Why businesses are using Big Data for competitive advantage.

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Businesses are using Big Data for competitive advantage because:- 

According to the Mckinsey Global Institute, there are 5 ways how Big Data creates value (McKinsey Global Institute, 2011):

  •   It can create transparency by being more widely available to the new potential.  
  • It enables companies to set up experiments. For example experiments for process changes, they can create and analyze large amounts of data from these experiments to identify possible performance improvements.  
  • Big Data can be used to create a more detailed segmentation of customers to customize actions and prepare specific services.
  •  Analysis of Big Data can support human decision-making by pointing to hidden correlations or some hidden risks. An example can be a risk or fraud analysis engine for insurance companies. Low decision-making can be even automated to those engines in some cases.
  • Data can also enable new business models, products, and services or can improve the existing ones. Data about how products and services are used can be used to develop and improve new versions of the product. 

By using Big Data and utilizing its benefits can companies gain a big competitive advantage and get ahead of their rivals. Big Data offers businesses much bigger growth potential than traditional technologies, even though it is still much less understood. Companies holding further from this concept can allow their competition, which has understood the importance of Big Data faster, to gain a leading position in the market. Organizations shouldn't underestimate the importance of this concept

Businesses are using Big Data for competitive advantage because:- 

Customer acquisition and retention 

  • Brands are analyzing big data to observe customer-related patterns and trends. This accelerates the pace at which new products and services are introduced.
  • For example, Coca-Cola uses a digital-led loyalty program to strengthen its data strategy and create advertising content that speaks directly to different audiences. Those audiences are defined by their interests, previous shopping habits, and more.

Innovation and product development 

  • Instead of relying on gut instinct, organizations looking to create additional revenue streams are now using big data to design new products and services that precisely meet a customer’s needs.
  • Amazon Fresh/Whole Foods is a great example of how big data can be used to improve product and service development. By understanding how customers buy groceries, not just what they buy or where they shop, Amazon is able to implement changes that make for better customer experiences.


Marketing Insights – 

  • The ability to match customer expectations is one of the greatest benefits big data offers. Because marketing and advertising departments are now able to make more sophisticated analyses, advertisements are more likely to strike a chord with their intended audiences.
  • With over 100 million subscribers, Netflix uses its huge database for targeted marketing based on past views and searches. The result? Its recommendation system influences about 80% of the content customers stream.

Risk management 

Risk management solutions are a critical investment for any industry. It now offers businesses the ability to quantify and model risks they face every day. This, in turn, lets them design smarter risk mitigation strategies.

Supply chain management 

  • The greater accuracy, clarity, and insights big data offers lets brands leverage higher levels of contextual intelligence, a necessary component of supply chain success. Packaged goods companies are big beneficiaries of this big data perk
  •  For example, when clients send them data reports with warehouse and POS inventory numbers, PepsiCo is now able to quickly replenish retailer shelves with the right type and volume of products.


OR,

 1. Big Data can unlock significant value by making information transparent. There is still a significant amount of information that is not yet captured in digital form, e.g., data that are on paper, or not made easily accessible and searchable through networks. We found that up to 25 percent of the effort in some knowledge worker workgroups consists of searching for data and then transferring them to another (sometimes virtual) location. This effort represents a significant source of inefficiency.

2. As organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to sick days and therefore expose variability and boost performance. In fact, some leading companies are using their ability to collect and analyze big data to conduct controlled experiments to make better management decisions.

3. Big Data allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services.

4. Sophisticated analytics can substantially improve decision-making, minimize risks, and unearth valuable insights that would otherwise remain hidden.

5. Big Data can be used to develop the next generation of products and services. For instance, manufacturers are using data obtained from sensors embedded in products to create innovative after-sales service offerings such as proactive maintenance to avoid failures in new products.

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