Need for Business Modelling

TRADITIONAL BUSINESS MODELS

Fundamentally, there are several basic business models: owners/landlords,

manufacturers, distributors, and sellers.

Within these broad categories are a number of more specific models – for example,
sellers include wholesalers, brokers, traders, retailers, and multi-level marketers. .

There is also a variety of conventional pricing, supply chain, marketing, and other
business strategies, which are often confused with business models and help
differentiate firms from each other.

Predictive analytics has upended many of these traditional models and strategies of
doing business in myriad ways.

In short, predictive analytics allows firms to create models of consumer behaviour

that are correlated positively with historical data, and use these models to forecast
future results.

Because, in our Digital Era, data comes in in real-time and because we have
developed highly sophisticated and robust hardware and software systems for
processing this “Big Data,” firms can feed data into these models in real-time and
adjust their business decisions automatically.
• The business intelligence market is growing nine percent per
year and will exceed $180 billion by 2019
• Predictive analytics is an area of statistical analysis that deals
with extracting information from data and using it to predict
future trends and behavior.
• It encompasses a variety of techniques from statistics,
modeling, machine learning, and data mining that analyze
current and historical data to make reliable predictions about
the future e.g. likelihood of a marketing campaign succeeding
and the revenue and profit uplift to be foreseen.
• With the right software tools it is now possible to collect,
analyze, and mine massive amounts of structured and
unstructured data for new insights.
• Exploring big data and using predictive analytics is within reach
of more organizations than ever before due to technological
advances in computer hardware and new technologies.
 Need for business modelling in predictive analysis
Increases productivity:
Data that can be readily used for analysis allows beneficiaries to be
more proactive and thrive in future predictions based on past data
and not on traditional presumptions.
Reduces Cost:
Prediction helps acknowledge a not-too-late methodology, thus
saving on the cost of a delayed processing that comes with an
additional cost to it in most of the cases.
Fewer Resources:
With the precision of the desired outcome, predictive analysis saves
on any misallocated resources, further saving on both cost and time
Faster Results:
Capitalise on future trends with predictions based on new
developments and customer acquisition models
 Need for business modelling in predictive analysis
Improved Operations (Quality and functionality):
Industries offering variable daily pricing, like airlines and hospitality,
use this technology in their decision-making process, thus
functioning more efficiently
Helps in Fraud Detection:
With the increased cyber threats and criminal activities ruling over,
methodologies relating to multiple layer analytics help recognise
such frauds and eventually detect and prevent any sort of
vulnerabilities
Risk Management:
Respond to challenges before they come with the help of predictive
analysis in real-time business
Optimise Marketing campaigns:
With the help of determining customer behavior, predictive
modeling creates and retains profitable users from the marketplace.
 Predictive analytics is typically a four step-step process:

• Establish objectives – Establish what you want to achieve, develop

hypothesis with experts and the data required.
• Collect good quality data - Establish a view of customer combining
enterprise and social media opinions, intent and sentiment
including unstructured and free form data such as comments,
emails, tweets, Facebook posts and SMS messages.
• Understand behavior and intent - Understand customer’s
behavior and intent across channels and platforms by deploying
predictive analytics in conjunction with organizational wisdom.
• Predict action - Predict a customer’s next purchase and make the
right offer at the right time and in the right way. Evaluate and
adjust as required.
 Need to Build Predictive Analytics Models

• Vendors are making it easier and easier to build models

using automated predictive modelling tools designed for
business analysts. Developers are utilizing machine learning
algorithms from open source marketplaces or automated
model building via APIs to build predictive applications.
• Think with a predictive mindset.
• Understand the basics of predictive techniques.
• Know how to think critically about variables.
• Understand how to interpret results and validate models.
• Know what it means to validate a model.
Applications of predictive analytics in business intelligence

• Customer segmentation
• Customer segmentation is the practice of
dividing a customer base into groups of
individuals that are similar in specific ways
relevant to marketing, such as age, gender,
interests and spending habits. It enables
companies to accurately target tailored
marketing messages to customers who are
most likely to buy their products.
Applications of predictive analytics in business intelligence

• Risk assessment
• Risk Assessment allows users to analyse
possible problems associated with a given
business. The goal for data mining here is to
build decision support systems that can
accurately predict which are the profitable
operations for a company and which are not.
Applications of predictive analytics in business intelligence

• Churn prevention
• Churn prevention aims to predict which
customers, when and why end their
relationship with our company. This
phenomenon can be very expensive, since the
cost of retaining an existing customer is much
lower than that of acquiring new one
• ****Churn :Agitation or Turnover)
Applications of predictive analytics in business intelligence

• Sales forecasting
• Examination of prior history, seasonality, market-
moving events, etc. results in a realistic
prediction sales, which is the cornerstone of a
company's planning. In this regard, data mining
could anticipate customer response and
changing attitudes by looking at all types of
factors. Sales forecasting can be applied to short-
term, medium-term or long-term forecasting.
Applications of predictive analytics in business intelligence

• Market analysis
• Analysis of market surveys helps companies to
address customer requirements, therefore
increasing their profit and reducing the
attrition rate.
Applications of predictive analytics in business intelligence

• Financial modeling
• Financial modeling is the task of building an
abstract representation (a model) of a real
world financial situation. This is a
mathematical model designed to represent (a
simplified version of) the performance of a
financial asset or portfolio of a business,
project, or any other investment.