Daily Bazar case study

1. How would you use customer transactions to optimise these parameters?

 Basic idea is to understand the pattern in customer segments and then accordingly do upsell
and cross sell to optimize profit
 Daily transactions contain huge volume of data including how much each customer buys, what
they prefer most to buy together, their most favourable brands, frequency of their purchase etc
 Using the loyalty card, every time a customer makes a transaction, their purchasing details gets
recorded and it can be used to study consumer behaviour, preferences, likes and dislikes
 Segmentation can be done to break down large data set and form small sets of customers by
clustering
 The data should be segmented on the basis of :-
 Demographics : Age, Gender, Income, Life stage
 Psychographic segments : Lifestyle, Personality, Values
 Behavioral segments: Needs and benefits , usage rates, loyalty status
 Data from clusters can be analysed through analytics tools to understand the preferences and
buying patterns of customers and hence provide personalized offers
 For example analysing the patterns of items brought, one can recognize the criteria to use for
cross selling as it suggests items brought together and the frequency of items of a brand
purchased tells about loyalty, usage rates and user status.
 This helps to have more efficient layout design and merchandise to place items that guarantee
increased sales and profits
 Based on the study of customer preference, understanding the patterns of each customer
segment, one can make promotional campaigns to retain customer and provide promotional
offers through mail, SMS, telephone, website of company and other sites, social media etc.
 Based on the analysis of customer transactions we can also create priority customer base
described by the purchasing frequency, spending amount, items purchased and loyalty shown
towards Daily Bazar
 Loyalty program provides varied incentives to different customer depending on their purchase
patterns and thus motivates them to stay loyal to the store in long run
 In the process of providing loyalty program, the most significant thing is to balance out the cost
incurred to offer such programs and the profit earned out of it

2. How could you classify and group customers for a specific department, e.g. dairy, who share
similar shopping behaviours?

 Customers can be classified into smaller groups using segmentation based on demographics,
psychographics and behavior segments.
 The segmentation can be done by categorizing the daily transaction data on the basis of
 Customer age and gender along with their profession and income levels
 Whether they look for niche-products or low priced products
 Consideration of durability and value in products
 Whether their primary motivations are ideals, achievements or self-expression
  Seek of benefits and needs
 How often they purchase products of particular brand and type
 How easily they switch to other brands
 Fashion and trends affecting purchase
 How much time they take for each purchase

 Clustering can be done by placing customers with similar preferences or interests in a single
set and dissimilar in another and then analyse the consumer spending data
 Example: A segment includes women aged between 25 and 35 who are homemakers. Their
purchase includes mostly groceries or home essentials and there might be a brand these
segment mostly follows
 Thus, each group having patterns must be identified from each data sets and use that to provide
promotional offers and discounts. These kind of Customer oriented marketing would make
them feel like having one to one relationship with the store as it understand their basic needs
 Analyse behavioural characteristics (recent purchases, past purchase data etc) of different
groups of customers or the segments and identify valuable prospects

3. What objectives would you chose for each of these customer groups and how would these
parameters look like?

 The main objective of segmentation is to correctly and precisely predict consumer behaviour
and profiling of prospective customers based on the classification.
 This objective would ultimately help us to optimize the number of times a customer visits and
purchase for maximum amount and volume
 The parameters for consumer groups would include
 Age
 Gender
 Occupation
 Income
 User status (ex-user, potential user, new user)
 Usage rate (heavy, medium, low)
 Loyalty (Hard-core, Split, Shifting and Switchers)
 Occasions (Week, month, year or season)

4. How will you measure the success of your offers/parameters and how can you prove that
different parameters influence the profit?

 Rather than checking total spend we can figure it out more easily by checking the kinds of
product customer brought (High/Low end product) and it vary from segment to segment
 Profitability of a loyalty program can be evaluated by examining the difference between
revenues and costs. This can be measured by factoring all those that have increased the revenue
( sales, partner payments, membership fees ) and those that added costs (advertisement and
promotions, salary, loyalty program costs)
 Success of the offers can be measured by analysing the purchasing frequency, purchasing
volume, willingness to pay premium, increase of customer retention and loyalty
 Customers who like to redeem points to obtain rewards are more likely to continue, or increase,
their spending and stay engaged with the brand for longer time. Hence the increase quantity of
x can also indicate success
 The more satisfied the customers are the more they recommend to their friends and family.
Hence Increased number of referrals/recommendations measures success of the offers
 Customer retention rate is another parameter that helps in analysing the success of loyalty
program. If customers feels cheated they would not buy more and hence churn rate may
increase. Hence a decreased churn rate measures success of parameters and the offerss