ANLY FPX 5510 Assessment 4 Presenting Advanced Analytics to Executives ANLY-FPX5510 Advanced Business Analytics
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Introduction
The marketing department of a large financial organization has recently experienced a budget reduction. In response, the department has requested assistance from the analytics team to optimize the budget and prevent wasting resources on contacting repetitive customers who may not be interested in the company’s services.
Cluster Analysis
The first solution was achieved through cluster analysis, which utilized data indicating whether customers were targeted via various communication channels, such as telephone, email, Facebook, Twitter, Instagram, Pinterest, Yahoo, Google search, and U.S. Postal Service mail. The purpose of this analysis was to identify groups of customers with similar behaviors and preferences, enabling the organization to reduce the number of marketing channels used. The goal was to understand which communication forms customers prefer. Based on the results, it is recommended that the company continue marketing through phone, mail, and Google while discontinuing all other communication channels.
Decision Tree Analysis
The second solution involved performing a decision tree analysis. Similar to the cluster analysis, this analysis examined data on customer advertisements through telephone, email, Facebook, Twitter, Instagram, Pinterest, Yahoo, Google search, and U.S. Postal Service mail. However, this analysis also included demographic information and the total deposits made by each customer in the previous year. The aim was to identify characteristics of high-deposit customers, allowing the marketing department to target this group. The results suggested that marketing via Instagram should continue for customers under the age of 43. Customers aged 56 to 80 years should not be targeted, as they had lower deposit amounts in the previous year.
Recommended Solution
The recommended solution for the business problem is the first option, cluster analysis. This method focuses on the effectiveness of communication channels rather than customer groups. It evaluates various advertising platforms, including telephone, email, Facebook, Twitter, Instagram, Pinterest, Yahoo, Google search, and U.S. Postal Service mail, to determine which are the most successful and which are inefficient, thus saving the company money. The decision tree analysis focuses on eliminating certain age groups from advertising campaigns based on customer characteristics. Cluster sampling offers several advantages, such as being more cost-effective than other methods and allowing the organization to gather large sample sizes from specific areas, making it easier to obtain relevant information (Money, 2019).
Implementation
Implementing analytics within an organization is not a one-time event, but an ongoing process. As the business evolves to meet customer, product, and operational needs, analytics-driven insights will become increasingly critical. The implementation of cluster analysis will follow a centralized approach, where all relevant assets, including software, hardware, skilled resources, metadata, and project management capabilities, are managed by a single department. This centralized approach provides several benefits, such as knowledge sharing, consistency in implementation, and reduced costs due to shared hardware and software (Sheikh, 2013). Initially, the process and data related to the cluster analysis will be introduced, followed by team training. Afterward, the engagement, project management, and development frameworks will be established before real projects begin to deliver value. Continuous monitoring of the cluster analysis will ensure that it is being effectively applied.
Benefits
The proposed solution focuses on reducing the amount of communication by identifying the delivery methods customers prefer. The target audience, product or service, and cost are key factors in determining the appropriate media channels for advertising. One of the fundamental rules of advertising is to eliminate waste. It is crucial to select the media that reaches the highest percentage of potential customers. Spending money on advertising to a broader audience may not be effective if the majority of those reached are not likely to purchase the product (The Inc., 2018). Reducing unnecessary advertising saves money by concentrating on communication methods that reach interested customers. Poor advertising choices can harm the budget and drain valuable resources, so making informed decisions helps the company stay within its reduced budget.
References
Money Matters (2019). Cluster sampling | Definition | Advantages & Disadvantages. Retrieved from https://accountlearning.com/cluster-sampling-definition-advantages-disadvantages/