Knowing what customers want
With globalization, the whole world is now connecting by information technology and with the proliferation of mobile devices, more data are available. Companies that can collect and analyze these data will find a lot of useful information that may give them competitive advantage. For example, by collecting information that people share on Facebook and social websites, Samsung was able to create a series of mobile devices with features and functions that customers want and gain advantage over Apple, Motorola and Nokia. By knowing what customers want and willing to pay, companies can create products and services that appeal to a large number of customers all over the world as the market is now global not local. That is why many companies are moving quickly into data-driven business approach and that will change many things. Instead of spending money on advertising and marketing, companies are spending money on collecting data and analyze them to identify demand because Big data analytics is the new approach to gain advantage for businesses in the 21st century.
Today aggressive companies are using Big data analytics to create products and services that meet market needs. An executive explained: “In the past, companies relied on marketing, advertising and discount to promote sales. It is no longer effective because you may or may not produce what customers want so you have to spend more on advertising and reducing prices with the hope of getting more sales. With Big data, you know exactly what type of products and service customers want; how many people would buy the product, and how much they are willing to pay. Basically the more you know about the market needs, the more you can meet the demand quickly and Big data analytics is the approach. Today people share a lot of information on social network sites and when properly collected and analyzed they can be used to develop strategy that attract new customers, increase profits, improve satisfaction, and gain advantages over competitors.”
Few years ago by collecting data in Facebook and other social networks, Samsung found that customers did not like smartphone screen that was small. They began to created larger screen smartphones that became best sellers when others such as Motorola, Nokia, Sony were still produce smaller screen smartphones that people do not like. An industry analyst explained: “Big data analytics makes it possible for companies to meet customers’ demands and build a better customer relationship which lead to better business and better customer loyalty. By collecting data, companies have enough information to deliver exactly what customers want and ensure a successful customer interaction. By knowing what products and services that customers like or do not like and how they use it, companies can create products and services that meet their expectations then eliminate competitors and capture the market.”
Traditionally, most companies rely on marketing people who survey the market to come up with new products and services but these are mostly “guess work” rather than fact. With Big data, everything changes as companies know what customers’ needs based on their data on social networks which are fact. A manager explained: “Big data analytics give companies the ability to do business differently as decisions are made from facts and data rather than opinions and it is the most profound way to do business. Now, every decision will be based on data which is accurate and precise. The whole market suddenly is wide open, and what you need is a clear strategy to capture it. There is no more guessing, no more opinions, no more arguments and it is easier to manage company in this direction.”
By using Big data analytics, Samsung dominated the smartphone market in 2013 by capturing 90% of the Android market, outselling others with over $5.2 billion in profits. Today Samsung is the world’s leading smartphone manufacturer with 35 % share in the global smartphone sales. A Wall Street analyst wrote: “Samsung is the king of global smartphone industry. It generates more revenue and profit than any others. Samsung has strong power that even Google was worried and feared that it could even create its own operating system and abandon Android. That is why Google bought Motorola as insurance just in case Samsung change strategy. Last month, Samsung and Google negotiated a long term agreement to reduce the tension and afterward Google executive told newspapers that they are still an alliance as the goals of Google is making money on Android and Samsung is making money on phones. Samsung manager also assured the industry that its focus is competing with Apple, not Google.
By then, everybody realizes that by using Big data analytics earlier, Samsung has positioned itself to be a dominating force in the global smartphone market in which others who did not realize it until too late were left behind. Today Sony, Nokia, Motorola, Erickson, Blackberry are all struggling to stay alive when Samsung and LG, both have strong Big data strategies, are thriving fast. However smartphone market is only the beginning as other industries are following it quickly on the use of Big data analytics. A Wall Street analyst wrote: “If you do not use Big data to improve your business, you will not survive the next few years as your competitors will capture your market soon. In this technology driven market, not catches up quickly means you will be left behind and you will not survive.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
