University School of Business

Department: AIT-MBA
Subject: Marketing Research and Analytics
Faculty Name : Nancy Jyani
(Assistant Professor)
Email: [email protected]

UNIT 1:MARKET RESEARCH AND ITS PROCESS

LECTURE 3: TYPE OF ANALYTICS

DISCOVER . LEARN . EMPOWER

Types of Analytics

MARKETING RESEARCH AND ANALYTICS 2

Types of business analytics
The process of business analytics is an essential tool for interpreting and applying the vast
amount of data your company collects and organizes. From customer behavior and conversion
rates to revenue and business processes, the information generated by your company’s
operations has to tell a helpful story to benefit you. Business analytics is the process that helps
turn those data points into actionable insights.
The four different types of business analytics are:
 DESCRIPTIVE
 PREDICTIVE
 PRESCRIPTIVE
 DIAGNOSTIC

Exploring the distinctions between these models can help you learn how to use each to support
your business goals.

MARKETING RESEARCH AND ANALYTICS 3

Descriptive analytics
Descriptive analytics examines what happened in the past. You’re utilizing descriptive analytics
when you examine past data sets for patterns and trends. This is the core of most businesses’
analytics because it answers important questions like how much you sold and if you hit specific
goals. It’s easy to understand even for non-data analysts.
Descriptive analytics functions by identifying what metrics you want to measure, collecting that
data, and analyzing it. It turns the stream of facts your business has collected into information
you can act on, plan around, and measure.

MARKETING RESEARCH AND ANALYTICS 4

Examples of descriptive analytics
include:

MARKETING RESEARCH AND ANALYTICS 5

Challenges:
The main difficulty of descriptive analytics is its limitations. It’s a helpful first step for decision
makers and managers, but it can’t go beyond analyzing data from past events. Once descriptive
analytics is done, it’s up to your team to ask how or why those trends occurred, brainstorm and
develop possible responses or solutions, and choose how to move forward.

MARKETING RESEARCH AND ANALYTICS 6

Predictive analytics

Predictive analytics is what it sounds like — it aims to predict likely outcomes and make
educated forecasts using historical data. Predictive analytics extends trends into the future to
see possible outcomes. This is a more complex version of data analytics because it uses
probabilities for predictions instead of simply interpreting existing facts.
Use predictive analytics by first identifying what you want to predict and then bringing existing
data together to project possibilities to a particular date. Statistical modeling or machine
learning are commonly used with predictive analytics. This is how you answer planning
questions such as how much you might sell or if you’re on track to hit your Q4 targets.
A business is in a better position to set realistic goals and avoid risks if they use data to create a
list of likely outcomes. Predictive analytics can keep your team or the company as a whole
aligned on the same strategic vision.

MARKETING RESEARCH AND ANALYTICS 7

Examples of predictive analytics include:

MARKETING RESEARCH AND ANALYTICS 8

Challenges
The primary challenge with predictive analytics is that the insights it generates are limited to the
data. First, that means that smaller or incomplete data sets will not yield predictions as accurate
as larger data sets might. Getting good business intelligence (BI) from predictive analytics
requires sufficient data, but what counts as “sufficient” depends on the industry, business,
audience, and the use case.
Additionally, the challenge of predictive analytics being restricted to the data simply means that
even the best algorithms with the biggest data sets can’t weigh intangible or distinctly human
factors. A sudden economic shift or even a change in the weather can affect spending, but a
predictive analytics model can’t account for those variables.

MARKETING RESEARCH AND ANALYTICS 9

Prescriptive analytics
Prescriptive analytics uses the data from a variety of sources — including statistics, machine
learning, and data mining — to identify possible future outcomes and show the best option.
Prescriptive analytics is the most advanced of the three types because it provides actionable
insights instead of raw data. This methodology is how you determine what should happen, not
just what could happen.
Using prescriptive analytics enables you to not only envision future outcomes, but to
understand why they will happen. Prescriptive analytics also can predict the effect of future
decisions, including the ripple effects those decisions can have on different parts of the
business. And it does this in whatever order the decisions may occur.
Prescriptive analytics is a complex process that involves many variables and tools like
algorithms, machine learning, and big data. Proper data infrastructures need to be established
or this type of analytics could be a challenge to manage.

