Welcome to marketing in the 21st century

[StatFreak]

Think it's paranoid to pay cash for everything? Maybe -- but it's scary just how advanced data mining has become and how sneaky large corporations can get when using the information to market to consumers. And one has to wonder how much further this will go.

Consider the articles below, published yesterday on the New York Times and Forbes websites. When Target decided that it wanted to know which of its customers were pregnant, the company was able to use its database of consumer buying habits to find out -- even if the customers didn't want them to know.

Keep in mind that Target (and probably many other large retailers) can assign these data to a customer based solely on their credit/debit card use without their having to sign up for a store discount card, so in many cases it's being done completely without their knowledge or consent.

In this case, even Target realized that their analyses could make their customers uncomfortable, so they employed even more deception in their use of their newly acquired knowledge: they decided to deliberately mix their "targeted" ads in with other offers to make it appear to the customer that the ads were random when they had, in fact, been carefully matched to the specific customer. Now that's sneaky! 

Of course, these types of analyses aren't perfect and will never be so, but they are getting more and more accurate as the tools of statistical analysis improve. On the positive side, the Times article points out that these same tools are also being used to help us change unwanted habits and behaviors and improve our lives.


Here are the links:

http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/

http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=2&hp=&pagewanted=all


StatFreak

[crgadyk]

I'm a dba and work some in the business intelligence world. Its amazing the types of things you can learn about your customer base just by looking closer at their data. The data has been around forever, people are just now learning how to use it effectively. Banks use predictive models to help weed out good and bad loans for people with no credit or less than stellar credit, stores use it to help get the correct coupons to their buying public, hospitals/doctors use it to find regional demographics for ilnesses. I sat through a BI symposium a while back where a hospital management company showed their data warehouse and its capabilities. It was pretty impressive to see what all can be done with big data.


Not all of it is bad but it is scary to know that they can use your data to their advantage without your expressed consent.

[jay]

The problem with cash is that you dont get members pricing.
Ie 2.98 for xyz product or  0.98 with the members card.
It adds up. In a way they are paying for your data.

You can always sign up using bogus info

[crgadyk]

Thats the good thing about "big data" they don't care about your personally... they only care about you as a spender of money. When you log into that machine, they just see Person A likes to buy beer, duct tape, rope and candy. Then they know to alert the authorities that there is a rapist in the building 

[jay]

I have no issues with them data mining based on a single store purchase.
If they want to use their market intelligence to stock their shelves with a house brand of Twinkies because 82% of the customer buys Twinkies and they think by offering the generics for 20% less they can steal some market share for a higher margin. Go for it.
Its their card - their business - and I have the option of taking my business elsewhere if I object how its used.

Where I would strongly object would be to sell my credit card data, and let Walmart know that I bought my olive oil from Giant Eagle.
It might help Walmart know they can make money by bringing in a better brand of Olive Oil but I don't want my global purchases aggregated and sold. I can't get away from my Credit Card as I need it to rent cars, online purchases, etc. I could go to debit but this is not really any better, and often the bank debits carry a Visa or MC symbol so they can be used where debit is not.

So far the CC companies don't have access to the line level data. But its not a stretch that they could buy this from retailers in return for a reduction in transaction fees.

[StatFreak]

The problem with cash is that you dont get members pricing.
Ie 2.98 for xyz product or  0.98 with the members card.
It adds up. In a way they are paying for your data.

You can always sign up using bogus info

Actually, when it comes to retail store shopping cards, you don't have to give them ANY data. I have a card for every grocery store I've shopped in and have never filled out a form. They press, but if you insist, they have to give it to you. Of course, I don't get any special coupons in the mail and I can't give them my phone number when I forget my card (which I never do because I leave them in my glove compartment ), but I do get all of the in-store discounts. If I were prone to forgetting the cards, I'd just use a bogus phone number on the applications and give no address.

If someone volunteers their address and other info to a store when requesting a discount card or by joining (Costco etc.), then they have essentially given consent and I don't have any issues with that data being used. I do take offense at the store using a person's debit or credit card number to create a data file and to track purchases without the customer's consent or knowledge (except for their own understanding of the way things are in the world today), and I don't care for the sneaky way that Target chose to use that data in the above article. Using multiple debit or credits cards offers no guarantee that the data won't be linked because the store has access to the name and the retail locations visited for every card used.

I'm a dba and work some in the business intelligence world. Its amazing the types of things you can learn about your customer base just by looking closer at their data. The data has been around forever, people are just now learning how to use it effectively.
...

Not all of it is bad but it is scary to know that they can use your data to their advantage without your expressed consent.

I've also been a dba and I agree. The data have been around for a long time but the techniques necessary to pull this level of information from them hasn't (I worked with OLAP as long ago as 1999.) I also agree that this level of data mining is not always a bad thing. It's a tool – and like any tool, it can be used positively or negatively.

The Target employees realized that what they were doing would be perceived negatively and they deliberately chose to mask their marketing efforts. That's a clear indication that they knew that they were misusing their data and had chosen to continue out of greed. Note also that they stopped allowing their employees to discuss the project with the author of the article after he had dug out more than they had expected.

[crgadyk]

I completely agree. With any advancement in technology there will be good and potentially bad uses of it. There is definitely a dark side of big data. The example that is used the most is the situation of a woman who either has a miscarriage or their infant dies. The system isn't intelligent enough to know that (at least not right away) so the person could continue getting ads or infromation about babies.

The other downside to big data is the potential for selling of data. I never worry too much about it since I know they aren't looking for individual people's sensitive data, they are just looking for the statistical data that drives sales. I've been through both PCI compliance audits as well as SOX audits enought times to know that companies aren't selling private individual user's data that could be used for identity theft. Hackers are always going to hack and that is happening regardless of data mining or not. I guess I could try to live off the grid but that just seems like too much work. The convenience far outweighs the potential risks for me.

[StatFreak]

...
 I guess I could try to live off the grid but that just seems like too much work. The convenience far outweighs the potential risks for me.

It's virtually impossible to live completely off the grid today (pun intended), but one can still be prudent.

For example, I moved recently and every utility company asked for my SSN. I refused every last one of them. One company started to insist and I pointed out that unless they were going to be reporting payments made to me to the IRS that they had no need of the number and no business asking. One operator defended her request by saying, "We only ask for the last four digits when you call."  Are you #$% kidding me?! The last four digits ARE your SSN identity today, since virtually every bank and institution asks for those same last four numbers when verifying ID on the phone. 

 (BTW, did you know that you can give your bank an alternate ID verification number that you randomly select yourself? If someone had my SSN and used the last four digits to verify ID with my bank they'd be refused information. I don't use the code I gave them anywhere else. It isn't even written down anywhere.)



It's the same with those store discount cards. I don't mind if they collect information about my purchases without tying it to my name and address, but I don't want to end up like the guy several years ago who slipped and injured himself at a store and sued, only to have the store use his alcohol purchase record against him to claim that he was an alcoholic and that his alcoholism was the reason he fell.

Another thing to consider with these cards is that in many cases there is no discount.  I tend to cross compare prices of supermarket items and many times the store actually raises the price, only to then "discount" it for using the card, bringing the price back to what it should have been in the first place. And people fall for this scam all the time.

[crgadyk]

We sign up for the shopper cards mainly for the coupons. We save at least $50 a week on groceries with coupons so any additional savings we can get, we do.