Today, almost every large company collects data about its customers — reams and reams of raw, unstructured data. And they aren’t storing it for posterity. They are using it to do what businesses always try to do: Sell more widgets. More specifically, companies are using big data to identify new customers, advertise more effectively, and develop new products and services.
An apocryphal-sounding story about how companies are using big data to find customers recently made its way around cyberspace. Target tracks customers’ purchases to determine what products to advertise. According to the New York Times, an enterprising researcher at Target thought to analyze purchase data for women and developed a list of 25 products that, when considered together, generated a pregnancy-prediction score. The researcher analyzed every woman in Target’s database, and Target sent women with high scores baby-related coupons and advertisements.
A teenage girl, using her parents Target Value Card, bought four items — scent-free soap, extra-large bag of cotton balls, hand-sanitizer, and washcloths. Target concluded that she was pregnant and sent baby-related coupons to her home address. The girl’s father called the local Target store manager to complain. The manager apologized. But when the manager followed up a few days later, the father said he had learned that Target was right. His daughter was pregnant.