SUMMARY: Crystal balls are out (except, maybe, for economists) and predictive analytics are in for marketers on the hunt for profitable, discrete market segments previously overlooked. Whether the common denominator is a health condition or shared hobby, predictive analytics marries a wide range of consumer, transaction and media information, revealing the “who” and “how” of an effective go-to-market strategy.
Think of predictive analytics as a quantitative treasure map leading the way around media bogeys and budget switchbacks to the ultimate prize: loyal consumers. Life just keeps getting more complicated for marketers as consumers exercise greater control over how they receive marketing messages, from channels to devices, and as corporate applies more pressure for better margins.
Predictive analytics can help three ways by providing 1) a deeper understanding of customers to guide the marketing spend, 2) guidance on selecting messages and vehicles for marketing communications, and 3) key metrics for measuring campaign impact. To illustrate the power of this methodology at work, here’s a case study of how predictive analytics shaped a program targeting the diabetes community.
|A real opportunity to target consumers from a health perspective...|
The real world
There are 24 million diabetics in the U.S., and unfortunately, one in three children born this year will develop diabetes in their lifetime. That incidence is even higher—one in two children—for minority groups. Diabetes accounts for 31% of health care costs in the U.S. and approximately $175 billion in annual spending.
Diabetics, like any group that shares an interest or concern, view the world through the prism of their disease, which influences things like food purchasing patterns. As might be expected given the concern with blood sugar levels, Nielsen uncovered high penetration items including dietetic candy, sugar substitutes, lemon/line diet soda, diet cola, dry beans, mineral supplements, medications/remedies, gelatin mixes and salad dressing. Conversely, calorie dense items or foods with high sugar content—like brownie mixes and regular cola—indexed low for diabetics.
|Identify high likelihood households...|
Health and wellness segments
Because health and wellness is a critical component of the everyday day lives of diabetic consumers, the predictive analytics model scored health and wellness segments, as defined by The Natural Marketing Institute (NMI), to diabetic consumers in the Nielsen Homescan panel. Each of NMI’s mutually exclusive five-cluster solution accounts for roughly one-fifth of the population. Two of the five segments—accounting for 35% of the population—registered significantly among Type 2 diabetics: Food Actives™ and Magic Bullets™. Together, these segments encompass almost half of all diabetic consumers who both manage their weight and opt for healthy convenience.
Magic Bullets are above average users of organic and natural food and beverages and the highest consumers of functional/fortified foods, weight-loss food, artificial sweeteners, OTC medications, alternative healthcare remedies, homeopathic and condition-specific supplements.
Food Actives embrace healthy eating with 75% following “heart-smart” diets. They are most likely to count calories and use artificial sweeteners and represent the highest consumers of prescription drugs, while they are least likely to pursue alternative healthcare options.
Triple media play
Since diet and lifestyle are critical components of consumers’ efforts to manage health conditions, retailers and manufacturers have a real opportunity to target consumers from a health perspective. But whether it is diabetes as a health concern, or other health conditions such as obesity, digestive health or heart disease, the methods of targeting and reaching consumers have evolved.
|Determine the channels a customer will be most responsive to...|
The playbook has expanded in this newly fragmented media world, affording emerging, highly efficient opportunities for connecting with niche markets. In addition to traditional media and retail channels, the promotional playbook also includes targeted direct mail and vertically-integrated multi-media platforms. As the number of ways to reach a customer increases, it becomes that much more challenging—and important—to determine the channels a customer will be most responsive to and focus marketing spend on those channels.
To develop a high-value diabetic mailing list, the team matched disaggregated records from Nielsen’s online panel of Type 2 diabetics with Experian INSOURCE variables such as credit and auto market statistics, demographic, activity and interest data for more than 2,500 variables. A proprietary algorithm was applied to identify high likelihood households, in turn generating an actionable, targeted list of households including postal addresses licensed for direct marketing execution.
The linkage between a highly-engaged target list and a multi-media solution platform illustrates the value of delivering on strategic objectives. Enter dLife: an integrated multimedia consumer lifestyle marketing solution comprising a national TV show featured on CNBC every Sunday evening, the top website with the greatest reach into and engagement with the diabetic community, a direct mail program to 2.5 million households operated in partnership with Rite Aid, as well as popular radio and retail programs.
|The best local markets are identified...|
Predictive analytics enhances the impact of channels like dLife in numerous ways. For example, take dLife’s Glucerma Mobile Marketing bus, which visits cities to educate diabetic consumers on the special needs and challenges of the disease. By using the predictive model, the best local markets are identified to ensure stops are made in cities that have high incidences of diabetes and—for those specific markets where needed—Spanish-language materials and programming are on-hand. Additionally, pre-marketing communications coupled with local PR creates advance awareness before the tour arrives with coupons, giveaways, challenges and other promotions to guarantee high attendance of the right audience.
Finally, by identifying the demographic fit between local retail stores and the diabetic consumer, key retail partners are identified to create promotions and marketing materials specific to those retailers.
|Predictive analytics enable a deeper understanding of targeted consumers...|
Predictive analytics enable a deeper understanding of targeted consumers, the categories they buy at a high rate, and the attitudes and behaviors that shape their purchase decisions. For diabetics, this is particularly true around issues of food and diet, because their disease requires a close check on nutritional values and a skew towards low-cholesterol, low-sodium and sugar-free products.
The need to know and understand prompted dLife to develop a disease education program with Splenda that included a 60-page booklet with a tutorial on how to read food labels and a DVD featuring a video where a dietitian took a diabetic tour through the grocery aisles. The kit was available in both hard copy and a downloadable version on the dLife web site.
Although initially conceptualized as a tool to be dispensed to patients by physicians at the time of diagnosis, the Splenda Starter Kit could easily extend to retail, offered for sale at the pharmacy, as a promotional incentive with purchase, or a giveaway in support of an in-store event.
Regardless of the common interest responsible for aggregating a consumer group, predictive analytics provides the actionable insights for informing marketing strategy, integrating marketing campaigns and mining the hidden treasure of consumer value.