MARKETING RESEARCH AND ANALYTICS 10

Examples of Prescriptive analytics
include:

MARKETING RESEARCH AND ANALYTICS 11

Challenges
The most common issue with prescriptive analytics is that it requires a lot of data to produce
useful results, but a large amount of data isn’t always available. This type of analytics could
easily become inaccessible for most.
Though the use of machine learning dramatically reduces the possibility of human error, an
additional downside is that it can’t always account for all external variables since it often relies
on machine learning algorithms.

MARKETING RESEARCH AND ANALYTICS 12

Diagnostic analytics
Another common type of analytics is diagnostic analytics and it helps explain why things
happened the way they did. It’s a more complex version of descriptive analytics, extending
beyond what happened to why it happened.
Diagnostics analytics identifies trends or patterns in the past and then goes a step further to
explain why the trends occurred the way they did. It’s a logical step after descriptive analytics
because it answers questions like why a certain amount was sold or why Q1 targets were hit.
Diagnostic analytics is also a useful tool for businesses that want more confidence to duplicate
good outcomes and avoid negative ones. Descriptive analytics can tell you what happened but
then it is up to your team to figure out what to do with that data. Diagnostic analytics applies
data to figure out why something happened so you can develop better strategies without so
much trial and error.

MARKETING RESEARCH AND ANALYTICS 13

Examples of DIagnostic analytics
include:

MARKETING RESEARCH AND ANALYTICS 14

Challenges
The main flaw with diagnostic analytics is its limitation of providing actionable observations
about the future by focusing on past occurrences. Understanding the causal relationships and
sequences may be enough for some businesses, but it may not provide sufficient answers for
others. For the latter, managing big data will likely require more advanced analytics solutions
and you might have to implement additional tools — venturing into predictive or prescriptive
analytics — to find meaningful insights.

MARKETING RESEARCH AND ANALYTICS 15

What is Exploratory Research?
Exploratory research is a research design that is used to
investigate a research problem that is not clearly defined or
understood. It provides researchers with a deeper
understanding of a research problem and its context before
further research can be carried out.
Therefore, exploratory research acts as a groundwork to
further research and is a useful tool when dealing with
research problems that have not been properly investigated
in the past.
This research design is also referred to as interpretive
research, and helps answer questions like “what”, “where”,
and “how”. A key feature of the exploratory research design
is that it is unstructured and therefore very flexible in nature.

MARKETING RESEARCH AND ANALYTICS 16

What are the characteristics of exploratory research?

Some characteristics of exploratory research are:

◦ It provides the groundwork for further research.
◦ It is used to investigate issues that aren’t fully
defined.
◦ It is the very first form of research in the research
process and therefore takes place before descriptive
research.
◦ It is unstructured in nature.
◦ It generally involves the use of qualitative research.

MARKETING RESEARCH AND ANALYTICS 17

Example of an exploratory research
design
Let’s assume a researcher wants to study the effects of
social media on a teenager’s attention span. Before going
forth with the investigation itself, the researcher may
choose to conduct surveys or interviews using open-
ended questions.
The responses will be collected from the target
audience, which, in this case, comprises those who fall
between the ages of 13 to 19. The data collected will
provide the researcher with meaningful insights that will
help them frame a more specific and realistic research
question that can be investigated effectively.

MARKETING RESEARCH AND ANALYTICS 18

 What is Descriptive Research?
The descriptive research design is used to describe a phenomenon
and its different characteristics. It is concerned with gaining a deeper
understanding of what the phenomenon is rather than why or how it
takes place. It, therefore, describes the subject of the research
without addressing why it happens.
Without a thorough understanding of a research problem, researchers
cannot effectively answer it. This enforces the importance of
descriptive research as it gives researchers a proper understanding of
a research problem before they begin investigating it.
When using descriptive research, researchers do not manipulate any
variables. Instead, the observational method is used to observe and
measure different variables and identify any changes and correlations
depicted in the data collected.

