Pregnancy Prediction Scoring Model

1. ​Probability of being pregnant

2. ​Stages of pregnancy

3. ​Items to buy in each stages

​Key insights from the model

​Pregnant women at the beginning of second trimester bought

• Unscented lotion

• Calcium, magnesium and zinc supplement

Closer to due date, they bought

• Scent-free soap

• Cotton ball

• Hand sanitizer

• Washcloth

​Acting on the insights

1. Target conducted market test

2. ​Choose a small, random sample from thousands of female shoppers who are most likely pregnant

3. Send them combinations of advertisements to see how they reacted

Multiple Choice

Which marketing approach do you think work best?

• Women who were pregnant were offered only pregnancy products

• Women who were pregnant were offered mixed products (pregnancy + other household items)

Women who were offered only pregnancy products reacted poorly—perhaps felt they were being spied on

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​Women who were offered mixed products (routine items + pregnancy products) responded better

Once the shopper is inside the store, Target will hit her with cues and rewards to entice her to purchase everything she normally buys somewhere else​