MIS 0855 Fall 2016 – Data Science€¦ · MIS 0855 Fall 2016 – Data Science. Week 11 –...

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Min-Seok Pang Management Information Systems Fox School of Business, Temple University [email protected] Nov. 10 th , 2016 MIS 0855 Fall 2016 – Data Science Week 11 – Predictive Analytics

Transcript of MIS 0855 Fall 2016 – Data Science€¦ · MIS 0855 Fall 2016 – Data Science. Week 11 –...

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Min-Seok Pang

Management Information SystemsFox School of Business, Temple University

[email protected]. 10th, 2016

MIS 0855 Fall 2016 –Data Science

Week 11 – Predictive Analytics

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Guess what…What is the product that a male customer in mid-30s is most likely to purchase with a bag of six-bottle beer in a grocery store?

Snacks Frozen Pizza Cigarette Diaper

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Crime Hotspots

http://www.theomegagroup.com/police/crimeview_desktop.html

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Collaborative Filtering

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Credit Scores Predict Divorces

http://www.bloomberg.com/news/articles/2015-10-02/the-federal-reserve-has-some-advice-for-your-love-life

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

http://www.bloomberg.com/news/2014-12-29/big-data-knows-when-you-re-going-to-quit-your-job-before-you-do.html

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

http://www.bloomberg.com/news/2014-12-29/big-data-knows-when-you-re-going-to-quit-your-job-before-you-do.html

Don’t Use Internet Explorer to Apply for a Job.

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

https://raymondpronk.wordpress.com/2013/06/12/digital-campaigns-using-microtargeting-and-data-mining-to-target-voters-videos/

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

http://www.emprender-facil.com/es/network-marketing/

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Cruz Campaign called voters

http://www.huffingtonpost.com/nancy-leamond/improving-the-voter-exper_b_5128654.htmlhttps://www.washingtonpost.com/politics/cruz-campaign-credits-psychological-data-and-analytics-for-its-rising-success/

2015/12/13/4cb0baf8-9dc5-11e5-bce4-708fe33e3288_story.html

True Believer

Stoic Traditionalist

Relaxed Leader

Temperamental Conservative

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Which customer is most valuable?

Jamie visited the store six months ago and purchased a $2,000 blouse. She never showed up again.

Linda has come by three times a month for the last two years and bought as much as $150 each visit.

Rachel began to shop at our store two months ago, visited three times, and bought $500 each time.

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Predicting Customer Value

Recency: How recently a customer purchased an item Frequency: How frequently she purchases an itemMonetary value: How much she spends each time

R F M

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Who is our MVC (most valuable customer)?

Jamie visited the store six months ago and purchased a $2,000 blouse. She never showed up again.

Linda has come by three times a month for the last two years and bought as much as $150 each visit.

Rachel began to shop at our store two months ago, visited three times, and bought $500 each time. She returns 20% of

what she bought.

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Valuing Customers at a Casino (1/2)

Two customers One who visits once a month and spends more than

$50,000 each visit, aka, a big whale One who visits once or twice a week and spends amount

$200-$300 each time.Which one is more valuable (or more profitable)?

http://eofdreams.com/whale.htmlhttp://www.sipadan.org/fish-group-sipadan.php

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Valuing Customers at a Casino (2/2)

Conventional industry wisdom used to say that the big whale is to catch, since they are more valuable than the small fishes. Analysis of data show that the small fishes are more profitable. Why? The big whale spends more, but it is more expensive to serve them.

http://eofdreams.com/whale.htmlhttp://www.sipadan.org/fish-group-sipadan.php

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

Three Types of Predictive Analytics Decisions Will Customer A purchase beer and diaper together? Will crimes occur in Neighborhood B? Will Voter C vote for Candidate D?

Rankings Who will win the World Series? Who are the most credible borrowers? (credit score)

Estimates What is the value of Customer E for his/her lifetime? What is the stock price of Company F next month?

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

https://www.safaribooksonline.com/library/view/data-science-for/9781449374273/ch04.html

A Decision Tree to Predict Breast Cancers

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

A Regression to Predict Stock Prices

http://bonnevie.azurewebsites.net/

Confidence Interval

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

An Association DetectionWhich products are likely to be purchased together?

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

What to Use to Predict Crimes?

What factors to use to predict future crimes?What are the most significant predictors? The more factors we use, the more accurate the prediction becomes, BUT, the more computing power we need.

http://www.theomegagroup.com/police/crimeview_desktop.html

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MIS 0855 – Data Science Min-Seok Pang – Nov.10.2016

In-Class Exercise –What to Use to Predict Mortgage Default?

What factors to use to predict a failure to pay back home mortgage?What are the most significant predictors?

http://thelaw.tv/tampa/Foreclosure+Defense+Law


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