MARKETING RESEARCH AND ANALYTICS 19

What are the characteristics of descriptive research?

These are some of the characteristics of descriptive research:

◦ Variables aren’t controlled in descriptive research, rather, observational methods are used to
conduct the research.
◦ Descriptive research generally takes the form of a cross-sectional study where multiple
sections belonging to the same group are being investigated.
◦ It provides a base for further research.

MARKETING RESEARCH AND ANALYTICS 20

Example of a Descriptive Research Design

Let’s take an example of a shoe company that is trying to conduct market research to
understand the shoe purchasing trends in the city of Toronto. Before delving into the
investigation itself, they may want first to conduct descriptive research to understand which
variables and statistics are relevant to their company and, therefore, which variables and
statistics need to be investigated.
The descriptive research conducted will provide the company with a deeper understanding
of the research topic before the investigation can be commenced.

MARKETING RESEARCH AND ANALYTICS 21

What is Causal Research?
Causal Research is a type of conclusive research that attempts to establish a cause-and-effect relationship
between two or more variables.
Several companies widely employ Causal Research. It assists in determining the impact of a change in
process and existing methods. It is easy to narrow down the cause-and-effect relationship by making sure
that both variables are not affected by any force other than each other.
In order to maintain accuracy, other variables are assumed to be constant. It can help determine the exact
impact an individual variable has on another. This type of research does not only reveal the existence of a
cause-and-effect relationship but also explores the link between the two.
Many companies conduct causal research, for example, to find the connection between their customers
and the changing prices of their goods. Thus, this method of research can be used by companies to help
craft favorable outcomes for themselves.
Such assessment can help businesses navigate their future with fewer interruptions and also help them
plan better for various situations.

MARKETING RESEARCH AND ANALYTICS 22

What are the characteristics of causal
research?
Some characteristics of causal research are:

o It follows a temporal sequence, and therefore the “cause”

must take place before the “effect.”
o The variation must be systematic between the variables. This
is non as concomitant variation.
o The association should be nonspurious, and therefore any
covariation between a cause and effect must not be due to a
‘third’ factor.

MARKETING RESEARCH AND ANALYTICS 23

Example of a Causal Research Design

A researcher is trying to study the effects of alcohol consumption on health. They select a
sample group consisting of people who consume different amounts of alcohol and then also
observe different metrics that are indicators of health.
This is an example of a causal research design as the researcher is investigating the cause-
and-effect relationship between alcohol consumption and a person’s health.

MARKETING RESEARCH AND ANALYTICS 24

 What is the difference between exploratory,
descriptive, and causal research?
APPROACH BASIS
One of the key differences between these three designs is their Exploratory research is sometimes confused with descriptive
research approach. Causal research has a highly structured and research, as both are conducted in the early stages of a research
rigid research design and is generally conducted in the later process. However, there are a few key differences between the
stages of decision-making. two.

In contrast, exploratory research is highly unstructured. It Exploratory research provides somewhat of a foundation or a
provides a lot of flexibility as it is generally the first step in any hypothesis about the research problem. It is, therefore, the first
research process and is, therefore, in the early stages of form of research that must be conducted when studying an
decision-making. unknown topic.
This is in contrast to descriptive research, which is used to describe
Descriptive research is conducted after explorative research,
a phenomenon that’s already been established, discovered, or
and its research design has more structure than the exploratory
suspected in exploratory research. Therefore, descriptive research
design but less structure than the causal design. In both takes place after exploratory research in the overall research
exploratory and descriptive research, the key research process.
statement is the research question itself. However, in causal
research, the key research statement is generally the research Additionally, the research design in exploratory research is not as
hypothesis. rigid as the research design in descriptive research.

MARKETING RESEARCH AND ANALYTICS 25