My colleague, Timo Elliott, likes to joke that a data scientist is a business analyst from Silicon Valley. At SAP, I think our data scientists combine science (e.g. statistics, mathematical models, computer programming) with analytic artistry (e.g. predictive analytics and visualization) to explain the story that the data is telling us.
Data Science in Action — An Example
Imagine that you are a retail store that wants to invest in a promotion. To be successful, you want to understand how your customers will behave if you change the price. On one hand, you want to maximize revenue (sales from goods sold); on the other hand, you want to maximize profits (amount that exceeds the costs and taxes of the product). If you drop the price enough, you’ll increase revenue. But at a certain point, you begin to lose profit. So your goal is to be able to predict the highest price to charge for your product to gain the maximum profit.
You can use your “gut-feel” to set the price in the promotion. Or you can base your decision on scientific analysis. Working with a data scientist, you can create mathematical models that can analyze large volumes of historic point-of-sale data against a variety of variables such as target market, channel, season, competitor prices, and customer sentiment.
As these pricing models crunch through the Big Data, they begin to display trends that can better forecast how customers will respond to price changes. A variety of pricing strategies can be visualized through analytic tools enabling you to:
- Assess revenue / profit trade-offs based on customer demand
- Optimize promotions (e.g. price, duration, timing) across target markets and channels.
With data science, you move from analyzing what happened in the past to predicting what will happen in the future. In addition, you can optimize your pricing and promotional strategies to best meet your financial needs and improve customer satisfaction.
Data Science in Action — Learn more
If you would like to discover other use cases (in retail, CPG, transportation, media, energy, and more), than join me on Monday, July 21st as I interview Dr. Helmut Linde, Head of Data Science Solutions at SAP.
In this webcast (part of the on-going SAP Big Data, Big Thinking Webinar Series), we’ll explore how data science can help you move beyond traditional analytics to help you discover trends, predict outcomes, and optimize your business – enabling you to become more competitive and efficient.
Register for the live session:
Date: July 21st
Time: 4pm CET / 3pm UK / 7am PT
Or join us at your leisure by viewing the on-demand version after the broadcast! Hope to see you there! ~ Marie
About the author: Marie Goodell is a Strategic Big Data Marketing lead at SAP. Follow her on twitter @mhgoodell.
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